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U.S. Silica Holdings, Inc. Announces Results For The Third Quarter 2012

Outlook and Guidance

The Company expects full year revenues of approximately $423 million to $433 million and Adjusted EBITDA of $144 million to $148 million.

Conference Call

U.S. Silica will host a conference call for investors tomorrow, November 2, 2012 at 11:00 a.m. Eastern Time to discuss these results. Hosting the call will be Bryan A. Shinn, President and Chief Executive Officer, and William A. White, Chief Financial Officer.

The call can 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 402328. A replay of the conference call will be available for approximately two weeks following the call. Interested parties may also listen to a simultaneous webcast of the conference call by logging onto U.S. Silica’s website at www.ussilica.com in the Investor Relation section. A replay of the webcast will also be available for approximately two weeks following the call.

About U.S. Silica Holdings, Inc.

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 200 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 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 September 30,
2012 2011
(in thousands, except per share amounts)
Sales $ 115,885 $ 73,453
Cost of goods sold (excluding depreciation, depletion and amortization) 69,706 45,241
Operating expenses
Selling, general and administrative 10,135 5,215
Advisory fees to parent - 313
Depreciation, depletion and amortization   5,968     5,295  
  16,103     10,823  
Operating income 30,076 17,389
Other (expense) income
Interest expense (3,326 ) (3,832 )
Early extinguishment of debt - -
Other income, net, including interest income   348     197  
  (2,978 )   (3,635 )
Income before income taxes 27,098 13,754
Income tax (expense) benefit   (8,302 )   (3,412 )
Net income $ 18,796   $ 10,342  
 
Earnings per share:
Basic $ 0.36 $ 0.21
Diluted $ 0.36 $ 0.21
 
       
U.S. SILICA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
 
September 30,

2012

    December 31,

2011

(in thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 93,010 $ 59,199
Accounts receivable, net 59,471 46,600
Inventories 36,228 29,307
Prepaid expenses and other current assets 8,599 8,561
Deferred income tax, net 11,171 28,007
Income tax receivable   -     3,895  
Total current assets   208,479     175,569  
Property, plant and mine development, net 393,756 336,788
Debt issuance costs, net 2,215 1,291
Goodwill 68,403 68,403
Trade names 10,436 10,436
Customer relationships, net 6,634 6,942
Other assets   7,266     6,367  
Total assets $ 697,189   $ 605,796  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Book overdraft $ 6,498 $ 5,588
Accounts payable 39,598 36,579
Accrued liabilities 9,415 9,875
Accrued interest 120 1,659
Current portion of long-term debt 6,364 6,364
Income tax payable 10,197 -
Current portion of deferred revenue   6,118     10,393  
Total current liabilities   78,310     70,458  
Long-term debt 253,600 255,425
Note payable to parent - 15,000
Liability for pension and other post-retirement benefits 47,630 52,078
Deferred revenue 946 2,128
Deferred income tax, net 64,813 75,915
Other long-term obligations   13,702     12,858  
Total liabilities 459,001 483,862
 
Commitments and contingencies
 
Stockholders’ Equity:
Common stock 529 500
Preferred stock - -
Additional paid-in capital 162,911 103,757
Retained earnings 87,398 30,038
Treasury stock, at cost (1,050 ) -
Accumulated other comprehensive loss   (11,600 )   (12,361 )
Total stockholders’ equity   238,188     121,934  
Total liabilities and stockholders’ equity $ 697,189   $ 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.

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