FREDERICK, Md., July 29, 2014 /PRNewswire/ -- U.S. Silica Holdings, Inc. (NYSE: SLCA) today announced net income of $28.7 million or $0.53 per basic and diluted share for the second quarter ended June 30, 2014 compared with net income of $20.2 million or $0.38 per basic and diluted share for the second quarter of 2013. Excluding M&A and business development expenses of $1.7 million or $0.02 per basic share during the quarter, EPS was $0.55 per basic share and diluted share.
Bryan Shinn, president and chief executive officer commented, "I'm extremely pleased with the performance of our oil and gas and industrial businesses. The robust demand we continue to see in oil and gas drove higher pricing and margins for both of our operating units during the quarter. We're moving quickly to add more capacity through both Greenfield developments and M&A to assure adequate supply for our customers going forward."
Second Quarter 2014 Highlights
Total Company
-- Revenue totaled $205.8 million compared with $129.8 million for the same period last year and up 14% sequentially over the first quarter of 2014. -- Overall sales volumes increased to 2.6 million tons, a 27% improvement over the second quarter of 2013 and up 13% sequentially over the first quarter of 2014. -- Contribution margin for the quarter was $74.7 million compared with $50.8 million in the same period of the prior year and up 36% sequentially over the first quarter of 2014. -- Adjusted EBITDA was $59.8 million versus $ 41.0 million for the same period last year and representing a 43% increase sequentially over the first quarter of 2014.
Oil and Gas
-- Revenue for the quarter totaled $149.3 million compared with $77.7 million in the same period in 2013. -- Overall tons sold totaled 1.5 million tons compared with 988 thousand tons sold in the second quarter of 2013. -- 68% of tons sold were made in basin via transloads compared with 42% in the second quarter of 2013. -- Segment contribution margin was $57.1 million versus $35.5 million in the second quarter of 2013.
Industrial and Specialty Products
-- Revenue for the quarter totaled $56.5 million compared with $52.2 million for the same period in 2013. -- Overall tons sold totaled 1.095 million tons compared with 1.060 million tons sold in the same period last year. -- Segment contribution margin was $17.6 million compared with $15.4 million in the second quarter of 2013.
Capital Update
As of June 30, 2014, the Company had $181.1 million in cash and cash equivalents and short term investments and $46.7 million available under its credit facilities. Total long-term debt at June 30, 2014 totaled $366.2 million. Capital expenditures in the second quarter totaled $7.4 million and were associated largely with the Company's investment in a new frac sand mine and plant located near Utica, Illinois, a new transload facility under construction in Odessa, Texas and other maintenance capital projects.
Outlook and Guidance
The Company is increasing the guidance it provided in its press release dated April 29, 2014. For the full-year 2014, the Company now anticipates Adjusted EBITDA in the range of $215 million to $225 million, which includes a small contribution from our Cadre acquisition. The Company is also revising guidance for capital expenditures and its full-year effective tax rate. The Company now expects capital expenditures in the range of $95 million to $105 million and an effective tax rate of approximately 27 percent.
Conference Call
U.S. Silica will host a conference call for investors tomorrow, July 30, 2014 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 (855) 325-2605 or for international callers, (970) 315-0758. The conference passcode is 71727515. A replay will be available shortly after the call and can be accessed by dialing (855) 859-2056. The passcode for the replay is 71727515. The replay of the call will be available through August 29, 2014.
About U.S. Silica
U.S. Silica Holdings, Inc., a member of the Russell 2000 and S&P Small Cap 600 indexes, 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 ( dollars in thousands, except per share amounts) Three Months Ended June 30, --------------------------- 2014 2013 ---- ---- Sales $205,801 $129,828 Cost of goods sold (excluding depreciation, depletion and amortization) 132,417 80,297 Operating expenses Selling, general and administrative 19,267 10,099 Depreciation, depletion and amortization 10,341 8,890 ------ ----- 29,608 18,989 ------ ------ Operating income 43,776 30,542 Other (expense) income Interest expense (4,013) (3,535) Other income, net, including interest income 221 63 --- --- (3,792) (3,472) ------ ------ Income before income taxes 39,984 27,070 Income tax expense (11,330) (6,878) ------- ------ Net income $28,654 $20,192 ======= ======= Earnings per share: Basic $0.53 $0.38 Diluted $0.53 $0.38
U.S. SILICA HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands) June 30, December 31, 2014 2013 ---- ---- (unaudited) (audited) ASSETS Current Assets: Cash and cash equivalents $105,974 $78,256 Short-term investments 75,101 74,980 Accounts receivable, net 108,452 75,207 Inventories, net 58,650 64,212 Prepaid expenses and other current assets 8,936 6,347 Deferred income tax, net 18,582 17,737 Income tax deposits 5,074 - Total current assets 380,769 316,739 ------- ------- Property, plant and mine development, net 441,450 442,116 Debt issuance costs, net 4,815 5,255 Goodwill 68,403 68,403 Trade names 10,436 10,436 Customer relationships, net 5,915 6,120 Other assets 11,073 14,392 ------ ------ Total assets $922,861 $863,461 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Book overdraft $3,466 $4,659 Accounts payable 52,826 37,376 Dividends payable 6,770 6,709 Accrued liabilities 13,020 10,823 Accrued interest 41 41 Current portion of long-term debt 3,489 3,488 Income tax payable - 1,037 --- ----- Total current liabilities 79,612 64,133 ------ ------ Long-term debt 366,218 367,963 Liability for pension and other post-retirement benefits 34,431 36,802 Deferred income tax, net 74,203 71,318 Other long-term obligations 14,913 13,951 ------ ------ Total liabilities 569,377 554,167 ------- ------- Commitments and contingencies Stockholders' Equity: Preferred stock - - Common stock 538 534 Additional paid-in capital 185,155 174,799 Retained earnings 171,540 137,978 Treasury stock, at cost - - Accumulated other comprehensive loss (3,749) (4,017) ------ ------ Total stockholders' equity 353,484 309,294 ------- ------- Total liabilities and stockholders' equity $922,861 $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 June 30, --------------------- 2014 2013 ---- ---- (in thousands) Sales: Oil & Gas Proppants $149,331 $77,672 Industrial & Specialty Products 56,470 52,156 ------ ------ Total sales 205,801 129,828 Segment contribution margin: Oil & Gas Proppants 57,060 35,475 Industrial & Specialty Products 17,615 15,358 ------ ------ Total segment contribution margin 74,675 50,833 Operating activities excluded from segment cost of goods sold (1,291) (1,302) Selling, general and administrative (19,267) (10,099) Depreciation, depletion and amortization (10,341) (8,890) Interest expense (4,013) (3,535) Other income, net, including interest income 221 63 --- --- Income (loss) before income taxes $39,984 $27,070 ======= =======
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, it 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 June 30, ------------------- 2014 2013 ---- ---- (in thousands) Net income $28,654 $20,192 Total interest expense, net of interest income 3,811 3,522 Provision for taxes 11,330 6,878 Total depreciation, depletion and amortization expenses 10,341 8,890 ------ ----- EBITDA 54,136 39,482 Non-cash incentive compensation(1) 2,053 704 Post-employment expenses (excluding service costs)(2) 381 586 Other adjustments allowable under our existing credit agreement(3) 3,215 213 ----- --- Adjusted EBITDA $59,785 $40,985 ======= ======= (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 M- Pension and Post-retirement Benefits to our Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. (3) Reflects miscellaneous adjustments permitted under our existing credit agreement, including such items as expenses related to offerings of our common stock by our former controlling shareholder, business development activities related to our growth and expansion initiatives, one-time litigation fees, expenses related to debt refinancing and employment agency fees.
Investor Relations Inquiries: Mike Lawson
Director of Investor Relations and Corporate Communications
301-682-0304
lawsonm@ussilica.com
SOURCE U.S. Silica Holdings, Inc.