U.S. Silica Holdings, Inc. (NYSE: SLCA) today announced net
income of $20.2 million or $0.38 per basic and diluted share for
the second quarter ended June 30, 2013 compared with net income of
$19.5 million or $0.37 per basic share and $0.36 per diluted share
for the same period in 2012.
“We are extremely pleased with our second quarter performance,
again delivering Adjusted EBITDA at the high end of our guidance
range,” said Bryan Shinn, president and chief executive officer.
“For the Company as a whole, the bottom line is that our business
is very strong, and we expect robust second half performance,
driven by record oil and gas demand and continued margin expansion
in our industrials business.”
Second Quarter 2013 Highlights
Total Company
- Revenue totaled $129.8 million compared
with $104.6 million for the same period in 2012, an improvement of
24.1%. The increase was driven primarily by additional volumes in
the oil and gas segment, including initial contributions from the
Company’s new frac sand facility in Sparta, WI.
- Overall volumes increased to 2.0
million tons, an increase of 14.9% over the second quarter of
2012.
- Adjusted EBITDA was $41.0 million or
32% of revenue compared with $37.1 million or 35% of revenue for
the same period last year.
Oil and Gas
- Revenue for the quarter totaled $77.7
million compared with $54.5 million in the same period in
2012.
- Segment contribution margin was $35.5
million versus $33.3 million in the second quarter of 2012.
- Tons sold totaled 988,120 versus
684,992 sold in the second quarter of 2012.
Industrial and Specialty
Products
- Revenue for the quarter totaled $52.1
million compared with $50.1 million for the same period in
2012.
- Segment contribution margin was $15.3
million versus $14.0 million in the second quarter of 2012. The
increase in contribution margin was driven largely by a richer mix
of value-added products sold during the quarter.
- Tons sold totaled 1,060,448 compared
with 1,098,425 sold in the second quarter of 2012.
Capital Update
As of June 30, 2013, the Company had $47.1 million in cash and
cash equivalents and $33.1 million available under its credit
facilities. Total outstanding debt at June 30, 2013 totaled $261.1
million. Capital expenditures in the second quarter totaled $8.5
million and were associated primarily with bringing the second
phase of the Sparta, WI, operation online and completing a new,
15,000 ton transload facility in San Antonio, Texas. Subsequent to
the end of the quarter, the Company completed the refinancing of
its existing senior credit facility with a new, $425 million senior
secured credit facility consisting of a new $375 million term loan
and a new $50 million revolver.
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 September 19, 2013, payable
on October 3, 2013. Future declarations of dividends are subject to
approval of the Board.
Capital Investment
The Company has made an initial investment in a new Greenfield
site near Utica, Illinois with an annual capacity of approximately
1.5 million tons of raw frac sand. The Company is working with a
third-party to develop the mine and construct a wet processing
plant along with drying and screening operations. Site work is
currently underway and the new mine and plant are expected to come
online in the first quarter of 2014.
Outlook and Guidance
For the full year, 2013, the Company is reaffirming its guidance
for Adjusted EBITDA in the range of $165 million to $175 million
and is raising its guidance for capital expenditures to a range of
$60 to $70 million. The Company anticipates its effective tax rate
will be in the range of 27 to 28 percent.
Conference Call
U.S. Silica will host a conference call for investors tomorrow,
August 1, 2013 at 10:00 a.m. Eastern Time to discuss these results.
Hosting the call will be Bryan 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 417446. The
replay of the call will be available through August 29, 2013.
About U.S. Silica
U.S. Silica Holdings, Inc., a member of the Russell 2000, 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 June 30, 2013
2012 (in thousands, except per share amounts) Sales $
129,828 $ 104,599 Cost of goods sold (excluding depreciation,
depletion and amortization) 80,297 58,920 Operating expenses
Selling, general and administrative 10,099 9,718 Depreciation,
depletion and amortization 8,890 5,974
18,989 15,692 Operating income 30,542
29,987 Other (expense) income Interest expense (3,535 ) (3,428 )
Other income, net, including interest income 63
179 (3,472 ) (3,249 ) Income before
income taxes 27,070 26,738 Income tax expense (6,878 )
(7,287 ) Net income $ 20,192 $ 19,451
Earnings per share: Basic $ 0.38 $ 0.37 Diluted $ 0.38 $ 0.36
U.S. SILICA HOLDINGS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2013 2012 (in thousands) ASSETS
Current Assets: Cash and cash equivalents $ 47,068 $ 61,022
Accounts receivable, net 61,784 59,564 Inventories, net 52,190
39,835 Prepaid expenses and other current assets 7,668 6,738
Deferred income tax, net 10,141 10,108 Income tax deposits, net
1,881 - Total current assets
180,732 177,267 Property, plant and mine
development, net 429,364 414,218 Debt issuance costs, net 1,849
2,111 Goodwill 68,403 68,403 Trade names 10,436 10,436 Customer
relationships, net 6,325 6,531 Other assets 8,369
7,844 Total assets $ 705,478 $ 686,810
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
Liabilities: Book overdraft $ 5,013 $ 5,390 Accounts payable
30,711 37,333 Dividends payable 6,634 - Accrued liabilities 9,178
9,481 Accrued interest 148 2 Current portion of capital lease 364 -
Current portion of long-term debt 2,434 2,433 Short-term debt 6,866
- Income tax payable - 20,596 Current portion of deferred revenue
570 4,855 Total current liabilities
61,918 80,090 Long-term debt 251,774
252,992 Liability for pension and other post-retirement benefits
52,019 52,747 Deferred income tax, net 62,200 59,111 Other
long-term obligations 10,531 10,176
Total liabilities 438,442 455,116 Commitments and
contingencies
Stockholders’ Equity: Common stock 530
529 Preferred stock - - Additional paid-in capital 166,195 163,579
Retained earnings 113,566 82,731 Treasury stock, at cost - (970 )
Accumulated other comprehensive loss (13,255 )
(14,175 ) Total stockholders’ equity 267,036
231,694 Total liabilities and stockholders’ equity $ 705,478
$ 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.
The following table sets forth a reconciliation of net income,
the most directly comparable GAAP financial measure, to Adjusted
EBITDA.
Three Months Ended
June 30, 2013 2012 (in thousands) Net
income $ 20,192 $ 19,451 Total interest expense, net of interest
income 3,522 3,383 Provision for taxes 6,878 7,287 Total
depreciation, depletion and amortization expenses 8,890
5,974 EBITDA 39,482 36,095 Non-cash incentive
compensation(1) 704 493 Post-employment expenses (excluding service
costs)(2) 586 404 Other adjustments allowable under our existing
credit agreements(3) 213 120 Adjusted EBITDA $ 40,985
$ 37,112
(1) Includes vesting of incentive equity compensation issued
to our employees. (2) Includes net pension cost and net
post-retirement cost relating to pension and other post-retirement
benefit obligations during the applicable period, but in each case
excluding the service cost relating to benefits earned during such
period. See Note Q to our Consolidated Financial Statements in Part
I, Item 1 of this Quarterly Report on Form 10-Q. (3)
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.
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