U.S. SILICA HOLDINGS, INC. FREDERICK, Md., Feb. 24, 2015 /PRNewswire/ --
-- Revenue for the quarter and the full year up 67% and 61%, respectively
-- Full year overall tons sold increased 34% to 10.9 million tons
-- Oil and Gas tons sold for the year up over 65% versus the same period
last year
-- Net income for the full year of $121.5 million or $2.26 per basic share
U.S. Silica Holdings, Inc. (NYSE: SLCA) today announced net income of $33.2 million or $0.62 per basic share and $0.61 per diluted share for the fourth quarter ended Dec. 31, 2014 compared with net income of $16.5 million or $0.31 per basic and diluted share for the fourth quarter of 2013. Excluding business development expense during the quarter of approximately $6.5 million or $0.10 per basic share, EPS was $0.72 per basic share. The quarter was also negatively impacted by a meaningful increase in bad debt expense of $6.9 million mostly related to the Company's assessment of a certain customer's current ability to pay its obligation to the Company.
"2014 was our best year by almost every measure, as evidenced by our record financial results and the substantial progress we made toward driving more speed, scale and strength across our organization," said Bryan Shinn, president and chief executive officer. "We expect 2015 to be a challenging year in light of lower oil prices but we have built our business and our balance sheet to capitalize on this type of market environment. Ultimately, I believe U.S. Silica will emerge as an even stronger company once oil and gas markets recover."
Full Year 2014 Highlights
Total Company
-- Revenue totaled $876.7 million compared with $546.0 million for the full
year of 2013, an improvement of 61%.
-- Overall tons sold increased to 10.9 million tons, an increase of 34%
over 2013 totals.
-- Selling, general and administrative expense for the year totaled $89.0
million or 10% of revenue compared with $49.8 million or 9% of revenue
for the full year 2013.
-- Contribution margin was $317.2 million compared with $202.9 million for
the full year 2013.
-- Adjusted EBITDA was $246.2 million compared with $160.7 million for the
full year 2013.
-- Net income was $121.5 million or $2.26 per basic share and $2.23 per
diluted share compared with $75.3 million or $1.42 per basic share and
$1.41 per diluted share for the full year 2013.
Fourth Quarter 2014 Highlights
Total Company
-- Revenue totaled $249.6 million compared with $149.5 million for the same
period last year, an increase of 67%.
-- Overall tons sold increased to 3.0 million tons, a 43% improvement over
the fourth quarter of 2013.
-- Selling, general and administrative expense for the quarter were greater
than expected and totaled $35.7 million compared with $14.5 million for
the fourth quarter of 2013. The increase in SG&A was due primarily to an
$8.7 million increase in compensation expense mostly related to our
annual bonus incentive plan, the $6.9 million increase in bad debt
expense and a $6.4 million increase in business development expense.
-- Contribution margin for the quarter was $93.9 million compared with
$48.0 million in the same period of the prior year.
-- Adjusted EBITDA was $67.0 million or 27% of revenue versus $35.9 million
or 24% of revenue for the same period last year.
Oil and Gas
-- Revenue for the quarter totaled $196.0 million compared with $102.0
million in the same period in 2013.
-- Overall tons sold totaled 2.0 million tons compared with 1.1 million
tons sold in the fourth quarter of 2013.
-- 66% of total tons sold were made in basin compared with 61% in the
fourth quarter of 2013.
-- Segment contribution margin was $80.4 million versus $34.2 million in
the fourth quarter of 2013.
Industrial and Specialty Products
-- Revenue for the quarter totaled $53.5 million compared with $47.5
million for the same period in 2013.
-- Overall tons sold totaled 1.0 million tons, a 2% increase compared with
the same period last year.
-- Segment contribution margin was $13.5 million versus $13.8 million in
the fourth quarter of 2013 due to higher manufacturing costs in the
quarter.
Capital Update
As of Dec. 31, 2014, the Company had $342.4 million in cash, cash equivalents and short term investments and $46.8 million available under its credit facilities. Total debt at Dec. 31, 2014 was $502.3 million compared with $371.5 million at December 31, 2013. Capital expenditures in the fourth quarter totaled $41.0 million and were associated largely with the Company's investments in various maintenance and growth initiatives.
Outlook and Guidance
Due to the current lack of visibility in our oil and gas business, the Company has decided to suspend guidance of 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 2015 will be in a range of $100 million to $120 million.
Conference Call
U.S. Silica will host a conference call for investors tomorrow, Feb. 25, 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 or for international callers, (201) 612-7415. The conference ID for the replay is 13599731. The replay of the call will be available through March 25, 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)
For the Three Months Ended December 31,
---------------------------------------
2014 2013
---- ----
Sales $249,589 $149,474
Cost of goods
sold (excluding
depreciation,
depletion and
amortization) 157,700 102,875
Operating expenses
Selling, general
and
administrative 35,659 14,456
Depreciation,
depletion and
amortization 12,664 10,098
------ ------
48,323 24,554
------ ------
Operating income 43,566 22,045
Other (expense) income
Interest expense (5,431) (4,086)
Other income,
net, including
interest income 379 152
--- ---
(5,052) (3,934)
------ ------
Income before
income taxes 38,514 18,111
Income tax
expense (5,276) (1,658)
------ ------
Net income $33,238 $16,453
======= =======
Earnings per share:
Basic $0.62 $0.31
Diluted $0.61 $0.31
U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
December 31,
------------
2014 2013
---- ----
ASSETS
Current Assets:
Cash and cash equivalents $267,281 $78,256
Short-term investments 75,143 74,980
Accounts receivable, net 120,881 75,207
Inventories, net 66,712 64,212
Prepaid expenses and other current
assets 9,267 7,140
Deferred income tax, net 22,295 17,737
Income tax deposits 746 -
Total current assets 562,325 317,532
------- -------
Property, plant and mine development,
net 565,755 442,116
Debt issuance costs, net 7,211 5,255
Goodwill 68,647 68,403
Trade names 14,914 10,436
Customer relationships, net 6,984 6,120
Other assets 12,317 13,599
------ ------
Total assets $1,238,153 $863,461
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Book overdraft $4,215 $4,659
Accounts payable 85,781 37,376
Dividends payable 6,805 6,709
Accrued liabilities 17,911 10,823
Accrued interest 60 41
Current portion of long-term debt 4,718 3,488
Income tax payable - 1,037
Current portion of deferred revenue 26,771 -
------ ---
Total current liabilities 146,261 64,133
------- ------
Long-term debt 497,579 367,963
Liability for pension and other post-
retirement benefits 59,932 36,802
Deferred revenue 64,722 -
Deferred income tax, net 49,749 71,318
Other long-term obligations 16,094 13,951
------ ------
Total liabilities 834,337 554,167
------- -------
Stockholders' Equity:
Common stock 539 534
Preferred stock - -
Additional paid-in capital 191,086 174,799
Retained earnings 232,551 137,978
Treasury stock, at cost (542) -
Accumulated other comprehensive loss (19,818) (4,017)
------- ------
Total stockholders' equity 403,816 309,294
------- -------
Total liabilities and stockholders'
equity $1,238,153 $863,461
========== ========
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 December 31,
---------------------
2014 2013
---- ----
(in thousands)
Sales:
Oil and gas proppants $196,043 $102,011
Industrial and specialty products 53,546 47,463
------ ------
Total sales 249,589 149,474
Segment contribution margin:
Oil and gas proppants 80,419 34,150
Industrial and specialty products 13,456 13,833
------ ------
Total segment contribution margin 93,875 47,983
Operating activities excluded from
segment cost of goods sold (1,985) (1,384)
Selling, general and administrative (35,660) (14,456)
Depreciation, depletion and
amortization (12,664) (10,098)
Interest expense (5,431) (4,086)
Early extinguishment of debt - -
Other income, net, including interest
income 379 152
--- ---
Income (loss) before income taxes $38,514 $18,111
======= =======
For the Year Ended
December 31,
-------------------
2014 2013
---- ----
(in thousands)
Sales:
Oil and gas proppants $662,770 $347,439
Industrial and specialty products 213,971 198,546
------- -------
Total sales 876,741 545,985
Segment contribution margin:
Oil and gas proppants 256,137 145,916
Industrial and specialty products 61,102 56,983
------ ------
Total segment contribution margin 317,239 202,899
Operating activities excluded from
segment cost of goods sold (7,082) (5,481)
Selling, general and administrative (88,971) (49,759)
Depreciation, depletion and
amortization (45,019) (36,418)
Interest expense (18,202) (15,341)
Early extinguishment of debt - (480)
Other income, net, including interest
income 758 597
--- ---
Income (loss) before income taxes $158,723 $96,017
======== =======
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 December 31,
--------------------
2014 2013
---- ----
(in thousands)
Net income $33,238 $16,453
Total interest
expense, net of
interest income 5,325 4,040
Provision for taxes 5,276 1,658
Total depreciation,
depletion and
amortization
expenses 12,664 10,098
------ ------
EBITDA 56,503 32,249
Non-cash
deductions, losses
and charges (1) 207 464
Loss on early
extinguishment of
debt (2) - -
Non-cash incentive
compensation (3) 2,681 803
Post-employment
expenses
(excluding service
costs) (4) 586 517
Business
development
related
expenses(5) 6,473 106
Other adjustments
allowable under
our existing
credit agreements
(6) 563 1,756
--- -----
Adjusted EBITDA $67,013 $35,895
======= =======
(1) Includes non-cash deductions, losses and charges arising
from adjustments to estimates of a future litigation liability and
the decision by our hourly workforce at our Rockwood facility to
withdraw from a pension plan administered by a third party.
(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.
(5) Expenses related to business development activities related to
our growth and expansion initiatives.
(6) Reflects miscellaneous adjustments permitted under our
existing credit agreement, including such items as purchase
accounting adjustments, one-time litigation fees, expenses related
to debt refinancing, offerings of our common stock by our former
controlling shareholder, employment agency fees.
For the Year Ended
December 31,
-------------------
2014 2013
---- ----
(in thousands)
Net income $121,540 $75,256
Total interest
expense, net
of interest
income 17,868 15,241
Provision for
taxes 37,183 20,761
Total
depreciation,
depletion and
amortization
expenses 45,019 36,418
------ ------
EBITDA 221,610 147,676
Non-cash
deductions,
losses and
charges (1) 198 464
Loss on early
extinguishment
of debt (2) - 480
Non-cash
incentive
compensation
(3) 7,487 3,039
Post-
employment
expenses
(excluding
service costs)
(4) 1,730 2,071
Business
development
related
expenses(5) 11,450 1,430
Other
adjustments
allowable
under our
existing
credit
agreements (6) 3,738 5,531
----- -----
Adjusted EBITDA $246,213 $160,691
======== ========
(1) Includes non-cash deductions, losses and charges arising from
adjustments to estimates of a future litigation liability and the
decision by our hourly workforce at our Rockwood facility to withdraw
from a pension plan administered by a third party.
(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.
(5) Expenses related to business development activities related to
our growth and expansion initiatives.
(6) Reflects miscellaneous adjustments permitted under our existing
credit agreement, including such items as purchase accounting
adjustments, one-time litigation fees, expenses related to debt
refinancing, offerings of our common stock by our former controlling
shareholder, employment agency fees.
Investor Contact:
Mike 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-fourth-quarter-and-full-year-2014-results-300040668.html
SOURCE U.S. Silica
