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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Silica Holdings Inc | NYSE:SLCA | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 15.43 | 0 | 09:00:00 |
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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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
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ý
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Accelerated filer
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|
¨
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Non-accelerated filer
|
|
¨
|
|
Smaller reporting company
|
|
¨
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|
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Emerging growth company
|
|
¨
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Page
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PART I
|
|
|
Item 1.
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
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|
PART II
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
Signatures
|
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(unaudited)
|
|
(audited)
|
||||
ASSETS
|
|||||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
463,650
|
|
|
$
|
711,225
|
|
Accounts receivable, net
|
206,099
|
|
|
89,006
|
|
||
Inventories, net
|
86,174
|
|
|
78,709
|
|
||
Prepaid expenses and other current assets
|
15,124
|
|
|
12,323
|
|
||
Income tax deposits
|
—
|
|
|
1,682
|
|
||
Total current assets
|
771,047
|
|
|
892,945
|
|
||
Property, plant and mine development, net
|
1,049,805
|
|
|
783,313
|
|
||
Goodwill
|
301,744
|
|
|
240,975
|
|
||
Trade names
|
33,068
|
|
|
32,318
|
|
||
Intellectual property, net
|
64,836
|
|
|
57,270
|
|
||
Customer relationships, net
|
51,433
|
|
|
50,890
|
|
||
Other assets
|
14,973
|
|
|
15,509
|
|
||
Total assets
|
$
|
2,286,906
|
|
|
$
|
2,073,220
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current Liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
140,188
|
|
|
$
|
70,778
|
|
Dividends payable
|
5,231
|
|
|
5,221
|
|
||
Accrued liabilities
|
17,494
|
|
|
13,034
|
|
||
Accrued interest
|
123
|
|
|
169
|
|
||
Current portion of long-term debt
|
4,735
|
|
|
4,821
|
|
||
Current portion of capital leases
|
1,090
|
|
|
2,237
|
|
||
Current portion of deferred revenue
|
33,089
|
|
|
13,700
|
|
||
Income tax payable
|
8,341
|
|
|
—
|
|
||
Total current liabilities
|
210,291
|
|
|
109,960
|
|
||
Long-term debt, net
|
506,569
|
|
|
508,417
|
|
||
Deferred revenue
|
89,373
|
|
|
58,090
|
|
||
Obligations under capital lease
|
168
|
|
|
717
|
|
||
Liability for pension and other post-retirement benefits
|
52,472
|
|
|
56,746
|
|
||
Deferred income taxes, net
|
60,735
|
|
|
50,075
|
|
||
Other long-term obligations
|
18,503
|
|
|
15,925
|
|
||
Total liabilities
|
938,111
|
|
|
799,930
|
|
||
Stockholders’ Equity:
|
|
|
|
||||
Preferred stock
|
—
|
|
|
—
|
|
||
Common stock
|
812
|
|
|
811
|
|
||
Additional paid-in capital
|
1,140,554
|
|
|
1,129,051
|
|
||
Retained earnings
|
221,132
|
|
|
163,173
|
|
||
Treasury stock, at cost
|
—
|
|
|
(3,869
|
)
|
||
Accumulated other comprehensive loss
|
(13,703
|
)
|
|
(15,876
|
)
|
||
Total stockholders’ equity
|
1,348,795
|
|
|
1,273,290
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,286,906
|
|
|
$
|
2,073,220
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
295,768
|
|
|
$
|
125,805
|
|
|
$
|
751,111
|
|
|
$
|
363,471
|
|
Service
|
49,255
|
|
|
11,943
|
|
|
129,174
|
|
|
13,781
|
|
||||
Total sales
|
345,023
|
|
|
137,748
|
|
|
880,285
|
|
|
377,252
|
|
||||
Cost of sales (excluding depreciation, depletion and amortization):
|
|
|
|
|
|
|
|
||||||||
Product
|
189,105
|
|
|
112,215
|
|
|
515,767
|
|
|
321,431
|
|
||||
Service
|
38,818
|
|
|
7,211
|
|
|
97,042
|
|
|
7,453
|
|
||||
Total cost of sales (excluding depreciation, depletion and amortization)
|
227,923
|
|
|
119,426
|
|
|
612,809
|
|
|
328,884
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
29,602
|
|
|
18,472
|
|
|
77,955
|
|
|
48,560
|
|
||||
Depreciation, depletion and amortization
|
24,673
|
|
|
17,175
|
|
|
69,898
|
|
|
46,940
|
|
||||
Total operating expenses
|
54,275
|
|
|
35,647
|
|
|
147,853
|
|
|
95,500
|
|
||||
Operating income (loss)
|
62,825
|
|
|
(17,325
|
)
|
|
119,623
|
|
|
(47,132
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(8,347
|
)
|
|
(6,684
|
)
|
|
(24,098
|
)
|
|
(19,974
|
)
|
||||
Other income (expense), net, including interest income
|
1,502
|
|
|
493
|
|
|
(2,168
|
)
|
|
2,891
|
|
||||
Total other expense
|
(6,845
|
)
|
|
(6,191
|
)
|
|
(26,266
|
)
|
|
(17,083
|
)
|
||||
Income (loss) before income taxes
|
55,980
|
|
|
(23,516
|
)
|
|
93,357
|
|
|
(64,215
|
)
|
||||
Income tax (expense) benefit
|
(14,707
|
)
|
|
12,177
|
|
|
(20,103
|
)
|
|
30,102
|
|
||||
Net income (loss)
|
$
|
41,273
|
|
|
$
|
(11,339
|
)
|
|
$
|
73,254
|
|
|
$
|
(34,113
|
)
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.51
|
|
|
$
|
(0.17
|
)
|
|
$
|
0.90
|
|
|
$
|
(0.55
|
)
|
Diluted
|
$
|
0.50
|
|
|
$
|
(0.17
|
)
|
|
$
|
0.89
|
|
|
$
|
(0.55
|
)
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
81,121
|
|
|
66,676
|
|
|
81,058
|
|
|
61,512
|
|
||||
Diluted
|
81,783
|
|
|
66,676
|
|
|
81,976
|
|
|
61,512
|
|
||||
Dividends declared per share
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
$
|
0.19
|
|
|
$
|
0.19
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
$
|
41,273
|
|
|
$
|
(11,339
|
)
|
|
$
|
73,254
|
|
|
$
|
(34,113
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrealized (loss) gain on derivatives (net of tax of $(2) for the three months ended September 30, 2017 and 2016, and $(26) and $7 for the nine months ended September 30, 2017 and 2016, respectively)
|
(4
|
)
|
|
(3
|
)
|
|
(43
|
)
|
|
12
|
|
||||
Unrealized loss on investments (net of tax of $0 for the three months ended September 30, 2017 and 2016, and $0 and $(4) for the nine months ended September 30, 2017 and 2016, respectively)
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||
Pension and other post-retirement benefits liability adjustment (net of tax of $2,180 and $176 for the three months ended September 30, 2017 and 2016, respectively, and $1,335 and $(2,592) for the nine months ended September 30, 2017 and 2016, respectively)
|
3,618
|
|
|
293
|
|
|
2,216
|
|
|
(4,301
|
)
|
||||
Comprehensive income (loss)
|
$
|
44,887
|
|
|
$
|
(11,049
|
)
|
|
$
|
75,427
|
|
|
$
|
(38,408
|
)
|
|
Common
Stock
|
|
Treasury
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Stockholders’
Equity
|
||||||||||||
Balance at December 31, 2016
|
$
|
811
|
|
|
$
|
(3,869
|
)
|
|
$
|
1,129,051
|
|
|
$
|
163,173
|
|
|
$
|
(15,876
|
)
|
|
$
|
1,273,290
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
73,254
|
|
|
—
|
|
|
73,254
|
|
||||||
Unrealized loss on derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(43
|
)
|
|
(43
|
)
|
||||||
Pension and post-retirement liability
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,216
|
|
|
2,216
|
|
||||||
Cash dividend declared ($0.1875 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,295
|
)
|
|
—
|
|
|
(15,295
|
)
|
||||||
Common stock-based compensation plans activity:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
18,520
|
|
|
—
|
|
|
—
|
|
|
18,520
|
|
||||||
Proceeds from options exercised
|
—
|
|
|
1,190
|
|
|
(392
|
)
|
|
—
|
|
|
—
|
|
|
798
|
|
||||||
Issuance of restricted stock
|
—
|
|
|
1,859
|
|
|
(1,859
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares withheld for employee taxes related to vested restricted stock and stock units
|
1
|
|
|
820
|
|
|
(4,766
|
)
|
|
—
|
|
|
—
|
|
|
(3,945
|
)
|
||||||
Balance at September 30, 2017
|
$
|
812
|
|
|
$
|
—
|
|
|
$
|
1,140,554
|
|
|
$
|
221,132
|
|
|
$
|
(13,703
|
)
|
|
$
|
1,348,795
|
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
73,254
|
|
|
$
|
(34,113
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, depletion and amortization
|
69,898
|
|
|
46,940
|
|
||
Debt issuance amortization
|
1,038
|
|
|
1,045
|
|
||
Original issue discount amortization
|
281
|
|
|
283
|
|
||
Deferred income taxes
|
10,149
|
|
|
(29,858
|
)
|
||
Deferred revenue
|
32,487
|
|
|
(5,644
|
)
|
||
Loss on disposal of property, plant and equipment
|
362
|
|
|
240
|
|
||
Equity-based compensation
|
18,520
|
|
|
9,075
|
|
||
Bad debt provision
|
1,779
|
|
|
(86
|
)
|
||
Other
|
2,746
|
|
|
2,560
|
|
||
Changes in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
||||
Accounts receivable
|
(106,119
|
)
|
|
2,979
|
|
||
Inventories
|
(521
|
)
|
|
(8,931
|
)
|
||
Prepaid expenses and other current assets
|
7,449
|
|
|
(2,259
|
)
|
||
Income taxes
|
9,737
|
|
|
5,223
|
|
||
Accounts payable and accrued liabilities
|
68,927
|
|
|
11,679
|
|
||
Accrued interest
|
(46
|
)
|
|
(1
|
)
|
||
Liability for pension and other post-retirement benefits
|
(788
|
)
|
|
938
|
|
||
Net cash provided by operating activities
|
189,153
|
|
|
70
|
|
||
Investing activities:
|
|
|
|
||||
Capital expenditures
|
(289,535
|
)
|
|
(32,756
|
)
|
||
Capitalized intellectual property costs
|
(2,600
|
)
|
|
(259
|
)
|
||
Maturities of short-term investments
|
—
|
|
|
21,872
|
|
||
Acquisition of businesses, net of cash acquired
|
(119,719
|
)
|
|
(176,447
|
)
|
||
Proceeds from sale of property, plant and equipment
|
12
|
|
|
84
|
|
||
Net cash used in investing activities
|
(411,842
|
)
|
|
(187,506
|
)
|
||
Financing activities:
|
|
|
|
||||
Dividends paid
|
(15,285
|
)
|
|
(10,706
|
)
|
||
Issuance of common stock
|
—
|
|
|
200,000
|
|
||
Common stock issuance costs
|
—
|
|
|
(13,968
|
)
|
||
Proceeds from options exercised
|
798
|
|
|
4,333
|
|
||
Tax payments related to shares withheld for vested restricted stock
|
(3,945
|
)
|
|
(982
|
)
|
||
Repayment of long-term debt
|
(5,576
|
)
|
|
(4,035
|
)
|
||
Principal payments on capital lease obligations
|
(878
|
)
|
|
(223
|
)
|
||
Net cash (used in) provided by financing activities
|
(24,886
|
)
|
|
174,419
|
|
||
Net increase (decrease) in cash and cash equivalents
|
(247,575
|
)
|
|
(13,017
|
)
|
||
Cash and cash equivalents, beginning of period
|
711,225
|
|
|
277,077
|
|
||
Cash and cash equivalents, end of period
|
$
|
463,650
|
|
|
$
|
264,060
|
|
Supplemental cash flow information:
|
|
|
|
||||
Cash paid (received) during the period for:
|
|
|
|
||||
Interest
|
$
|
18,498
|
|
|
$
|
15,953
|
|
Taxes, net of refunds
|
$
|
216
|
|
|
$
|
(5,445
|
)
|
Non-cash Items:
|
|
|
|
||||
Capital lease obligations incurred to acquire assets
|
$
|
—
|
|
|
$
|
165
|
|
Common stock issued in connection with acquisitions
|
$
|
—
|
|
|
$
|
278,229
|
|
Equipment received
|
$
|
18,185
|
|
|
$
|
—
|
|
Increase (decrease) in accounts payable and accrued liabilities included in capital expenditures
|
$
|
21,116
|
|
|
$
|
(4,495
|
)
|
Dividends per Common Share
|
|
Declaration Date
|
|
Record Date
|
|
Payable Date
|
||
$
|
0.0625
|
|
|
February 16, 2017
|
|
March 15, 2017
|
|
April 5, 2017
|
$
|
0.0625
|
|
|
May 4, 2017
|
|
June 15, 2017
|
|
July 6, 2017
|
$
|
0.0625
|
|
|
July 21, 2017
|
|
September 15, 2017
|
|
October 3, 2017
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Weighted-average outstanding stock options excluded
|
564
|
|
|
1,095
|
|
|
195
|
|
|
1,217
|
|
Weighted-average outstanding restricted stock awards excluded
|
457
|
|
|
1,493
|
|
|
358
|
|
|
1,062
|
|
|
For the Nine Months Ended September 30, 2017
|
||||||||||
|
Unrealized
gain/(loss) on
cash flow hedges
|
|
Pension and
other
post-retirement
benefits liability
|
|
Total
|
||||||
Beginning Balance
|
$
|
(32
|
)
|
|
$
|
(15,844
|
)
|
|
$
|
(15,876
|
)
|
Other comprehensive gain (loss) before reclassifications
|
(43
|
)
|
|
2,000
|
|
|
1,957
|
|
|||
Amounts reclassed from accumulated other comprehensive income
|
—
|
|
|
216
|
|
|
216
|
|
|||
Ending Balance
|
$
|
(75
|
)
|
|
$
|
(13,628
|
)
|
|
$
|
(13,703
|
)
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||
|
2016
|
|
2016
|
||||
Sales
|
$
|
153,358
|
|
|
$
|
433,179
|
|
Net loss
|
$
|
(18,111
|
)
|
|
$
|
(38,207
|
)
|
Basic loss per share
|
$
|
(0.27
|
)
|
|
$
|
(0.62
|
)
|
Diluted loss per share
|
$
|
(0.27
|
)
|
|
$
|
(0.62
|
)
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Trade receivables
|
$
|
211,936
|
|
|
$
|
93,982
|
|
Less: Allowance for doubtful accounts
|
(7,503
|
)
|
|
(7,042
|
)
|
||
Net trade receivables
|
204,433
|
|
|
86,940
|
|
||
Other receivables
|
1,666
|
|
|
2,066
|
|
||
Total accounts receivable
|
$
|
206,099
|
|
|
$
|
89,006
|
|
|
September 30,
2017 |
||
Beginning balance
|
$
|
7,042
|
|
Bad debt provision
|
1,779
|
|
|
Write-offs
|
(1,318
|
)
|
|
Ending balance
|
$
|
7,503
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Supplies
|
$
|
20,409
|
|
|
$
|
18,824
|
|
Raw materials and work in process
|
26,247
|
|
|
25,161
|
|
||
Finished goods
|
39,518
|
|
|
34,724
|
|
||
Total inventories
|
$
|
86,174
|
|
|
$
|
78,709
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Mining property and mine development
|
$
|
559,130
|
|
|
$
|
414,434
|
|
Asset retirement cost
|
8,537
|
|
|
8,062
|
|
||
Land
|
35,928
|
|
|
35,052
|
|
||
Land improvements
|
43,460
|
|
|
42,738
|
|
||
Buildings
|
55,059
|
|
|
52,178
|
|
||
Machinery and equipment
|
551,918
|
|
|
450,881
|
|
||
Furniture and fixtures
|
2,898
|
|
|
2,566
|
|
||
Construction-in-progress
|
121,790
|
|
|
43,790
|
|
||
|
1,378,720
|
|
|
1,049,701
|
|
||
Accumulated depletion, depreciation and amortization
|
(328,915
|
)
|
|
(266,388
|
)
|
||
Total property, plant and mine development, net
|
$
|
1,049,805
|
|
|
$
|
783,313
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Senior secured credit facility:
|
|
|
|
||||
Revolver expiring July 23, 2018 (5.75% at September 30, 2017 and 5.25% at December 31, 2016)
|
$
|
—
|
|
|
$
|
—
|
|
Term loan facility—final maturity July 23, 2020 (4.4% - 4.9% at September 30, 2017 and 4% - 4.5% at December 31, 2016)
|
490,350
|
|
|
494,175
|
|
||
Less: Unamortized original issue discount
|
(1,037
|
)
|
|
(1,318
|
)
|
||
Less: Unamortized debt issuance cost
|
(3,444
|
)
|
|
(4,482
|
)
|
||
Note payable secured by royalty interest
|
23,611
|
|
|
23,076
|
|
||
Customer note payable
|
1,005
|
|
|
1,787
|
|
||
Equipment notes payable
|
819
|
|
|
—
|
|
||
Total debt
|
511,304
|
|
|
513,238
|
|
||
Less: current portion
|
(4,735
|
)
|
|
(4,821
|
)
|
||
Total long-term portion of debt
|
$
|
506,569
|
|
|
$
|
508,417
|
|
2017
|
$
|
1,275
|
|
2018
|
5,100
|
|
|
2019
|
5,100
|
|
|
2020
|
478,875
|
|
|
Total
|
$
|
490,350
|
|
2017
|
$
|
438
|
|
2018
|
1,750
|
|
|
2019
|
1,750
|
|
|
2020
|
1,750
|
|
|
2021
|
1,750
|
|
2017
|
$
|
100
|
|
2018
|
316
|
|
|
2019
|
286
|
|
|
2020
|
117
|
|
|
Total
|
819
|
|
2017
|
$
|
561
|
|
2018
|
722
|
|
|
Total minimum lease payments
|
1,283
|
|
|
Less: amount representing interest
|
(25
|
)
|
|
Present value of minimum lease payments
|
1,258
|
|
|
Less: current portion of capital lease obligations
|
(1,090
|
)
|
|
Non-current portion of capital lease obligations
|
$
|
168
|
|
|
September 30,
2017 |
||
Beginning balance
|
$
|
11,159
|
|
Accretion
|
650
|
|
|
Additions due to acquisition
|
474
|
|
|
Ending balance
|
$
|
12,283
|
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Interest rate derivatives
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Net asset
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
(Amounts in thousands)
|
Operating Leases
|
|
Minimum Purchase Commitments
|
||||
2017
|
$
|
15,317
|
|
|
$
|
6,530
|
|
2018
|
63,047
|
|
|
21,707
|
|
||
2019
|
55,897
|
|
|
18,017
|
|
||
2020
|
45,098
|
|
|
8,860
|
|
||
2021
|
34,984
|
|
|
5,736
|
|
||
Thereafter
|
81,539
|
|
|
12,800
|
|
||
Total future lease and purchase commitments
|
$
|
295,882
|
|
|
$
|
73,650
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service cost
|
$
|
260
|
|
|
$
|
267
|
|
|
$
|
704
|
|
|
$
|
559
|
|
Interest cost
|
993
|
|
|
1,009
|
|
|
2,447
|
|
|
2,257
|
|
||||
Expected return on plan assets
|
(1,317
|
)
|
|
(1,361
|
)
|
|
(3,405
|
)
|
|
(2,768
|
)
|
||||
Net amortization and deferral
|
443
|
|
|
395
|
|
|
1,391
|
|
|
884
|
|
||||
Net pension benefit costs
|
$
|
379
|
|
|
$
|
310
|
|
|
$
|
1,137
|
|
|
$
|
932
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service cost
|
$
|
11
|
|
|
$
|
(28
|
)
|
|
$
|
76
|
|
|
$
|
60
|
|
Interest cost
|
79
|
|
|
(187
|
)
|
|
462
|
|
|
425
|
|
||||
Expected return on plan assets
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Special termination benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||
Net amortization and deferral
|
—
|
|
|
—
|
|
|
107
|
|
|
270
|
|
||||
Net post-retirement costs
|
$
|
90
|
|
|
$
|
(215
|
)
|
|
$
|
644
|
|
|
$
|
776
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Oil & Gas Proppants
|
$
|
286,369
|
|
|
$
|
86,782
|
|
|
$
|
714,345
|
|
|
$
|
225,573
|
|
Industrial & Specialty Products
|
58,654
|
|
|
50,966
|
|
|
165,940
|
|
|
151,679
|
|
||||
Total sales
|
345,023
|
|
|
137,748
|
|
|
880,285
|
|
|
377,252
|
|
||||
Segment contribution margin:
|
|
|
|
|
|
|
|
||||||||
Oil & Gas Proppants
|
96,087
|
|
|
(1,897
|
)
|
|
206,149
|
|
|
(7,041
|
)
|
||||
Industrial & Specialty Products
|
23,978
|
|
|
21,587
|
|
|
67,462
|
|
|
59,967
|
|
||||
Total segment contribution margin
|
120,065
|
|
|
19,690
|
|
|
273,611
|
|
|
52,926
|
|
||||
Operating activities excluded from segment cost of sales
|
(2,965
|
)
|
|
(1,368
|
)
|
|
(6,135
|
)
|
|
(4,558
|
)
|
||||
Selling, general and administrative
|
(29,602
|
)
|
|
(18,472
|
)
|
|
(77,955
|
)
|
|
(48,560
|
)
|
||||
Depreciation, depletion and amortization
|
(24,673
|
)
|
|
(17,175
|
)
|
|
(69,898
|
)
|
|
(46,940
|
)
|
||||
Interest expense
|
(8,347
|
)
|
|
(6,684
|
)
|
|
(24,098
|
)
|
|
(19,974
|
)
|
||||
Other income (expense), net, including interest income
|
1,502
|
|
|
493
|
|
|
(2,168
|
)
|
|
2,891
|
|
||||
Income tax (expense) benefit
|
(14,707
|
)
|
|
12,177
|
|
|
(20,103
|
)
|
|
30,102
|
|
||||
Net income (loss)
|
$
|
41,273
|
|
|
$
|
(11,339
|
)
|
|
$
|
73,254
|
|
|
$
|
(34,113
|
)
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Amounts in thousands except per ton data
|
|
|
|
Percentage Change for Three Months Ended
|
||||||||||||||||||||
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30, 2017 vs. June 30, 2017
|
|
June 30, 2017 vs. March 31, 2017
|
|
March 31,
2017 vs. December 31, 2016 |
||||||||||||
Oil & Gas Proppants
|
2017
|
|
2017
|
|
2017
|
|
2016
|
|
|
|
||||||||||||||
Sales
|
$
|
286,369
|
|
|
$
|
235,018
|
|
|
$
|
192,959
|
|
|
$
|
136,977
|
|
|
22
|
%
|
|
22
|
%
|
|
41
|
%
|
Tons Sold
|
3,147
|
|
|
2,745
|
|
|
2,532
|
|
|
2,081
|
|
|
15
|
%
|
|
8
|
%
|
|
22
|
%
|
||||
Average Selling Price per Ton
|
$
|
91.00
|
|
|
$
|
85.62
|
|
|
$
|
76.21
|
|
|
$
|
65.82
|
|
|
6
|
%
|
|
12
|
%
|
|
16
|
%
|
•
|
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 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 believe that our supply chain network and logistics capabilities are a competitive advantage that enables us to provide superior service for our customers. We expect to continue to make strategic investments and develop partnerships with transload operators and transportation providers that will enhance our portfolio of supply chain services that we can provide to customers. As of
September 30, 2017
, we have storage capacity at
58
transloads located near all of the major shale basins in the
|
•
|
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 depending on market conditions, could become operational as early as late 2017 and add approximately 4 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 second quarter of 2018 and add approximately 2.6 million tons of annual frac sand capacity.
|
◦
|
W
e 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 2016 Annual Report, 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 pursue acquisitions and new growth opportunities as they arise and manage through any oil and gas proppant industry downturn. As of
September 30, 2017
, we had
$463.7 million
of cash on hand and
$45.2 million
of availability under our Revolver.
|
(All amounts in thousands)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
$
|
41,273
|
|
|
$
|
(11,339
|
)
|
|
$
|
73,254
|
|
|
$
|
(34,113
|
)
|
Total interest expense, net of interest income
|
6,900
|
|
|
6,211
|
|
|
19,852
|
|
|
18,731
|
|
||||
Provision for taxes
|
14,707
|
|
|
(12,177
|
)
|
|
20,103
|
|
|
(30,102
|
)
|
||||
Total depreciation, depletion and amortization expenses
|
24,673
|
|
|
17,175
|
|
|
69,898
|
|
|
46,940
|
|
||||
EBITDA
|
87,553
|
|
|
(130
|
)
|
|
183,107
|
|
|
1,456
|
|
||||
Non-cash incentive compensation
(1)
|
6,567
|
|
|
3,720
|
|
|
18,519
|
|
|
9,075
|
|
||||
Post-employment expenses (excluding service costs)
(2)
|
194
|
|
|
(184
|
)
|
|
923
|
|
|
780
|
|
||||
Business development related expenses
(3)
|
2,355
|
|
|
4,667
|
|
|
5,384
|
|
|
5,635
|
|
||||
Other adjustments allowable under our existing credit agreement
(4)
|
7
|
|
|
185
|
|
|
6,527
|
|
|
1,937
|
|
||||
Adjusted EBITDA
|
$
|
96,676
|
|
|
$
|
8,258
|
|
|
$
|
214,460
|
|
|
$
|
18,883
|
|
|
|
|
(1)
|
Reflects equity-based 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. See Note M - Pension and Post-retirement Benefits to our Financial Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q.
|
|
(3)
|
Reflects expenses related to business development activities in connection with our growth and expansion initiatives.
|
|
(4)
|
Reflects miscellaneous adjustments permitted under our existing credit agreement. The nine months ended September 30, 2017 amount includes a contract restructuring cost of $6.3 million.
|
(All numbers in thousands except per ton data)
|
Three Months Ended
September 30, |
|
Amount Change
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
'17 vs.'16
|
|
'17 vs.'16
|
|||||||
Sales:
|
|
|
|
|
|
|
|
|||||||
Oil & Gas Proppants
|
$
|
286,369
|
|
|
$
|
86,782
|
|
|
$
|
199,587
|
|
|
230
|
%
|
Industrial & Specialty Products
|
58,654
|
|
|
50,966
|
|
|
7,688
|
|
|
15
|
%
|
|||
Total Sales
|
$
|
345,023
|
|
|
$
|
137,748
|
|
|
$
|
207,275
|
|
|
150
|
%
|
Tons:
|
|
|
|
|
|
|
|
|||||||
Oil & Gas Proppants
|
3,147
|
|
|
1,617
|
|
|
1,530
|
|
|
95
|
%
|
|||
Industrial & Specialty Products
|
928
|
|
|
876
|
|
|
52
|
|
|
6
|
%
|
|||
Total Tons
|
4,075
|
|
|
2,493
|
|
|
1,582
|
|
|
63
|
%
|
|||
Average Selling Price per Ton:
|
|
|
|
|
|
|
|
|||||||
Oil & Gas Proppants
|
$
|
91.00
|
|
|
$
|
53.67
|
|
|
$
|
37.33
|
|
|
70
|
%
|
Industrial & Specialty Products
|
63.20
|
|
|
58.18
|
|
|
5.02
|
|
|
9
|
%
|
|||
Overall Average Selling Price per Ton:
|
$
|
84.67
|
|
|
$
|
55.25
|
|
|
$
|
29.42
|
|
|
53
|
%
|
•
|
Compensation-related expense increased by
$9.6 million
for the three months ended
September 30, 2017
compared to the three months ended
September 30, 2016
, mainly driven by increased equity-based compensation and incremental personnel expense related to our NBI, Sandbox and MS Sand employees.
|
•
|
Bad debt expense increased by
$1.1 million
for the three months ended
September 30, 2017
compared to the three months ended
September 30, 2016
, mainly due to increased sales.
|
•
|
Business development related expense decreased by
$2.3 million
to
$2.4 million
for the three months ended
September 30, 2017
compared to
$4.7 million
for the three months ended
September 30, 2016
. The decrease was primarily due to cost related to our NBI and Sandbox acquisitions in 2016 partially offset by cost related to our MS Sand acquisition in 2017.
|
(All numbers in thousands except per ton data)
|
Nine Months Ended
September 30, |
|
Amount Change
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
'17 vs. '16
|
|
'17 vs. '16
|
|||||||
Sales:
|
|
|
|
|
|
|
|
|||||||
Oil & Gas Proppants
|
$
|
714,345
|
|
|
$
|
225,573
|
|
|
$
|
488,772
|
|
|
217
|
%
|
Industrial & Specialty Products
|
165,940
|
|
|
151,679
|
|
|
14,261
|
|
|
9
|
%
|
|||
Total Sales
|
$
|
880,285
|
|
|
$
|
377,252
|
|
|
$
|
503,033
|
|
|
133
|
%
|
Tons:
|
|
|
|
|
|
|
|
|||||||
Oil & Gas Proppants
|
8,424
|
|
|
4,361
|
|
|
4,063
|
|
|
93
|
%
|
|||
Industrial & Specialty Products
|
2,682
|
|
|
2,642
|
|
|
40
|
|
|
2
|
%
|
|||
Total Tons
|
11,106
|
|
|
7,003
|
|
|
4,103
|
|
|
59
|
%
|
|||
Average Selling Price per Ton:
|
|
|
|
|
|
|
|
|||||||
Oil & Gas Proppants
|
$
|
84.80
|
|
|
$
|
51.73
|
|
|
$
|
33.07
|
|
|
64
|
%
|
Industrial & Specialty Products
|
61.87
|
|
|
57.41
|
|
|
4.46
|
|
|
8
|
%
|
|||
Overall Average Selling Price per Ton:
|
$
|
79.26
|
|
|
$
|
53.87
|
|
|
$
|
25.39
|
|
|
47
|
%
|
•
|
Compensation related expense increased by
$23.4 million
for the
nine
months ended
September 30, 2017
compared to the
nine
months ended
September 30, 2016
, primarily due to increased equity-based compensation and higher employee headcount due to our acquisitions of NBI, Sandbox and MS Sand.
|
•
|
Bad debt expense increased by
$1.9 million
for the
nine
months ended
September 30, 2017
compared to the
nine
months ended
September 30, 2016
, mainly due to increased sales.
|
•
|
Business development related expense decreased by
$0.3 million
to
$5.4 million
for the
nine
months ended
September 30, 2017
compared to
$5.6 million
for the
nine
months ended
September 30, 2016
. The decrease was primarily due to cost related to our NBI and Sandbox acquisitions in 2016 partially offset by cost related to our MS Sand acquisition in 2017.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
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
|
|
$
|
1
|
|
|
$
|
1
|
|
|
2019
|
|
$249 million
|
|
$
|
72
|
|
|
$
|
72
|
|
|
|
|
(1)
|
Agreements limit the LIBOR floating interest rate base to 4%.
|
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)
|
||||||
July 2017
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
|
||
August 2017
|
|
685
|
|
(2)
|
$
|
25.21
|
|
|
|
—
|
|
|
|
||
September 2017
|
|
60
|
|
(2)
|
$
|
28.81
|
|
|
|
—
|
|
|
|
||
Total
|
|
745
|
|
|
$
|
25.50
|
|
|
|
—
|
|
|
$
|
33,173,725
|
|
|
|
|
(1)
|
A program covering the repurchase of up to $25.0 million of our common stock was initially announced in June 2012 and was increased to $50.0 million in December 2014. In November 2017, our Board of Directors authorized the repurchase of up to $100.0 million of our common stock through December 11, 2018.
|
|
(2)
|
Represents shares withheld by U.S. Silica to pay taxes due upon the vesting of employee restricted stock and restricted stock units.
|
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 four 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;
|
•
|
delay or failure by our customers to pay our outstanding receivables;
|
•
|
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 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
2016
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
|
3.1
|
|
8-K
|
|
001-35416
|
|
3.1
|
|
May 10, 2017
|
|
3.2
|
|
8-K
|
|
001-35416
|
|
3.2
|
|
May 10, 2017
|
|
4.1
|
|
|
S-1/A
|
|
333-175636
|
|
4.1
|
|
December 7, 2011
|
10.1+
|
|
8-K
|
|
001-35416
|
|
10.1
|
|
August 18, 2017
|
|
31.1*
|
|
|
|
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
|
|
|
|
32.2*
|
|
|
|
|
|
|
|
|
|
95.1*
|
|
|
|
|
|
|
|
|
|
99.1*
|
|
|
|
|
|
|
|
|
|
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
|
1 Year Silica Chart |
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