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| 8-K - FORM 8-K - U.S. SILICA HOLDINGS, INC. | d432896d8k.htm |
Exhibit 99.1
U.S. Silica Holdings, Inc. Announces Results for the Third Quarter 2012
Achieves Record Performance in Volume, Revenue and Adjusted EBITDA.
Revenue of $115.9 Million, Adjusted EBITDA of $37.5 Million and Net Income of $18.8 Million.
Frederick, MD, November 1, 2012 (BUSINESS WIRE) – U.S. Silica Holdings, Inc. (NYSE: SLCA) today announced net income of $18.8 million, or $0.36 per basic and diluted share for the quarter ended September 30, 2012, compared with net income of $10.3 million, or $0.21 per basic and diluted share for the same period in 2011.
Summary Financial and Operating Data
| ($ in millions, except statistics and per share) | Three Months Ended September 30, | |||||||
| 2012 | 2011 | |||||||
| Key Operating Statistics: |
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| Tons Sold: (000s) |
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| Oil & Gas |
769.0 | 458.8 | ||||||
| Industrial & Specialty Products |
1,115.1 | 1,119.5 | ||||||
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| Total |
1,884.1 | 1,578.3 | ||||||
| Income: |
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| Revenue |
$ | 115.9 | $ | 73.5 | ||||
| Contribution Margin |
$ | 48.4 | $ | 29.4 | ||||
| % Margin |
41.8 | % | 40.0 | % | ||||
| Adjusted EBITDA (a) |
$ | 37.5 | $ | 23.2 | ||||
| % Margin |
32.4 | % | 31.6 | % | ||||
| Net Income |
$ | 18.8 | $ | 10.3 | ||||
| EPS, Basic |
$ | 0.36 | $ | 0.21 | ||||
| EPS, Diluted |
$ | 0.36 | $ | 0.21 | ||||
| (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. |
Bryan Shinn, President and Chief Executive Officer, said, “For the third quarter of 2012, U.S. Silica achieved record performance in volume, revenue and Adjusted EBITDA, exceeding the high end of the guidance that we provided in our last earnings release. Our performance demonstrates the power of U.S. Silica’s business model – which balances the upside growth potential in unconventional drilling with stable industrial markets.”
The Company reported third quarter 2012 revenues of $115.9 million, an increase of $42.4 million, or 58% from the $73.5 million reported for the same period in 2011. Overall sales volume increased to nearly 1.9 million tons, or 19% above the prior year sales volume of 1.6 million tons.
The Oil and Gas Proppants segment was the primary driver of year-over-year revenue growth. Third quarter Oil and Gas revenues were $64.5 million – up 166% compared to third quarter of 2011. The
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Company sold 769.0 thousand tons of sand into the Oil and Gas services markets, which produced $34.2 million in contribution margin for the third quarter, compared to nearly 458.8 thousand tons and a contribution margin of $15.6 million in the third quarter of 2011.
Third quarter Industrial and Specialty Products segment revenues were $51.3 million, a year-over-year increase of 4%. The ISP segment sold 1.1 million tons and delivered $14.2 million in contribution margin, compared to 1.1 million tons and a contribution margin of $13.7 million in the third quarter of 2011.
SG&A expense was $10.1 million for the third quarter of 2012 compared to $5.2 million for the third quarter of 2011. The increase continues to be driven by additional staffing to support our growth and the administrative requirements of a public company.
Adjusted EBITDA for the third quarter of 2012 was $37.5 million, an increase of 62% compared to $23.2 million for the third quarter of 2011.
Capital Update
As of September 30, 2012, we had $93.0 million of cash and cash equivalents and $23.8 million available under our credit facilities. Our total outstanding long-term debt was $260.0 million. Capital spending for the first three quarters of 2012 was $74.9 million.
In June 2012, we announced a stock repurchase program of up to $25 million over the next 18 months. As of the end of the third quarter, we had repurchased 100,000 shares under the program for $1.1 million, and we are treating these shares as treasury stock.
Outlook and Guidance
The Company expects full year revenues of approximately $423 million to $433 million and Adjusted EBITDA of $144 million to $148 million.
Conference Call
U.S. Silica will host a conference call for investors tomorrow, November 2, 2012 at 11:00 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 402328. A replay of the conference call will be available for approximately two weeks following the call. 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 Investor Relation section. A replay of the webcast will also be available for approximately two 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. The Company also processes ground and unground silica sand for a variety of industrial and specialty products end markets such as glass, fiberglass, foundry molds, municipal filtration and recreational uses. During its 100-plus 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, MD.
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.
U.S. Silica Holdings, Inc.,
Investor Relations
(855) SILICA-7 (855-745-4227)
IR@ussilica.com
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U.S. SILICA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended September 30, | ||||||||
| 2012 | 2011 | |||||||
| (in thousands, except per share amounts) | ||||||||
| Sales |
$ | 115,885 | $ | 73,453 | ||||
| Cost of goods sold (excluding depreciation, depletion and amortization) |
69,706 | 45,241 | ||||||
| Operating expenses |
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| Selling, general and administrative |
10,135 | 5,215 | ||||||
| Advisory fees to parent |
— | 313 | ||||||
| Depreciation, depletion and amortization |
5,968 | 5,295 | ||||||
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| 16,103 | 10,823 | |||||||
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| Operating income |
30,076 | 17,389 | ||||||
| Other (expense) income |
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| Interest expense |
(3,326 | ) | (3,832 | ) | ||||
| Early extinguishment of debt |
— | — | ||||||
| Other income, net, including interest income |
348 | 197 | ||||||
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| (2,978 | ) | (3,635 | ) | |||||
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| Income before income taxes |
27,098 | 13,754 | ||||||
| Income tax (expense) benefit |
(8,302 | ) | (3,412 | ) | ||||
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| Net income |
$ | 18,796 | $ | 10,342 | ||||
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| Earnings per share: |
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| Basic |
$ | 0.36 | $ | 0.21 | ||||
| Diluted |
$ | 0.36 | $ | 0.21 | ||||
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U.S. SILICA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
| September 30, 2012 |
December 31, 2011 |
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| (in thousands) | ||||||||
| ASSETS | ||||||||
| Current Assets: |
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| Cash and cash equivalents |
$ | 93,010 | $ | 59,199 | ||||
| Accounts receivable, net |
59,471 | 46,600 | ||||||
| Inventories |
36,228 | 29,307 | ||||||
| Prepaid expenses and other current assets |
8,599 | 8,561 | ||||||
| Deferred income tax, net |
11,171 | 28,007 | ||||||
| Income tax receivable |
— | 3,895 | ||||||
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| Total current assets |
208,479 | 175,569 | ||||||
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| Property, plant and mine development, net |
393,756 | 336,788 | ||||||
| Debt issuance costs, net |
2,215 | 1,291 | ||||||
| Goodwill |
68,403 | 68,403 | ||||||
| Trade names |
10,436 | 10,436 | ||||||
| Customer relationships, net |
6,634 | 6,942 | ||||||
| Other assets |
7,266 | 6,367 | ||||||
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| Total assets |
$ | 697,189 | $ | 605,796 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: |
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| Book overdraft |
$ | 6,498 | $ | 5,588 | ||||
| Accounts payable |
39,598 | 36,579 | ||||||
| Accrued liabilities |
9,415 | 9,875 | ||||||
| Accrued interest |
120 | 1,659 | ||||||
| Current portion of long-term debt |
6,364 | 6,364 | ||||||
| Income tax payable |
10,197 | — | ||||||
| Current portion of deferred revenue |
6,118 | 10,393 | ||||||
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| Total current liabilities |
78,310 | 70,458 | ||||||
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| Long-term debt |
253,600 | 255,425 | ||||||
| Note payable to parent |
— | 15,000 | ||||||
| Liability for pension and other post-retirement benefits |
47,630 | 52,078 | ||||||
| Deferred revenue |
946 | 2,128 | ||||||
| Deferred income tax, net |
64,813 | 75,915 | ||||||
| Other long-term obligations |
13,702 | 12,858 | ||||||
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| Total liabilities |
459,001 | 483,862 | ||||||
| Commitments and contingencies |
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| Stockholders’ Equity: |
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| Common stock |
529 | 500 | ||||||
| Preferred stock |
— | — | ||||||
| Additional paid-in capital |
162,911 | 103,757 | ||||||
| Retained earnings |
87,398 | 30,038 | ||||||
| Treasury stock, at cost |
(1,050 | ) | — | |||||
| Accumulated other comprehensive loss |
(11,600 | ) | (12,361 | ) | ||||
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| Total stockholders’ equity |
238,188 | 121,934 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 697,189 | $ | 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 September 30, | ||||||||
| 2012 | 2011 | |||||||
| (in thousands) | ||||||||
| Net income |
$ | 18,796 | $ | 10,342 | ||||
| Total interest expense, net of interest income |
3,276 | 3,823 | ||||||
| Provision for taxes (benefit) |
8,302 | 3,412 | ||||||
| Total depreciation, depletion and amortization expenses |
5,968 | 5,295 | ||||||
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| EBITDA |
36,342 | 22,872 | ||||||
| Non-recurring expenses (income)(1) |
(30 | ) | (1,295 | ) | ||||
| Permitted management fees and expenses(2) |
— | 312 | ||||||
| Non-cash incentive compensation(3) |
515 | 532 | ||||||
| Post-employment expenses (excluding service costs)(4) |
335 | 11 | ||||||
| Other adjustments allowable under our existing credit agreements(5) |
357 | 763 | ||||||
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| Adjusted EBITDA |
$ | 37,519 | $ | 23,195 | ||||
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| (1) | Includes the gain on the sale of assets. |
| (2) | Includes fees and expenses 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. |
| (3) | Includes vesting of incentive equity compensation issued to our employees. |
| (4) | 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. |
| (5) | 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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