slca-20240426
0001524741false00015247412024-04-262024-04-26

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): April 26, 2024
__________________________________________
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.)
24275 Katy Freeway, Suite 600
Katy
Texas
 77494
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (281) 258-2170
  ___________________________________________
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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par value SLCA  New York Stock Exchange
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-2 of 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 2.02Results of Operations and Financial Condition.
On April 26, 2024, U.S. Silica Holdings, Inc. issued a press release providing information regarding earnings for the quarter ended March 31, 2024. A copy of the press release is attached hereto as Exhibit 99.1.

In accordance with General Instructions B.2. of Form 8-K, the information furnished under this Item 2.02, including Exhibit 99.1, shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
 
Item 9.01Financial Statements and Exhibits.
(d) Exhibits. The following exhibit is furnished herewith:
 
  
104Cover Page Interactive Data File (embedded within the Inline XBRL document).





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: April 26, 2024
 
  U.S. SILICA HOLDINGS, INC.
   /s/ KEVIN J. HOUGH
   Kevin J. Hough
   Executive Vice President & Chief Financial Officer

Document

                                             Exhibit 99.1
https://cdn.kscope.io/611e4b7b937faf500e57d0184fc64bf8-usslogo2q15a38a.jpg    
News Release
U.S. Silica Holdings, Inc. Reports First Quarter 2024 Results

GAAP and adjusted EPS for the quarter of $0.17 and $0.20 per diluted share, respectively
Industrial and Specialty Products segment contribution margin increased 7% year over year
Total tonnage sold company wide increased 6% sequentially
Cash flow from operations of $40.9 million for the quarter
Completed term loan repricing and extinguished additional $25 million of debt
Received credit rating upgrades from Moody's and S&P Global
Company enters into definitive agreement to be acquired by Apollo Funds for $1.85 billion

Katy, Texas, April 26, 2024 – U.S. Silica Holdings, Inc. (NYSE: SLCA) (the “Company”), a diversified industrial minerals company and the leading last-mile logistics provider to the oil and gas industry, today announced its first quarter results for the period ended March 31, 2024. As separately announced, U.S. Silica has entered into a definitive agreement to be acquired by funds managed by affiliates of Apollo Global Management, Inc. (NYSE: APO) (the “Apollo Funds”) in an all-cash transaction that values the Company at an enterprise value of approximately $1.85 billion. In light of the pending transaction with Apollo Funds, U.S. Silica is not hosting an earnings conference call.
“During the first quarter, we continued to execute our strategy,” said Bryan Shinn, the Company’s Chief Executive Officer. “We generated robust cash flow from operations to start the year, positioning us well for the remainder of 2024.
“With the successful repricing of our term loan, we reduced our total interest rate by 85 basis points. We also repurchased and extinguished an additional $25 million of debt.
"In our Oil & Gas segment, volumes were up 5% sequentially, although our margins were impacted by slightly lower pricing, driven in part by lower natural gas prices. We continue to have 80% of our capacity under long-term contracts, with additional amendments and extensions signed in the first quarter. Additionally, our new, patent-pending Guardian frac fluid filtration system continues to gain momentum in the market.
"In our Industrial and Specialty Products segment, revenue and volumes increased 5% and 10% sequentially, respectively, with margins increasing 7% year over year. In the first quarter, we entered into several new customer agreements with favorable pricing and we continue to benefit from ongoing structural cost reductions.
“We are pleased to reach the separately announced agreement with Apollo, which will provide our stockholders with compelling, certain, cash value for their shares. The transaction also provides us with a partner who is committed to helping us achieve our long-term objectives while maintaining our core values and customer-centric approach.”




First Quarter 2024 Financial Highlights
Net income for the first quarter was $13.7 million, or $0.17 per diluted share. The first quarter results included $3.2 million pre-tax, or $0.03 per diluted share after-tax, of charges primarily related to the loss on extinguishment of debt. Excluding these charges, adjusted EPS (a non-GAAP measure) was $0.20 per diluted share.
These results compared with net income of $29.1 million, or $0.37 per diluted share, for the fourth quarter of 2023. The fourth quarter included $9.1 million pre-tax, or $0.09 per diluted share after-tax, of gains primarily related to asset sales, partially offset by facility closure costs, business optimization, and the loss on extinguishment of debt.
In the first quarter of 2024, the Company completed a $25 million voluntary term loan principal repayment, extinguishing the debt at par using excess cash on hand.
Total Company
In millions
Q1 2024
Q4 2023
Sequential Change
Q1 2023
Year-over-year Change
Revenue
$325.9 $336.0 (3)%$442.2 (26)%
Net Income
$13.7 $29.1 (53)%$44.6 (69)%
Tons Sold
4.092 3.865 6%4.934 (17)%
Contribution Margin*
$105.5 $116.9 (10)%$152.8 (31)%
Adjusted EBITDA*
$77.1 $88.6 (13)%$124.6 (38)%
Oil & Gas Segment
First quarter 2024 results were driven by slightly lower pricing, partially influenced by persistently low natural gas prices.
In millions
Q1 2024
Q4 2023
Sequential Change
Q1 2023
Year-over-year Change
Revenue
$183.2 $200.6 (9)%$300.0 (39)%
Tons Sold
3.042 2.907 5%3.921 (22)%
Contribution Margin*
$59.5 $70.1 (15)%$109.9 (46)%

Industrial & Specialty Products (ISP) Segment
First quarter 2024 results were impacted by increased activity levels, improvements in operational efficiencies, price increases, and lower costs.
In millions
Q1 2024Q4 2023
Sequential Change
Q1 2023
Year-over-year Change
Revenue
$142.8 $135.5 5%$142.2 —%
Tons Sold
1.050 0.958 10%1.013 4%
Contribution Margin*
$45.9 $46.8 (2)%$42.9 7%
*Contribution Margin and Adjusted EBITDA are non-GAAP financial measures; see the discussion of non-GAAP information below and the reconciliation of GAAP to non-GAAP results included as an exhibit to this press release.




Capital Update
As of March 31, 2024, the Company had $234.5 million in cash and cash equivalents and total debt of $809.5 million. The Company's $150.0 million Revolver had zero drawn with $15.3 million allocated for letters of credit and availability of $134.7 million. During the first quarter of 2024, the Company generated $40.9 million in cash flow from operations while capital expenditures totaled $12.4 million.
Reclassification of Northern White Sand Offerings
The Company has postponed the proposed realignment of its Northern White Sand offerings from its Oil & Gas segment to its Industrial and Specialty Products segment to a later date as it prioritized the repricing of its term loan during the quarter.
About U.S. Silica
U.S. Silica Holdings, Inc. is a global performance materials company and is a member of the Russell 2000. The Company is a leading producer of commercial silica used in the oil and gas industry and in a wide range of industrial applications. Over its 124-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 800 diversified products to customers across our end markets.
U.S. Silica's wholly-owned subsidiaries include EP Minerals and SandBox Logistics™. EP Minerals is an industry leader in the production of products derived from diatomaceous earth, perlite, engineered clays, and non-activated clays. SandBox Logistics™ is a state-of-the-art leader in proppant storage, handling and well-site delivery, dedicated to making proppant logistics cleaner, safer and more efficient. The Company has 26 operating mines and processing facilities and two additional exploration stage properties across the United States and is headquartered in Katy, Texas.



Forward-looking Statements
This first quarter 2024 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 U.S. Silica's estimated and projected costs and cost reduction programs, reserves and finished products estimates, growth opportunities, strategy, future financial results, forecasts, projections, plans and capital expenditures, technological innovations, and the expected outcome or impact of pending or threatened litigation. 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 global economic conditions; heightened levels of inflation and rising interest rates; supply chain and logistics constraints for our company and our customers, fluctuations in demand for commercial silica, diatomaceous earth, perlite, clay and cellulose; fluctuations in demand for frac sand or the development of either effective alternative proppants or new processes to replace hydraulic fracturing; the entry of competitors into our marketplace; changes in production spending by companies in the oil and gas industry and changes in the level of oil and natural gas exploration and development; changes in oil and gas inventories; general economic, political and business conditions in key regions of the world including the ongoing conflicts between Russia and Ukraine and between Israel and Hamas; pricing pressure; cost inflation; weather and seasonal factors; the cyclical nature of our customers' business; our inability to meet our financial and performance targets and other forecasts or expectations; our substantial indebtedness and pension obligations, including restrictions on our operations imposed by our indebtedness; operational modifications, delays or cancellations; prices for electricity, natural gas and diesel fuel; our ability to maintain our transportation network; changes in government regulations and regulatory requirements, including those related to mining, explosives, chemicals, and oil and gas production; silica-related health issues and corresponding litigation; and other risks and uncertainties detailed in this press release and our most recent Forms 10-K, 10-Q, and 8-K filed with or furnished to the U.S. Securities and Exchange Commission. If one or more of these or other risks or uncertainties materialize (or the consequences of such a development changes), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. The forward-looking statements speak only as of the date hereof, and we disclaim any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.





U.S. SILICA HOLDINGS, INC.
SELECTED FINANCIAL DATA FROM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; dollars in thousands, except per share amounts)
 Three Months Ended
 March 31,
2024
December 31, 2023March 31,
2023
Total sales$325,942 $336,037 $442,240 
Total cost of sales (excluding depreciation, depletion and amortization)223,724 226,764 293,133 
Operating expenses:
Selling, general and administrative30,754 31,653 29,163 
Depreciation, depletion and amortization31,368 32,505 35,386 
Total operating expenses62,122 64,158 64,549 
Operating income40,096 45,115 84,558 
Other (expense) income:
Interest expense(24,263)(25,622)(24,061)
Other income (expense), net, including interest income2,523 17,778 (2,352)
Total other expense(21,740)(7,844)(26,413)
Income before income taxes18,356 37,271 58,145 
Income tax expense(4,775)(8,306)(13,573)
Net income$13,581 $28,965 $44,572 
Less: Net loss attributable to non-controlling interest(107)(144)(76)
Net income attributable to U.S. Silica Holdings, Inc. $13,688 $29,109 $44,648 
Earnings per share attributable to U.S. Silica Holdings, Inc.:
Basic$0.18 $0.38 $0.58 
Diluted$0.17 $0.37 $0.57 
Weighted average shares outstanding:
Basic77,671 77,181 76,517 
Diluted79,032 78,799 78,292 








U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
UnauditedAudited
March 31, 2024December 31, 2023
 
ASSETS
Current Assets:
Cash and cash equivalents$234,481 $245,716 
Accounts receivable, net189,506 185,917 
Inventories, net139,535 149,429 
Prepaid expenses and other current assets15,124 19,682 
Total current assets578,646 600,744 
Property, plant and mine development, net1,107,352 1,125,220 
Lease right-of-use assets41,678 41,095 
Goodwill185,649 185,649 
Intangible assets, net129,033 131,384 
Other assets12,701 12,501 
Total assets$2,055,059 $2,096,593 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses$122,588 $147,479 
Current portion of operating lease liabilities17,753 18,569 
Current portion of long-term debt12,708 16,367 
Current portion of deferred revenue1,226 3,124 
Income tax payable5,697 311 
Total current liabilities159,972 185,850 
Long-term debt, net796,755 823,670 
Deferred revenue12,456 12,388 
Liability for pension and other post-retirement benefits24,679 28,715 
Deferred income taxes, net100,452 100,458 
Operating lease liabilities53,912 55,089 
Other long-term liabilities 36,508 34,896 
Total liabilities1,184,734 1,241,066 
Stockholders’ Equity:
Preferred stock— — 
Common stock891 877 
Additional paid-in capital1,253,497 1,249,460 
Retained deficit(190,471)(204,159)
Treasury stock, at cost(202,363)(196,745)
Accumulated other comprehensive income (loss)2,623 (125)
Total U.S. Silica Holdings, Inc. stockholders’ equity864,177 849,308 
Non-controlling interest6,148 6,219 
Total stockholders' equity870,325 855,527 
Total liabilities and stockholders’ equity$2,055,059 $2,096,593 



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 expansion expenses, and facility closure costs.
The following table sets forth a reconciliation of net income, the most directly comparable GAAP financial measure, to segment contribution margin.
 (All amounts in thousands)Three Months Ended
 March 31,
2024
December 31, 2023March 31,
2023
Sales:
Oil & Gas Proppants$183,172 $200,552 $300,013 
Industrial & Specialty Products142,770 135,485 142,227 
Total sales325,942 336,037 442,240 
Segment contribution margin:
Oil & Gas Proppants59,515 70,142 109,897 
Industrial & Specialty Products45,949 46,794 42,929 
Total segment contribution margin105,464 116,936 152,826 
Operating activities excluded from segment cost of sales(3,246)(7,663)(3,719)
Selling, general and administrative(30,754)(31,653)(29,163)
Depreciation, depletion and amortization(31,368)(32,505)(35,386)
Interest expense(24,263)(25,622)(24,061)
Other income (expense), net, including interest income2,523 17,778 (2,352)
Income tax expense(4,775)(8,306)(13,573)
Net income$13,581 $28,965 $44,572 
Less: Net loss attributable to non-controlling interest(107)(144)(76)
Net income attributable to U.S. Silica Holdings, Inc. $13,688 $29,109 $44,648 













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, the most directly comparable GAAP financial measure, to Adjusted EBITDA:
(All amounts in thousands)Three Months Ended
 March 31,
2024
December 31, 2023March 31,
2023
Net income attributable to U.S. Silica Holdings, Inc.$13,688 $29,109 $44,648 
Total interest expense, net of interest income20,673 22,845 21,568 
Provision for taxes4,775 8,306 13,573 
Total depreciation, depletion and amortization expenses31,368 32,505 35,386 
EBITDA70,504 92,765 115,175 
Non-cash incentive compensation (1)
4,051 3,910 3,335 
Post-employment expenses (excluding service costs) (2)
(664)982 (839)
Merger and acquisition related expenses (3)
361 665 224 
Plant capacity expansion expenses (4)
47 66 
Business optimization projects (5)
(77)846 956 
Facility closure costs (6)
345 3,462 81 
Other adjustments allowable under the Credit Agreement (7)
2,565 (14,045)5,637 
Adjusted EBITDA$77,132 $88,591 $124,635 



(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, professional fees, bank fees, severance costs, and other employee related costs. 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 $2 million in capital expenditures or plant start up projects. While these expenses are not operational in nature and are not expected to continue for any singular project on an ongoing basis, similar types of expenses have occurred in prior periods and may recur in the future if we continue to pursue future plant capacity expansion.
(5)

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.
(6)

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.
(7)
Reflects miscellaneous adjustments permitted under the Credit Agreement, such as recruiting fees and relocation costs. The three months ended March 31, 2024 also included costs related to severance restructuring of $0.1 million, $0.3 million of sales of assets, and $2.0 million related to the loss on extinguishment of debt. The three months ended December 31, 2023 also included costs related to severance restructuring of $0.1 million, recruiting costs of $0.5 million, and $1.0 million related to the loss on extinguishment of debt, offset by net proceeds of the sale of assets of $12.4 million. The three months ended March 31, 2023 also included costs related to severance restructuring of $0.8 million, an adjustment to non-controlling interest of $0.2 million and $5.3 million related to the loss on extinguishment of debt, offset by an insurance recovery of $0.8 million.
Adjusted EPS
Adjusted EPS is diluted earnings or loss per share adjusted to exclude costs associated with merger & acquisition related activities and strategic business reviews, costs associated with business optimization, the effect of a non-recurring depreciation adjustment, and gain or loss on debt extinguishment.
Management believes Adjusted EPS is useful in providing period-to-period comparisons of the results of the Company's operations to assist investors in reviewing the Company's operating performance over time. Management believes it is useful to exclude certain items when comparing current performance to prior periods because these items can vary significantly depending on specific underlying transactions or events. Also, management believes certain excluded items may not relate specifically to current operating trends or be indicative of future results.







The following table sets forth a reconciliation from GAAP EPS to adjusted EPS:
Three Months Ended
March 31, 2024 December 31, 2023March 31, 2023
Reported Diluted EPS$0.17 $0.37 $0.57 
Business Optimization— 0.01 0.01 
Facility Closure Costs— 0.03 — 
Asset (Gain)/Loss— (0.15)— 
(Gain)/Loss on extinguishment of debt0.02 0.01 0.05 
Other0.01 0.01 0.01 
Total Adjustments0.03 (0.09)0.07 
Adjusted Diluted EPS$0.20 $0.28 $0.64 
Diluted Shares79,03278,79978,292
Net Debt
Net Debt is calculated by adding together the current portion of long-term debt and long-term debt, net and subtracting cash and cash equivalents from the total. Net debt shows how a company’s indebtedness has changed over a period as a result of cash flows. Net debt allows investors to see how business financing has changed and assess whether an entity that has had a significant increase in cash has, for example, achieved this only by taking on a corresponding increase in debt. Net debt is not a measure of our financial performance or liquidity under GAAP and should not be considered as an alternative to net income as a measure of operating performance, cash flows from operating activities as a measure of liquidity or any other performance measure derived in accordance with GAAP.
Net Leverage Ratio
Net Leverage Ratio is calculated by dividing net debt by Trailing Twelve Month (TTM) Adjusted EBITDA. Management believes that net leverage ratio provides useful information to investors because it is an important indicator of the Company’s indebtedness in relation to its operating performance. Net Leverage Ratio should be considered in addition to results prepared in accordance with GAAP and should not be considered substitutes for or superior to GAAP results. In addition, our Net Leverage Ratio may not be comparable to similarly titled measures utilized by other companies.
The following table sets forth a reconciliation for net debt and net leverage ratio:
Three Months Ended
(All amounts in thousands)March 31, 2023June 30, 2023September 30, 2023December 31, 2023March 31, 2024
Cash and cash equivalents$(139,494)$(186,961)$(222,435)$(245,716)$(234,481)
Current portion of long-term debt13,59010,15219,76316,36712,708
Long-term debt897,013871,913847,849823,670796,754
Net debt$771,109 $695,104 $645,177 $594,321 $574,981 
TTM Adjusted EBITDA$425,291 $455,142 $454,565 $439,000 $391,497 
Net Leverage Ratio1.8x1.5x1.4x1.4x1.5x







Forward-looking Non-GAAP Measures
A reconciliation of net leverage ratio and segment contribution margin as used in our guidance, which are forward-looking non-GAAP financial measures, to the most directly comparable GAAP financial measure, is not provided because the Company is unable to provide such reconciliations without unreasonable effort. The inability to provide each reconciliation is due to the unpredictability of the amounts and timing of events affecting the items we exclude from the non-GAAP measure.
U.S. Silica Holdings, Inc.
Investor Contact
Marcelo Barbosa
Vice President, Finance
(281) 258-2173
barbosa@ussilica.com