U.S. Silica Holdings, Inc. Announces Fourth Quarter and Full Year 2023 Results
- Strong financial performance for U.S. Silica Holdings Inc. in Q4 2023.
- GAAP EPS of $0.37 and adjusted EPS of $0.28 per diluted share.
- Full-year 2023 net income increased by 88% to $146.9 million.
- Total company contribution margin increased by 16% year-over-year to $549.7 million.
- Balance sheet strengthened with the extinguishment of $25 million in debt.
- Oil and Gas segment achieved a 35% contribution margin in Q4.
- Industrial and Specialty Products segment showed a 27% increase in contribution margin per ton.
- Optimistic outlook for 2024 with strong cash flow generation expected.
- None.
Insights
The recent financial results reported by U.S. Silica Holdings, Inc. indicate a significant year-over-year growth in net income and an overall strengthening of the company's financial position. An 88% increase in annual net income and a 16% increase in total company contribution margin reflect a robust performance despite the reported revenue decline in the fourth quarter of 2023. The reduction in debt by $25 million through excess cash utilization demonstrates a strategic approach to balance sheet management and debt reduction, which is likely to be viewed positively by investors and market analysts.
From an operational perspective, the company's ability to deliver on its guidance with a 25% improvement in Adjusted EBITDA and to maintain a low net leverage ratio of 1.4x provides evidence of disciplined financial control and operational efficiency. The Oil and Gas segment's strong contribution margin of 35% for the quarter, despite lower drilling activity, suggests a resilient pricing strategy and effective cost management. The Industrial and Specialty Products (ISP) segment also showed improved profitability with a 27% increase in contribution margin on a per ton basis, highlighting the benefits of structural cost reductions and a favorable product mix.
Looking ahead, the company's positive outlook for 2024, with expectations of strong operating cash flow and well-positioned business segments, could signal continued growth and stability. The reallocation of Northern White Sand offerings to the ISP segment may further streamline operations and enhance product portfolio management. These factors collectively suggest a potential for sustained investor confidence and a positive impact on the company's stock performance.
The financial metrics provided by U.S. Silica, particularly the cash flow from operations of $263.9 million, are indicative of the company's strong cash-generating capabilities. This operational cash flow, coupled with the company's capital expenditure of $65.2 million, primarily directed towards growth and facility improvements, reflects a balanced approach to reinvestment and cash management. The capital expenditure forecast for 2024 at approximately $60 million, while maintaining robust operating cash flow, suggests a continued focus on growth without compromising financial health.
It is important to note that the company operates within the cyclical oil and gas industry, which is currently in a growth phase. The constructive commodity prices and improved well completion efficiencies are favorable for U.S. Silica's Oil and Gas segment. The company's strong contractual commitments for sand production capacity could provide a stable revenue stream and mitigate the volatility typically associated with the energy sector.
The company's stock may respond favorably to the reported financial results and positive outlook, as investors often seek companies with strong cash flows, solid growth strategies and effective debt management. However, it is crucial to monitor the industry trends and commodity prices as they can significantly influence the company's performance.
The reclassification of Northern White Sand offerings from the Oil and Gas business segment to the Industrial and Specialty Products segment is a strategic move that requires careful legal and regulatory consideration. This change in reporting design must comply with SEC regulations and ensure transparent communication with investors. The company's management will need to provide historical examples to bridge prior quarter results to the new reporting structure, which is crucial for maintaining the integrity of financial reporting and investor trust.
Additionally, the company's patent-pending Guardian frac fluid filtration system, which is gaining market momentum, highlights the importance of intellectual property in maintaining a competitive edge in the market. The legal protection of such innovations can be a significant factor in the company's long-term success and valuation.
Overall, the legal aspects of these operational changes and innovations are critical in ensuring that the company's strategic decisions are sustainable and that they contribute positively to shareholder value without exposing the company to unnecessary legal risks.
- GAAP and adjusted EPS for the quarter of
$0.37 $0.28 - Full year 2023 net income of
$146.9 million 88% year-over-year - Full year 2023 total company contribution margin of
$549.7 million 16% year-over-year - Full year 2023 cash flow from operations of
$263.9 million - Balance sheet strengthened with additional
$25 million
"During the fourth quarter, we continued to strengthen our financial foundation and advance our growth strategy while closing out an exceptionally strong and historic year for the company," said Bryan Shinn, U.S. Silica's Chief Executive Officer. "In 2023, we delivered on our guidance of approximately
"In our Oil and Gas segment, thanks to our disciplined pricing approach, coupled with our variable cost reduction initiatives, we delivered a strong segment contribution margin of
"In our Industrial and Specialty Products segment, we benefited from ongoing structural cost reductions, price increases, and greater sales from advanced materials, resulting in improved profitability with a
"Looking ahead, 2024 is shaping up to be another strong year of operating cash flow generation. Our Oil and Gas segment is well positioned in active well completion basins, with strong customer commitments that provide cash flow visibility. In our Industrial segment, customer demand remains strong overall, and we anticipate year-over-year improvements as we realize a full quarter of price increases."
Fourth Quarter 2023 Highlights
Net income for the fourth quarter ended December 31, 2023 was
These results compared with net income of
In the fourth quarter of 2023, the Company completed a
Total Company
In millions | Q4 2023 | Q3 2023 | Sequential | Q4 2022 | Year-over- | 2023 | 2022 | Year-over- |
Revenue | $ 336.0 | $ 367.0 | (8) % | $ 412.9 | (19) % | $ 1,552.0 | $ 1,525.1 | 2 % |
Net Income | $ 29.1 | $ 26.9 | 8 % | $ 31.6 | (8) % | $ 146.9 | $ 78.2 | 88 % |
Tons Sold | 3.865 | 4.121 | (6) % | 4.606 | (16) % | 17.378 | 18.016 | (4) % |
Contribution Margin* | $ 116.9 | $ 129.2 | (10) % | $ 134.4 | (13) % | $ 549.7 | $ 472.1 | 16 % |
Adjusted EBITDA* | $ 88.6 | $ 102.1 | (13) % | $ 104.2 | (15) % | $ 439.0 | $ 353.6 | 24 % |
Oil & Gas Segment
- Fourth quarter 2023 results were driven by lower proppant volumes, fewer SandBox loads, and a decrease in average selling price per ton.
In millions | Q4 2023 | Q3 2023 | Sequential | Q4 2022 | Year-over- |
Revenue | $ 200.6 | $ 231.4 | (13) % | $ 273.7 | (27) % |
Tons Sold | 2.907 | 3.122 | (7) % | 3.568 | (19) % |
Contribution Margin* | $ 70.1 | $ 82.9 | (15) % | $ 94.4 | (26) % |
Industrial & Specialty Products (ISP) Segment
- Fourth quarter 2023 results were impacted by typical seasonality, partially offset by improvements in operational efficiencies, price increases, and product mix.
In millions | Q4 2023 | Q3 2023 | Sequential | Q4 2022 | Year-over- |
Revenue | $ 135.5 | $ 135.5 | — % | $ 139.2 | (3) % |
Tons Sold | 0.958 | 0.999 | (4) % | 1.038 | (8) % |
Contribution Margin* | $ 46.8 | $ 46.3 | 1 % | $ 40.0 | 17 % |
*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 December 31, 2023, the Company had
Reclassification of Northern White Sand Offerings
After careful consideration, the Company is reallocating its Northern White Sand offerings from the Oil and Gas business segment to the Industrial and Specialty Products segment beginning with first quarter 2024 results. Given how the Northern White Sand business has evolved over the years, the Company believes that it is better positioned today as an offering within ISP. This change will streamline U.S. Silica's business operations and allow the Company to maximize value as it will now have all Northern White Sand based offerings in one business unit. Management will discuss this reclassification further on its first-quarter 2024 earnings call and offer historical examples to bridge prior quarter results to the new reporting design.
Outlook and Guidance
"Looking ahead to the first quarter of 2024, our two business segments remain well positioned in their respective markets," said Shinn. "U.S. Silica 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. We expect growth in our underlying base business, coupled with pricing increases and total addressable market expansions.
"The oil and gas industry continues to progress through a multi-year growth cycle. Constructive through-cycle commodity prices coupled with improved well completion efficiencies and intensity are supportive of an active environment over the next few years, and we have strong contractual commitments for our sand production capacity for the year.
"We remain focused on generating cash flow from operations and de-levering the balance sheet. We expect to produce robust operating cash flow in 2024, while investing approximately
Conference Call
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 more than 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, and is 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
Forward-looking Statements
This full-year and fourth-quarter 2023 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, and technological innovations. 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
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 | |||||
December 31, | September 30, | December 31, | |||
Total sales | $ 336,037 | $ 366,961 | $ 412,934 | ||
Total cost of sales (excluding depreciation, depletion and amortization) | 226,764 | 240,957 | 282,904 | ||
Operating expenses: | |||||
Selling, general and administrative | 31,653 | 29,287 | 34,978 | ||
Depreciation, depletion and amortization | 32,505 | 35,822 | 33,202 | ||
Total operating expenses | 64,158 | 65,109 | 68,180 | ||
Operating income | 45,115 | 60,895 | 61,850 | ||
Other (expense) income: | |||||
Interest expense | (25,622) | (26,039) | (22,821) | ||
Other income, net, including interest income | 17,778 | 4,016 | 3,437 | ||
Total other expense | (7,844) | (22,023) | (19,384) | ||
Income before income taxes | 37,271 | 38,872 | 42,466 | ||
Income tax expense | (8,306) | (12,064) | (10,950) | ||
Net income | $ 28,965 | $ 26,808 | $ 31,516 | ||
Less: Net loss attributable to non-controlling interest | (144) | (101) | (74) | ||
Net income attributable to U.S. Silica Holdings, Inc. | $ 29,109 | $ 26,909 | $ 31,590 | ||
Earnings per share attributable to U.S. Silica Holdings, Inc.: | |||||
Basic | $ 0.38 | $ 0.35 | $ 0.42 | ||
Diluted | $ 0.37 | $ 0.34 | $ 0.40 | ||
Weighted average shares outstanding: | |||||
Basic | 77,181 | 77,125 | 75,711 | ||
Diluted | 78,799 | 78,700 | 78,026 | ||
Year Ended | |||
December 31, | December 31, | ||
Total sales | $ 1,552,022 | $ 1,525,147 | |
Total cost of sales (excluding depreciation, depletion and amortization) | 1,020,627 | 1,070,189 | |
Operating expenses: | |||
Selling, general and administrative | 118,797 | 143,838 | |
Depreciation, depletion and amortization | 137,259 | 140,166 | |
Total operating expenses | 256,056 | 284,004 | |
Operating income | 275,339 | 170,954 | |
Other (expense) income: | |||
Interest expense | (101,709) | (77,598) | |
Other income, net, including interest income | 21,939 | 10,643 | |
Total other expense | (79,770) | (66,955) | |
Income before income taxes | 195,569 | 103,999 | |
Income tax expense | (49,080) | (26,159) | |
Net income | $ 146,489 | $ 77,840 | |
Less: Net loss attributable to non-controlling interest | (436) | (336) | |
Net income attributable to U.S. Silica Holdings, Inc. | $ 146,925 | $ 78,176 | |
Earnings per share attributable to U.S. Silica Holdings, Inc.: | |||
Basic | $ 1.91 | $ 1.04 | |
Diluted | $ 1.87 | $ 1.01 | |
Weighted average shares outstanding: | |||
Basic | 76,980 | 75,512 | |
Diluted | 78,520 | 77,670 | |
Dividends declared per share | $ — | $ — | |
U.S. SILICA HOLDINGS, INC. | |||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
(Unaudited; dollars in thousands) | |||
December 31, | December 31, | ||
ASSETS | |||
Current Assets: | |||
Cash and cash equivalents | $ 245,716 | $ 280,845 | |
Accounts receivable, net | 185,917 | 208,631 | |
Inventories, net | 149,429 | 147,626 | |
Prepaid expenses and other current assets | 19,682 | 20,182 | |
Total current assets | 600,744 | 657,284 | |
Property, plant and mine development, net | 1,125,220 | 1,178,834 | |
Lease right-of-use assets | 41,095 | 42,374 | |
Goodwill | 185,649 | 185,649 | |
Intangible assets, net | 131,384 | 140,809 | |
Other assets | 12,501 | 9,630 | |
Total assets | $ 2,096,593 | $ 2,214,580 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current Liabilities: | |||
Accounts payable and accrued liabilities | $ 147,479 | $ 216,239 | |
Current portion of operating lease liabilities | 18,569 | 19,773 | |
Current portion of long-term debt | 16,367 | 19,535 | |
Current portion of deferred revenue | 3,124 | 16,275 | |
Income tax payable | 311 | 128 | |
Total current liabilities | 185,850 | 271,950 | |
Long-term debt, net | 823,670 | 1,037,458 | |
Deferred revenue | 12,388 | 14,477 | |
Liability for pension and other post-retirement benefits | 28,715 | 30,911 | |
Deferred income taxes, net | 100,458 | 64,636 | |
Operating lease liabilities | 55,089 | 64,478 | |
Other long-term obligations | 34,896 | 25,976 | |
Total liabilities | 1,241,066 | 1,509,886 | |
Stockholders' Equity: | |||
Preferred stock | — | — | |
Common stock | 877 | 854 | |
Additional paid-in capital | 1,249,460 | 1,234,834 | |
Retained deficit | (204,159) | (351,084) | |
Treasury stock, at cost | (196,745) | (186,196) | |
Accumulated other comprehensive loss | (125) | (1,723) | |
Total U.S. Silica Holdings, Inc. stockholders' equity | 849,308 | 696,685 | |
Non-controlling interest | 6,219 | 8,009 | |
Total stockholders' equity | 855,527 | 704,694 | |
Total liabilities and stockholders' equity | $ 2,096,593 | $ 2,214,580 | |
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. We believe that segment contribution margin, as defined above, is an appropriate measure for evaluating the operating performance of our segments. However, segment contribution margin is a non-GAAP measure and should be considered in addition to, not a substitute for, or superior to, net income (loss) or other measures of financial performance prepared in accordance with GAAP.
The following table sets forth a reconciliation of net income, the most directly comparable GAAP financial measure, to segment contribution margin.
Three Months Ended | |||||
December 31, | September 30, | December 31, | |||
Sales: | |||||
Oil & Gas Proppants | $ 200,552 | $ 231,426 | $ 273,717 | ||
Industrial & Specialty Products | 135,485 | 135,535 | 139,217 | ||
Total sales | 336,037 | 366,961 | 412,934 | ||
Segment contribution margin: | |||||
Oil & Gas Proppants | 70,142 | 82,890 | 94,437 | ||
Industrial & Specialty Products | 46,794 | 46,347 | 40,004 | ||
Total segment contribution margin | 116,936 | 129,237 | 134,441 | ||
Operating activities excluded from segment cost of sales | (7,663) | (3,233) | (4,411) | ||
Selling, general and administrative | (31,653) | (29,287) | (34,978) | ||
Depreciation, depletion and amortization | (32,505) | (35,822) | (33,202) | ||
Interest expense | (25,622) | (26,039) | (22,821) | ||
Other income, net, including interest income | 17,778 | 4,016 | 3,437 | ||
Income tax expense | (8,306) | (12,064) | (10,950) | ||
Net income | $ 28,965 | $ 26,808 | $ 31,516 | ||
Less: Net loss attributable to non-controlling interest | (144) | (101) | (74) | ||
Net income attributable to U.S. Silica Holdings, Inc. | $ 29,109 | $ 26,909 | $ 31,590 | ||
Year Ended | |||
December 31, | December 31, | ||
Sales: | |||
Oil & Gas Proppants | $ 994,276 | $ 961,667 | |
Industrial & Specialty Products | 557,746 | 563,480 | |
Total sales | 1,552,022 | 1,525,147 | |
Segment contribution margin: | |||
Oil & Gas Proppants | 361,998 | 301,837 | |
Industrial & Specialty Products | 187,665 | 170,280 | |
Total segment contribution margin | 549,663 | 472,117 | |
Operating activities excluded from segment cost of sales | (18,268) | (17,159) | |
Selling, general and administrative | (118,797) | (143,838) | |
Depreciation, depletion and amortization | (137,259) | (140,166) | |
Interest expense | (101,709) | (77,598) | |
Other income, net, including interest income | 21,939 | 10,643 | |
Income tax expense | (49,080) | (26,159) | |
Net income | $ 146,489 | $ 77,840 | |
Less: Net loss attributable to non-controlling interest | (436) | (336) | |
Net income attributable to U.S. Silica Holdings, Inc. | $ 146,925 | $ 78,176 | |
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 available 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. Trailing Twelve Month (TTM) Adjusted EBITDA is a measure of Adjusted EBITDA over the trailing twelve months.
The following table sets forth a reconciliation of net income, the most directly comparable GAAP financial measure, to Adjusted EBITDA:
(All amounts in thousands) | Three Months Ended | ||||
December 31, | September 30, | December 31, | |||
Net income attributable to U.S. Silica Holdings, Inc. | $ 29,109 | $ 26,909 | $ 31,590 | ||
Total interest expense, net of interest income | 22,845 | 23,912 | 21,511 | ||
Provision for taxes | 8,306 | 12,064 | 10,950 | ||
Total depreciation, depletion and amortization expenses | 32,505 | 35,822 | 33,202 | ||
EBITDA | 92,765 | 98,707 | 97,253 | ||
Non-cash incentive compensation (1) | 3,910 | 3,723 | 4,875 | ||
Post-employment expenses (excluding service costs) (2) | 982 | (1,001) | (674) | ||
Merger and acquisition related expenses (3) | 665 | 421 | 1,495 | ||
Plant capacity expansion expenses (4) | 6 | 59 | 86 | ||
Business optimization projects (6) | 846 | — | 648 | ||
Facility closure costs (7) | 3,462 | 123 | 303 | ||
Other adjustments allowable under the Credit Agreement (8) | (14,045) | 105 | 170 | ||
Adjusted EBITDA | $ 88,591 | $ 102,137 | $ 104,156 | ||
(All amounts in thousands) | Year Ended | ||
December 31, | December 31, | ||
Net income attributable to U.S. Silica Holdings, Inc. | $ 146,925 | $ 78,176 | |
Total interest expense, net of interest income | 92,694 | 75,437 | |
Provision for taxes | 49,080 | 26,159 | |
Total depreciation, depletion and amortization expenses | 137,259 | 140,166 | |
EBITDA | 425,958 | 319,938 | |
Non-cash incentive compensation (1) | 14,699 | 19,653 | |
Post-employment expenses (excluding service costs) (2) | (1,698) | (2,654) | |
Merger and acquisition related expenses (3) | 2,155 | 6,984 | |
Plant capacity expansion expenses (4) | 163 | 213 | |
Contract termination expenses (5) | — | 6,500 | |
Business optimization projects (6) | 1,892 | 1,209 | |
Facility closure costs (7) | 3,737 | 1,503 | |
Other adjustments allowable under the Credit Agreement (8) | (7,906) | 212 | |
Adjusted EBITDA | $ 439,000 | $ 353,558 | |
(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) | 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. | |
(7) | 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. | |
(8) | Reflects miscellaneous adjustments permitted under the Credit Agreement. The year ended December 31, 2023 also included costs related to severance restructuring of | |
Adjusted EPS
Adjusted EPS is diluted earnings or loss per share adjusted to exclude costs associated with merger & acquisition related activities and strategic business reviews, costs associated with business optimization, facility closure costs, asset gain or loss, the effect of a non-recurring depreciation adjustment, and gain or loss on debt extinguishment.
Management believes Adjusted EPS is useful in providing period-to-period comparisons of the results of the Company's operations to assist investors in reviewing the Company's operating performance over time. Management believes it is useful to exclude certain items when comparing current performance to prior periods because these items can vary significantly depending on specific underlying transactions or events. Also, management believes certain excluded items may not relate specifically to current operating trends or be indicative of future results.
The following table sets forth a reconciliation from GAAP EPS to adjusted EPS:
Three Months Ended | |||||
December | September | December | |||
Reported Diluted EPS | $ 0.37 | $ 0.34 | $ 0.40 | ||
Merger & Acquisition | — | — | 0.02 | ||
Business Optimization | 0.01 | — | 0.01 | ||
Facility Closure Costs | 0.03 | — | — | ||
Asset (Gain)/Loss | (0.15) | — | — | ||
Depreciation Adjustment | — | 0.03 | — | ||
(Gain)/Loss on extinguishment of debt | 0.01 | 0.01 | (0.01) | ||
Other | 0.01 | — | 0.01 | ||
Total Adjustments | (0.09) | 0.04 | 0.03 | ||
Adjusted Diluted EPS | $ 0.28 | $ 0.38 | $ 0.43 | ||
Diluted Shares | 78,799 | 78,700 | 78,026 | ||
Free Cash Flow
Free Cash Flow is a non-GAAP financial measure which is calculated as net cash provided by operating activities less capital expenditures. Management believes that Free Cash Flow is a measure to assess liquidity of the business.
The following table sets forth a reconciliation of cash flows from operating activities to free cash flow:
(All amounts in thousands) | Year Ended | Three Months | |||
December 31, | December 31, | December 31, | |||
Net cash provided by operating activities | $ 263,868 | $ 262,716 | $ 54,160 | ||
Capital expenditures | (65,155) | (53,168) | (17,529) | ||
Free cash flow | $ 198,713 | $ 209,548 | $ 36,631 | ||
Net Debt
Net Debt is calculated by adding together the current portion of long-term debt and long-term debt, net and subtracting cash and cash equivalents from the total. Net debt shows how a company's indebtedness has changed over a period as a result of cash flows. Net debt allows investors to see how business financing has changed and assess whether an entity that has had a significant increase in cash has, for example, achieved this only by taking on a corresponding increase in debt. Net debt 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.
Net Leverage Ratio
Net Leverage Ratio is calculated by dividing net debt by Trailing Twelve Month (TTM) Adjusted EBITDA. Management believes that net leverage ratio provides useful information to investors because it is an important indicator of the Company's indebtedness in relation to its operating performance. Net Leverage Ratio should be considered in addition to results prepared in accordance with GAAP and should not be considered substitutes for or superior to GAAP results. In addition, our Net Leverage Ratio may not be comparable to similarly titled measures utilized by other companies.
The following table sets forth a reconciliation for net debt and net leverage ratio:
Year Ended | Three Months Ended | ||||
(All amounts in thousands) | December | March 31, | June 30, | September | December 31, |
Cash and cash equivalents | $ (280,845) | $ (139,494) | $ (186,961) | $ (222,435) | $ (245,716) |
Current portion of long-term debt | 19,535 | 13,590 | 10,152 | 19,763 | 16,367 |
Long-term debt | 1,037,458 | 897,013 | 871,913 | 847,849 | 823,670 |
Net debt | $ 776,148 | $ 771,109 | $ 695,104 | $ 645,177 | $ 594,321 |
TTM Adjusted EBITDA | $ 353,558 | $ 425,291 | $ 455,142 | $ 454,565 | $ 439,000 |
Net Leverage Ratio | 2.2x | 1.8x | 1.5x | 1.4x | 1.4x |
Forward-looking Non-GAAP Measures
A reconciliation of net leverage ratio and segment contribution margin as used in our guidance, which are forward-looking non-GAAP financial measures, to the most directly comparable GAAP financial measure, is not provided because the Company is unable to provide such reconciliations without unreasonable effort. The inability to provide each reconciliation is due to the unpredictability of the amounts and timing of events affecting the items we exclude from the non-GAAP measures.
Investor Contacts
Patricia Gil
Vice President, Investor Relations & Sustainability
(281) 505-6011
gil@ussilica.com
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SOURCE U.S. Silica Holdings, Inc.
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