U.S. Silica Holdings, Inc. (NYSE:SLCA) Q3 2022 Earnings Conference Call October 28, 2022 8:30 AM ET

Company Participants

Bryan Shinn - Chief Executive Officer

Don Merril - Executive Vice President, Chief Financial Officer

Patricia Gil - Vice President of Investor Relations

Conference Call Participants

Stephen Gengaro - Stifel

Samantha Hoh - Evercore

Derek Podhaizer - Barclays

John Daniel - Daniel Energy

Operator

Good morning and welcome to the U.S. Silica Third Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded.

It is now my pleasure to introduce you to Patricia Gil, Vice President of Investor Relations. Thank you, you may begin.

Patricia Gil

Thank you and good morning everyone. I’d like to thank you for joining us today for U.S. Silica’s third quarter 2022 earnings conference call. Leading the call today are our Chief Executive Officer, Bryan Shinn; and Don Merril, our Executive Vice President and Chief Financial Officer.

Before we begin, I would like to remind you of our standard cautionary remarks regarding the forward-looking nature of some of the statements that will be made today. Such forward-looking statements which are predictions, projections or other statements about future events are based on current expectations and assumptions which are subject to certain risks and uncertainties.

For a complete discussion of these risks and uncertainties, we encourage you to read the company’s press release and our documents on file with the SEC. We do not undertake any duty to update any forward-looking statements.

Additionally, we may refer to the non-GAAP measures such as adjusted EBITDA, segment contribution margin, net debt and our net leverage ratio during this call. Please refer to today’s press release or our public filings for a full reconciliation of adjusted EBITDA to net income and discussions of segment contribution margin, net debt and the net leverage ratio.

And with that, I will hand the call over to Bryan Shinn.

Bryan Shinn

Thanks Patricia and good morning everyone. We delivered another exceptional print in Q3, resulting in our best quarterly financial performance in the last four years. These tremendous results were driven by continued robust customer demand in both business segments and outstanding execution by our talented team. We enjoyed a full quarter of price increases to fight inflationary impacts in our industrial segment, realized greater contract coverage and improved prices in sand proppant, and delivered further margin expansion in SandBox last-mile-logistics. This resulted in sequentially higher revenue, earnings, and strong cash generation across the Company, affording us the opportunity to repurchase an additional $50 million of debt earlier this month. So far this year, we have used our strong cash flow generation to repurchase a total of $150 million of debt and expect to generate substantial operating cash flow in the fourth quarter and in 2023, which should further strengthen our balance sheet and help us achieve our objective of meaningfully reducing net debt.