U.S. Silica Holdings, Inc. Announces Second Quarter 2021 Results

- Settled customer dispute and received $128 million of consideration, including $90 million in cash

- Second quarter revenue totaled $317.3 million

- GAAP and adjusted EPS for the quarter of $0.34 and ($0.12) per diluted share, respectively

- Overall volumes increased 15% sequentially with growth in both Industrial & Specialty Products and Oil & Gas Segments

KATY, Texas, July 29, 2021 /PRNewswire/ -- U.S. Silica Holdings, Inc. (NYSE: SLCA), a diversified industrial minerals company and the leading last-mile logistics provider to the oil and gas industry (the "Company"), today announced net income of $26.0 million, or $0.34 per diluted share, for the second quarter ended June 30, 2021, compared with a net loss of $20.8 million, or $0.28 per diluted share, for the first quarter of 2021.

The second quarter results were positively impacted by $46.9 million net, or $0.46 per diluted share, due to a customer settlement of $48.9 million, or $0.49 per diluted share, recorded in the Oil & Gas segment, and partially offset by delayed winter weather impacts and facility closure costs.  

Bryan Shinn, Chief Executive Officer, commented, "Our strong financial and operational performance during the second quarter exceeded both revenue and Adjusted EBITDA expectations. Additionally, we recorded sequential volume growth in both of our operating segments, supported by the broader market recovery and constructive commodity prices.

"In the Industrial & Specialty Products segment, second quarter revenue grew at a rate that exceeded GDP growth and we recently announced our third price increase this year for our industrial and specialty products beginning September 1st. Our Oil & Gas segment benefited from strong commodity prices and completions activity, as we out-executed our competition and gained market share in the second quarter, which drove sequential increases in proppant volumes and SandBox delivered loads.

"I'm also happy to report that in late June, we came to an agreement with a customer to settle a dispute regarding fees related to minimum purchase commitments from 2014-2020. As a result of this resolution, the Company received approximately $128 million of consideration, including $90 million in cash. Half of the cash settlement amount was received in the second quarter and the balance was received in July. We have used a portion of this settlement to pay off our outstanding revolver balance of $25 million.

"Our commitment to deleveraging the balance sheet remains a key corporate initiative. As the macro environment continues to improve, we are focused on prioritizing free cash flow, growing the Industrial & Specialty Products segment, and maximizing efficiencies in the Oil & Gas segment."

Second Quarter 2021 Highlights

Total Company

• Revenue of $317.3 million for the second quarter of 2021 increased 84% when compared with the second quarter of 2020 and increased 35% compared with $234.4 million in the first quarter of 2021. However, excluding the $48.9 million benefit in the Oil & Gas segment related to a customer settlement, revenue increased 15% sequentially.
• Overall tons sold of 4.104 million for the second quarter of 2021 increased 15% compared with 3.561 million tons sold in the first quarter of 2021 and increased 116% when compared with the second quarter of 2020.
• Contribution margin of $128.6 million for the second quarter of 2021 increased 110% when compared with the second quarter of 2020 and increased 109% compared with $61.6 million in the first quarter of 2021. However, excluding the $48.9 million benefit in the Oil & Gas segment, contribution margin increased 29% sequentially. In addition, costs associated with delayed winter weather impact and facility closure costs negatively impacted the second quarter.
• Adjusted EBITDA of $103.3 million for the second quarter of 2021 increased 170% compared with $38.3 million in the first quarter of 2021. However, excluding the $48.9 million benefit in the Oil & Gas segment, adjusted EBITDA increased 42% sequentially.

Industrial & Specialty Products (ISP)

• Revenue of $124.0 million for the second quarter of 2021 increased 10% compared with $112.7 million in the first quarter of 2021, and increased 24% when compared with the second quarter of 2020.
• Tons sold totaled 1.08 million for the second quarter of 2021 increased 10% compared with 0.984 million tons sold in the first quarter of 2021, and increased 36% when compared with the second quarter of 2020.
• Segment contribution margin of $45.9 million, or $42.50 per ton, for the second quarter of 2021 increased 15% compared with $40.0 million in the first quarter of 2021, and increased 31% when compared with the second quarter of 2020.

Oil & Gas

• Revenue of $193.3 million for the second quarter of 2021 increased 59% when compared with $121.7 million in the first quarter of 2021 and increased 167% when compared with the second quarter of 2020. However, excluding the $48.9 million customer settlement, revenue increased 19% sequentially.
• Tons sold of 3.024 million for the second quarter of 2021 increased 17% compared with 2.577 million tons sold in the first quarter of 2021, and increased 172% when compared with the second quarter of 2020.
• Segment contribution margin of $82.7 million, or $27.35 per ton, increased 285% when compared with $21.5 million in the first quarter of 2021 and increased 216% when compared with the second quarter of 2020. However, excluding the $48.9 million customer settlement, segment contribution margin increased 57% sequentially.

Capital Update

As of June 30, 2021, the Company had $212.7 million in cash and cash equivalents and total debt was $1.235 billion. The Company's $100.0 million Revolver had $25.0 million drawn, with $22.0 million allocated for letters of credit, and availability of $53.0 million. On July 27, 2021, the Company paid off its $25.0 million outstanding Revolver balance. Capital expenditures in the second quarter totaled $3.6 million. During the second quarter of 2021, the Company generated $68.3 million in cash flow from operations including the cash settlement. However, excluding the $48.9 million customer settlement, cash flow from operations would have been $23.3 million.  The Company remains focused on building on its fundamental operating successes, its disciplined approach to expanding its business, ensuring that it generates sustainable free cash flow and continuing to de-lever its balance sheet. 

Outlook and Guidance

Looking ahead to the second half of 2021 and beyond, the Company is well positioned for sustainable, long-term growth. The Company has a strong portfolio of industrial and specialty products, supported by a robust pipeline of new products under development as well as recent pricing increases.

The Industrial & Specialty Products segment continues to prove its strength and stability through cycles.

The oil and gas industry is progressing through a transitional year of what is forecasted to be a multi-year growth cycle as economic activity recovers. The first half of 2021 was marked by strong WTI crude oil prices and the completion of previously drilled but uncompleted wells. Progressing through the second half of 2021, customer spending in the Oil & Gas segment is anticipated to rebalance from well completions towards drilling activity.

The Company expects to deliver positive free cash flow this year and to continue to reduce net debt by year end.

Conference Call

U.S. Silica will host a conference call for investors today, July 29, 2021 at 8:00 a.m. Central Time to discuss these results. Hosting the call will be Bryan Shinn, Chief Executive Officer and Don Merril, Executive Vice President and Chief Financial Officer.  Investors are invited to listen to a live webcast of the conference call by visiting the "Investors" 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) 869-3847 or for international callers, (201) 689-8261.  A replay will be available shortly after the call and can be accessed by dialing (877) 660-6853 or for international callers, (201) 612-7415.  The conference ID for the replay is 13721444. The replay will be available through August 29, 2021.