KATY, Texas, May 1, 2019
/PRNewswire/ -- U.S. Silica Holdings, Inc. (NYSE: SLCA) today
announced a net loss of $19.3
million, or $(0.26) per basic
and diluted share, for the first quarter ended March 31, 2019,
compared with net income of $31.3
million, or $0.39 per basic
and diluted share, for the first quarter of 2018. The first quarter
results were negatively impacted by $8.6
million or $0.09 per share in
costs related to plant startup and expansion expenses, $4.8 million or $0.05 per share related to merger and acquisition
expenses, $1.0 million or
$0.01 per share in contract
termination costs and $3.6 million or
$0.03 per share in other adjustments,
resulting in adjusted EPS loss for the first quarter of
$(0.08) per basic and diluted
share.
![U.S. Silica (PRNewsFoto/U.S. Silica) U.S. Silica (PRNewsFoto/U.S. Silica)](https://mma.prnewswire.com/media/212300/us_silica_logo.jpg)
"We're off to a strong start to 2019, driven by record results
from our Sandbox unit, a solid quarter from our Industrial business
and better than expected results from our Oil and Gas sand
business, as we saw a resurgence in both volumes and pricing for
Northern White sand that has continued into the second quarter,''
said Bryan Shinn, president and
chief executive officer.
First Quarter 2019 Highlights
Total Company
- Revenue of $378.7 million for the
first quarter of 2019 compared with $357.4
million in the fourth quarter of 2018, up 6% sequentially
and 3% over the first quarter of 2018.
- Overall tons sold of 4.830 million for the first quarter of
2019 compared with 4.637 million tons sold in the fourth quarter of
2018, up 4% sequentially and 17% over the first quarter of
2018.
- Contribution margin of $103.1
million for the first quarter of 2019 compared with
$98.8 million in the fourth quarter
of 2018, up 4% sequentially and down 14% over the first quarter of
2018.
- Adjusted EBITDA of $68.8 million
for the first quarter of 2019 compared with $68.0 million in the fourth quarter of 2018, up
1% sequentially and down 28% from the first quarter of 2018.
Industrial and Specialty Products
- Revenue of $118.3 million for the
first quarter of 2019 compared with $113.8
million in the fourth quarter of 2018, up 4% sequentially
and up 110% over the first quarter of 2018.
- Tons sold totaled 0.966 million for the first quarter of 2019
compared with 0.933 million tons sold in the fourth quarter of
2018, up 4% sequentially and 10% over the first quarter of
2018.
- Segment contribution margin of $44.6
million, or $46.12 per ton,
for the first quarter of 2019 compared with $44.6 million in the fourth quarter of 2018, flat
sequentially and up 117% over the first quarter of 2018.
Oil & Gas
- Revenue of $260.5 million for the
first quarter of 2019 compared with $243.5
million in the fourth quarter of 2018, up 7% sequentially
and down 17% over the first quarter of 2018.
- Tons sold of 3.864 million for the first quarter of 2019
compared with 3.704 million tons sold in the fourth quarter of
2018, up 4% sequentially and 19% over the first quarter of
2018.
- Segment contribution margin of $58.6
million, or $15.16 per ton,
for the first quarter of 2019 compared with $54.3 million in the fourth quarter of 2018, up
8% sequentially and down 41% from the first quarter of 2018.
Capital Update
As of March 31, 2019, the Company had $161.6 million in cash and cash equivalents and
$95.2 million available under its
credit facilities. Total debt outstanding under our Credit Facility
as of March 31, 2019 was $1.267
billion. Capital expenditures in the first quarter totaled
$44.4 million and were mainly for
engineering, procurement and construction of our growth projects,
primarily Lamesa and equipment to
expand our Sandbox operations, and other maintenance and cost
improvement capital projects. During the first quarter the company
generated $10.9 million in cash flow
from operations.
Outlook and Guidance
The Company is making no changes to its previous guidance for
capital expenditures for 2019, which are expected to be in the
range of $100 million to $125 million.
We believe a robust U.S. economy, supported by strong job growth
and moderate interest rates, bodes well for many of our end-use
markets in our Industrial business. First quarter GDP numbers
recently released show the strongest rate of first quarter growth
in four years, according to the Commerce Department. Despite some
early weakness, housing starts are expected to strengthen through
the remainder of 2019 and big-ticket residential remodeling
activity is expected to stay strong nationwide according to the
National Association of Home Builders and Metrostudy. U.S.
auto sales are expected to decline modestly year-over-year,
according to the Center for Automotive Research but sales of
premium wine, an important filtration market for us are expected to
grow between 4 and 8 percent, according to the State of the Wine
Industry for 2019 by Silicon Valley Bank.
For Oil and Gas, starting with sand proppants, demand and
pricing for Northern White sand began to strengthen in the first
quarter, and we remain optimistic that we'll see heightened
activity around Northern White sand in the coming quarters. We
expect Oil and Gas sand volumes will grow low to mid-single digits
sequentially, driven by the continued ramp in West Texas volumes and the reactivation of
some of our Northern White sand capacity.
For Sandbox, we believe that load volumes should be up more than
15 percent sequentially. We have several recent customer wins and a
very robust pipeline of potential new opportunities. We are also
seeing a trend toward larger jobs as more of our business today is
being conducted directly with E&P companies.
Conference Call
U.S. Silica will host a conference call for investors
today, May 1, 2019 at 7:30 a.m. Central
Time to discuss these results. Hosting the call will
be Bryan Shinn, president and chief executive officer
and Don Merril, executive 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 or for international
callers, (201) 612-7415. The conference ID for the replay is
13689413. The replay will be available through June 3, 2019.
About U.S. Silica
U.S. Silica Holdings, Inc. is a performance materials
company and is a member of the Russell 2000 Index. The Company is a
leading producer of commercial silica used in the oil and gas
industry, and in a wide range of industrial applications. Over its
119-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 1,500
diversified products to customers across our end markets. U.S.
Silica's wholly-owned subsidiaries include EP Minerals and
SandBox Logistics™. EP Minerals is an industry leader in the
production of products derived from diatomaceous earth, perlite,
engineered clays, and non-activated clays. SandBox
Logistics™ is a state-of-the-art leader in proppant storage,
handling and well-site delivery, dedicated to making proppant
logistics cleaner, safer and more efficient. The Company currently
operates over 25 mines and production facilities. The Company is
headquartered in Katy, Texas and has offices
in Frederick, Maryland, Reno,
Nevada and Chicago, Illinois.
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, outlook, guidance, 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 our
products; (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 and/or mining; (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
and truckload drivers; (10) silica-related health issues and
corresponding litigation; (11) seasonal and severe weather
conditions; (12) our ability to protect and enforce our
intellectual property rights; and (13) extensive and evolving
environmental, mining, health and safety, licensing, reclamation,
trucking 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.
SELECTED FINANCIAL
DATA FROM CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited;
dollars in thousands, except per share amounts)
|
|
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Total
sales
|
$
|
378,750
|
|
|
$
|
357,380
|
|
|
$
|
369,313
|
|
Total cost of sales
(excluding depreciation, depletion and
amortization)
|
297,538
|
|
|
287,038
|
|
|
260,910
|
|
Operating
expenses:
|
|
|
|
|
|
Selling, general and
administrative
|
34,656
|
|
|
32,168
|
|
|
34,591
|
|
Depreciation,
depletion and amortization
|
44,600
|
|
|
46,527
|
|
|
28,592
|
|
Goodwill and other
asset impairments
|
—
|
|
|
265,715
|
|
|
—
|
|
Total operating
expenses
|
79,256
|
|
|
344,410
|
|
|
63,183
|
|
Operating income
(loss)
|
1,956
|
|
|
(274,068)
|
|
|
45,220
|
|
Other (expense)
income:
|
|
|
|
|
|
Interest
expense
|
(23,978)
|
|
|
(21,281)
|
|
|
(7,070)
|
|
Other income, net,
including interest income
|
722
|
|
|
1,336
|
|
|
665
|
|
Total other
expense
|
(23,256)
|
|
|
(19,945)
|
|
|
(6,405)
|
|
(Loss) income before
income taxes
|
(21,300)
|
|
|
(294,013)
|
|
|
38,815
|
|
Income tax benefit
(expense)
|
1,972
|
|
|
37,938
|
|
|
(7,521)
|
|
Net (loss)
income
|
$
|
(19,328)
|
|
|
$
|
(256,075)
|
|
|
$
|
31,294
|
|
Less: Net (loss)
income attributable to non-controlling interest
|
(4)
|
|
|
(13)
|
|
|
—
|
|
Net (loss) income
attributable to U.S. Silica
Holdings, Inc.
|
$
|
(19,324)
|
|
|
$
|
(256,062)
|
|
|
$
|
31,294
|
|
|
|
|
|
|
|
Earnings (loss) per
share attributable to U.S. Silica Holdings, Inc.:
|
|
|
|
|
|
Basic
|
$
|
(0.26)
|
|
|
$
|
(3.44)
|
|
|
$
|
0.39
|
|
Diluted
|
$
|
(0.26)
|
|
|
$
|
(3.44)
|
|
|
$
|
0.39
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
Basic
|
73,040
|
|
|
74,485
|
|
|
79,496
|
|
Diluted
|
73,040
|
|
|
74,485
|
|
|
80,309
|
|
Dividends declared
per share
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
$
|
0.06
|
|
U.S. SILICA
HOLDINGS, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited;
dollars in thousands)
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
|
|
|
ASSETS
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
161,615
|
|
|
$
|
202,498
|
|
Accounts receivable,
net
|
258,348
|
|
|
215,486
|
|
Inventories,
net
|
143,149
|
|
|
162,087
|
|
Prepaid expenses and
other current assets
|
14,572
|
|
|
17,966
|
|
Income tax
deposits
|
1,388
|
|
|
2,200
|
|
Total current
assets
|
579,072
|
|
|
600,237
|
|
Property, plant and
mine development, net
|
1,820,102
|
|
|
1,826,303
|
|
Operating lease
right-of-use assets
|
209,699
|
|
|
—
|
|
Goodwill
|
273,524
|
|
|
261,340
|
|
Intangible assets,
net
|
190,584
|
|
|
194,626
|
|
Other
assets
|
16,459
|
|
|
18,334
|
|
Total
assets
|
$
|
3,089,440
|
|
|
$
|
2,900,840
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
223,611
|
|
|
$
|
216,400
|
|
Current portion of
operating lease liabilities
|
61,583
|
|
|
—
|
|
Current portion of
long-term debt
|
13,112
|
|
|
13,327
|
|
Current portion of
deferred revenue
|
28,838
|
|
|
31,612
|
|
Total current
liabilities
|
327,144
|
|
|
261,339
|
|
Long-term debt,
net
|
1,245,242
|
|
|
1,246,428
|
|
Deferred
revenue
|
86,930
|
|
|
81,707
|
|
Liability for pension
and other post-retirement benefits
|
56,879
|
|
|
57,194
|
|
Deferred income
taxes, net
|
131,053
|
|
|
137,239
|
|
Operating lease
liabilities
|
149,040
|
|
|
—
|
|
Other long-term
liabilities
|
59,054
|
|
|
64,629
|
|
Total
liabilities
|
2,055,342
|
|
|
1,848,536
|
|
Stockholders'
Equity:
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
Common
stock
|
820
|
|
|
818
|
|
Additional paid-in
capital
|
1,173,259
|
|
|
1,169,383
|
|
Retained
earnings
|
43,920
|
|
|
67,854
|
|
Treasury stock, at
cost
|
(180,125)
|
|
|
(178,215)
|
|
Accumulated other
comprehensive loss
|
(15,985)
|
|
|
(15,020)
|
|
Total U.S. Silica
Holdings, Inc. stockholders' equity
|
1,021,889
|
|
|
1,044,820
|
|
Non-controlling
interest
|
12,209
|
|
|
7,484
|
|
Total stockholders'
equity
|
1,034,098
|
|
|
1,052,304
|
|
Total liabilities and
stockholders' equity
|
$
|
3,089,440
|
|
|
$
|
2,900,840
|
|
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 net income,
the most directly comparable GAAP financial measure, to segment
contribution margin.
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Sales:
|
|
|
|
|
|
Oil & Gas
Proppants
|
$
|
260,477
|
|
|
$
|
243,546
|
|
|
$
|
312,930
|
|
Industrial &
Specialty Products
|
118,273
|
|
|
113,834
|
|
|
56,383
|
|
Total
sales
|
378,750
|
|
|
357,380
|
|
|
369,313
|
|
Segment contribution
margin:
|
|
|
|
|
|
Oil & Gas
Proppants
|
58,588
|
|
|
54,254
|
|
|
99,433
|
|
Industrial &
Specialty Products
|
44,561
|
|
|
44,556
|
|
|
20,530
|
|
Total segment
contribution margin
|
103,149
|
|
|
98,810
|
|
|
119,963
|
|
Operating activities
excluded from segment cost of sales
|
(21,937)
|
|
|
(28,468)
|
|
|
(11,560)
|
|
Selling, general and
administrative
|
(34,656)
|
|
|
(32,168)
|
|
|
(34,591)
|
|
Depreciation,
depletion and amortization
|
(44,600)
|
|
|
(46,527)
|
|
|
(28,592)
|
|
Goodwill and other
asset impairments
|
—
|
|
|
(265,715)
|
|
|
—
|
|
Interest
expense
|
(23,978)
|
|
|
(21,281)
|
|
|
(7,070)
|
|
Other income, net,
including interest income
|
722
|
|
|
1,336
|
|
|
665
|
|
Income tax benefit
(expense)
|
1,972
|
|
|
37,938
|
|
|
(7,521)
|
|
Net (loss)
income
|
$
|
(19,328)
|
|
|
$
|
(256,075)
|
|
|
$
|
31,294
|
|
Less: Net (loss)
income attributable to non-controlling interest
|
(4)
|
|
|
(13)
|
|
|
—
|
|
Net (loss) income
attributable to U.S. Silica Holdings, Inc.
|
$
|
(19,324)
|
|
|
$
|
(256,062)
|
|
|
$
|
31,294
|
|
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:
|
(All amounts in
thousands)
|
Three Months
Ended
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
|
Net (loss) income
attributable to U.S. Silica Holdings, Inc.
|
$
|
(19,324)
|
|
|
$
|
(256,062)
|
|
|
$
|
31,294
|
|
|
|
Total interest
expense, net of interest income
|
22,920
|
|
|
21,446
|
|
|
5,855
|
|
|
|
Provision for
taxes
|
(1,972)
|
|
|
(37,938)
|
|
|
7,521
|
|
|
|
Total depreciation,
depletion and amortization expenses
|
44,600
|
|
|
46,527
|
|
|
28,592
|
|
|
|
EBITDA
|
46,224
|
|
|
(226,027)
|
|
|
73,262
|
|
|
|
Non-cash incentive
compensation (1)
|
4,045
|
|
|
3,725
|
|
|
6,254
|
|
|
|
Post-employment
expenses (excluding service costs) (2)
|
552
|
|
|
554
|
|
|
555
|
|
|
|
Merger and
acquisition related expenses (3)
|
4,783
|
|
|
5,668
|
|
|
2,507
|
|
|
|
Plant capacity
expansion expenses (4)
|
8,571
|
|
|
14,012
|
|
|
9,380
|
|
|
|
Contract termination
expenses (5)
|
1,000
|
|
|
2,491
|
|
|
—
|
|
|
|
Goodwill and other
asset impairments (6)
|
—
|
|
|
265,715
|
|
|
—
|
|
|
|
Business optimization
projects (7)
|
6
|
|
|
54
|
|
|
—
|
|
|
|
Other adjustments
allowable under the Credit Agreement (8)
|
3,638
|
|
|
1,814
|
|
|
3,408
|
|
|
|
Adjusted
EBITDA
|
$
|
68,819
|
|
|
$
|
68,006
|
|
|
$
|
95,366
|
|
|
_________________
|
(1)
|
Reflects
equity-based, non-cash 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. Non-service net periodic benefit costs
are not considered reflective of our operating performance because
these costs do not exclusively originate from employee services
during the applicable period and may experience periodic
fluctuations as a result of changes in non-operating factors,
including changes in discount rates, changes in expected returns on
benefit plan assets, and other demographic actuarial
assumptions.
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(3)
|
Merger and
acquisition related expenses include legal fees, consulting fees,
bank fees, severance costs, certain purchase accounting items such
as the amortization of inventory fair value step-up, information
technology integration costs and similar charges. While these costs
are not operational in nature and are not expected to continue for
any singular transaction on an ongoing basis, similar types of
costs, expenses and charges have occurred in prior periods and may
recur in the future as we continue to integrate prior acquisitions
and pursue any future acquisitions.
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(4)
|
Plant capacity
expansion expenses include expenses that are not inventoriable or
capitalizable as related to plant expansion projects greater than
$5 million in capital expenditures or plant start up projects.
While these expenses are not operational in nature and are not
expected to continue for any singular project on an ongoing basis,
similar types of expenses have occurred in prior periods and may
recur in the future as we continue to pursue future plant capacity
expansion.
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(5)
|
Reflects contract
termination expenses related to strategically exiting a service
contract and losses related to sub-leases. While these expenses are
not operational in nature and are not expected to continue for any
singular event on an ongoing basis, similar types of expenses have
occurred in prior periods and may recur in the future as we
continue to strategically evaluate our contracts.
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(6)
|
For the fourth
quarter of 2018, reflects $164.2 million of goodwill impairments,
$97.0 million of long-lived asset impairments and $4.5 million of
intangible asset impairments in our Oil & Gas Proppants
reporting segment due to a decline in demand for Northern White
sand caused by some of our customers shifting to local in-basin
frac sands with lower logistics costs.
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(7)
|
Reflects costs
incurred related to business optimization projects within our
corporate center, which aim to measure and improve the efficiency,
productivity and performance of our organization. While these costs
are not operational in nature and are not expected to continue for
any singular project on an ongoing basis, similar types of expenses
may recur in the future.
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(8)
|
Reflects
miscellaneous adjustments permitted under the Credit Agreement. The
first quarter of 2019 includes $2.4 million related to facility
closure costs and $2.2 million of loss contingencies reserve,
partially offset by insurance proceeds of $2.2 million. The first
quarter of 2018 includes a net loss of $3.4 million on divestitures
of assets, consisting of $7.9 million of contract termination costs
and $1.3 million of divestiture related expenses such as legal fees
and consulting fees, partially offset by a $5.8 million gain on
sale of assets.
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Investor Contacts
Michael Lawson
Vice President of Investor Relations and Corporate
Communications
301-682-0304
lawsonm@ussilica.com
Nick Shaver
Investor Relations Manager
281-394-9630
shavern@ussilica.com
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SOURCE U.S. Silica Holdings, Inc.