U.S. Silica Holdings, Inc. Announces Third Quarter 2015 Results
''We took decisive actions during the quarter to profitably sell higher volume in our Oil and Gas business and take share,'' said
Commenting on the industrial and specialty products segment, Shinn said, "ISP had a record quarter for contribution margin as it continues to benefit from strong end markets like building products and automotive and the introduction of new, higher margin products. Our industrial business is on track for possibly the best year in its 115-year history and is a testament to the strength of our corporate model, with two complementary business units, which serves us well through a wide variety of economic cycles and market conditions,'' he added.
Third Quarter 2015 Highlights
- Revenue totaled
$155.4 million compared with$241.3 million for the same period last year, a decrease of 36% on a year-over-year basis and an increase of 5% sequentially from the second quarter of 2015. - Overall tons sold totaled 2.6 million, down 12% compared with 3.0 million tons sold in the third quarter of 2014 and an increase of 16% sequentially from the second quarter of 2015.
- Contribution margin for the quarter was
$36.5 million , down 61% compared with$93.9 million in the same period of the prior year and an increase of 11% sequentially from the second quarter of 2015. - Adjusted EBITDA was
$24.0 million compared with Adjusted EBITDA of$77.5 million for the same period last year, a decrease of 69% on a year-over-year basis and an increase of 2% sequentially from the second quarter of 2015. - Income tax benefit of
$4.7 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
$102.0 million compared with$186.8 million in the same period in 2014, a decrease of 45% on a year-over-year basis and an increase of 12% sequentially from the second quarter of 2015. - Tons sold totaled 1.6 million, a decrease of 15% compared with 1.9 million tons sold in the third quarter of 2014 and an increase of 32% sequentially compared with the tons sold in the second quarter of 2015.
- 61% of tons were sold in basin compared with 67% sold in basin in the third quarter of 2014.
- Segment contribution margin was
$16.5 million versus$77.0 million in the third quarter of 2014, a decrease of 79% on a year-over-year basis and an increase of 25% sequentially compared with the second quarter of 2015.
Industrial and Specialty Products
- Revenue for the quarter totaled
$53.4 million compared with$54.4 million for the same period in 2014, a decrease of 2% on a year-over-year basis and a 6% decrease on a sequential basis from the second quarter of 2015. - Tons sold totaled 1.0 million, a decrease of 8% on a year-over-year basis and down 3% on a sequential basis compared with the second quarter of 2015.
- Segment contribution margin was
$20.0 million compared with$16.8 million in the third quarter of 2014, an increase of 19% on a year-over-year basis and up 2% sequentially compared with the second quarter of 2015.
Capital Update
As of
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 as we can gain more clarity around our customers' business activity levels and the associated demand for our products. Based on current market conditions, the Company anticipates that its capital expenditures for 2015 will be in the range of
Conference Call
About
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 HOLDINGS, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(unaudited; dollars in thousands, except per share amounts) |
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Three Months Ended September 30, |
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2015 |
2014 |
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Sales |
$ 155,408 |
$ 241,256 |
|
Cost of goods sold (excluding depreciation, depletion and amortization) |
122,599 |
149,697 |
|
Operating expenses |
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Selling, general and administrative |
13,559 |
18,600 |
|
Depreciation, depletion and amortization |
15,158 |
12,425 |
|
28,717 |
31,025 |
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Operating income |
4,092 |
60,534 |
|
Other income/(expense) |
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Interest expense |
(6,684) |
(4,950) |
|
Other income, net, including interest income |
309 |
120 |
|
(6,375) |
(4,830) |
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Income/(loss) before income taxes |
(2,283) |
55,704 |
|
Income tax benefit/(expense) |
4,695 |
(14,427) |
|
Net income |
$ 2,412 |
$ 41,277 |
|
Earnings per share: |
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Basic |
$ 0.05 |
$ 0.77 |
|
Diluted |
$ 0.04 |
$ 0.76 |
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Weighted average shares outstanding: |
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Basic |
53,321 |
53,801 |
|
Diluted |
53,742 |
54,393 |
|
Dividends declared per share |
$ 0.13 |
$ 0.13 |
|
U.S. SILICA HOLDINGS, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(dollars in thousands) |
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September 30, |
December 31, 2014 |
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(unaudited) |
(audited) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$ 253,765 |
$ 267,281 |
|
Short-term investments |
46,007 |
75,143 |
|
Accounts receivable, net |
85,605 |
120,881 |
|
Inventories, net |
70,671 |
66,712 |
|
Prepaid expenses and other current assets |
12,516 |
9,267 |
|
Deferred income taxes, net |
8,925 |
22,295 |
|
Income tax deposits |
6,260 |
746 |
|
Total current assets |
483,749 |
562,325 |
|
Property, plant and mine development, net |
563,262 |
565,755 |
|
Goodwill |
68,647 |
68,647 |
|
Trade names |
14,914 |
14,914 |
|
Customer relationships, net |
6,577 |
6,984 |
|
Other assets |
19,444 |
12,317 |
|
Total assets |
$ 1,156,593 |
$ 1,230,942 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities: |
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Book overdraft |
$ 2,405 |
$ 4,215 |
|
Accounts payable |
57,982 |
85,781 |
|
Dividends payable |
6,772 |
6,805 |
|
Accrued liabilities |
14,055 |
17,911 |
|
Accrued interest |
58 |
60 |
|
Current portion of long-term debt |
3,327 |
3,329 |
|
Deferred revenue |
14,022 |
26,771 |
|
Total current liabilities |
98,621 |
144,872 |
|
Long-term debt |
489,208 |
491,757 |
|
Deferred revenue |
64,759 |
64,722 |
|
Liability for pension and other post-retirement benefits |
60,099 |
59,932 |
|
Deferred income taxes, net |
28,124 |
49,749 |
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Other long-term obligations |
18,115 |
16,094 |
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Total liabilities |
758,926 |
827,126 |
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Stockholders' Equity: |
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Common stock |
539 |
539 |
|
Additional paid-in capital |
192,915 |
191,086 |
|
Retained earnings |
239,655 |
232,551 |
|
Treasury stock, at cost |
(15,960) |
(542) |
|
Accumulated other comprehensive loss |
(19,482) |
(19,818) |
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Total stockholders' equity |
397,667 |
403,816 |
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Total liabilities and stockholders' equity |
$ 1,156,593 |
$ 1,230,942 |
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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.
Three Months Ended September 30, |
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2015 |
2014 |
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(unaudited; in thousands) |
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Sales: |
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Oil & Gas Proppants |
$ 101,987 |
$ 186,812 |
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Industrial & Specialty Products |
53,421 |
54,444 |
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Total sales |
155,408 |
241,256 |
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Segment contribution margin: |
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Oil & Gas Proppants |
16,521 |
77,030 |
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Industrial & Specialty Products |
19,967 |
16,844 |
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Total segment contribution margin |
36,488 |
93,874 |
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Operating activities excluded from segment cost of goods sold |
(3,679) |
(2,315) |
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Selling, general and administrative |
(13,559) |
(18,600) |
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Depreciation, depletion and amortization |
(15,158) |
(12,425) |
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Interest expense |
(6,684) |
(4,950) |
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Other income, net, including interest income |
309 |
120 |
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Income/(loss) before income taxes |
$ (2,283) |
$ 55,704 |
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:
Three Months Ended September30, |
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2015 |
2014 |
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(unaudited; in thousands) |
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Net income |
$ 2,412 |
$ 41,277 |
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Total interest expense, net of interest income |
6,485 |
4,859 |
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Provision for taxes |
(4,695) |
14,427 |
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Total depreciation, depletion and amortization expenses |
15,158 |
12,425 |
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EBITDA |
19,360 |
72,988 |
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Non-cash incentive compensation (1) |
1,913 |
1,424 |
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Post-employment expenses (excluding service costs) (2) |
765 |
380 |
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Business development related expenses (3) |
390 |
1,339 |
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Other adjustments allowable under our existing credit agreement (4) |
1,577 |
1,356 |
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Adjusted EBITDA |
$ 24,005 |
$ 77,487 |
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(1) |
Reflects stock based compensation expense, including valuation adjustments, related to stock awards issued to our employees. |
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(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. |
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(3) |
Reflects expenses related to business development activities in connection with our growth and expansion initiatives. |
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(4) |
Reflects miscellaneous adjustments permitted under our existing credit agreement, including such items as restructuring costs and certain employment agency fees. We incurred restructuring costs of $0.5 million, mostly severance expense, during the three months ended September 30, 2015 for actions that will provide future cost savings. |
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Investor Contact:
Director of Investor Relations and Corporate Communications
(301) 682-0304
lawsonm@USSilica.com
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