U.S. Silica Holdings, Inc. Announces Fourth Quarter and Full Year 2020 Results
"I am proud of how our company successfully navigated 2020 and of our industry leading performance during the year in spite of the challenging macro-economic environment."
"We delivered another strong financial quarter and substantially beat expectations through structural cost reductions, disciplined execution in oil and gas and a rebound in the industrial and specialty products segment."
"2021 is off to a good start with surging proppant demand and a continuing recovery in general industrial markets. We are well positioned for success this year and beyond with numerous growth opportunities in our new product pipeline across a diverse set of markets and end uses," said
Full Year 2020 Highlights
- Revenue of
$845.9 million decreased 43% compared with$1.47 billion for 2019. - Net loss of
$114.1 million , or$1.55 per basic and per diluted share, for 2020, compared with a net loss of$329.1 million , or$4.49 per basic and per diluted share, for 2019. - Overall tons sold of 11.130 million for 2020 decreased 41% compared with 18.788 million tons sold in 2019.
- Contribution margin of
$301.2 million for 2020 decreased 29% compared with$426.8 million for 2019. - Adjusted EBITDA of
$203.9 million for 2020 decreased 29% compared with Adjusted EBITDA of$286.3 million for 2019.
Fourth Quarter 2020 Highlights
- Revenue of
$227.3 million for the fourth quarter of 2020 increased 29% compared with$176.5 million in the third quarter of 2020 and decreased 33% when compared with the fourth quarter of 2019. - Overall tons sold of 2.827 million for the fourth quarter of 2020 increased 26% compared with 2.239 million tons sold in the third quarter of 2020 and decreased 33% when compared with the fourth quarter of 2019.
- Contribution margin of
$89.9 million for the fourth quarter of 2020 increased 22% compared with$73.8 million in the third quarter of 2020 and decreased 16% when compared with the fourth quarter of 2019. - Adjusted EBITDA of
$63.6 million for the fourth quarter of 2020 increased 24% compared with$51.3 million in the third quarter of 2020 and decreased 14% when compared with the fourth quarter of 2019.
Industrial and Specialty Products
- Revenue of
$106.9 million for the fourth quarter of 2020 decreased 3% compared with$110.1 million in the third quarter of 2020 and increased 2% when compared with the fourth quarter of 2019. - Tons sold totaled 0.926 million for the fourth quarter of 2020 decreased 3% compared with 0.957 million tons sold in the third quarter of 2020 and increased 10% when compared with the fourth quarter of 2019.
- Segment contribution margin of
$38.4 million , or$41.47 per ton, for the fourth quarter of 2020 decreased 9% compared with$42.4 million in the third quarter of 2020 and decreased 2% when compared with the fourth quarter of 2019.
Oil & Gas
- Revenue of
$120.3 million for the fourth quarter of 2020 increased 81% compared with$66.3 million in the third quarter of 2020 and decreased 49% when compared with the fourth quarter of 2019. - Tons sold of 1.901 million for the fourth quarter of 2020 increased 48% compared with 1.282 million tons sold in the third quarter of 2020 and decreased 43% when compared with the fourth quarter of 2019.
- Segment contribution margin of
$51.5 million , or$27.10 per ton, for the fourth quarter of 2020 increased 64% compared with$31.5 million in the third quarter of 2020 and decreased 24% when compared with the fourth quarter of 2019.
Capital Update
As of
Outlook and Guidance
Looking ahead to 2021 and beyond, the Company is well positioned for sustainable, long-term growth by servicing critical industries such as food and beverage production, housing, automotive, glass manufacturing, biopharma, and energy. The Company has a pipeline of innovative, new products to service high growth, sustainable end uses including solar energy, wind power, cleaner air, green diesel, food safety and energy efficient buildings.
The Company continued to focus on its three strategic priorities in 2020, namely, 1) prioritizing free cash flow, 2) repositioning its Oil & Gas segment, and 3) growing its Industrial & Specialty Products segment.
The Company is focused on free cash flow and de-levering the balance sheet and intends on being cash flow positive in 2021, keeping an estimated
Despite the continued macro-economic uncertainty, the Industrial & Specialty Products segment has proven its resiliency and is off to a good start in 2021 and growth is expected to outpace
The Company has repositioned the Oil & Gas segment by right sizing proppant capacity and reducing costs to match current and expected demand from well completions. The Company expects a robust recovery in energy sector proppant and last mile delivery demand especially in the first half of 2021 and expects the first quarter to be up 15-20% in volume sequentially, despite temporary headwinds from the unprecedented cold weather in February.
Conference Call
About
Forward-looking Statements
This full-year and fourth-quarter 2020 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
SELECTED FINANCIAL DATA FROM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; dollars in thousands, except per share amounts) |
|||||||||||
Three Months Ended |
|||||||||||
|
|
|
|||||||||
Total sales |
$ |
227,277 |
$ |
176,472 |
$ |
339,059 |
|||||
Total cost of sales (excluding depreciation, depletion and amortization) |
141,418 |
107,592 |
257,962 |
||||||||
Operating expenses: |
|||||||||||
Selling, general and administrative |
27,777 |
27,216 |
37,325 |
||||||||
Depreciation, depletion and amortization |
39,964 |
40,069 |
42,819 |
||||||||
|
2,644 |
222 |
363,717 |
||||||||
Total operating expenses |
70,385 |
67,507 |
443,861 |
||||||||
Operating income (loss) |
15,474 |
1,373 |
(362,764) |
||||||||
Other (expense) income: |
|||||||||||
Interest expense |
(16,155) |
(19,274) |
(22,996) |
||||||||
Other income (expense), net, including interest income |
8,758 |
(409) |
443 |
||||||||
Total other expense |
(7,397) |
(19,683) |
(22,553) |
||||||||
Income (loss) before income taxes |
8,077 |
(18,310) |
(385,317) |
||||||||
Income tax (expense) benefit |
(3,760) |
4,094 |
91,892 |
||||||||
Net income (loss) |
$ |
4,317 |
$ |
(14,216) |
$ |
(293,425) |
|||||
Less: Net loss attributable to non-controlling interest |
(250) |
(254) |
(554) |
||||||||
Net income (loss) attributable to |
$ |
4,567 |
$ |
(13,962) |
$ |
(292,871) |
|||||
Earnings (loss) per share attributable to |
|||||||||||
Basic |
$ |
0.06 |
$ |
(0.19) |
$ |
(3.99) |
|||||
Diluted |
$ |
0.06 |
$ |
(0.19) |
$ |
(3.99) |
|||||
Weighted average shares outstanding: |
|||||||||||
Basic |
73,728 |
73,688 |
73,343 |
||||||||
Diluted |
74,328 |
73,688 |
73,343 |
||||||||
Dividends declared per share |
$ |
— |
$ |
— |
$ |
0.06 |
Year Ended |
|||||||
|
|
||||||
Total sales |
$ |
845,885 |
$ |
1,474,477 |
|||
Total cost of sales (excluding depreciation, depletion and amortization) |
575,070 |
1,133,293 |
|||||
Operating expenses: |
|||||||
Selling, general and administrative |
124,171 |
150,848 |
|||||
Depreciation, depletion and amortization |
155,568 |
179,444 |
|||||
|
110,688 |
363,847 |
|||||
Total operating expenses |
390,427 |
694,139 |
|||||
Operating loss |
(119,612) |
(352,955) |
|||||
Other (expense) income: |
|||||||
Interest expense |
(79,885) |
(95,472) |
|||||
Other income (expense), net, including interest income |
24,350 |
19,519 |
|||||
Total other expense |
(55,535) |
(75,953) |
|||||
Loss before income taxes |
(175,147) |
(428,908) |
|||||
Income tax benefit |
60,025 |
99,151 |
|||||
Net loss |
$ |
(115,122) |
$ |
(329,757) |
|||
Less: Net loss attributable to non-controlling interest |
(1,028) |
(675) |
|||||
Net loss attributable to |
$ |
(114,094) |
$ |
(329,082) |
|||
Loss per share attributable to |
|||||||
Basic |
$ |
(1.55) |
$ |
(4.49) |
|||
Diluted |
$ |
(1.55) |
$ |
(4.49) |
|||
Weighted average shares outstanding: |
|||||||
Basic |
73,634 |
73,253 |
|||||
Diluted |
73,634 |
73,253 |
|||||
Dividends declared per share |
$ |
0.02 |
$ |
0.25 |
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; dollars in thousands)
|
|||||||
|
|
||||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and cash equivalents |
$ |
150,920 |
$ |
185,740 |
|||
Accounts receivable, net |
206,934 |
182,238 |
|||||
Inventories, net |
104,684 |
124,432 |
|||||
Prepaid expenses and other current assets |
23,147 |
16,155 |
|||||
Income tax deposits |
628 |
475 |
|||||
Total current assets |
486,313 |
509,040 |
|||||
Property, plant and mine development, net |
1,368,092 |
1,517,587 |
|||||
Operating lease right-of-use assets |
37,469 |
53,098 |
|||||
|
185,649 |
273,524 |
|||||
Intangible assets, net |
159,582 |
183,815 |
|||||
Other assets |
9,842 |
16,170 |
|||||
Total assets |
$ |
2,246,947 |
$ |
2,553,234 |
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts payable and accrued expenses |
$ |
121,920 |
$ |
248,237 |
|||
Current portion of operating lease liabilities |
17,388 |
53,587 |
|||||
Current portion of long-term debt |
42,042 |
18,463 |
|||||
Current portion of deferred revenue |
13,545 |
15,111 |
|||||
Total current liabilities |
194,895 |
335,398 |
|||||
Long-term debt, net |
1,197,660 |
1,213,985 |
|||||
Deferred revenue |
20,147 |
35,523 |
|||||
Liability for pension and other post-retirement benefits |
48,169 |
58,453 |
|||||
Deferred income taxes, net |
49,386 |
38,585 |
|||||
Operating lease liabilities |
76,361 |
117,964 |
|||||
Other long-term obligations |
33,538 |
36,746 |
|||||
Total liabilities |
1,620,156 |
1,836,654 |
|||||
Stockholders' Equity: |
|||||||
Preferred stock |
— |
— |
|||||
Common stock |
827 |
823 |
|||||
Additional paid-in capital |
1,200,023 |
1,185,116 |
|||||
Retained deficit |
(395,496) |
(279,956) |
|||||
|
(181,615) |
(180,912) |
|||||
Accumulated other comprehensive loss |
(8,479) |
(19,854) |
|||||
|
615,260 |
705,217 |
|||||
Non-controlling interest |
11,531 |
11,363 |
|||||
Total stockholders' equity |
626,791 |
716,580 |
|||||
Total liabilities and stockholders' equity |
$ |
2,246,947 |
$ |
2,553,234 |
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 net income, the most directly comparable GAAP financial measure, to segment contribution margin.
Three Months Ended |
|||||||||||
|
|
|
|||||||||
Sales: |
|||||||||||
Oil & Gas Proppants |
$ |
120,344 |
$ |
66,343 |
$ |
234,273 |
|||||
Industrial & Specialty Products |
106,933 |
110,129 |
104,786 |
||||||||
Total sales |
227,277 |
176,472 |
339,059 |
||||||||
Segment contribution margin: |
|||||||||||
Oil & Gas Proppants |
51,501 |
31,478 |
67,993 |
||||||||
Industrial & Specialty Products |
38,350 |
42,353 |
39,114 |
||||||||
Total segment contribution margin |
89,851 |
73,831 |
107,107 |
||||||||
Operating activities excluded from segment cost of sales |
(3,992) |
(4,951) |
(26,010) |
||||||||
Selling, general and administrative |
(27,777) |
(27,216) |
(37,325) |
||||||||
Depreciation, depletion and amortization |
(39,964) |
(40,069) |
(42,819) |
||||||||
|
(2,644) |
(222) |
(363,717) |
||||||||
Interest expense |
(16,155) |
(19,274) |
(22,996) |
||||||||
Other income (expense), net, including interest income |
8,758 |
(409) |
443 |
||||||||
Income tax (expense) benefit |
(3,760) |
4,094 |
91,892 |
||||||||
Net income (loss) |
$ |
4,317 |
$ |
(14,216) |
$ |
(293,425) |
|||||
Less: Net loss attributable to non-controlling interest |
(250) |
(254) |
(554) |
||||||||
Net income (loss) attributable to |
$ |
4,567 |
$ |
(13,962) |
$ |
(292,871) |
Year Ended |
|||||||
|
|
||||||
Sales: |
|||||||
Oil & Gas Proppants |
$ |
414,897 |
$ |
1,010,521 |
|||
Industrial & Specialty Products |
430,988 |
463,956 |
|||||
Total sales |
845,885 |
1,474,477 |
|||||
Segment contribution margin: |
|||||||
Oil & Gas Proppants |
142,041 |
248,594 |
|||||
Industrial & Specialty Products |
159,176 |
178,215 |
|||||
Total segment contribution margin |
301,217 |
426,809 |
|||||
Operating activities excluded from segment cost of sales |
(30,402) |
(85,625) |
|||||
Selling, general and administrative |
(124,171) |
(150,848) |
|||||
Depreciation, depletion and amortization |
(155,568) |
(179,444) |
|||||
|
(110,688) |
(363,847) |
|||||
Interest expense |
(79,885) |
(95,472) |
|||||
Other income (expense), net, including interest income |
24,350 |
19,519 |
|||||
Income tax benefit |
60,025 |
99,151 |
|||||
Net loss |
$ |
(115,122) |
$ |
(329,757) |
|||
Less: Net loss attributable to non-controlling interest |
(1,028) |
(675) |
|||||
Net loss attributable to |
$ |
(114,094) |
$ |
(329,082) |
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 (loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA:
(All amounts in thousands) |
Three Months Ended |
||||||||||
|
|
|
|||||||||
Net income (loss) attributable to |
$ |
4,567 |
$ |
(13,962) |
$ |
(292,871) |
|||||
Total interest expense, net of interest income |
15,858 |
19,801 |
22,366 |
||||||||
Provision for taxes |
3,760 |
(4,094) |
(91,892) |
||||||||
Total depreciation, depletion and amortization expenses |
39,964 |
40,069 |
42,819 |
||||||||
EBITDA |
64,149 |
41,814 |
(319,578) |
||||||||
Non-cash incentive compensation (1) |
3,068 |
5,523 |
5,340 |
||||||||
Post-employment expenses (excluding service costs) (2) |
428 |
161 |
434 |
||||||||
Merger and acquisition related expenses (3) |
143 |
285 |
16,274 |
||||||||
Plant capacity expansion expenses (4) |
825 |
744 |
1,347 |
||||||||
Contract termination expenses (5) |
— |
— |
822 |
||||||||
|
2,644 |
222 |
363,717 |
||||||||
Business optimization projects (7) |
28 |
24 |
— |
||||||||
Facility Closure Costs (8) |
1,377 |
1,881 |
2,114 |
||||||||
Gain on valuation change of royalty note payable (9) |
(8,263) |
— |
(750) |
||||||||
Other adjustments allowable under the Credit Agreement (10) |
(817) |
675 |
3,857 |
||||||||
Adjusted EBITDA |
$ |
63,582 |
$ |
51,329 |
$ |
73,577 |
(All amounts in thousands) |
Year Ended |
||||||
|
|
||||||
Net loss attributable to |
$ |
(114,094) |
$ |
(329,082) |
|||
Total interest expense, net of interest income |
79,148 |
92,063 |
|||||
Provision for taxes |
(60,025) |
(99,151) |
|||||
Total depreciation, depletion and amortization expenses |
155,568 |
179,444 |
|||||
EBITDA |
60,597 |
(156,726) |
|||||
Non-cash incentive compensation (1) |
15,827 |
15,906 |
|||||
Post-employment expenses (excluding service costs) (2) |
1,729 |
1,735 |
|||||
Merger and acquisition related expenses (3) |
1,423 |
32,021 |
|||||
Plant capacity expansion expenses (4) |
6,149 |
17,576 |
|||||
Contract termination expenses (5) |
— |
1,882 |
|||||
|
110,688 |
363,847 |
|||||
Business optimization projects (7) |
67 |
55 |
|||||
Facility closure costs (8) |
7,093 |
12,718 |
|||||
Gain on valuation change of royalty note payable (9) |
(8,263) |
(16,854) |
|||||
Other adjustments allowable under the Credit Agreement (10) |
8,612 |
14,165 |
|||||
Adjusted EBITDA |
$ |
203,922 |
$ |
286,325 |
(1) |
Reflects equity-based non-cash 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) |
Reflects contract termination expenses related to strategically exiting a service contract and losses related to sub-leases. While these expenses are not operational in nature and are not expected to continue for any singular event on an ongoing basis, similar types of expenses have occurred in prior periods and may recur in the future as we continue to strategically evaluate our contracts. |
|
(6) |
During 2020, there was an unprecedented drop in global demand combined with the breakdown of the |
|
(7) |
Reflects costs incurred related to business optimization projects mainly 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. |
|
(8) |
Reflects costs incurred mainly related to idled sand facilities and closed corporate offices, including severance costs and remaining contracted costs such as office lease costs, and common area maintenance fees. 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. |
|
(9) |
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 |
|
(10) |
Reflects miscellaneous adjustments permitted under the Credit Agreement. For 2020, includes |
Investor Contacts
EVP and Chief Financial Officer
(301) 682-0302
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