FREDERICK, Md., April 28, 2015 /PRNewswire/ -- U.S. Silica
Holdings, Inc. (NYSE: SLCA) today announced net income of
$14.8 million or $0.28 per basic and $0.27 per diluted share for the first quarter
ended March 31, 2015 compared with
net income of $18.4 million or
$0.34 per basic share and diluted
share for the first quarter of 2014. Earnings per share during the
quarter were negatively impacted by $8.3
million of business development expenses, $7.6 million of which was related to an adverse,
unanticipated arbitration ruling. The Company also incurred
$1.4 million in restructuring costs
for actions designed to help bring the business more in line with
current market conditions. Excluding these additional expenses, EPS
for the quarter was $0.40 per basic
share.
"I am very proud of our performance in the quarter
against the backdrop of rapidly falling oil prices and declining
rig count. Our results demonstrate the strength of our
business model, assets, team and customer base," said Bryan Shinn, president and chief executive
officer. "However, given the magnitude of the reduction in
drilling and completions activity, we expect that volumes and
pricing of frac sand will remain under pressure, resulting in lower
profitability in the second quarter. We will continue to work
closely with our customers during this energy sector downturn to
help them be more competitive and we expect to continue to gain
market share," he added. "While we are clearly focused on
maximizing near term business results, we are also continuing to
focus on our longer term goals. Specifically, we plan to
continue to strengthen our position in the oil and gas proppant
market, grow and diversify our industrial business and prepare for
future growth," Shinn noted.
First Quarter 2015 Highlights
Total Company
- Revenue totaled $204.0 million
compared with $180.1 million for the
same period last year, an increase of 13% year-over-year but an 18%
decline sequentially from the fourth quarter of 2014.
- Overall tons sold increased to 2.7 million tons, a 16%
improvement over the first quarter of 2014 but a 12% decline
sequentially from the fourth quarter of 2014.
- Contribution margin for the quarter was $67.7 million compared with $54.8 million in the same period of the prior
year, a 23% improvement year-over-year but a decrease of 28%
sequentially from the fourth quarter of 2014.
- Adjusted EBITDA was $51.3 million
versus $41.9 million for the same
period last year, an increase of 22% on a year-over-year basis but
a 23% decline sequentially compared with the fourth quarter of
2014.
Oil and Gas
- Revenue for the quarter totaled $148.8
million compared with $130.6
million in the same period in 2014, up 14% year-over-year
but a 24% decline sequentially from the fourth quarter of
2014.
- 63% of tons sold were made in basin compared with 69% in the
first quarter of 2014 and 66% in the fourth quarter of 2014.
- Overall tons sold totaled 1.7 million tons compared with 1.3
million tons sold in the first quarter of 2014 and 2.0 million tons
sold in the fourth quarter of 2014.
- Segment contribution margin was $52.2
million versus $41.6 million
in the first quarter of 2014, an increase of 25% on a
year-over-year basis but a decrease of 35% sequentially from the
fourth quarter of 2014.
Industrial and Specialty Products
- Revenue for the quarter totaled $55.2
million compared with $49.5
million for the same period in 2014, an increase of 12%
year-over-year and up 3% sequentially from the fourth quarter of
2014.
- Overall tons sold totaled 1.0 million tons, an increase of 1%
compared with the first quarter of 2014 and a decrease of 4%
sequentially compared with the fourth quarter of 2014.
- Segment contribution margin was $15.5
million compared with $13.2
million in the first quarter of 2014, an increase of 17% on
a year-over-year basis and up 15% sequentially from the fourth
quarter of 2014.
Capital Update
As of March 31, 2015, the Company
had $327.8 million in cash and cash
equivalents and short term investments and $46.9 million available under its credit
facilities. Total debt at March 31,
2015 was $494.2 million.
Capital expenditures in the first quarter totaled $13.4 million and were associated largely with
the Company's investment in a new frac sand mine and plant located
near Fairchild, WI, a new
transload facility near Odessa,
Texas and other maintenance capital projects.
Outlook and Guidance
Due to the current lack of visibility in its Oil and Gas
business, the Company will continue to refrain from providing
guidance for Adjusted EBITDA until such time as it can gain more
clarity around its customers' business activity levels and the
associated demand for its products. Based on current market
conditions, the Company anticipates that its capital expenditures
for 2015 will be in a range of $60 million
to $80 million.
Conference Call
U.S. Silica will host a conference call for investors tomorrow,
April 29, 2015 at 9:00 a.m. Eastern Time to discuss these results.
Hosting the call will be Bryan
Shinn, president and chief executive officer and
Don Merril, vice president and chief
financial officer. Investors are invited to listen to a live
webcast of the conference call by visiting the "Investor Resources"
section of the Company's website at www.ussilica.com. The webcast
will be archived for one year. The call can also be accessed live
over the telephone by dialing (877) 869-3847 or for international
callers, (201) 689-8261. A replay will be available shortly
after the call and can be accessed by dialing (877) 660-6853. The
conference ID number for the replay is 13606608. The replay of the
call will be available through May 29,
2015.
About U.S. Silica
U.S. Silica Holdings, Inc., a member of the Russell 2000, is a
leading producer of commercial silica used in the oil and gas
industry, and in a wide range of industrial applications. Over its
115-year history, U.S. Silica has developed core competencies in
mining, processing, logistics and materials science that enable it
to produce and cost-effectively deliver over 260 products to
customers across our end markets. The Company currently operates
nine industrial sand production plants and eight oil and gas sand
production plants. The Company is headquartered in Frederick, Maryland and also has offices
located in Chicago, Illinois,
Houston, Texas and Shanghai, China. The Company operates on
a platform of ethics, safety and sustainability. U.S. Silica is a
founding member of Wisconsin Industrial Sand Association (WISA) and
has been recognized by the Wisconsin Department of Natural
Resources (WDNR) as a partner in the WDNR Green Tier program. In
becoming a Green Tier participant, U.S. Silica demonstrates its
commitment to achieving superior environmental and economic
performance.
Forward-looking Statements
Certain statements in this press release are "forward-looking
statements" made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 and speak only as
of this date. Forward-looking statements made include any statement
that does not directly relate to any historical or current fact and
may include, but are not limited to, statements regarding U.S.
Silica's growth opportunities, strategy, future financial results,
forecasts, projections, plans and capital expenditures, and the
commercial silica industry. Forward-looking statements are based on
our current expectations and assumptions, which may not prove to be
accurate. These statements are not guarantees and are subject to
risks, uncertainties and changes in circumstances that are
difficult to predict. Many factors could cause actual results to
differ materially and adversely from these forward-looking
statements. Among these factors are: (1) fluctuations in demand for
commercial silica; (2) the cyclical nature of our customers'
businesses; (3) operating risks that are beyond our control; (4)
federal, state and local legislative and regulatory initiatives
relating to hydraulic fracturing; (5) our ability to implement our
capacity expansion plans within our current timetable and budget;
(6) loss of, or reduction in, business from our largest customers
or failure of our customers to pay amounts due to us; (7)
increasing costs or a lack of dependability or availability of
transportation services or infrastructure; (8) our substantial
indebtedness and pension obligations; (9) our ability to attract
and retain key personnel; (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
|
(dollars in
thousands, except per share amounts)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2015
|
|
2014
|
|
|
|
|
Sales
|
$
203,958
|
|
$
180,095
|
Cost of goods sold
(excluding depreciation, depletion and amortization)
|
138,653
|
|
126,770
|
Operating
expenses
|
|
|
|
Selling, general and
administrative
|
26,961
|
|
15,445
|
Depreciation,
depletion and amortization
|
13,243
|
|
9,589
|
|
40,204
|
|
25,034
|
Operating
income
|
25,101
|
|
28,291
|
Other (expense)
income
|
|
|
|
Interest
expense
|
(6,836)
|
|
(3,808)
|
Other income, net,
including interest income
|
11
|
|
38
|
|
(6,825)
|
|
(3,770)
|
Income before income
taxes
|
18,276
|
|
24,521
|
Income tax
expense
|
(3,453)
|
|
(6,150)
|
Net income
|
$
14,823
|
|
$
18,371
|
|
|
|
|
Earnings per
share:
|
|
|
|
Basic
|
$
0.28
|
|
$
0.34
|
Diluted
|
$
0.27
|
|
$
0.34
|
|
|
|
|
U.S. SILICA
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
March 31,
2015
|
|
December 31,
2014
|
|
|
|
|
ASSETS
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
252,555
|
|
$
267,281
|
Short-term
investments
|
75,253
|
|
75,143
|
Accounts receivable,
net
|
96,355
|
|
120,881
|
Inventories,
net
|
65,035
|
|
66,712
|
Prepaid expenses and
other current assets
|
10,775
|
|
9,267
|
Deferred income
taxes, net
|
23,776
|
|
22,295
|
Income tax
deposits
|
-
|
|
746
|
Total current
assets
|
523,749
|
|
562,325
|
Property, plant and
mine development, net
|
565,337
|
|
565,755
|
Goodwill
|
68,647
|
|
68,647
|
Trade
names
|
14,914
|
|
14,914
|
Customer
relationships, net
|
6,824
|
|
6,984
|
Other
assets
|
13,882
|
|
12,317
|
Total
assets
|
$
1,193,353
|
|
$
1,230,942
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities:
|
|
|
|
Book
overdraft
|
$
6,756
|
|
$
4,215
|
Accounts
payable
|
56,699
|
|
85,781
|
Dividends
payable
|
6,738
|
|
6,805
|
Accrued
liabilities
|
13,922
|
|
17,911
|
Accrued
interest
|
60
|
|
60
|
Current portion of
long-term debt
|
3,321
|
|
3,329
|
Deferred
revenue
|
26,771
|
|
26,771
|
Income tax
payable
|
4,997
|
|
-
|
Total current
liabilities
|
119,264
|
|
144,872
|
Long-term
debt
|
490,873
|
|
491,757
|
Deferred
revenue
|
59,224
|
|
64,722
|
Liability for pension
and other post-retirement benefits
|
61,554
|
|
59,932
|
Deferred income
taxes, net
|
47,918
|
|
49,749
|
Other long-term
obligations
|
16,472
|
|
16,094
|
Total
liabilities
|
795,305
|
|
827,126
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
Preferred
stock
|
-
|
|
-
|
Common
stock
|
540
|
|
539
|
Additional paid-in
capital
|
193,140
|
|
191,086
|
Retained
earnings
|
240,683
|
|
232,551
|
Treasury stock, at
cost
|
(16,156)
|
|
(542)
|
Accumulated other
comprehensive loss
|
(20,159)
|
|
(19,818)
|
Total stockholders'
equity
|
398,048
|
|
403,816
|
Total liabilities and
stockholders' equity
|
$
1,193,353
|
|
$
1,230,942
|
Non-GAAP Financial Measures
Segment Contribution Margin
Segment contribution margin is a key metric that management uses
to evaluate our operating performance and to determine resource
allocation between segments. Segment contribution margin excludes
certain corporate costs not associated with the operations of the
segment. These unallocated costs include costs related to corporate
functional areas such as sales, production and engineering,
corporate purchasing, accounting, treasury, information technology,
legal and human resources.
The following table sets forth a reconciliation of income before
income taxes, the most directly comparable GAAP financial measure,
to segment contribution margin.
|
|
|
|
|
For the Three
Months Ended March 31,
|
|
2015
|
|
2014
|
|
(in
thousands)
|
Sales:
|
|
|
|
Oil & Gas
Proppants
|
$
148,753
|
|
$
130,584
|
Industrial &
Specialty Products
|
55,205
|
|
49,511
|
Total
sales
|
203,958
|
|
180,095
|
Segment contribution
margin:
|
|
|
|
Oil & Gas
Proppants
|
52,195
|
|
41,628
|
Industrial &
Specialty Products
|
15,456
|
|
13,187
|
Total segment
contribution margin
|
67,651
|
|
54,815
|
Operating activities
excluded from segment cost of goods sold
|
(2,346)
|
|
(1,490)
|
Selling, general and
administrative
|
(26,961)
|
|
(15,445)
|
Depreciation,
depletion and amortization
|
(13,243)
|
|
(9,589)
|
Interest
expense
|
(6,836)
|
|
(3,808)
|
Other income, net,
including interest income
|
11
|
|
38
|
Income before income
taxes
|
$
18,276
|
|
$
24,521
|
|
|
|
|
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
|
|
|
|
|
|
|
For the Three
Months Ended March 31,
|
|
|
2015
|
|
2014
|
|
|
(in
thousands)
|
|
Net income
|
$ 14,823
|
|
$ 18,371
|
|
Total interest
expense, net of interest income
|
6,940
|
|
3,873
|
|
Provision for
taxes
|
3,453
|
|
6,150
|
|
Total depreciation,
depletion and amortization expenses
|
13,243
|
|
9,589
|
|
EBITDA
|
38,459
|
|
37,983
|
|
Non-cash incentive
compensation(1)
|
2,090
|
|
1,330
|
|
Post-employment
expenses (excluding service costs)(2)
|
868
|
|
381
|
|
Business development
related expenses(3)
|
8,328
|
|
1,925
|
|
Other adjustments
allowable under our existing credit
agreements(4)
|
1,538
|
|
309
|
|
Adjusted
EBITDA
|
$ 51,283
|
|
$ 41,928
|
|
|
|
|
|
(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 N - Pension and Post-retirement
Benefits to our Financial Statements in Part 1, Item 1 in our
Quarterly Report on Form 10-Q.
|
(3)
|
Reflects expenses
related to business development activities in connection with our
growth and expansion initiatives.
|
(4)
|
Reflects
miscellaneous adjustments permitted under our existing credit
agreement, including such items as restructuring costs and
employment agency fees.
|
Investor Contact:
Mike Lawson
Director of Investor Relations and Corporate Communications
301-682-0304
lawsonm@USSilica.com
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