U.S. Silica Holdings, Inc.

Fourth quarter 2023 revenue was $336 million, down 8% sequentially. Adjusted EBITDA was $88.6 million, down 13% sequentially, and total company contribution margin was $116.9 million, down 10% sequentially. Tons sold declined 6% sequentially to $3.9 million. Oil and Gas revenue was $200.6 million, down 13% sequentially, with segment contribution margin of $70.1 million, or $24.13 per ton. Industrial and Specialty Products revenue was $135.5 million, flat sequentially, with segment contribution margin of $46.8 million, or $48.85 per ton. For 2023, management said adjusted EBITDA grew 24% year over year, company contribution margin grew 16%, net income rose 88%, and cash flow from operations was $264 million. For Q4, cash flow from operations was $54.2 million, SG&A was $31.7 million, and cash and cash equivalents were $245.7 million at quarter-end. The company forecast 2024 capital spending of approximately $60 million, full-year SG&A up approximately 5% year over year, depreciation/depletion/amortization down approximately 5%, and an effective tax rate of approximately 26%. Management said net leverage should remain below 1.5x through 2024.

Bryan Shinn framed 2023 as a “fantastic” year and emphasized that the company strengthened its financial foundation while advancing its growth strategy. He highlighted disciplined pricing in Oil and Gas, improved product mix and pricing in Industrials, and a lean cost structure as the drivers of record profitability. His tone was upbeat and confident, especially around 2024 visibility, contract coverage, new product adoption, and the company’s ability to keep building value.

Kevin Hough focused on the earnings bridge, noting that Q4 sequential declines reflected softer activity in both segments, with Oil and Gas volumes down 7% and ISP volumes down 4%. He highlighted strong cash generation of $54.2 million in Q4, $17.5 million of capital investment, and quarter-end cash of $245.7 million, while also noting the company drew $0 on its revolver and had $134.7 million available after letters of credit. On capital structure, he said the company extinguished $25 million of debt in Q4, has retired $334 million since Q2 2022, and expects about $33.8 million of annual interest expense savings; he also reiterated 2024 targets for about $60 million of capex, SG&A up about 5%, D&A down about 5%, and a 26% tax rate.

Analysts focused on the ISP margin outlook, the reclassification of Northern White Sand into ISP, the implications of industry consolidation, and the use of capital between debt paydown and shareholder returns. Management said ISP contribution margin growth should remain in the 8% to 10% annual window they had previously discussed, and clarified that moving Northern White Sand management to ISP does not mean exiting Oil and Gas sales. On consolidation, management argued the frac sand industry remains fragmented and said more M&A could improve discipline and stabilize pricing, while also noting that pricing in Oil and Gas has stabilized but is expected to be down a couple of dollars per ton versus Q4 levels.