SLCA Silica Holdings Inc

U.S. Silica Holdings, Inc. (NYSE: SLCA) announced today net income of $17.3 million or $0.33 per basic and $0.32 per diluted share for the first quarter ended March 31, 2013 compared with net income of $19.1 million or $0.37 per basic and diluted share for the same period in 2012. Earnings per share in the quarter were negatively impacted by $1.9 million on a pre-tax basis or $0.03 per share due to certain non-recurring charges related to our secondary offering in March and M&A and business development activities. Excluding this additional expense, net income for the first quarter ended March 31, 2013 was $18.7 million or $0.35 per basic share.

Bryan A. Shinn, president and chief executive officer of the company commented, “The first quarter of 2013 was very strong for our company as we posted record revenue, driven by our strong performance in oil and gas. We believe that drilling and efficiency improvements in hydraulic fracturing will drive increased demand in oil and gas and we expect to grow market share in a growing market.” Shinn added that, “We are also seeing success in our ISP business. We anticipate this segment will continue to be a positive contributor to this year’s earnings growth, due to the continuing rebounds in housing, chemical and automotive end markets and our focus on developing and marketing higher value offerings.”

First Quarter 2013 Highlights

Total Company

• Revenue totaled $122.3 million compared with $102.6 million for the same period in 2012, an improvement of 19.2%. The increase was driven primarily by strength in the Oil and Gas Proppants segment.
• Overall sales volumes increased to 1.9 million tons, an increase of 8.2% over the first quarter of 2012.
• Contribution margin for the quarter of $49.4 million compared with $47.4 million for the same period last year.
• Adjusted EBITDA was $38.8 million or 31.7% of revenue compared with $37.0 million or 36.1% of revenue for the same period last year.

Oil and Gas

• Revenue for the quarter totaled $73.6 million compared with $53.8 million in the same period in 2012.
• Segment contribution margin was $36.2 million versus $35.1 million in the first quarter of 2012.
• Tons sold totaled 920,569 versus 678,982 sold in the first quarter of 2012.

Industrial and Specialty Products

• Revenue for the quarter totaled $48.7 million compared with $48.8 million for the same period in 2012.
• Segment contribution margin was $13.2 million versus $12.4 million in the first quarter of 2012.
• Tons sold totaled 964,956 compared with 1,063,900 sold in the first quarter of 2012.

Capital Update

As of March 31, 2013, the Company had $42.9 million in cash and cash equivalents and $29.0 million available under its credit facilities. Total outstanding debt at March 31, 2013 totaled $265.4 million. Capital expenditures in the first quarter totaled $22.7 million and were associated primarily with our raw sand plant in Sparta, Wisconsin, the acquisition of an existing silica sand processing facility near our Ottawa operations, and the construction of three new transloads in Texas, West Virginia and Ohio.

Quarterly Cash Dividend

The Company’s Board of Directors has declared a regular quarterly cash dividend of $0.125 per share to common shareholders of record at the close of business on June 19, 2013, payable on July 3, 2013. Future declarations of dividends are subject to approval of the Board. Commenting on the Board’s decision, President and CEO Bryan Shinn said “the initiation of this dividend reflects the confidence that we have in our future business prospects and ability to generate cash beyond the needs for growth investment.”

Outlook and Guidance

The company expects revenues of approximately $132 million to $140 million and adjusted EBITDA of between $39 million and $42 million in the second quarter of 2013. For the full year, 2013, the Company is reaffirming its guidance for adjusted EBITDA in the range of $165 million to $175 million and capital expenditures of between $50 and $60 million.

Conference Call

U.S. Silica will host a conference call for investors today, April 30, 2013 at 10:00 a.m. Eastern Time to discuss these results. Hosting the call will be Bryan A. Shinn, President and Chief Executive Officer and Don Merril, 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) 705-6003 or for international callers, (201) 493-6725. A replay will be available shortly after the call and can be accessed by dialing (877) 870-5176, or for international callers, (858) 384-5517. The Passcode for the replay is 412223. The replay of the call will be available through May 31, 2013.

About U.S. Silica

U.S. Silica Holdings, Inc., a Delaware corporation, is the second largest domestic producer of commercial silica, a specialized mineral that is a critical input into the oil and gas proppants end market. The company also processes ground and unground silica sand for a variety of industrial and specialty products end markets such as glass, fiberglass, foundry molds, municipal filtration and recreational uses. During its 100-plus year history, U.S. Silica Holdings, Inc. has developed core competencies in mining, processing, logistics and materials science that enable it to produce and cost-effectively deliver over 250 products to customers across these end markets. U.S. Silica Holdings, Inc. is headquartered in Frederick, MD.

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; (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; (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 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.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    Three Months Ended March 31, 2013   2012 (in thousands, except per share amounts) Sales $ 122,311 $ 102,591 Cost of goods sold (excluding depreciation, depletion and amortization) 74,412 56,921 Operating expenses Selling, general and administrative 12,404 9,904 Depreciation, depletion and amortization   8,278   5,978   20,682   15,882 Operating income 27,217 29,788 Other (expense) income Interest expense (3,576) (3,797) Other income, net, including interest income   122   154   (3,454)   (3,643) Income before income taxes 23,763 26,145

Income tax expense

  (6,486)   (7,032) Net income $ 17,277 $ 19,113   Earnings per share: Basic $ 0.33 $ 0.37 Diluted $ 0.32 $ 0.37       U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

  March 31, December 31, 2013 2012 (in thousands) ASSETS Current Assets: Cash and cash equivalents $ 42,919 $ 61,022 Accounts receivable, net 65,249 59,564 Inventories, net 42,776 39,835 Prepaid expenses and other current assets 7,686 6,738 Deferred income tax, net   10,122   10,108 Total current assets   168,752   177,267 Property, plant and mine development, net 429,611 414,218 Debt issuance costs, net 1,980 2,111 Goodwill 68,403 68,403 Trade names 10,436 10,436 Customer relationships, net 6,428 6,531 Other assets   8,451   7,844 Total assets $ 694,061 $ 686,810   LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Book overdraft $ 4,376 $ 5,390 Accounts payable 30,307 37,333 Accrued liabilities 10,080 9,481 Accrued interest 154 2 Current portion of capital lease 489 - Current portion of long-term debt 2,434 2,433 Short-term debt 10,551 - Income tax payable 6,149 20,596 Current portion of deferred revenue   2,938   4,855 Total current liabilities   67,478   80,090 Long-term debt 252,383 252,992 Liability for pension and other post-retirement benefits 52,768 52,747 Deferred income tax, net 60,154 59,111 Other long-term obligations   10,323   10,176 Total liabilities 443,106 455,116   Commitments and contingencies   Stockholders’ Equity: Common stock 529 529 Preferred stock - - Additional paid-in capital 164,535 163,579 Retained earnings 100,008 82,731 Treasury stock, at cost (364) (970) Accumulated other comprehensive loss   (13,753)   (14,175) Total stockholders’ equity   250,955   231,694 Total liabilities and stockholders’ equity $ 694,061 $ 686,810  

Non-GAAP Financial Measures

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.

  Three Months Ended March 31, 2013   2012 (in thousands) Net income $ 17,277 $ 19,113 Total interest expense, net of interest income 3,552 3,763

Provision for taxes

6,486 7,032 Total depreciation, depletion and amortization expenses   8,278   5,978 EBITDA 35,593 35,886

Non-recurring expense (income)(1)

- (439) Transaction expenses(2) - 156 Non-cash incentive compensation(3) 678 654 Post-employment expenses (excluding service costs)(4) 586 605 Other adjustments allowable under our existing credit agreements(5)   1,930   125 Adjusted EBITDA $ 38,787 $ 36,987   (1) Includes the gain on sale of assets for the three months ended March 31, 2013, and 2012, respectively. (2) Includes fees and expenses related to the January 27, 2012 amendment of our Term Loan and Revolver. (3) Includes vesting of incentive equity compensation issued to our employees. (4) 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 Q to our Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. (5) Reflects miscellaneous adjustments permitted under our existing credit agreements, including such items as expenses related to a secondary offering by Golden Gate Capital and reviewing growth initiatives and potential acquisitions.