UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 23, 2018
U.S. Silica Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
001-35416 | 26-3718801 | |
(Commission File Number) | (IRS Employer Identification No.) | |
8490 Progress Drive, Suite 300, Frederick, MD | 21701 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (301) 682-0600
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 | Regulation FD Disclosure. |
A copy of material that will be used in an investor presentation delivered by representatives of U.S. Silica Holdings, Inc. (the Company) on May 23, 2018, is attached as Exhibit 99.1 hereto. This material shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits:
Exhibit |
Description | |
99.1 | Investor Presentation dated May 23, 2018. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 23, 2018
U.S. SILICA HOLDINGS, INC. |
/s/ Donald A. Merril |
Donald A. Merril |
Executive Vice President, Chief Financial Officer and Corporate Secretary |
19th Annual B. Riley FBR Investor CONFERENCE BRYAN SHINN PRESIDENT & CEO SANTA MONICA, CA May 23, 2018 A Performance Materials Growth Company Exhibit 99.1
Disclaimer This presentation contains forward-looking statements that reflect, when made, our current views with respect to current events and financial performance. Such forward-looking statements are subject to many risks, uncertainties and factors relating to our operations and business environment, which may cause our actual results to be materially different from any future results, express or implied, by such forward-looking statements. All statements that address future operating, financial or business performance or our strategies or expectations are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “outlook” or “continue,” and other comparable terminology. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, those discussed in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events and/or otherwise, except to the extent required by law. This presentation includes certain non-GAAP financial measures, including Segment Contribution Margin. This measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP and may differ from similarly titled measures used by others. For a reconciliation of such measures to the most directly comparable GAAP term, please see our most recent Annual Report on Form 10K for the year ended December 31, 2017.
THE U.S. SILICA STORY A Performance Materials Growth Company Multiple “firsts” Scale, positioning, SandBox first mover, low cost High growth, adds stability Balanced approach Multiple EBITDA growth drivers 1 2 3 4 5 LEADERSHIP SUSTAINABLE COMPETITIVE ADVANTAGES Growing Stable INDUSTRIAL businesses Disciplined capital allocation SUPERIOR Growth
AT A GLANCE U.S. Silica: A Profile of Leadership Diversified Profits2 Industrial Minerals Oil & Gas Proppants Production: 15.1M tons in 2017 2017 The ONLY Ground to Ground supplier of proppant DOUBLED ~75% #1 or #2 market position in ISP & EP Minerals end markets ISP CM/ton has increased last 5 years ($161M 2013 à $308M 2017) from 2014 to 2017 Adj. EBITDA $330M Cash1 Note 1: As of 3/31/18 Note 2: Pro-forma to include EP Minerals
THE U.S. SILICA STORY A Performance Materials Growth Company Multiple “firsts” Scale, positioning, SandBox first mover, low cost High growth, adds stability Balanced approach Multiple EBITDA growth drivers 1 2 3 4 5 LEADERSHIP SUSTAINABLE COMPETITIVE ADVANTAGES Growing Stable INDUSTRIAL businesses Disciplined capital allocation SUPERIOR Growth
Differentiated Business Model Provides Sustainable Competitive Advantages 1. Unrivaled Scale 3. Proprietary Manufacturing 4. Most Vertically Integrated 5. Low End Of Cost Curve 2. Diverse End Use Markets
Positioned in a Growth Market that is also Rapidly Evolving. SCLA is Ahead of the Curve. Secular growth in proppant per well – drives well efficiency Shift to finer mesh (40/70 and 100M) – drives rig efficiency Shift to regional/local sands – lowers delivered cost 1 2 3 Growth in US Proppant Demand (M Tons) Key Trends Underway
C A N A D A Diverse, Flexible, Low-Cost Rail and Transload Network operating facilities 28 50 transload terminals 85% of rigs within 50 miles of our transloads #1 network in industry with most unit train capabilities Transloads Oil & Gas Sandbox Offices ISP Plants U.S. Silica Locations EP Minerals Plants Uniquely able to redirect product flow nationally to maximize margins
SandBox – Industry Leading Containerized Last Mile Delivery Solution SandBox – first mover in containerized solutions Utilizes specially designed, patent-protected equipment Cleaner, safer, reliable and more efficient Sandbox is the market-leading alternative to pneumatics Greatly exceeding initial expectations 1.7 7.0 SandBox Pneumatic Truck Unload Wait at well site Drive time of 1.5 hours Load Wait at pick up site Truck Delivery Time per Load (hrs) 76% reduction Advantages
THE U.S. SILICA STORY A Performance Materials Growth Company Multiple “firsts” Scale, positioning, SandBox first mover, low cost High growth, adds stability Balanced approach Multiple EBITDA growth drivers 1 2 3 4 5 LEADERSHIP SUSTAINABLE COMPETITIVE ADVANTAGES Growing Stable INDUSTRIAL businesses Disciplined capital allocation SUPERIOR Growth
ISP: A Diverse Mix of End Markets with Long Term Loyal Customers >210 products, critical raw materials for long term customers – Top 5 customers >50 year relationships Glass | 32% Building Products | 29% Foundry | 9% Fillers & Extenders | 11% Smartphones Tablets Containers Automotive glass Fiberglass Performance coatings Architectural, industrial and traffic paints Silicone rubber Grouts and Mortars Specialty Cements Quartz Surfaces Roofing Shingles Molds and Cores for Metal Casting % of ISP Revenue Rec./Filtration + Misc./Other | 11% Golf and volleyball sands Pool filtration Forensic testing Chemicals | 8% Silica-based Chemicals Ceramics Sodium Silicates Silicon Carbide
A Predictable, Growing Business with High Barriers to Entry Contribution Margin ($M) 10% CAGR High Barriers to Entry A local business Most customers within 100 miles of mine, transportation a larger cost component High switching costs Complicated customer processes, our products specified into “recipe” High cost technology We process, grind product with high cost equipment 1 2 3
Oil & Gas Brings Significant Upside to Reliable Industrials 2012 2017 2013 2014 2015 2016 2017 2015 2016 Industrial Oil & Gas Oil & Gas Revenue – Quarterly ($ Millions) Contribution Margin – Quarterly ($ Millions) Consistently delivers ~$200M/year 25-45% of total revenue over the full oil & gas cycle Consistently delivers ~$75M/year 30-90% of total contribution dollars over the full oil & gas cycle Covers SLCA SG&A Industrial
EP Minerals: Diverse Company with Rare Combination of Advantages and Strengths Profile Key Metrics TTM February(1) Revenue Adj. EBITDA Adj. EBITDA Margin Maintenance Capex Recurring revenue End customers Global leader in diatomaceous earth (DE), bentonite and perlite filter aids, absorbents and functional additives #1 or #2 player in each of its global markets 7 processing plants: Nevada (3), Oregon, Tennessee, Nebraska and Mississippi Acquired by Golden Gate Capital in 2011 ~680 employees globally Headquarters: Reno, NV (1) Pro forma for the acquisition of BASF’s bleaching clay and mineral absorbents business, which closed in July 2017 $242M $60M 25% $5M >90% >10,000
EP Minerals: Attractive Market Structure/Unique Products Key Strengths Revenue by Geography Europe N. America 16% 72% 2017 Asia Pacific 7% 5% Latin America Revenue by Application 2017 17% 15% 50% Filtration Additives Engineered Clays High barriers to entry Due to limited DE deposits and unique traits of each of the deposits worldwide 2 1 4 3 5 Market leader #1 or #2 player in each of its global markets Sticky customers Recurring customers account for more than 90% of revenues Stable, growing and diversified global end markets Differentiation supported by strong IP and high-quality reserves 18% Absorbents
Consistent growth business – platform for new products and M&A EP Minerals: Attractive Returns for Shareholders While Enhancing Financial Flexibility Increases contribution from industrial GDP+ businesses Provides U.S. Silica a greater ability to invest throughout cycles U.S. Silica core competencies in operating markets similar to EP Minerals’ Platform For Growth Reduces Cyclicality Aligned with U.S. Silica’s Strategy U.S. Silica the Right Owner for EP Minerals In first year of ownership Accretive
THE U.S. SILICA STORY A Performance Materials Growth Company Multiple “firsts” Scale, positioning, SandBox first mover, low cost High growth, adds stability Balanced approach Multiple EBITDA growth drivers 1 2 3 4 5 LEADERSHIP SUSTAINABLE COMPETITIVE ADVANTAGES Growing Stable INDUSTRIAL businesses Disciplined capital allocation SUPERIOR Growth
Powerful Cash Flow Will Drive Strong, Dependable Growth Sandbox share growth Return to shareholders Base business requirements Free cash flow priorities M&A and growth projects >10% 2% FCF Yield 1 Note 1: Based on consensus analyst estimates and market cap of $2.59B
THE U.S. SILICA STORY A Performance Materials Growth Company Multiple “firsts” Scale, positioning, SandBox first mover, low cost High growth, adds stability Balanced approach Multiple EBITDA growth drivers 1 2 3 4 5 LEADERSHIP SUSTAINABLE COMPETITIVE ADVANTAGES Growing Stable INDUSTRIAL businesses Disciplined capital allocation SUPERIOR Growth
Multiple EBITDA Growth Drivers Doubled low-cost Oil & Gas capacity Sandbox market share expansion ISP segment new product pipeline New markets/products at EP Minerals 1. 2. 3. 4. Pipeline of accretive acquisitions 5.
WHERE ARE WE HEADED Increased Diversification/Strong Growth 2017 ~2-3 Years Estimated Future Business Profit Mix By Source1 Profile Stability Industrial Best in class stability further supported by delivered to well sand solutions Tracks well completions GDP+ growth with strong pipeline of new performance products O&G Sand Sandbox ISP EP Minerals O&G Sand Sandbox ISP EP Minerals Bolt-On M&A 25-30% Last Mile Share Very Stable Low delivered cost assets with high percentage of attractive long term contracts 1- 2017 EP Minerals is a Pro Forma. Future projections are illustrative only.
THE U.S. SILICA STORY A Performance Materials Growth Company Multiple “firsts” Scale, positioning, SandBox first mover, low cost High growth, adds stability Balanced approach Multiple EBITDA growth drivers 1 2 3 4 5 LEADERSHIP SUSTAINABLE COMPETITIVE ADVANTAGES Growing Stable INDUSTRIAL businesses Disciplined capital allocation SUPERIOR Growth
A Performance Materials Company
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