UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-35416

 

U.S. Silica Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	26-3718801
(State or other jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

24275 Katy Freeway, Suite 600

Katy, Texas 77494

(Address of Principal Executive Offices) (Zip Code)

(281) 258-2170

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	SLCA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	þ	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐  No  þ

As of October 28, 2020, 73,949,978 shares of common stock, par value $0.01 per share, of the registrant were outstanding.

U.S. SILICA HOLDINGS, INC.

FORM 10-Q

For the Quarter Ended September 30, 2020

TABLE OF CONTENTS

		Page
PART I	Financial Information (Unaudited):
Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	49
PART II	Other Information:
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	52
Signatures		S-1

PART I-FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; dollars in thousands)

	September 30, 2020		December 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	134,923	$	185,740
Accounts receivable, net	173,827		182,238
Inventories, net	104,711		124,432
Prepaid expenses and other current assets	44,280		16,155
Income tax deposits	—		475
Total current assets	457,741		509,040
Property, plant and mine development, net	1,415,636		1,517,587
Operating lease right-of-use assets	41,265		53,098
Goodwill	185,649		273,524
Intangible assets, net	164,632		183,815
Other assets	11,724		16,170
Total assets	$	2,276,647	$	2,553,234
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	128,193	$	248,237
Current portion of operating lease liabilities	30,887		53,587
Current portion of long-term debt	44,248		18,463
Current portion of deferred revenue	15,531		15,111
Total current liabilities	218,859		335,398
Long-term debt, net	1,208,969		1,213,985
Deferred revenue	28,811		35,523
Liability for pension and other post-retirement benefits	67,913		58,453
Deferred income taxes, net	40,334		38,585
Operating lease liabilities	76,827		117,964
Other long-term liabilities	31,268		36,746
Total liabilities	1,672,981		1,836,654
Commitments and Contingencies (Note O)
Stockholders’ Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; zero issued and outstanding at September 30, 2020 and December 31, 2019	—		—
Common stock, $0.01 par value, 500,000,000 shares authorized; 83,076,544 issued and 73,937,777 outstanding at September 30, 2020; 82,601,926 issued and 73,601,950 outstanding at December 31, 2019	827		823
Additional paid-in capital	1,197,464		1,185,116
Retained deficit	(400,061)		(279,956)
Treasury stock, at cost, 9,138,767 and 8,999,976 shares at September 30, 2020 and December 31, 2019, respectively	(181,542)		(180,912)
Accumulated other comprehensive loss	(24,841)		(19,854)
Total U.S. Silica Holdings, Inc. stockholders’ equity	591,847		705,217
Non-controlling interest	11,819		11,363
Total stockholders' equity	603,666		716,580
Total liabilities and stockholders’ equity	$	2,276,647	$	2,553,234

The accompanying notes are an integral part of these financial statements.

2

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; dollars in thousands, except per share amounts)

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2020		2019		2020		2019
Sales:
Product	$	159,637	$	287,977	$	541,998	$	887,878
Service	16,835		73,837		76,610		247,540
Total sales	176,472		361,814		618,608		1,135,418
Cost of sales (excluding depreciation, depletion and amortization):
Product	93,747		226,797		373,373		687,186
Service	13,845		56,836		60,279		188,145
Total cost of sales (excluding depreciation, depletion and amortization)	107,592		283,633		433,652		875,331
Operating expenses:
Selling, general and administrative	27,216		40,208		96,394		113,523
Depreciation, depletion and amortization	40,069		47,126		115,604		136,625
Goodwill and other asset impairments	222		130		108,044		130
Total operating expenses	67,507		87,464		320,042		250,278
Operating income (loss)	1,373		(9,283)		(135,086)		9,809
Other (expense) income:
Interest expense	(19,274)		(24,733)		(63,730)		(72,476)
Other (expense) income, net, including interest income	(409)		3,280		15,592		19,076
Total other expense	(19,683)		(21,453)		(48,138)		(53,400)
Loss before income taxes	(18,310)		(30,736)		(183,224)		(43,591)
Income tax benefit	4,094		7,671		63,785		7,259
Net loss	$	(14,216)	$	(23,065)	$	(119,439)	$	(36,332)
Less: Net loss attributable to non-controlling interest	(254)		(28)		(778)		(121)
Net loss attributable to U.S. Silica Holdings, Inc.	$	(13,962)	$	(23,037)	$	(118,661)	$	(36,211)
Loss per share attributable to U.S. Silica Holdings, Inc.:
Basic	$	(0.19)	$	(0.31)	$	(1.61)	$	(0.49)
Diluted	$	(0.19)	$	(0.31)	$	(1.61)	$	(0.49)
Weighted average shares outstanding:
Basic	73,688		73,328		73,601		73,223
Diluted	73,688		73,328		73,601		73,223
Dividends declared per share	$	—	$	0.06	$	0.02	$	0.19

The accompanying notes are an integral part of these financial statements.

3

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited; dollars in thousands)

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2020		2019		2020		2019
Net loss	$	(14,216)	$	(23,065)	$	(119,439)	$	(36,332)
Other comprehensive loss:
Unrealized gain (loss) on derivatives (net of tax of $231 and $156 for the three months ended September 30, 2020 and 2019, respectively, and $973 and $(803) for the nine months ended September 30, 2020 and 2019, respectively)	725		491		3,053		(2,520)
Foreign currency translation adjustment (net of tax of $202 and $(170) for the three months ended September 30, 2020 and 2019, respectively, and $212 and $(181) for the nine months ended September 30, 2020 and 2019, respectively)	631		(543)		662		(577)
Pension and other post-retirement benefits liability adjustment (net of tax of $(1,048) and $(1,270) for the three months ended September 30, 2020 and 2019, respectively, and $(2,773) and $(2,327) for the nine months ended September 30, 2020 and 2019, respectively)	(3,287)		(3,987)		(8,702)		(7,304)
Comprehensive loss	$	(16,147)	$	(27,104)	$	(124,426)	$	(46,733)
Less: Comprehensive loss attributable to non-controlling interest	(254)		(28)		(778)		(121)
Comprehensive loss attributable to U.S. Silica Holdings, Inc.	$	(15,893)	$	(27,076)	$	(123,648)	$	(46,612)

The accompanying notes are an integral part of these financial statements.

4

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited; dollars in thousands, except per share amounts)

	Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Loss		Total U.S. Silica Holdings Inc., Stockholders’ Equity		Non-controlling Interest		Total Stockholders’ Equity
Balance at June 30, 2020	$	826	$	(181,413)	$	1,192,068	$	(386,110)	$	(22,910)	$	602,461	$	10,807	$	613,268
Net loss	—		—		—		(13,962)		—		(13,962)		(254)		(14,216)
Unrealized gain on derivatives	—		—		—		—		725		725		—		725
Foreign currency translation adjustment	—		—		—		—		631		631		—		631
Pension and post-retirement liability	—		—		—		—		(3,287)		(3,287)		—		(3,287)
Cash dividend declared	—		—		—		11		—		11		—		11
Contributions from non-controlling interest	—		—		—		—		—		—		1,266		1,266
Common stock-based compensation plans activity:
Equity-based compensation	—		—		5,397		—		—		5,397		—		5,397
Tax payments related to shares withheld for vested restricted stock and stock units	1		(129)		(1)		—		—		(129)		—		(129)
Balance at September 30, 2020	$	827	$	(181,542)	$	1,197,464	$	(400,061)	$	(24,841)	$	591,847	$	11,819	$	603,666
Balance at June 30, 2019	$	821	$	(180,775)	$	1,176,057	$	45,224	$	(21,382)	$	1,019,945	$	12,520	$	1,032,465
Net loss	—		—		—		(23,037)		—		(23,037)		(28)		(23,065)
Unrealized gain on derivatives	—		—		—		—		491		491		—		491
Foreign currency translation adjustment	—		—		—		—		(543)		(543)		—		(543)
Pension and post-retirement liability	—		—		—		—		(3,987)		(3,987)		—		(3,987)
Cash dividend declared ($0.0625 per share)	—		—		—		(4,682)		—		(4,682)		—		(4,682)
Contributions from non-controlling interest	—		—		—		—		—		—		56		56
Common stock-based compensation plans activity:
Equity-based compensation	—		—		3,722		—		—		3,722		—		3,722
Tax payments related to shares withheld for vested restricted stock and stock units	—		(58)		—		—		—		(58)		—		(58)
Balance at September 30, 2019	$	821	$	(180,833)	$	1,179,779	$	17,505	$	(25,421)	$	991,851	$	12,548	$	1,004,399

5

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(Unaudited; dollars in thousands, except per share amounts)

	Common Stock		Treasury Stock		Additional Paid-In Capital		Retained (Deficit) Earnings		Accumulated Other Comprehensive Loss		Total U.S. Silica Holdings Inc., Stockholders’ Equity		Non-controlling Interest		Total Stockholders’ Equity
Balance at December 31, 2019	$	823	$	(180,912)	$	1,185,116	$	(279,956)	$	(19,854)	$	705,217	$	11,363	$	716,580
Net loss	—		—		—		(118,661)		—		(118,661)		(778)		(119,439)
Unrealized gain on derivatives	—		—		—		—		3,053		3,053		—		3,053
Foreign currency translation adjustment	—		—		—		—		662		662		—		662
Pension and post-retirement liability	—		—		—		—		(8,702)		(8,702)		—		(8,702)
Cash dividends	—		—		—		(1,444)		—		(1,444)		—		(1,444)
Contributions from non-controlling interest	—		—		—		—		—		—		1,234		1,234
Common stock-based compensation plans activity:
Equity-based compensation	—		—		12,352		—		—		12,352		—		12,352
Tax payments related to shares withheld for vested restricted stock and stock units	4		(630)		(4)		—		—		(630)		—		(630)
Balance at September 30, 2020	$	827	$	(181,542)	$	1,197,464	$	(400,061)	$	(24,841)	$	591,847	$	11,819	$	603,666

Balance at December 31, 2018	$	818	$	(178,215)	$	1,169,383	$	67,854	$	(15,020)	$	1,044,820	$	7,484	$	1,052,304
Net loss	—		—		—		(36,211)		—		(36,211)		(121)		(36,332)
Unrealized loss on derivatives	—		—		—		—		(2,520)		(2,520)		—		(2,520)
Foreign currency translation adjustment	—		—		—		—		(577)		(577)		—		(577)
Pension and post-retirement liability	—		—		—		—		(7,304)		(7,304)		—		(7,304)
Cash dividend declared ($0.1875 per share)	—		—		—		(14,138)		—		(14,138)		—		(14,138)
Contributions from non-controlling interest	—		—		—		—		—		—		5,185		5,185
Common stock-based compensation plans activity:
Equity-based compensation	—		—		10,566		—		—		10,566		—		10,566
Proceeds from options exercised	—		295		(167)		—		—		128		—		128
Tax payments related to shares withheld for vested restricted stock and stock units	3		(2,913)		(3)		—		—		(2,913)		—		(2,913)
Balance at September 30, 2019	$	821	$	(180,833)	$	1,179,779	$	17,505	$	(25,421)	$	991,851	$	12,548	$	1,004,399

6

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; dollars in thousands)

	Nine Months Ended   September 30,
	2020		2019
Operating activities:
Net loss	$	(119,439)	$	(36,332)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation, depletion and amortization	115,604		136,625
Goodwill and other asset impairments	108,044		130
Gain on valuation change of royalty note payable	—		(16,104)
Debt issuance amortization	3,855		4,304
Original issue discount amortization	778		792
Deferred income taxes	(65,645)		(8,489)
Deferred revenue	(6,292)		(32,379)
(Gain) loss on disposal of property, plant and equipment	(1,785)		58
Gain on early extinguishment of debt	—		(81)
Equity-based compensation	12,352		10,566
Provision for credit losses, net of recoveries	1,381		3,082
Gain on remeasurement of leases	(24,415)		—
Other	(2,381)		(13,197)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	81,234		3,792
Inventories	15,218		(35)
Prepaid expenses and other current assets	(25,384)		8,460
Income taxes	804		(396)
Accounts payable and accrued expenses	(102,449)		39,456
Short-term and long-term obligations-vendor incentives	—		4,021
Liability for pension and other post-retirement benefits	9,053		9,063
Other noncurrent assets and liabilities	(34,976)		3,045
Net cash (used in) provided by operating activities	(34,443)		116,381
Investing activities:
Capital expenditures	(27,751)		(97,902)
Capitalized intellectual property costs	(531)		(3,493)
Proceeds from sale of property, plant and equipment	2,749		1,543
Net cash used in investing activities	(25,533)		(99,852)
Financing activities:
Dividends paid	(6,169)		(13,880)
Proceeds from options exercised	—		128
Tax payments related to shares withheld for vested restricted stock and stock units	(630)		(2,913)
Proceeds from draw down of the Revolver	25,000		—
Payments on long-term debt	(10,235)		(20,207)
Contributions from non-controlling interest	1,234		5,185
Principal payments on finance lease obligations	(41)		(51)
Net cash provided by (used in) financing activities	9,159		(31,738)
Net decrease in cash and cash equivalents	(50,817)		(15,209)
Cash and cash equivalents, beginning of period	185,740		202,498
Cash and cash equivalents, end of period	$	134,923	$	187,289

7

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited; dollars in thousands)

	Nine Months Ended   September 30,
	2020		2019
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest	$	57,107	$	66,429
Taxes, net of refunds	$	(35,676)	$	(14,031)
Non-cash items:
Accrued capital expenditures	$	15,111	$	27,357
Net assets assumed in business acquisition	$	8,241	$	—

The accompanying notes are an integral part of these financial statements.

8

U.S. SILICA HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; dollars in thousands, except per share amounts)

NOTE A—ORGANIZATION AND BASIS OF PRESENTATION

Organization

U.S. Silica Holdings, Inc. (“Holdings,” and together with its subsidiaries “we,” “us” or the “Company”) is a performance materials company and one of the largest domestic producers of commercial silica used in the oil and gas industry and in a wide range of industrial applications. In addition, through our acquisition of EP Minerals, LLC ("EPM") and its affiliated companies in 2018, we are an industry leader in the production of industrial minerals, including diatomaceous earth, clay (calcium bentonite and calcium montmorillonite) and perlite. During our 120-year history, we have developed core competencies in mining, processing, logistics and materials science that enable us to produce and cost-effectively deliver products to customers across our end markets. Our operations are organized into two reportable segments based on end markets served: (1) Oil & Gas Proppants and (2) Industrial & Specialty Products. See Note U - Segment Reporting for more information on our reportable segments.

Basis of Presentation and Consolidation

The accompanying unaudited Condensed Consolidated Financial Statements for the quarter ended September 30, 2020 included in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the U.S. Securities and Exchange Commission (“SEC”). They do not contain certain information included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019; therefore, the unaudited Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K. Operating results for the three-month period ended September 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020. In the opinion of management, all adjustments necessary for a fair presentation have been included. Such adjustments are of a normal, recurring nature.

The unaudited Condensed Consolidated Financial Statements include the accounts of Holdings and its direct and indirect wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

We follow Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) guidance for identification and reporting of entities over which control is achieved through means other than voting rights. The guidance defines such entities as Variable Interest Entities (“VIEs”). We consolidate VIEs when we have variable interests and are the primary beneficiary. We continually evaluate our involvement with VIEs to determine when these criteria are met.

During the third quarter of 2018, we finalized a shareholders' agreement with unrelated parties to form a limited liability company with the purpose of constructing and operating a water pipeline to transport and sell water. In connection with the shareholders’ agreement, we acquired a 50% equity ownership in the limited liability company for $3.2 million, with a maximum initial capital contribution of $7.0 million, and a water rights intangible asset for $0.7 million. Based on our evaluation, we determined that this limited liability company is a VIE, of which we are the primary beneficiary, and therefore we are required to consolidate it. As of September 30, 2020, the VIE had total assets of $17.9 million and total liabilities of $0.1 million. We made $0.2 million in capital contributions during the nine months ended September 30, 2020.

Throughout this report we refer to (i) our unaudited Condensed Consolidated Balance Sheets as our “Balance Sheets,” (ii) our unaudited Condensed Consolidated Statements of Operations as our “Income Statements,” and (iii) our unaudited Condensed Consolidated Statements of Cash Flows as our “Cash Flows.”

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates and Assumptions

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to the purchase price allocation for businesses acquired; mineral reserves that are the basis for future cash flow estimates utilized in impairment calculations and units-of-production amortization calculations; environmental, reclamation and closure obligations; estimates of recoverable minerals; estimates of allowance for credit losses; estimates of fair value for certain reporting units and asset

9

impairments (including impairments of goodwill, intangible assets and other long-lived assets); write-downs of inventory to net realizable value; equity-based compensation expense; post-employment, post-retirement and other employee benefit liabilities; valuation allowances for deferred tax assets; contingent considerations; reserves for contingencies and litigation and the fair value and accounting treatment of financial instruments, including derivative instruments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.

New Accounting Pronouncements Recently Adopted

In August 2018, the FASB issued Accounting Standards Update ("ASU") 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The new guidance requires a customer in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The update was effective for calendar-year public business entities in 2020. We adopted the new standard on January 1, 2020. The adoption of this ASU had no significant impact on our Condensed Consolidated Statements of Operations.

In November 2018, FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses. The amendments in this ASU clarified issues related to Topic 326. In Issue 1, the amendment in this ASU mitigates transition complexity by requiring that for nonpublic business entities the amendments in ASU 2016-13 are effective for fiscal years after December 15, 2021, including interim periods within those fiscal years. In Issue 2, the amendment clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. The ASU was effective for all entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We adopted the new standard on January 1, 2020. The adoption of the new standard did not have a significant impact on our Condensed Consolidated Financial Statements as our current process for estimating expected credit losses for trade receivables aligned with the expected credit loss model. See Note F - Accounts Receivable for more information.

New Accounting Pronouncements Not Yet Adopted

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20). The new guidance removes certain disclosure requirements for employers which sponsor defined benefit pension or other post-retirement plans, but also adds disclosure requirements for the weighted average interest crediting rates for cash balance plans and other plans with promised crediting rates and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify disclosure requirements for the projected benefit obligation (PBO) and accumulated benefit obligation (ABO) and fair value of plan assets for plans with PBOs and ABOs in excess of plan assets. Entities should apply the amendments on a retrospective basis for all periods presented. The amendments in this ASU are effective for public entities for fiscal years ending after December 15, 2020. We are currently evaluating the effect that the guidance will have on our disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing several exceptions and also simplify the accounting for income taxes by requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction, specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements (however, an entity may elect to do so on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority, requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, and making minor codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We are currently evaluating the effect that the guidance will have on our consolidated financial statements and related disclosures.

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NOTE C—EARNINGS PER SHARE

Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is computed similarly to basic earnings per common share except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.

Diluted net earnings per share assumes the conversion of contingently convertible securities and stock options under the treasury stock method, if dilutive. Contingently convertible securities and stock options are excluded from the calculation of fully diluted earnings per share if they are anti-dilutive, including when we incur a loss from continuing operations. 

The following table shows the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2020 and 2019:

In thousands, except per share amounts	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2020		2019		2020		2019
Numerator:
Net loss attributable to U.S. Silica Holdings, Inc.	$	(13,962)	$	(23,037)	$	(118,661)	$	(36,211)
Denominator:
Weighted average shares outstanding	73,688		73,328		73,601		73,223
Diluted effect of stock awards	—		—		—		—
Weighted average shares outstanding assuming dilution	73,688		73,328		73,601		73,223
Loss per share attributable to U.S. Silica Holdings, Inc.:
Basic loss per share	$	(0.19)	$	(0.31)	$	(1.61)	$	(0.49)
Diluted loss per share	$	(0.19)	$	(0.31)	$	(1.61)	$	(0.49)

Potentially dilutive shares (in thousands) of 348 and 91 for the three months ended September 30, 2020 and 2019, respectively, and 173 and 191 for the nine months ended September 30, 2020 and 2019, respectively, were excluded from the calculation of diluted weighted average shares outstanding and diluted earnings per share because we were in a net loss position. Certain stock options, restricted stock awards and performance share units were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. Stock awards excluded from the calculation of diluted loss per common share were as follows:

In thousands	Three Months Ended   September 30,		Nine Months Ended   September 30,
	2020	2019	2020	2019
Stock options excluded	826	700	826	716
Restricted stock and performance share unit awards excluded	2,667	265	4,103	280

NOTE D—CAPITAL STRUCTURE AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Common Stock

Our Amended and Restated Certificate of Incorporation authorizes up to 500,000,000 shares of common stock, par value of $0.01. Subject to the rights of holders of any series of preferred stock, all of the voting power of the stockholders of Holdings shall be vested in the holders of the common stock. There were 83,076,544 shares issued and 73,937,777 shares outstanding at September 30, 2020. There were 82,601,926 shares issued and 73,601,950 shares outstanding at December 31, 2019.

During the nine months ended September 30, 2020, our Board of Directors declared quarterly cash dividends as follows:

Dividends per Common Share		Declaration Date	Record Date	Payable Date
$	0.02	February 10, 2020	March 13, 2020	April 3, 2020

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All dividends were paid as scheduled.

Any determination to pay dividends and other distributions in cash, stock, or property by Holdings in the future will be at the discretion of our Board of Directors and will be dependent on then-existing conditions, including our business and financial condition, results of operations, liquidity, capital requirements, contractual restrictions including restrictive covenants contained in our debt agreements, and other factors. Additionally, because we are a holding company, our ability to pay dividends on our common stock may be limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us, including restrictions under the terms of the agreements governing our indebtedness. During May of 2020, our Board of Directors determined that it was not in the best interest of our shareholders to issue a dividend for the second quarter of 2020 and they subsequently decided not to issue a dividend for the third quarter of 2020. The Board of Directors will make determinations regarding future dividends on a quarterly basis using the criteria described above.

Preferred Stock

Our Amended and Restated Certificate of Incorporation authorizes our Board of Directors to issue up to 10,000,000 shares, in the aggregate, of preferred stock, par value of $0.01 in one or more series, to fix the powers, preferences and other rights of such series, and any qualifications, limitations or restrictions thereof, including the dividend rate, conversion rights, voting rights, redemption rights and liquidation preference, and to fix the number of shares to be included in any such series, without any further vote or action by our stockholders.

There were no shares of preferred stock issued or outstanding at September 30, 2020 or December 31, 2019. At present, we have no plans to issue any preferred stock.

Share Repurchase Program

In May 2018, our Board of Directors authorized the repurchase of up to $200 million of our common stock from time to time on the open market or in privately negotiated transactions. Stock repurchases, if any, will be funded using our available liquidity. The timing and amount of stock repurchases will depend on a variety of factors, including the market conditions as well as corporate and regulatory considerations. As of September 30, 2020, we have repurchased a total of 5,036,139 shares of our common stock at an average price of $14.59 and have $126.5 million of remaining availability under this program. We did not repurchase any shares during the nine months ended September 30, 2020.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of fair value adjustments associated with cash flow hedges, accumulated adjustments for net experience losses and prior service costs related to employee benefit plans and foreign currency translation adjustments, net of tax. The following table presents the changes in accumulated other comprehensive loss by component (in thousands) during the nine months ended September 30, 2020:

	For the Nine Months Ended September 30, 2020
	Unrealized (loss) gain on cash flow hedges		Foreign currency translation adjustments		Pension and other post-retirement benefits liability		Total
Beginning Balance	$	(3,053)	$	(808)	$	(15,993)	$	(19,854)
Other comprehensive gain (loss) before reclassifications	3,053		662		(10,498)		(6,783)
Amounts reclassified from accumulated other comprehensive loss	—		—		1,796		1,796
Ending Balance	$	—	$	(146)	$	(24,695)	$	(24,841)

Amounts reclassified from accumulated other comprehensive loss related to cash flow hedges are included in interest expense in our Income Statements and amounts reclassified related to pension and other post-retirement benefits are included in the computation of net periodic benefit costs at their pre-tax amounts.

NOTE E—BUSINESS COMBINATIONS

    During the first quarter of 2020, we settled multiple intellectual property and contractual lawsuits involving our SandBox Logistics unit and Arrows Up, LLC.  As part of the settlement, SandBox Logistics took control of Arrows Up's existing business, including all equipment and sand logistics contracts, while also receiving a cash payment.

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    We have accounted for the acquisition of Arrows Up, LLC under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Estimates of fair value included in the Condensed Consolidated Financial Statements represent our best estimates and valuations. In accordance with the acquisition method of accounting, the fair values are subject to adjustment until we complete our analysis, within a period of time not to exceed one year after the date of acquisition, or March 7, 2021. This business combination resulted in a bargain purchase pursuant to ASC 805-30-25 because no consideration was paid for the fair value of assets acquired and liabilities assumed. The fair value of assets acquired, which included cash, accounts receivable, inventories, lease right-of-use assets, and property plant, and equipment, was $19.9 million. The fair value of liabilities assumed, which included lease liabilities and other long-term liabilities, was $2.5 million. A gain on bargain purchase of $17.4 million was recorded in "Other income, net, including interest income" in the Condensed Consolidated Statement of Operations.

In the three months ended September 30, 2020, we recorded a $0.1 million increase to accounts receivable. In the nine months ended September 30, 2020, we recorded a $3.3 million decrease in inventory, a $1.0 million increase to accounts receivable, and a $0.1 million decrease to property, plant and equipment. The total measurement period adjustments during the nine months ended September 30, 2020 of $2.4 million were recorded as a net decrease to the initial gain on bargain purchase and recorded in "Other (expense) income, net, including interest income" in the Condensed Consolidated Statement of Operations.

NOTE F—ACCOUNTS RECEIVABLE

Accounts receivable are recorded when billed or accrued and represent claims against third parties that will be settled in cash. The carrying value of our accounts receivable, net of the allowance for credit losses, represents their estimated net realizable value. At September 30, 2020 and December 31, 2019, accounts receivable (in thousands) consisted of the following:

	September 30, 2020		December 31, 2019
Trade receivables	$	133,127	$	178,182
Less: Allowance for credit losses	(6,677)		(8,984)
Net trade receivables	126,450		169,198
Other receivables(1)	47,377		13,040
Total accounts receivable	$	173,827	$	182,238

(1) At September 30, 2020, other receivables included $42.3 million of refunds related to NOL carryback claims filed for various tax years in accordance with certain provisions of the CARES Act. At December 31, 2019, other receivables included $8.1 million of refundable alternative minimum tax credits.

We classify our trade receivables into the following portfolio segments: Oil & Gas Proppants and Industrial & Specialty Products, which also aligns with our reporting segments. We estimate the allowance for credit losses based on historical collection trends, the age of outstanding receivables, risks attributable to specific customers, such as credit history, bankruptcy or other going concern issues, and current economic and industry conditions. If events or circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past due balances are written off when we have exhausted our internal and external collection efforts and have been unsuccessful in collecting the amount due.

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The following table reflects the change of the allowance for credit losses (in thousands) for the nine months ended September 30, 2020, disaggregated by portfolio segments:

	Oil & Gas Proppants		Industrial & Specialty Products		Total
Beginning balance, December 31, 2019	$	7,640	$	1,344	$	8,984
Provision for credit losses	1,340		41		1,381
Write-offs	(3,328)		(360)		(3,688)
Ending balance, September 30, 2020	$	5,652	$	1,025	$	6,677

Our ten largest customers accounted for 23% and 32% of total sales for the three and nine months ended September 30, 2020, respectively, and 43% and 42% for the three and nine months ended September 30, 2019, respectively. No customers accounted for 10% or more of our total sales for the three or nine months ended September 30, 2020. Sales to one of our customers accounted for 11% and 12% for the three and nine months ended September 30, 2019, respectively. No other customers accounted for 10% or more of our total sales during the same period. At September 30, 2020, one of our customer's accounts receivable represented 15% of our total trade accounts receivable. At December 31, 2019, the same customer's accounts receivable represented 12% of our total trade accounts receivable. No other customers accounted for 10% or more of our total trade accounts receivable during the same period.

NOTE G—INVENTORIES

At September 30, 2020 and December 31, 2019, inventories (in thousands) consisted of the following:

	September 30, 2020		December 31, 2019
Supplies	$	43,331	$	47,277
Raw materials and work in process	34,544		41,167
Finished goods	26,836		35,988
Total inventories	$	104,711	$	124,432

    During 2020, there was an unprecedented drop in global demand combined with the breakdown of the Organization of the Petroleum Exporting Countries and other oil producing nations ("OPEC+") agreement to restrict oil production that led to one of the largest annual crude oil inventory builds in history. This led to sharp reductions in global crude oil prices. Containment measures and other economic, travel, and business disruptions caused by COVID-19 also affected refinery activity and future demand for crude oil, and consequently, the services and products of our Oil & Gas Proppants Segment. As a result of these events, we recorded impairment charges of zero and $6.7 million for the three and nine months ended September 30, 2020, respectively, primarily related to unused inventory at idled plants. These charges related to the Oil & Gas Proppants Segment and were recorded in "Goodwill and other asset impairments" in the Condensed Consolidated Statements of Operations.

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NOTE H—PROPERTY, PLANT AND MINE DEVELOPMENT

At September 30, 2020 and December 31, 2019, property, plant and mine development (in thousands) consisted of the following:

	September 30, 2020		December 31, 2019
Mining property and mine development	$	788,710	$	794,899
Asset retirement cost	18,011		18,260
Land	55,281		57,082
Land improvements	75,878		73,203
Buildings	69,492		69,112
Machinery and equipment	1,179,002		1,152,898
Furniture and fixtures	4,071		4,068
Construction-in-progress	34,034		54,675
	2,224,479		2,224,197
Accumulated depreciation, depletion, amortization and impairment charges	(808,843)		(706,610)
Total property, plant and mine development, net	$	1,415,636	$