- Revenue of $144.4 million increased
25% over the third quarter of 2012
- Oil and gas volumes increased 37%
over the same period in 2012
- Over 50% of oil and gas sales
occurring in basin through transloads
- Third quarter results include
non-operating, pre-tax charges of $1.6 million related to
refinancing and the early extinguishment of the Company’s term loan
due in June, 2017
U.S. Silica Holdings, Inc. (NYSE: SLCA) today announced net
income of $21.3 million or $0.40 per basic and diluted share for
the third quarter ended Sept. 30, 2013 compared with net income of
$18.8 million or $0.36 per basic and diluted share for the third
quarter of 2012. Earnings in the quarter were negatively impacted
by additional one-time expense of $1.6 million due to costs related
to the refinancing and the early extinguishment of the Company’s
term loan, due in June, 2017. Excluding this one-time expense,
earnings per share for the quarter were $0.42 per basic and diluted
share.
Bryan Shinn, president and chief executive officer commented,
“U.S. Silica delivered another strong performance in the third
quarter, once again demonstrating the effectiveness of our
logistics-driven business model. I was particularly pleased to see
the 600 basis point sequential increase in our oil and gas
contribution margin dollars per ton. I am also very encouraged by
the strong secular demand trends driven by increased drilling
efficiencies and overall greater proppant use per well. We continue
to be right on track to deliver our 2016 goal of doubling company
adjusted EBITDA.”
Third Quarter 2013 Highlights
Total Company
- Revenue totaled $144.4 million compared
with $115.9 million for the same period in 2012, an improvement of
25%.
- Overall volumes increased to 2.1
million tons, an increase of 12.4% over the third quarter of
2012.
- Selling, general and administrative
expense in the quarter totaled $12.8 million compared with $10.1
million in the same period last year. The increase in SG&A
during the quarter includes fees related to the refinancing of the
Company’s term debt during the quarter of approximately $1.1
million.
- Interest expense in the quarter totaled
$4.1 million and early extinguishment of debt expense was
approximately $0.5 million.
- Adjusted EBITDA was $45.0 million or
31% of revenue compared with $37.5 million or 32% of revenue for
the same period last year.
Oil and Gas
- Revenue for the quarter totaled $94.2
million compared with $64.5 million in the same period in 2012.56%
of total sales were made in basin via transloads compared with 32%
in the third quarter of 2012.
- Segment contribution margin was $40.1
million versus $34.2 million in the third quarter of 2012.
- Tons sold totaled 1,052,000 versus
769,000 sold in the third quarter of 2012.
Industrial and Specialty
Products
- Revenue for the quarter totaled $50.2
million compared with $51.3 million for the same period in
2012.Lower revenues were driven by lower volumes, primarily in
glass.
- Segment contribution margin was $14.5
million versus $14.2 million in the third quarter of 2012.The
increase in contribution margin was driven by higher margin product
line extensions.
- Tons sold totaled 1,066,000 compared
with 1,115,000 sold in the third quarter of 2012.
Capital Update
As of September 30, 2013, the Company had $153.7 million in cash
and cash equivalents and short term investments and $40.7 million
available under its credit facilities. Total long-term debt at
September 30, 2013 totaled $368.8 million. Capital expenditures in
the third quarter totaled $15.6 million and were associated
primarily with bringing the second phase of the Sparta, WI,
operation online, completing a new, 15,000 ton transload facility
in San Antonio, Texas and our new Greenfield site in Utica, IL.
Conference Call
U.S. Silica will host a conference call for investors tomorrow,
Nov. 7, 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 (855) 325-2605 or for international callers, (970)
315-0758. The conference passcode is 89146171. A replay will be
available shortly after the call and can be accessed by dialing
(855) 859-2056. The Passcode for the replay is 89146171. The replay
of the call will be available through Dec. 6, 2013.
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.
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 (unaudited; dollars in thousands,
except per share amounts) Three Months Ended
September 30, 2013 2012 Sales $ 144,372 $
115,885 Cost of goods sold (excluding depreciation, depletion and
amortization) 90,983 69,706 Operating expenses Selling, general and
administrative 12,800 10,135 Depreciation, depletion and
amortization 9,152 5,968 21,952
16,103 Operating income 31,437 30,076 Other
(expense) income Interest expense (4,144 ) (3,326 ) Early
extinguishment of debt (480 ) - Other income, net, including
interest income 260 348 (4,364 )
(2,978 ) Income before income taxes 27,073 27,098 Income tax
expense (5,739 ) (8,302 ) Net income $ 21,334
$ 18,796 Earnings per share: Basic $ 0.40 $ 0.36
Diluted $ 0.40 $ 0.36
U.S. SILICA HOLDINGS,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (dollars
in thousands) September 30, December
31, 2013 2012 (unaudited) ASSETS
Current Assets: Cash and cash equivalents $ 128,687 $ 61,022
Short-term investments 24,986 - Accounts receivable, net 74,661
59,564 Inventories, net 59,127 39,835 Prepaid expenses and other
current assets 10,826 6,738 Deferred income tax, net 9,979 10,108
Income tax deposits 2,629 - Total
current assets 310,895 177,267
Property, plant and mine development, net 437,748 414,218 Debt
issuance costs, net 5,475 2,111 Goodwill 68,403 68,403 Trade names
10,436 10,436 Customer relationships, net 6,223 6,531 Other assets
9,325 7,844 Total assets $ 848,505
$ 686,810
LIABILITIES AND STOCKHOLDERS’
EQUITY Current Liabilities: Book overdraft $ 3,651 $
5,390 Accounts payable 40,600 37,333 Dividends payable 6,681 -
Accrued liabilities 10,755 9,481 Accrued interest 45 2 Current
portion of capital lease 266 - Current portion of long-term debt
3,487 2,433 Income tax payable - 20,596 Current portion of deferred
revenue - 4,855 Total current
liabilities 65,485 80,090 Long-term
debt 368,835 252,992 Liability for pension and other
post-retirement benefits 50,672 52,747 Deferred income tax, net
63,433 59,111 Other long-term obligations 12,434
10,176 Total liabilities 560,859
455,116 Commitments and contingencies
Stockholders’ Equity: Common stock 533 529 Preferred stock -
- Additional paid-in capital 172,024 163,579 Retained earnings
128,219 82,731 Treasury stock, at cost - (970 ) Accumulated other
comprehensive loss (13,130 ) (14,175 ) Total
stockholders’ equity 287,646 231,694
Total liabilities and stockholders’ equity $ 848,505 $
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 September 30, 2013
2012 (in thousands) Net income $ 21,334 $ 18,796
Total interest expense, net of interest income 4,127 3,276
Provision for taxes 5,739 8,302 Total depreciation, depletion and
amortization expenses 9,152 5,968 EBITDA
40,352 36,342 Non-recurring expense (income)(1) - (30 ) Loss on
early extinguishment of debt(2) 480 - Non-cash incentive
compensation(3) 854 515 Post-employment expenses (excluding service
costs)(4) 382 335 Other adjustments allowable under our existing
credit agreements(5) 2,956 357 Adjusted EBITDA
$ 45,024 $ 37,519
(1)
Includes the gain on sale of assets for
the three months ended September 30, 2012.
(2)
Includes write-offs of debt issuance
costs, legal fees and a prepayment penalty related to the early
extinguishment of debt.
(3)
Includes vesting of incentive equity
compensation issued to our employees.
(4)
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 R to our Consolidated Financial Statements in Part
I, Item 1 of this Quarterly Report on Form 10-Q.
(5)
Reflects miscellaneous adjustments
permitted under the Term Loan and the Revolver, including such
items as expenses related to our refinancing,employment agency
fees, secondary stock offerings by Golden Gate Capital, reviewing
growth initiatives and potential acquisitions and one-time
litigation fees.
Investor Contact:U.S. Silica Holdings, Inc.Michael
LawsonDirector of Investor Relations and Corporate
Communications301-682-0304lawsonm@USSilica.com
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