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KATY, Texas, April 26, 2024 /PRNewswire/ -- 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 | Q1 2023 | Year-over- |
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
In millions | Q1 2024 | Q4 2023 | Sequential | Q1 2023 | Year-over- |
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
In millions | Q1 2024 | Q4 2023 | Sequential | Q1 2023 | Year-over- |
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, | December 31, | March 31, | |||
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 administrative | 30,754 | 31,653 | 29,163 | ||
Depreciation, depletion and amortization | 31,368 | 32,505 | 35,386 | ||
Total operating expenses | 62,122 | 64,158 | 64,549 | ||
Operating income | 40,096 | 45,115 | 84,558 | ||
Other (expense) income: | |||||
Interest expense | (24,263) | (25,622) | (24,061) | ||
Other income (expense), net, including interest income | 2,523 | 17,778 | (2,352) | ||
Total other expense | (21,740) | (7,844) | (26,413) | ||
Income before income taxes | 18,356 | 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: | |||||
Basic | 77,671 | 77,181 | 76,517 | ||
Diluted | 79,032 | 78,799 | 78,292 | ||
U.S. SILICA HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) | |||
Unaudited | Audited | ||
March 31, 2024 | December 31, 2023 | ||
ASSETS | |||
Current Assets: | |||
Cash and cash equivalents | $ 234,481 | $ 245,716 | |
Accounts receivable, net | 189,506 | 185,917 | |
Inventories, net | 139,535 | 149,429 | |
Prepaid expenses and other current assets | 15,124 | 19,682 | |
Total current assets | 578,646 | 600,744 | |
Property, plant and mine development, net | 1,107,352 | 1,125,220 | |
Lease right-of-use assets | 41,678 | 41,095 | |
Goodwill | 185,649 | 185,649 | |
Intangible assets, net | 129,033 | 131,384 | |
Other assets | 12,701 | 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 liabilities | 17,753 | 18,569 | |
Current portion of long-term debt | 12,708 | 16,367 | |
Current portion of deferred revenue | 1,226 | 3,124 | |
Income tax payable | 5,697 | 311 | |
Total current liabilities | 159,972 | 185,850 | |
Long-term debt, net | 796,755 | 823,670 | |
Deferred revenue | 12,456 | 12,388 | |
Liability for pension and other post-retirement benefits | 24,679 | 28,715 | |
Deferred income taxes, net | 100,452 | 100,458 | |
Operating lease liabilities | 53,912 | 55,089 | |
Other long-term liabilities | 36,508 | 34,896 | |
Total liabilities | 1,184,734 | 1,241,066 | |
Stockholders' Equity: | |||
Preferred stock | — | — | |
Common stock | 891 | 877 | |
Additional paid-in capital | 1,253,497 | 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' equity | 864,177 | 849,308 | |
Non-controlling interest | 6,148 | 6,219 | |
Total stockholders' equity | 870,325 | 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, | December 31, | March 31, | |||
Sales: | |||||
Oil & Gas Proppants | $ 183,172 | $ 200,552 | $ 300,013 | ||
Industrial & Specialty Products | 142,770 | 135,485 | 142,227 | ||
Total sales | 325,942 | 336,037 | 442,240 | ||
Segment contribution margin: | |||||
Oil & Gas Proppants | 59,515 | 70,142 | 109,897 | ||
Industrial & Specialty Products | 45,949 | 46,794 | 42,929 | ||
Total segment contribution margin | 105,464 | 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 income | 2,523 | 17,778 | (2,352) | ||
Income tax expense | (4,775) | (8,306) | (13,573) | ||
Net income | $ 13,581 |
Visual performance / price development - Apollo Global
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