U.S. SILICA HOLDINGS, INC. (SLCA)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 revenue was $325.9M with GAAP EPS of $0.17 and adjusted EPS of $0.20; adjusted EBITDA was $77.1M, down sequentially on softer pricing in Oil & Gas and mix, while total tons sold rose 6% q/q .
• ISP segment delivered sequential growth (revenue +5%, tons +10%) and a 7% YoY increase in contribution margin; Oil & Gas volumes increased 5% q/q but margins compressed on slightly lower pricing, partly linked to low natural gas prices .
• Balance sheet progress: $40.9M cash from operations, $12.4M capex, voluntary $25M term loan repayment, and term loan repricing reducing interest rate by 85 bps; net leverage 1.5x TTM Adj. EBITDA .
• Bold corporate event: company entered into definitive agreement to be acquired by Apollo Funds at ~$1.85B enterprise value; no earnings call held due to the pending transaction, which is a key stock reaction catalyst .
• Consensus estimates from S&P Global were unavailable for Q1 2024, limiting beat/miss analysis (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

• ISP execution: “revenue and volumes increased 5% and 10% sequentially, respectively, with margins increasing 7% year over year” and several new customer agreements signed with favorable pricing, aided by structural cost reductions .
• Cash generation and de-leveraging: $40.9M operating cash flow, $25M voluntary debt repayment, interest rate reduced by 85 bps, plus credit rating upgrades (Moody’s and S&P) .
• Long-term contracts and product innovation: ~80% of capacity under long-term contracts; Guardian frac fluid filtration system “continues to gain momentum” in the market .

What Went Wrong

• Oil & Gas margin pressure: “volumes were up 5% sequentially, although our margins were impacted by slightly lower pricing, driven in part by lower natural gas prices,” pulling segment contribution margin down sequentially .
• Company-level softness vs prior year: revenue down 26% YoY, adjusted EBITDA down 38% YoY, tons sold down 17% YoY, reflecting broader activity/pricing normalization vs a strong 2023 baseline .
• Reporting transition delay: Northern White Sand reclassification from Oil & Gas to ISP postponed, adding temporary complexity to segment trend comparisons .

Financial Results

Consolidated Results vs Prior Periods and YoY

Notes: Adjusted EPS and Adjusted EBITDA are non-GAAP metrics per company definitions .

Segment Breakdown

KPIs and Balance Sheet

Results vs Estimates

Consensus estimates from S&P Global were unavailable; beat/miss cannot be determined.

Guidance Changes

No explicit numerical revenue/EPS/margin guidance was provided in Q1 2024 due to the pending transaction .

Earnings Call Themes & Trends

Note: No Q1 2024 call was held due to the Apollo transaction .

Management Commentary

• “We generated robust cash flow from operations to start the year, positioning us well for the remainder of 2024.” — Bryan Shinn, CEO .
• “In our Oil & Gas segment, volumes were up 5% sequentially, although our margins were impacted by slightly lower pricing, driven in part by lower natural gas prices... Additionally, our new, patent-pending Guardian frac fluid filtration system continues to gain momentum in the market.” .
• “In our Industrial and Specialty Products segment, revenue and volumes increased 5% and 10% sequentially, respectively, with margins increasing 7% year over year... we continue to benefit from ongoing structural cost reductions.” .
• “We are pleased to reach the separately announced agreement with Apollo, which will provide our stockholders with compelling, certain, cash value... [and] a partner who is committed to helping us achieve our long-term objectives.” .
• Context from prior quarter: “disciplined pricing in our Oil and Gas segment, and increased pricing and improved product mix for our Industrial and Specialty Products segment” supported strong 2023 results .

Q&A Highlights

• No Q1 2024 earnings call was held due to the pending Apollo acquisition; therefore, no Q&A or clarifications were provided this quarter .

Estimates Context

• Wall Street consensus (S&P Global) for Q1 2024 EPS and revenue was unavailable; beat/miss analysis cannot be determined (S&P Global data unavailable).
• Given sequential volume improvements (total tons +6% q/q; O&G tons +5% q/q) but lower pricing and margin compression, we would expect estimates for FY 2024 profitability to reflect caution in O&G margins while acknowledging ISP resilience .

Key Takeaways for Investors

• Acquisition is the dominant catalyst: Apollo’s ~$1.85B EV deal and the absence of a call re-frame the near-term stock narrative around deal close and regulatory timing rather than quarterly fundamentals .
• Operations remain solid: sequential volume gains and ISP pricing/mix strength offset pricing headwinds in O&G; adjusted EBITDA margin compressed to 23.7% on price/mix but cash generation persisted .
• De-leveraging continues: $25M debt extinguished and term loan repricing lower interest burden; net leverage at 1.5x despite lower TTM EBITDA, providing balance sheet flexibility .
• ISP is an anchor of stability: sequential revenue and ton growth, plus YoY margin improvement signal durable demand and effective cost actions even amid softer macro pockets .
• O&G outlook nuanced: volumes improving, but pricing tied to commodity dynamics (notably natural gas); capacity under ~80% long-term contracts supports visibility, though margin sensitivity to pricing persists .
• Reporting change delayed: Northern White Sand reclassification postponed, temporarily complicating segment trend bridge; expect future clarification post financing priorities .
• With consensus unavailable, trading implications skew to deal dynamics (spread, timing, regulatory milestones) and any updates on contract coverage, pricing, and Guardian adoption momentum in subsequent disclosures .