U.S. Silica Holdings, Inc. Announces Fourth Quarter and Full Year 2022 Results
U.S. Silica Holdings, Inc. (NYSE: SLCA) reported fourth quarter revenue of $412.9 million and a full year revenue of $1.5 billion, reflecting a 38% increase year-over-year. The company achieved a net income of $31.6 million, or $0.40 per diluted share, for Q4 2022, with adjusted earnings per share of $0.43. Cash flow from operations rose 55% to $262.7 million. The Oil & Gas segment saw a 2% increase in proppant volumes. While the Industrial Products segment faced seasonal profit declines, overall customer demand remains strong. Looking ahead, U.S. Silica expects continued growth and free cash flow generation.
- Fourth quarter revenue of $412.9 million, up 45% year-over-year.
- Full year revenue of $1.5 billion, a 38% increase compared to 2021.
- Net income of $78.2 million for 2022, reversing a net loss from 2021.
- Cash flow from operations increased 55% to $262.7 million.
- Oil & Gas segment revenue increased 73% year-over-year.
- Fourth quarter revenue decreased 1% from Q3 2022.
- Industrial and Specialty Products segment revenue declined 8% sequentially.
- Fourth quarter revenue of
$412.9 million $1.5 billion - GAAP and adjusted EPS for the quarter of
$0.40 $0.43 - Full year 2022 cash flow from operations of
$262.7 million 55% year-over-year - Oil & Gas proppant volumes increased
2% and SandBox loads increased3% sequentially - Oil & Gas segment contribution margin increased
11% sequentially
These results compared with net income of
"In our Oil and Gas segment, activity was strong through the holidays, and we did not experience meaningful disruptions from seasonality or weather. The supply and demand balance remained very tight in sand proppant and last-mile logistics, and we continued to be effectively sold-out due to strong well completion demand, especially in
"In our Industrial and Specialty Products segment, our fourth quarter profitability declined sequentially as we'd expected, due to normal year-end seasonality. Partially offsetting these seasonal impacts, were lower natural gas input costs and the previously announced
"In summary, 2023 is setting up to be another strong year of financial performance and free cash flow generation. Our
Full Year 2022 Highlights
- Revenue of
$1.5 billion 38% compared with$1.1 billion - Net income of
$78.2 million $1.01 $33.8 million $(0.45) - Overall tons sold of 18.016 million for 2022 increased
14% compared with 15.837 million tons sold in 2021. - Contribution margin of
$472.1 million 44% compared with$328.6 million - Adjusted EBITDA of
$353.6 million 58% compared with Adjusted EBITDA of$223.5 million
Fourth Quarter 2022 Highlights
- Revenue of
$412.9 million 1% compared with$418.8 million 45% when compared with the fourth quarter of 2021. - Overall tons sold of 4.606 million for the fourth quarter of 2022 were essentially flat compared with 4.624 million tons sold in the third quarter of 2022 and increased
10% when compared with the fourth quarter of 2021. - Contribution margin of
$134.4 million 2% compared with$131.8 million 88% when compared with the fourth quarter of 2021. - Adjusted EBITDA of
$104.2 million 1% compared with$102.7 million 147% when compared with the fourth quarter of 2021.
Oil & Gas
- Revenue of
$273.7 million 2% compared with$267.5 million 73% when compared with the fourth quarter of 2021. - Tons sold of 3.568 million for the fourth quarter of 2022 increased
2% compared with 3.498 million tons sold in the third quarter of 2022 and increased15% when compared with the fourth quarter of 2021. - Segment contribution margin of
$94.4 million $26.47 11% compared with$85.3 million 214% when compared with the fourth quarter of 2021.
Industrial and Specialty Products
- Revenue of
$139.2 million 8% compared with$151.4 million 10% when compared with the fourth quarter of 2021. - Tons sold of 1.038 million for the fourth quarter of 2022 decreased
8% compared with 1.126 million tons sold in the third quarter of 2022 and decreased4% when compared with the fourth quarter of 2021. - Segment contribution margin of
$40.0 million $38.54 14% compared with$46.5 million 4% when compared with the fourth quarter of 2021.
Capital Update
As of
Outlook and Guidance
Looking forward to the first quarter and into 2023, the Company's two business segments remain well positioned in their respective markets. The Company has a strong portfolio of industrial and specialty products that serve numerous essential, high growth and attractive end markets, supported by a robust pipeline of new products under development. The Company also expects growth in its underlying base business, coupled with pricing increases and surcharges to continue to fight inflationary impacts.
The oil and gas industry is progressing through a multi-year growth cycle. Constructive customer sentiment and strength in WTI crude oil prices are supportive of an active well completions environment in 2023.
The Company remains focused on generating free cash flow and de-levering the balance sheet and intends on being operating cash flow positive in 2023, keeping an estimated
Conference Call
About
Forward-looking Statements
This full-year and fourth-quarter 2022 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
SELECTED FINANCIAL DATA FROM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; dollars in thousands, except per share amounts)
| |||||
Three Months Ended | |||||
Total sales | $ 412,934 | $ 418,813 | $ 284,864 | ||
Total cost of sales (excluding depreciation, depletion and amortization) | 282,904 | 291,520 | 217,591 | ||
Operating expenses: | |||||
Selling, general and administrative | 34,978 | 33,933 | 34,939 | ||
Depreciation, depletion and amortization | 33,202 | 34,500 | 38,637 | ||
— | — | 153 | |||
Total operating expenses | 68,180 | 68,433 | 73,729 | ||
Operating income (loss) | 61,850 | 58,860 | (6,456) | ||
Other (expense) income: | |||||
Interest expense | (22,821) | (20,174) | (17,732) | ||
Other income, net, including interest income | 3,437 | 3,576 | 1,147 | ||
Total other expense | (19,384) | (16,598) | (16,585) | ||
Income (loss) before income taxes | 42,466 | 42,262 | (23,041) | ||
Income tax (expense) benefit | (10,950) | (10,259) | 3,927 | ||
Net income (loss) | $ 31,516 | $ 32,003 | $ (19,114) | ||
Less: Net loss attributable to non-controlling interest | (74) | (68) | (98) | ||
Net income (loss) attributable to | $ 31,590 | $ 32,071 | $ (19,016) | ||
Earnings (loss) per share attributable to | |||||
Basic | $ 0.42 | $ 0.42 | $ (0.25) | ||
Diluted | $ 0.40 | $ 0.41 | $ (0.25) | ||
Weighted average shares outstanding: | |||||
Basic | 75,711 | 75,587 | 74,598 | ||
Diluted | 78,026 | 77,770 | 74,598 | ||
Year Ended | |||
Total sales | $ 1,525,147 | $ 1,103,879 | |
Total cost of sales (excluding depreciation, depletion and amortization) | 1,070,189 | 794,983 | |
Operating expenses: | |||
Selling, general and administrative | 143,838 | 119,628 | |
Depreciation, depletion and amortization | 140,166 | 161,131 | |
— | 202 | ||
Total operating expenses | 284,004 | 280,961 | |
Operating income | 170,954 | 27,935 | |
Other (expense) income: | |||
Interest expense | (77,598) | (71,157) | |
Other income, net, including interest income | 10,643 | 6,146 | |
Total other expense | (66,955) | (65,011) | |
Income (loss) before income taxes | 103,999 | (37,076) | |
Income tax (expense) benefit | (26,159) | 2,755 | |
Net income (loss) | $ 77,840 | $ (34,321) | |
Less: Net loss attributable to non-controlling interest | (336) | (560) | |
Net income (loss) attributable to | $ 78,176 | $ (33,761) | |
Earnings (loss) per share attributable to | |||
Basic | $ 1.04 | $ (0.45) | |
Diluted | $ 1.01 | $ (0.45) | |
Weighted average shares outstanding: | |||
Basic | 75,512 | 74,350 | |
Diluted | 77,670 | 74,350 | |
Dividends declared per share | $ — | $ — | |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited; dollars in thousands)
| |||
ASSETS | |||
Current Assets: | |||
Cash and cash equivalents | $ 280,845 | $ 239,425 | |
Accounts receivable, net | 208,631 | 202,759 | |
Inventories, net | 147,626 | 115,713 | |
Prepaid expenses and other current assets | 20,182 | 18,018 | |
Total current assets | 657,284 | 575,915 | |
Property, plant and mine development, net | 1,178,834 | 1,258,646 | |
Lease right-of-use assets | 42,374 | 42,241 | |
185,649 | 185,649 | ||
Intangible assets, net | 140,809 | 150,054 | |
Other assets | 9,630 | 7,095 | |
Total assets | $ 2,214,580 | $ 2,219,600 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current Liabilities: | |||
Accounts payable and accrued liabilities | $ 216,239 | $ 167,670 | |
Current portion of operating lease liabilities | 19,773 | 14,469 | |
Current portion of long-term debt | 19,535 | 18,285 | |
Current portion of deferred revenue | 16,275 | 4,247 | |
Income tax payable | 128 | 1,200 | |
Total current liabilities | 271,950 | 205,871 | |
Long-term debt, net | 1,037,458 | 1,193,135 | |
Deferred revenue | 14,477 | 16,494 | |
Liability for pension and other post-retirement benefits | 30,911 | 32,935 | |
Deferred income taxes, net | 64,636 | 44,774 | |
Operating lease liabilities | 64,478 | 75,130 | |
Other long-term obligations | 25,976 | 37,178 | |
Total liabilities | 1,509,886 | 1,605,517 | |
Stockholders' Equity: | |||
Preferred stock | — | — | |
Common stock | 854 | 845 | |
Additional paid-in capital | 1,234,834 | 1,218,575 | |
Retained deficit | (351,084) | (429,260) | |
(186,196) | (186,294) | ||
Accumulated other comprehensive (loss) income | (1,723) | 349 | |
696,685 | 604,215 | ||
Non-controlling interest | 8,009 | 9,868 | |
Total stockholders' equity | 704,694 | 614,083 | |
Total liabilities and stockholders' equity | $ 2,214,580 | $ 2,219,600 | |
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 net income, the most directly comparable GAAP financial measure, to segment contribution margin.
Three Months Ended | |||||
Sales: | |||||
Oil & Gas Proppants | $ 273,717 | $ 267,461 | $ 158,606 | ||
Industrial & Specialty Products | 139,217 | 151,352 | 126,258 | ||
Total sales | 412,934 | 418,813 | 284,864 | ||
Segment contribution margin: | |||||
Oil & Gas Proppants | 94,437 | 85,295 | 30,114 | ||
Industrial & Specialty Products | 40,004 | 46,526 | 41,518 | ||
Total segment contribution margin | 134,441 | 131,821 | 71,632 | ||
Operating activities excluded from segment cost of sales | (4,411) | (4,528) | (4,359) | ||
Selling, general and administrative | (34,978) | (33,933) | (34,939) | ||
Depreciation, depletion and amortization | (33,202) | (34,500) | (38,637) | ||
— | — | (153) | |||
Interest expense | (22,821) | (20,174) | (17,732) | ||
Other income, net, including interest income | 3,437 | 3,576 | 1,147 | ||
Income tax (expense) benefit | (10,950) | (10,259) | 3,927 | ||
Net income (loss) | $ 31,516 | $ 32,003 | $ (19,114) | ||
Less: Net loss attributable to non-controlling interest | (74) | (68) | (98) | ||
Net income (loss) attributable to | $ 31,590 | $ 32,071 | $ (19,016) | ||
Year Ended | |||
Sales: | |||
Oil & Gas Proppants | $ 961,667 | $ 615,448 | |
Industrial & Specialty Products | 563,480 | 488,431 | |
Total sales | 1,525,147 | 1,103,879 | |
Segment contribution margin: | |||
Oil & Gas Proppants | 301,837 | 160,052 | |
Industrial & Specialty Products | 170,280 | 168,499 | |
Total segment contribution margin | 472,117 | 328,551 | |
Operating activities excluded from segment cost of sales | (17,159) | (19,655) | |
Selling, general and administrative | (143,838) | (119,628) | |
Depreciation, depletion and amortization | (140,166) | (161,131) | |
— | (202) | ||
Interest expense | (77,598) | (71,157) | |
Other income, net, including interest income | 10,643 | 6,146 | |
Income tax (expense) benefit | (26,159) | 2,755 | |
Net income (loss) | $ 77,840 | $ (34,321) | |
Less: Net loss attributable to non-controlling interest | (336) | (560) | |
Net income (loss) attributable to | $ 78,176 | $ (33,761) | |
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 (loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA:
(All amounts in thousands) | Three Months Ended | ||||
Net income (loss) attributable to | $ 31,590 | $ 32,071 | $ (19,016) | ||
Total interest expense, net of interest income | 21,511 | 19,495 | 17,690 | ||
Provision for taxes | 10,950 | 10,259 | (3,927) | ||
Total depreciation, depletion and amortization expenses | 33,202 | 34,500 | 38,637 | ||
EBITDA | 97,253 | 96,325 | 33,384 | ||
Non-cash incentive compensation (1) | 4,875 | 4,826 | 5,714 | ||
Post-employment expenses (excluding service costs) (2) | (674) | (535) | (506) | ||
Merger and acquisition related expenses (3) | 1,495 | 1,532 | 2,154 | ||
Plant capacity expansion expenses (4) | 86 | 32 | 86 | ||
Contract termination expenses (5) | — | — | — | ||
— | — | 153 | |||
Business optimization projects (7) | 648 | 550 | 28 | ||
Facility closure costs (8) | 137 | 270 | 1,377 | ||
Gain on valuation change of royalty note payable (9) | — | — | (8,263) | ||
Other adjustments allowable under the Credit Agreement (10) | 170 | (286) | 962 | ||
Adjusted EBITDA | $ 104,156 | $ 102,714 | $ 42,112 | ||
(All amounts in thousands) | Year Ended | ||
Net income (loss) attributable to | $ 78,176 | $ (33,761) | |
Total interest expense, net of interest income | 75,437 | 69,173 | |
Provision for taxes | 26,159 | (2,755) | |
Total depreciation, depletion and amortization expenses | 140,166 | 161,131 | |
EBITDA | 319,938 | 193,788 | |
Non-cash incentive compensation (1) | 19,653 | 19,692 | |
Post-employment expenses (excluding service costs) (2) | (2,654) | (1,920) | |
Merger and acquisition related expenses (3) | 6,984 | 2,961 | |
Plant capacity expansion expenses (4) | 213 | 928 | |
Contract termination expenses (5) | 6,500 | — | |
— | 202 | ||
Business optimization projects (7) | 1,209 | 105 | |
Facility closure costs (8) | 1,503 | 1,347 | |
Gain on valuation change of royalty note payable (9) | — | — | |
Other adjustments allowable under the Credit Agreement (10) | 212 | 6,372 | |
Adjusted EBITDA | $ 353,558 | $ 223,475 | |
(1) | Reflects equity-based non-cash compensation expense. | |
(2) | 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. Non-service net periodic benefit costs are not considered reflective of our operating performance because these costs do not exclusively originate from employee services during the applicable period and may experience periodic fluctuations as a result of changes in non-operating factors, including changes in discount rates, changes in expected returns on benefit plan assets, and other demographic actuarial assumptions. | |
(3) | Merger and acquisition related expenses include legal fees, professional fees, bank fees, severance costs, and other employee related costs. While these costs are not operational in nature and are not expected to continue for any singular transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in the future as we continue to integrate prior acquisitions and pursue any future acquisitions. | |
(4) | Plant capacity expansion expenses include expenses that are not inventoriable or capitalizable as related to plant expansion projects greater than | |
(5) | Reflects contract termination expenses related to strategically exiting a service contract. While these expenses are not operational in nature and are not expected to continue for any singular event on an ongoing basis, similar types of expenses have occurred in prior periods and may recur in the future as we continue to strategically evaluate our contracts. | |
(6) | No impairment charges were recorded for the year ended | |
(7) | Reflects costs incurred related to business optimization projects mainly within our corporate center, which aim to measure and improve the efficiency, productivity and performance of our organization. While these costs are not operational in nature and are not expected to continue for any singular project on an ongoing basis, similar types of expenses may recur in the future. | |
(8) | Reflects costs incurred mainly related to idled sand facilities and closed corporate offices, including severance costs and remaining contracted costs such as office lease costs, and common area maintenance fees. While these costs are not operational in nature and are not expected to continue for any singular event on an ongoing basis, similar types of expenses may recur in the future. | |
(9) | Gain on valuation change of royalty note payable due to a change in estimate of future tonnages and sales related to the sand shipped from our | |
(10) | Reflects miscellaneous adjustments permitted under the Credit Agreement. The year ended | |
Investor Contacts
Vice President, Investor Relations
(281) 505-6011
gil@ussilica.com
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