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

- First quarter revenue of $234.4 million

- GAAP EPS loss for the quarter of $(0.28) per basic and diluted share and adjusted EPS loss of $(0.27) per basic and diluted share

- Overall volumes increased 26% sequentially with growth in both Industrial & Specialty Products and Oil & Gas Segments

KATY, Texas, April 30, 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 a net loss of $20.8 million, or $(0.28) per basic and diluted share, for the first quarter ended March 31, 2021, compared with net income of $4.6 million, or $0.06 per basic and diluted share, for the fourth quarter of 2020.

Bryan Shinn, Chief Executive Officer, commented, "I am pleased with our strong financial and operational performance during the first quarter.  We delivered impressive results which exceeded both revenue and Adjusted EBITDA expectations.  Our volumes grew in both operating segments and we recently announced another price increase for our industrial and specialty products effective as of May 1st. 

Industrial activity and commodity prices have rebounded from earlier this year and we are optimistic that markets are in the early stages of a broader recovery, particularly as we look ahead to the second half of 2021 and into 2022. We are well-positioned to benefit from and respond to this improving market dynamic."

Shinn continued "As a leader in the industrial minerals market, we are poised to monetize a compelling new pipeline of specialty and performance products that serve traditional end markets such as housing, food and beverage, automotive, biopharma and energy as well as emerging sustainable industries including solar energy, wind power, cleaner air, green diesel, food quality, and energy-efficient buildings.

For our valued customers, we will continue to focus on ensuring that we consistently deliver the operational excellence you have come to expect from us."

First Quarter 2021 Highlights

Total Company

• Revenue of $234.4 million for the first quarter of 2021 decreased 13% when compared with the first quarter of 2020 and increased 3% compared with $227.3 million in the fourth quarter of 2020. However, excluding the $27.2 million benefit in the Oil & Gas segment related to customer shortfall penalties in the fourth quarter, revenue increased 17% sequentially.
• Overall tons sold of 3.561 million for the first quarter of 2021 increased 26% compared with 2.827 million tons sold in the fourth quarter of 2020 and decreased 14% when compared with the first quarter of 2020.
• Contribution margin of $61.6 million for the first quarter of 2021 decreased 19% when compared with the first quarter of 2020 and decreased 31% compared with $89.9 million in the fourth quarter of 2020. However, excluding the $27.2 million benefit in the Oil & Gas segment related to customer shortfall penalties in the fourth quarter, contribution margin decreased 2% sequentially. In addition, costs associated with winter weather events as well as empty railcar moves and trucking inflation negatively impacted the first quarter.
• Adjusted EBITDA of $38.3 million for the first quarter of 2021 decreased 40% compared with $63.6 million in the fourth quarter of 2020. However, excluding the $27.2 million benefit in the Oil & Gas segment related to customer shortfall penalties in the fourth quarter, adjusted EBITDA increased 5% sequentially.

Industrial & Specialty Products (ISP)

• Revenue of $112.7 million for the first quarter of 2021 increased 5% compared with $106.9 million in the fourth quarter of 2020, and was virtually flat when compared with the first quarter of 2020.
• Tons sold totaled 0.984 million for the first quarter of 2021 increased 6% compared with 0.926 million tons sold in the fourth quarter of 2020, and increased 3% when compared with the first quarter of 2020.
• Segment contribution margin of $40.0 million, or $40.69 per ton, for the first quarter of 2021 increased 4% compared with $38.4 million in the fourth quarter of 2020, and decreased 8% when compared with the first quarter of 2020.

Oil & Gas

• Revenue of $121.7 million for the first quarter of 2021 decreased 22% when compared with the first quarter of 2020 and was virtually flat when compared with $120.3 million in the fourth quarter of 2020. However, excluding the $27.2 million benefit in the Oil & Gas segment related to customer shortfall penalties in the fourth quarter, revenue increased 31% sequentially.
• Tons sold of 2.577 million for the first quarter of 2021 increased 36% compared with 1.901 million tons sold in the fourth quarter of 2020, and decreased 20% when compared with the first quarter of 2020.
• Segment contribution margin of $21.5 million, or $8.36 per ton, decreased 35% when compared with the first quarter of 2020 and decreased 58% when compared with $51.5 million in the fourth quarter of 2020. However, excluding the $27.2 million benefit in the Oil & Gas segment related to customer shortfall penalties in the fourth quarter, segment contribution margin decreased 11% sequentially.
• The reduction in contribution margin is primarily related to positive accounting items discussed above and is consistent with the Company's fourth quarter comments on the expected contribution margin for the first quarter of this year.

Capital Update

As of March 31, 2021, the Company had $154.4 million in cash and cash equivalents and total debt was $1.240 billion. Capital expenditures in the first quarter totaled $3.5 million. During the first quarter of 2021, the Company generated $13.6 million in cash flow from operations aided by a $16 million tax refund.  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 in 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.  It has implemented measures to leverage and further develop this industrial core, placing the Company on a long-term financially rewarding path.

In 2021, the Company is reinforcing its commitment to three strategic priorities:  1) growing its Industrial & Specialty Products segment, 2) repositioning its Oil & Gas segment, and 3) prioritizing free cash flow.

The Industrial & Specialty Products segment continues to prove its resiliency through cycles and is expected to consistently outpace U.S. GDP growth. In the second quarter, the Company expects Industrial & Specialty Products segment contribution margin to increase 5% to 10% sequentially.   

The oil and gas industry is emerging from the worst downturn in recent oilfield history. As we progress through the year and into 2022 and economic activity rebounds and gains momentum, the Company expects a robust energy recovery. Given this backdrop, the Company anticipates second quarter sequential Oil & Gas contribution margin to be up 30 – 35%.

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

Conference Call

U.S. Silica will host a conference call for investors today, April 30, 2021 at 7:30 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 13718876. The replay will be available through May 30, 2021.