U.S. SILICA HOLDINGS, INC. FREDERICK, Md., July 28, 2015 /PRNewswire/ -- U.S. Silica Holdings, Inc. (NYSE: SLCA) today announced net income of $10.0 million or $0.19 per basic and $0.18 per diluted share for the second quarter ended June 30, 2015 compared with net income of $28.7 million or $0.53 per basic share and diluted share for the second quarter of 2014. The second quarter earnings per share included a tax benefit of $0.12 per share, which was the result of an update to the estimated annual effective tax rate from 25% to 0%. Excluding the tax benefit, business development related expenses and restructuring costs for actions designed to help bring the business more in line with current market conditions, EPS was $0.08 per basic share.
"I am very proud of what our team achieved during this very challenging and dynamic quarter. Our Industrial segment produced double digit bottom line growth, and we grew share in our Oil and Gas segment while making the tough decisions necessary to reduce costs across the Company," said Bryan Shinn, president and chief executive officer. "Looking ahead at our Oil and Gas business, we believe sales volumes are stabilizing but pricing is likely to remain fluid in the near-term. For Industrials, we expect continued strong performance, driven by a combination of contributions from new, higher margin products, new business opportunities and healthy end markets for our major product lines," he added.
Second Quarter 2015 Highlights
Total Company
-- Revenue totaled $147.5 million compared with $205.8 million for the same
period last year, a decrease of 28% both on a year-over-year basis and
sequentially from the first quarter of 2015.
-- Overall tons sold totaled 2.3 million, down 13% compared with 2.6
million tons sold in the second quarter of 2014 and a decrease of 15%
sequentially from the first quarter of 2015.
-- Contribution margin for the quarter was $32.8 million, down 56% compared
with $74.7 million in the same period of the prior year and a decrease
of 52% sequentially from the first quarter of 2015.
-- Adjusted EBITDA was $23.4 million compared with Adjusted EBITDA of $59.8
million for the same period last year, a decrease of 61% on a
year-over-year basis and 54% sequentially from the first quarter of
2015.
-- Income tax benefit of $6.3 million represented the cumulative adjustment
during the quarter to reflect the updated estimated annual effective tax
rate.
Oil and Gas
-- Revenue for the quarter totaled $90.9 million compared with $149.3
million in the same period in 2014, a decrease of 39% both on a
year-over-year basis and sequentially from the first quarter of 2015.
-- 62% of tons were sold in basin compared with 67% sold in basin in the
second quarter of 2014.
-- Tons sold totaled 1.2 million, a decrease of 19% compared with 1.5
million tons sold in the second quarter of 2014 and down 27%
sequentially compared with the tons sold in the first quarter of 2015.
-- Segment contribution margin was $13.3 million versus $57.1 million in
the second quarter of 2014, a decrease of 77% on a year-over-year basis
and 75% sequentially compared with the first quarter of 2015.
Industrial and Specialty Products
-- Revenue for the quarter totaled $56.7 million compared with $56.5
million for the same period in 2014, essentially flat on a
year-over-year basis and up 3% sequentially from the first quarter of
2015.
-- Tons sold totaled 1.0 million, a decrease of 6% on a year-over-year
basis and an increase of 5% sequentially compared with the first quarter
of 2015.
-- Segment contribution margin was $19.5 million compared with $17.6
million in the second quarter of 2014, an increase of 11% on a
year-over-year basis and up 26% sequentially compared with the first
quarter of 2015.
Capital Update
As of June 30, 2015, the Company had $322.2 million in cash and cash equivalents and short term investments and $46.9 million available under its credit facilities. Total debt at June 30, 2015 was $493.4 million. Capital expenditures in the second quarter totaled $13.8 million and were associated largely with the Company's investment in a new frac sand mine and plant located near Fairchild WI, the expansions of our Pacific, MO facility and San Antonio transload, and various cost improvement projects and maintenance capital 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 when it can gain more clarity around its customers' business activity levels and the associated demand for its products. Based on current market conditions, the Company anticipates that its capital expenditures for 2015 will be in a range of $60 million to $70 million.
Conference Call
U.S. Silica will host a conference call for investors tomorrow, July 29, 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. The conference ID number for the replay is 13614342. The replay of the call will be available through Aug. 28, 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
(unaudited; dollars in thousands, except per share amounts)
Three Months Ended June 30,
---------------------------
2015 2014
---- ----
Sales $147,511 $205,801
Cost of goods sold (excluding depreciation, depletion and amortization) 117,200 132,417
Operating expenses
Selling, general and administrative 6,575 19,267
Depreciation, depletion and amortization 13,695 10,341
------ ------
20,270 29,608
------ ------
Operating income 10,041 43,776
Other (expense)/income
Interest expense (6,249) (4,013)
Other (expense)/income, net, including interest income (181) 221
---- ---
(6,430) (3,792)
------ ------
Income before income taxes 3,611 39,984
Income tax benefit/(expense) 6,342 (11,330)
----- -------
Net income $9,953 $28,654
====== =======
Earnings per share:
Basic $0.19 $0.53
Diluted $0.18 $0.53
Weighted average shares outstanding:
Basic 53,303 53,733
Diluted 53,857 54,262
Dividends declared per share $0.13 $0.13
U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, December 31,
2015 2014
---- ----
(unaudited) (audited)
ASSETS
Current Assets:
Cash and cash equivalents $251,488 $267,281
Short-term investments 70,740 75,143
Accounts receivable, net 77,777 120,881
Inventories, net 64,183 66,712
Prepaid expenses and other current assets 9,658 9,267
Deferred income taxes, net 21,472 22,295
Income tax deposits 3,979 746
Total current assets 499,297 562,325
------- -------
Property, plant and mine development, net 567,197 565,755
Goodwill 68,647 68,647
Trade names 14,914 14,914
Customer relationships, net 6,700 6,984
Other assets 17,915 12,317
------ ------
Total assets $1,174,670 $1,230,942
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Book overdraft $3,833 $4,215
Accounts payable 53,815 85,781
Dividends payable 6,754 6,805
Accrued liabilities 14,431 17,911
Accrued interest 58 60
Current portion of long-term debt 3,324 3,329
Deferred revenue 26,771 26,771
------ ------
Total current liabilities 108,986 144,872
------- -------
Long-term debt 490,041 491,757
Deferred revenue 55,506 64,722
Liability for pension and other post-retirement benefits 53,765 59,932
Deferred income taxes, net 44,648 49,749
Other long-term obligations 17,725 16,094
------ ------
Total liabilities 770,671 827,126
Stockholders' Equity:
Common stock 539 539
Additional paid-in capital 191,042 191,086
Retained earnings 243,934 232,551
Treasury stock, at cost (15,937) (542)
Accumulated other comprehensive loss (15,579) (19,818)
------- -------
Total stockholders' equity 403,999 403,816
------- -------
Total liabilities and stockholders' equity $1,174,670 $1,230,942
========== ==========
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,
-----------------------------------
2015 2014
---- ----
(unaudited; in thousands)
Sales:
Oil & Gas Proppants $90,855 $149,331
Industrial & Specialty Products 56,656 56,470
------ ------
Total sales 147,511 205,801
Segment contribution margin:
Oil & Gas Proppants 13,257 57,060
Industrial & Specialty Products 19,531 17,615
------ ------
Total segment contribution margin 32,788 74,675
Operating activities excluded from segment cost of goods sold (2,477) (1,291)
Selling, general and administrative (6,575) (19,267)
Depreciation, depletion and amortization (13,695) (10,341)
Interest expense (6,249) (4,013)
Other (expense)/income, net, including interest income (181) 221
---- ---
Income before income taxes $3,611 $39,984
====== =======
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 June 30,
-----------------------------------
2015 2014
---- ----
(unaudited; in thousands)
Net income $9,953 $28,654
Total interest expense, net of interest income 6,537 3,811
Provision for taxes (6,342) 11,330
Total depreciation, depletion and amortization expenses 13,695 10,341
------ ------
EBITDA 23,843 54,136
Non-cash incentive compensation (1) (2,179) 2,053
Post-employment expenses (excluding service costs) (2) 868 381
Business development related expenses (3) (375) 1,713
Other adjustments allowable under our existing credit agreement (4) 1,286 1,502
Adjusted EBITDA $23,443 $59,785
======= =======
(1) Reflects stock based compensation including adjustments for the revaluation of performance
share units.
(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 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 and employment agency fees.
Investor Contact:
Michael Lawson
Director of Investor Relations and Corporate Communications
(301) 682-0304
lawsonm@USSilica.com
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SOURCE U.S. Silica Holdings, Inc.
