FREDERICK,
Md., July 16, 2014
/PRNewswire/ -- U.S. Silica Holdings, Inc. (NYSE: SLCA) today
announced that it has signed a stock purchase agreement to acquire
all of the outstanding shares of Cadre Services Inc., a leading
regional sand mining Company based in Voca, Texas, for approximately $98 million in cash. Closing is expected by the
end of the month.
Cadre operates a single frac sand mine and plant, with
recently expanded annual capacity of about 800,000 tons per year of
Premium Hickory® sand. The fully-automated, state-of-the-art
facility, which became operational in 2011, has more than 65 years
of high-quality reserves. Cadre's regional location allows it
to service customers in the fast growing Permian Basin on both a
contract and a spot basis, with about 40 percent of revenue derived
from customers under take-or-pay contracts.
Bryan Shinn, president and
chief executive officer of U.S. Silica said, "This accretive
acquisition aligns with our strategy to increase market share by
expanding our footprint and product offerings in one of the fastest
growing basins in the country. The addition of the Cadre team and
their outstanding operational and logistics capabilities allows us
to provide our customers with a high quality, regionally-produced
product which effectively meets the demands of many Permian oil and
gas wells."
The purchase price of $98
million, less the net present value of approximately
$14 million in deferred tax assets,
results in $84 million of net
consideration. Adjusted LTM EBITDA of $11.1 million represents a purchase price
multiple of 7.6 times. Projected 2015 Adjusted EBITDA of
approximately $18 million after
synergies and the benefit of a full year of sales from the March
capacity expansion represents a purchase price multiple of 4.7
times. This would result in Adjusted EPS accretion of $0.11 to $0.13 per share in 2015.
A conference call to discuss the strategic benefits of the
transaction with investors will be held tomorrow, July 17 at 9:00 a.m.
Eastern Time. Hosting the call will be Bryan Shinn, president and chief executive
officer. Investors are invited to listen to a live webcast of the
call by visiting the "Investor Resources" section of the Company's
website at www.ussilica.com. A presentation on the acquisition will
be available tomorrow morning on the company's website as
well. The call can also be accessed live over the telephone by
dialing 855-325-2605 or 970-315-0758 for international callers. The
conference passcode is 74171980.
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.
Adjusted EBITDA and Adjusted EPS
Adjusted EBITDA and Adjusted EPS are not measures 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, these measures are not intended
to be measures of free cash flow for management's discretionary
use, as they do not consider certain cash requirements such as
interest payments, tax payments and debt service requirements.
These measures contain 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 these measures only supplementally. Our measures of Adjusted
EBITDA and Adjusted EPS are not necessarily comparable to other
similarly titled captions of other companies due to potential
inconsistencies in the methods of calculation. We are unable to
reconcile our projections to the comparable GAAP measures because
we do not predict the future impact of adjustments due to the
difficulty of doing so.
About U.S. Silica
U.S. Silica Holdings, Inc., a member of the Russell 2000, is one
of the largest domestic producers 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.
About Cadre Services
Headquartered in Houston Texas, Cadre Services is a major
supplier of API/ISO-quality Premium Hickory® Sand to the oil
and gas industry. Cadre produces four products: Cadre
16/30, Cadre 20/40, Cadre 30/50 and Cadre 40/70. With
principal operations located in Voca,
Texas, Cadre was recognized as the 2012 Outstanding Large
Business in McCulloch County and
was identified as one of the Houston Top 100 by the Houston
Business Journal. For more information, visit
www.CadreProppants.com.
U.S. Silica Holdings, Inc.
Michael Lawson
Director of Investor Relations and Corporate Communications
301-682-0304
lawsonm@ussilica.com
Cadre Services Inc.
M.A. Shute
Director, Marketing and Public Affairs
713-303-0456
m.a.shute@cadreproppants.com
SOURCE U.S. Silica Holdings, Inc.