FREDERICK,
Md., April 26, 2016
/PRNewswire/ -- U.S. Silica Holdings, Inc. (NYSE: SLCA) today
announced a net loss of $10.7 million
or $(0.20) per basic share for the
first quarter ended March 31, 2016
compared with net income of $14.8
million or $0.28 per basic
share for the first quarter of 2015. The first quarter results were
negatively impacted by $2.2 million
in restructuring costs for actions designed to help bring the
business more in line with current market conditions and business
development expenses, partially offset by a $1.5 million gain related to an insurance
settlement. Excluding these adjustments, EPS was $(0.19) per basic share.
"During the first quarter of 2016, we saw continued
pressure on both volumes and pricing in our Oil and Gas segment, as
business conditions weakened further and the market environment
became even more competitive," said Bryan
Shinn, president and chief executive officer. He added that
the Company's Industrial and Specialty Products segment, however,
saw improvement in its business, recording sequential and
year-over-year increases in contribution margin, driven largely by
a combination of strategic price increases implemented earlier this
year and by selling a larger mix of higher-margin products during
the quarter.
Commenting on the Company's common stock offering during
the quarter, Shinn said, "The equity raise provides our Company
with enhanced financial flexibility and makes a strong balance
sheet even stronger. We believe our balance sheet gives us a key
strategic advantage over most in our industry and puts us in the
best position to drive industry consolidation."
Going forward, Shinn added that the Company anticipates
continued downward pressure on volumes and pricing in its Oil and
Gas business in the second quarter, with further declines expected
in drilling and completion activity. At the same time, he said, "We
are keenly focused on three key areas, cash, customers and costs.
We're tightly managing our cash. We are working to be a faster,
more efficient Company to do business with and we are lowering our
cost structure during this downturn to be even more competitive and
profitable in the upcycle," he concluded.
First Quarter 2016 Highlights
Total Company
- Revenue totaled $122.5
million compared with $204
million for the same period last year, a decrease of 40% on
a year-over-year basis and a decrease of 10% sequentially from the
fourth quarter of 2015.
- Overall tons sold totaled 2.3 million, down 15% compared
with 2.7 million tons sold in the first quarter of 2015 and a
decrease of 8% sequentially from the fourth quarter of
2015.
- Contribution margin for the quarter was $17.7 million, down 74% compared with
$67.7 million in the same period of
the prior year and a down 20% sequentially from the fourth quarter
of 2015.
- Adjusted EBITDA was $5.3
million compared with Adjusted EBITDA of $51.3 million for the same period last year, a
decrease of 90% on a year-over-year basis and a decrease of 51%
sequentially from the fourth quarter of 2015.
Oil and Gas
- Revenue for the quarter totaled $73.9 million compared with $148.8 million in the same period in 2015, a
decrease of 50% on a year-over-year basis and a decrease of 17%
sequentially from the fourth quarter of 2015.
- Tons sold totaled 1.4 million, a decrease of 16% compared
with 1.7 million tons sold in the first quarter of 2015 and a
decrease of 9% sequentially compared with the tons sold in the
fourth quarter of 2015.
- 49% of tons were sold in basin compared with 63% sold in
basin in the first quarter of 2015.
- Segment contribution margin was $0.9 million versus $52.2
million in the first quarter of 2015, a decrease of 98% on a
year-over-year basis and a decrease of 88% sequentially compared
with the fourth quarter of 2015.
Industrial and Specialty Products
- Revenue for the quarter totaled $48.6 million compared with $55.2 million for the same period in 2015, a
decrease of 12% on a year-over-year basis and an increase of 3% on
a sequential basis from the fourth quarter of 2015.
- Tons sold totaled 0.9 million, a decrease of 12% on a
year-over-year basis and 6% on a sequential basis compared with the
fourth quarter of 2015.
- Segment contribution margin was $16.9 million compared with $15.5 million in the first quarter of 2015, an
increase of 9% on a year-over-year basis and up 11% sequentially
compared with the fourth quarter of 2015.
Capital Update
In March, 2016, the Company completed a public offering of
10 million shares of its common stock for net cash proceeds of
approximately $186.2 million. As of
March 31, 2016, the Company had
$470.2 million in cash and cash
equivalents and short term investments and $46.7 million available under its credit
facilities. Total debt at March 31,
2016 was $490.9 million.
Capital expenditures in the first quarter totaled $6.1 million and were associated largely with the
Company's investments in various maintenance, expansion and cost
improvement 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 we can gain more
clarity around our customers' business activity levels and the
associated demand for our products. Based on current market
conditions, the Company anticipates that its capital expenditures
for 2016 will be in the range of $15 million
to $20 million.
Conference Call
U.S. Silica will host a conference call for investors
tomorrow, April 27, 2016 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 13634309. The replay of the call will be
available through May 27,
2016.
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
116-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, and
Houston, Texas.
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
|
(unaudited; in
thousands, except per share amounts)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2016
|
|
2015
|
|
|
|
|
Sales
|
$
122,510
|
|
$
203,958
|
Cost of goods sold
(excluding depreciation, depletion and amortization)
|
106,751
|
|
138,653
|
Operating
expenses
|
|
|
|
Selling, general and
administrative
|
15,503
|
|
26,961
|
Depreciation,
depletion and amortization
|
14,556
|
|
13,243
|
|
30,059
|
|
40,204
|
Operating income
(loss)
|
(14,300)
|
|
25,101
|
Other income
(expense)
|
|
|
|
Interest
expense
|
(6,643)
|
|
(6,836)
|
Other income, net,
including interest income
|
1,790
|
|
11
|
|
(4,853)
|
|
(6,825)
|
Income (loss) before
income taxes
|
(19,153)
|
|
18,276
|
Income tax benefit
(expense)
|
8,493
|
|
(3,453)
|
Net income
(loss)
|
$
(10,660)
|
|
$
14,823
|
Earnings (loss) per
share:
|
|
|
|
Basic
|
$
(0.20)
|
|
$
0.28
|
Diluted
|
$
(0.20)
|
|
$
0.28
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
54,470
|
|
53,416
|
Diluted
|
54,470
|
|
53,869
|
Dividends declared
per share
|
$
0.06
|
|
$
0.13
|
U.S. SILICA
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
|
(unaudited)
|
|
(audited)
|
ASSETS
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
463,395
|
|
$
277,077
|
Short-term
investments
|
6,840
|
|
21,849
|
Accounts receivable,
net
|
59,078
|
|
58,706
|
Inventories,
net
|
67,091
|
|
65,004
|
Prepaid expenses and
other current assets
|
10,375
|
|
9,921
|
Income tax
deposits
|
939
|
|
6,583
|
Total current
assets
|
607,718
|
|
439,140
|
Property, plant and
mine development, net
|
553,005
|
|
561,196
|
Goodwill
|
68,647
|
|
68,647
|
Trade
names
|
14,474
|
|
14,474
|
Customer
relationships, net
|
6,329
|
|
6,453
|
Other
assets
|
18,127
|
|
18,709
|
Total
assets
|
$
1,268,300
|
|
$
1,108,619
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
45,394
|
|
49,631
|
Dividends
payable
|
3,339
|
|
3,453
|
Accrued
liabilities
|
11,547
|
|
11,708
|
Accrued
interest
|
57
|
|
58
|
Current portion of
long-term debt
|
3,333
|
|
3,330
|
Current portion of
deferred revenue
|
7,216
|
|
15,738
|
Total current
liabilities
|
70,886
|
|
83,918
|
Long-term
debt
|
487,540
|
|
488,375
|
Liability for pension
and other post-retirement benefits
|
60,600
|
|
55,893
|
Deferred
revenue
|
66,948
|
|
59,676
|
Deferred income
taxes, net
|
9,770
|
|
19,513
|
Other long-term
obligations
|
17,563
|
|
17,077
|
Total
liabilities
|
713,307
|
|
724,452
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
Preferred
stock
|
-
|
|
-
|
Common
stock
|
639
|
|
539
|
Additional paid-in
capital
|
379,336
|
|
194,670
|
Retained
earnings
|
207,040
|
|
220,974
|
Treasury stock, at
cost
|
(13,323)
|
|
(15,845)
|
Accumulated other
comprehensive loss
|
(18,699)
|
|
(16,171)
|
Total stockholders'
equity
|
554,993
|
|
384,167
|
Total liabilities and
stockholders' equity
|
$
1,268,300
|
|
$
1,108,619
|
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,
|
|
2016
|
|
2015
|
|
(in
thousands)
|
Sales:
|
|
|
|
Oil & Gas
Proppants
|
$
73,865
|
|
$
148,753
|
Industrial &
Specialty Products
|
48,645
|
|
55,205
|
Total
sales
|
122,510
|
|
203,958
|
Segment contribution
margin:
|
|
|
|
Oil & Gas
Proppants
|
851
|
|
52,195
|
Industrial &
Specialty Products
|
16,893
|
|
15,456
|
Total segment
contribution margin
|
17,744
|
|
67,651
|
Operating activities
excluded from segment cost of goods sold
|
(1,985)
|
|
(2,346)
|
Selling, general and
administrative
|
(15,503)
|
|
(26,961)
|
Depreciation,
depletion and amortization
|
(14,556)
|
|
(13,243)
|
Interest
expense
|
(6,643)
|
|
(6,836)
|
Other income, net,
including interest income
|
1,790
|
|
11
|
Income (loss)
before income taxes
|
$
(19,153)
|
|
$
18,276
|
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,
|
|
|
2016
|
|
2015
|
|
|
(in
thousands)
|
|
Net income
(loss)
|
$
(10,660)
|
|
$
14,823
|
|
Total interest
expense, net of interest income
|
6,370
|
|
6,940
|
|
Provision for
taxes
|
(8,493)
|
|
3,453
|
|
Total depreciation,
depletion and amortization expenses
|
14,556
|
|
13,243
|
|
EBITDA
|
1,773
|
|
38,459
|
|
Non-cash incentive
compensation(1)
|
1,906
|
|
2,090
|
|
Post-employment
expenses (excluding service costs)(2)
|
765
|
|
868
|
|
Business development
related expenses(3)
|
107
|
|
8,328
|
|
Other adjustments
allowable under our existing credit
agreements(4)
|
701
|
|
1,538
|
|
Adjusted
EBITDA
|
$
5,252
|
|
$
51,283
|
|
|
|
|
|
(1)
|
Reflects equity-based
compensation expense.
|
|
|
|
(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 L - Pension and Post-retirement
Benefits to our Financial Statements in Part 1, Item 1 of this
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. The 2016
amount includes a gain on insurance settlement of $1.5 million and
restructuring costs of $2.2 million for actions that will provide
future cost savings.
|
Investor Contact:
Michael Lawson
Director of
Investor Relations and Corporate
Communications
(301)
682-0304
lawsonm@USSilica.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/us-silica-holdings-inc-announces-first-quarter-2016-results-300257758.html
SOURCE U.S. Silica Holdings, Inc.