U.S. Silica Holdings, Inc. Announces Fourth Quarter and Full Year 2013 Results - WDRB 41 Louisville News

U.S. Silica Holdings, Inc. Announces Fourth Quarter and Full Year 2013 Results

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SOURCE U.S. Silica Holdings, Inc.

- Revenue for the quarter and the full year up 25.8% and 23.6%, respectively, year-over-year

- Full year overall sales volumes increased nearly 14% to 8.2 million tons

- Over 60% of oil and gas sales during the quarter made downstream via transloads

- Company reaffirming guidance for 2014 for adjusted EBITDA, capital expenditures and effective tax rate

FREDERICK, Md., Feb. 25, 2014 /PRNewswire/ -- U.S. Silica Holdings, Inc. (NYSE: SLCA) today announced net income of $16.5  million or $0.31 per basic and diluted share for the fourth quarter ended Dec. 31, 2013 compared with net income of $21.8 million or $0.41 per basic and diluted share for the fourth quarter of 2012. As stated in a previous press release, results in the quarter were negatively impacted by severe winter storms in mid- and late December, reducing well completion activity, thus driving higher costs across our supply chain. The quarter was also negatively impacted by meaningful one-time costs, including a bad debt expense related to a customer bankruptcy.

Bryan Shinn, president and chief executive officer commented, "In 2013, we took several steps to position our Company for success going forward. We increased the speed with which we respond to customers by adding several new transloads near the major shale basins. We expanded the scale of our business by adding a state-of-the-art frac sand mine and plant in Sparta, Wisconsin and a resin-coated sand plant in Rochelle, Illinois. We strengthened our balance sheet and added top new talent to our team to support further growth of the Company. For 2014, we will be focused on improving the efficiency of our supply chain, bringing our new Utica operations online and carefully evaluating acquisition opportunities to expand our infrastructure and add additional mine production."

Full Year 2013 Highlights

Total Company

  • Revenue totaled $546.0 million compared with $441.9 million for the full year of 2012, an improvement of 23.6%.
  • Overall sales volumes increased to 8.2 million tons, an increase of 13.8% over 2012 totals.
  • Selling, general and administrative expense for the year totaled $49.8 million or 9.1% of revenue compared with $41.3 million or 9.3% of revenue for the full year 2012.
  • Contribution margin was $202.9 million compared with $193.7 million for the full year 2012.
  • Adjusted EBITDA was $160.7 million or 29.4% of revenue compared with $150.6 million or 34.1% of revenue for the full year 2012.
  • Net income was $75.3 million or $1.41 per diluted share compared with $79.2 million or $1.50 per diluted share for the full year 2012.

Fourth Quarter 2013 Highlights

Total Company

  • Revenue totaled $149.5 million compared with $118.8 million for the same period last year, an increase of 25.8%.
  • Overall sales volumes increased to 2.1 million tons, a 19.9% improvement over the fourth quarter of 2012.
  • Contribution margin for the quarter was $48.0 million compared with $50.5 million in the same period of the prior year.
  • Adjusted EBITDA was $35.9 million or 24.0% of revenue versus $39.0 million or 32.8% of revenue for the same period last year.

Oil and Gas

  • Revenue for the quarter totaled $102.0 million compared with $70.9 million in the same period in 2012.
  • 61% of total sales were made in basin via transloads compared with 32% in the fourth quarter of 2012.
  • Overall sales volumes totaled 1.1 million tons compared with 785.8 thousand tons sold in the fourth quarter of 2012.
  • Segment contribution margin was $34.2 million versus $37.5 million in the fourth quarter of 2012.

Industrial and Specialty Products

  • Revenue for the quarter totaled $47.5 million compared with $47.9 million for the same period in 2012.
  • Overall sales volumes totaled 1.0 million tons compared with 973.4 thousand tons sold in the same period last year.
  • Segment contribution margin was $13.8 million versus $13.0 million in the fourth quarter of 2012.

Capital Update

As of Dec. 31, 2013, the Company had $153.2 million in cash and cash equivalents and short term investments and $41.0 million available under its credit facilities. Total long-term debt at Dec. 31, 2013 was $368.0 million. Capital expenditures in the fourth quarter totaled $13.6 million and were associated largely with the Company's investment in a new frac sand mine and plant located near Utica, IL.

Outlook and Guidance

The Company is reiterating the guidance it provided in its press release dated Jan. 31, 2014. For the full year 2014, the Company anticipates adjusted EBITDA in range of $180 million to $200 million. In addition, the Company expects capital expenditures of between $75 million and $85 million and an effective tax rate of approximately 25 percent.

Conference Call

U.S. Silica will host a conference call for investors tomorrow, Feb. 26, 2014 at 10:00 a.m. Eastern Time to discuss these results. Hosting the call will be Bryan Shinn, president and chief executive officer and Don Merril, vice president and chief financial officer. Investors are invited to listen to a live webcast of the conference call by visiting the "Investor Resources" section of the Company's website at www.ussilica.com. The webcast will be archived for one year. The call can also be accessed live over the telephone by dialing (866) 612-9923 or for international callers, (404) 537-3239. The conference passcode is 57596409. A replay will be available shortly after the call and can be accessed by dialing (800) 585-8367. The Passcode for the replay is 57596409. The replay of the call will be available through March 26, 2014.

About U.S. Silica

U.S. Silica Holdings, Inc., a member of the Russell 2000 and S&P Small Cap 600 indexes, is one of the largest domestic producers 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 250 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 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 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.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share amounts) 






For the Three Months Ended December 31,


2013


2012





Sales

$   149,474


$    118,846

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

102,875


70,988

Operating expenses




Selling, general and administrative

14,456


11,542

Depreciation, depletion and amortization

10,098


7,179


24,554


18,721

Operating income

22,045


29,137

Other (expense) income




Interest expense

(4,086)


(3,244)

Other income, net, including interest income

152


3,931


(3,934)


687

Income before income taxes

18,111


29,824

Income tax expense

(1,658)


(8,030)

Net income

$     16,453


$      21,794





Earnings per share:




Basic

$         0.31


$          0.41

Diluted

$         0.31


$          0.41

 

 

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands) 






December 31,


2013


2012





ASSETS

Current Assets:




Cash and cash equivalents

$     78,256


$       61,022

Short-term investments

74,980


-

Accounts receivable, net

75,207


59,564

Inventories, net

64,212


39,835

Prepaid expenses and other current assets

11,104


6,738

Deferred income tax, net

17,737


10,108

Total current assets

321,496


177,267

Property, plant and mine development, net

442,116


414,218

Debt issuance costs, net

5,255


2,111

Goodwill

68,403


68,403

Trade names

10,436


10,436

Customer relationships, net

6,120


6,531

Other assets

9,635


7,844

Total assets

$   863,461


$     686,810

























LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:




Book overdraft

$       4,659


$         5,390

Accounts payable

37,376


37,333

Dividends payable

6,709


-

Accrued liabilities

10,823


9,481

Accrued interest

41


2

Current portion of long-term debt

3,488


2,433

Income tax payable

1,037


20,596

Current portion of deferred revenue

-


4,855

Total current liabilities

64,133


80,090

Long-term debt

367,963


252,992

Liability for pension and other post-retirement benefits

36,802


52,747

Deferred income tax, net

71,318


59,111

Other long-term obligations

13,951


10,176

Total liabilities

554,167


455,116









Stockholders' Equity:




Common stock

534


529

Preferred stock

-


-

Additional paid-in capital

174,799


163,579

Retained earnings

137,978


82,731

Treasury stock, at cost

-


(970)

Accumulated other comprehensive loss

(4,017)


(14,175)

Total stockholders' equity

309,294


231,694

Total liabilities and stockholders' equity

$    863,461


$      686,810









 

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 certain corporate costs not associated with the operations of the segment. These unallocated costs include costs related to corporate functional areas such as sales, production and engineering, corporate purchasing, accounting, treasury, information technology, legal and human resources.

The following table sets forth a reconciliation of  income before income taxes, the most directly comparable GAAP financial measure, to segment contribution margin.

 






For the Three Months Ended December 31,


2013


2012


(in thousands)

Sales:




  Oil and gas proppants

$     102,011


$      70,920

  Industrial and specialty products

47,463


47,926

  Total sales

149,474


118,846

Segment contribution margin:




  Oil and gas proppants

34,150


37,507

  Industrial and specialty products

13,833


13,033

  Total segment contribution margin

47,983


50,540

Operating activities excluded from segment cost of goods sold

(1,384)


(2,682)

Selling, general and administrative

(14,456)


(11,542)

Depreciation, depletion and amortization

(10,098)


(7,179)

Interest expense

(4,086)


(3,244)

Early extinguishment of debt

-


-

Other income, net, including interest income

152


3,931

Income (loss) before income taxes

$        18,111


$      29,824





 

 






For the Year Ended December 31,


2013


2012


(in thousands)

Sales:




  Oil and gas proppants

$          347,439


$          243,765

  Industrial and specialty products

198,546


198,156

  Total sales

545,985


441,921

Segment contribution margin:




  Oil and gas proppants

145,916


140,070

  Industrial and specialty products

56,983


53,601

  Total segment contribution margin

202,899


193,671

Operating activities excluded from segment cost of goods sold

(5,481)


(8,285)

Selling, general and administrative

(49,759)


(41,299)

Depreciation, depletion and amortization

(36,418)


(25,099)

Interest expense

(15,341)


(13,795)

Early extinguishment of debt

(480)


-

Other income, net, including interest income

597


4,612

Income (loss) before income taxes

$            96,017


$          109,805





 

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.

 






For the Three Months Ended December 31,


2013


2012


(in thousands)

Net income

$ 16,453


$ 21,794

Total interest expense, net of interest income

4,040


3,193

Provision for taxes

1,658


8,030

Total depreciation, depletion and amortization expenses

10,098


7,179

  EBITDA

32,249


40,196

Non-cash losses and charges (1)

464


379

Non-recurring expense (income)(2)

(189)


(3,737)

Non-cash incentive compensation(3)

803


668

Post-employment expenses (excluding service costs)(4)

517


450

Other adjustments allowable under our existing credit agreements(5)

2,051


1,015

  Adjusted EBITDA

$ 35,895


$ 38,971









(1) Includes non-cash losses and charges arising from adjustments to estimates of a future litigation liability.

(2) Includes gain on sale of assets for the three months ended December 31, 2013, and gain on insurance settlement for the three months ended December 31, 2012.

(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 the Term Loan and the Revolver, including such items as expenses related to one-time litigation fees, Sarbanes-Oxley implementation, secondary stock offerings by Golden Gate Capital, reviewing growth initiatives and potential acquisitions and employment agency fees.

 

 






For the Year Ended December 31,


2013


2012


(in thousands)

Net income

$   75,256


$  79,154

Total interest expense, net of interest income

15,241


13,615

Provision for taxes

20,761


30,651

Total depreciation, depletion and amortization expenses

36,418


25,099

  EBITDA

147,676


148,519

Non-cash losses and charges (1)

464


379

Non-recurring expense (income)(2)

(189)


(4,206)

Early extinguishment of debt(3)

480


-

Non-cash incentive compensation(4)

3,039


2,330

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

2,071


1,794

Other adjustments allowable under our existing credit agreements(6)

7,150


1,773

  Adjusted EBITDA

$ 160,691


$ 150,589









(1) Includes non-cash deductions, losses and charges arising from adjustments to estimates of a future litigation liability and the decision by our hourly workforce at our Rockwood facility to withdraw from a pension plan administered by a third party.

(2) Includes the gain on insurance settlements of $0 and $(3,734) for the years ended December 31, 2013 and 2012, respectively. Includes the gain on sale of assets of $(189) and $(472) for the years ended December 31, 2013 and 2012, respectively.

(3) Includes natural gas hedging losses, purchase accounting adjustments, management bonuses and other expenses related to the Golden Gate Capital acquisition, as well as unamortized transaction fees and expenses arising from the refinancing of our Term Loan and Revolver.

(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. See Note R to our Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

(6) Reflects miscellaneous adjustments permitted under our existing credit agreements, including such items as expenses related to offerings of our common stock by Golden Gate Capital, business development activities related to our growth and expansion initiatives, one-time litigation fees, expenses related to our refinancing and employment agency fees.

 

Investors:
Mike Lawson
Director of Investor Relations and Corporate Communications
301-682-0304
lawsonm@ussilica.com

Media:
Alison Holder
Manager of Corporate Communications
301-682-0326
holder@ussilica.com

©2012 PR Newswire. All Rights Reserved.

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