ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 26-3718801 | |
(State or other jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | ý | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ |
Page | ||
PART I | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Signatures |
ITEM 1. | FINANCIAL STATEMENTS |
March 31, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 329,512 | $ | 384,567 | |||
Accounts receivable, net | 251,275 | 212,586 | |||||
Inventories, net | 76,579 | 92,376 | |||||
Prepaid expenses and other current assets | 13,023 | 13,715 | |||||
Total current assets | 670,389 | 703,244 | |||||
Property, plant and mine development, net | 1,195,722 | 1,169,155 | |||||
Goodwill | 274,879 | 272,079 | |||||
Intangible assets, net | 148,702 | 150,007 | |||||
Other assets | 17,346 | 12,798 | |||||
Total assets | $ | 2,307,038 | $ | 2,307,283 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable and accrued expenses | $ | 154,148 | $ | 171,041 | |||
Current portion of long-term debt | 4,305 | 4,504 | |||||
Current portion of capital leases | 631 | 706 | |||||
Current portion of deferred revenue | 52,305 | 36,128 | |||||
Income tax payable | 605 | 1,566 | |||||
Total current liabilities | 211,994 | 213,945 | |||||
Long-term debt, net | 506,607 | 506,732 | |||||
Deferred revenue | 69,670 | 82,286 | |||||
Liability for pension and other post-retirement benefits | 50,167 | 52,867 | |||||
Deferred income taxes, net | 38,371 | 29,856 | |||||
Other long-term obligations | 77,246 | 25,091 | |||||
Total liabilities | 954,055 | 910,777 | |||||
Commitments and Contingencies (Note O) | |||||||
Stockholders’ Equity: | |||||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized; zero issued and outstanding at March 31, 2018 and December 31, 2017 | — | — | |||||
Common stock, $0.01 par value, 500,000,000 shares authorized; 81,518,347 issued and 77,867,261 outstanding at March 31, 2018; 81,267,205 issued and 80,524,255 outstanding at December 31, 2017 | 814 | 812 | |||||
Additional paid-in capital | 1,153,336 | 1,147,084 | |||||
Retained earnings | 314,405 | 287,992 | |||||
Treasury stock, at cost, 3,651,086 and 742,950 shares at March 31, 2018 and December 31, 2017, respectively | (103,940 | ) | (25,456 | ) | |||
Accumulated other comprehensive loss | (11,632 | ) | (13,926 | ) | |||
Total stockholders’ equity | 1,352,983 | 1,396,506 | |||||
Total liabilities and stockholders’ equity | $ | 2,307,038 | $ | 2,307,283 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Sales: | |||||||
Product | $ | 294,788 | $ | 203,251 | |||
Service | 74,525 | 41,546 | |||||
Total sales | 369,313 | 244,797 | |||||
Cost of sales (excluding depreciation, depletion and amortization): | |||||||
Product | 207,239 | 162,183 | |||||
Service | 53,671 | 25,292 | |||||
Total cost of sales (excluding depreciation, depletion and amortization) | 260,910 | 187,475 | |||||
Operating expenses: | |||||||
Selling, general and administrative | 34,591 | 22,341 | |||||
Depreciation, depletion and amortization | 28,592 | 21,599 | |||||
Total operating expenses | 63,183 | 43,940 | |||||
Operating income | 45,220 | 13,382 | |||||
Other (expense) income: | |||||||
Interest expense | (7,070 | ) | (7,646 | ) | |||
Other income (expense), net, including interest income | 665 | (4,928 | ) | ||||
Total other expense | (6,405 | ) | (12,574 | ) | |||
Income before income taxes | 38,815 | 808 | |||||
Income tax (expense) benefit | (7,521 | ) | 1,714 | ||||
Net income | $ | 31,294 | $ | 2,522 | |||
Earnings per share: | |||||||
Basic | $ | 0.39 | $ | 0.03 | |||
Diluted | $ | 0.39 | $ | 0.03 | |||
Weighted average shares outstanding: | |||||||
Basic | 79,496 | 80,983 | |||||
Diluted | 80,309 | 82,244 | |||||
Dividends declared per share | $ | 0.06 | $ | 0.06 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Net income | $ | 31,294 | $ | 2,522 | |||
Other comprehensive income (loss): | |||||||
Unrealized gain (loss) on derivatives (net of tax of $1 and $(22) for the three months ended March 31, 2018 and 2017, respectively) | (2 | ) | (36 | ) | |||
Foreign currency translation adjustment (net of tax of $1 and zero for the three months ended March 31, 2018 and 2017, respectively.) | 3 | — | |||||
Pension and other post-retirement benefits liability adjustment (net of tax of $730 and $340 for the three months ended March 31, 2018 and 2017, respectively) | 2,293 | 565 | |||||
Comprehensive income | $ | 33,588 | $ | 3,051 |
Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||
Balance at December 31, 2017 | $ | 812 | $ | (25,456 | ) | $ | 1,147,084 | $ | 287,992 | $ | (13,926 | ) | $ | 1,396,506 | |||||||||
Net income | — | — | — | 31,294 | — | 31,294 | |||||||||||||||||
Unrealized loss on derivatives | — | — | — | — | (2 | ) | (2 | ) | |||||||||||||||
Foreign currency translation adjustment | — | — | — | — | 3 | 3 | |||||||||||||||||
Pension and post-retirement liability | — | — | — | — | 2,293 | 2,293 | |||||||||||||||||
Cash dividend declared ($0.0625 per share) | — | — | — | (4,881 | ) | — | (4,881 | ) | |||||||||||||||
Common stock-based compensation plans activity: | |||||||||||||||||||||||
Equity-based compensation | — | — | 6,254 | — | — | 6,254 | |||||||||||||||||
Shares withheld for employee taxes related to vested restricted stock and stock units | 2 | (3,484 | ) | (2 | ) | — | — | (3,484 | ) | ||||||||||||||
Repurchase of common stock | — | (75,000 | ) | — | — | — | (75,000 | ) | |||||||||||||||
Balance at March 31, 2018 | $ | 814 | $ | (103,940 | ) | $ | 1,153,336 | $ | 314,405 | $ | (11,632 | ) | $ | 1,352,983 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Operating activities: | |||||||
Net income | $ | 31,294 | $ | 2,522 | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Depreciation, depletion and amortization | 28,592 | 21,599 | |||||
Debt issuance amortization | 345 | 347 | |||||
Original issue discount amortization | 93 | 94 | |||||
Deferred income taxes | 7,786 | (1,726 | ) | ||||
Deferred revenue | 3,562 | (4,689 | ) | ||||
(Gain) loss on disposal of property, plant and equipment | (5,799 | ) | 59 | ||||
Equity-based compensation | 6,254 | 5,510 | |||||
Bad debt provision, net of recoveries | 237 | 783 | |||||
Other | (1,476 | ) | 1,012 | ||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||
Accounts receivable | (39,077 | ) | (51,747 | ) | |||
Inventories | 15,797 | 9,251 | |||||
Prepaid expenses and other current assets | 694 | (78 | ) | ||||
Income taxes | (961 | ) | 68 | ||||
Accounts payable and accrued expenses | (27,930 | ) | (3,020 | ) | |||
Short-term and long-term obligations-vendor incentives | 57,986 | — | |||||
Liability for pension and other post-retirement benefits | 212 | 497 | |||||
Net cash provided by (used in) operating activities | 77,609 | (19,518 | ) | ||||
Investing activities: | |||||||
Capital expenditures | (72,327 | ) | (19,896 | ) | |||
Capitalized intellectual property costs | (1,011 | ) | (1,245 | ) | |||
Proceeds from sale of property, plant and equipment | 25,960 | 12 | |||||
Net cash used in investing activities | (47,378 | ) | (21,129 | ) | |||
Financing activities: | |||||||
Dividends paid | (5,069 | ) | (5,092 | ) | |||
Repurchase of common stock | (75,000 | ) | — | ||||
Proceeds from options exercised | — | 517 | |||||
Tax payments related to shares withheld for vested restricted stock and stock units | (3,485 | ) | (3,377 | ) | |||
Repayment of long-term debt | (1,657 | ) | (1,405 | ) | |||
Principal payments on capital lease obligations | (75 | ) | (318 | ) | |||
Net cash used in financing activities | (85,286 | ) | (9,675 | ) | |||
Net decrease in cash and cash equivalents | (55,055 | ) | (50,322 | ) | |||
Cash and cash equivalents, beginning of period | 384,567 | 711,225 | |||||
Cash and cash equivalents, end of period | $ | 329,512 | $ | 660,903 | |||
Supplemental cash flow information: | |||||||
Cash paid (received) during the period for: | |||||||
Interest | $ | 6,592 | $ | 6,157 | |||
Taxes, net of refunds | $ | 770 | $ | (57 | ) |
Related party purchases | $ | 672 | $ | 858 | |||
Non-cash Items: | |||||||
Equipment received | $ | — | $ | 18,185 | |||
Accrued capital expenditures | $ | 20,170 | $ | 4,142 | |||
Capital lease assumed by third-party | $ | 119 | $ | — | |||
Asset retirement obligation assumed by third-party | $ | 2,116 | $ | — |
As Previously Reported | Adjustments | As Revised | |||||||
Product cost of sales | $ | 162,637 | $ | (287 | ) | $ | 162,350 | ||
Total cost of sales | 187,475 | (287 | ) | 187,188 | |||||
Selling, general and administrative expenses | 22,341 | (202 | ) | 22,139 | |||||
Operating income | 13,382 | 489 | 13,871 | ||||||
Other income (expense) | (4,928 | ) | (489 | ) | (5,417 | ) |
In thousands, except per share amounts | Three Months Ended March 31, | |||||||
2018 | 2017 | |||||||
Numerator: | ||||||||
Net income | $ | 31,294 | $ | 2,522 | ||||
Denominator: | ||||||||
Weighted average shares outstanding | 79,496 | — | 80,983 | |||||
Diluted effect of stock awards | 813 | 1,261 | ||||||
Weighted average shares outstanding assuming dilution | 80,309 | 82,244 | ||||||
Basic earnings per share | $ | 0.39 | $ | 0.03 | ||||
Diluted earnings per share | $ | 0.39 | $ | 0.03 |
Three Months Ended March 31, | |||||
2018 | 2017 | ||||
Weighted-average outstanding stock options excluded | 428 | 195 | |||
Weighted-average outstanding restricted stock and performance share units awards excluded | 337 | — |
Dividends per Common Share | Declaration Date | Record Date | Payable Date | |||||
$ | 0.0625 | February 16, 2018 | March 15, 2018 | April 5, 2018 |
For the Three Months Ended March 31, 2018 | |||||||||||||||
Unrealized gain/(loss) on cash flow hedges | Foreign currency translation adjustments | Pension and other post-retirement benefits liability | Total | ||||||||||||
Beginning Balance | $ | (76 | ) | $ | (6 | ) | $ | (13,844 | ) | $ | (13,926 | ) | |||
Other comprehensive gain (loss) before reclassifications | — | (3 | ) | 1,806 | 1,803 | ||||||||||
Amounts reclassed from accumulated other comprehensive income | 2 | — | 489 | 491 | |||||||||||
Ending Balance | $ | (74 | ) | $ | (9 | ) | $ | (11,549 | ) | $ | (11,632 | ) |
Estimate as of December 31, 2017 | Measurement Period Adjustments | Purchase Price Allocation | |||||||
Accounts receivable | $ | 11,201 | $ | — | $ | 11,201 | |||
Inventories | 8,067 | — | 8,067 | ||||||
Other current assets | 362 | — | 362 | ||||||
Assets held for sale | 9,453 | — | 9,453 | ||||||
Property, plant and mine development | 27,458 | — | 27,458 | ||||||
Mineral rights | 26,300 | (2,800 | ) | 23,500 | |||||
Other non-current assets | 1,136 | — | 1,136 | ||||||
Goodwill | 22,522 | 2,800 | 25,322 | ||||||
Customer relationships | 1,840 | — | 1,840 | ||||||
Total assets acquired | 108,339 | — | 108,339 | ||||||
Accounts payable and accrued expenses | 3,761 | — | 3,761 | ||||||
Unfavorable leasehold positions | 2,237 | — | 2,237 | ||||||
Notes Payable | 866 | — | 866 | ||||||
Other long term liabilities | — | — | — | ||||||
Asset retirement obligations | 474 | — | 474 | ||||||
Total liabilities assumed | 7,338 | — | 7,338 | ||||||
Net assets acquired | $ | 101,001 | $ | — | $ | 101,001 |
Approximate Fair Value | Estimated Useful Life | |||
(in thousands) | (in years) | |||
Customer relationships | $ | 1,840 | 15 |
For the year ended December 31, | |||||||
2017 | 2016 | ||||||
Sales | $ | 1,287,202 | $ | 642,951 | |||
Net income (loss) | $ | 143,604 | $ | (55,835 | ) | ||
Basic earnings (loss) per share | $ | 1.77 | $ | (0.86 | ) | ||
Diluted earnings (loss) per share | $ | 1.75 | $ | (0.86 | ) |
March 31, 2018 | December 31, 2017 | ||||||
Trade receivables | $ | 247,178 | $ | 217,649 | |||
Less: Allowance for doubtful accounts | (7,250 | ) | (7,100 | ) | |||
Net trade receivables | 239,928 | 210,549 | |||||
Other receivables | 11,347 | 2,037 | |||||
Total accounts receivable | $ | 251,275 | $ | 212,586 |
March 31, 2018 | |||
Beginning balance | $ | 7,100 | |
Bad debt provision | 237 | ||
Write-offs | (87 | ) | |
Ending balance | $ | 7,250 |
March 31, 2018 | December 31, 2017 | ||||||
Supplies | $ | 22,338 | $ | 21,277 | |||
Raw materials and work in process | 24,175 | 28,034 | |||||
Finished goods | 30,066 | 43,065 | |||||
Total inventories | $ | 76,579 | $ | 92,376 |
March 31, 2018 | December 31, 2017 | ||||||
Mining property and mine development | $ | 584,778 | $ | 586,242 | |||
Asset retirement cost | 12,166 | 14,184 | |||||
Land | 36,552 | 36,552 | |||||
Land improvements | 50,793 | 45,878 | |||||
Buildings | 55,280 | 56,330 | |||||
Machinery and equipment | 634,807 | 590,566 | |||||
Furniture and fixtures | 2,862 | 2,953 | |||||
Construction-in-progress | 187,639 | 189,970 | |||||
1,564,877 | 1,522,675 | ||||||
Accumulated depletion, depreciation and amortization | (369,155 | ) | (353,520 | ) | |||
Total property, plant and mine development, net | $ | 1,195,722 | $ | 1,169,155 |
Goodwill | ||||
Balance at December 31, 2017 | $ | 272,079 | ||
MS Sand acquisition measurement period adjustment | 2,800 | |||
Balance at March 31, 2018 | $ | 274,879 |
March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||
Estimated Useful Life | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||||||||
(in years) | |||||||||||||||||||||||||
Technology and intellectual property | 15 | $ | 71,713 | $ | (7,127 | ) | $ | 64,586 | $ | 70,703 | $ | (5,917 | ) | $ | 64,786 | ||||||||||
Customer relationships | 13 - 15 | 61,229 | (10,181 | ) | 51,048 | 61,229 | (9,076 | ) | 52,153 | ||||||||||||||||
Total definite-lived intangible assets: | $ | 132,942 | $ | (17,308 | ) | $ | 115,634 | $ | 131,932 | $ | (14,993 | ) | $ | 116,939 | |||||||||||
Trade name | 33,068 | — | 33,068 | 33,068 | — | 33,068 | |||||||||||||||||||
Total intangible assets: | $ | 166,010 | $ | (17,308 | ) | $ | 148,702 | $ | 165,000 | $ | (14,993 | ) | $ | 150,007 |
2018 | $ | 6,980 | |
2019 | 9,306 | ||
2020 | 9,306 | ||
2021 | 9,306 | ||
2022 | 9,291 |
March 31, 2018 | December 31, 2017 | ||||||
Senior secured credit facility: | |||||||
Revolver expiring July 23, 2018 (6.25% at March 31, 2018 and 5.75% at December 31, 2017) | $ | — | $ | — | |||
Term loan facility—final maturity July 23, 2020 (4.94%-5.44% at March 31, 2018 and 4.75%-5.25% December 31, 2017) | 487,800 | 489,075 | |||||
Less: Unamortized original issue discount | (850 | ) | (944 | ) | |||
Less: Unamortized debt issuance cost | (2,755 | ) | (3,099 | ) | |||
Note payable secured by royalty interest | 25,635 | 24,740 | |||||
Customer note payable | 566 | 745 | |||||
Equipment notes payable | 516 | 719 | |||||
Total debt | 510,912 | 511,236 | |||||
Less: current portion | (4,305 | ) | (4,504 | ) | |||
Total long-term portion of debt | $ | 506,607 | $ | 506,732 |
2018 | $ | 3,825 | |
2019 | 5,100 | ||
2020 | 478,875 | ||
Total | $ | 487,800 |
2018 | $ | 1,313 | |
2019 | 1,750 | ||
2020 | 1,750 | ||
2021 | 1,750 | ||
2022 | 1,750 |
March 31, 2018 | |||
Beginning balance | $ | 19,032 | |
Accretion | 326 | ||
Additions and revisions of prior estimates | (486 | ) | |
Disposal related to sale of transloads | (2,116 | ) | |
Ending balance | $ | 16,756 |
March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||
Maturity Date | Contract/Notional Amount | Carrying Amount | Fair Value | Maturity Date | Contract/Notional Amount | Carrying Amount | Fair Value | ||||||||||||||||||||
Interest rate cap agreement(1) | 2019 | $249 | million | $ | — | $ | — | 2019 | $249 | million | $ | — | $ | — |
March 31, 2018 | March 31, 2017 | ||||||
Deferred losses from derivatives in OCI, beginning of period | $ | (76 | ) | $ | (32 | ) | |
Loss recognized in OCI from derivative instruments | — | (36 | ) | ||||
Gain reclassified from Accumulated OCI | 2 | — | |||||
Deferred losses from derivatives in OCI, end of period | $ | (74 | ) | $ | (68 | ) |
Number of Shares | Weighted Average Exercise Price | Aggregate Intrinsic Value (in thousands) | Weighted Average Remaining Contractual Term in Years | |||||||||
Outstanding at December 31, 2017 | 908,919 | $ | 28.46 | $ | 7,008 | 6.1 years | ||||||
Granted | — | — | — | |||||||||
Exercised | — | — | — | |||||||||
Forfeited | (918 | ) | 31.30 | — | ||||||||
Outstanding at March 31, 2018 | 908,001 | $ | 28.46 | $ | 3,679 | 5.5 years | ||||||
Exercisable at March 31, 2018 | 791,868 | $ | 27.02 | $ | 3,679 | 5.3 years |
Number of Shares | Grant Date Weighted Average Fair Value | |||||
Unvested, December 31, 2017 | 461,346 | $ | 30.76 | |||
Granted | 3,852 | 30.11 | ||||
Vested | (132,081 | ) | 24.56 | |||
Forfeited | (10,309 | ) | 35.65 | |||
Unvested, March 31, 2018 | 322,808 | $ | 33.14 |
Number of Shares | Grant Date Weighted Average Fair Value | |||||
Unvested, December 31, 2017 | 881,416 | $ | 42.16 | |||
Granted | — | — | ||||
Vested | (225,000 | ) | 41.99 | |||
Forfeited | (5,972 | ) | 58.71 | |||
Unvested, March 31, 2018 | 650,444 | $ | 42.07 |
Year ending December 31, | Operating Lease Minimum Rental Payments | Minimum Purchase Commitments | |||||
2018 | $ | 53,739 | $ | 18,292 | |||
2019 | 64,746 | 22,829 | |||||
2020 | 52,868 | 17,951 | |||||
2021 | 36,031 | 9,459 | |||||
2022 | 30,301 | 6,851 | |||||
Thereafter | 55,739 | 4,565 | |||||
Total future lease and purchase commitments | $ | 293,424 | $ | 79,947 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Service cost | $ | 279 | $ | 295 | |||
Interest cost | 978 | 883 | |||||
Expected return on plan assets | (1,243 | ) | (1,331 | ) | |||
Net amortization and deferral | 631 | 693 | |||||
Net pension benefit costs | $ | 645 | $ | 540 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Service cost | $ | 27 | $ | 32 | |||
Interest cost | 188 | 192 | |||||
Net amortization and deferral | — | 54 | |||||
Net post-retirement benefit costs | $ | 215 | $ | 278 |
Category | Oil & Gas Proppants | Industrial & Specialty Products | Total Sales | |||||||||
Product | $ | 238,422 | $ | 56,366 | $ | 294,788 | ||||||
Service | 74,508 | 17 | 74,525 | |||||||||
Total Sales | 312,930 | 56,383 | 369,313 |
Unbilled Receivables | ||||
December 31, 2017 | $ | 5,245 | ||
Reclassifications to billed receivables | (5,245 | ) | ||
Revenues recognized in excess of period billings | 2,939 | |||
March 31, 2018 | $ | 2,939 |
Deferred Revenue | ||||
December 31, 2017 | $ | 118,414 | ||
Revenues recognized from balances held at the beginning of the period | (6,969 | ) | ||
Revenues deferred from period collections on unfulfilled performance obligations | 10,530 | |||
March 31, 2018 | $ | 121,975 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Sales: | |||||||
Oil & Gas Proppants | $ | 312,930 | $ | 192,959 | |||
Industrial & Specialty Products | 56,383 | 51,838 | |||||
Total sales | 369,313 | 244,797 | |||||
Segment contribution margin: | |||||||
Oil & Gas Proppants | 99,433 | 38,842 | |||||
Industrial & Specialty Products | 20,530 | 20,215 | |||||
Total segment contribution margin | 119,963 | 59,057 | |||||
Operating activities excluded from segment cost of sales | (11,560 | ) | (1,735 | ) | |||
Selling, general and administrative | (34,591 | ) | (22,341 | ) | |||
Depreciation, depletion and amortization | (28,592 | ) | (21,599 | ) | |||
Interest expense | (7,070 | ) | (7,646 | ) | |||
Other income (expense), net, including interest income | 665 | (4,928 | ) | ||||
Income tax (expense) benefit | (7,521 | ) | 1,714 | ||||
Net income | $ | 31,294 | $ | 2,522 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Amounts in thousands except per ton data | Three months ended | Percentage Change | ||||||||
Oil & Gas Proppants | March 31, 2018 | December 31, 2017 | March 31, 2018 vs. December 31, 2017 | |||||||
Sales | $ | 312,930 | $ | 306,019 | 2 | % | ||||
Tons Sold | 3,252 | 3,171 | 3 | % | ||||||
Average Selling Price per Ton | $ | 96.23 | $ | 96.51 | — | % |
• | Expand our Oil & Gas Proppants production capacity and product portfolio. We continue to consider and execute several initiatives to increase our frac sand production capacity and augment our proppant product portfolio. We are evaluating Greenfield opportunities and are expanding production capacities and maximizing production efficiencies of our existing facilities. |
• | Increase our presence and product offering in industrial and specialty products end markets. Our research and business development teams work in tandem with our customers to develop new products, which we expect will either increase our presence and market share in certain industrial and specialty products end markets or allow us to enter new markets. We manage a robust pipeline of new products in various stages of development. Some of these products have already come to market, resulting in a positive impact on our financial results. We continue to work toward offering more value-driven industrial and specialty products that will enhance the profitability of the business. For instance, on April 1, 2017, we completed the White Armor acquisition, a product line of cool roof granules used in industrial roofing applications. |
• | Optimize product mix and further develop value-added capabilities to maximize margins. We continue to actively manage our product mix at each of our plants to ensure we maximize our profit margins. This requires us to use our proprietary expertise in balancing key variables, such as mine geology, processing capacities, transportation availability, customer requirements and pricing. We expect to continue investing in ways to increase the value we provide to our customers by expanding our product offerings, improving our supply chain management, upgrading our information technology, and creating a world class customer service model. |
• | Expand our supply chain network and leverage our logistics capabilities to meet our customers’ needs in each strategic oil and gas basin. We continue to strategically position our supply chain in order to deliver sand according to our customers’ needs, whether at a plant, a transload, or at the wellhead. We believe that our supply chain network and logistics capabilities are a competitive advantage that enables us to provide superior service for our customers. |
◦ | We continue to expand our transload network to ensure product is available to meet the in-basin needs of our customers. This approach allows us to provide strong customer service and puts us in a position to take advantage of opportunistic spot market sales. Our plant sites are strategically located to provide access to key Class I railroads, which enables us to cost effectively send product to each of the strategic basins in North America. We can ship product by truck, barge and rail with an ability to connect to short-line railroads as necessary to meet our customers’ evolving in-basin product needs. We expect to continue to develop strategic partnerships with transload operators and transportation providers that will enhance our portfolio of supply chain services that we can provide to customers. As of March 31, 2018, we have storage capacity at 57 transloads located near all of the major shale basins in the United States. |
◦ | Our acquisition of Sandbox extends our delivery capability directly to our customers' wellhead locations, which increases efficiency and provides a lower cost logistics solution for our customers. Sandbox has operations in Texas (Midland/Odessa, Kenedy, Dallas/Fort Worth, Tyler); Morgantown, West Virginia; western North Dakota; northeast of Denver, Colorado; Oklahoma City, Oklahoma; Cambridge, Ohio and Mansfield, Pennsylvania, where its major customers are located. |
• | Evaluate both Greenfield and Brownfield expansion opportunities and other acquisitions. We expect to continue leveraging our reputation, processing capabilities and infrastructure to increase production, as well as explore other opportunities to expand our reserve base. |
◦ | We may accomplish this by developing Greenfield projects, where we can capitalize on our technical knowledge of geology, mining and processing and our strong reputation within local communities. For instance, in May 2017, we purchased a new Greenfield site in Crane County, Texas, which became operational during the first quarter of 2018 and will eventually add approximately 6 million tons of annual frac sand capacity. Additionally, in July 2017, we purchased a new Greenfield site near Lamesa, Texas, which depending on market conditions, could become operational as early as the third quarter of 2018 and will eventually add approximately 2.6 million tons of annual frac sand capacity. |
◦ | We are continuing to actively pursue acquisitions to grow by taking advantage of our asset footprint, our management’s experience with high-growth businesses, and our strong customer relationships. Our primary objective is to acquire assets with differing levels of frac sand qualities that are complementary to our Oil & Gas Proppants segment, with a focus on mining, processing and logistics to further enhance our market presence. We prioritize acquisitions that provide opportunities to realize synergies (and, in some cases, the acquisition may be immediately accretive assuming synergies), including entering new geographic and frac sand product markets, acquiring attractive customer contracts and improving operations. On August 16, 2016, we completed our acquisition of NBI, the ultimate parent company of NBR Sand, LLC, a regional sand producer located near Tyler, Texas. On August 22, 2016, we completed the acquisition of Sandbox, a provider of logistics solutions and technology for the transportation of proppant used in hydraulic fracturing in the oil and gas industry. On August 16, 2017, we completed our acquisition of MS Sand, a frac sand mining and logistics company based in St. Louis, Missouri. We are in active discussions to acquire additional assets fitting this strategy, which, if completed, could be “significant” under Regulation S-X and could require additional sources of financing. There can be no assurance that we will reach a definitive agreement and complete any of these potential transactions. See the risk factors disclosed in Item 1A of Part I of our 2017 Annual Report on Form 10-K, including the risk factor entitled, “If we cannot successfully complete acquisitions or integrate acquired businesses, our growth may be limited and our financial condition may be adversely affected.” |
• | Maintain financial strength and flexibility. We intend to maintain financial strength and flexibility to enable us to better manage through industry downturns and pursue acquisitions and new growth opportunities as they arise. As of March 31, 2018, we had $329.5 million of cash on hand and $45.5 million of availability under our revolving credit facility (the "Revolver"). |
(All amounts in thousands) | Three Months Ended March 31, | ||||||
2018 | 2017 | ||||||
Net income | $ | 31,294 | $ | 2,522 | |||
Total interest expense, net of interest income | 5,855 | 6,311 | |||||
Provision for taxes | 7,521 | (1,714 | ) | ||||
Total depreciation, depletion and amortization expenses | 28,592 | 21,599 | |||||
EBITDA | 73,262 | 28,718 | |||||
Non-cash incentive compensation (1) | 6,254 | 5,510 | |||||
Post-employment expenses (excluding service costs) (2) | 555 | 489 | |||||
Merger and acquisition related expenses (3) | 2,507 | 1,252 | |||||
Plant capacity expansion expenses(4) | 9,380 | 1 | |||||
Contract termination expenses(5) | — | 325 | |||||
Other adjustments allowable under our existing credit agreement (6) | 3,408 | 6,416 | |||||
Adjusted EBITDA | $ | 95,366 | $ | 42,711 |
(1) | Reflects equity-based non-cash compensation expense. | |
(2) | Includes net pension cost and net post-retirement cost relating to pension and other post-retirement benefit obligations during the applicable period, but in each case excluding the service cost relating to benefits earned during such period. Non-service net periodic benefit costs are not considered reflective of our operating performance as these costs do not exclusively originate from employee services during the applicable period and may experience periodic fluctuations as a result of changes in non-operating factors, including changes in discount rates, changes in expected returns on benefit plan assets, and other demographic actuarial assumptions. See Note P - Pension and Post-Retirement Benefits to our Financial Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q. | |
(3) | Merger and acquisition related expenses include legal fees, consulting fees, bank fees, severance costs, certain purchase accounting items, inventory write-offs, information technology integration costs and similar charges. While these costs are not operational in nature and are not expected to continue for any singular transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in the future as we continue to integrate prior acquisitions and pursue any future acquisitions. | |
(4) | Plant capacity expansion expenses include expenses that are not inventoriable or capitalizable as related to plant expansion projects greater than $5 million in capital expenditures or plant start up projects. While these expenses are not operational in nature and are not expected to continue for any singular project on an ongoing basis, similar types of expenses have occurred in prior periods and may recur in the future as we continue to pursue future plant capacity expansion. | |
(5) | Reflects contract termination expenses related to strategically exiting a service contract. While these expenses are not operational in nature and are not expected to continue for any singular event on an ongoing basis, similar types of expenses have occurred in prior periods and may recur in the future as we continue to strategically evaluate our contracts. | |
(6) | Reflects miscellaneous adjustments permitted under our existing credit agreement. The three months ended March 31, 2018 includes a net loss of $3.4 million on divestiture of assets, consisting of $7.9 million of contract termination costs and $1.3 million of divestiture related expenses such as legal fees and consulting fees, partially offset by a $5.8 million gain on sale of assets. While the gain and costs related to a divestiture of assets are not operational in nature and are not expected to continue for any singular divestiture on an ongoing basis, similar types of expenses have occurred in prior periods and may recur in the future. The three months ended March 31, 2017 amount includes a contract restructuring cost of $6.3 million. |
(All numbers in thousands except per ton data) | Three Months Ended March 31, | Percent Change | ||||||||
2018 | 2017 | '18 vs.'17 | ||||||||
Sales: | ||||||||||
Oil & Gas Proppants | $ | 312,930 | $ | 192,959 | 62 | % | ||||
Industrial & Specialty Products | 56,383 | 51,838 | 9 | % | ||||||
Total Sales | $ | 369,313 | $ | 244,797 | 51 | % | ||||
Tons: | ||||||||||
Oil & Gas Proppants | 3,252 | 2,532 | 28 | % | ||||||
Industrial & Specialty Products | 877 | 861 | 2 | % | ||||||
Total Tons | 4,129 | 3,393 | 22 | % | ||||||
Average Selling Price per Ton: | ||||||||||
Oil & Gas Proppants | $ | 96.23 | $ | 76.21 | 26 | % | ||||
Industrial & Specialty Products | 64.29 | 60.21 | 7 | % | ||||||
Overall Average Selling Price per Ton: | $ | 89.44 | $ | 72.15 | 24 | % |
• | Compensation related expense increased by $6.1 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017, mainly due to increased equity-based compensation and higher employee head count. |
• | Bad debt expense decreased by $0.5 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017, mainly due to improvements in our collection efforts. |
• | Merger and acquisition related expense increased by $1.3 million to $2.5 million for the three months ended March 31, 2018 compared to $1.3 million for the three months ended March 31, 2017. The increase was mainly due to costs related to our growth and expansion initiatives, including costs related to the evaluation of business acquisitions. |
• | A net loss of $3.4 million on divestiture of assets, consisting of $7.9 million of contract termination costs and $1.3 million of divestiture related expenses such as legal fees and consulting fees, partially offset by a $5.8 million gain on sale of assets. |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | 77,609 | $ | (19,518 | ) | ||
Investing activities | (47,378 | ) | (21,129 | ) | |||
Financing activities | (85,286 | ) | (9,675 | ) |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program(1) | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program(1) | |||||||||||
January 2018 | 670 | (2) | $ | 26.47 | — | ||||||||||
February 2018 | 2,210,915 | (2) | $ | 26.67 | 2,133,174 | ||||||||||
March 2018 | 736,021 | (2) | $ | 26.48 | 694,849 | ||||||||||
Total | 2,947,606 | $ | 26.62 | 2,828,023 | $ | — |
(1) | A program covering the repurchase of up to $100.0 million of our common stock was approved by the Board in November 2017. | |
(2) | Includes 482; 77,741; and 39,972 shares withheld by U.S. Silica to pay taxes due upon the vesting of employee restricted stock and restricted stock units for the monthly periods ended January, February and March 2018, respectively. |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
• | fluctuations in demand for commercial silica; |
• | the cyclical nature of our customers’ businesses; |
• | operating risks that are beyond our control, such as changes in the price and availability of transportation, natural gas or electricity; unusual or unexpected geological formations or pressures; cave-ins, pit wall failures or rock falls; or unanticipated ground, grade or water conditions; |
• | our dependence on five of our plants for a significant portion of our sales; |
• | the level of activity in the natural gas and oil industries; |
• | decreased demand for frac sand or the development of either effective alternative proppants or new processes to replace hydraulic fracturing; |
• | federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing and the potential for related regulatory action or litigation affecting our customers’ operations; |
• | our rights and ability to mine our properties and our renewal or receipt of the required permits and approvals from governmental authorities and other third parties; |
• | our ability to implement our capacity expansion plans within our current timetable and budget and our ability to secure demand for our increased production capacity, and the actual operating costs once we have completed the capacity expansion; |
• | our ability to succeed in competitive markets; |
• | loss of, or reduction in, business from our largest customers; |
• | increasing costs or a lack of dependability or availability of transportation services and transload network access or infrastructure; |
• | extensive regulation of trucking services; |
• | our ability to recruit and retain truckload drivers; |
• | increases in the prices of, or interruptions in the supply of, natural gas and electricity, or any other energy sources; |
• | increases in the price of diesel fuel; |
• | diminished access to water; |
• | our ability to successfully complete acquisitions or integrate acquired businesses; |
• | our ability to make capital expenditures to maintain, develop and increase our asset base and our ability to obtain needed capital or financing on satisfactory terms; |
• | our substantial indebtedness and pension obligations; |
• | restrictions imposed by our indebtedness on our current and future operations; |
• | contractual obligations that require us to deliver minimum amounts of frac sand or purchase minimum amounts of services; |
• | the accuracy of our estimates of mineral reserves and resource deposits; |
• | a shortage of skilled labor and rising costs in the mining industry; |
• | our ability to attract and retain key personnel; |
• | our ability to maintain satisfactory labor relations; |
• | our reliance on patents, trade secrets and contractual restrictions to protect our proprietary rights; |
• | our significant unfunded pension obligations and post-retirement health care liabilities; |
• | our ability to maintain effective quality control systems at our mining, processing and production facilities; |
• | seasonal and severe weather conditions; |
• | fluctuations in our sales and results of operations due to seasonality and other factors; |
• | interruptions or failures in our information technology systems; |
• | the impact of a terrorist attack or armed conflict; |
• | extensive and evolving environmental, mining, health and safety, licensing, reclamation and other regulation (and changes in their enforcement or interpretation); |
• | silica-related health issues and corresponding litigation; |
• | our ability to acquire, maintain or renew financial assurances related to the reclamation and restoration of mining property; and |
• | other factors included and disclosed in Part I, Item 1A, “Risk Factors” of our 2017 Annual Report. |
ITEM 6. | EXHIBITS |
U.S. Silica Holdings, Inc. | |||
/s/ DONALD A. MERRIL | |||
Name: | Donald A. Merril | ||
Title: | Chief Financial Officer |
Incorporated by Reference | |||||||||
Exhibit Number | Description | Form | File No. | Exhibit | Filing Date | ||||
Agreement and Plan of Merger, dated as of March 22, 2018, by and among EP Acquisition Parent, Inc. US Silica Company, Tranquility Acquisition Corp., EPMC Parent LLC, as the Stockholders' Representative, and solely for the purposes of Section 11.17, Golden Gate Private Equity, Inc. | |||||||||
Form of Performance Share Unit Agreement Pursuant to the Amended and Restated U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan. | |||||||||
Form of Restricted Stock Unit Agreement Pursuant to the Amended and Restated U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan. | |||||||||
Form of Restricted Stock Agreement Pursuant to the Amended and Restated U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan. | |||||||||
Form of Restricted Stock Agreement Pursuant to the Amended and Restated U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan. | |||||||||
Rule 13a-14(a)/15(d)-14(a) Certification by Bryan A. Shinn, Chief Executive Officer. | |||||||||
Rule 13a-14(a)/15(d)-14(a) Certification by Donald A. Merril, Chief Financial Officer. | |||||||||
Section 1350 Certification by Bryan A. Shinn, Chief Executive Officer. | |||||||||
Section 1350 Certification by Donald A. Merril, Chief Financial Officer. | |||||||||
Mine Safety Disclosure | |||||||||
Consent of IHS Markit. | |||||||||
101* | 101.INS XBRL Instance | ||||||||
101.SCH XBRL Taxonomy Extension Schema | |||||||||
101.CAL XBRL Taxonomy Extension Calculation | |||||||||
101.LAB XBRL Taxonomy Extension Labels | |||||||||
101.PRE XBRL Taxonomy Extension Presentation | |||||||||
101.DEF XBRL Taxonomy Extension Definition | |||||||||
+ | Management contract or compensatory plan/arrangement |
* | Filed herewith |
Page | ||||
Article 1 Definitions | 2 | |||
Section 1.01 | Definitions | 2 | ||
Section 1.02 | Other Definitional and Interpretive Provisions | 13 | ||
Article 2 The Merger | 14 | |||
Section 2.01 | The Merger | 14 | ||
Section 2.02 | Closing; Effective Time | 15 | ||
Section 2.03 | Certificate of Incorporation; Bylaws; Directors and Officers | 15 | ||
Section 2.04 | Conversion of Common Stock | 15 | ||
Section 2.05 | Adjustment Escrow Amount; Closing Date Payments | 16 | ||
Section 2.06 | Surrender and Payment | 17 | ||
Section 2.07 | Dissenting Common Stock | 18 | ||
Section 2.08 | Adjustments | 19 | ||
Section 2.09 | Lost Certificates | 19 | ||
Section 2.10 | Rights Not Transferable | 19 | ||
Section 2.11 | Withholding Rights | 19 | ||
Section 2.12 | Purchase Price Adjustment | 20 | ||
Article 3 Representations and Warranties of the Company | 22 | |||
Section 3.01 | Organization | 23 | ||
Section 3.02 | Power and Authorization | 23 | ||
Section 3.03 | No Violation or Approval; Consents | 24 | ||
Section 3.04 | Capitalization of the Acquired Companies | 24 | ||
Section 3.05 | Financial Matters | 26 | ||
Section 3.06 | Absence of Certain Developments | 26 | ||
Section 3.07 | Debt; Guarantees | 26 | ||
Section 3.08 | Assets | 27 | ||
Section 3.09 | Real Property | 27 | ||
Section 3.10 | Intellectual Property | 29 | ||
Section 3.11 | Tax Matters | 30 | ||
Section 3.12 | Employee Benefit Plans | 32 | ||
Section 3.13 | Environmental Matters | 34 | ||
Section 3.14 | Contracts | 35 | ||
Section 3.15 | Related Party Transactions | 37 | ||
Section 3.16 | Labor Matters | 37 | ||
Section 3.17 | Litigation; Governmental Orders | 37 | ||
Section 3.18 | Compliance with Laws | 38 | ||
Section 3.19 | Corruption and Proceeds of Crime | 38 | ||
Section 3.20 | Trade Controls and U.S. Sanctions | 39 | ||
Section 3.21 | Safety Reports | 39 | ||
Section 3.22 | Insurance | 39 |
Section 3.23 | Customers and Suppliers | 40 | ||
Section 3.24 | No Brokers | 40 | ||
Section 3.25 | Licenses and Permits | 40 | ||
Section 3.26 | Bank Relations; Powers of Attorney | 41 | ||
Section 3.27 | Product Warranty | 41 | ||
Section 3.28 | Product Liability | 41 | ||
Section 3.29 | Sufficient Escrow Amounts | 41 | ||
Section 3.30 | Reserve Information | 41 | ||
Article 4 Representations and Warranties of Buyer and MergerSub | 42 | |||
Section 4.01 | Organization | 42 | ||
Section 4.02 | Power and Authorization | 42 | ||
Section 4.03 | No Violation or Approval; Consents | 42 | ||
Section 4.04 | Litigation | 43 | ||
Section 4.05 | Available Funds | 43 | ||
Section 4.06 | No Brokers | 43 | ||
Article 5 Covenants of the Company | 43 | |||
Section 5.01 | Conduct of the Company | 43 | ||
Section 5.02 | Access to Information | 46 | ||
Section 5.03 | Data Room CD ROM | 47 | ||
Section 5.04 | Insurance Policy | 47 | ||
Section 5.05 | Cooperation with Financing and Financial Reporting | 47 | ||
Section 5.06 | 280G Approvals | 48 | ||
Section 5.07 | Termination of Affiliate Contracts and Transactions | 49 | ||
Article 6 Covenants of Buyer | 49 | |||
Section 6.01 | Access | 49 | ||
Section 6.02 | Employees and Offers of Employment | 50 | ||
Section 6.03 | Company Employee Plans | 50 | ||
Section 6.04 | Buyer Employee Plans | 50 | ||
Section 6.05 | Limitation of Rights | 51 | ||
Section 6.06 | Obligations of MergerSub and Surviving Corporation | 51 | ||
Section 6.07 | Director and Officer Liability | 51 | ||
Article 7 Covenants of Buyer, MergerSub and the Company | 52 | |||
Section 7.01 | Closing Efforts | 52 | ||
Section 7.02 | Public Announcements | 53 | ||
Section 7.03 | Confidentiality | 53 | ||
Section 7.04 | Tax Matters | 54 | ||
Section 7.05 | Debt Payoff Letter | 55 | ||
Section 7.06 | Termination of Expired Financing Statements | 55 | ||
Article 8 Conditions to the Merger | 55 | |||
Section 8.01 | Conditions to Obligations of the Parties | 55 | ||
Section 8.02 | Conditions to Obligations of Buyer and MergerSub | 55 | ||
Section 8.03 | Conditions to Obligation of the Company | 57 | ||
Article 9 Termination | 57 |
Section 9.01 | Grounds for Termination | 57 | ||
Section 9.02 | Effect of Termination | 58 | ||
Article 10 Stockholders’ Representative | 59 | |||
Article 11 Miscellaneous | 61 | |||
Section 11.01 | Notices | 61 | ||
Section 11.02 | Amendments and Waivers | 62 | ||
Section 11.03 | Expenses | 63 | ||
Section 11.04 | Waiver of Conflicts Regarding Representation; Non-Assertion of Attorney Client Privilege | 63 | ||
Section 11.05 | Successors and Assigns | 64 | ||
Section 11.06 | Governing Law | 64 | ||
Section 11.07 | Jurisdiction | 64 | ||
Section 11.08 | WAIVER OF JURY TRIAL | 65 | ||
Section 11.09 | NO OTHER REPRESENTATIONS | 66 | ||
Section 11.10 | Specific Performance | 68 | ||
Section 11.11 | Counterparts | 68 | ||
Section 11.12 | Third Party Beneficiaries; No Recourse Against Third Parties | 69 | ||
Section 11.13 | Entire Agreement | 69 | ||
Section 11.14 | Severability | 69 | ||
Section 11.15 | Negotiation of Agreement | 69 | ||
Section 11.16 | Schedules; Construction | 70 | ||
Section 11.17 | Treatment of Confidential Information | 70 | ||
Section 11.18 | Provisions Related to Financing Sources | 71 |
Exhibit A | Form of Escrow Agreement |
Exhibit B | Form of Letter of Transmittal |
Exhibit C-1 | Stockholders Executing Release and Waiver |
Exhibit C-2 | Form of Release and Waiver |
Schedule 1.01(a) | Closing Working Capital |
Schedule 1.01(b) | Knowledge |
Schedule 1.01(c) | Permitted Liens |
Schedule 5.01 | Conduct of the Company |
Schedule 7.06 | Termination of Expired Financing Statements |
Schedule 8.01(a) | Governmental Approvals |
Schedule 8.02(i) | Director and Officer Resignations |
Schedule 8.02(j) | Termination of Liens |
Section 3.01 | Organization |
Section 3.02 | Power and Authorization |
Section 3.03 | No Violation or Approval; Consents |
Section 3.04 | Capitalization of the Acquired Companies |
Section 3.05 | Financial Matters |
Section 3.06 | Absence of Certain Developments |
Section 3.07 | Debt; Guarantees |
Section 3.08 | Assets |
Section 3.09 | Real Property |
Section 3.10 | Intellectual Property |
Section 3.11 | Tax Matters |
Section 3.12 | Employee Benefit Plans |
Section 3.13 | Environmental Matters |
Section 3.14 | Contracts |
Section 3.15 | Related Party Transactions |
Section 3.16 | Labor Matters |
Section 3.17 | Litigation; Governmental Orders |
Section 3.18 | Compliance with Laws |
Section 3.19 | Corruption and Proceeds of Crime |
Section 3.20 | Trade Controls and U.S. Sanctions |
Section 3.21 | Safety Reports |
Section 3.22 | Insurance |
Section 3.23 | Customers and Suppliers |
Section 3.24 | No Brokers |
Section 3.25 | Licenses and Permits |
Section 3.26 | Bank Relations; Powers of Attorney |
Section 3.27 | Product Warranty |
Section 3.28 | Product Liability |
Section 3.30 | Reserve Information |
(A) | Seven Hundred Fifty Million Dollars ($750,000,000), |
(B) | plus the sum of the following: |
(1) | the total amount of the Closing Cash Balance (if the Closing Cash Balance is a positive amount), and |
(2) | if Closing Working Capital exceeds Target Working Capital, the amount of such excess. |
(C) | minus the sum of the following: |
(1) | the total amount of the Closing Cash Balance (if the Closing Cash Balance is a negative amount), |
(2) | the Closing Debt Amount, |
(3) | the Closing Transaction Expenses, and |
(4) | if Target Working Capital exceeds Closing Working Capital, the amount of such excess. |
Term | Section |
Accounting Firm | Section 2.12(e) |
Agreement | Preamble |
Anti-Corruption Laws | Section 3.19(a) |
Assets | Section 3.08 |
Balance Sheet | Section 3.05(c) |
Buyer | Preamble |
Buyer Benefit Plans | Section 6.04 |
Buyer Related Parties | Section 11.04 |
Certificate of Merger | Section 2.02 |
Charges | Article 10 |
Closing | Section 2.02 |
Company | Preamble |
Company Convertible Securities | Section 3.04(b) |
Term | Section |
Company Plan | Section 3.12(a) |
Confidentiality Agreement | Section 5.02 |
Continuing Employees | Section 6.02 |
DGCL | Recitals |
Disclosed Contracts | Section 3.14(b) |
Disclosure Schedules | Article 3 |
Dispute Notice | Section 2.12(d) |
Dispute Submission Notice | Section 2.12(e) |
Dissenting Shares | Section 2.07 |
Estimated Aggregate Merger Consideration | Section 2.12(b) |
Estimated Closing Cash Balance | Section 2.12(a) |
Estimated Closing Debt Amount | Section 2.12(a) |
Estimated Closing Statement | Section 2.12(a) |
Estimated Closing Transaction Expenses | Section 2.12(a) |
Estimated Per-Share Consideration | Section 2.12(a) |
FCPA | Section 3.19(a) |
Final Closing Statement | Section 2.12(e) |
Financials | Section 3.05(a) |
GGPE | Preamble |
Leased Real Property | Section 3.09(c) |
Leases | Section 3.09(c) |
Merger | Section 2.01(a) |
MergerSub | Preamble |
Money Laundering Laws | Section 3.19(c) |
Most Recent Balance Sheet | Section 3.05(a) |
Most Recent Balance Sheet Date | Section 3.05(a) |
Non-Signatory Holder | Section 2.06(c) |
Nonparty Affiliate | Section 11.12(b) |
OFAC | Section 3.20 |
Other Regulatory Laws | Section 7.01(b) |
Owned Real Property | Section 3.09(a) |
Paying Agent | Section 2.06 |
Per-Share Consideration | Section 2.04(a) |
Post-Closing Representation | Section 11.04 |
Pre-Closing Representation | Section 11.04 |
Prior Company Counsel | Section 11.04 |
Proposed Final Closing Statement | Section 2.12(c) |
Real Property | Section 3.09(b) |
Release and Waivers | Section 8.02(h) |
Remaining Escrow Property | Article 10 |
Stockholder Related Parties | Section 11.04 |
Term | Section |
Stockholders’ Representative | Preamble |
Stockholders’ Representative Fund Property | Section 2.05(b) |
Surviving Corporation | Section 2.01(a) |
Tail Policy | Section 6.07(c) |
EP ACQUISITION PARENT, INC. | |
By: | |
Name: | |
Title: |
U.S. SILICA COMPANY | |
By: | |
Name: | |
Title: |
TRANQUILITY ACQUISITION CORP. | |
By: | |
Name: | |
Title: |
EPMC PARENT LLC, solely in its capacity as the Stockholders’ Representative | ||
By: | ||
Name: | ||
Title: | ||
GOLDEN GATE PRIVATE EQUITY, INC., solely for purposes of Section 11.17 | ||
By: | ||
Name: | ||
Title: |
TSR Ranking January 1, 2018 through December 31, 2020 | Number of PSUs Vested as Percentage of Target |
Less Than 30th percentile | 0% |
30th percentile | 50% (Threshold) |
50th percentile | 100% |
75th percentile | 150% |
Equal to or Greater Than 90th percentile | 200% (Maximum) |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
1. | Competing Businesses |
• | Unimin Corporation |
• | Fairmount Minerals/Santrol |
• | Preferred Proppants, LLC |
• | Badger Mining Corporation |
• | Hi-Crush Proppants LLC |
• | Emerge Energy Services LP |
• | Superior Silica Sands LLC |
• | EOG Resources, Inc. |
• | Alpine Materials, LLC |
• | Canadian Sand and Proppants, Inc. |
• | Sierra Frac Sand, LLC |
• | Grit Energy Solutions, LLC |
• | Grit Energy, LLC |
• | Proppant Express Solutions LLC |
• | Arrows Up LLC |
• | OmniTrax, Inc. |
2. | Customers: |
• | Halliburton Energy Services, Inc. |
• | Schlumberger Technology Corporation |
• | C&J Well Services, Inc./Nabors Industries Ltd./C&J and Nabors affiliates |
• | Weatherford International Ltd. |
• | Baker Hughes Incorporated/BJ Services Company |
• | Liberty Oilfield Services LLC |
3. | Geographic Area: |
• | Colorado |
• | Illinois |
• | Louisiana |
• | New Jersey |
• | New Mexico |
• | North Dakota |
• | Oklahoma |
• | Pennsylvania |
• | Texas |
• | West Virginia |
• | Wisconsin |
5 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
1. | Competing Businesses |
• | Unimin Corporation |
• | Fairmount Minerals/Santrol |
• | Preferred Proppants, LLC |
• | Badger Mining Corporation |
• | Hi-Crush Proppants LLC |
• | Emerge Energy Services LP |
• | Superior Silica Sands LLC |
• | EOG Resources, Inc. |
• | Alpine Materials, LLC |
• | Canadian Sand and Proppants, Inc. |
• | Sierra Frac Sand, LLC |
• | Grit Energy Solutions, LLC |
• | Grit Energy, LLC |
• | Proppant Express Solutions LLC |
• | Arrows Up LLC |
• | OmniTrax, Inc. |
2. | Customers: |
• | Halliburton Energy Services, Inc. |
• | Schlumberger Technology Corporation |
• | C&J Well Services, Inc./Nabors Industries Ltd./C&J and Nabors affiliates |
• | Weatherford International Ltd. |
• | Baker Hughes Incorporated/BJ Services Company |
• | Liberty Oilfield Services LLC |
3. | Geographic Area: |
• | Colorado |
• | Illinois |
• | Louisiana |
• | New Jersey |
• | New Mexico |
• | North Dakota |
• | Oklahoma |
• | Pennsylvania |
• | Texas |
• | West Virginia |
• | Wisconsin |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
1. | Competing Businesses |
• | Unimin Corporation |
• | Fairmount Minerals/Santrol |
• | Preferred Proppants, LLC |
• | Badger Mining Corporation |
• | Hi-Crush Proppants LLC |
• | Emerge Energy Services LP |
• | Superior Silica Sands LLC |
• | EOG Resources, Inc. |
• | Alpine Materials, LLC |
• | Canadian Sand and Proppants, Inc. |
• | Sierra Frac Sand, LLC |
• | Grit Energy Solutions, LLC |
• | Grit Energy, LLC |
• | Proppant Express Solutions LLC |
• | Arrows Up LLC |
• | OmniTrax, Inc. |
2. | Customers: |
• | Halliburton Energy Services, Inc. |
• | Schlumberger Technology Corporation |
• | C&J Well Services, Inc./Nabors Industries Ltd./C&J and Nabors affiliates |
• | Weatherford International Ltd. |
• | Baker Hughes Incorporated/BJ Services Company |
• | Liberty Oilfield Services LLC |
3. | Geographic Area: |
• | Colorado |
• | Illinois |
• | Louisiana |
• | New Jersey |
• | New Mexico |
• | North Dakota |
• | Oklahoma |
• | Pennsylvania |
• | Texas |
• | West Virginia |
• | Wisconsin |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
1. | Competing Businesses |
• | Unimin Corporation |
• | Fairmount Minerals/Santrol |
• | Preferred Proppants, LLC |
• | Badger Mining Corporation |
• | Hi-Crush Proppants LLC |
• | Emerge Energy Services LP |
• | Superior Silica Sands LLC |
• | EOG Resources, Inc. |
• | Alpine Materials, LLC |
• | Canadian Sand and Proppants, Inc. |
• | Sierra Frac Sand, LLC |
• | Grit Energy Solutions, LLC |
• | Grit Energy, LLC |
• | Proppant Express Solutions LLC |
• | Arrows Up LLC |
• | OmniTrax, Inc. |
2. | Customers: |
• | Halliburton Energy Services, Inc. |
• | Schlumberger Technology Corporation |
• | C&J Well Services, Inc./Nabors Industries Ltd./C&J and Nabors affiliates |
• | Weatherford International Ltd. |
• | Baker Hughes Incorporated/BJ Services Company |
• | Liberty Oilfield Services LLC |
3. | Geographic Area: |
• | Colorado |
• | Illinois |
• | Louisiana |
• | New Jersey |
• | New Mexico |
• | North Dakota |
• | Oklahoma |
• | Pennsylvania |
• | Texas |
• | West Virginia |
• | Wisconsin |
1. | I have reviewed this Quarterly Report on Form 10-Q of U.S. Silica Holdings, Inc. (the “Company”) for the quarter ended March 31, 2018; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ BRYAN A. SHINN | |
Name: Bryan A. Shinn | |
Title: Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of U.S. Silica Holdings, Inc. (the “Company”) for the quarter ended March 31, 2018; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ DONALD A. MERRIL | |
Name: Donald A. Merril | |
Title: Chief Financial Officer |
i. | The Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
ii. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ BRYAN A. SHINN | |
Name: Bryan A. Shinn | |
Title: Chief Executive Officer |
i. | The Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
ii. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ DONALD A. MERRIL | |
Name: Donald A. Merril | |
Title: Chief Financial Officer |
• | Section 104 S&S Citations: Citations received from MSHA under section 104 of the Mine Act for violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard. |
• | Section 104(b) Orders: Orders issued by MSHA under section 104(b) of the Mine Act, which represents a failure to abate a citation under section 104(a) within the period of time prescribed by MSHA. This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines that the violation has been abated. |
• | Section 104(d) Citations and Orders: Citations and orders issued by MSHA under section 104(d) of the Mine Act for unwarrantable failure to comply with mandatory health or safety standards. |
• | Section 110(b)(2) Violations: Flagrant violations issued by MSHA under section 110(b)(2) of the Mine Act. |
• | Section 107(a) Orders: Orders issued by MSHA under section 107(a) of the Mine Act for situations in which MSHA determined an “imminent danger” (as defined by MSHA) existed. |
Mine(a) | Section 104 S&S Citations(#) | Section 104(b) Orders (#) | Section 104(d) Citations and Orders (#) | Section 110(b)(2) Violations (#) | Section 107(a) Orders (#) | Proposed Assessments(b) ($, amounts in dollars) | Mining Related Fatalities (#) | |||||||||||||
Ottawa, IL | — | — | — | — | — | — | ||||||||||||||
Mill Creek, OK | — | — | — | — | — | — | — | |||||||||||||
Pacific, MO | — | — | — | — | — | 118 | — | |||||||||||||
Berkeley Springs, WV | 2 | — | — | — | — | — | — | |||||||||||||
Mapleton Depot, PA | — | — | — | — | — | 118 | — | |||||||||||||
Kosse, TX | — | — | — | — | — | — | — | |||||||||||||
Mauricetown, NJ | — | — | — | — | — | — | — | |||||||||||||
Columbia, SC | — | — | — | — | — | — | — | |||||||||||||
Montpelier, VA | — | — | — | — | — | — | — | |||||||||||||
Rockwood, MI | 1 | — | — | — | — | — | — | |||||||||||||
Jackson, TN | — | — | — | — | — | — | — | |||||||||||||
Dubberly, LA | — | — | — | — | — | 118 | — | |||||||||||||
Hurtsboro, AL | — | — | — | — | — | — | — | |||||||||||||
Sparta, WI | — | — | — | — | — | — | — | |||||||||||||
Voca, TX | — | — | — | — | — | — | — | |||||||||||||
Peru, IL | — | — | — | — | — | — | — | |||||||||||||
Utica, IL | 7 | — | 3 | — | — | 2,631 | — | |||||||||||||
Tyler, TX | — | — | — | — | — | — | — | |||||||||||||
Festus, MO | — | — | — | — | — | — | — | |||||||||||||
Seagraves, TX | 2 | — | — | — | — | — | — |
(a) | The definition of mine under section 3 of the Mine Act includes the mine, as well as other items used in, or to be used in, or resulting from, the work of extracting minerals, such as land, structures, facilities, equipment, machines, tools and minerals preparation facilities. Unless otherwise indicated, any of these other items associated with a single mine have been aggregated in the totals for that mine. MSHA assigns an identification number to each mine and may or may not assign separate identification numbers to related facilities such as preparation facilities. We are providing the information in the table by mine rather than MSHA identification number because that is how we manage and operate our mining business and we believe this presentation will be more useful to investors than providing information based on MSHA identification numbers. |
(b) | Represents the total dollar value of proposed assessments from MSHA under the Mine Act relating to any type of citation or order issued during the quarter ended March 31, 2018. |
IHS MARKIT | ||||
By: | /s/ Pritesh Patel | |||
Name: | Pritesh Patel | |||
Title: | Director of Consulting |
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Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 20, 2018 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | U.S. Silica Holdings, Inc. | |
Entity Central Index Key | 0001524741 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 77,937,011 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock authorized (shares) | 10,000,000 | 10,000,000 |
Preferred stock issued (shares) | 0 | 0 |
Preferred stock outstanding (shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock authorized (shares) | 500,000,000 | 500,000,000 |
Common stock issued (shares) | 81,518,347 | 81,267,205 |
Common stock outstanding (shares) | 77,867,261 | 80,524,255 |
Treasury stock, at cost (shares) | 3,651,086 | 742,950 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 31,294 | $ 2,522 |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on derivatives (net of tax of $1 and $(22) for the three months ended March 31, 2018 and 2017, respectively) | (2) | (36) |
Foreign currency translation adjustment (net of tax of $1 and zero for the three months ended March 31, 2018 and 2017, respectively.) | 3 | 0 |
Pension and other post-retirement benefits liability adjustment (net of tax of $730 and $340 for the three months ended March 31, 2018 and 2017, respectively) | 2,293 | 565 |
Comprehensive income | $ 33,588 | $ 3,051 |
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Unrealized gain (loss) on derivatives, tax | $ 1 | $ (22) |
Unrealized gain (loss) on investments, tax | 1 | 0 |
Pension and other post-retirement benefits liability adjustment, tax | $ 730 | $ 340 |
Condensed Consolidated Statements of Stockholders' Equity - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands |
Total |
Common Stock |
Treasury Stock |
Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
---|---|---|---|---|---|---|
Beginning Balance at Dec. 31, 2017 | $ 1,396,506 | $ 812 | $ (25,456) | $ 1,147,084 | $ 287,992 | $ (13,926) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 31,294 | 31,294 | ||||
Unrealized loss on derivatives | (2) | (2) | ||||
Foreign currency translation adjustment | 3 | 3 | ||||
Pension and post-retirement liability | 2,293 | 2,293 | ||||
Cash dividend declared ($0.0625 per share) | (4,881) | (4,881) | ||||
Equity-based compensation | 6,254 | 6,254 | ||||
Shares withheld for employee taxes related to vested restricted stock and stock units | (3,484) | 2 | (3,484) | (2) | ||
Repurchase of common stock | (75,000) | (75,000) | ||||
Ending Balance at Mar. 31, 2018 | $ 1,352,983 | $ 814 | $ (103,940) | $ 1,153,336 | $ 314,405 | $ (11,632) |
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) |
3 Months Ended |
---|---|
Mar. 31, 2018
$ / shares
| |
Cash dividend declared (in dollars per share) | $ 0.06 |
Retained Earnings | |
Cash dividend declared (in dollars per share) | $ 0.0625 |
Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation The accompanying Condensed Consolidated Financial Statements (the “Financial Statements”) of U.S. Silica Holdings, Inc. (“Holdings,” and together with its subsidiaries “we,” “us” or the “Company”) 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, 2017; therefore, the interim Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K. In the opinion of management, all adjustments necessary for a fair presentation of the Financial Statements have been included. Such adjustments are of a normal, recurring nature. Certain reclassifications of prior year's amounts have been made to conform to the current year presentation. In conforming to the current year's presentation, the Company identified and corrected an immaterial amount in its statement of cash flows for the three months ended March 31, 2017. The correction reduced Capital Expenditures within Net Cash Used in Investing Activities with a corresponding decrease to Accounts Payable and Accrued Expenses within Net Cash Used in Operating Activities. The amount is presented as Non-cash Accrued Capital Expenditures and had no impact in the Company's Balance Sheet, Income Statement or Net Change in Cash and Cash Equivalents in the Statement of Cash Flows. In order to make this report easier to read, we refer throughout to (i) our Condensed Consolidated Balance Sheets as our “Balance Sheets,” (ii) our Condensed Consolidated Statements of Operations as our “Income Statements,” and (iii) our Condensed Consolidated Statements of Cash Flows as our “Cash Flows.” Unaudited Interim Financial Statements The accompanying Balance Sheet as of March 31, 2018; the Income Statements and Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018 and 2017; the Condensed Consolidated Statements of Stockholders' Equity and Cash Flows for the three months ended March 31, 2018; and other information disclosed in the related notes are unaudited. The Balance Sheet as of December 31, 2017, was derived from our audited consolidated financial statements included in our 2017 Annual Report. Use of Estimates and Assumptions The preparation of the Financial Statements requires us 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 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 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 doubtful accounts; estimates of fair value for certain reporting units and asset impairments (including impairments of goodwill 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. Revenue Recognition Products We derive our product sales by mining and processing minerals that our customers purchase for various uses. Our product sales are primarily a function of the price per ton and the number of tons sold. We primarily sell our products through individual purchase orders executed under short-term price agreements or at prevailing market rates. The amount invoiced reflects product, transportation and / or additional handling services as applicable, such as storage, transloading the product from railcars to trucks and last mile logistics to the customer site. We invoice most of our product customers on a per shipment basis, although for some larger customers, we consolidate invoices weekly or monthly. Standard collection terms are net 30 days, although extended terms are offered in competitive situations. We recognize revenue for products and materials at a point in time following the transfer of control of such items to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. We account for shipping and handling activities related to product and material sales contracts with customers as costs to fulfill our promise to transfer the associated products pursuant to the accounting policy election allowed under ASC 606-10-18. Accordingly, we record amounts billed for shipping and handling costs as a component of net sales, and accrue and classify related costs as a component of cost of sales at the time revenue is recognized. For a limited number of customers, we sell under long-term, minimum purchase supply agreements. These agreements define, among other commitments, the volume of product that our customers must purchase, the volume of product that we must provide and the price that we will charge and that our customers will pay for each product. Prices under these agreements are generally fixed and subject to certain contractual adjustments. Sometimes these agreements may undergo negotiations regarding pricing and volume requirements, which may often occur in volatile market conditions. While these negotiations continue, we may deliver sand at prices or at volumes below the requirements in our existing supply agreements. We do not consider these agreements solely representative of contracts with customers. An executed order specifying the type and quantity of product to be delivered, in combination with the noted agreements, comprise our contracts in these arrangements. Service We derive our service revenues primarily through the provision of transportation, equipment rental, and contract labor services to companies in the oil and gas industry. Transportation services typically consist of transporting customer proppant from storage facilities to proximal well-sites and are contracted through work orders executed under established pricing agreements. The amount invoiced reflects the transportation services rendered. Equipment rental services provide customers with use of either dedicated or nonspecific wellhead proppant delivery equipment solutions for contractual periods defined either through formal lease agreements or executed work orders under established pricing agreements. The amounts invoiced reflect the length of time the equipment set was utilized in the billing period. Contract labor services provide customers with proppant delivery equipment operators through work orders executed under established pricing agreements. The amounts invoiced reflect the amount of time our labor services were utilized in the billing period. We typically invoice our customers on a weekly or monthly basis; however, some customers receive invoices upon well-site operation completion. Standard collection terms are net 30 days, although extended terms are offered in competitive situations. We typically recognize revenue for specific, dedicated equipment set rental arrangements under ASC 840, Leases. For the remaining components of service revenue, we have applied the practical expedient allowed under ASC 606-10-55-18 to recognize transportation revenues in proportion to the amount we have the right to invoice. Contracts with Multiple Performance Obligations For contracts that contain multiple performance obligations, such as work orders containing a combination of product, transportation, equipment rentals, and contract labor services, we allocate the transaction price to each performance obligation identified in the contract based on relative standalone selling prices, or estimates of such prices, and recognize the related revenue as control of each individual product or service is transferred to the customer, in satisfaction of the corresponding performance obligations. Taxes Collected from Customers and Remitted to Governmental Authorities. We exclude from our measurement of transaction prices all taxes assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers. Accordingly, such tax amounts are not included as a component of net sales or cost of sales. Deferred Revenues For a limited number of customers, we enter into supply agreements which give customers the right to make advanced payments toward the purchase of certain products at specified volumes over an average initial period of one to five years. These payments represent consideration that is unconditional for which we have yet to transfer the related product. These payments are recorded as contract liabilities referred to as “deferred revenues” upon receipt and recognized as revenue upon delivery of the related product. Unbilled Receivables Revenues recognized in advance of invoice issuance create assets referred to as “unbilled receivables.” Any portion of our unbilled receivables for which our right to consideration is conditional on a factor other than the passage of time is considered a contract asset. These assets are presented on a combined basis with accounts receivable and are converted to accounts receivable once billed. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes previous revenue recognition guidance. The new guidance introduces a new principles-based framework for revenue recognition and disclosure. Since its issuance, the FASB has issued additional ASUs, amending the guidance and the effective dates of amendments, and the SEC has rescinded certain related SEC guidance. On January 1, 2018, we adopted the new accounting standard and all of the related amendments (“new revenue standard”) to all contracts using the modified retrospective method. Adoption of the new revenue standard did not result in a material cumulative effect adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. We do not expect the adoption of the new revenue standard to have a material impact to our net income on an ongoing basis. See Note S -Revenue to these Financial Statements for additional disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms greater than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. Similarly, lessors will be required to classify leases as sales-type, finance or operating, with classification affecting the pattern of income recognition. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract. This update is effective for public entities for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. This standard mandates a modified retrospective transition method. While we continue to evaluate the effect of the standard, we anticipate that the adoption will result in a material increase in assets and liabilities on our consolidated balance sheet and will not have a material impact on our consolidated income statement or statement of cash flows. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which removes Step 2 from the goodwill impairment test. It is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed with a measurement date after January 1, 2017. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements. In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit. The update requires companies to include the service cost component of net periodic benefit costs in the same line item or items as compensation costs arising from services rendered by the associated employees during the period. The update also disallows capitalization of the other components of net periodic benefit costs and requires those costs to be presented in the income statement separately from the service cost component and outside of a subtotal of income from operations. The update is effective for fiscal years beginning after December 15, 2017, including interim periods within those annual periods for public business entities. Companies are required to retrospectively apply the requirement for a separate presentation in the income statement of service costs and other components of net benefit cost and prospectively adopt the requirement to limit the capitalization of benefit costs to the service component. Application of a practical expedient is allowed permitting an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. We implemented the update on January 1, 2018 and utilized the practical expedient to estimate the impact on the prior comparative period information presented in the interim and annual financial statements. We previously capitalized all net periodic benefit costs incurred for plant personnel in inventory and recorded the majority of net periodic benefit costs incurred by corporate personnel and retirees into selling, general, and administrative expenses. The following is a reconciliation of the effect of the reclassification (in thousands) of the net benefit cost in the Company’s condensed consolidated statements of income for the three months ended March 31, 2017:
In February 2018, the FASB issued Accounting Standards Update ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The ASU provides that the stranded tax effects from the Tax Act in accumulated other comprehensive loss may be reclassified to retained earnings. The ASU is effective February 1, 2019, with early adoption permitted. We are currently evaluating the effect that the transition guidance will have on our financial statements and related disclosures. |
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EARNINGS PER SHARE | NOTE B—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. The following table shows the computation of basic and diluted earnings per share for the three months ended March 31, 2018 and 2017:
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. Weighted-average stock awards (in thousands) excluded from the calculation of diluted earnings per common share were as follows:
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Capital Structure and Accumulated Other Comprehensive Income (Loss) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CAPITAL STRUCTURE AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | NOTE C—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 81,518,347 shares issued and 77,867,261 shares outstanding at March 31, 2018. There were 81,267,205 shares issued and 80,524,255 shares outstanding at December 31, 2017. During the three months ended March 31, 2018, our Board of Directors declared quarterly cash dividends as follows:
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. 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 March 31, 2018 or December 31, 2017. At present, we have no plans to issue any preferred stock. Share Repurchase Program We are authorized by our Board of Directors to repurchase shares of our outstanding common stock from time to time on the open market or in privately negotiated transactions. As of March 31, 2018, we were authorized to repurchase up to $100 million of our common stock through December 11, 2018. 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. During the three months ended March 31, 2018 we repurchased 2,828,023 shares of our common stock at an average price of $26.52. As of March 31, 2018, we have repurchased a total of 3,555,104 shares of our common stock at an average price of $28.13, completing the $100 million authorized under this program. Our Board of Directors previously had authorized the repurchase of up to $50.0 million of our common stock. This program expired on December 11, 2017. We repurchased a total of 706,093 shares of our common stock at an average price of $23.83 under this program. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) consists of fair value adjustments associated with cash flow hedges, accumulated adjustments for net experience losses and prior service cost related to employee benefit plans and foreign currency translation adjustments primarily related to accounts payable denominated in Euros. The following table presents the changes in accumulated other comprehensive income (loss) by component (in thousands) during the three months ended March 31, 2018:
Amounts reclassified from accumulated other comprehensive income (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. |
Business Combinations |
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BUSINESS COMBINATIONS | NOTE D—BUSINESS COMBINATIONS 2018 Acquisitions: On March 22, 2018, U.S. Silica entered into a definitive agreement to acquire all of the outstanding capital stock of EP Minerals, a global producer of engineered materials derived from industrial minerals, including diatomaceous earth (DE), clay (calcium bentonite) and perlite. The consideration payable consists of $750.0 million of cash, subject to customary adjustments for net working capital, indebtedness, cash and transaction expenses as of the closing. U.S. Silica expects to fund the consideration with additional borrowings pursuant to a contemplated amendment to its existing credit facilities and with cash on hand. The consummation of the acquisition is subject to the satisfaction or waiver of closing conditions applicable to both U.S. Silica and EP Minerals and it is expected to close in the second quarter of 2018. 2017 Acquisitions: White Armor Acquisition: On April 1, 2017, we completed the acquisition of White Armor, a product line of cool roof granules used in industrial roofing applications, for cash consideration of $18.6 million. The final purchase price was allocated to goodwill of approximately $3.9 million, identifiable intangible assets of $12.8 million and other net assets of approximately $1.9 million. Goodwill in this transaction is attributable to planned growth in our specialty industrial sand segment. The goodwill amount is included in our Industrial & Specialty Products segment. Identifiable definite lived intangibles, including customer relationships, and goodwill are expected to be deductible for tax purposes. We incurred $0.2 million of acquisition-related charges which are included in selling, general and administrative expenses during the year ended December 31, 2017. Revenue and earnings for White Armor after the acquisition date are not presented as the business was integrated into our operations subsequent to the acquisition and therefore impracticable to quantify. MS Sand Acquisition: On August 16, 2017, we completed the acquisition of Mississippi Sand, LLC ("MS Sand"), a Missouri limited liability company, for cash consideration of approximately $95.4 million, net of cash acquired of $2.2 million. As is normal and customary, subsequent adjustments were made including $(0.5) million to the net working capital adjustment plus an additional $6.1 million consideration paid related to a pre-existing contracted asset sale, which was entered into prior to our acquisition, for total cash consideration of $101.0 million. MS Sand is a frac sand mining and logistics company based in St. Louis, Missouri. The acquisition of MS Sand increased our regional frac sand product offering in our Oil & Gas Proppants segment. We have accounted for the acquisition of MS Sand under the acquisition method of accounting in accordance with ASC 805, Business Combinations, and have accounted for measurement period adjustments in accordance with ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. Estimates of fair value included in the consolidated financial statements represent our best estimates and valuations. In accordance with the acquisition method of accounting, the allocation of consideration value is subject to adjustment until we complete our analysis, in a period of time, but not to exceed one year after the date of acquisition, or August 16, 2018, in order to provide us with the time to complete the valuation of its assets and liabilities. The following table sets forth the current allocation of the purchase price to MS Sands' identifiable tangible and intangible assets acquired and liabilities assumed, including measurement period adjustments (in thousands):
The acquired intangible assets and the related estimated useful lives consist of the following:
Goodwill in this transaction is attributable to planned growth in our regional frac sand product offering in our Oil & Gas Proppants segment. The goodwill amount is included in our Oil & Gas Proppants segment. Identifiable definite lived intangibles, including customer relationships, and goodwill are expected to be deductible for tax purposes. We have incurred $0.9 million to date of acquisition-related charges which are included in selling, general and administrative expenses. Revenue and earnings for MS Sand after the acquisition date are not presented as the business was integrated into our operations subsequent to the acquisition and therefore impracticable to quantify. Both acquisitions were accounted for using the acquisition method of accounting. The purchase price and purchase price allocation for the MS Sand acquisition is preliminary and subject to customary post-closing adjustments and changes in the fair value of assets and liabilities. The above estimated fair values of net assets acquired are based on the information that was available as of the reporting date. We believe that the information provides a reasonable basis for estimating the fair values of the acquired assets and assumed liabilities, but the potential for measurement period adjustments exists based on our continuing review of matters related to the acquisition. As a result, our final purchase price allocation may be significantly different than reflected above. We expect to complete the purchase price allocation as soon as practicable, but no later than one year from the acquisition date. Unaudited Pro Forma Results The results of MS Sand’s operations have been included in the consolidated financial statements subsequent to the acquisition dates. The following unaudited pro forma consolidated financial information reflects the results of operations as if the MS Sand Acquisition had occurred on January 1, 2016, after giving effect to certain purchase accounting adjustments. These adjustments mainly include incremental depreciation expense related to the fair value adjustment of property, plant, equipment and mine development, amortization expense related to identifiable intangible assets and tax expense related to the combined tax provisions. This information does not purport to be indicative of the actual results that would have occurred if the acquisition had actually been completed on the date indicated, nor is it necessarily indicative of the future operating results or the financial position of the combined company (in thousands, except per share amounts):
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Accounts Receivable |
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ACCOUNTS RECEIVABLE | NOTE E—ACCOUNTS RECEIVABLE At March 31, 2018 and December 31, 2017, accounts receivable (in thousands) consisted of the following:
Changes in our allowance for doubtful accounts (in thousands) during the three months ended March 31, 2018 are as follows:
Our ten largest customers accounted for approximately 52% and 55% of total sales during the three months ended March 31, 2018 and 2017, respectively. Sales to one of our customers accounted for 15% of our total sales during the three months ended March 31, 2018. Sales to two of our customers accounted for 14% and 11% of our total sales during the three months ended March 31, 2017. No other customers accounted for 10% or more of our total sales. At March 31, 2018, one of our customers' accounts receivable represented 17% of our total accounts receivable, net of allowance. At December 31, 2017, two of our customers' accounts receivable represented 19% and 11% of our total accounts receivable, net of allowance. No other customers accounted for 10% or more of our total accounts receivable. |
Inventories |
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INVENTORIES | NOTE F—INVENTORIES At March 31, 2018 and December 31, 2017, inventories (in thousands) consisted of the following:
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Property, Plant and Mine Development |
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PROPERTY, PLANT AND MINE DEVELOPMENT | NOTE G—PROPERTY, PLANT AND MINE DEVELOPMENT At March 31, 2018 and December 31, 2017, property, plant and mine development (in thousands) consisted of the following:
At March 31, 2018 and December 31, 2017, the aggregate cost of machinery and equipment acquired under capital leases was $0.9 million, reduced by accumulated depreciation of $0.2 million. The amount of interest costs capitalized in property, plant and mine development was $1.8 million for the three months ended March 31, 2018. There were no interest costs capitalized for the three months ended March 31, 2017. 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, 2018, vendor incentives are classified in accounts payable and accrued expenses and in other long-term obligations on our balance sheet. Separately, the Company has accrued $7.9 million in contract termination costs for facilities contracts operated by third-parties, which will not transfer to CIG. These costs of $5.9 million in accounts payable and accrued expenses and $2.0 million of other long-term obligations are on our balance sheet. |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | NOTE H—GOODWILL AND INTANGIBLE ASSETS The changes in the carrying amount of goodwill (in thousands) consisted of the following:
The changes in the carrying amount of intangible assets (in thousands) consisted of the following:
Amortization expense was $2.3 million and $2.0 million for the three months ended March 31, 2018 and 2017. The estimated amortization expense related to definite-lived intangible assets (in thousands) for the five succeeding years is as follows:
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | NOTE I—DEBT At March 31, 2018 and December 31, 2017, debt (in thousands) consisted of the following:
Revolving Line-of-Credit We have a $50.0 million revolving line-of-credit (the “Revolver”), with zero drawn and $4.5 million allocated for letters of credit as of March 31, 2018, leaving $45.5 million available under the Revolver. Senior Secured Credit Facility At March 31, 2018, contractual maturities of our senior secured credit facility (in thousands) are as follows:
Our senior secured credit facility is secured by a pledge of substantially all of our assets, including accounts receivable, inventory, property, plant and mine development, and a pledge of the equity interests in certain of our subsidiaries. The facility contains covenants that, among other things, govern our ability to create, incur or assume indebtedness and liens, to make acquisitions or investments, to sell assets and to pay dividends. This includes a restriction on the ability of our operating subsidiaries to make distributions to us to the extent that the incurrence ratio (as defined in the senior secured credit facility) after giving effect to the distribution is 3:1 or greater. The facility also requires us to maintain a consolidated total net 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 25% of the Revolver commitment. As of March 31, 2018 and December 31, 2017, we are in compliance with all covenants in accordance with our senior secured credit facility. Note Payable Secured by Royalty Interest In conjunction with the acquisition of NBI in August 2016, we assumed a note payable secured by a royalty interest. The monthly royalty payment is calculated based on future tonnages and sales related to the sand shipped from our Tyler, Texas facility. The note payable is due by June 30, 2032. The note does not provide a stated interest rate. The minimum payments (in thousands) for the next five years required by the note are as follows:
Under this agreement once a certain number of tons have been shipped from the Tyler facility, the minimum payments will decrease to $0.5 million per year, subject to proration in the period this threshold is met. The royalty note payable fair value was estimated to be $22.5 million on the acquisition date. The estimate was made using a discounted cash flow model, which calculated the present value of projected future cash payments required under the agreement using a discounted rate of 14%. As of March 31, 2018, the note payable has a balance of $25.6 million. The increase in the note payable amount is due to interest paid-in-kind. The effective interest rate based on the updated projected future cash payments is 22% at March 31, 2018. |
Deferred Revenue |
3 Months Ended |
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Mar. 31, 2018 | |
Deferred Revenue Disclosure [Abstract] | |
DEFERRED REVENUE | NOTE J—DEFERRED REVENUE We enter into certain customer supply agreements which give the customers the right to purchase certain products for a discounted price at certain volumes over an average initial contract term of one to five years. The advance payments represent future purchases and are recorded as deferred revenue, recognized as revenue over the contract term of each supply agreement. During the three months ended March 31, 2018 we received advances of $10.5 million. At March 31, 2018 and December 31, 2017, the total deferred revenue balance was $122.0 million and $118.4 million, respectively, of which $52.3 million and $36.1 million was classified as current on our Balance Sheets. |
Asset Retirement Obligation |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||
Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
ASSET RETIREMENT OBLIGATION | NOTE K—ASSET RETIREMENT OBLIGATION 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 a 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, 2018, we had a liability of $16.8 million in other long-term obligations related to our asset retirement obligation. Changes in the asset retirement obligation (in thousands) during the three months ended March 31, 2018 are as follows:
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Fair Value Accounting |
3 Months Ended |
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Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE ACCOUNTING | 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, 2018 and December 31, 2017 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. Derivative Instruments The estimated fair value of our derivative instruments (interest rate caps) are recorded at each reporting period and are based upon widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. We also incorporate credit valuation adjustments to appropriately reflect both our nonperformance risk as well as that of the respective counterparty in the fair value measurements. Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default of ourselves and our counterparties. However, as of March 31, 2018, we have assessed that the impact of the credit valuation adjustments on the overall valuation of our derivative positions is not significant. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. As of March 31, 2018 and December 31, 2017, the fair value of our derivative instruments was zero. Additional disclosures for derivative instruments are presented in Note M - Derivative Instruments to these Financial Statements. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | NOTE M—DERIVATIVE INSTRUMENTS Cash Flow Hedges of Interest Rate Risk We enter into interest rate cap agreements in connection with our term loan facility (the "Term Loan") to add stability to interest expense and to manage our exposure to interest rate movements. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an upfront premium. The following table summarizes the fair value of our derivative instruments (in thousands, except contract/notional amount). See Note L - Fair Value Accounting for additional disclosures regarding the estimated fair values of our derivative instruments at March 31, 2018 and December 31, 2017.
(1) Agreements limit the LIBOR floating interest rate base to 4%. We have designated these contracts as qualified cash flow hedges. Accordingly, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and recognized in earnings in the same period or periods during which the hedged transaction affects earnings. During the three months ended March 31, 2018 and 2017, we had no ineffectiveness for such contracts. The following table summarizes the effect of derivatives instruments (in thousands) on our income statements and our consolidated statements of comprehensive income for the three months ended March 31, 2018 and 2017.
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Equity-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY-BASED COMPENSATION | NOTE N—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. 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, 2018, we have 4,481,559 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. Stock Options The following table summarizes the status of, and changes in, our stock option awards during the three months ended March 31, 2018:
There were no grants of stock options during the three months ended March 31, 2018 and 2017. There were zero and 24,852 stock options exercised during the three months ended March 31, 2018 and 2017, respectively. The total intrinsic value of stock options exercised was $0.9 million for the three months ended March 31, 2017. Cash received from options exercised during the three months ended March 31, 2017 was $0.5 million. The tax benefit realized from option exercises totaled $0.3 million for the three months ended March 31, 2017. We recognized $0.5 million and $0.6 million of equity-based compensation expense related to options during the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, there was $0.7 million of total unrecognized compensation expense related to these options, which is expected to be recognized over a weighted-average period of approximately 0.5 years. 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, 2018:
We granted 3,852 and 1,500 restricted stock and restricted stock unit awards during the three months ended March 31, 2018 and 2017, respectively. The fair value of the awards was based on the market price of our stock at date of grant. We recognized $1.8 million and $1.5 million of equity-based compensation expense related to restricted stock awards during the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, there was $7.2 million of total unrecognized compensation expense related to these restricted stock awards, which is expected to be recognized over a weighted-average period of 1.6 years. 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, 2018:
There were no grants of performance share unit awards during the three months ended March 31, 2018 and 2017, respectively. We recognized $4.3 million and $3.4 million of compensation expense related to performance share unit awards during the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, there was $13.9 million of estimated total unrecognized compensation expense related to these performance share unit awards, which is expected to be recognized over a weighted-average period of 1 year. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | NOTE O—COMMITMENTS AND CONTINGENCIES Future Minimum Annual Commitments at March 31, 2018 (in thousands):
Operating Leases We are obligated under certain operating leases for railroad cars, office space, mining property, mining/processing equipment and transportation and other equipment. Certain operating lease agreements include options to purchase the equipment for fair market value at the end of the original lease term. In general, the above leases include renewal options and provide that we pay for all utilities, insurance, taxes and maintenance. Expense related to operating leases and rental agreements totaled approximately $22.8 million and $15.4 million for the three months ended March 31, 2018 and 2017, respectively. Minimum Purchase Commitments We enter into service agreements with our transload service providers 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 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, 2018, one new claim was brought against U.S. Silica. As of March 31, 2018, there were 60 active silica-related products 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 obligations as well as estimated recoveries under the indemnity agreement and an estimate of future recoveries under insurance in other assets on our condensed consolidated balance sheets. As of both March 31, 2018, and December 31, 2017 other non-current assets included zero for insurance for third-party products liability claims and other long-term obligations included $1.0 million for third-party products liability claims. |
Pension and Post-Retirement Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION AND POST-RETIREMENT BENEFITS | NOTE P— PENSION AND POST-RETIREMENT BENEFITS We maintain a single-employer noncontributory defined benefit pension plan covering certain employees. There have been no new entrants to the plan since May 2009 when the plan was 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 obligation. 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. Net pension benefit cost (in thousands) consisted of the following for the three months ended March 31, 2018 and 2017:
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. We previously maintained a Voluntary Employees’ Beneficiary Association trust that was used to partially fund health care benefits for future retirees. Benefits were funded to the extent contributions were tax deductible, which under current legislation is limited. In 2017, the trust terminated upon depletion of its assets, which were used in accordance with trust terms. In general, retiree health benefits are paid as covered expenses are incurred. Net post-retirement benefit cost (in thousands) consisted of the following for the three months ended March 31, 2018 and 2017:
We made $0.3 million and zero contributions to the qualified pension plan for the three months ended March 31, 2018 and 2017, respectively. Total expected employer funding contributions during the fiscal year ending December 31, 2018 are $2.5 million for the pension plan and $1.4 million for the post-retirement medical and life plan. We contribute to three multiemployer defined benefit pension plans under the terms of collective-bargaining agreements for union-represented employees. A multiemployer plan is subject to collective bargaining for employees of two or more unrelated companies. These plans allow multiple employers to pool their pension resources and realize efficiencies associated with the daily administration of the plan. Multiemployer plans are generally governed by a board of trustees composed of management and labor representatives and are funded through employer contributions. However, in most cases, management is not directly represented. Our contributions to individual multiemployer pension funds did not exceed 5% of the fund’s total contributions. Additionally, our contributions to the multiemployer post-retirement benefit plans were immaterial for the three months ended March 31, 2018 and 2017 |
Obligations Under Guarantees |
3 Months Ended |
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Mar. 31, 2018 | |
Guarantees [Abstract] | |
OBLIGATIONS UNDER GUARANTEES | NOTE Q— OBLIGATIONS UNDER GUARANTEES We have indemnified the Travelers Companies, Inc. and subsidiaries (“Travelers”) against any loss Travelers may incur in the event that holders of surety bonds, issued on behalf of us by Travelers, execute the bonds. As of March 31, 2018, Travelers had $12.2 million in bonds outstanding for us. The majority of these bonds, $10.3 million, relate 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 such indefinite purposes as licenses, permits, and tax collection. |
Income Taxes |
3 Months Ended |
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Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE R— INCOME TAXES On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code including, but not limited to, (1) bonus depreciation that will allow for full expensing of qualified property; (2) reduction of the U.S. federal corporate tax rate; (3) elimination of the corporate alternative minimum tax; (4) a new limitation on deductible interest expense; (5) the repeal of the domestic production activity deduction; (6) limitations on the deductibility of certain executive compensation; and (7) limitations on net operating losses generated after December 31, 2017, to 80 percent of taxable income. The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. Additional information that may affect the accounting under ASC 740 would include further clarification and guidance on how the Internal Revenue Service and state taxing authorities will implement the Tax Act. We did not make any Tax Act adjustments to the accounting under ASC 740 for the three months ending March 31, 2018 and we do not believe potential adjustments in future periods would materially impact the Company’s financial condition or results of operations. The Tax Act reduces the corporate tax rate to 21 percent, effective January 1, 2018. Because ASC 740-10-25-47 requires the effect of a change in tax laws or rates to be recognized as of the date of enactment, we were required to adjust deferred tax assets and liabilities as of December 22, 2017. Accordingly, for the year ended December 31, 2017, we recorded a decrease related to deferred tax assets and liabilities of $45.0 million and $80.8 million, respectively, with a corresponding net adjustment to deferred income tax benefit of $35.8 million. Under the Tax Act, net operating loss (NOL) deductions arising in tax years beginning after December 31, 2017 can only offset up to 80 percent of future taxable income. The Act also prohibits NOL carrybacks, but allows indefinite carryforwards for NOLs arising in tax years beginning after December 31, 2017. Net operating losses arising before January 1, 2018 are accounted for under the previous tax rules that imposed no limit on the amount of the taxable income that can be set off using NOLs and that can be carried back 2 years, and carried forward 20 years. The Tax Act repeals the corporate alternative minimum tax (AMT), effective for tax years beginning after December 31, 2017, but allows an entity to claim portions of any unused AMT credits over the next four years to offset its regular tax liability. An entity with unused AMT credits as of December 31, 2017 can first use these credits to offset its regular tax for 2017, and can then claim up to 50 percent of the remaining AMT credits in 2018, 2019, and 2020, with all remaining AMT credits refundable in 2021. For interim period reporting, we record income taxes using an estimated annual effective tax rate based upon projected annual income, forecasted permanent tax differences, discrete items and statutory rates in states in which we operate. At the end of each interim period, we update the estimated annual effective tax rate, and if the estimated tax rate changes based on new information, we make a cumulative adjustment in the period. We record the tax effect of an unusual or infrequently occurring item in the interim period in which it occurs as a discrete item of tax. In the three months ended March 31, 2018, we recorded a tax expense of $0.5 million related to equity compensation pursuant to ASU 2016-09. In the three months ended March 31, 2017, we recorded a tax benefit of $1.5 million related to equity compensation pursuant to ASU 2016-09. The effective tax rate was 19% and (212)% for the three months ended March 31, 2018 and 2017, respectively. The tax rate for the three months ended March 31, 2018 and 2017 would have been 18% and (26)%, respectively, without the equity compensation tax expense or benefit recorded discretely. Historically, our actual effective tax rates have differed from the statutory effective rate primarily due to the benefit received from statutory percentage depletion allowances. The deduction for statutory percentage depletion does not necessarily change proportionately to changes in income before income taxes. |
Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE | NOTE S— REVENUE We consider sales disaggregated at the product and service level by segment to depict how the nature, amount, timing and uncertainty of revenues and cash flow are impacted by changes in economic factors. The following table disaggregates our sales by major source for the three months ended March 31, 2018 (in thousands):
The following tables reflect the changes in our contract assets, which we classify as unbilled receivables and our contract liabilities, which we classify as deferred revenues, for the three months ended March 31, 2018 (in thousands):
We have elected to use the practical expedients allowed under ASC 606-10-50-14, pursuant to which we have excluded disclosures of transaction prices allocated to remaining performance obligations and when we expect to recognize such revenue. The majority of our remaining performance obligations are primarily comprised of unfulfilled product, transportation service, and labor service orders, all of which hold a remaining duration of less than one year. The long term portion of deferred revenue primarily represents a combination of refundable and nonrefundable customer prepayments for which related current performance obligations do not yet exist, but are expected to arise, before the expiration of the contract. Our residual unfulfilled performance obligations are comprised primarily of long-term equipment rental arrangements in which we recognize revenues equal to what we have a right to invoice. Generally, no variable consideration exists related to our remaining performance obligations and no consideration is excluded from the associated transaction prices. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE T— RELATED PARTY TRANSACTIONS A current officer of one of our operating subsidiaries holds an ownership interest in a transportation brokerage and logistics services vendor, from which we made purchases of approximately $0.9 million and $0.6 million for the three months ended March 31, 2018 and 2017, respectively. |
Segment Reporting |
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SEGMENT REPORTING | NOTE U— SEGMENT REPORTING Our business is organized into two reportable segments, Oil & Gas Proppants and Industrial & Specialty Products, based on end markets. The reportable segments are consistent with how management views the markets that we serve and the financial information reviewed by the chief operating decision maker. We manage our Oil & Gas Proppants and Industrial & Specialty Products businesses as components of an enterprise for which separate information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assess performance. In the Oil & Gas Proppants segment, we serve the oil and gas recovery market primarily by providing and delivering fracturing sand, or “frac sand,” which is pumped down oil and natural gas wells to prop open rock fissures and increase the flow rate of oil and natural gas from the wells. The Industrial & Specialty Products segment consists of over 200 products and materials used in a variety of industries, including container glass, fiberglass, specialty glass, flat glass, building products, fillers and extenders, foundry products, chemicals, recreation products and filtration products. An operating segment’s performance is primarily evaluated based on segment contribution margin, which excludes certain corporate costs not associated with the operations of the segment. These corporate costs are separately stated below and include costs that are related to functional areas such as operations management, corporate purchasing, accounting, treasury, information technology, legal and human resources. We believe that segment contribution margin, as defined above, is an appropriate measure for evaluating the operating performance of our segments. However, this measure should be considered in addition to, not a substitute for, or superior to, net income (loss) or other measures of financial performance prepared in accordance with generally accepted accounting principles. The other accounting policies of each of the two reporting segments are the same as those in Note A - Summary of Significant Accounting Policies to these Financial Statements. The following table presents sales and segment contribution margin (in thousands) for the reporting segments and other operating results not allocated to the reported segments for the three months ended March 31, 2018 and 2017:
Asset information, including capital expenditures and depreciation, depletion, and amortization, by segment is not included in reports used by management in its monitoring of performance and, therefore, is not reported by segment. At March 31, 2018, goodwill of $274.9 million has been allocated to these segments with $250.3 million assigned to Oil & Gas Proppants and $24.6 million to Industrial & Specialty Products. At December 31, 2017, goodwill of $272.1 million had been allocated to these segments with $247.5 million assigned to Oil & Gas Proppants and $24.6 million to Industrial & Specialty Products. |
Subsequent Events |
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Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE V— SUBSEQUENT EVENTS On April 5, 2018, we paid a cash dividend of $0.0625 per share to common stockholders of record on March 15, 2018, which had been declared by our Board of Directors on February 16, 2018. |
Summary of Significant Accounting Policies (Policies) |
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Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying Condensed Consolidated Financial Statements (the “Financial Statements”) of U.S. Silica Holdings, Inc. (“Holdings,” and together with its subsidiaries “we,” “us” or the “Company”) 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, 2017; therefore, the interim Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K. In the opinion of management, all adjustments necessary for a fair presentation of the Financial Statements have been included. Such adjustments are of a normal, recurring nature. Certain reclassifications of prior year's amounts have been made to conform to the current year presentation. In conforming to the current year's presentation, the Company identified and corrected an immaterial amount in its statement of cash flows for the three months ended March 31, 2017. The correction reduced Capital Expenditures within Net Cash Used in Investing Activities with a corresponding decrease to Accounts Payable and Accrued Expenses within Net Cash Used in Operating Activities. The amount is presented as Non-cash Accrued Capital Expenditures and had no impact in the Company's Balance Sheet, Income Statement or Net Change in Cash and Cash Equivalents in the Statement of Cash Flows. In order to make this report easier to read, we refer throughout to (i) our Condensed Consolidated Balance Sheets as our “Balance Sheets,” (ii) our Condensed Consolidated Statements of Operations as our “Income Statements,” and (iii) our Condensed Consolidated Statements of Cash Flows as our “Cash Flows.” |
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Reclassifications | Certain reclassifications of prior year's amounts have been made to conform to the current year presentation. |
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Unaudited Interim Financial Statements | Unaudited Interim Financial Statements The accompanying Balance Sheet as of March 31, 2018; the Income Statements and Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018 and 2017; the Condensed Consolidated Statements of Stockholders' Equity and Cash Flows for the three months ended March 31, 2018; and other information disclosed in the related notes are unaudited. The Balance Sheet as of December 31, 2017, was derived from our audited consolidated financial statements included in our 2017 Annual Report. |
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Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of the Financial Statements requires us 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 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 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 doubtful accounts; estimates of fair value for certain reporting units and asset impairments (including impairments of goodwill 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. |
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Revenue Recognition | Revenue Recognition Products We derive our product sales by mining and processing minerals that our customers purchase for various uses. Our product sales are primarily a function of the price per ton and the number of tons sold. We primarily sell our products through individual purchase orders executed under short-term price agreements or at prevailing market rates. The amount invoiced reflects product, transportation and / or additional handling services as applicable, such as storage, transloading the product from railcars to trucks and last mile logistics to the customer site. We invoice most of our product customers on a per shipment basis, although for some larger customers, we consolidate invoices weekly or monthly. Standard collection terms are net 30 days, although extended terms are offered in competitive situations. We recognize revenue for products and materials at a point in time following the transfer of control of such items to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. We account for shipping and handling activities related to product and material sales contracts with customers as costs to fulfill our promise to transfer the associated products pursuant to the accounting policy election allowed under ASC 606-10-18. Accordingly, we record amounts billed for shipping and handling costs as a component of net sales, and accrue and classify related costs as a component of cost of sales at the time revenue is recognized. For a limited number of customers, we sell under long-term, minimum purchase supply agreements. These agreements define, among other commitments, the volume of product that our customers must purchase, the volume of product that we must provide and the price that we will charge and that our customers will pay for each product. Prices under these agreements are generally fixed and subject to certain contractual adjustments. Sometimes these agreements may undergo negotiations regarding pricing and volume requirements, which may often occur in volatile market conditions. While these negotiations continue, we may deliver sand at prices or at volumes below the requirements in our existing supply agreements. We do not consider these agreements solely representative of contracts with customers. An executed order specifying the type and quantity of product to be delivered, in combination with the noted agreements, comprise our contracts in these arrangements. Service We derive our service revenues primarily through the provision of transportation, equipment rental, and contract labor services to companies in the oil and gas industry. Transportation services typically consist of transporting customer proppant from storage facilities to proximal well-sites and are contracted through work orders executed under established pricing agreements. The amount invoiced reflects the transportation services rendered. Equipment rental services provide customers with use of either dedicated or nonspecific wellhead proppant delivery equipment solutions for contractual periods defined either through formal lease agreements or executed work orders under established pricing agreements. The amounts invoiced reflect the length of time the equipment set was utilized in the billing period. Contract labor services provide customers with proppant delivery equipment operators through work orders executed under established pricing agreements. The amounts invoiced reflect the amount of time our labor services were utilized in the billing period. We typically invoice our customers on a weekly or monthly basis; however, some customers receive invoices upon well-site operation completion. Standard collection terms are net 30 days, although extended terms are offered in competitive situations. We typically recognize revenue for specific, dedicated equipment set rental arrangements under ASC 840, Leases. For the remaining components of service revenue, we have applied the practical expedient allowed under ASC 606-10-55-18 to recognize transportation revenues in proportion to the amount we have the right to invoice. Contracts with Multiple Performance Obligations For contracts that contain multiple performance obligations, such as work orders containing a combination of product, transportation, equipment rentals, and contract labor services, we allocate the transaction price to each performance obligation identified in the contract based on relative standalone selling prices, or estimates of such prices, and recognize the related revenue as control of each individual product or service is transferred to the customer, in satisfaction of the corresponding performance obligations. Taxes Collected from Customers and Remitted to Governmental Authorities. We exclude from our measurement of transaction prices all taxes assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers. Accordingly, such tax amounts are not included as a component of net sales or cost of sales. |
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Deferred Revenues | Deferred Revenues For a limited number of customers, we enter into supply agreements which give customers the right to make advanced payments toward the purchase of certain products at specified volumes over an average initial period of one to five years. These payments represent consideration that is unconditional for which we have yet to transfer the related product. These payments are recorded as contract liabilities referred to as “deferred revenues” upon receipt and recognized as revenue upon delivery of the related product. |
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Unbilled Receivables | Unbilled Receivables Revenues recognized in advance of invoice issuance create assets referred to as “unbilled receivables.” Any portion of our unbilled receivables for which our right to consideration is conditional on a factor other than the passage of time is considered a contract asset. These assets are presented on a combined basis with accounts receivable and are converted to accounts receivable once billed. |
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes previous revenue recognition guidance. The new guidance introduces a new principles-based framework for revenue recognition and disclosure. Since its issuance, the FASB has issued additional ASUs, amending the guidance and the effective dates of amendments, and the SEC has rescinded certain related SEC guidance. On January 1, 2018, we adopted the new accounting standard and all of the related amendments (“new revenue standard”) to all contracts using the modified retrospective method. Adoption of the new revenue standard did not result in a material cumulative effect adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. We do not expect the adoption of the new revenue standard to have a material impact to our net income on an ongoing basis. See Note S -Revenue to these Financial Statements for additional disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms greater than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. Similarly, lessors will be required to classify leases as sales-type, finance or operating, with classification affecting the pattern of income recognition. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract. This update is effective for public entities for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. This standard mandates a modified retrospective transition method. While we continue to evaluate the effect of the standard, we anticipate that the adoption will result in a material increase in assets and liabilities on our consolidated balance sheet and will not have a material impact on our consolidated income statement or statement of cash flows. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which removes Step 2 from the goodwill impairment test. It is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed with a measurement date after January 1, 2017. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements. In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit. The update requires companies to include the service cost component of net periodic benefit costs in the same line item or items as compensation costs arising from services rendered by the associated employees during the period. The update also disallows capitalization of the other components of net periodic benefit costs and requires those costs to be presented in the income statement separately from the service cost component and outside of a subtotal of income from operations. The update is effective for fiscal years beginning after December 15, 2017, including interim periods within those annual periods for public business entities. Companies are required to retrospectively apply the requirement for a separate presentation in the income statement of service costs and other components of net benefit cost and prospectively adopt the requirement to limit the capitalization of benefit costs to the service component. Application of a practical expedient is allowed permitting an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. We implemented the update on January 1, 2018 and utilized the practical expedient to estimate the impact on the prior comparative period information presented in the interim and annual financial statements. We previously capitalized all net periodic benefit costs incurred for plant personnel in inventory and recorded the majority of net periodic benefit costs incurred by corporate personnel and retirees into selling, general, and administrative expenses. The following is a reconciliation of the effect of the reclassification (in thousands) of the net benefit cost in the Company’s condensed consolidated statements of income for the three months ended March 31, 2017:
In February 2018, the FASB issued Accounting Standards Update ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The ASU provides that the stranded tax effects from the Tax Act in accumulated other comprehensive loss may be reclassified to retained earnings. The ASU is effective February 1, 2019, with early adoption permitted. We are currently evaluating the effect that the transition guidance will have on our financial statements and related disclosures. |
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Fair Value Measurement | 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, 2018 and December 31, 2017 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. Derivative Instruments The estimated fair value of our derivative instruments (interest rate caps) are recorded at each reporting period and are based upon widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. We also incorporate credit valuation adjustments to appropriately reflect both our nonperformance risk as well as that of the respective counterparty in the fair value measurements. Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default of ourselves and our counterparties. However, as of March 31, 2018, we have assessed that the impact of the credit valuation adjustments on the overall valuation of our derivative positions is not significant. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. |
Summary of Significant Accounting Policies (Tables) |
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Schedule of Reconciliation of Effects of Reclassification | The following is a reconciliation of the effect of the reclassification (in thousands) of the net benefit cost in the Company’s condensed consolidated statements of income for the three months ended March 31, 2017:
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Earnings Per Share (Tables) |
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Schedule of Computation of Basic and Diluted Earnings Per Share | The following table shows the computation of basic and diluted earnings per share for the three months ended March 31, 2018 and 2017:
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Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share | 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. Weighted-average stock awards (in thousands) excluded from the calculation of diluted earnings per common share were as follows:
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Capital Structure and Accumulated Other Comprehensive Income (Loss) (Tables) |
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Schedule of Declared Quarterly Cash Dividends | During the three months ended March 31, 2018, our Board of Directors declared quarterly cash dividends as follows:
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Changes in Accumulated Other Comprehensive Income | The following table presents the changes in accumulated other comprehensive income (loss) by component (in thousands) during the three months ended March 31, 2018:
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Business Combinations (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Identifiable Assets Acquired and Liabilities Assumed | The following table sets forth the current allocation of the purchase price to MS Sands' identifiable tangible and intangible assets acquired and liabilities assumed, including measurement period adjustments (in thousands):
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Summary of Identifiable Intangible Assets | The acquired intangible assets and the related estimated useful lives consist of the following:
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Schedule of Pro Forma Information | The following unaudited pro forma consolidated financial information reflects the results of operations as if the MS Sand Acquisition had occurred on January 1, 2016, after giving effect to certain purchase accounting adjustments. These adjustments mainly include incremental depreciation expense related to the fair value adjustment of property, plant, equipment and mine development, amortization expense related to identifiable intangible assets and tax expense related to the combined tax provisions. This information does not purport to be indicative of the actual results that would have occurred if the acquisition had actually been completed on the date indicated, nor is it necessarily indicative of the future operating results or the financial position of the combined company (in thousands, except per share amounts):
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Accounts Receivable (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Receivable and Allowance for Doubtful Accounts | At March 31, 2018 and December 31, 2017, accounts receivable (in thousands) consisted of the following:
Changes in our allowance for doubtful accounts (in thousands) during the three months ended March 31, 2018 are as follows:
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Inventories (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | At March 31, 2018 and December 31, 2017, inventories (in thousands) consisted of the following:
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Property, Plant and Mine Development (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property, Plant and Mine Development | At March 31, 2018 and December 31, 2017, property, plant and mine development (in thousands) consisted of the following:
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Goodwill and Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in the Carrying Amount of Goodwill | The changes in the carrying amount of goodwill (in thousands) consisted of the following:
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Schedule of Changes in the Carrying Amount of Definite-Lived Intangible Assets | The changes in the carrying amount of intangible assets (in thousands) consisted of the following:
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Schedule of Changes in the Carrying Amount of Indefinite-Lived Intangible Assets | The changes in the carrying amount of intangible assets (in thousands) consisted of the following:
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Schedule of Estimated Amortization Expense Related to Definite-Lived Intangible Assets | The estimated amortization expense related to definite-lived intangible assets (in thousands) for the five succeeding years is as follows:
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | At March 31, 2018 and December 31, 2017, debt (in thousands) consisted of the following:
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Schedule of Contractual Maturities of Debt | The minimum payments (in thousands) for the next five years required by the note are as follows:
At March 31, 2018, contractual maturities of our senior secured credit facility (in thousands) are as follows:
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Asset Retirement Obligations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||
Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
Schedule of Changes in Asset Retirement Obligation | Changes in the asset retirement obligation (in thousands) during the three months ended March 31, 2018 are as follows:
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Derivative Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Fair Values of Derivative Instruments | The following table summarizes the fair value of our derivative instruments (in thousands, except contract/notional amount). See Note L - Fair Value Accounting for additional disclosures regarding the estimated fair values of our derivative instruments at March 31, 2018 and December 31, 2017.
(1) Agreements limit the LIBOR floating interest rate base to 4%. |
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Schedule of Effect of Derivatives Instruments on Combined Statements of Operations and Comprehensive Income | The following table summarizes the effect of derivatives instruments (in thousands) on our income statements and our consolidated statements of comprehensive income for the three months ended March 31, 2018 and 2017.
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Equity-Based Compensation (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Options Activity | The following table summarizes the status of, and changes in, our stock option awards during the three months ended March 31, 2018:
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Schedule of Restricted Stock, Restricted Stock Unit and Performance Share Unit Awards Activity | 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, 2018:
The following table summarizes the status of, and changes in, our performance share unit awards during the three months ended March 31, 2018:
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Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Annual Commitments | Future Minimum Annual Commitments at March 31, 2018 (in thousands):
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Pension and Post-Retirement Benefits (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Pension and Post-retirement Benefit Costs | Net post-retirement benefit cost (in thousands) consisted of the following for the three months ended March 31, 2018 and 2017:
Net pension benefit cost (in thousands) consisted of the following for the three months ended March 31, 2018 and 2017:
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Revenue (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Sales by Major Source | The following table disaggregates our sales by major source for the three months ended March 31, 2018 (in thousands):
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Schedule of Changes in Contract Assets and Liabilities | The following tables reflect the changes in our contract assets, which we classify as unbilled receivables and our contract liabilities, which we classify as deferred revenues, for the three months ended March 31, 2018 (in thousands):
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Segment Reporting (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Sales and Segment Contribution Margin for Reporting Segments and Operating Results | The following table presents sales and segment contribution margin (in thousands) for the reporting segments and other operating results not allocated to the reported segments for the three months ended March 31, 2018 and 2017:
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Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Numerator: | ||
Net income | $ 31,294 | $ 2,522 |
Denominator: | ||
Weighted average shares outstanding (shares) | 79,496 | 80,983 |
Diluted effect of stock awards (shares) | 813 | 1,261 |
Weighted average shares outstanding assuming dilution (shares) | 80,309 | 82,244 |
Basic earnings per share (in dollars per share) | $ 0.39 | $ 0.03 |
Diluted earnings per share (in dollars per share) | $ 0.39 | $ 0.03 |
Earnings Per Share - Antidilutive Securities Excluded From Calculation of Diluted Earnings Per Share (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Weighted-average outstanding stock options excluded (shares) | 428 | 195 |
Restricted Stock and Restricted Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Weighted-average outstanding stock options excluded (shares) | 337 | 0 |
Capital Structure and Accumulated Other Comprehensive Income (Loss) - Declared Quarterly Cash Dividends (Details) - $ / shares |
Apr. 05, 2018 |
Mar. 15, 2018 |
Feb. 16, 2018 |
---|---|---|---|
Dividends Payable [Line Items] | |||
Dividends per Common Share (in dollars per share) | $ 0.0625 | ||
Declaration Date | Feb. 16, 2018 | ||
Record Date | Mar. 15, 2018 | ||
Subsequent Event | |||
Dividends Payable [Line Items] | |||
Payable Date | Apr. 05, 2018 |
Business Combinations - Intangible Assets Acquired (Details) - MS Sand - Customer relationships $ in Thousands |
Aug. 16, 2017
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Definite lived intangible assets - approximate fair value | $ 1,840 |
Finite-lived intangible asset, useful life (in years) | 15 years |
Business Combinations - Pro Forma Information (Details) - MS Sand - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Business Acquisition [Line Items] | ||
Sales | $ 1,287,202 | $ 642,951 |
Net income (loss) | $ 143,604 | $ (55,835) |
Basic earnings (loss) per share (in dollars per share) | $ 1.77 | $ (0.86) |
Diluted earnings (loss) per share (in dollars per share) | $ 1.75 | $ (0.86) |
Accounts Receivable (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
Trade receivables | $ 247,178 | $ 217,649 |
Less: Allowance for doubtful accounts | (7,250) | (7,100) |
Net trade receivables | 239,928 | 210,549 |
Other receivables | 11,347 | 2,037 |
Total accounts receivable | $ 251,275 | $ 212,586 |
Accounts Receivable - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Allowance for Doubtful Accounts Receivable | ||
Beginning balance | $ 7,100 | |
Bad debt provision | 237 | $ 783 |
Write-offs | (87) | |
Ending balance | $ 7,250 |
Accounts Receivable - Additional Information (Details) - Product Concentration Risk |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Sales | Ten Largest Customers | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 52.00% | 55.00% | |
Sales | Customer One | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 15.00% | 14.00% | |
Sales | Customer Two | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 11.00% | ||
Accounts Receivable, Net | Customer One | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 17.00% | 19.00% | |
Accounts Receivable, Net | Customer Two | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 11.00% |
Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Supplies | $ 22,338 | $ 21,277 |
Raw materials and work in process | 24,175 | 28,034 |
Finished goods | 30,066 | 43,065 |
Total inventories | $ 76,579 | $ 92,376 |
Goodwill and Intangible Assets - Changes in Carrying Amount of Goodwill (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at December 31, 2017 | $ 272,079 |
Balance at March 31, 2018 | 274,879 |
MS Sand acquisition | |
Goodwill [Roll Forward] | |
Balance at December 31, 2017 | 25,322 |
MS Sand acquisition measurement period adjustment | $ 2,800 |
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 2.3 | $ 2.0 |
Goodwill and Intangible Assets - Estimated Amortization Expense Related to Definite-Lived Intangible Assets (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2018 | $ 6,980 |
2019 | 9,306 |
2020 | 9,306 |
2021 | 9,306 |
2022 | $ 9,291 |
Debt - Additional Information (Details) |
3 Months Ended | |
---|---|---|
Aug. 16, 2016
USD ($)
|
Mar. 31, 2018
USD ($)
|
|
Notes Payable, Other Payables | Note payable secured by royalty interest | ||
Debt Instrument [Line Items] | ||
Annual minimum payments | $ 500,000 | |
Debt instrument, fair value | $ 22,500,000 | $ 25,600,000 |
Fair value discount rate | 14.00% | |
Interest rate, effective percentage | 22.00% | |
Revolving Line-of-Credit | Revolver | ||
Debt Instrument [Line Items] | ||
Available borrowing base | $ 50,000,000 | |
Amount drawn from borrowing base | 0 | |
Amount available for general corporate use under this revolving credit agreement | $ 45,500,000 | |
Secured Debt | Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Line of credit facility, covenant terms, minimum incurrence ratio | 3 | |
Credit facility consolidated total net leverage ratio | 0.0375 | |
Net leverage ratio, credit facility threshold percentage | 25.00% | |
Letter of Credit | Revolver | ||
Debt Instrument [Line Items] | ||
Amount allocated for letters of credit | $ 4,500,000 |
Debt - Contractual Maturities of Senior Secured Credit Facility (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Total | $ 510,912 | $ 511,236 |
Secured Debt | Term Loan Facility | ||
Debt Instrument [Line Items] | ||
2018 | 3,825 | |
2019 | 5,100 | |
2020 | 478,875 | |
Total | $ 487,800 | $ 489,075 |
Debt - Contractual Maturities of Note Payable Secured by Royalty Interest (Details) - Notes Payable, Other Payables - Note payable secured by royalty interest $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
2018 | $ 1,313 |
2019 | 1,750 |
2020 | 1,750 |
2021 | 1,750 |
2022 | $ 1,750 |
Deferred Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenue, advances received | $ 10,500 | |
Deferred revenue | 122,000 | $ 118,400 |
Current portion of deferred revenue | $ 52,305 | $ 36,128 |
Supply Agreement | Minimum | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenue, average initial contract term | 1 year | |
Supply Agreement | Maximum | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenue, average initial contract term | 5 years |
Asset Retirement Obligations (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Asset Retirement Obligation Disclosure [Abstract] | |
Other long-term liabilities related to asset retirement obligation | $ 16,756 |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |
Beginning balance | 19,032 |
Accretion | 326 |
Additions and revisions of prior estimates | (486) |
Disposal related to sale of transloads | $ (2,116) |
Fair Value Accounting (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Fair Value, Measurements, Recurring | Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value of derivative instruments (interest rate caps) | $ 0 |
Derivative Instruments - Estimated Fair Values of Derivative Instruments (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Interest rate cap agreement | ||
Derivative Instruments, Gain (Loss) | ||
Contract/Notional Amount | $ 249,000,000 | $ 249,000,000 |
Carrying Amount | $ 0 | $ 0 |
LIBOR | Maximum | ||
Derivative Instruments, Gain (Loss) | ||
Derivative, basis spread on variable rate (maximum) | 4.00% | 4.00% |
Fair Value, Measurements, Recurring | Level 2 | ||
Derivative Instruments, Gain (Loss) | ||
Fair Value | $ 0 | |
Fair Value, Measurements, Recurring | Level 2 | Interest rate cap agreement | ||
Derivative Instruments, Gain (Loss) | ||
Fair Value | $ 0 | $ 0 |
Derivative Instruments - Additional Information (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Ineffective portion of derivative contracts | $ 0 | $ 0 |
Derivative Instruments - Effect of Derivatives Instruments on Combined Statements of Operations and Comprehensive Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Deferred Losses from Derivatives in OCI [Roll Forward] | ||
Deferred losses from derivatives in OCI, beginning of period | $ (76) | $ (32) |
Loss recognized in OCI from derivative instruments | 0 | (36) |
Gain reclassified from Accumulated OCI | 2 | 0 |
Deferred losses from derivatives in OCI, end of period | $ (74) | $ (68) |
Equity-Based Compensation - Restricted Stock and Restricted Stock Units Activity (Details) - Restricted Stock and Restricted Stock Units - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Number of Shares | ||
Unvested at beginning of period (in shares) | 461,346 | |
Granted (in shares) | 3,852 | 1,500 |
Vested (in shares) | (132,081) | |
Forfeited (in shares) | (10,309) | |
Unvested at period end (in shares) | 322,808 | |
Grant Date Weighted Average Fair Value | ||
Unvested at beginning of period (in dollars per share) | $ 30.76 | |
Granted (in dollars per share) | 30.11 | |
Vested (in dollars per share) | 24.56 | |
Forfeited (in dollars per share) | 35.65 | |
Unvested at period end (in dollars per share) | $ 33.14 |
Equity-Based Compensation - Performance Share Unit Activity (Details) - Performance Share Units - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Number of Shares | ||
Unvested at beginning of period (in shares) | 881,416 | |
Granted (in shares) | 0 | 0 |
Vested (in shares) | (225,000) | |
Forfeited (in shares) | (5,972) | |
Unvested at period end (in shares) | 650,444 | |
Weighted Average | ||
Unvested at beginning of period (in dollars per share) | $ 42.16 | |
Granted (in dollars per share) | 0.00 | |
Vested (in dollars per share) | 41.99 | |
Forfeited (in dollars per share) | 58.71 | |
Unvested at period end (in dollars per share) | $ 42.07 |
Commitments and Contingencies - Future Minimum Annual Commitments (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Operating Lease Minimum Rental Payments | |
2018 | $ 53,739 |
2019 | 64,746 |
2020 | 52,868 |
2021 | 36,031 |
2022 | 30,301 |
Thereafter | 55,739 |
Total future lease commitments | 293,424 |
Minimum Purchase Commitments | |
2018 | 18,292 |
2019 | 22,829 |
2020 | 17,951 |
2021 | 9,459 |
2022 | 6,851 |
Thereafter | 4,565 |
Total future purchase commitments | $ 79,947 |
Commitments and Contingencies (Details) |
3 Months Ended | |||
---|---|---|---|---|
May 17, 2017
USD ($)
|
Mar. 31, 2018
USD ($)
claim
|
Mar. 31, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Loss Contingencies | ||||
Expenses related to operating leases and rental agreements | $ 22,800,000 | $ 15,400,000 | ||
Purchased reserves | $ 94,400,000 | |||
Other non-current assets | ||||
Loss Contingencies | ||||
Third party products claims liability under insurance in other long-term obligations | 0 | $ 0 | ||
Other long-term obligations | ||||
Loss Contingencies | ||||
Third party products claims liability under insurance in other long-term obligations | $ 1,000,000 | $ 1,000,000 | ||
Pending Litigation | ||||
Loss Contingencies | ||||
New claims filed | claim | 1 | |||
Number of pending claims | claim | 60 |
Pension and Post-Retirement Benefits - Net Pension and Post-Retirement Benefit Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Pension Benefits | ||
Defined Benefit Plan Disclosure | ||
Service cost | $ 279 | $ 295 |
Interest cost | 978 | 883 |
Expected return on plan assets | (1,243) | (1,331) |
Net amortization and deferral | 631 | 693 |
Net pension benefit costs | 645 | 540 |
Post-retirement Benefits | ||
Defined Benefit Plan Disclosure | ||
Service cost | 27 | 32 |
Interest cost | 188 | 192 |
Net amortization and deferral | 0 | 54 |
Net pension benefit costs | $ 215 | $ 278 |
Pension and Post-Retirement Benefits - Additional Information (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018
USD ($)
plan
|
Mar. 31, 2017
USD ($)
|
|
Defined Benefit Plan Disclosure | ||
Number of multiemployer plans | plan | 3 | |
Multiemployer plan, percentage of fund's total contributions | 5.00% | |
Pension Benefits | ||
Defined Benefit Plan Disclosure | ||
Contributions to plan by employer | $ 300,000 | $ 0 |
Expected contributions in current fiscal year | 2,500,000 | |
Post-retirement Benefits | ||
Defined Benefit Plan Disclosure | ||
Expected contributions in current fiscal year | $ 1,400,000 |
Obligations Under Guarantees (Details) - Travelers Casualty and Surety Company $ in Millions |
Mar. 31, 2018
USD ($)
|
---|---|
Surety Bonds | |
Loss Contingencies | |
Surety bonds outstanding | $ 12.2 |
Reclamation Bonds | |
Loss Contingencies | |
Bonds related to reclamation requirements | $ 10.3 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Operating Loss Carryforwards [Line Items] | |||
Provisional income tax expense, decrease in deferred tax assets due to change in tax rate | $ 45.0 | ||
Provisional income tax benefit, decrease in deferred tax liability due to change in tax rate | 80.8 | ||
Provisional income tax benefit, net, decrease in tax assets and liabilities due to change in tax rate | $ 35.8 | ||
Effective income tax rate | 19.00% | (212.00%) | |
Effective income tax rate without discrete tax benefit | 18.00% | (26.00%) | |
Accounting Standards Update 2016-09 | |||
Operating Loss Carryforwards [Line Items] | |||
Recorded tax expense (benefit) related to excess tax benefits on equity compensation | $ 0.5 | $ (1.5) |
Revenue - Sales by Major Source (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Disaggregation of Revenue [Line Items] | ||
Product | $ 294,788 | $ 203,251 |
Service | 74,525 | 41,546 |
Total sales | 369,313 | $ 244,797 |
Oil & Gas Proppants | ||
Disaggregation of Revenue [Line Items] | ||
Product | 238,422 | |
Service | 74,508 | |
Total sales | 312,930 | |
Industrial & Specialty Products | ||
Disaggregation of Revenue [Line Items] | ||
Product | 56,366 | |
Service | 17 | |
Total sales | $ 56,383 |
Revenue - Changes in Contract Assets and Liabilities (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Unbilled Receivables | |
December 31, 2017 | $ 5,245 |
Reclassifications to billed receivables | (5,245) |
Revenues recognized in excess of period billings | 2,939 |
March 31, 2018 | 2,939 |
Deferred Revenue | |
December 31, 2017 | 118,414 |
Revenues recognized from balances held at the beginning of the period | (6,969) |
Revenues deferred from period collections on unfulfilled performance obligations | 10,530 |
March 31, 2018 | $ 121,975 |
Revenue - Additional Information (Details) |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining duration period of expected satisfaction of performance obligations | 1 year |
Related Party Transactions (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Related Party Transaction [Line Items] | ||
Related party purchases | $ 672 | $ 858 |
Officer | Transportation Brokerage And Logistics Services Vendor | ||
Related Party Transaction [Line Items] | ||
Related party purchases | $ 900 | $ 600 |
Segment Reporting (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018
USD ($)
Segment
Product
|
Dec. 31, 2017
USD ($)
|
|
Segment Reporting Information | ||
Number of reportable segments | Segment | 2 | |
Number of products in Industrial & Specialty segment | Product | 200 | |
Goodwill | $ 274,879 | $ 272,079 |
Operating Segments | Oil & Gas Proppants | ||
Segment Reporting Information | ||
Goodwill | 250,300 | 247,500 |
Operating Segments | Industrial & Specialty Products | ||
Segment Reporting Information | ||
Goodwill | $ 24,600 | $ 24,600 |
Subsequent Events (Details) |
Apr. 05, 2018
$ / shares
|
---|---|
Subsequent Event | |
Subsequent Event | |
Cash dividends paid (in dollars per share) | $ 0.0625 |
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