U.S. Silica Holdings Inc. announced a net loss of $20.0 million, or $0.27 per diluted share, for the third quarter ended Sept. 30. This compared with net income of $26.0 million, or $0.34 per diluted share, for the second quarter of 2021, which benefited from a pre-tax customer settlement of $48.9 million.
The third quarter results were negatively impacted by $4.8 million pre-tax, or $0.05 per diluted share after-tax, of charges related to merger and acquisition related expense, plant startup and expansion costs, and other adjustments, resulting in adjusted EPS for the third quarter of $(0.22) per diluted share.
Bryan Shinn, chief executive officer, commented, “I am proud of our team’s execution and ability to deliver on our strategy to generate strong cash flow and strengthen our balance sheet. In the third quarter, we paid off our revolver balance and increased our cash on hand to over $250 million.
“In our Industrial & Specialty Products segment, we continue to enjoy robust customer demand and continued success with new offerings including several product launches and successful customer scale up trials during the quarter. We are also moving quickly and aggressively to combat macro headwinds associated with logistical and supply chain constraints, overall cost inflation, and higher natural gas prices through the implementation of additional price increases and surcharges.
“In our Oil & Gas segment, sand and logistics demand moderated slightly during the quarter as completions activity slowed due to annual budget exhaustion at some customers. Additionally, this segment experienced a shift in customer mix with more spot sales at lower margins and higher costs, including higher natural gas prices and accelerated plant maintenance. Sandbox was a bright spot during the quarter with improved sequential profitability from increased pricing.
“Earlier this month, we announced that we have commenced a review of strategic alternatives for our Industrial & Specialty Products segment. We are considering a broad range of options, including a potential sale or separation of this segment. Both our Industrial & Specialty Products and Oil & Gas segments are industry leaders, and it is from a position of strength that we believe a separation or sale of the Industrial & Specialty Products segment has the potential to unlock significant value and maximize returns for all of our shareholders and other stakeholders.
“Looking ahead, we are well positioned for strong growth in our Industrial & Specialty Products segment, driven by new opportunities in several fast growing end-uses, new product adoption, expected GDP expansion and planned price increases. In our Oil & Gas segment, we are forecasting robust proppant and logistics demand in 2022 as energy company budgets reset and completions activity increases to levels consistent with very supportive commodity prices. We also expect improved pricing and increased contract coverage with potential upside if commodity prices rise further.”
Revenue of $267.3 million for the third quarter of 2021 increased 51% when compared with the third quarter of 2020 and decreased 16% compared with $317.3 million in the second quarter of 2021. However, excluding the $48.9 million benefit in the Oil & Gas segment related to a customer settlement, revenues were flat sequentially.
Overall tons sold of 3.989 million for the third quarter of 2021 decreased 3% compared with 4.104 million tons sold in the second quarter of 2021 and increased 78% when compared with the third quarter of 2020.
Contribution margin of $66.7 million for the third quarter of 2021 decreased 10% when compared with the third quarter of 2020 and decreased 48% compared with $128.6 million in the second quarter of 2021. However, excluding the $48.9 million benefit in the Oil & Gas segment, contribution margin decreased 16% sequentially.
Oil & Gas revenue of $141.8 million for the third quarter of 2021 decreased 27% when compared with $193.3 million in the second quarter of 2021 and increased 114% when compared with the third quarter of 2020. However, excluding the $48.9 million customer settlement, revenue decreased 2% when compared with the second quarter of 2021.
Tons sold of 2.912 million for the third quarter of 2021 decreased 4% compared with 3.024 million tons sold in the second quarter of 2021 and increased 127% when compared with the third quarter of 2020.
Segment contribution margin of $25.7 million, or $8.83 per ton, decreased 69% when compared with $82.7 million in the second quarter of 2021 and decreased 18% when compared with the third quarter of 2020.
However, excluding the $48.9 million customer settlement, segment contribution margin decreased 24% when compared with the second quarter of 2021, and was impacted by a shift in customer mix with more spot sales at lower margins and higher costs, including higher natural gas prices and accelerated plant maintenance.