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U.S. Silica Posts Strong Second Quarter

U.S. Silica Holdings Inc. announced net income of $6.2 million, or $0.08 per basic and diluted share for the second quarter of 2019. In its oil and gas segment, the company is reporting:

•    Revenue of $273.1 million for the second quarter of 2019 compared with $260.5 million in the first quarter of 2019, up 5% sequentially and down 16% over the second quarter of 2018.
•    Tons sold of 3.932 million for the second quarter of 2019 compared with 3.864 million tons sold in the first quarter of 2019, up 2% sequentially and 13% over the second quarter of 2018.
•    Segment contribution margin of $71.5 million, or $18.17 per ton, for the second quarter of 2019 compared with $58.6 million in the first quarter of 2019, up 22% sequentially and down 38% from the second quarter of 2018.

In its Oil & Gas segment, the company sold a record 3.9 million tons, up 2% sequentially, as it continues to ramp up new West Texas capacity. Volumes in Oil & Gas were negatively affected in the quarter due to flooding in the Midwest, which took the company’s Festus, Mo., plant offline for nearly two months.

Oil & Gas contribution margin of $71.5 million was better than expected, despite some pricing pressure in West Texas, partly due to a strong performance from SandBox, a rebound in Northern White sand pricing and reduced operating costs, some of which may not repeat in the third quarter. SandBox posted another record load count, with loads up 14% quarter over quarter, and June exit load volumes hitting an all-time high.

"Our Industrial and Specialty Products business delivered record contribution margin in the second quarter and Sandbox had all-time record delivered loads,'' said Bryan Shinn, president and chief executive officer. "These successes are a result of the significant growth and diversification strategy we have executed over the last three years. Going forward, we expect U.S. Silica to transition from a net cash consumer to a net cash generator. While we intend to continue investing in modest industrial growth projects and Sandbox technology and growth, we are modeling substantially lower overall capex, minimal investments in oil and gas sand and stable dividend payments. We plan to deploy some of our projected cash flow to reduce our gross debt to Adjusted EBITDA leverage ratio to 3 times by the end of 2021, through a combination of debt reduction and profitable growth,'' he added.