NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; dollars in thousands, except per share amounts)
NOTE A—ORGANIZATION AND BASIS OF PRESENTATION
Organization
U.S. Silica Holdings, Inc. (“Holdings,” and together with its subsidiaries “we,” “us” or the “Company”) is a performance materials company and one of the largest domestic producers of commercial silica used in the oil and gas industry and in a wide range of industrial applications. In addition, through our acquisition of EP Minerals, LLC ("EPM") and its affiliated companies in 2018, we are an industry leader in the production of industrial minerals, including diatomaceous earth, clay (calcium bentonite and calcium montmorillonite) and perlite. During our 120-year history, we have developed core competencies in mining, processing, logistics and materials science that enable us to produce and cost-effectively deliver products to customers across our end markets. Our operations are organized into two reportable segments based on end markets served: (1) Oil & Gas Proppants and (2) Industrial & Specialty Products. See Note U - Segment Reporting for more information on our reportable segments.
Basis of Presentation and Consolidation
The accompanying unaudited Condensed Consolidated Financial Statements for the quarter ended June 30, 2020 included in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the U.S. Securities and Exchange Commission (“SEC”). They do not contain certain information included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019; therefore, the unaudited Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K. Operating results for the three-month period ended June 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020. In the opinion of management, all adjustments necessary for a fair presentation have been included. Such adjustments are of a normal, recurring nature.
The unaudited Condensed Consolidated Financial Statements include the accounts of Holdings and its direct and indirect wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
We follow Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) guidance for identification and reporting of entities over which control is achieved through means other than voting rights. The guidance defines such entities as Variable Interest Entities (“VIEs”). We consolidate VIEs when we have variable interests and are the primary beneficiary. We continually evaluate our involvement with VIEs to determine when these criteria are met.
During the third quarter of 2018, we finalized a shareholders' agreement with unrelated parties to form a limited liability company with the purpose of constructing and operating a water pipeline to transport and sell water. In connection with the shareholders’ agreement, we acquired a 50% equity ownership in the limited liability company for $3.2 million, with a maximum initial capital contribution of $7.0 million, and a water rights intangible asset for $0.7 million. Based on our evaluation, we determined that this limited liability company is a VIE, of which we are the primary beneficiary, and therefore we are required to consolidate it. As of June 30, 2020, the VIE had total assets of $17.1 million and total liabilities of $0.1 million. We made $0.2 million in capital contributions during the six months ended June 30, 2020.
Throughout this report we refer to (i) our unaudited Condensed Consolidated Balance Sheets as our “Balance Sheets,” (ii) our unaudited Condensed Consolidated Statements of Operations as our “Income Statements,” and (iii) our unaudited Condensed Consolidated Statements of Cash Flows as our “Cash Flows.”
NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates and Assumptions
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to the purchase price allocation for businesses acquired; mineral reserves that are the basis for future cash flow estimates utilized in impairment calculations and units-of-production amortization calculations; environmental, reclamation and closure obligations; estimates of recoverable minerals; estimates of allowance for credit losses; estimates of fair value for certain reporting units and asset
impairments (including impairments of goodwill, intangible assets and other long-lived assets); write-downs of inventory to net realizable value; equity-based compensation expense; post-employment, post-retirement and other employee benefit liabilities; valuation allowances for deferred tax assets; contingent considerations; reserves for contingencies and litigation and the fair value and accounting treatment of financial instruments, including derivative instruments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.
New Accounting Pronouncements Recently Adopted
In August 2018, the FASB issued Accounting Standards Update ("ASU") 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The new guidance requires a customer in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The update was effective for calendar-year public business entities in 2020. We adopted the new standard on January 1, 2020. The adoption of this ASU had no significant impact on our Condensed Consolidated Statements of Operations.
In November 2018, FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses. The amendments in this ASU clarified issues related to Topic 326. In Issue 1, the amendment in this ASU mitigates transition complexity by requiring that for nonpublic business entities the amendments in ASU 2016-13 are effective for fiscal years after December 15, 2021, including interim periods within those fiscal years. In Issue 2, the amendment clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. The ASU was effective for all entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We adopted the new standard on January 1, 2020. The adoption of the new standard did not have a significant impact on our Condensed Consolidated Financial Statements as our current process for estimating expected credit losses for trade receivables aligned with the expected credit loss model. See Note F - Accounts Receivable for more information.
New Accounting Pronouncements Not Yet Adopted
In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20). The new guidance removes certain disclosure requirements for employers which sponsor defined benefit pension or other post-retirement plans, but also adds disclosure requirements for the weighted average interest crediting rates for cash balance plans and other plans with promised crediting rates and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify disclosure requirements for the projected benefit obligation (PBO) and accumulated benefit obligation (ABO) and fair value of plan assets for plans with PBOs and ABOs in excess of plan assets. Entities should apply the amendments on a retrospective basis for all periods presented. The amendments in this ASU are effective for public entities for fiscal years ending after December 15, 2020. We are currently evaluating the effect that the guidance will have on our disclosures.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing several exceptions and also simplify the accounting for income taxes by requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction, specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements (however, an entity may elect to do so on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority, requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, and making minor codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We are currently evaluating the effect that the guidance will have on our consolidated financial statements and related disclosures.
NOTE C—EARNINGS PER SHARE
Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is computed similarly to basic earnings per common share except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.
Diluted net earnings per share assumes the conversion of contingently convertible securities and stock options under the treasury stock method, if dilutive. Contingently convertible securities and stock options are excluded from the calculation of fully diluted earnings per share if they are anti-dilutive, including when we incur a loss from continuing operations.
The following table shows the computation of basic and diluted earnings per share for the three and six months ended June 30, 2020 and 2019:
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In thousands, except per share amounts
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended June 30,
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|
|
|
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2020
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2019
|
2020
|
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2019
|
|
Numerator:
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|
|
|
|
|
|
Net (loss) income attributable to U.S. Silica Holdings, Inc.
|
|
$
|
(32,354)
|
|
|
$
|
6,150
|
|
$
|
(104,699)
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|
|
$
|
(13,174)
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|
|
|
|
|
|
|
|
|
Denominator:
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|
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|
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Weighted average shares outstanding
|
|
73,620
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|
|
73,301
|
|
73,545
|
|
|
73,165
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|
|
Diluted effect of stock awards
|
|
—
|
|
|
204
|
|
—
|
|
|
—
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|
|
Weighted average shares outstanding assuming dilution
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|
73,620
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|
|
73,505
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|
73,545
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|
|
73,165
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|
(Loss) earnings per share attributable to U.S. Silica Holdings, Inc.:
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Basic (loss) earnings per share
|
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$
|
(0.44)
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|
|
$
|
0.08
|
|
$
|
(1.42)
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|
|
$
|
(0.18)
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|
|
Diluted (loss) earnings per share
|
|
$
|
(0.44)
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|
|
$
|
0.08
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|
$
|
(1.42)
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|
|
$
|
(0.18)
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|
Potentially dilutive shares (in thousands) of 91 for the three months ended June 30, 2020, and 77 and 222 for the six months ended June 30, 2020 and 2019, respectively, were excluded from the calculation of diluted weighted average shares outstanding and diluted earnings per share because we were in a net loss position. Certain stock options, restricted stock awards and performance share units were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. Stock awards excluded from the calculation of diluted loss per common share were as follows:
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In thousands
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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|
|
|
|
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2020
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2019
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2020
|
|
2019
|
|
Stock options excluded
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826
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|
|
689
|
|
826
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|
|
712
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|
|
Restricted stock and performance share unit awards excluded
|
|
7,169
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|
|
254
|
|
4,817
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|
|
298
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|
NOTE D—CAPITAL STRUCTURE AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Common Stock
Our Amended and Restated Certificate of Incorporation authorizes up to 500,000,000 shares of common stock, par value of $0.01. Subject to the rights of holders of any series of preferred stock, all of the voting power of the stockholders of Holdings shall be vested in the holders of the common stock. There were 82,986,454 shares issued and 73,876,427 shares outstanding at June 30, 2020. There were 82,601,926 shares issued and 73,601,950 shares outstanding at December 31, 2019.
During the six months ended June 30, 2020, our Board of Directors declared quarterly cash dividends as follows:
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Dividends per Common Share
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Declaration Date
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Record Date
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Payable Date
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$
|
0.02
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|
|
February 10, 2020
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|
March 13, 2020
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April 3, 2020
|
All dividends were paid as scheduled.
Any determination to pay dividends and other distributions in cash, stock, or property by Holdings in the future will be at the discretion of our Board of Directors and will be dependent on then-existing conditions, including our business and financial condition, results of operations, liquidity, capital requirements, contractual restrictions including restrictive covenants contained in our debt agreements, and other factors. Additionally, because we are a holding company, our ability to pay dividends on our common stock may be limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us, including restrictions under the terms of the agreements governing our indebtedness. During May of 2020, our Board of Directors determined that it was not in the best interest of our shareholders to issue a dividend for the second quarter of 2020 and they subsequently decided not to issue a dividend for the third quarter of 2020. The Board of Directors will make determinations regarding future dividends on a quarterly basis using the criteria described above.
Preferred Stock
Our Amended and Restated Certificate of Incorporation authorizes our Board of Directors to issue up to 10,000,000 shares, in the aggregate, of preferred stock, par value of $0.01 in one or more series, to fix the powers, preferences and other rights of such series, and any qualifications, limitations or restrictions thereof, including the dividend rate, conversion rights, voting rights, redemption rights and liquidation preference, and to fix the number of shares to be included in any such series, without any further vote or action by our stockholders.
There were no shares of preferred stock issued or outstanding at June 30, 2020 or December 31, 2019. At present, we have no plans to issue any preferred stock.
Share Repurchase Program
In May 2018, our Board of Directors authorized the repurchase of up to $200 million of our common stock from time to time on the open market or in privately negotiated transactions. Stock repurchases, if any, will be funded using our available liquidity. The timing and amount of stock repurchases will depend on a variety of factors, including the market conditions as well as corporate and regulatory considerations. As of June 30, 2020, we have repurchased a total of 5,036,139 shares of our common stock at an average price of $14.59 and have $126.5 million of remaining availability under this program. We did not repurchase any shares during the six months ended June 30, 2020.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists of fair value adjustments associated with cash flow hedges, accumulated adjustments for net experience losses and prior service costs related to employee benefit plans and foreign currency translation adjustments, net of tax. The following table presents the changes in accumulated other comprehensive loss by component (in thousands) during the six months ended June 30, 2020:
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|
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For the Six Months Ended June 30, 2020
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|
|
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|
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Unrealized (loss) gain on cash flow hedges
|
|
Foreign currency translation adjustments
|
|
Pension and other post-retirement benefits liability
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Total
|
|
Beginning Balance
|
$
|
(3,053)
|
|
|
$
|
(808)
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|
|
$
|
(15,993)
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|
|
$
|
(19,854)
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|
|
Other comprehensive gain (loss) before reclassifications
|
2,328
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|
|
31
|
|
|
(6,613)
|
|
|
(4,254)
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|
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Amounts reclassified from accumulated other comprehensive loss
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—
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|
|
—
|
|
|
1,198
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|
|
1,198
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Ending Balance
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$
|
(725)
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|
|
$
|
(777)
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|
|
$
|
(21,408)
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|
|
$
|
(22,910)
|
|
Amounts reclassified from accumulated other comprehensive loss related to cash flow hedges are included in interest expense in our Income Statements and amounts reclassified related to pension and other post-retirement benefits are included in the computation of net periodic benefit costs at their pre-tax amounts.
NOTE E—BUSINESS COMBINATIONS
During the first quarter of 2020, we settled multiple intellectual property and contractual lawsuits involving our SandBox Logistics unit and Arrows Up, LLC. As part of the settlement, SandBox Logistics took control of Arrows Up's existing business, including all equipment and sand logistics contracts, while also receiving a cash payment.
We have accounted for the acquisition of Arrows Up, LLC under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Estimates of fair value included in the Condensed Consolidated Financial Statements represent our best estimates and valuations. In accordance with the acquisition method of accounting, the fair values are subject to adjustment until we complete our analysis, within a period of time not to exceed one year after the date of acquisition, or March 7, 2021. This business combination resulted in a bargain purchase pursuant to ASC 805-30-25 because no consideration was paid for the fair value of assets acquired and liabilities assumed. The fair value of assets acquired, which included cash, accounts receivable, inventories, lease right-of-use assets, and property plant, and equipment, was $19.9 million. The fair value of liabilities assumed, which included lease liabilities and other long-term liabilities, was $2.5 million. A gain on bargain purchase of $17.4 million was recorded in "Other income, net, including interest income" in the Condensed Consolidated Statement of Operations.
During the second quarter of 2020, we recorded measurement period adjustments which included a $3.3 million decrease in inventory, a $0.9 million increase to accounts receivable, and a $0.1 million decrease to property, plant and equipment. The total measurement period adjustments of $2.5 million were recorded as a decrease to the initial gain on bargain purchase and recorded in "Other (expense) income, net, including interest income" in the Condensed Consolidated Statement of Operations.
NOTE F—ACCOUNTS RECEIVABLE
Accounts receivable are recorded when billed or accrued and represent claims against third parties that will be settled in cash. The carrying value of our accounts receivable, net of the allowance for credit losses, represents their estimated net realizable value. At June 30, 2020 and December 31, 2019, accounts receivable (in thousands) consisted of the following:
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|
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|
|
June 30,
2020
|
|
December 31,
2019
|
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Trade receivables
|
$
|
119,682
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|
|
$
|
178,182
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Less: Allowance for credit losses
|
(8,040)
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|
|
(8,984)
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|
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Net trade receivables
|
111,642
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|
|
169,198
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|
|
Other receivables(1)
|
46,704
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|
|
13,040
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|
|
Total accounts receivable
|
$
|
158,346
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|
|
$
|
182,238
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(1)
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|
At June 30, 2020, other receivables included $42.3 million of refunds related to NOL carryback claims filed for various tax years in accordance with certain provisions of the CARES Act. At December 31, 2019, other receivables included $8.1 million of refundable alternative minimum tax credits.
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|
We classify our trade receivables into the following portfolio segments: Oil & Gas Proppants and Industrial & Specialty Products, which also aligns with our reporting segments. We estimate the allowance for credit losses based on historical collection trends, the age of outstanding receivables, risks attributable to specific customers, such as credit history, bankruptcy or other going concern issues, and current economic and industry conditions. If events or circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past due balances are written off when we have exhausted our internal and external collection efforts and have been unsuccessful in collecting the amount due.
The following table is a rollforward of the allowance for credit losses (in thousands) for the six months ended June 30, 2020, disaggregated by portfolio segments:
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|
|
Oil & Gas Proppants
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|
Industrial & Specialty Products
|
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Total
|
|
Beginning balance, December 31, 2019
|
$
|
7,640
|
|
|
$
|
1,344
|
|
|
$
|
8,984
|
|
|
Provision for credit losses
|
840
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|
|
(135)
|
|
|
705
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|
|
Write-offs
|
(1,309)
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|
|
(340)
|
|
|
(1,649)
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|
|
Ending balance, June 30, 2020
|
$
|
7,171
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|
|
$
|
869
|
|
|
$
|
8,040
|
|
Our ten largest customers accounted for 40% and 36% of total sales for the three and six months ended June 30, 2020, respectively, and 41% for both the three and six months ended June 30, 2019. Sales to one of our customers accounted for 10% of our total sales for the three months ended June 30, 2020 and 11% and 12% for the three and six months ended June 30, 2019, respectively. No customers accounted for 10% or more of our total sales for the six months ended June 30, 2020. No other customers accounted for 10% or more of our total sales. At June 30, 2020, one of our customer's accounts receivable represented 17% of our total trade accounts receivable. At December 31, 2019, the same customer's accounts receivable represented 12% of our total trade accounts receivable. No other customers accounted for 10% or more of our total trade accounts receivable.
NOTE G—INVENTORIES
At June 30, 2020 and December 31, 2019, inventories (in thousands) consisted of the following:
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|
|
|
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|
|
June 30, 2020
|
|
December 31, 2019
|
|
Supplies
|
$
|
44,409
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|
|
$
|
47,277
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|
|
Raw materials and work in process
|
32,961
|
|
|
41,167
|
|
|
Finished goods
|
30,460
|
|
|
35,988
|
|
|
Total inventories
|
$
|
107,830
|
|
|
$
|
124,432
|
|
During the first six months of 2020, there was an unprecedented drop in global demand combined with the breakdown of the Organization of the Petroleum Exporting Countries and other oil producing nations ("OPEC+") agreement to restrict oil production that led to one of the largest annual crude oil inventory builds in history. This led to sharp reductions in global crude oil prices. Containment measures and other economic, travel, and business disruptions caused by the coronavirus disease of 2019 ("COVID-19") also affected refinery activity and future demand for crude oil, and consequently, the services and products of our Oil & Gas Proppants Segment. As a result of these events, we recorded impairment charges of $1.0 million and $6.7 million for the three and six months ended June 30, 2020, respectively, primarily related to unused inventory at idled plants. These charges related to the Oil & Gas Proppants Segment and were recorded in "Goodwill and other asset impairments" in the Condensed Consolidated Statements of Operations.
NOTE H—PROPERTY, PLANT AND MINE DEVELOPMENT
At June 30, 2020 and December 31, 2019, property, plant and mine development (in thousands) consisted of the following:
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|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
|
Mining property and mine development
|
$
|
788,710
|
|
|
$
|
794,899
|
|
|
Asset retirement cost
|
18,011
|
|
|
18,260
|
|
|
Land
|
56,727
|
|
|
57,082
|
|
|
Land improvements
|
74,688
|
|
|
73,203
|
|
|
Buildings
|
67,832
|
|
|
69,112
|
|
|
Machinery and equipment
|
1,176,900
|
|
|
1,152,898
|
|
|
Furniture and fixtures
|
4,071
|
|
|
4,068
|
|
|
Construction-in-progress
|
41,512
|
|
|
54,675
|
|
|
|
2,228,451
|
|
|
2,224,197
|
|
|
Accumulated depletion, depreciation, amortization and impairment charges
|
(774,673)
|
|
|
(706,610)
|
|
|
Total property, plant and mine development, net
|
$
|
1,453,778
|
|
|
$
|
1,517,587
|
|
Depreciation, depletion, and amortization expense related to property, plant and mine development was $34.0 million and $41.8 million for the three months ended June 30, 2020 and 2019, respectively, and $69.4 million and $83.4 million for the six months ended June 30, 2020 and 2019, respectively. The amount of interest costs capitalized in property, plant and mine development was $33 thousand and $1.0 million for the six months ended June 30, 2020 and 2019, respectively.
During the first six months of 2020, there was an unprecedented drop in global demand combined with the breakdown of the OPEC+ agreement to restrict oil production that led to one of the largest annual crude oil inventory builds in history. This led to sharp reductions in global crude oil prices. Containment measures and other economic, travel, and business disruptions caused by COVID-19 also affected refinery activity and future demand for crude oil, and consequently, the services and products of our Oil & Gas Proppants Segment. As a result of these events, we recorded impairment charges of $1.3 million and $11.6 million for the three and six months ended June 30, 2020, respectively, related primarily to our Kosse, Texas facility, which has been idled. These impairment charges related to the Oil & Gas Proppants Segment and were recorded in "Goodwill and other asset impairments" in the Condensed Consolidated Statements of Operations.
On March 21, 2018, we completed the sale of three transload facilities located in the Permian, Eagle Ford, and Marcellus Basins to CIG Logistics (“CIG”) for total consideration of $86.1 million, including the assumption by CIG of $2.2 million of Company obligations. Total cash consideration was $83.9 million. The consideration includes receipt of a vendor incentive from CIG to enter into master transloading service arrangements. Of the total consideration, $25.8 million was allocated to the fair value of the transload facilities, which had a net book value of $20.0 million and resulted in a gain on sale of $5.8 million. The consideration included a related asset retirement obligation of $2.1 million and an equipment note of $0.1 million assumed by CIG. In addition, $60.3 million of the consideration received in excess of the facilities' fair value was allocated to vendor incentives to be recognized as a reduction of costs using a service-level methodology over the contract lives of the transloading service arrangements. At June 30, 2020, vendor incentives of $14.3 million were classified in accounts payable and accrued expenses on our balance sheet.
NOTE I—GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying amount of goodwill (in thousands) by business segment consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil & Gas Proppants Segment
|
|
Industrial & Specialty Products Segment
|
|
Totals
|
|
Balance at December, 2019
|
$
|
86,100
|
|
|
$
|
187,424
|
|
|
$
|
273,524
|
|
|
Impairment loss
|
(86,100)
|
|
|
—
|
|
|
(86,100)
|
|
|
EPM acquisition adjustment(1)
|
—
|
|
|
(1,775)
|
|
|
(1,775)
|
|
|
Balance at June 30, 2020
|
$
|
—
|
|
|
$
|
185,649
|
|
|
$
|
185,649
|
|
(1) During the first quarter of 2020, an adjustment was made in accordance with ASC 250 to correct an immaterial error to acquisition accounting. We reclassified $1.8 million between goodwill and deferred tax liabilities. There was no impact to the Condensed Consolidated Statements of Operations.
Goodwill and trade names are evaluated for impairment annually as of October 31, or more frequently when indicators of impairment exist. We evaluated events and circumstances since the date of our last qualitative assessment, including macroeconomic conditions, industry and market conditions, and our overall financial performance.
During the first six months of 2020, there was an unprecedented drop in global demand combined with the breakdown of the OPEC+ agreement to restrict oil production that led to one of the largest annual crude oil inventory builds in history. This led to sharp reductions in global crude oil prices. Containment measures and other economic, travel, and business disruptions caused by COVID-19 also affected refinery activity and future demand for crude oil, and consequently, the services and products of our Oil & Gas Proppants Segment. As a result of these triggering events, we performed a quantitative analysis and determined that the goodwill of our Oil & Gas reporting unit was impaired. We recognized goodwill impairment charges of $86.1 million during the first quarter of 2020, which were recorded in "Goodwill and other asset impairments" in the Condensed Consolidated Statements of Operations.
The changes in the carrying amount of intangible assets (in thousands) consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
|
|
December 31, 2019
|
|
|
|
|
|
Gross Carrying Amount
|
Accumulated Amortization
|
Impairments
|
Net
|
Gross Carrying Amount
|
Accumulated Amortization
|
Impairments
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
Technology and intellectual property
|
$
|
72,768
|
|
$
|
(18,029)
|
|
$
|
—
|
|
$
|
54,739
|
|
$
|
86,183
|
|
$
|
(17,080)
|
|
$
|
—
|
|
$
|
69,103
|
|
|
Customer relationships
|
66,999
|
|
(20,778)
|
|
—
|
|
46,221
|
|
68,599
|
|
(18,737)
|
|
(1,240)
|
|
48,622
|
|
|
Total definite-lived intangible assets:
|
$
|
139,767
|
|
$
|
(38,807)
|
|
$
|
—
|
|
$
|
100,960
|
|
$
|
154,782
|
|
$
|
(35,817)
|
|
$
|
(1,240)
|
|
$
|
117,725
|
|
|
Trade names
|
65,390
|
|
—
|
|
—
|
|
65,390
|
|
65,390
|
|
—
|
|
—
|
|
65,390
|
|
|
Other
|
700
|
|
—
|
|
—
|
|
700
|
|
700
|
|
—
|
|
—
|
|
700
|
|
|
Total intangible assets:
|
$
|
205,857
|
|
$
|
(38,807)
|
|
$
|
—
|
|
$
|
167,050
|
|
$
|
220,872
|
|
$
|
(35,817)
|
|
$
|
(1,240)
|
|
$
|
183,815
|
|
Estimated useful life of technology and intellectual property is 15 years. Estimated useful life of customer relationships is a range of 13 - 15 years.
During the second quarter of 2020, we expensed $11.8 million of capitalized legal fees related to the unsuccessful defense of a small number of our patents. These charges related to the Oil & Gas Proppants segment and were recorded in Selling, general and administrative expense in the Condensed Consolidated Statement of Operations.
Amortization expense was $2.7 million and $5.4 million for both the three and six months ended June 30, 2020, and June 30, 2019, respectively.
The estimated amortization expense related to definite-lived intangible assets (in thousands) for the five succeeding years is as follows:
|
|
|
|
|
|
|
|
2020 (remaining six months)
|
$
|
5,426
|
|
|
2021
|
10,848
|
|
|
2022
|
10,833
|
|
|
2023
|
10,828
|
|
|
2024
|
10,830
|
|
NOTE J—DEBT
At June 30, 2020 and December 31, 2019, debt (in thousands) consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
|
Senior secured credit facility:
|
|
|
|
|
Revolver expiring May 1, 2023 (6.25% at June 30, 2020 and 7.75% at December 31, 2019)
|
$
|
25,000
|
|
|
$
|
—
|
|
|
Term Loan—final maturity May 1, 2025 (5.00% at June 30, 2020 and 5.81% at December 31, 2019)
|
1,241,200
|
|
|
1,247,600
|
|
|
Less: Unamortized original issue discount
|
(4,893)
|
|
|
(5,412)
|
|
|
Less: Unamortized debt issuance cost
|
(22,815)
|
|
|
(25,390)
|
|
|
Note payable secured by royalty interest
|
10,469
|
|
|
10,438
|
|
|
Insurance financing notes payable
|
—
|
|
|
5,055
|
|
|
Equipment notes payable
|
11
|
|
|
87
|
|
|
Finance leases
|
2
|
|
|
70
|
|
|
Total debt
|
1,248,974
|
|
|
1,232,448
|
|
|
Less: current portion
|
(38,456)
|
|
|
(18,463)
|
|
|
Total long-term portion of debt
|
$
|
1,210,518
|
|
|
$
|
1,213,985
|
|
Senior Secured Credit Facility
On May 1, 2018, we entered into a Third Amended and Restated Credit Agreement (the "Credit Agreement"), which increased our existing senior debt by entering into a new $1.380 billion senior secured credit facility, consisting of a $1.280 billion term loan (the "Term Loan") and a $100 million revolving credit facility (the "Revolver") (collectively the "Credit Facility) that may also be used for swingline loans or letters of credit, and we may elect to increase the term loan in accordance with the terms of the Credit Agreement. Borrowings under the Credit Agreement will bear interest at variable rates as determined at our election, at LIBOR or a base rate, in each case, plus an applicable margin. In addition, under the Credit Agreement, we are required to pay a per annum facility fee and fees for letters of credit. The Credit Agreement is secured by substantially all of our assets and of our domestic subsidiaries' assets and a pledge of the equity interests in such entities. The Term Loan matures on May 1, 2025, and the Revolver expires May 1, 2023. We capitalized $38.7 million in debt issuance costs and original issue discount as a result of the new Credit Agreement.
The Credit Facility contains covenants that, among other things, limit our ability, and certain of our subsidiaries' abilities, to create, incur or assume indebtedness and liens, to make acquisitions or investments, to sell assets and to pay dividends. The Credit Agreement also requires us to maintain a consolidated leverage ratio of no more than 3.75:1.00 as of the last day of any fiscal quarter whenever usage of the Revolver (other than certain undrawn letters of credit) exceeds 30% of the Revolver commitment. These covenants are subject to a number of important exceptions and qualifications. The Credit Agreement includes events of default and other affirmative and negative covenants that are usual for facilities and transactions of this type. As of June 30, 2020 and December 31, 2019, we are in compliance with all covenants in accordance with our senior secured Credit Facility.
Term Loan
At June 30, 2020, contractual maturities of our Term Loan (in thousands) are as follows:
|
|
|
|
|
|
|
|
2020 (remaining six months)
|
$
|
6,400
|
|
|
2021
|
12,800
|
|
|
2022
|
12,800
|
|
|
2023
|
12,800
|
|
|
2024
|
12,800
|
|
|
Thereafter
|
1,183,600
|
|
|
Total
|
$
|
1,241,200
|
|
Revolving Line-of-Credit
We have a $100.0 million Revolver with $25.0 million drawn and $12.0 million allocated for letters of credit as of June 30, 2020, leaving $63.0 million available under the Revolver. We have the intent and ability to repay the amounts outstanding on the Revolver within one year, therefore, the outstanding balance as of June 30, 2020 has been classified as current.
Based on our consolidated leverage ratio of 5.65:1.00 as of June 30, 2020, we may draw up to $30.0 million without the consent of our lenders. With the consent of our lenders, we have access to the full availability of the Revolver.
Note Payable Secured by Royalty Interest
In conjunction with the acquisition of New Birmingham, Inc. in August 2016, we assumed a note payable secured by a royalty interest. The monthly royalty payment is calculated based on future tonnages and sales related to the sand shipped from our Tyler, Texas facility. The note payable is due by June 30, 2032. The note does not provide a stated interest rate. The minimum payments (in thousands) for the next five years and thereafter required by the note are as follows:
|
|
|
|
|
|
|
|
2020 (remaining six months)
|
$
|
454
|
|
|
2021
|
381
|
|
|
2022
|
437
|
|
|
2023
|
502
|
|
|
2024
|
573
|
|
|
Thereafter
|
8,122
|
|
|
Total
|
$
|
10,469
|
|
Under this agreement once a certain number of tons have been shipped from the Tyler facility, the minimum payments will decrease to $0.5 million per year, subject to proration in the period this threshold is met.
The royalty note payable fair value was estimated to be $22.5 million on the acquisition date. The estimate was made using a discounted cash flow model, which calculated the present value of projected future cash payments required under the agreement using a discounted rate of 14%, which is also the effective rate as of June 30, 2020. As of June 30, 2020, the note payable had a balance of $10.5 million. Changes in fair value of the note payable amount may result if estimates of future tonnages and sales increase or decrease.
Insurance Financing Notes Payable
During September 2019, the Company renewed its insurance policies and financed the payments through notes payable with a stated interest rate of 4.5%. These payments will be made in installments throughout a 10-month period and, as such, have been classified as current debt. As of June 30, 2020, the notes payable had a balance of zero.
NOTE K—ASSET RETIREMENT OBLIGATIONS
Mine reclamation or future remediation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the costs expected to be incurred at such site. Such cost estimates include, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimates at inactive mines are reflected in earnings in the period an estimate is revised.
As of June 30, 2020 and 2019, we had a liability of $25.7 million and $20.2 million, respectively, in other long-term liabilities related to our asset retirement obligations. Changes in the asset retirement obligations (in thousands) during the six months ended June 30, 2020 and 2019 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2020
|
|
2019
|
|
Beginning balance
|
$
|
25,825
|
|
|
$
|
18,413
|
|
|
Accretion
|
735
|
|
|
745
|
|
|
Additions and revisions of estimates
|
(890)
|
|
|
1,061
|
|
|
Ending balance
|
$
|
25,670
|
|
|
20,219
|
NOTE L—FAIR VALUE ACCOUNTING
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
Cash Equivalents
Due to the short-term maturity, we believe our cash equivalent instruments at June 30, 2020 and December 31, 2019, approximate their reported carrying values.
Long-Term Debt, Including Current Maturities
We believe that the fair values of our long-term debt, including current maturities, approximate their carrying values based on their effective interest rates compared to current market rates.
Changes in the fair value of the royalty note payable utilize Level 3 inputs, such as estimates of future tonnages sold and average sales price. See Note J - Debt for more information on the royalty note payable.
Derivative Instruments
The estimated fair value of our derivative instruments is recorded at each reporting period and are based upon widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. We also incorporate credit valuation adjustments to appropriately reflect both our nonperformance risk as well as that of the respective counterparty in the fair value measurements.
Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default of ourselves and our counterparties. However, as of June 30, 2020, we have assessed that the impact of the credit valuation adjustments on the overall valuation of our derivative positions is not
significant. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. See Note M - Derivative Instruments for more information.
NOTE M—DERIVATIVE INSTRUMENTS
Cash Flow Hedges of Interest Rate Risk
We enter into interest rate swap agreements in connection with our Term Loan to add stability to interest expense and to manage our exposure to interest rate movements. The derivative instruments are recorded on the balance sheet within other assets or liabilities at their fair values. As of June 30, 2020, the fair values of our two interest rate swaps were a liability of $0.7 million and a liability of $0.3 million and were classified within accounts payable and accrued liabilities on our balance sheets. At December 31, 2019, the fair values of our two interest rate swaps were a liability of $2.8 million and a liability of $1.3 million and were classified within accounts payable and accrued liabilities on our balance sheets. We have designated the interest rate swap agreements as qualified cash flow hedges. Accordingly, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and recognized in earnings in the same period or periods during which the hedged transaction affects earnings.
The following table summarizes the fair value of our derivative instruments (in thousands, except contract/notional amount). See Note L - Fair Value Accounting for more information regarding the estimated fair values of our derivative instruments at June 30, 2020 and December 31, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Maturity
Date
|
|
Contract/Notional
Amount
|
|
Carrying
Amount
|
|
Fair
Value
|
|
|
Maturity Date
|
|
Contract/Notional
Amount
|
|
Carrying
Amount
|
|
Fair
Value
|
|
LIBOR(1) interest rate swap agreement
|
2020
|
|
$440 million
|
|
|
$
|
(658)
|
|
|
$
|
(658)
|
|
|
|
2020
|
|
$440 million
|
|
|
$
|
(2,768)
|
|
|
$
|
(2,768)
|
|
|
LIBOR(1) interest rate swap agreement
|
2020
|
|
$200 million
|
|
|
$
|
(299)
|
|
|
$
|
(299)
|
|
|
|
2020
|
|
$200 million
|
|
|
$
|
(1,259)
|
|
|
$
|
(1,259)
|
|
(1) Agreements fix the LIBOR interest rate base to 2.74%.
During the six months ended June 30, 2020, we had no ineffectiveness for the interest rate swap derivatives.
The following table summarizes the effect of derivative instruments (in thousands) on our income statements and our consolidated statements of comprehensive income for the six months ended June 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2020
|
|
2019
|
|
Deferred losses from derivatives in OCI, beginning of period
|
$
|
(3,053)
|
|
|
$
|
(1,621)
|
|
|
Gain (loss) recognized in OCI from derivative instruments
|
2,328
|
|
|
(3,011)
|
|
|
Deferred losses from derivatives in OCI, end of period
|
$
|
(725)
|
|
|
$
|
(4,632)
|
|
NOTE N—EQUITY-BASED COMPENSATION
In July 2011, we adopted the U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan (the “2011 Plan”), which was amended and restated in May 2015 and amended and restated effective February 1, 2020. The 2011 Plan provides for grants of stock options, restricted stock, performance share units and other incentive-based awards. We believe our 2011 Plan aligns the interests of our employees and directors with those of our common stockholders. At June 30, 2020, we have 3,553,104 shares of common stock that may be issued under the 2011 Plan. We use a combination of treasury stock and new shares if necessary to satisfy option exercises or vesting of restricted awards and performance share units.
Stock Options
The following table summarizes the status of, and changes in, our stock option awards during the six months ended June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise Price
|
|
Aggregate Intrinsic Value
|
|
Weighted
Average
Remaining Contractual Term in Years
|
|
Outstanding at December 31, 2019
|
826,658
|
|
|
$
|
28.97
|
|
|
$
|
11,557
|
|
|
4.1 years
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Exercised
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Forfeited
|
(443)
|
|
|
$
|
32.41
|
|
|
$
|
—
|
|
|
|
|
Expired
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Outstanding at June 30, 2020
|
826,215
|
|
|
$
|
29.05
|
|
|
$
|
—
|
|
|
3.6 years
|
|
Exercisable at June 30, 2020
|
826,215
|
|
|
$
|
29.05
|
|
|
$
|
—
|
|
|
3.6 years
|
There were no grants of stock options during the three and six months ended June 30, 2020 and 2019.
There were zero stock options exercised during the three and six months ended June 30, 2020, respectively. There were zero and 10,000 stock options exercised during the three and six months ended June 30, 2019. The total intrinsic value of stock options exercised was $12 thousand for the six months ended June 30, 2019. Cash received from stock options exercised during the six months ended June 30, 2019 was $128 thousand. The tax benefit realized from stock option exercises was $3 thousand for the six months ended June 30, 2019.
As of June 30, 2020 and 2019, there was no unrecognized compensation expense related to these options. We account for forfeitures as they occur.
Restricted Stock and Restricted Stock Unit Awards
The following table summarizes the status of, and changes in, our unvested restricted stock awards during the six months ended June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Grant Date Weighted
Average Fair Value
|
|
Unvested, December 31, 2019
|
1,020,248
|
|
|
$
|
15.86
|
|
|
Granted
|
1,491,777
|
|
|
$
|
4.15
|
|
|
Vested
|
(384,499)
|
|
|
$
|
18.42
|
|
|
Forfeited
|
(161,973)
|
|
|
$
|
12.89
|
|
|
Unvested, June 30, 2020
|
1,965,553
|
|
|
$
|
6.72
|
|
We granted 590,925 and 1,491,777 restricted stock and restricted stock unit awards during the three and six months ended June 30, 2020, respectively. We granted 24,253 and 757,113 restricted stock and restricted stock unit awards during the three and six months ended June 30, 2019, respectively. The fair value of the awards was based on the market price of our stock at date of grant.
We recognized $2.4 million and $3.9 million of equity-based compensation expense related to restricted stock awards during the three and six months ended June 30, 2020, respectively. We recognized $2.0 million and $4.3 million of equity-based compensation expense related to restricted stock awards during the three and six months ended June 30, 2019, respectively. As of June 30, 2020, there was $10.7 million of unrecognized compensation expense related to these restricted stock awards, which is expected to be recognized over a weighted-average period of 1.9 years.
We also granted zero and 285,342 awards during the three and six months ended June 30, 2020, respectively. These awards will vest over a period of three years and will be settled in cash. As such, these awards have been classified as liability instruments. We recognized $0.1 million of expense related to these awards for both the three and six months ended June 30, 2020. The liability for these awards is included in accounts payable and other accrued expenses on our balance sheets. These awards will be remeasured at fair value each reporting period with resulting changes reflected in our income statements. Estimated unrecognized expense related to these awards is $0.9 million over a period of 2.6 years.
Performance Share Unit Awards
The following table summarizes the status of, and changes in, our performance share unit awards during the six months ended June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Grant Date Weighted
Average Fair Value
|
|
Unvested, December 31, 2019
|
838,722
|
|
|
$
|
18.00
|
|
|
Granted
|
1,020,161
|
|
|
$
|
9.94
|
|
|
Vested
|
—
|
|
|
$
|
—
|
|
|
Forfeited/Cancelled
|
(202,790)
|
|
|
$
|
27.59
|
|
|
Unvested, June 30, 2020
|
1,656,093
|
|
|
$
|
13.95
|
|
We granted zero and 1,020,161 performance share units during the three and six months ended June 30, 2020, respectively. We granted zero and 607,130 performance share units during the three and six months ended June 30, 2019, respectively. The grant date fair value for these awards was estimated using a Monte Carlo simulation model. The Monte Carlo simulation model requires the use of highly subjective assumptions. Our key assumptions in the model included the price and the expected volatility of our common stock and our self-determined peer group companies’ stock, risk-free rate of interest, dividend yields and cross-correlations between our common stock and our self-determined peer group companies' stock.
We recognized $1.7 million and $3.0 million of compensation expense related to performance share unit awards during the three and six months ended June 30, 2020, respectively. We recognized $0.8 million and $2.6 million of compensation expense related to performance share unit awards during the three and six months ended June 30, 2019, respectively. As of June 30, 2020, there was $13.9 million of unrecognized compensation expense related to these performance share unit awards, which is expected to be recognized over a weighted-average period of 2.1 years.
We also granted cash awards during the six months ended June 30, 2020. These awards will vest over a period of three years and will be settled in cash. As such, these awards have been classified as liability instruments. We recognized $0.3 million of expense related to these awards for the six months ended June 30, 2020. The liability for these awards is included in accounts payable and other accrued expenses on our balance sheets. These awards will be remeasured at fair value each reporting period with resulting changes reflected in our income statements. Estimated unrecognized expense related to these awards is $1.7 million over a period of 2.6 years.
NOTE O—COMMITMENTS AND CONTINGENCIES
Future Minimum Annual Commitments at June 30, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
Minimum Purchase Commitments
|
|
2020 (remaining six months)
|
$
|
3,132
|
|
|
2021
|
12,829
|
|
|
2022
|
10,328
|
|
|
2023
|
10,328
|
|
|
2024
|
7,020
|
|
|
Thereafter
|
10,147
|
|
|
Total future purchase commitments
|
$
|
53,784
|
|
Minimum Purchase Commitments
We enter into service agreements with our transload and transportation service providers. Some of these agreements require us to purchase a minimum amount of services over a specific period of time. Any inability to meet these minimum contract requirements requires us to pay a shortfall fee, which is based on the difference between the minimum amount contracted for and the actual amount purchased.
Contingent Liability on Royalty Agreement
On May 17, 2017, we purchased reserves in Crane County, Texas, for $94.4 million cash consideration plus contingent consideration. The contingent consideration is a royalty that is based on the tonnage shipped to third-parties. Because the contingent consideration is dependent on future tonnage sold, the amounts of which are uncertain, it is not currently possible to estimate the fair value of these future payments. The contingent consideration will be capitalized at the time a payment is probable and reasonably estimable, and the related depletion expense will be adjusted prospectively.
Other Commitments and Contingencies
Our operating subsidiary, U.S. Silica Company (“U.S. Silica”), has been named as a defendant in various product liability claims alleging silica exposure causing silicosis. During the six months ended June 30, 2020, zero new claims were brought against U.S. Silica. As of June 30, 2020, there were 55 active silica-related product liability claims pending in which U.S. Silica is a defendant. Although the outcomes of these claims cannot be predicted with certainty, in the opinion of management, it is not reasonably possible that the ultimate resolution of these matters will have a material adverse effect on our financial position or results of operations that exceeds the accrual amounts.
We have recorded estimated liabilities for these claims in other long-term liabilities as well as estimated recoveries under the indemnity agreement and an estimate of future recoveries under insurance in other assets on our consolidated balance sheets. As of both June 30, 2020 and December 31, 2019, other non-current assets included zero for insurance for third-party product liability claims. As of June 30, 2020 and December 31, 2019 other long-term liabilities included $1.0 million and $0.9 million, respectively, for third-party product liability claims.
One of our subsidiaries has also been named as a defendant in lawsuits regarding certain labor practices. If we are unsuccessful in defending the litigation, these cases could result in a material liability for us.
Obligations under Guarantees
We have indemnified our insurers against any loss they may incur in the event that holders of surety bonds, issued on our behalf, execute the bonds. As of June 30, 2020, there was $36.4 million in bonds outstanding, of which $30.9 million relate to reclamation requirements issued by various governmental authorities. Reclamation bonds remain outstanding until the mining area is reclaimed and the authority issues a formal release. The remaining bonds relate to licenses, permits, and tax collection.
NOTE P—PENSION AND POST-RETIREMENT BENEFITS
We maintain single-employer noncontributory defined benefit pension plans covering certain employees. There have been no new entrants to the U.S. Silica Company plan since May 2009 and to the EP Management Corporation plan since January 2007 for salaried participants and January 2010 for hourly participants when the plans were frozen to all new employees. The plans provide benefits based on each covered employee’s years of qualifying service. Our funding policy is to contribute amounts within the range of the minimum required and maximum deductible contributions for the plans consistent with a goal of appropriate minimization of the unfunded projected benefit obligations. The pension plans use a benefit level per year of service for covered hourly employees and a final average pay method for covered salaried employees. The plans use the projected unit credit cost method to determine the actuarial valuation.
In addition, we provide defined benefit post-retirement health care and life insurance benefits to some employees. Covered employees become eligible for these benefits at retirement after meeting minimum age and service requirements. The projected future cost of providing post-retirement benefits, such as healthcare and life insurance, is recognized as an expense as employees render services. We previously maintained a Voluntary Employees’ Beneficiary Association trust that was used to partially fund health care benefits for future retirees. Benefits were funded to the extent contributions were tax deductible, which under current legislation is limited. In 2017, the trust terminated upon depletion of its assets, which were used in accordance with trust terms. In general, retiree health benefits are paid as covered expenses are incurred.
Net pension benefit cost (in thousands) consisted of the following for the three and six months ended June 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2020
|
|
2019
|
2020
|
|
2019
|
|
Service cost
|
$
|
663
|
|
|
$
|
156
|
|
$
|
1,316
|
|
|
$
|
742
|
|
|
Interest cost
|
1,004
|
|
|
726
|
|
1,993
|
|
|
3,310
|
|
|
Expected return on plan assets
|
(1,442)
|
|
|
(834)
|
|
(2,863)
|
|
|
(4,018)
|
|
|
Net amortization and deferral
|
908
|
|
|
222
|
|
1,802
|
|
|
846
|
|
|
Net pension benefit costs
|
$
|
1,133
|
|
|
$
|
270
|
|
$
|
2,248
|
|
|
$
|
880
|
|
Net post-retirement benefit cost (in thousands) consisted of the following for the three and six months ended June 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2020
|
|
2019
|
2020
|
|
2019
|
|
Service cost
|
$
|
12
|
|
|
$
|
23
|
|
$
|
37
|
|
|
$
|
47
|
|
|
Interest cost
|
62
|
|
|
194
|
|
191
|
|
|
390
|
|
|
Net post-retirement benefit costs
|
$
|
74
|
|
|
$
|
217
|
|
$
|
228
|
|
|
$
|
437
|
|
We contributed $1.3 million and $2.0 million to the qualified pension plans for the three and six months ended June 30, 2020, respectively. We contributed $0.9 million and $1.7 million to the qualified pension plans for the three and six months ended June 30, 2019, respectively. Our best estimate of expected contributions to the pension and post-retirement medical benefit plans for the 2020 fiscal year are $5.1 million and $1.4 million, respectively.
We contribute to three multiemployer defined benefit pension plans under the terms of collective-bargaining agreements for union-represented employees. A multiemployer plan is subject to collective bargaining for employees of two or more unrelated companies. These plans allow multiple employers to pool their pension resources and realize efficiencies associated with the daily administration of the plan. Multiemployer plans are generally governed by a board of trustees composed of management and labor representatives and are funded through employer contributions. However, in most cases, management is not directly represented. Our contributions to individual multiemployer pension funds did not exceed 5% of the fund’s total contributions for the three and six months ended June 30, 2020 and 2019. Additionally, our contributions to multiemployer post-retirement benefit plans were immaterial for all periods presented in the accompanying condensed consolidated financial statements.
We also sponsor a defined contribution plan covering certain employees. We contribute to the plan in two ways. For certain employees not covered by the defined benefit plan, we make a contribution equal to 4% of their salary. For all other eligible employees, we make a contribution up to 6% of eligible earnings. Contributions were $0.8 million and $2.2 million for the three and six months ended June 30, 2020, respectively. Contributions were $1.1 million and $2.4 million for the three and six months ended June 30, 2019, respectively.
NOTE Q— LEASES
We lease railroad cars, office space, mining property, mining/processing equipment and transportation and other equipment. The majority of our leases have remaining lease terms of one year to 20 years. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We have lease agreements with lease and non-lease components, the latter of which are generally accounted for separately.
Supplemental balance sheet information related to leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leases
|
Classification
|
|
June 30,
2020
|
December 31, 2019
|
|
Assets
|
|
|
|
|
|
Operating
|
Operating lease right-of-use assets
|
|
$
|
44,966
|
|
$
|
53,098
|
|
|
Total leased right-of-use assets
|
|
|
$
|
44,966
|
|
$
|
53,098
|
|
|
Liabilities
|
|
|
|
|
|
Current
|
|
|
|
|
|
Operating
|
Current portion of operating lease liabilities
|
|
$
|
45,015
|
|
$
|
53,587
|
|
|
Non-current
|
|
|
|
|
|
Operating
|
Operating lease liabilities
|
|
100,667
|
|
117,964
|
|
|
Total lease liabilities
|
|
|
$
|
145,682
|
|
$
|
171,551
|
|
|
|
|
|
|
|
|
Lease Term and Discount Rate
|
|
|
|
|
|
Weighted average remaining lease term:
|
|
|
|
|
|
Operating leases
|
|
|
4.6 years
|
4.5 years
|
|
|
|
|
|
|
|
Weighted average discount rate:
|
|
|
|
|
|
Operating leases
|
|
|
5.7%
|
5.7%
|
During the first six months of 2020, there was an unprecedented drop in global demand combined with the breakdown of the Organization of the Petroleum Exporting Countries and other oil producing nations ("OPEC+") agreement to restrict oil production that led to one of the largest annual crude oil inventory builds in history. This led to sharp reductions in global crude oil prices. Containment measures and other economic, travel, and business disruptions caused by the coronavirus disease of 2019 ("COVID-19") also affected refinery activity and future demand for crude oil, and consequently, the services and products of our Oil & Gas Proppants Segment. As a result of these events, we recorded impairment charges of $1.7 million and $3.2 million for the three and six months ended June 30, 2020, respectively, primarily related to railcar leases, various equipment leases and an office building lease. These charges related to the Oil & Gas Proppants Segment and were recorded in "Goodwill and other asset impairments" in the Condensed Consolidated Statements of Operations.
During the second quarter, we received lease concessions from certain lessors. Based on accounting elections provided by the FASB and in accordance with ASC 842-10, we have elected to not account for these concessions as lease modifications. Based on remeasurement of the amended leases, we recorded a decrease to the ROU asset of $0.5 million and a decrease to the liability of $4.1 million. A gain of $3.9 million was recognized as operating income in our income statements.
The components of lease expense were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease Costs
|
Classification
|
Three Months Ended
June 30, 2020
|
Three Months Ended
June 30, 2019
|
Six Months Ended
June 30, 2020
|
Six Months Ended
June 30, 2019
|
|
Operating lease costs(1)
|
Cost of sales
|
$
|
6,089
|
|
$
|
22,645
|
|
$
|
15,706
|
|
$
|
47,760
|
|
|
Operating lease costs(2)
|
Selling, general and administrative
|
463
|
|
1,068
|
|
1,005
|
|
2,237
|
|
|
Total
|
|
$
|
6,552
|
|
$
|
23,713
|
|
$
|
16,711
|
|
$
|
49,997
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Included short-term operating lease costs of $4.4 million and $7.2 million for the three and six months ended June 30, 2020, respectively. Included short-term operating lease costs of $4.5 million and $11.1 million for the three and six months ended June 30, 2019, respectively.
|
|
|
|
(2) Included short-term operating lease costs of $0.1 million and $0.2 million for the three months ended June 30, 2020, respectively. Included short-term operating lease costs of $0.2 million and $0.4 million for the three and six months ended June 30, 2019, respectively.
|
|
|
Supplemental cash flow information related to leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2020
|
Six Months Ended
June 30, 2019
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
Operating cash flows for operating leases
|
|
$
|
31,782
|
|
$
|
35,941
|
|
|
|
|
|
|
|
Right-of-use assets obtained in exchange for new lease liabilities:
|
|
|
|
|
Operating leases
|
|
$
|
9,373
|
|
$
|
226,950
|
|
Maturities of lease liabilities as of June 30, 2020:
|
|
|
|
|
|
|
|
in thousands
|
Operating leases
|
|
2020 (remaining six months)
|
$
|
29,193
|
|
|
2021
|
44,654
|
|
|
2022
|
32,741
|
|
|
2023
|
21,137
|
|
|
2024
|
16,755
|
|
|
Thereafter
|
28,413
|
|
|
Total lease payments
|
$
|
172,893
|
|
|
Less: Interest
|
27,211
|
|
|
Total
|
$
|
145,682
|
|
NOTE R— INCOME TAXES
For interim period reporting, we record income taxes using an estimated annual effective tax rate based upon projected annual income, forecasted permanent tax differences, discrete items and statutory rates in states in which we operate. At the end of each interim period, we update the estimated annual effective tax rate, and if the estimated tax rate changes based on new information, we make a cumulative adjustment in the period. We record the tax effect of an unusual or infrequently occurring item in the interim period in which it occurs as a discrete item of tax.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES” Act) was enacted and signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning after 2017 and before 2021. In addition, the CARES Act allows NOLs generated after 2017 and before 2021 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. As a result, we have carried the NOL generated in 2019 back to offset the taxable income in the 2014 tax year generating a refund of $36.6 million. This refund was received at the end of the second quarter. We have also amended our 2018 tax return to generate an NOL by electing bonus depreciation. We then carried the NOL generated in 2018 back to offset the taxable income in prior years generating a refund of $26.3 million. This refund has been reclassified from deferred tax asset to accounts receivable in our balance sheets as of June 30, 2020. The deferred tax assets related to the NOLs generated in 2018 and 2019 were recorded at the statutory income tax rate for 2018 and 2019, which was 21% for both years. As a result of the carry back of these NOLs to prior years, the NOLs will be utilized at the statutory income tax rate for pre-2018, which was 35%. This increase in the tax rate at which the 2018 and 2019 NOLs will be utilized results in a deferred tax benefit. Accordingly, during the six months ended June 30, 2020, we recorded a deferred tax benefit of $22.3 million. Pursuant to ASC 740, this has been recorded as a discrete component of the tax benefit.
The CARES Act also accelerates the ability of companies to receive refunds of alternative minimum tax (“AMT”) credits related to tax years beginning in 2018 and 2019. AMT credits have been presented as a receivable or a deferred tax asset in the prior period balance sheets. The presentation of refundable AMT credits in the current balance sheet has been reclassified from deferred tax asset to accounts receivable to reflect the timing of when the credits are expected to be monetized. AMT credits in the amount of $16.0 million are included in accounts receivable on our balance sheets as of June 30, 2020.
Additionally, the CARES Act provides temporary relief for payment of certain payroll taxes. Prior to the CARES Act, payroll taxes generally would have been deductible for income tax purposes in the same period that they were expensed for book purposes under the “recurring item exception” of the Internal Revenue Code. However, if a company defers payment of
its payroll taxes as a result of the CARES Act such that the recurring item exception no longer applies, accrued payroll taxes would not be deductible until the tax year in which they are actually paid. If the book expense and tax deduction are expected to occur in different periods, a deferred tax asset would need to be recorded for the deductible temporary difference related to the payroll tax accrual. The temporary relief for payment of certain payroll taxes did not have a material impact to the second quarter of 2020.
We are currently still evaluating all provisions of the CARES Act and its impact on income tax and in our Consolidated Statements of Operation.
For the three and six months ended June 30, 2020, we had tax benefits of $23.6 million and $59.7 million, respectively. For the three and six months ended June 30, 2019, we had tax expense of $2.4 million and $0.4 million, respectively. The effective tax rate was 42% and 36% for the three and six months ended June 30, 2020, respectively. The effective tax rate was 28% and (3)% for the three and six months ended June 30, 2019, respectively. Without discrete items, which primarily consist of tax expense related to equity compensation and tax benefits related to the carryback of NOLs described above, the effective tax rate for both the three and six months ended June 30, 2020 would have been 24%. Without discrete items, the effective tax rate for the three and six months ended June 30, 2019 would have been 18% and 36%, respectively.
During the three and six months ended June 30, 2020, we recorded tax expense related to equity compensation of $0.8 million and $1.3 million, respectively. During the three and six months ended June 30, 2019, we recorded tax expense related to equity compensation of $0.5 million and $4.5 million, respectively.
NOTE S— REVENUE
We consider sales disaggregated at the product and service level by business segment to depict how the nature, amount, timing and uncertainty of revenues and cash flow are impacted by changes in economic factors. The following table disaggregates our sales by major source for the three and six months ended June 30, 2020 and 2019 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2020
|
|
|
|
|
|
Three Months Ended
June 30, 2019
|
|
|
|
|
|
Category
|
|
Oil & Gas Proppants
|
|
Industrial & Specialty Products
|
|
Total Sales
|
|
Oil & Gas Proppants
|
|
Industrial & Specialty Products
|
|
Total Sales
|
|
Product
|
|
$
|
60,158
|
|
|
$
|
100,042
|
|
|
$
|
160,200
|
|
|
$
|
181,251
|
|
|
$
|
121,790
|
|
|
$
|
303,041
|
|
|
Service
|
|
12,337
|
|
|
—
|
|
|
12,337
|
|
|
91,813
|
|
|
—
|
|
|
91,813
|
|
|
Total Sales
|
|
$
|
72,495
|
|
|
$
|
100,042
|
|
|
$
|
172,537
|
|
|
$
|
273,064
|
|
|
$
|
121,790
|
|
|
$
|
394,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2020
|
|
|
|
|
|
Six Months Ended
June 30, 2019
|
|
|
|
|
|
Category
|
|
Oil & Gas Proppants
|
|
Industrial & Specialty Products
|
|
Total Sales
|
|
Oil & Gas Proppants
|
|
Industrial & Specialty Products
|
|
Total Sales
|
|
Product
|
|
$
|
168,435
|
|
|
$
|
213,926
|
|
|
$
|
382,361
|
|
|
$
|
359,838
|
|
|
$
|
240,063
|
|
|
$
|
599,901
|
|
|
Service
|
|
59,775
|
|
|
—
|
|
|
59,775
|
|
|
173,703
|
|
|
—
|
|
|
173,703
|
|
|
Total Sales
|
|
$
|
228,210
|
|
|
$
|
213,926
|
|
|
$
|
442,136
|
|
|
$
|
533,541
|
|
|
$
|
240,063
|
|
|
$
|
773,604
|
|
The following tables reflect the changes in our contract assets, which we classify as unbilled receivables and our contract liabilities, which we classify as deferred revenues, for the six months ended June 30, 2020 and 2019 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unbilled Receivables
|
|
|
|
|
June 30, 2020
|
June 30, 2019
|
|
Beginning Balance
|
|
$
|
144
|
|
$
|
90
|
|
|
Reclassifications to billed receivables
|
|
(252)
|
|
(1,660)
|
|
|
Revenues recognized in excess of period billings
|
|
205
|
|
3,134
|
|
|
Ending Balance
|
|
$
|
97
|
|
$
|
1,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue
|
|
|
|
|
June 30, 2020
|
June 30, 2019
|
|
Beginning Balance
|
|
$
|
50,634
|
|
$
|
113,319
|
|
|
Revenues recognized from balances held at the beginning of the period
|
|
(5,180)
|
|
(15,830)
|
|
|
Revenues deferred from period collections on unfulfilled performance obligations
|
|
446
|
|
12,225
|
|
|
Revenues recognized from period collections
|
|
(268)
|
|
(1,649)
|
|
|
Ending Balance
|
|
$
|
45,632
|
|
$
|
108,065
|
|
We have elected to use the practical expedients allowed under ASC 606-10-50-14, pursuant to which we have excluded disclosures of transaction prices allocated to remaining performance obligations and when we expect to recognize such revenue. The majority of our remaining performance obligations are primarily comprised of unfulfilled product, transportation service, and labor service orders, all of which hold a remaining duration of less than one year. The long-term portion of deferred revenue primarily represents a combination of refundable and nonrefundable customer prepayments for which related current performance obligations do not yet exist, but are expected to arise, before the expiration of the contract. Our residual unfulfilled performance obligations are comprised primarily of long-term equipment rental arrangements in which we recognize revenues equal to what we have a right to invoice. Generally, no variable consideration exists related to our remaining performance obligations and no consideration is excluded from the associated transaction prices. However, the decrease in the current year deferred revenue balance is partially attributable to revenue recognized as variable consideration from shortfall penalties assessed to multiple customers according to contract terms. During the first six months ending June 30, 2020, we have recognized revenue as variable consideration from shortfall penalties according to contract terms in the amount of $17.6 million, of which $1.5 million was included in deferred revenue. In some cases, amounts recorded are estimates which are in negotiation and may increase or decrease.
Foreign Operations
The following table includes information related to our foreign operations for the three and six months ended June 30, 2020 and 2019 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2020
|
Three Months Ended
June 30, 2019
|
Six Months Ended
June 30, 2020
|
Six Months Ended
June 30, 2019
|
|
Total Sales
|
|
$
|
22,259
|
|
$
|
16,594
|
|
$
|
43,864
|
|
$
|
31,879
|
|
|
Pre-tax income
|
|
$
|
3,768
|
|
$
|
2,604
|
|
$
|
7,981
|
|
$
|
4,500
|
|
|
Net income
|
|
$
|
2,977
|
|
$
|
2,135
|
|
$
|
6,305
|
|
$
|
3,704
|
|
Foreign operations constituted approximately $32.1 million and $10.9 million of consolidated assets as of June 30, 2020 and 2019, respectively.
NOTE T— RELATED PARTY TRANSACTIONS
There were no related party transactions during the three and six months ended June 30, 2020 or 2019.
NOTE U— SEGMENT REPORTING
Our business is organized into two reportable segments, Oil & Gas Proppants and Industrial & Specialty Products, based on end markets. The reportable segments are consistent with how management views the markets that we serve and the financial information reviewed by the chief operating decision maker. We manage our Oil & Gas Proppants and Industrial & Specialty Products businesses as components of an enterprise for which separate information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assess performance.
In the Oil & Gas Proppants segment, we serve the oil and gas recovery market primarily by providing and delivering fracturing sand, or “frac sand,” which is pumped down oil and natural gas wells to prop open rock fissures and increase the flow rate of oil and natural gas from the wells.
The Industrial & Specialty Products segment consists of over 400 product types and materials used in a variety of industries, including container glass, fiberglass, specialty glass, flat glass, building products, fillers and extenders, foundry products, chemicals, recreation products and filtration products.
An operating segment’s performance is primarily evaluated based on segment contribution margin, which excludes selling, general, and administrative costs, corporate costs, plant capacity expansion expenses, and facility closure costs. We believe that segment contribution margin, as defined above, is an appropriate measure for evaluating the operating performance of our segments. However, segment contribution margin is a non-GAAP measure and should be considered in addition to, not a substitute for, or superior to, net income (loss) or other measures of financial performance prepared in accordance with GAAP. The other accounting policies of each of the two reportable segments are the same as those in Note B - Summary of Significant Accounting Policies to the Consolidated Financial Statements in Item 8 of our 2019 Annual Report on Form 10-K.
The following table presents sales and segment contribution margin (in thousands) for the reportable segments and other operating results not allocated to the reportable segments for the three and six months ended June 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2020
|
|
2019
|
2020
|
|
2019
|
|
Sales:
|
|
|
|
|
|
|
|
Oil & Gas Proppants
|
$
|
72,495
|
|
|
$
|
273,064
|
|
$
|
228,210
|
|
|
$
|
533,541
|
|
|
Industrial & Specialty Products
|
100,042
|
|
|
121,790
|
|
213,926
|
|
|
240,063
|
|
|
Total sales
|
172,537
|
|
|
394,854
|
|
442,136
|
|
|
773,604
|
|
|
Segment contribution margin:
|
|
|
|
|
|
|
|
Oil & Gas Proppants
|
26,170
|
|
|
71,456
|
|
59,062
|
|
|
130,044
|
|
|
Industrial & Specialty Products
|
35,119
|
|
|
50,145
|
|
78,468
|
|
|
94,706
|
|
|
Total segment contribution margin
|
61,289
|
|
|
121,601
|
|
137,530
|
|
|
224,750
|
|
|
Operating activities excluded from segment cost of sales
|
(13,495)
|
|
|
(20,907)
|
|
(21,454)
|
|
|
(42,844)
|
|
|
Selling, general and administrative
|
(39,126)
|
|
|
(38,659)
|
|
(69,178)
|
|
|
(73,315)
|
|
|
Depreciation, depletion and amortization
|
(37,086)
|
|
|
(44,899)
|
|
(75,535)
|
|
|
(89,499)
|
|
|
Goodwill and other asset impairments
|
(3,956)
|
|
|
—
|
|
(107,822)
|
|
|
—
|
|
|
Interest expense
|
(22,179)
|
|
|
(23,765)
|
|
(44,456)
|
|
|
(47,743)
|
|
|
Other (expense) income, net, including interest income
|
(1,670)
|
|
|
15,074
|
|
16,001
|
|
|
15,796
|
|
|
Income tax benefit (expense)
|
23,605
|
|
|
(2,384)
|
|
59,691
|
|
|
(412)
|
|
|
Net (loss) income
|
$
|
(32,618)
|
|
|
$
|
6,061
|
|
$
|
(105,223)
|
|
|
$
|
(13,267)
|
|
|
Less: Net loss attributable to non-controlling interest
|
(264)
|
|
|
(89)
|
|
(524)
|
|
|
(93)
|
|
|
Net (loss) income attributable to U.S. Silica Holdings, Inc.
|
$
|
(32,354)
|
|
|
$
|
6,150
|
|
$
|
(104,699)
|
|
|
$
|
(13,174)
|
|
Asset information, including capital expenditures and depreciation, depletion, and amortization, by segment is not included in reports used by management in its monitoring of performance and, therefore, is not reported by segment. At June 30, 2020, goodwill of $185.6 million has been allocated to these segments with zero assigned to Oil & Gas Proppants and $185.6 million to Industrial & Specialty Products. At December 31, 2019, goodwill of $273.5 million had been allocated to these segments with $86.1 million assigned to Oil & Gas Proppants and $187.4 million to Industrial & Specialty Products.