FREDERICK, Md., Nov. 6, 2017 /PRNewswire/ -- U.S. Silica
Holdings, Inc. (NYSE: SLCA) today announced net income of
$41.3 million or $0.51 per basic share, or $0.50 per diluted share, for the third quarter
ended Sept. 30, 2017 compared with a
net loss of $11.3 million or
$(0.17) per basic and diluted share
for the third quarter of 2016. The third quarter results were
negatively impacted by $2.4 million
in business development related expenses. Excluding this expense,
net of the $0.9 million tax effect,
EPS was $0.53 per basic share for the
quarter.
"Robust market demand in our Oil and Gas business, coupled with
record profitability from our Industrial and Specialty Products
segment drove an exceptionally strong performance in the third
quarter that led to a record Adjusted EBITDA for the total
Company," said Bryan Shinn,
president and chief executive officer.
"In Oil and Gas, volumes were up 15% sequentially to a record
3.1 million tons, with capacity utilization running at nearly 100%.
Pricing was up over 5% sequentially and our contribution margin per
ton in Oil and Gas was $30.54. Our
Sandbox unit had a very strong performance as well, exiting the
quarter fully utilized with 52 crews online. Additionally, we
signed five new long-term supply agreements during the quarter for
both Northern White and local and regional sand, many of which
included capacity reservation fees.
"Our ISP segment had record contribution margin during the
quarter of $24 million, driven by a
combination of strategic price increases and a better mix of higher
margin products sold during the quarter,'' Shinn concluded.
Third Quarter 2017 Highlights
Total Company
- Revenue totaled $345 million
compared with $137.7 million for the
same period last year, an increase of 151% on a year-over-year
basis and an increase of 19% sequentially over the second quarter
of 2017.
- Overall tons sold totaled 4.075 million, up 63% compared to
2.493 million tons sold in the third quarter of 2016 and an
increase of 12% sequentially over the second quarter of 2017.
- Contribution margin for the quarter was $120.1 million, up 510% compared with
$19.7 million in the same period of
the prior year and up 27% sequentially from the second quarter of
2017.
- Adjusted EBITDA was $96.7 million
compared with Adjusted EBITDA of $8.3
million in the third quarter of 2016 and $75.1 million in the second quarter of 2017.
Oil and Gas
- Revenue totaled $286.4 million
compared with $86.8 million for the
same period of 2016, up 230% on a year-over-year basis and an
increase of 22% sequentially from the second quarter of 2017.
- Tons sold totaled 3.147 million, an increase of 95% over the
1.617 million tons sold in the third quarter of 2016, and an
increase of 15% sequentially over the 2.745 million tons sold in
the second quarter of 2017.
- 66% of tons sold were in basin compared with the 62% sold in
basin in the second quarter of 2017.
- Segment contribution margin was $96.1
million versus a loss of $1.9
million in the third quarter of 2016, and an increase of 35%
over the $71.2 million in the second
quarter of 2017.
Industrial and Specialty Products
- Revenue in the third quarter of 2017 totaled $58.7 million, an increase of 15% over the third
quarter of 2016, and up 6% over the second quarter of 2017.
- Tons sold totaled 0.928 million, up 6% over the 0.876 million
tons sold in the same period of 2016, and an increase of 4%
compared with the second quarter of 2017.
- Segment contribution margin was $24
million compared to $21.6
million in the third quarter of 2016, an increase of 11% on
a year-over-year basis and up 3% sequentially over the second
quarter of 2017.
Capital Update and Share Repurchase Plan
As of Sept. 30, 2017, the Company
had $463.7 million in cash and cash
equivalents and $45.2 million
available under its credit facilities. Total debt at Sept. 30, 2017 was $511.3
million. Capital expenditures in the third quarter totaled
$130.7 million, and were associated
largely with our previously announced growth projects and other
maintenance and cost improvement capital projects.
Subsequent to the end of the quarter, the Board of Directors
approved a new Share Repurchase Plan to repurchase up to
$100 million of the Company's common
stock. Commenting on the action, Shinn noted that, "U.S.
Silica is the only Company in the sand space that has had the
financial strength and flexibility to continually pay a quarterly
dividend, fund growth projects, complete accretive acquisitions and
make share repurchases, all while maintaining an industry-leading
balance sheet."
Outlook and Guidance
The Company anticipates that its capital expenditures for the
full year 2017 will be at the high end of the second quarter
guidance or approximately $375
million.
For the fourth quarter, we expect that sand volumes will be up
in oil and gas but perhaps restrained by some frac crews
extending their holiday time off, plant down time due to planned
maintenance and brief outages for capacity expansion work at a few
mines. We do expect to see continued pricing upside in oil and
gas during the fourth quarter. Contract interest is at an all-time
high and we will continue to prioritize customers with capacity
reservation fee contracts and long-term partners in this tight
market. For Sandbox, we expect strong growth and plan to increase
from the 52 crews online at the end of the third quarter to 70
active crews by year end.
For 2018, the Company expects another strong year, driven by
record demand for frac sand, increased opportunities for Sandbox
and increased market penetration for some of ISP's new, higher
margin products. We are forecasting total industry demand for frac
sand to be in the range of 90 million to 100 million tons, assuming
a rig count that is essentially flat with today's levels and
proppant per well up 15-20% year-over-year. Additionally, the
Company expects to invest significantly in Sandbox and is targeting
to have over 100 crews online exiting 2018. Finally, ISP, which has
grown contribution margin at a 10% CAGR for the last five years, is
expected to continue this trend in 2018 with increased market
penetration of new, higher margin products like our cool roof
granules and by the introduction of additional attractive new
products.
Conference Call
U.S. Silica will host a conference call for investors
tomorrow, Nov. 7, 2017 at 9:00 a.m. Eastern
Time to discuss these results. Hosting the call will
be Bryan Shinn, president and chief executive officer
and Don Merril, executive vice president and chief financial
officer. Investors are invited to listen to a live webcast of
the conference call by visiting the "Investor Resources" section of
the Company's website at www.ussilica.com. The webcast will be
archived for one year. The call can also be accessed live over the
telephone by dialing (877) 869-3847 or for international callers,
(201) 689-8261. A replay will be available shortly after the call
and can be accessed by dialing (877) 660-6853 or for international
callers, (201) 612-7415. The conference ID for the replay is
13672060. The replay will be available through Dec. 7,
2017.
About U.S. Silica
U.S. Silica Holdings, Inc., a member of the Russell 2000, is a
leading producer of commercial silica used in the oil and gas
industry, and in a wide range of industrial applications. Over its
117-year history, U.S. Silica has developed core
competencies in mining, processing, logistics and materials science
that enable it to produce and cost-effectively deliver over 240
products to customers across our end markets. The Company currently
operates nine industrial sand production plants and eight oil and
gas sand production plants. The Company is headquartered
in Frederick, Maryland and also has offices located
in Chicago, Illinois,
and Houston, Texas.
Forward-looking Statements
Certain statements in this press release are "forward-looking
statements" made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 and speak only as
of this date. Forward-looking statements made include any statement
that does not directly relate to any historical or current fact and
may include, but are not limited to, statements regarding U.S.
Silica's growth opportunities, strategy, future financial
results, forecasts, projections, plans and capital expenditures,
and the commercial silica industry. Forward-looking statements are
based on our current expectations and assumptions, which may not
prove to be accurate. These statements are not guarantees and are
subject to risks, uncertainties and changes in circumstances that
are difficult to predict. Many factors could cause actual results
to differ materially and adversely from these forward-looking
statements. Among these factors are: (1) fluctuations in demand for
commercial silica; (2) the cyclical nature of our customers'
businesses; (3) operating risks that are beyond our control; (4)
federal, state and local legislative and regulatory initiatives
relating to hydraulic fracturing; (5) our ability to implement our
capacity expansion plans within our current timetable and budget;
(6) loss of, or reduction in, business from our largest customers
or failure of our customers to pay amounts due to us; (7)
increasing costs or a lack of dependability or availability of
transportation services or infrastructure; (8) our substantial
indebtedness and pension obligations; (9) our ability to attract
and retain key personnel and truckload drivers; (10) silica-related
health issues and corresponding litigation; (11) seasonal and
severe weather conditions; and (12) extensive and evolving
environmental, mining, health and safety, licensing, reclamation,
trucking and other regulation (and changes in their enforcement or
interpretation). Additional information concerning these and other
factors can be found in U.S. Silica's filings with
the Securities and Exchange Commission. We undertake no
obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or
otherwise, except as otherwise required by law.
U.S. SILICA
HOLDINGS, INC.
|
SELECTED FINANCIAL
DATA FROM CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
(unaudited;
dollars in thousands, except per share
amounts)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 30,
2017
|
|
June 30,
2017
|
|
September 30,
2016
|
|
|
|
|
|
|
Total
sales
|
$
345,023
|
|
$
290,465
|
|
$
137,748
|
Total cost of sales
(excluding depreciation, depletion and amortization)
|
227,923
|
|
197,411
|
|
119,426
|
Operating
expenses:
|
|
|
|
|
|
Selling, general and
administrative
|
29,602
|
|
26,012
|
|
18,472
|
Depreciation,
depletion and amortization
|
24,673
|
|
23,626
|
|
17,175
|
Total operating expenses
|
54,275
|
|
49,638
|
|
35,647
|
Operating income (loss)
|
62,825
|
|
43,416
|
|
(17,325)
|
Other income
(expense):
|
|
|
|
|
|
Interest
expense
|
(8,347)
|
|
(8,105)
|
|
(6,684)
|
Other income
(expense), net, including interest income
|
1,502
|
|
1,258
|
|
493
|
Total other expense
|
(6,845)
|
|
(6,847)
|
|
(6,191)
|
Income
(loss) before income taxes
|
55,980
|
|
36,569
|
|
(23,516)
|
Income tax (expense)
benefit
|
(14,707)
|
|
(7,110)
|
|
12,177
|
Net
income (loss)
|
$
41,273
|
|
$
29,459
|
|
$
(11,339)
|
Earnings (loss) per
share:
|
|
|
|
|
|
Basic
|
$0.51
|
|
$0.36
|
|
($0.17)
|
Diluted
|
$0.50
|
|
$0.36
|
|
($0.17)
|
Weighted average
shares outstanding:
|
|
|
|
|
|
Basic
|
81,121
|
|
81,087
|
|
66,676
|
Diluted
|
81,783
|
|
81,945
|
|
66,676
|
Dividends declared
per share
|
$0.06
|
|
$0.06
|
|
$0.06
|
|
|
|
|
|
|
U.S. SILICA
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
(unaudited)
|
|
(audited)
|
ASSETS
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
463,650
|
|
$
711,225
|
Accounts receivable,
net
|
206,099
|
|
89,006
|
Inventories,
net
|
86,174
|
|
78,709
|
Prepaid expenses and
other current assets
|
15,124
|
|
12,323
|
Income tax
deposits
|
-
|
|
1,682
|
Total current
assets
|
771,047
|
|
892,945
|
Property, plant and
mine development, net
|
1,049,805
|
|
783,313
|
Goodwill
|
301,744
|
|
240,975
|
Trade
names
|
33,068
|
|
32,318
|
Intellectual
property, net
|
64,836
|
|
57,270
|
Customer
relationships, net
|
51,433
|
|
50,890
|
Other
assets
|
14,973
|
|
15,509
|
Total
assets
|
$
2,286,906
|
|
$
2,073,220
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
140,188
|
|
$
70,778
|
Dividends
payable
|
5,231
|
|
5,221
|
Accrued
liabilities
|
17,494
|
|
13,034
|
Accrued
interest
|
123
|
|
169
|
Current portion of
long-term debt
|
4,735
|
|
4,821
|
Current portion of
capital leases
|
1,090
|
|
2,237
|
Current portion of
deferred revenue
|
33,089
|
|
13,700
|
Income tax
payable
|
8,341
|
|
-
|
Total current
liabilities
|
210,291
|
|
109,960
|
Long-term debt,
net
|
506,569
|
|
508,417
|
Deferred
revenue
|
89,373
|
|
58,090
|
Obligations under
capital lease
|
168
|
|
717
|
Liability for pension
and other post-retirement benefits
|
52,472
|
|
56,746
|
Deferred income
taxes, net
|
60,735
|
|
50,075
|
Other long-term
obligations
|
18,503
|
|
15,925
|
Total
liabilities
|
938,111
|
|
799,930
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
Preferred
stock
|
—
|
|
—
|
Common
stock
|
812
|
|
811
|
Additional paid-in
capital
|
1,140,554
|
|
1,129,051
|
Retained
earnings
|
221,132
|
|
163,173
|
Treasury stock, at
cost
|
-
|
|
(3,869)
|
Accumulated other
comprehensive loss
|
(13,703)
|
|
(15,876)
|
Total stockholders'
equity
|
1,348,795
|
|
1,273,290
|
Total liabilities and
stockholders' equity
|
$
2,286,906
|
|
$
2,073,220
|
Non-GAAP Financial Measures
Segment Contribution Margin
Segment contribution margin is a key metric that management uses
to evaluate our operating performance and to determine resource
allocation between segments. Segment contribution margin excludes
certain corporate costs not associated with the operations of the
segment. These unallocated costs include costs related to corporate
functional areas such as sales, production and engineering,
corporate purchasing, accounting, treasury, information technology,
legal and human resources.
The following table sets forth a reconciliation of net income
(loss) the most directly comparable GAAP financial measure, to
segment contribution margin.
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
September 30,
2017
|
|
June 30,
2017
|
|
September 30,
2016
|
|
(dollars in
thousands)
|
Sales:
|
|
|
|
|
|
Oil & Gas
Proppants
|
$
286,369
|
|
$
235,018
|
|
$
86,782
|
Industrial &
Specialty Products
|
58,654
|
|
55,447
|
|
50,966
|
Total
sales
|
345,023
|
|
290,465
|
|
137,748
|
Segment contribution
margin:
|
|
|
|
|
|
Oil & Gas
Proppants
|
96,087
|
|
71,222
|
|
(1,897)
|
Industrial &
Specialty Products
|
23,978
|
|
23,267
|
|
21,587
|
Total segment
contribution margin
|
120,065
|
|
94,489
|
|
19,690
|
Operating activities
excluded from segment cost of sales
|
(2,965)
|
|
(1,435)
|
|
(1,368)
|
Selling, general and
administrative
|
(29,602)
|
|
(26,012)
|
|
(18,472)
|
Depreciation,
depletion and amortization
|
(24,673)
|
|
(23,626)
|
|
(17,175)
|
Interest
expense
|
(8,347)
|
|
(8,105)
|
|
(6,684)
|
Other income (loss),
net, including interest income
|
1,502
|
|
1,258
|
|
493
|
Income tax (expense)
benefit
|
(14,707)
|
|
(7,110)
|
|
12,177
|
Net income
(loss)
|
$
41,273
|
|
$
29,459
|
|
$
(11,339)
|
Adjusted EBITDA
Adjusted EBITDA is not a measure of our financial performance or
liquidity under GAAP and should not be considered as an alternative
to net income as a measure of operating performance, cash flows
from operating activities as a measure of liquidity or any other
performance measure derived in accordance with GAAP. Additionally,
Adjusted EBITDA is not intended to be a measure of free cash flow
for management's discretionary use, as it does not consider certain
cash requirements such as interest payments, tax payments and debt
service requirements. Adjusted EBITDA contains certain other
limitations, including the failure to reflect our cash
expenditures, cash requirements for working capital needs and cash
costs to replace assets being depreciated and amortized, and
excludes certain non-recurring charges that may recur in the
future. Management compensates for these limitations by relying
primarily on our GAAP results and by using Adjusted EBITDA only
supplementally. Our measure of Adjusted EBITDA is not necessarily
comparable to other similarly titled captions of other companies
due to potential inconsistencies in the methods of calculation.
The following table sets forth a reconciliation of net income
(loss) the most directly comparable GAAP financial measure, to
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
|
September 30,
2017
|
|
June 30,
2017
|
|
September 30,
2016
|
|
|
(dollars in
thousands)
|
|
Net income
(loss)
|
$
41,273
|
|
$
29,459
|
|
$
(11,339)
|
|
Total interest
expense, net of interest income
|
6,900
|
|
6,641
|
|
6,211
|
|
Provision for
taxes
|
14,707
|
|
7,110
|
|
(12,177)
|
|
Total depreciation,
depletion and amortization expenses
|
24,673
|
|
23,626
|
|
17,175
|
|
EBITDA
|
87,553
|
|
66,836
|
|
(130)
|
|
Non-cash incentive
compensation(1)
|
6,567
|
|
6,442
|
|
3,720
|
|
Post-employment
expenses (excluding service costs)(2)
|
194
|
|
240
|
|
(184)
|
|
Business development
related expenses(3)
|
2,355
|
|
1,543
|
|
4,667
|
|
Other adjustments
allowable under our existing credit
agreements(4)
|
7
|
|
11
|
|
185
|
|
Adjusted
EBITDA
|
$
96,676
|
|
$
75,072
|
|
$
8,258
|
|
|
|
|
|
|
|
(1)
|
Reflects equity-based
compensation expense.
|
|
|
|
(2)
|
Includes net pension
cost and net post-retirement cost relating to pension and other
post-retirement benefit obligations during the applicable period,
but in each case excluding the service cost relating to benefits
earned during such period. See Note M - Pension and Post-retirement
Benefits to our Financial Statements in Part 1, Item 1 of this
Quarterly Report on Form 10-Q.
|
(3)
|
Reflects expenses
related to business development activities in connection with our
growth and expansion initiatives.
|
(4)
|
Reflects
miscellaneous adjustments permitted under our existing credit
agreement.
|
Investor Contacts
Michael Lawson
Vice President of Investor Relations and Corporate
Communications
301-682-0304
lawsonm@ussilica.com
Nick Shaver
Investor Relations Manager
281-394-9630
shavern@ussilica.com
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SOURCE U.S. Silica Holdings, Inc.