U.S. Silica Holdings, Inc. Announces Third Quarter 2014 Results

FREDERICK, Md., Oct. 29, 2014 /PRNewswire/ -- U.S. Silica Holdings, Inc. SLCA today announced net income of $41.3 million or $0.77 per basic share and $0.76 per diluted share for the third quarter ended Sept. 30, 2014 compared with net income of $21.3 million or $0.40 per basic and diluted share for the third quarter of 2013. Excluding business development and related expenses during the quarter, EPS was $0.79 per basic share.

Bryan Shinn, president and chief executive officer commented, "I'm extremely pleased with our performance during the quarter. Contribution margin for our Oil and Gas segment almost doubled year-over-year, volumes were up significantly and we continue to see very strong demand for our high quality products. In addition, our Cadre acquisition is performing above our initial expectations and our Industrial and Specialty Products business is making steady progress in expanding margins and growing their bottom line."

Third Quarter 2014 Highlights

Total Company

• Revenue totaled $241.3 million compared with $144.4 million for the same period last year and up 17% sequentially over the second quarter of 2014.
• Overall sales volumes increased to 2.993 thousand tons, a 42% improvement over the third quarter of 2013 and up 15% sequentially over the second quarter of 2014.
• Contribution margin for the quarter was $93.9 million compared with $54.7 million in the same period of the prior year and up 26% sequentially over the second quarter of 2014.
• Adjusted EBITDA was $77.5 million versus $45.0 million for the same period last year and representing a 30% increase sequentially over the second quarter of 2014.

Oil and Gas

• Revenue for the quarter totaled $186.8 million compared with $94.2 million in the same period in 2013.
• Overall tons sold totaled 1.895 thousand tons compared with 1.052 thousand tons sold in the third quarter of 2013.
• 61% of tons sold were made in basin via transloads compared with 56% in the third quarter of 2013.
• Segment contribution margin was $77.0 million versus $40.1 million in the third quarter of 2013.

Industrial and Specialty Products

• Revenue for the quarter totaled $54.4 million compared with $50.2 million for the same period in 2013.
• Overall tons sold totaled 1.098 thousand tons compared with 1.059 thousand tons sold in the same period last year.
• Segment contribution margin was $16.8 million compared with $14.5 million in the third quarter of 2013.

Capital Update

As of September 30, 2014, the Company had $196.9 million in cash and cash equivalents and short term investments and $47.0 million available under its credit facilities. Total long-term debt at September 30, 2014 totaled $365.3 million. Capital expenditures in the third quarter, excluding the Cadre acquisition, totaled $33.6 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, the expansion of its Pacific, Missouri facility, the development of a new Greenfield site in Fairchild, Wisconsin  and other maintenance capital projects.

Outlook and Guidance

The Company is now expecting full-year 2014 Adjusted EBITDA to be at the high end of its guidance range of $230 million to $240 million. The Company still anticipates full-year 2014 capital expenditures to be in the range of $95 million to $105 million and its effective tax rate to be approximately 27 percent. 

Conference Call

U.S. Silica will host a conference call for investors tomorrow, October 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 (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 passcode for the replay is 13592747. The replay of the call will be available through November 28, 2014.

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 114-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 250 products to customers across our end markets. The company currently operates nine industrial sand production plants and seven 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 was named America's Best Small Company for 2014 by Forbes Magazine. The Company 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; (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.

 

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.

 

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.

 

 

Media Inquiries: Alison Holder
Manager of Corporate Communications
301-682-0326
holder@ussilica.com  

Investor Relations Inquiries: Mike Lawson
Director of Investor Relations and Corporate Communications
301-682-0304
lawsonm@ussilica.com

SOURCE U.S. Silica Holdings, Inc.