U.S. Silica Holdings Inc. announced its fourth quarter and full-year results for the period ended Dec. 31, 2023. The company is reporting full-year 2023 net income of $146.9 million, an 88% year-over-year increase. Full-year 2023 total company contribution margin of $549.7 million represented a 16% year-over-year increase.
Net income for the fourth quarter ended Dec. 31, 2023, was $29.1 million, or $0.37 per diluted share. The fourth quarter results were impacted by $9.1 million pre-tax, or $0.09 per diluted share after-tax, of gains primarily related to asset sales, partially offset by facility closure costs, business optimization, and the loss on extinguishment of debt, resulting in adjusted EPS (a non-GAAP measure) of $0.28 per diluted share.
These results compared with net income of $26.9 million, or $0.34 per diluted share, for the third quarter of 2023, which was impacted by $3.8 million pre-tax, or $0.04 per diluted share after-tax, of charges primarily related to a non-recurring adjustment to depreciation and the loss on extinguishment of debt, resulting in adjusted EPS (a non-GAAP measure) of $0.38 per diluted share.
“During the fourth quarter, we continued to strengthen our financial foundation and advance our growth strategy while closing out an exceptionally strong and historic year for the company,” said Bryan Shinn, U.S. Silica’s chief executive officer. “In 2023, we delivered on our guidance of approximately 25% year-over-year improvement in Adjusted EBITDA, generated another year of robust cash flow from operations of $264 million, managed an 88% increase in annual net income, and improved our total company contribution margin by 16% year-over-year. These impressive annual results were driven by healthy customer demand, disciplined pricing in our Oil and Gas segment, and increased pricing and improved product mix for our Industrial and Specialty Products segment, all of which was supported by our optimized and lean cost structure. Furthermore, in the fourth quarter, we repurchased and extinguished an additional $25 million of debt, improving our balance sheet and maintaining a low net leverage ratio of 1.4x.
“In our Oil and Gas segment, thanks to our disciplined pricing approach, coupled with our variable cost reduction initiatives, we delivered a strong segment contribution margin of 35% for the quarter despite the demand impact of lower drilling and completions activity due to weather and fourth-quarter seasonality. In the fourth quarter, we signed four customer contract amendments and extensions, reflecting our stellar market reputation for reliability and ability to deliver proppant at scale. Additionally, our new, patent-pending Guardian frac fluid filtration system continues to perform well and gain momentum in the market, and we expect to add several incremental systems to the fleet in 2024.
“In our Industrial and Specialty Products segment, we benefited from ongoing structural cost reductions, price increases and greater sales from advanced materials, resulting in improved profitability with a 27% increase in contribution margin on a per ton basis when compared to the prior year quarter. As expected, however, our fourth quarter volumes declined on a year-over-year basis, due to a combination of normal reduced seasonal demand, customer facility maintenance, and customer year-end inventory management.
“Looking ahead, 2024 is shaping up to be another strong year of operating cash flow generation. Our Oil and Gas segment is well positioned in active well completion basins, with strong customer commitments that provide cash flow visibility. In our Industrial segment, customer demand remains strong overall, and we anticipate year-over-year improvements as we realize a full quarter of price increases,” Shin concluded.