Form 8-K

 

 

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 8, 2012

 

 

U.S. Silica Holdings, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-35416   26-3718801

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

8490 Progress Drive, Suite 300, Frederick, MD   21701
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s 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))

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On May 8, 2012, U.S. Silica Holdings, Inc. issued a press release providing information regarding earnings for the period ended March 31, 2012. A copy of the press release is attached hereto as Exhibit 99.1.

The information including Exhibit 99.1, in this Form 8-K is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 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, except as shall otherwise be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits. The following exhibit is furnished herewith:

 

99.1    U.S. Silica Holdings, Inc. press release dated May 8, 2012


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, thereunto duly authorized.

 

U.S. Silica Holdings, Inc.

/S/ WILLIAM A. WHITE

Name:   William A. White
Title:   Chief Financial Officer

Date: May 8, 2012


EXHIBIT INDEX

 

Exhibit

Number

  

Description

99.1    Press Release of U.S. Silica Holdings, Inc. dated May 8, 2012
Press Release

Exhibit 99.1

U.S. Silica Holdings, Inc. Announces First Quarter 2012 Results

Reaffirms Full Year 2012 Guidance

FREDERICK, MD. May 8, 2012 (BUSINESS WIRE) – U.S. Silica Holdings, Inc. (NYSE: SLCA) today announced net income of $19.1 million, or $0.37 per basic and diluted share for the quarter ended March 31, 2012, compared with net income of $3.5 million, or $0.07 per share for the same period in 2011.

Summary Financial and Operating Data

(unaudited; $ in millions, except statistics and per share)

 

     Three Months Ended March 31,  
     2012     2011  

Key Operating Statistics:

    

Tons Sold: (000s)

    

Oil & Gas

     679.0        433.8   

Industrial & Specialty Products

     1,063.9        1,034.7   
  

 

 

   

 

 

 

Total

     1,742.9        1,468.5   

Income:

    

Revenue

   $ 102.6      $ 64.4   

Contribution Margin

   $ 47.4      $ 21.4   

% Margin

     46.2     33.2

Adjusted EBITDA (a)

   $ 37.0      $ 16.7   

% Margin

     36.1     26.0

Net Income

   $ 19.1      $ 3.5   

EPS, Basic and Diluted

   $ 0.37      $ 0.07   

 

(a)

A reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to net income, the most comparable GAAP measure, and other important information appears on page 6.

President and Chief Executive Officer Bryan Shinn commented, “We are very pleased with our first quarter performance, delivering record revenues and earnings for the Company. Customers continue to highly value our premium Ottawa white sand, our multi-plant-multi-basin logistics capabilities, and supply chain responsiveness. We believe we are well positioned for continued success and reaffirm our guidance for the full year 2012.”


The Company reported first quarter 2012 revenues of $102.6 million, an increase of $38.2 million, or 59% from $64.4 million in 2011 driven by continued growth in demand for our Ottawa White frac sand. Overall sales volume increased 19% during the first quarter of 2012 to 1.7 million tons, as compared to 1.5 million tons in the first quarter of 2011.

First quarter 2012 sales volume within our Oil & Gas Proppants segment increased by 57%, to 679 thousand tons, compared to 434 thousand tons in 2011, while sales volumes for our Industrial and Specialty Products segment grew year over year by 29 thousand tons, or 3%, to 1,064 thousand tons, compared to 1,035 thousand tons in the prior year.

SG&A expense was $9.9 million in the first quarter of 2012, as compared to $5.3 million for 2011. The increase was driven by increased staffing to support our Oil & Gas Proppants segment and to support the transformation and administrative requirements of a public company.

Adjusted EBITDA increased 121%, or $20.3 million, to $37.0 million for the three months ended March 31, 2012, as compared to $16.7 million for the three months ended March 31, 2011, driven by accelerated volume increases in our Oil & Gas Proppants segment, as well as increased pricing in both segments. Adjusted EBITDA margin percentage increased for the three months ended March 31, 2012 to 36%, compared to 26% during the three months ended March 31, 2011.

Capital Update

As of March 31, 2012, we had $84.6 million of cash on hand and $24.0 million available under our credit facilities. Our total outstanding debt at March 31, 2012 was $261.2 million.

Outlook and Guidance

The Company reaffirms full year 2012 guidance with revenues of approximately $395 million to $420 million and Adjusted EBITDA of approximately $142 million to $150 million. The Company has raised the range for full year 2012 capital spend to between $100 million to $115 million. Spending is expected to be primarily directed towards the construction of a resin-coated sand plant in Rochelle, IL and a new Greenfield raw sand plant in Sparta, WI, with $15 million allocated for maintenance.

Conference Call

U.S. Silica will host a conference call for investors today, May 8, 2012 at 10:00 a.m. Eastern Time to discuss these results. Hosting the call will be Bryan A. Shinn, President and Chief Executive Officer, and William A. White, Chief Financial Officer.

The call can be accessed live over the telephone by dialing (877) 705-6003, or for international callers, (201) 493-6725. A replay will be available shortly after the call and can be accessed by dialing (877) 870-5176, or for international callers, (858) 384-5517. The passcode for the replay is 392803. The replay will be available until May 22, 2012.

Interested parties may also listen to a simultaneous webcast of the conference call by logging onto U.S. Silica’s website at www.ussilica.com in the Investors Resources section. A replay of the webcast will also be available for approximately 2 weeks following the call.

 

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About U.S. Silica Holdings, Inc.

U.S. Silica Holdings, Inc., a Delaware corporation, is the second largest domestic producer of commercial silica, a specialized mineral that is a critical input into the oil and gas proppants end market and a variety of attractive industrial and specialty products end markets. During its 112-year history, U.S. Silica Holdings, Inc. has developed core competencies in mining, processing, logistics and materials science that enable it to produce and cost-effectively deliver over 200 products to customers across these end markets. U.S. Silica Holdings, Inc. is headquartered in Frederick, Maryland.

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 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 growth opportunities, strategy, future financial results, forecasts, projections, plans and capital expenditures, and the commercial silica industry. 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 (1) fluctuations in demand for commercial silica; (2) the cyclical nature of our customers’ businesses; (3) operating risks that are beyond our control; (4) federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing; (5) our ability to implement our capacity expansion plans within our current timetable and budget; (6) loss of, or reduction in, business from our largest customers; (7) increasing costs or a lack of dependability or availability of transportation services or infrastructure; (8) our substantial indebtedness and pension obligations; (9) our ability to attract and retain key personnel; (10) silica-related health issues and corresponding litigation; (11) seasonal and severe weather conditions; and (12) extensive and evolving environmental, mining, health and safety, licensing, reclamation and other regulation (and changes in their enforcement or interpretation). Additional information concerning these and other factors can be found in U.S. Silica’s filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

CONTACT: U.S. Silica Holdings, Inc., Telephone: 855-SILICA-7 (855-745-4227), Email: IR@ussilica.com

 

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U.S. SILICA HOLDINGS, INC.

COMBINED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per share amounts)

 

     Three Months Ended March 31,  
     2012     2011  

Sales

   $ 102,591      $ 64,432   

Cost of goods sold (excluding depreciation, depletion and amortization)

     56,921        43,275   

Operating expenses

    

Selling, general and administrative

     9,904        5,323   

Advisory fees to parent

     —          313   

Depreciation, depletion and amortization

     5,978        5,089   
  

 

 

   

 

 

 
     15,882        10,725   
  

 

 

   

 

 

 

Operating income

     29,788        10,432   

Other (expense) income

    

Interest expense

     (3,797     (5,449

Other income, net, including interest income

     154        174   
  

 

 

   

 

 

 
     (3,643     (5,275
  

 

 

   

 

 

 

Income before income taxes

     26,145        5,157   

Income tax expense

     (7,032     (1,647
  

 

 

   

 

 

 

Net income

   $ 19,113      $ 3,510   
  

 

 

   

 

 

 

Earnings per share:

    

Basic

   $ 0.37      $ 0.07   

Diluted

   $ 0.37      $ 0.07   

 

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U.S. SILICA HOLDINGS, INC.

COMBINED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

     March 31,
2012
    December 31,
2011
 
     (unaudited)        
ASSETS     

Current Assets:

    

Cash and cash equivalents

   $ 84,641      $ 59,199   

Accounts receivable, net

     56,766        46,600   

Inventories, net

     31,936        29,307   

Prepaid expenses and other current assets

     5,804        8,561   

Deferred income taxes, net

     24,283        28,007   

Income tax receivable

     —          3,895   
  

 

 

   

 

 

 

Total current assets

     203,430        175,569   
  

 

 

   

 

 

 

Property, plant and mine development, net

     345,277        336,788   

Debt issuance costs, net

     2,483        1,291   

Goodwill

     68,403        68,403   

Trade names

     10,436        10,436   

Customer relationships, net

     6,839        6,942   

Other assets

     6,182        6,367   
  

 

 

   

 

 

 

Total assets

   $ 643,050      $ 605,796   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current Liabilities:

    

Book overdraft

   $ 4,170      $ 5,588   

Accounts payable

     19,705        36,579   

Accrued liabilities

     8,771        9,875   

Accrued interest

     99        1,659   

Current portion of long-term debt

     6,364        6,364   

Income tax payable

     2,550        —     

Current portion of deferred revenue

     10,393        10,393   
  

 

 

   

 

 

 

Total current liabilities

     52,052        70,458   
  

 

 

   

 

 

 

Long-term debt

     254,817        255,425   

Note payable to parent

     —          15,000   

Liability for pension and other post-retirement benefits

     50,328        52,078   

Deferred revenue

     701        2,128   

Deferred income taxes, net

     72,601        75,915   

Other long-term obligations

     13,139        12,858   
  

 

 

   

 

 

 

Total liabilities

     443,638        483,862   

Commitments and contingencies

    

Stockholders’ Equity:

    

Common stock - $0.01 par value, 100,000,000 authorized shares; 52,941,176 and 50,000,000 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively

     529        500   

Additional paid-in capital

     162,100        103,757   

Retained earnings

     49,151        30,038   

Accumulated other comprehensive loss

     (12,368     (12,361
  

 

 

   

 

 

 

Total stockholders’ equity

     199,412        121,934   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 643,050      $ 605,796   
  

 

 

   

 

 

 

 

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Non-GAAP Financial Measures

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
March 31,
 
     2012     2011  
     (unaudited)  

Net income

   $ 19,113      $ 3,510   

Total interest expense, net of interest income

     3,763        5,441   

Provision for taxes (benefit)

     7,032        1,647   

Total depreciation, depletion and amortization expenses

     5,978        5,089   
  

 

 

   

 

 

 

EBITDA

     35,886        15,687   

Non-recurring expenses (income) (1)

     (439     —     

Transaction expenses (2)

     156        —     

Permitted management fees and expenses (3)

     —          313   

Non-cash incentive compensation (4)

     654        96   

Post-employment expenses (excluding service costs) (5)

     605        628   

Other adjustments allowable under our existing credit agreements (6)

     125        5   
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 36,987      $ 16,729   
  

 

 

   

 

 

 

 

(1) Includes the gain on the sale of assets.
(2) Includes fees and expenses related to the January 27, 2012 amendment of our Term Loan Facility and ABL Facility.
(3) Includes fees and expense paid to Golden Gate Capital for ongoing consulting and management services provided pursuant to an Advisory Agreement entered into in connection with the Golden Gate Capital Acquisition; this Advisory Agreement was terminated in connection with our IPO.
(4) Includes vesting of incentive equity compensation issued to our employees.
(5) 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.
(6) Reflects miscellaneous adjustments permitted under our existing credit agreements, including such items as expenses related to reviewing growth initiatives and potential acquisitions.

 

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