U.S. Silica Holdings, Inc. Announces Financial Guidance and Fourth Quarter and Fiscal 2012 Results

U.S. Silica Holdings, Inc. Announces Financial Guidance and Fourth Quarter and Fiscal 2012 Results

  • Company posts record earnings and revenue for the quarter and the year

  • Revenue increased 50% in 2012

  • Adjusted EBITDA improved 61% over full year 2011

  • EPS increased 146% in 2012 compared with 2011

FREDERICK, Md.--(BUSINESS WIRE)-- U.S. Silica Holdings, Inc. (NYS: SLCA) announced today net income of $21.8 million or $0.41 per basic and diluted share for the fourth quarter ended Dec. 31, 2012 compared with net income of $10.0 million or $0.20 per basic and diluted share for the same period in 2011.

Bryan A. Shinn, president and chief executive officer of the company commented, "2012 was truly exceptional for U.S. Silica, starting with our successful initial public offering at the beginning of the year and concluding with record financial results for the full twelve months. Our success is due largely to the power of our business model, our strong customer relationships and the drive and determination of our talented group of employees." Shinn continued, "Looking ahead, we have strategically positioned ourselves well in all of our major markets to provide a strong platform for sustained growth and increased profitability in 2013."


Fiscal 2012 Highlights

Total Company

  • Revenue totaled $441.9 million compared with $295.6 million in 2011, driven primarily by strength in the Oil and Gas Proppants segment.

  • Overall sales volumes increased to 7.2 million tons or 14% above the prior year sales volume of 6.3 million tons.

  • Contribution margin totaled $193.7 million compared with $120.6 million in 2011.

  • Adjusted EBITDA was $150.6 million or 34.0% of revenue compared with $93.6 million or 31.7% of revenue in 2011.

  • Net income was $79.2 million or $1.50 per basic and diluted share compared with $30.3 million or $0.61 per basic and diluted share for the full year 2011.

  • Cash and cash equivalents at Dec. 31, 2012 totaled $61.0 million versus $59.2 million at Dec. 31, 2011.

Fourth Quarter 2012 Highlights

Total Company

  • Revenue totaled $118.8 million compared with $83.6 million for the same period in 2011, an improvement of 42.1%. The increase was driven primarily by strength in the Oil and Gas Proppants segment.

  • Overall sales volumes increased to 1.8 million tons or 10.0% above the fourth quarter of 2011.

  • Contribution margin for the quarter of $50.5 million was $12.2 million or 32% higher than the same period last year.

  • Adjusted EBITDA was $39.0 million or 32.8% of revenue compared with $27.2 million or 32.5% of revenue for the same period last year.

  • Net income was $21.8 million compared with $10.0 million in the fourth quarter 2011, an improvement of 117.0%.

Oil and Gas

  • Revenue for the quarter totaled $70.9 million compared with $37.8 million in the same period in 2011.

  • Segment contribution margin was $37.5 million versus $23.8 million in the fourth quarter of 2011.

Industrial and Specialty Products

  • Revenue for the quarter totaled $47.9 million compared with $45.9 million for the same period in 2011.

  • Segment contribution margin was $13.0 million versus $14.5 million in the fourth quarter of 2011.

Capital Update

As of Dec. 31, 2012, the Company had $61.0 million in cash and cash equivalents and $32.1 million available under its credit facilities. Total outstanding debt at Dec. 31, 2012 totaled $255.4 million. Capital expenditures in 2012 totaled $105.7 million and were associated primarily with investments in a new resin-coated proppant plant in Rochelle, IL, a new Greenfield mine in Sparta, WI and various investments in its logistics network company-wide.

In December, 2012, the Company amended its credit facility which increases the commitment from $35 million to $50 million, garners more favorable fees and terms and extends the length of the agreement by one year.

Outlook and Guidance

The company expects first quarter 2013 revenues of approximately $115 million to $123 million and adjusted EBITDA of between $36 million and $39 million. For the full year, 2013, the Company anticipates adjusted EBITDA in the range of $165 million to $175 million. In addition, the Company expects capital expenditures of between $50 million to $60 million and an effective tax rate of approximately 27% to 28%.

Conference Call

U.S. Silica will host a conference call for investors today, Feb. 26, 2013 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 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 (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 408533. The replay of the call will be available through March 26, 2013.

About U.S. Silica

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 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.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended December 31,

2012

2011

(in thousands, except per share amounts)

Sales

$

118,846

$

83,631

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

70,988

50,051

Operating expenses

Selling, general and administrative

11,542

6,856

Advisory fees to parent

-

8,313

Depreciation, depletion and amortization

7,179

5,363

18,721

20,532

Operating income

29,137

13,048

Other (expense) income

Interest expense

(3,244

)

(3,902

)

Other income, net, including interest income

3,931

528

687

(3,374

)

Income before income taxes

29,824

9,674

Income tax (expense) benefit

(8,030

)

371

Net income

$

21,794

$

10,045

Earnings per share:

Basic

$

0.41

$

0.20

Diluted

$

0.41

$

0.20

U.S. SILICA HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

December 31,

2012

2011

(in thousands)

ASSETS

Current Assets:

Cash and cash equivalents

$

61,022

$

59,199

Accounts receivable, net

59,564

46,600

Inventories, net

39,835

29,307

Prepaid expenses and other current assets

6,738

8,561

Deferred income tax, net

10,108

28,007

Income tax receivable

-

3,895

Total current assets

177,267

175,569

Property, plant and mine development, net

414,218

336,788

Debt issuance costs, net

2,111

1,291

Goodwill

68,403

68,403

Trade names

10,436

10,436

Customer relationships, net

6,531

6,942

Other assets

7,844

6,367

Total assets

$

686,810

$

605,796

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Book overdraft

$

5,390

$

5,588

Accounts payable

37,333

36,579

Accrued liabilities

9,481

9,875

Accrued interest

2

1,659

Current portion of long-term debt

2,433

6,364

Income tax payable

20,596

-

Current portion of deferred revenue

4,855

10,393

Total current liabilities

80,090

70,458

Long-term debt

252,992

255,425

Note payable to parent

-

15,000

Liability for pension and other post-retirement benefits

52,747

52,078

Deferred revenue

-

2,128

Deferred income tax, net

59,111

75,915

Other long-term obligations

10,176

12,858

Total liabilities

455,116

483,862

Commitments and contingencies

Stockholders' Equity:

Common stock

529

500

Preferred stock

-

-

Additional paid-in capital

163,579

103,757

Retained earnings

82,731

30,038

Treasury stock, at cost

(970

)

-

Accumulated other comprehensive loss

(14,175

)

(12,361

)

Total stockholders' equity

231,694

121,934

Total liabilities and stockholders' equity

$

686,810

$

605,796

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.

Three Months Ended December 31,

2012

2011

(in thousands)

Net income

$

21,794

$

10,045

Total interest expense, net of interest income

3,193

3,866

Provision for taxes (benefit)

8,030

(371

)

Total depreciation, depletion and amortization expenses

7,179

5,363

EBITDA

40,196

18,903

Non-cash deductions, losses and charges(1)

379

(526

)

Non-recurring expenses (income)(2)

(3,737

)

(733

)

Transaction expenses(3)

-

-

Permitted management fees and expenses(4)

-

8,312

Non-cash incentive compensation(5)

668

555

Post-employment expenses (excluding service costs)(6)

450

422

Other adjustments allowable under our existing credit agreements

1,015

269

Adjusted EBITDA

$

38,971

$

27,202



U.S. Silica Holdings, Inc.
Michael Lawson, 301-682-0304
Director of Investor Relations and Corporate Communications
lawsonm@USSilica.com

KEYWORDS: United States North America Maryland

INDUSTRY KEYWORDS:

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