U.S. Silica Holdings, Inc. Announces First Quarter 2021 Results
Industrial activity and commodity prices have rebounded from earlier this year and we are optimistic that markets are in the early stages of a broader recovery, particularly as we look ahead to the second half of 2021 and into 2022. We are well-positioned to benefit from and respond to this improving market dynamic."
Shinn continued "As a leader in the industrial minerals market, we are poised to monetize a compelling new pipeline of specialty and performance products that serve traditional end markets such as housing, food and beverage, automotive, biopharma and energy as well as emerging sustainable industries including solar energy, wind power, cleaner air, green diesel, food quality, and energy-efficient buildings.
For our valued customers, we will continue to focus on ensuring that we consistently deliver the operational excellence you have come to expect from us."
First Quarter 2021 Highlights
- Revenue of
$234.4 million for the first quarter of 2021 decreased 13% when compared with the first quarter of 2020 and increased 3% compared with$227.3 million in the fourth quarter of 2020. However, excluding the$27.2 million benefit in the Oil & Gas segment related to customer shortfall penalties in the fourth quarter, revenue increased 17% sequentially. - Overall tons sold of 3.561 million for the first quarter of 2021 increased 26% compared with 2.827 million tons sold in the fourth quarter of 2020 and decreased 14% when compared with the first quarter of 2020.
- Contribution margin of
$61.6 million for the first quarter of 2021 decreased 19% when compared with the first quarter of 2020 and decreased 31% compared with$89.9 million in the fourth quarter of 2020. However, excluding the$27.2 million benefit in the Oil & Gas segment related to customer shortfall penalties in the fourth quarter, contribution margin decreased 2% sequentially. In addition, costs associated with winter weather events as well as empty railcar moves and trucking inflation negatively impacted the first quarter. - Adjusted EBITDA of
$38.3 million for the first quarter of 2021 decreased 40% compared with$63.6 million in the fourth quarter of 2020. However, excluding the$27.2 million benefit in the Oil & Gas segment related to customer shortfall penalties in the fourth quarter, adjusted EBITDA increased 5% sequentially.
Industrial & Specialty Products (ISP)
- Revenue of
$112.7 million for the first quarter of 2021 increased 5% compared with$106.9 million in the fourth quarter of 2020, and was virtually flat when compared with the first quarter of 2020. - Tons sold totaled 0.984 million for the first quarter of 2021 increased 6% compared with 0.926 million tons sold in the fourth quarter of 2020, and increased 3% when compared with the first quarter of 2020.
- Segment contribution margin of
$40.0 million , or$40.69 per ton, for the first quarter of 2021 increased 4% compared with$38.4 million in the fourth quarter of 2020, and decreased 8% when compared with the first quarter of 2020.
Oil & Gas
- Revenue of
$121.7 million for the first quarter of 2021 decreased 22% when compared with the first quarter of 2020 and was virtually flat when compared with$120.3 million in the fourth quarter of 2020. However, excluding the$27.2 million benefit in the Oil & Gas segment related to customer shortfall penalties in the fourth quarter, revenue increased 31% sequentially. - Tons sold of 2.577 million for the first quarter of 2021 increased 36% compared with 1.901 million tons sold in the fourth quarter of 2020, and decreased 20% when compared with the first quarter of 2020.
- Segment contribution margin of
$21.5 million , or$8.36 per ton, decreased 35% when compared with the first quarter of 2020 and decreased 58% when compared with$51.5 million in the fourth quarter of 2020. However, excluding the$27.2 million benefit in the Oil & Gas segment related to customer shortfall penalties in the fourth quarter, segment contribution margin decreased 11% sequentially. - The reduction in contribution margin is primarily related to positive accounting items discussed above and is consistent with the Company's fourth quarter comments on the expected contribution margin for the first quarter of this year.
Capital Update
As of
Outlook and Guidance
Looking ahead in 2021 and beyond, the Company is well positioned for sustainable, long-term growth. The Company has a strong portfolio of industrial and specialty products, supported by a robust pipeline of new products under development. It has implemented measures to leverage and further develop this industrial core, placing the Company on a long-term financially rewarding path.
In 2021, the Company is reinforcing its commitment to three strategic priorities: 1) growing its Industrial & Specialty Products segment, 2) repositioning its Oil & Gas segment, and 3) prioritizing free cash flow.
The Industrial & Specialty Products segment continues to prove its resiliency through cycles and is expected to consistently outpace
The oil and gas industry is emerging from the worst downturn in recent oilfield history. As we progress through the year and into 2022 and economic activity rebounds and gains momentum, the Company expects a robust energy recovery. Given this backdrop, the Company anticipates second quarter sequential Oil & Gas contribution margin to be up 30 – 35%.
The Company fully expects to deliver positive free cash flow this year and reduce net debt by year end.
Conference Call
About
Forward-looking Statements
This first quarter 2021 earnings release, as well as other statements we make, contain "forward-looking statements" within the meaning of the federal securities laws - that is, statements about the future, not about past events. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "will," "should," "could," "can have," "likely" and other words and terms of similar meaning. 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
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|||||||||||
SELECTED FINANCIAL DATA FROM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||
(Unaudited; dollars in thousands, except per share amounts) |
|||||||||||
Three Months Ended |
|||||||||||
|
|
|
|||||||||
Total sales |
$ |
234,416 |
$ |
227,277 |
$ |
269,599 |
|||||
Total cost of sales (excluding depreciation, depletion and amortization) |
176,989 |
141,418 |
201,317 |
||||||||
Operating expenses: |
|||||||||||
Selling, general and administrative |
26,224 |
27,777 |
30,052 |
||||||||
Depreciation, depletion and amortization |
41,348 |
39,964 |
38,449 |
||||||||
|
38 |
2,644 |
103,866 |
||||||||
Total operating expenses |
67,610 |
70,385 |
172,367 |
||||||||
Operating (loss) income |
(10,183) |
15,474 |
(104,085) |
||||||||
Other (expense) income: |
|||||||||||
Interest expense |
(17,711) |
(16,155) |
(22,277) |
||||||||
Other income, net, including interest income |
2,605 |
8,758 |
17,671 |
||||||||
Total other expense |
(15,106) |
(7,397) |
(4,606) |
||||||||
(Loss) income before income taxes |
(25,289) |
8,077 |
(108,691) |
||||||||
Income tax benefit (expense) |
4,354 |
(3,760) |
36,086 |
||||||||
Net (loss) income |
$ |
(20,935) |
$ |
4,317 |
$ |
(72,605) |
|||||
Less: Net loss attributable to non-controlling interest |
(157) |
(250) |
(260) |
||||||||
Net (loss) income attributable to |
$ |
(20,778) |
$ |
4,567 |
$ |
(72,345) |
|||||
(Loss) income per share attributable to |
|||||||||||
Basic |
$ |
(0.28) |
$ |
0.06 |
$ |
(0.98) |
|||||
Diluted |
$ |
(0.28) |
$ |
0.06 |
$ |
(0.98) |
|||||
Weighted average shares outstanding: |
|||||||||||
Basic |
73,927 |
73,728 |
73,467 |
||||||||
Diluted |
73,927 |
74,328 |
73,467 |
||||||||
Dividends declared per share |
$ |
— |
$ |
— |
$ |
0.02 |
|
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(Unaudited; dollars in thousands) |
|||||||
|
|
||||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and cash equivalents |
$ |
154,411 |
$ |
150,920 |
|||
Accounts receivable, net |
211,840 |
206,934 |
|||||
Inventories, net |
106,151 |
104,684 |
|||||
Prepaid expenses and other current assets |
24,321 |
23,147 |
|||||
Income tax deposits |
410 |
628 |
|||||
Total current assets |
497,133 |
486,313 |
|||||
Property, plant and mine development, net |
1,333,317 |
1,368,092 |
|||||
Lease right-of-use assets |
35,697 |
37,469 |
|||||
|
185,649 |
185,649 |
|||||
Intangible assets, net |
157,219 |
159,582 |
|||||
Other assets |
9,218 |
9,842 |
|||||
Total assets |
$ |
2,218,233 |
$ |
2,246,947 |
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts payable and accrued expenses |
$ |
127,123 |
$ |
121,920 |
|||
Current portion of operating lease liabilities |
16,571 |
17,388 |
|||||
Current portion of long-term debt |
40,200 |
42,042 |
|||||
Current portion of deferred revenue |
13,956 |
13,545 |
|||||
Total current liabilities |
197,850 |
194,895 |
|||||
Long-term debt, net |
1,196,559 |
1,197,660 |
|||||
Deferred revenue |
17,972 |
20,147 |
|||||
Liability for pension and other post-retirement benefits |
34,543 |
48,169 |
|||||
Deferred income taxes, net |
47,630 |
49,386 |
|||||
Operating lease liabilities |
71,603 |
76,361 |
|||||
Other long-term liabilities |
33,801 |
33,538 |
|||||
Total liabilities |
1,599,958 |
1,620,156 |
|||||
Stockholders' Equity: |
|||||||
Preferred stock |
— |
— |
|||||
Common stock |
832 |
827 |
|||||
Additional paid-in capital |
1,203,922 |
1,200,023 |
|||||
Retained deficit |
(416,267) |
(395,496) |
|||||
|
(182,515) |
(181,615) |
|||||
Accumulated other comprehensive income (loss) |
1,103 |
(8,479) |
|||||
|
607,075 |
615,260 |
|||||
Non-controlling interest |
11,200 |
11,531 |
|||||
Total stockholders' equity |
618,275 |
626,791 |
|||||
Total liabilities and stockholders' equity |
$ |
2,218,233 |
$ |
2,246,947 |
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 selling, general, and administrative costs, corporate costs, plant capacity expenses, and facility closure costs.
The following table sets forth a reconciliation of net (loss) income, the most directly comparable GAAP financial measure, to segment contribution margin.
(All amounts in thousands) |
Three Months Ended |
||||||||||
|
|
|
|||||||||
Sales: |
|||||||||||
Oil & Gas Proppants |
$ |
121,697 |
$ |
120,344 |
$ |
155,715 |
|||||
Industrial & Specialty Products |
112,719 |
106,933 |
113,884 |
||||||||
Total sales |
234,416 |
227,277 |
269,599 |
||||||||
Segment contribution margin: |
|||||||||||
Oil & Gas Proppants |
21,540 |
51,501 |
32,891 |
||||||||
Industrial & Specialty Products |
40,038 |
38,350 |
43,348 |
||||||||
Total segment contribution margin |
61,578 |
89,851 |
76,239 |
||||||||
Operating activities excluded from segment cost of sales |
(4,151) |
(3,992) |
(7,957) |
||||||||
Selling, general and administrative |
(26,224) |
(27,777) |
(30,052) |
||||||||
Depreciation, depletion and amortization |
(41,348) |
(39,964) |
(38,449) |
||||||||
|
(38) |
(2,644) |
(103,866) |
||||||||
Interest expense |
(17,711) |
(16,155) |
(22,277) |
||||||||
Other income, net, including interest income |
2,605 |
8,758 |
17,671 |
||||||||
Income tax benefit (expense) |
4,354 |
(3,760) |
36,086 |
||||||||
Net (loss) income |
$ |
(20,935) |
$ |
4,317 |
$ |
(72,605) |
|||||
Less: Net loss attributable to non-controlling interest |
(157) |
(250) |
(260) |
||||||||
Net (loss) income attributable to |
$ |
(20,778) |
$ |
4,567 |
$ |
(72,345) |
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 (loss) 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 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 (loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA:
(All amounts in thousands) |
Three Months Ended |
||||||||||
|
|
|
|||||||||
Net (loss) income attributable to |
$ |
(20,778) |
$ |
4,567 |
$ |
(72,345) |
|||||
Total interest expense, net of interest income |
15,803 |
15,858 |
22,194 |
||||||||
Provision for taxes |
(4,354) |
3,760 |
(36,086) |
||||||||
Total depreciation, depletion and amortization expenses |
41,348 |
39,964 |
38,449 |
||||||||
EBITDA |
32,019 |
64,149 |
(47,788) |
||||||||
Non-cash incentive compensation (1) |
4,574 |
3,068 |
2,847 |
||||||||
Post-employment expenses (excluding service costs) (2) |
363 |
428 |
613 |
||||||||
Merger and acquisition related expenses (3) |
194 |
143 |
609 |
||||||||
Plant capacity expansion expenses (4) |
41 |
825 |
2,190 |
||||||||
|
38 |
2,644 |
103,866 |
||||||||
Business optimization projects (6) |
39 |
28 |
19 |
||||||||
Facility closure costs (7) |
502 |
1,377 |
1,097 |
||||||||
Gain on valuation change of royalty note payable (8) |
— |
(8,263) |
— |
||||||||
Other adjustments allowable under the Credit Agreement (9) |
546 |
(817) |
(15,207) |
||||||||
Adjusted EBITDA |
$ |
38,316 |
$ |
63,582 |
$ |
48,246 |
(1) |
Reflects equity-based and other equity-related compensation expense. |
|
(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. Non-service net periodic benefit costs are not considered reflective of our operating performance because these costs do not exclusively originate from employee services during the applicable period and may experience periodic fluctuations as a result of changes in non-operating factors, including changes in discount rates, changes in expected returns on benefit plan assets, and other demographic actuarial assumptions. |
|
(3) |
Merger and acquisition related expenses include legal fees, consulting fees, bank fees, severance costs, certain purchase accounting items such as the amortization of inventory fair value step-up, information technology integration costs and similar charges. While these costs are not operational in nature and are not expected to continue for any singular transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in the future as we continue to integrate prior acquisitions and pursue any future acquisitions. |
|
(4) |
Plant capacity expansion expenses include expenses that are not inventoriable or capitalizable as related to plant expansion projects greater than |
|
(5) |
The three months ended |
|
(6) |
Reflects costs incurred related to business optimization projects within our corporate center, which aim to measure and improve the efficiency, productivity and performance of our organization. While these costs are not operational in nature and are not expected to continue for any singular project on an ongoing basis, similar types of expenses may recur in the future. |
|
(7) |
Reflects costs incurred related to idled sand facilities and closed corporate offices, including severance costs and remaining contracted costs such as office lease costs, maintenance, and utilities. While these costs are not operational in nature and are not expected to continue for any singular event on an ongoing basis, similar types of expenses may recur in the future. |
|
(8) |
Gain on valuation change of royalty note payable due to a change in estimate of future tonnages and sales related to the sand shipped from our |
|
(9) |
Reflects miscellaneous adjustments permitted under the Credit Agreement, such as recruiting fees and relocation costs. The three months ended |
Investor Contact
EVP and Chief Financial Officer
(301) 682-0302
merril@ussilica.com
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