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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 March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-35416
 slca-20210331_g1.jpg
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 classTrading SymbolName 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 ¨  Accelerated filer þ
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 April 23, 2021, 74,341,417 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 March 31, 2021
TABLE OF CONTENTS
 
  Page
PART IFinancial Information (Unaudited):
PART IIOther Information:



PART I-FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; dollars in thousands)
March 31,
2021
December 31,
2020
ASSETS
Current Assets:
Cash and cash equivalents$154,411 $150,920 
Accounts receivable, net211,840 206,934 
Inventories, net106,151 104,684 
Prepaid expenses and other current assets24,321 23,147 
Income tax deposits410 628 
Total current assets497,133 486,313 
Property, plant and mine development, net1,333,317 1,368,092 
Lease right-of-use assets35,697 37,469 
Goodwill185,649 185,649 
Intangible assets, net157,219 159,582 
Other assets9,218 9,842 
Total assets$2,218,233 $2,246,947 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses$127,123 $121,920 
Current portion of operating lease liabilities16,571 17,388 
Current portion of long-term debt40,200 42,042 
Current portion of deferred revenue13,956 13,545 
Total current liabilities197,850 194,895 
Long-term debt, net1,196,559 1,197,660 
Deferred revenue17,972 20,147 
Liability for pension and other post-retirement benefits34,543 48,169 
Deferred income taxes, net47,630 49,386 
Operating lease liabilities71,603 76,361 
Other long-term liabilities 33,801 33,538 
Total liabilities1,599,958 1,620,156 
Commitments and Contingencies (Note N)
Stockholders’ Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; zero issued and outstanding at March 31, 2021 and December 31, 2020
  
Common stock, $0.01 par value, 500,000,000 shares authorized; 83,596,565 issued and 74,306,324 outstanding at March 31, 2021; 83,143,176 issued and 73,986,566 outstanding at December 31, 2020
832 827 
Additional paid-in capital1,203,922 1,200,023 
Retained deficit(416,267)(395,496)
Treasury stock, at cost, 9,290,241 and 9,156,610 shares at March 31, 2021 and December 31, 2020, respectively
(182,515)(181,615)
Accumulated other comprehensive income (loss)1,103 (8,479)
Total U.S. Silica Holdings, Inc. stockholders’ equity607,075 615,260 
Non-controlling interest11,200 11,531 
Total stockholders' equity618,275 626,791 
Total liabilities and stockholders’ equity$2,218,233 $2,246,947 
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 
 March 31,
 20212020
Sales:
Product$191,390 $222,161 
Service43,026 47,438 
Total sales234,416 269,599 
Cost of sales (excluding depreciation, depletion and amortization):
Product142,797 165,496 
Service34,192 35,821 
Total cost of sales (excluding depreciation, depletion and amortization)176,989 201,317 
Operating expenses:
Selling, general and administrative26,224 30,052 
Depreciation, depletion and amortization41,348 38,449 
Goodwill and other asset impairments38 103,866 
Total operating expenses67,610 172,367 
Operating loss(10,183)(104,085)
Other (expense) income:
Interest expense(17,711)(22,277)
Other income, net, including interest income2,605 17,671 
Total other expense(15,106)(4,606)
Loss before income taxes(25,289)(108,691)
Income tax benefit4,354 36,086 
Net loss$(20,935)$(72,605)
Less: Net loss attributable to non-controlling interest(157)(260)
Net loss attributable to U.S. Silica Holdings, Inc. $(20,778)$(72,345)
Loss per share attributable to U.S. Silica Holdings, Inc.:
Basic$(0.28)$(0.98)
Diluted$(0.28)$(0.98)
Weighted average shares outstanding:
Basic73,927 73,467 
Diluted73,927 73,467 
Dividends declared per share$ $0.02 
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 
 March 31,
 20212020
Net loss$(20,935)$(72,605)
Other comprehensive income (loss):
Unrealized gain on derivatives (net of tax of zero and $67 for the three months ended March 31, 2021 and 2020, respectively)
 211 
Foreign currency translation adjustment (net of tax of $(180) and $(92) for the three months ended March 31, 2021 and 2020, respectively)
(569)(289)
Pension and other post-retirement benefits liability adjustment (net of tax of $3,234 and $(1,634) for the three months ended March 31, 2021 and 2020, respectively)
10,151 (5,128)
Comprehensive loss$(11,353)$(77,811)
Less: Comprehensive loss attributable to non-controlling interest(157)(260)
Comprehensive loss attributable to U.S. Silica Holdings, Inc.$(11,196)$(77,551)
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
Deficit
Accumulated
Other
Comprehensive
Loss
Total U.S. Silica Holdings Inc., Stockholders’
Equity
Non-controlling InterestTotal
Stockholders’
Equity
Balance at December 31, 2020$827 $(181,615)$1,200,023 $(395,496)$(8,479)$615,260 $11,531 $626,791 
Net loss— — — (20,778)— (20,778)(157)(20,935)
Foreign currency translation adjustment— — — — (569)(569)— (569)
Pension and post-retirement liability— — — — 10,151 10,151 — 10,151 
Cash dividend declared— — — 7 — 7 — 7 
Distributions to non-controlling interest— — — — — — (174)(174)
Common stock-based compensation plans activity:
Equity-based compensation— — 4,143 — — 4,143 — 4,143 
Proceeds from options exercised— 344 (239)— — 105 — 105 
Tax payments related to shares withheld for vested restricted stock and stock units5 (1,244)(5)— — (1,244)— (1,244)
Balance at March 31, 2021$832 $(182,515)$1,203,922 $(416,267)$1,103 $607,075 $11,200 $618,275 
Balance at December 31, 2019$823 $(180,912)$1,185,116 $(279,956)$(19,854)$705,217 $11,363 $716,580 
Net loss— — — (72,345)— (72,345)(260)(72,605)
Unrealized gain on derivatives— — — — 211 211 — 211 
Foreign currency translation adjustment— — — — (289)(289)— (289)
Pension and post-retirement liability— — — — (5,128)(5,128)— (5,128)
Cash dividend declared ($0.0200 per share)
— — — (1,561)— (1,561)— (1,561)
Distributions to non-controlling interest— — — — — — (4)(4)
Common stock-based compensation plans activity:
Equity-based compensation— — 2,847 — — 2,847 — 2,847 
Tax payments related to shares withheld for vested restricted stock and stock units1 (457)(1)— — (457)— (457)
Balance at March 31, 2020$824 $(181,369)$1,187,962 $(353,862)$(25,060)$628,495 $11,099 $639,594 

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


5


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; dollars in thousands)
 Three Months Ended 
 March 31,
 20212020
Operating activities:
Net loss$(20,935)$(72,605)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization41,348 38,449 
Goodwill and other asset impairments38 103,866 
Debt issuance amortization1,271 1,290 
Original issue discount amortization258 260 
Deferred income taxes(4,869)(36,979)
Deferred revenue(5,132)(2,525)
Gain on disposal of property, plant and equipment(35)(419)
Equity-based compensation4,143 2,847 
Allowance for credit losses, net of recoveries10 902 
Other18,456 (16,792)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable(4,917)(13,471)
Inventories(1,467)2,917 
Prepaid expenses and other current assets(568)(2,146)
Income taxes218 578 
Accounts payable and accrued expenses9,053 (40,455)
Operating lease liabilities(8,159)(17,365)
Liability for pension and other post-retirement benefits(13,602)6,751 
Other noncurrent assets and liabilities(1,469)6,768 
Net cash provided by (used in) operating activities13,642 (38,129)
Investing activities:
Capital expenditures(3,511)(16,116)
Capitalized intellectual property costs(95)(494)
Proceeds from sale of property, plant and equipment72 224 
Net cash used in investing activities(3,534)(16,386)
Financing activities:
Dividends paid (4,604)
Proceeds from options exercised105  
Tax payments related to shares withheld for vested restricted stock and stock units(1,244)(457)
Proceeds from draw down of the Revolver 25,000 
Payments on short-term debt(2,077)(2,674)
Payments on long-term debt(3,200)(3,782)
Distributions to non-controlling interest(174)(4)
Principal payments on finance lease obligations(27)(3)
Net cash (used in) provided by financing activities(6,617)13,476 
Net increase (decrease) in cash and cash equivalents3,491 (41,039)
Cash and cash equivalents, beginning of period150,920 185,740 
Cash and cash equivalents, end of period$154,411 $144,701 



6


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited; dollars in thousands)
 Three Months Ended 
 March 31,
 20212020
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest$16,104 $20,677 
Taxes, net of refunds$(15,889)$101 
Non-cash items:
Accrued capital expenditures$792 $20,111 
Net assets assumed in business acquisition$68 $10,955 
The accompanying notes are an integral part of these financial statements.

7


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 global performance materials company and a leading producer of commercial silica used in the oil and gas industry and in a wide range of industrial applications. In addition, through our subsidiary EP Minerals, LLC ("EPM"), we are an industry leader in the production of industrial minerals, including diatomaceous earth, clay (calcium bentonite and calcium montmorillonite) and perlite. During our 121-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 T - 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 March 31, 2021 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, 2020; 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 March 31, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021. 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.
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.”
Reclassifications
Certain reclassifications of prior period presentations were made to conform to the current period presentation.
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 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 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. 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.
8


New Accounting Pronouncements Recently Adopted

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 adopted this guidance during the first quarter of 2021 and it did not have a material impact to our Condensed Consolidated Financial Statements.
New Accounting Pronouncements Not Yet Adopted

None

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 months ended March 31, 2021 and 2020:
9


In thousands, except per share amounts
Three Months Ended 
 March 31,
 20212020
Numerator:
Net loss attributable to U.S. Silica Holdings, Inc.$(20,778)$(72,345)
Denominator:
Weighted average shares outstanding73,927 73,467 
Diluted effect of stock awards  
Weighted average shares outstanding assuming dilution73,927 73,467 
Loss per share attributable to U.S. Silica Holdings, Inc.:
Basic loss per share$(0.28)$(0.98)
Diluted loss per share$(0.28)$(0.98)
Potentially dilutive shares 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. Such potentially dilutive shares and stock awards excluded from the calculation of diluted loss per common share were as follows:
In thousandsThree Months Ended 
 March 31,
 20212020
Potentially dilutive shares excluded 1,852 41 
Stock options excluded608 827 
Restricted stock and performance share unit awards excluded50 2,391 
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 83,596,565 shares issued and 74,306,324 shares outstanding at March 31, 2021. There were 83,143,176 shares issued and 73,986,566 shares outstanding at December 31, 2020.
Dividends
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 2020, our Board of Directors determined that it was not in the best interest of our shareholders to issue a dividend subsequent to the second quarter and for the remainder of the year. 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.
10


There were no shares of preferred stock issued or outstanding at March 31, 2021 or December 31, 2020. 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 March 31, 2021, 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 three months ended March 31, 2021.
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) consists of fair value adjustments associated with 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 income (loss) by component (in thousands):
 For the Three Months Ended March 31, 2021
 Foreign currency translation adjustmentsPension and other post-retirement benefits liabilityTotal
Beginning Balance$583 $(9,062)$(8,479)
Other comprehensive (loss) gain before reclassifications(569)9,423 8,854 
Amounts reclassified from accumulated other comprehensive loss 728 728 
Ending Balance$14 $1,089 $1,103 
Amounts reclassified from 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.

    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 completed our analysis, which was during the first quarter of 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 $20.1 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 $17.6 million was recorded in "Other income, net, including interest income" in the Condensed Consolidated Statement of Operations.

In the three months ended March 31, 2021, we recorded a $0.1 million increase to accounts receivable. The total adjustments during the measurement period 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.
11


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. Accounts receivable (in thousands) consisted of the following:
March 31,
2021
December 31,
2020
Trade receivables$194,170 $171,230 
Less: Allowance for credit losses(6,601)(6,604)
Net trade receivables187,569 164,626 
Other receivables(1)
24,271 42,308 
Total accounts receivable$211,840 $206,934 
(1)
At March 31, 2021 and December 31, 2020, other receivables included $21.4 million and $37.4 million, respectively, of refunds related to NOL carryback claims filed for various tax years in accordance with certain provisions of the CARES Act.
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.
The following table reflects the change of the allowance for credit losses (in thousands) for the three months ended March 31, 2021, disaggregated by portfolio segments:
Oil & Gas ProppantsIndustrial & Specialty ProductsTotal
Beginning balance, December 31, 2020$5,684 $920 $6,604 
Allowance for credit losses 10 10 
Write-offs(16)3 (13)
Ending balance, March 31, 2021$5,668 $933 $6,601 
Our ten largest customers accounted for 42% and 38% of total sales for the three months ended March 31, 2021 and 2020, respectively. No customers accounted for 10% or more of our total sales for the three months ended March 31, 2021. Sales to one of our customers accounted for 10% for the three months ended March 31, 2020. No other customers accounted for 10% or more of our total sales during the same periods. At March 31, 2021, one of our customer's accounts receivable represented 22% of our total trade accounts receivable. At December 31, 2020, the same customer's accounts receivable represented 24% of our total trade accounts receivable. No other customers accounted for 10% or more of our total trade accounts receivable during the same periods.
NOTE G—INVENTORIES
At March 31, 2021 and December 31, 2020, inventories (in thousands) consisted of the following:
March 31, 2021December 31, 2020
Supplies$41,624 $42,329 
Raw materials and work in process34,261 33,723 
Finished goods30,266 28,632 
Total inventories$106,151 $104,684 

12


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 $5.7 million for the three months ended March 31, 2020 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. No impairment charges were recorded related to inventory for the three months ended March 31, 2021.
NOTE H—PROPERTY, PLANT AND MINE DEVELOPMENT
At March 31, 2021 and December 31, 2020, property, plant and mine development (in thousands) consisted of the following:
March 31,
2021
December 31,
2020
Mining property and mine development$789,143 $788,287 
Asset retirement cost15,985 15,985 
Land55,292 54,710 
Land improvements76,290 76,002 
Buildings69,982 69,841 
Machinery and equipment1,172,940 1,171,382 
Furniture and fixtures4,071 4,071 
Construction-in-progress27,299 27,216 
2,211,002 2,207,494 
Accumulated depreciation, depletion, amortization and impairment charges(877,685)(839,402)
Total property, plant and mine development, net$1,333,317 $1,368,092 
Depreciation, depletion, and amortization expense related to property, plant and mine development was $38.6 million and $35.4 million for the three months ended March 31, 2021 and 2020, respectively.
During 2020, there was an unprecedented drop in global demand combined with the breakdown of the 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 $10.3 million for the three months ended March 31, 2020 related primarily to our Kosse, Texas facility, which was idled. These impairment charges related to the Oil & Gas Proppants Segment and were recorded in "Goodwill and other asset impairments" in the Condensed Consolidated Statements of Operations. No impairment charges were recorded related to property, plant and mine development for the three months ended March 31, 2021.
On March 21, 2018, we completed the sale of three transload facilities located in the Permian, Eagle Ford, and Marcellus Basins to CIG Logistics (“CIG”) for total consideration of $86.1 million, including the assumption by CIG of $2.2 million of Company obligations. Total cash consideration was $83.9 million. The consideration includes receipt of a vendor incentive from CIG to enter into master transloading service arrangements. Of the total consideration, $25.8 million was allocated to the fair value of the transload facilities, which had a net book value of $20.0 million and resulted in a gain on sale of $5.8 million. The consideration included a related asset retirement obligation of $2.1 million and an equipment note of $0.1 million assumed by CIG. In addition, $60.3 million of the consideration received in excess of the facilities' fair value was allocated to vendor incentives to be recognized as a reduction of costs using a service-level methodology over the contract lives of the transloading service arrangements. At March 31, 2021, vendor incentives of $2.4 million were classified in accounts payable and accrued expenses on our balance sheet.


13


NOTE I—GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying amount of goodwill (in thousands) by business segment consisted of the following:
 Oil & Gas Proppants SegmentIndustrial & Specialty Products SegmentTotals
Balance at December 31, 2020$ $185,649 $185,649 
Impairment loss   
Balance at March 31, 2021$ $185,649 $185,649 

Goodwill and trade names are evaluated for impairment annually as of October 31, or more frequently when indicators of impairment exist. We evaluated events and circumstances since the date of our last qualitative assessment, including macroeconomic conditions, industry and market conditions, and our overall financial performance.

During 2020, there was an unprecedented drop in global demand combined with the breakdown of the 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 triggering events, we performed a quantitative analysis and determined that the goodwill of our Oil & Gas reporting unit was impaired. We recognized goodwill impairment charges of $86.1 million for the three months ended March 31, 2020, which were recorded in "Goodwill and other asset impairments" in the Condensed Consolidated Statements of Operations. There were no triggering events during the first quarter, therefore, no impairment charges were recorded related to goodwill for the three months ended March 31, 2021.
The changes in the carrying amount of intangible assets (in thousands) consisted of the following:
 March 31, 2021December 31, 2020
 Gross Carrying AmountAccumulated AmortizationImpairmentsNetGross Carrying AmountAccumulated AmortizationImpairmentsNet
Technology and intellectual property$71,108 $(21,446)$ $49,662 $71,052 $(18,854)$(1,373)$50,825 
Customer relationships66,999 (24,382) 42,617 66,999 (23,182) 43,817 
 Total definite-lived intangible assets:$138,107 $(45,828)$ $92,279 $138,051 $(42,036)$(1,373)$94,642 
Trade names64,240 —  64,240 65,390 — (1,150)64,240 
Other700 —  700 700 —  700 
Total intangible assets:$203,047 $(45,828)$ $157,219 $204,141 $(42,036)$(2,523)$159,582 

Estimated useful life of technology and intellectual property is 15 years. Estimated useful life of customer relationships is a range of 13 - 20 years.

Amortization expense was $2.4 million and $2.7 million for the three months ended March 31, 2021, and 2020, respectively.

14


The estimated amortization expense related to definite-lived intangible assets (in thousands) for the five succeeding years is as follows:
2021 (remaining nine months)$7,263 
20229,667 
20239,662 
20249,663 
20259,662 
NOTE J—DEBT
At March 31, 2021 and December 31, 2020, debt (in thousands) consisted of the following:
March 31,
2021
December 31,
2020
Senior secured credit facility:
Revolver expiring May 1, 2023 (4.13% at March 31, 2021 and 4.19% at December 31, 2020)
$25,000 $25,000 
Term Loan—final maturity May 1, 2025 (5.00% at March 31, 2021 and 5.00% at December 31, 2020)
1,231,600 1,234,800 
Less: Unamortized original issue discount(4,118)(4,376)
Less: Unamortized debt issuance cost(18,987)(20,259)
Insurance financing notes payable2,107 4,187 
Finance leases1,157 350 
Total debt1,236,759 1,239,702 
Less: current portion(40,200)(42,042)
Total long-term portion of debt$1,196,559 $1,197,660 
Senior Secured Credit Facility
On May 1, 2018, we entered into a Third Amended and Restated Credit Agreement (the "Credit Agreement"), which increased our existing senior debt by entering into a new $1.380 billion senior secured credit facility, consisting of a $1.280 billion term loan (the "Term Loan") and a $100 million revolving credit facility (the "Revolver") (collectively the "Credit Facility) that may also be used for swingline loans or letters of credit, and we may elect to increase the term loan in accordance with the terms of the Credit Agreement. Borrowings under the Credit Agreement will bear interest at variable rates as determined at our election, at LIBOR or a base rate, in each case, plus an applicable margin. In addition, under the Credit Agreement, we are required to pay a per annum facility fee and fees for letters of credit. The Credit Agreement is secured by substantially all of our assets and of our domestic subsidiaries' assets and a pledge of the equity interests in such entities. The Term Loan matures on May 1, 2025, and the Revolver expires May 1, 2023. We capitalized $38.7 million in debt issuance costs and original issue discount as a result of the new Credit Agreement.
The Credit Facility contains covenants that, among other things, limit our ability, and certain of our subsidiaries' abilities, to create, incur or assume indebtedness and liens, to make acquisitions or investments, to sell assets and to pay dividends. The Credit Agreement also requires us to maintain a consolidated leverage ratio of no more than 3.75:1.00 as of the last day of any fiscal quarter whenever usage of the Revolver (other than certain undrawn letters of credit) exceeds 30% of the Revolver commitment. These covenants are subject to a number of important exceptions and qualifications. The Credit Agreement includes events of default and other affirmative and negative covenants that are usual for facilities and transactions of this type. As of March 31, 2021 and December 31, 2020, we are in compliance with all covenants in accordance with our senior secured Credit Facility.
15


Term Loan
At March 31, 2021, contractual maturities of our Term Loan (in thousands) are as follows:
2021 (remaining nine months)$9,600 
202212,800 
202312,800 
202412,800 
20251,183,600 
Thereafter 
Total$1,231,600 
Revolving Line-of-Credit
We have a $100.0 million Revolver with $25.0 million drawn and $23.3 million allocated for letters of credit as of March 31, 2021, leaving $51.7 million available under the Revolver. We have the intent and ability to repay the amounts outstanding on the Revolver within one year, therefore, the outstanding balance as of March 31, 2021 has been classified as current.
Based on our consolidated leverage ratio of 6.37:1.00 as of March 31, 2021, we may draw up to approximately $30.0 million without the consent of our lenders. With the consent of our lenders, we have access to the full availability of the Revolver.
Insurance Financing Notes Payable
During the third quarter of 2020, the Company renewed its insurance policies and financed the payments through notes payable with a stated interest rate of 3.0%. These payments will be made in installments throughout a nine-month period and, as such, have been classified as current debt. As of March 31, 2021, the notes payable had a balance of $2.1 million.
16


NOTE K—ASSET RETIREMENT OBLIGATIONS
Mine reclamation or future remediation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the costs expected to be incurred at such site. Such cost estimates include, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimates at inactive mines are reflected in earnings in the period an estimate is revised.
As of March 31, 2021 and 2020, we had a liability of $25.3 million and $25.3 million, respectively, in other long-term liabilities related to our asset retirement obligations. Changes in the asset retirement obligations (in thousands) during the three months ended March 31, 2021 and 2020 are as follows:
Three Months Ended 
 March 31,
20212020
Beginning balance$24,717 $25,825 
Accretion342 373 
Additions and revisions of estimates279 (890)
Ending balance$25,338 25,308
NOTE L—FAIR VALUE ACCOUNTING
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
    Level 1—Quoted prices in active markets for identical assets or liabilities.
    Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
    Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
Cash Equivalents
Due to the short-term maturity, we believe our cash equivalent instruments at March 31, 2021 and December 31, 2020, approximate their reported carrying values.
Long-Term Debt, Including Current Maturities
We believe that the fair values of our long-term debt, including current maturities, approximate their carrying values based on their effective interest rates compared to current market rates.
NOTE M—EQUITY-BASED COMPENSATION
In July 2011, we adopted the U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan (the “2011 Plan”), which was amended and restated in May 2015 and amended and restated effective February 1, 2020. The 2011 Plan provides for grants of stock options, restricted stock, performance share units and other incentive-based awards. We believe our 2011 Plan aligns the interests of our employees and directors with those of our common stockholders. At March 31, 2021, we had 2,645,658 shares of common stock that may be issued under the 2011 Plan. We use a combination of treasury stock and new shares if necessary to satisfy option exercises or vesting of restricted awards and performance share units.
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Stock Options

The following table summarizes the status of, and changes in, our stock option awards during the three months ended March 31, 2021:
Number of
Shares
Weighted
Average
Exercise Price
Weighted
Average
Remaining Contractual Term in Years
Outstanding at December 31, 2020826,215 $29.05 3.1 years
Granted $ 
Exercised(10,164)$10.33 
Forfeited (113,333)$24.76 
Expired $ 
Outstanding at March 31, 2021702,718 $30.01 3.0 years
Exercisable at March 31, 2021702,718 $30.01 3.0 years
There were no grants of stock options during the three months ended March 31, 2021 and 2020.
There were 10,164 stock options exercised during the three months ended March 31, 2021. The total intrinsic value of stock options exercised was $44 thousand for the three months ended March 31, 2021. Cash received from stock options exercised during the three months ended March 31, 2021 was $105 thousand. The tax benefit realized from stock option exercises was $11 thousand for the three months ended March 31, 2021. There were no stock options exercised during the three months ended March 31, 2020.
As of March 31, 2021 and 2020, there was no unrecognized compensation expense related to these options. We account for forfeitures as they occur.
Restricted Stock and Restricted Stock Unit Awards
The following table summarizes the status of, and changes in, our unvested restricted stock awards during the three months ended March 31, 2021:
Number of SharesGrant Date Weighted
Average Fair Value
Unvested, December 31, 20201,779,826 $6.22 
Granted633,973 $9.77 
Vested(443,225)$7.52 
Forfeited(9,762)$12.82 
Unvested, March 31, 20211,960,812 $6.92 
We granted 633,973 and 900,852 restricted stock and restricted stock unit awards during the three months ended March 31, 2021 and 2020, respectively. The fair value of the awards was based on the market price of our stock at date of grant.
We recognized $1.6 million and $1.5 million of equity-based compensation expense related to restricted stock awards during the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, there was $10.9 million of unrecognized compensation expense related to these restricted stock awards, which is expected to be recognized over a weighted-average period of 2.2 years.
We also granted cash awards during the three months ended March 31, 2020. These awards will vest over a period of three years and will be settled in cash. As such, these awards have been classified as liability instruments. We recognized $0.4 million and $0.1 million of expense related to these awards for the three months ended March 31, 2021 and 2020, respectively. The liability for these awards is included in accounts payable and other accrued expenses on our balance sheets. These awards will be remeasured at fair value each reporting period with resulting changes reflected in our income statements. Estimated unrecognized expense related to these awards is $1.8 million over a period of 1.9 years.
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Performance Share Unit Awards
The following table summarizes the status of, and changes in, our performance share unit awards during the three months ended March 31, 2021:
Number of SharesGrant Date Weighted
Average Fair Value
Unvested, December 31, 20201,513,648 $12.36 
Granted773,023 $11.46 
Vested $ 
Forfeited/Cancelled(177,242)$30.63 
Unvested, March 31, 20212,109,429 $10.54 
We granted 773,023 and 1,020,161 performance share units during the three months ended March 31, 2021 and 2020, respectively. The grant date fair value for these awards was estimated using a Monte Carlo simulation model. The Monte Carlo simulation model requires the use of highly subjective assumptions. Our key assumptions in the model included the price and the expected volatility of our common stock and our self-determined peer group companies’ stock, risk-free rate of interest, dividend yields and cross-correlations between our common stock and our self-determined peer group companies' stock.
We recognized $2.5 million and $1.3 million of compensation expense related to performance share unit awards during the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, there was $14.0 million of unrecognized compensation expense related to these performance share unit awards, which is expected to be recognized over a weighted-average period of 2.3 years.
We also granted cash awards during the three months ended March 31,2020. These awards will vest over a period of three years and will be settled in cash. As such, these awards have been classified as liability instruments. We recognized $0.2 million and $0.7 million of expense related to these awards for the three months ended March 31, 2021 and 2020, respectively. The liability for these awards is included in accounts payable and other accrued expenses on our balance sheets. These awards will be remeasured at fair value each reporting period with resulting changes reflected in our income statements. Estimated unrecognized expense related to these awards is $1.0 million over a period of 1.9 years.
NOTE N—COMMITMENTS AND CONTINGENCIES
Future Minimum Annual Commitments at March 31, 2021 (in thousands):
Minimum Purchase Commitments
2021 (remaining nine months)$10,297 
202210,258 
202310,258 
20246,950 
20252,584 
Thereafter6,604 
Total future purchase commitments$46,951 
Minimum Purchase Commitments
We enter into service agreements with our transload and transportation service providers. Some of these agreements require us to purchase a minimum amount of services over a specific period of time. Any inability to meet these minimum contract requirements requires us to pay a shortfall fee, which is based on the difference between the minimum amount contracted for and the actual amount purchased.
Contingent Liability on Royalty Agreement
On May 17, 2017, we purchased reserves in Crane County, Texas, for $94.4 million cash consideration plus contingent consideration. The contingent consideration is a royalty that is based on the tonnage shipped to third-parties. Because the
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contingent consideration is dependent on future tonnage sold, the amounts of which are uncertain, it is not currently possible to estimate the fair value of these future payments. The contingent consideration will be capitalized at the time a payment is probable and reasonably estimable, and the related depletion expense will be adjusted prospectively.
Other Commitments and Contingencies
Our operating subsidiary, U.S. Silica Company (“U.S. Silica”), has been named as a defendant in various product liability claims alleging silica exposure causing silicosis. During the three months ended March 31, 2021, one new claim was brought against U.S. Silica. As of March 31, 2021, there were 52 active silica-related product liability claims pending in which U.S. Silica is a defendant. Although the outcomes of these claims cannot be predicted with certainty, in the opinion of management, it is not reasonably possible that the ultimate resolution of these matters will have a material adverse effect on our financial position or results of operations that exceeds the accrual amounts.
We have recorded estimated liabilities for these claims in other long-term liabilities as well as estimated recoveries under the indemnity agreement and an estimate of future recoveries under insurance in other assets on our consolidated balance sheets. As of both March 31, 2021 and December 31, 2020, other non-current assets included zero for insurance for third-party product liability claims. As of March 31, 2021 and December 31, 2020 other long-term liabilities included $0.9 million and $1.0 million, respectively, for third-party product liability claims.
Obligations under Guarantees
We have indemnified our insurers against any loss they may incur in the event that holders of surety bonds, issued on our behalf, execute the bonds. As of March 31, 2021, there was $37.3 million in bonds outstanding, of which $33.3 million related to reclamation requirements issued by various governmental authorities. Reclamation bonds remain outstanding until the mining area is reclaimed and the authority issues a formal release. The remaining bonds relate to licenses, permits, and tax collection.
NOTE O—PENSION AND POST-RETIREMENT BENEFITS
We maintain a single-employer noncontributory defined benefit pension plan covering certain employees. The plan is frozen to all new employees. The plan provides benefits based on each covered employee’s years of qualifying service. Our funding policy is to contribute amounts within the range of the minimum required and maximum deductible contributions for the plan consistent with a goal of appropriate minimization of the unfunded projected benefit obligations. The pension plan uses a benefit level per year of service for covered hourly employees and a final average pay method for covered salaried employees. The plan uses the projected unit credit cost method to determine the actuarial valuation.
In addition, we provide defined benefit post-retirement health care and life insurance benefits to some employees. Covered employees become eligible for these benefits at retirement after meeting minimum age and service requirements. The projected future cost of providing post-retirement benefits, such as healthcare and life insurance, is recognized as an expense as employees render services. In general, retiree health benefits are paid as covered expenses are incurred.
Net pension benefit cost (in thousands) consisted of the following for the three months ended March 31, 2021 and 2020:
 Three Months Ended 
 March 31,
 20212020
Service cost$805 $653 
Interest cost739 989 
Expected return on plan assets(1,429)(1,421)
Net amortization and deferral950 894 
Net pension benefit costs$1,065 $1,115 
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Net post-retirement benefit cost (in thousands) consisted of the following for the three months ended March 31, 2021 and 2020:
 Three Months Ended 
 March 31,
 20212020
Service cost$19 $25 
Interest cost102