U.S. Silica(SLCA) - 2021 Q1 - Quarterly Report

PART I Financial Information Financial Statements The company reported a Q1 2021 net loss of $20.9 million on sales of $234.4 million, an improvement from the prior year Condensed Consolidated Balance Sheets Total assets decreased slightly to $2.218 billion, while total liabilities and stockholders' equity also saw minor reductions Key Balance Sheet Items | Account | March 31, 2021 ($ thousands) | December 31, 2020 ($ thousands) | | :--- | :--- | :--- | | Total Current Assets | 497,133 | 486,313 | | Total Assets | 2,218,233 | 2,246,947 | | Total Current Liabilities | 197,850 | 194,895 | | Total Liabilities | 1,599,958 | 1,620,156 | | Total Stockholders' Equity | 618,275 | 626,791 | Condensed Consolidated Statements of Operations Q1 2021 net loss narrowed to $20.8 million from $72.3 million year-over-year, driven by lower impairment charges Key Operational Metrics | Metric | Three Months Ended March 31, 2021 ($ thousands) | Three Months Ended March 31, 2020 ($ thousands) | | :--- | :--- | :--- | | Total Sales | 234,416 | 269,599 | | Operating Loss | (10,183) | (104,085) | | Net Loss | (20,935) | (72,605) | | Net Loss Attributable to U.S. Silica | (20,778) | (72,345) | | Diluted Loss Per Share | (0.28) | (0.98) | - Goodwill and other asset impairments were only $38 thousand in Q1 2021, compared to a significant $103.9 million in Q1 2020, which was the primary driver for the reduced operating and net losses[14] Condensed Consolidated Statements of Cash Flows Cash flow from operations turned positive at $13.6 million, a significant improvement from a $38.1 million use in Q1 2020 Key Cash Flow Activities | Activity | Three Months Ended March 31, 2021 ($ thousands) | Three Months Ended March 31, 2020 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | 13,642 | (38,129) | | Net cash used in investing activities | (3,534) | (16,386) | | Net cash (used in) provided by financing activities | (6,617) | 13,476 | | Net increase (decrease) in cash | 3,491 | (41,039) | Notes to Condensed Consolidated Financial Statements The notes detail segment performance, debt structure, and legal contingencies, including 52 active product liability claims Sales by Segment and Category (Q1 2021 vs Q1 2020, $ thousands) | Category | Oil & Gas Proppants 2021 | Industrial & Specialty Products 2021 | Oil & Gas Proppants 2020 | Industrial & Specialty Products 2020 | | :--- | :--- | :--- | :--- | :--- | | Product | 78,671 | 112,719 | 108,277 | 113,884 | | Service | 43,026 | — | 47,438 | — | | Total Sales | 121,697 | 112,719 | 155,715 | 113,884 | Segment Contribution Margin (Q1 2021 vs Q1 2020, $ thousands) | Segment | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Oil & Gas Proppants | 21,540 | 32,891 | | Industrial & Specialty Products | 40,038 | 43,348 | | Total segment contribution margin | 61,578 | 76,239 | - As of March 31, 2021, the company had total debt of $1.237 billion, primarily consisting of a $1.232 billion Term Loan maturing in 2025 and $25 million drawn on its Revolver[55] - As of March 31, 2021, there were 52 active silica-related product liability claims pending against the company[82] Management's Discussion and Analysis of Financial Condition and Results of Operations Sales declined 13% year-over-year due to weakness in the Oil & Gas segment, with Adjusted EBITDA falling to $38.3 million Recent Trends and Outlook The Oil & Gas segment faces headwinds from reduced drilling activity, while the Industrial segment remains more stable - Demand for proppant and logistics services has declined as customers reduce capital budgets and drilling operations in response to lower oil prices and the COVID-19 pandemic[125] Oil & Gas Proppants Segment Performance (Q1 2021 vs. Q4 2020) | Metric | Q1 2021 | Q4 2020 | % Change | | :--- | :--- | :--- | :--- | | Sales ($ thousands) | 121,697 | 120,344 | 1% | | Tons Sold (thousands) | 2,577 | 1,901 | 36% | | Average Selling Price per Ton ($) | 47.22 | 63.31 | (25)% | Results of Operations Q1 2021 sales fell 13% to $234.4 million, but operating loss improved significantly due to the absence of prior-year impairments Sales and Volume Analysis (Q1 2021 vs Q1 2020) | Segment | Sales Q1 2021 ($M) | Sales Q1 2020 ($M) | Tons Sold Q1 2021 (k) | Tons Sold Q1 2020 (k) | | :--- | :--- | :--- | :--- | :--- | | Oil & Gas Proppants | 121.7 | 155.7 | 2,577 | 3,202 | | Industrial & Specialty Products | 112.7 | 113.9 | 984 | 959 | | Total | 234.4 | 269.6 | 3,561 | 4,161 | - The Oil & Gas Proppants contribution margin decreased by $11.4 million to $21.5 million in Q1 2021, driven by a $34.0 million decrease in sales[163] - Selling, general and administrative (SG&A) expenses decreased by 13% to $26.2 million due to cost reduction measures[164] How We Evaluate Our Business Management uses key metrics including tons sold and non-GAAP measures like Segment Contribution Margin and Adjusted EBITDA Adjusted EBITDA Reconciliation ($ thousands) | Line Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net loss attributable to U.S. Silica | (20,778) | (72,345) | | Interest expense, net | 15,803 | 22,194 | | Provision for taxes | (4,354) | (36,086) | | Depreciation, depletion and amortization | 41,348 | 38,449 | | EBITDA | 32,019 | (47,788) | | Goodwill and other asset impairments | 38 | 103,866 | | Other Adjustments | 5,855 | (10,246) | | Adjusted EBITDA | 38,316 | 48,246 | Liquidity and Capital Resources The company maintains sufficient liquidity with $154.4 million in cash and $51.7 million available under its revolver - As of March 31, 2021, the company had $299.3 million in working capital and $51.7 million available under its Revolver[174] - The company anticipates 2021 capital expenditures to be in the range of $30 million to $40 million[184] Summary of Cash Flows ($ thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Operating activities | 13,642 | (38,129) | | Investing activities | (3,534) | (16,386) | | Financing activities | (6,617) | 13,476 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks stem from variable interest rate debt and customer credit in the volatile oil and gas sector - As of March 31, 2021, the company had $1.257 billion of debt outstanding; a hypothetical 1.0% increase in interest rates would change annual interest expense by $12.6 million[200] - The company is subject to credit risk from nonpayment by customers, particularly those who have experienced financial difficulties[202][203] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - Based on an evaluation as of March 31, 2021, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[205] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[207] PART II Other Information Legal Proceedings The company faces 52 active silica-related product liability claims but does not expect a material adverse financial impact - As of March 31, 2021, U.S. Silica was a defendant in 52 active silica-related product liability claims[213] - One new silica-related claim was brought against the company during the three months ended March 31, 2021[213] Risk Factors No material changes were reported from the risk factors disclosed in the company's 2020 Annual Report on Form 10-K - The company reported no material changes to the risk factors disclosed in its 2020 Annual Report on Form 10-K[216] Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased in Q1 2021, with $126.5 million remaining available under the company's buyback program - No shares of common stock were repurchased under the share repurchase program during the three months ended March 31, 2021[217] - As of March 31, 2021, $126.5 million remained available under the authorized share repurchase program[217] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[220] Mine Safety Disclosures Information regarding mine safety violations is included in Exhibit 95.1 of the quarterly report - Mine safety disclosures required by Section 1503(a) of the Dodd-Frank Act are included in Exhibit 95.1 to the Form 10-Q[221] Other Information The company reported no other information for this item - None[222] Exhibits This section lists all exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files