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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-35416
 slca-20220331_g1.jpg
U.S. Silica Holdings, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware 26-3718801
(State or other jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
24275 Katy Freeway, Suite 600
Katy, Texas 77494
(Address of Principal Executive Offices) (Zip Code)
(281) 258-2170
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par value SLCA  New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes    No  þ
As of April 22, 2022, 75,477,339 shares of common stock, par value $0.01 per share, of the registrant were outstanding.




U.S. SILICA HOLDINGS, INC.
FORM 10-Q
For the Quarter Ended March 31, 2022
TABLE OF CONTENTS
 
  Page
PART IFinancial Information (Unaudited):
PART IIOther Information:



PART I-FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; dollars in thousands)
March 31,
2022
December 31,
2021
ASSETS
Current Assets:
Cash and cash equivalents$239,768 $239,425 
Accounts receivable, net198,835 202,759 
Inventories, net123,784 115,713 
Prepaid expenses and other current assets14,525 18,018 
Total current assets576,912 575,915 
Property, plant and mine development, net1,228,071 1,258,646 
Lease right-of-use assets41,751 42,241 
Goodwill185,649 185,649 
Intangible assets, net147,694 150,054 
Other assets7,620 7,095 
Total assets$2,187,697 $2,219,600 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses$162,970 $167,670 
Current portion of operating lease liabilities13,158 14,469 
Current portion of long-term debt16,303 18,285 
Current portion of deferred revenue2,643 4,247 
Income tax payable8,866 1,200 
Total current liabilities203,940 205,871 
Long-term debt, net1,191,980 1,193,135 
Deferred revenue16,491 16,494 
Liability for pension and other post-retirement benefits28,843 32,935 
Deferred income taxes, net30,388 44,774 
Operating lease liabilities71,355 75,130 
Other long-term liabilities 33,906 37,178 
Total liabilities1,576,903 1,605,517 
Commitments and Contingencies (Note M)
Stockholders’ Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; zero issued and outstanding at March 31, 2022 and December 31, 2021
  
Common stock, $0.01 par value, 500,000,000 shares authorized; 85,341,383 issued and 75,434,553 outstanding at March 31, 2022; 84,746,194 issued and 75,033,352 outstanding at December 31, 2021
851 845 
Additional paid-in capital1,222,780 1,218,575 
Retained deficit(437,641)(429,260)
Treasury stock, at cost, 9,906,830 and 9,712,842 shares at March 31, 2022 and December 31, 2021, respectively
(188,092)(186,294)
Accumulated other comprehensive income3,502 349 
Total U.S. Silica Holdings, Inc. stockholders’ equity601,400 604,215 
Non-controlling interest9,394 9,868 
Total stockholders' equity610,794 614,083 
Total liabilities and stockholders’ equity$2,187,697 $2,219,600 
The accompanying notes are an integral part of these financial statements.
2


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; dollars in thousands, except per share amounts)
 Three Months Ended 
 March 31,
 20222021
Sales:
Product$233,234 $191,390 
Service71,653 43,026 
Total sales304,887 234,416 
Cost of sales (excluding depreciation, depletion and amortization):
Product173,608 142,797 
Service53,261 34,192 
Total cost of sales (excluding depreciation, depletion and amortization)226,869 176,989 
Operating expenses:
Selling, general and administrative40,110 26,224 
Depreciation, depletion and amortization37,749 41,348 
Goodwill and other asset impairments 38 
Total operating expenses77,859 67,610 
Operating income (loss)159 (10,183)
Other (expense) income:
Interest expense(17,173)(17,711)
Other income, net, including interest income1,531 2,605 
Total other expense(15,642)(15,106)
Loss before income taxes(15,483)(25,289)
Income tax benefit6,969 4,354 
Net loss$(8,514)$(20,935)
Less: Net loss attributable to non-controlling interest(121)(157)
Net loss attributable to U.S. Silica Holdings, Inc. $(8,393)$(20,778)
Loss per share attributable to U.S. Silica Holdings, Inc.:
Basic$(0.11)$(0.28)
Diluted$(0.11)$(0.28)
Weighted average shares outstanding:
Basic75,240 73,927 
Diluted75,240 73,927 
Dividends declared per share$ $ 
The accompanying notes are an integral part of these financial statements.
3


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited; dollars in thousands)
 Three Months Ended 
 March 31,
 20222021
Net loss$(8,514)$(20,935)
Other comprehensive income (loss):
Foreign currency translation adjustment (net of tax of $(98) and $(180)) for the three months ended March 31, 2022 and 2021, respectively.
(309)(569)
Pension and other post-retirement benefits liability adjustment (net of tax of $1,084 and $3,234) for the three months ended March 31, 2022 and 2021, respectively.
3,462 10,151 
Comprehensive loss$(5,361)$(11,353)
Less: Comprehensive loss attributable to non-controlling interest(121)(157)
Comprehensive loss attributable to U.S. Silica Holdings, Inc.$(5,240)$(11,196)
The accompanying notes are an integral part of these financial statements.
4


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited; dollars in thousands, except per share amounts)
Common
Stock
Treasury
Stock
Additional
Paid-In
Capital
Retained
Deficit
Accumulated
Other
Comprehensive Income
(Loss)
Total U.S. Silica Holdings Inc., Stockholders’
Equity
Non-controlling InterestTotal
Stockholders’
Equity
Balance at December 31, 2021$845 $(186,294)$1,218,575 $(429,260)$349 $604,215 $9,868 $614,083 
Net loss— — — (8,393)— (8,393)(121)(8,514)
Foreign currency translation adjustment— — — — (309)(309)— (309)
Pension and post-retirement liability— — — — 3,462 3,462 — 3,462 
Cash dividends— — — 12 — 12 — 12 
Distributions to non-controlling interest— — — — — — (353)(353)
Common stock-based compensation plans activity:
Equity-based compensation— — 4,382 — — 4,382 — 4,382 
Proceeds from options exercised— 254 (171)— — 83 — 83 
Tax payments related to shares withheld for vested restricted stock and stock units6 (2,052)(6)— — (2,052)— (2,052)
Balance at March 31, 2022$851 $(188,092)$1,222,780 $(437,641)$3,502 $601,400 $9,394 $610,794 
Balance at December 31, 2020$827 $(181,615)$1,200,023 $(395,496)$(8,479)$615,260 $11,531 $626,791 
Net loss— — — (20,778)— (20,778)(157)(20,935)
Foreign currency translation adjustment— — — — (569)(569)— (569)
Pension and post-retirement liability— — — — 10,151 10,151 — 10,151 
Cash dividend declared— — — 7 — 7 — 7 
Distributions to non-controlling interest— — — — — — (174)(174)
Common stock-based compensation plans activity:
Equity-based compensation— — 4,143 — — 4,143 — 4,143 
Proceeds from options exercised— 344 (239)— — 105 — 105 
Tax payments related to shares withheld for vested restricted stock and stock units5 (1,244)(5)— — (1,244)— (1,244)
Balance at March 31, 2021$832 $(182,515)$1,203,922 $(416,267)$1,103 $607,075 $11,200 $618,275 

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



5


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; dollars in thousands)
 Three Months Ended 
 March 31,
 20222021
Operating activities:
Net loss$(8,514)$(20,935)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization37,749 41,348 
Goodwill and other asset impairments 38 
Debt issuance amortization1,253 1,271 
Original issue discount amortization255 258 
Deferred income taxes(15,312)(4,869)
Deferred revenue(873)(5,132)
Gain on disposal of property, plant and equipment(375)(35)
Equity-based compensation4,382 4,143 
Allowance for credit losses, net of recoveries286 10 
Other8,329 18,456 
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable4,088 (4,917)
Inventories(7,882)(1,467)
Prepaid expenses and other current assets3,493 (568)
Income taxes7,666 218 
Accounts payable and accrued expenses(5,197)9,053 
Operating lease liabilities(7,518)(8,159)
Liability for pension and other post-retirement benefits(4,740)(13,602)
Other noncurrent assets and liabilities(2,011)(1,469)
Net cash provided by operating activities15,079 13,642 
Investing activities:
Capital expenditures(7,030)(3,511)
Capitalized intellectual property costs(67)(95)
Proceeds from sale of property, plant and equipment714 72 
Net cash used in investing activities(6,383)(3,534)
Financing activities:
Dividends paid(151) 
Proceeds from options exercised83 105 
Tax payments related to shares withheld for vested restricted stock and stock units(2,052)(1,244)
Payments on short-term debt(2,212)(2,077)
Payments on long-term debt(3,338)(3,200)
Distributions to non-controlling interest(353)(174)
Principal payments on finance lease obligations(330)(27)
Net cash used in financing activities(8,353)(6,617)
Net increase in cash and cash equivalents343 3,491 
Cash and cash equivalents, beginning of period239,425 150,920 
Cash and cash equivalents, end of period$239,768 $154,411 



6


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited; dollars in thousands)
 Three Months Ended 
 March 31,
 20222021
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest$15,702 $16,104 
Taxes, net of refunds$(20,403)$(15,889)
Non-cash items:
Accrued capital expenditures$121 $792 
Net assets assumed in business acquisition$ $68 
The accompanying notes are an integral part of these financial statements.

7


U.S. SILICA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; dollars in thousands, except per share amounts)
NOTE A—ORGANIZATION AND BASIS OF PRESENTATION
Organization
U.S. Silica Holdings, Inc. (“Holdings,” and together with its subsidiaries “we,” “us” or the “Company”) is a global performance materials company and a leading producer of commercial silica used in the oil and gas industry and in a wide range of industrial applications. In addition, through our subsidiary EP Minerals, LLC ("EPM"), we are an industry leader in the production of industrial minerals, including diatomaceous earth, clay (calcium bentonite and calcium montmorillonite) and perlite. During our 122-year history, we have developed core competencies in mining, processing, logistics and materials science that enable us to produce and cost-effectively deliver products to customers across our end markets. Our operations are organized into two reportable segments based on end markets served: (1) Oil & Gas Proppants and (2) Industrial & Specialty Products. See Note S - Segment Reporting for more information on our reportable segments.
Basis of Presentation and Consolidation
The accompanying unaudited Condensed Consolidated Financial Statements for the quarter ended March 31, 2022 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, 2021; therefore, the unaudited Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K. Operating results for the three-month period ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022. In the opinion of management, all adjustments necessary for a fair presentation have been included. Such adjustments are of a normal, recurring nature.
The unaudited Condensed Consolidated Financial Statements include the accounts of Holdings and its direct and indirect wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Throughout this report we refer to (i) our unaudited Condensed Consolidated Balance Sheets as our “Balance Sheets,” (ii) our unaudited Condensed Consolidated Statements of Operations as our “Income Statements,” and (iii) our unaudited Condensed Consolidated Statements of Cash Flows as our “Cash Flows.”

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates and Assumptions
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The areas requiring the use of management estimates and assumptions relate to the purchase price allocation for businesses acquired; mineral reserves that are the basis for future cash flow estimates utilized in impairment calculations and units-of-production amortization calculations; environmental, reclamation and closure obligations; estimates of recoverable minerals; estimates of allowance for credit losses; estimates of fair value for certain reporting units and asset impairments (including impairments of goodwill, intangible assets and other long-lived assets); write-downs of inventory to net realizable value; equity-based compensation expense; post-employment, post-retirement and other employee benefit liabilities; valuation allowances for deferred tax assets; contingent considerations; reserves for contingencies and litigation and the fair value and accounting treatment of financial instruments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.
New Accounting Pronouncements Recently Adopted

None.
8


New Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting followed by ASU 2021-01, Reference Rate Reform (Topic 848): Scope, issued in January 2021 to provide clarifying guidance regarding the scope of Topic 848. ASU 2020-04 was issued to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Generally, the guidance is to be applied as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. ASU 2020-04 and ASU 2021-01 are effective for all entities through December 31, 2022. As of March 31, 2022, we have not elected to use the optional guidance and continue to evaluate the options provided by ASU 2020-04 and ASU 2021-01. See Note I - Debt for discussion of the use of the adjusted LIBOR rate in connection with borrowings under our senior secured revolving credit facility.


NOTE C—EARNINGS PER SHARE
Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is computed similarly to basic earnings per common share except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.
Diluted net earnings per share assumes the conversion of contingently convertible securities and stock options under the treasury stock method, if dilutive. Contingently convertible securities and stock options are excluded from the calculation of fully diluted earnings per share if they are anti-dilutive, including when we incur a loss from continuing operations. 
The following table shows the computation of basic and diluted earnings per share:
In thousands, except per share amounts
Three Months Ended 
 March 31,
 20222021
Numerator:
Net loss attributable to U.S. Silica Holdings, Inc.$(8,393)$(20,778)
Denominator:
Weighted average shares outstanding75,240 73,927 
Diluted effect of stock awards  
Weighted average shares outstanding assuming dilution75,240 73,927 
Loss per share attributable to U.S. Silica Holdings, Inc.:
Basic loss per share$(0.11)$(0.28)
Diluted loss per share$(0.11)$(0.28)
9


Potentially dilutive shares were excluded from the calculation of diluted weighted average shares outstanding and diluted earnings per share because we were in a net loss position. Certain stock options, restricted stock awards and performance share units were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. Such potentially dilutive shares and stock awards excluded from the calculation of diluted earnings per common share were as follows:
In thousandsThree Months Ended 
 March 31,
 20222021
Potentially dilutive shares excluded 1,808 1,852 
Stock options excluded541 608 
Restricted stock and performance share unit awards excluded12 50 
NOTE D—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other comprehensive income (loss) consists of fair value adjustments associated with accumulated adjustments for net experience losses and prior service costs related to employee benefit plans and foreign currency translation adjustments, net of tax. The following table presents the changes in accumulated other comprehensive income (loss) by component (in thousands):
 For the Three Months Ended March 31, 2022
 Foreign currency translation adjustmentsPension and other post-retirement benefits liabilityTotal
Beginning Balance$(417)$766 $349 
Other comprehensive (loss) gain before reclassifications(309)3,494 3,185 
Amounts reclassified from accumulated other comprehensive income (32)(32)
Ending Balance$(726)$4,228 $3,502 
Any amounts reclassified from accumulated other comprehensive income (loss) related to pension and other post-retirement benefits are included in the computation of net periodic benefit costs at their pre-tax amounts.
NOTE E—ACCOUNTS RECEIVABLE
Accounts receivable are recorded when billed or accrued and represent claims against third parties that will be settled in cash. The carrying value of our accounts receivable, net of the allowance for credit losses, represents their estimated net realizable value. Accounts receivable (in thousands) consisted of the following:
March 31,
2022
December 31,
2021
Trade receivables$201,081 $182,992 
Less: Allowance for credit losses(5,511)(5,248)
Net trade receivables195,570 177,744 
Other receivables(1)
3,265 25,015 
Total accounts receivable$198,835 $202,759 
(1) Other receivables included $0.4 million and $21.5 million at March 31, 2022 and December 31, 2021, respectively, of refunds related to NOL carryback claims filed for various tax years in accordance with certain provisions of the CARES Act.
We classify our trade receivables into the following portfolio segments: Oil & Gas Proppants and Industrial & Specialty Products, which also aligns with our reporting segments. We estimate the allowance for credit losses based on historical collection trends, the age of outstanding receivables, risks attributable to specific customers, such as credit history, bankruptcy or other going concern issues, and current economic and industry conditions. If events or circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past due balances are written off when we have exhausted our internal and external collection efforts and have been unsuccessful in collecting the amount due.
10


The following table reflects the change of the allowance for credit losses (in thousands):
Oil & Gas ProppantsIndustrial & Specialty ProductsTotal
Beginning balance, December 31, 2021$4,625 $623 $5,248 
Allowance for credit losses 286 286 
Write-offs (23)(23)
Ending balance, March 31, 2022$4,625 $886 $5,511 
Our ten largest customers accounted for 40% and 42% of total sales for the three months ended March 31, 2022 and 2021, respectively. No customers accounted for 10% or more of our total sales for the three months ended March 31, 2022 or 2021. At March 31, 2022 and December 31, 2021, none of our customers' accounts receivable represented 10% or more of our total trade accounts receivable.
NOTE F—INVENTORIES
Inventories (in thousands) consisted of the following:
March 31, 2022December 31, 2021
Supplies$49,224 $45,605 
Raw materials and work in process36,542 36,529 
Finished goods38,018 33,579 
Total inventories$123,784 $115,713 


NOTE G—PROPERTY, PLANT AND MINE DEVELOPMENT
Property, plant and mine development (in thousands) consisted of the following:
March 31,
2022
December 31,
2021
Mining property and mine development$788,441 $789,122 
Asset retirement cost19,937 22,283 
Land55,551 55,541 
Land improvements76,248 76,248 
Buildings72,252 72,207 
Machinery and equipment1,193,025 1,189,548 
Furniture and fixtures3,932 3,932 
Construction-in-progress36,264 35,060 
2,245,650 2,243,941 
Accumulated depreciation, depletion, amortization and impairment charges(1,017,579)(985,295)
Total property, plant and mine development, net$1,228,071 $1,258,646 
Depreciation, depletion, and amortization expense related to property, plant and mine development was $34.8 million and $38.6 million for the three months ended March 31, 2022 and 2021, respectively.


11


NOTE H—GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying amount of goodwill (in thousands) by business segment consisted of the following:
 Oil & Gas Proppants SegmentIndustrial & Specialty Products SegmentTotals
Balance at December 31, 2021$ $185,649 $185,649 
Impairment loss   
Balance at March 31, 2022$ $185,649 $185,649 

Goodwill and trade names are evaluated for impairment annually as of October 31, or more frequently when indicators of impairment exist. We evaluated events and circumstances since the date of our last qualitative assessment, including macroeconomic conditions, industry and market conditions, and our overall financial performance. There were no triggering events during the first three months of 2022, therefore, no impairment charges were recorded related to goodwill or trade names for the three months ended March 31, 2022.
The changes in the carrying amount of intangible assets (in thousands) consisted of the following:
 March 31, 2022December 31, 2021
 Gross Carrying AmountAccumulated AmortizationImpairmentsNetGross Carrying AmountAccumulated AmortizationImpairmentsNet
Technology and intellectual property$71,270 $(26,329)$ $44,941 $71,209 $(25,069)$(38)$46,102 
Customer relationships66,999 (29,186) 37,813 66,999 (27,987) 39,012 
 Total definite-lived intangible assets:$138,269 $(55,515)$ $82,754 $138,208 $(53,056)$(38)$85,114 
Trade names64,240 —  64,240 64,240 —  64,240 
Other700 —  700 700 —  700 
Total intangible assets:$203,209 $(55,515)$ $147,694 $203,148 $(53,056)$(38)$150,054 

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

Amortization expense was $2.4 million for both the three months ended March 31, 2022 and 2021, respectively.

The estimated amortization expense related to definite-lived intangible assets (in thousands) for the five succeeding years is as follows:
2022 (remaining nine months)$7,249 
2023$9,665 
2024$9,665 
2025$9,665 
2026$9,665 
12


NOTE I—DEBT
Debt (in thousands) consisted of the following:
March 31,
2022
December 31,
2021
Senior secured credit facility:
Revolver expiring May 1, 2023 (4.50% at March 31, 2022 and 4.13% at December 31, 2021)
$ $ 
Term Loan—final maturity May 1, 2025 (5.00% at March 31, 2022 and 5.00% at December 31, 2021)
1,218,662 1,222,000 
Less: Unamortized original issue discount(3,095)(3,350)
Less: Unamortized debt issuance cost(13,947)(15,200)
Insurance financing notes payable2,212 4,424 
Finance leases (See Note O - Leases)4,451 3,546 
Total debt1,208,283 1,211,420 
Less: current portion(16,303)(18,285)
Total long-term portion of debt$1,191,980 $1,193,135 
Senior Secured Credit Facility
On May 1, 2018, we entered into a Third Amended and Restated Credit Agreement (the "Credit Agreement"), which increased our existing senior debt by entering into a new $1.380 billion senior secured credit facility, consisting of a $1.280 billion term loan (the "Term Loan") and a $100 million revolving credit facility (the "Revolver") (collectively the "Credit Facility) that may also be used for swingline loans or letters of credit, and we may elect to increase the term loan in accordance with the terms of the Credit Agreement. Borrowings under the Credit Agreement will bear interest at variable rates as determined at our election, at LIBOR or a base rate, in each case, plus an applicable margin. In addition, under the Credit Agreement, we are required to pay a per annum facility fee and fees for letters of credit. The Credit Agreement is secured by substantially all of our assets and our domestic subsidiaries' assets and a pledge of the equity interests in such entities. The Term Loan matures on May 1, 2025, and the Revolver expires May 1, 2023. We capitalized $38.7 million in debt issuance costs and original issue discount as a result of the Credit Agreement.
The Credit Facility contains covenants that, among other things, limit our ability, and certain of our subsidiaries' abilities, to create, incur or assume indebtedness and liens, to make acquisitions or investments, to sell assets and to pay dividends. The Credit Agreement also requires us to maintain a consolidated leverage ratio of no more than 3.75:1.00 as of the last day of any fiscal quarter whenever usage of the Revolver (other than certain undrawn letters of credit) exceeds 30% of the Revolver commitment. These covenants are subject to a number of important exceptions and qualifications. The Credit Agreement includes events of default and other affirmative and negative covenants that are usual for facilities and transactions of this type. As of March 31, 2022 and December 31, 2021, we are in compliance with all covenants in accordance with our senior secured Credit Facility.
13


Term Loan
At March 31, 2022, contractual maturities of our Term Loan (in thousands) are as follows:
2022 (remaining nine months)$9,600 
202312,800 
202412,800 
20251,183,462 
2026 
Thereafter 
Total$1,218,662 
Revolving Line-of-Credit
We have a $100.0 million Revolver with zero drawn and $21.6 million allocated for letters of credit as of March 31, 2022, leaving $78.4 million available under the Revolver.
Based on our consolidated leverage ratio of 5.07:1.00 as of March 31, 2022, we may draw up to approximately $30.0 million without the consent of our lenders. With the consent of our lenders, we have access to the full availability of the Revolver.
Insurance Financing Notes Payable
During the third quarter of 2021, we renewed our insurance policies and financed the payments through notes payable with a stated interest rate of 2.9%. These payments will be made in installments throughout a nine-month period and, as such, were classified as current debt. As of March 31, 2022, the notes payable had a balance of $2.2 million.
14


NOTE J—ASSET RETIREMENT OBLIGATIONS
Mine reclamation or future remediation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the costs expected to be incurred at such site. Such cost estimates include, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimates at inactive mines are reflected in earnings in the period an estimate is revised. Liabilities related to our asset retirement obligations are reflected in other long-term liabilities on our balance sheets. Changes in the asset retirement obligations (in thousands) are as follows:
Three Months Ended 
 March 31,
20222021
Beginning balance$32,049 $24,717 
Accretion374 342 
Additions and revisions of estimates(3,126)279 
Ending balance$29,297 $25,338 
NOTE K—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, 2022 and December 31, 2021, approximated their reported carrying values.
Long-Term Debt, Including Current Maturities
We believe that the fair values of our long-term debt, including current maturities, approximated their carrying values based on their effective interest rates compared to current market rates.
NOTE L—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 effective May 2015, amended and restated effective February 1, 2020, and amended and restated effective May 13, 2021. 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. 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.
15


Stock Options

The following table summarizes the status of, and changes in, our stock option awards during the three months ended March 31, 2022:
Number of
Shares
Weighted
Average
Exercise Price
Weighted
Average
Remaining Contractual Term in Years
Outstanding at December 31, 2021666,718 $30.84 2.4 years
Granted $ 
Exercised(7,500)$11.08 
Forfeited  $ 
Expired(35,695)$20.06 
Outstanding at March 31, 2022623,523 $31.70 2.3 years
Exercisable at March 31, 2022623,523 $31.70 2.3 years
There were no grants of stock options during the three months ended March 31, 2022 and 2021.
There were 7,500 and 10,164 stock options exercised during the three months ended March 31, 2022 and 2021, respectively. The total intrinsic value of stock options exercised was $25 thousand and $44 thousand for the three months ended March 31, 2022 and 2021, respectively. Cash received from stock options exercised during the three months ended March 31, 2022 and 2021 was $83 thousand and $105 thousand, respectively. The tax benefits realized from stock option exercises were $6 thousand and $11 thousand for the three months ended March 31, 2022 and 2021, respectively.
As of March 31, 2022 and 2021, there was no unrecognized compensation expense related to these options. We account for forfeitures as they occur.
Restricted Stock and Restricted Stock Unit Awards
The following table summarizes the status of, and changes in, our unvested restricted stock awards during the three months ended March 31, 2022:
Number of SharesGrant Date Weighted
Average Fair Value
Unvested, December 31, 20211,144,310 $8.37 
Granted588,492 $9.81 
Vested(111,829)$11.36 
Forfeited(1,058)$13.56 
Unvested, March 31, 20221,619,915 $8.68 
We granted 588,492 and 633,973 restricted stock and restricted stock unit awards during the three months ended March 31, 2022 and 2021, respectively. The fair value of the awards was based on the market price of our stock at date of grant.
We recognized $1.6 million and $1.6 million of equity-based compensation expense related to restricted stock and restricted stock units during the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, there was $11.6 million of unrecognized compensation expense related to these restricted stock and restricted stock units, which is expected to be recognized over a weighted-average period of 2.2 years.
We also granted cash awards during the three months ended March 31, 2020. These awards will vest over a period of three years and will be settled in cash. As such, these awards have been classified as liability instruments. We recognized $0.3 million and $0.4 million of expense related to these awards for the three months ended March 31, 2022 and 2021, respectively. The liability for these awards is included in accounts payable and other accrued expenses on our balance sheets. These awards will be remeasured at fair value each reporting period with resulting changes reflected in our income statements. Estimated unrecognized expense related to these awards is $1.2 million over a period of one year.
16


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, 2022:
Number of SharesGrant Date Weighted
Average Fair Value
Unvested, December 31, 20211,914,589 $9.77 
Granted920,681 $11.79 
Vested(497,401)$14.56 
Forfeited/Cancelled(658)$13.86 
Unvested, March 31, 20222,337,211 $9.54 
We granted 920,681 and 773,023 performance share unit awards during the three months ended March 31, 2022 and 2021, respectively. A portion of these awards was measured against total shareholder return ("TSR"), and a portion was measured against adjusted free cash flow ("ACF") targets. The grant date weighted average fair value of these awards was estimated to be $11.79 and $11.46 for the three months ended March 31, 2022 and 2021, respectively.
The number of TSR measured units that will vest will depend on the percentage ranking of our TSR compared to the TSR for each of the companies in the peer group over the three year period from January 1, 2022 through December 31, 2024 for the 2022 grant, January 1, 2021 through December 31, 2023 for the 2021 grant, and from January 1, 2020 through December 31, 2022 for the 2020 grant. The number of ACF measured units that will vest will be based on ACF achievement versus target. The ACF targets are set annually and are approved by the Board of Directors. The related compensation expense is recognized on a straight-line basis over the vesting period.
The grant date fair value for the TSR awards was estimated using a Monte Carlo simulation model. The Monte Carlo simulation model requires the use of highly subjective assumptions. Our key assumptions in the model included the price and the expected volatility of our common stock and our self-determined peer group companies’ stock, risk-free rate of interest, dividend yields and cross-correlations between our common stock and our self-determined peer group companies' stock.
We recognized $2.8 million and $2.5 million of compensation expense related to performance share unit awards during the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, there was $14.6 million of unrecognized compensation expense related to these performance share unit awards, which is expected to be recognized over a weighted-average period of 2.3 years.
We also granted cash awards during the three months ended March 31, 2020. These awards will vest over a period of three years and will be settled in cash. As such, these awards have been classified as liability instruments. We recognized $0.2 million and $0.2 million of expense related to these awards for the three months ended March 31, 2022 and 2021, respectively. The liability for these awards is included in accounts payable and other accrued expenses on our balance sheets. These awards will be remeasured at fair value each reporting period with resulting changes reflected in our income statements. Estimated unrecognized expense related to these awards is $0.4 million over a period of one year.
17


NOTE M—COMMITMENTS AND CONTINGENCIES
Future Minimum Annual Commitments at March 31, 2022 (in thousands):
Minimum Purchase Commitments
2022 (remaining nine months)$6,537 
20235,976 
20244,295 
20252,886 
20262,180 
Thereafter9,288 
Total future purchase commitments$31,162 
Minimum Purchase Commitments
We enter into service agreements with our transload and transportation service providers. Some of these agreements require us to purchase a minimum amount of services over a specific period of time. Any inability to meet these minimum contract requirements requires us to pay a shortfall fee, which is based on the difference between the minimum amount contracted for and the actual amount purchased.
Contingent Liability on Royalty Agreement
On May 17, 2017, we purchased reserves in Crane County, Texas, for $94.4 million cash 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, 2022, zero new claims were brought against U.S. Silica. As of March 31, 2022, there were 42 active silica-related product liability claims pending in which U.S. Silica is a defendant. Although the outcomes of these claims cannot be predicted with certainty, in the opinion of management, it is not reasonably possible that the ultimate resolution of these matters will have a material adverse effect on our financial position or results of operations that exceeds the accrual amounts.
We have recorded estimated liabilities for these claims in other long-term liabilities as well as estimated recoveries under the indemnity agreement and an estimate of future recoveries under insurance in other assets on our consolidated balance sheets. As of both March 31, 2022 and December 31, 2021, other non-current assets included zero for insurance for third-party product liability claims. As of both March 31, 2022 and December 31, 2021 other long-term liabilities included $0.9 million for third-party product liability claims.
Obligations under Guarantees
We have indemnified our insurers against any loss they may incur in the event that holders of surety bonds, issued on our behalf, execute the bonds. As of March 31, 2022, there was $40.2 million in bonds outstanding, of which $36.2 million related to reclamation requirements issued by various governmental authorities. Reclamation bonds remain outstanding until the mining area is reclaimed and the authority issues a formal release. The remaining bonds relate to licenses, permits, and tax collection.
18


NOTE N—PENSION AND POST-RETIREMENT BENEFITS
We maintain a single-employer noncontributory defined benefit pension plan covering certain employees. The plan is frozen to all new employees. The plan provides benefits based on each covered employee’s years of qualifying service. Our funding policy is to contribute amounts within the range of the minimum required and maximum deductible contributions for the plan consistent with a goal of appropriate minimization of the unfunded projected benefit obligations. The pension plan uses a benefit level per year of service for covered hourly employees and a final average pay method for covered salaried employees. The plan uses the projected unit credit cost method to determine the actuarial valuation.
In addition, we provide defined benefit post-retirement health care and life insurance benefits to some employees. Covered employees become eligible for these benefits at retirement after meeting minimum age and service requirements. The projected future cost of providing post-retirement benefits, such as healthcare and life insurance, is recognized as an expense as employees render services. In general, retiree health benefits are paid as covered expenses are incurred. Expenses incurred other than service costs are reported in Other income (expense) in our Condensed Consolidated Statements of Operations.
Net pension benefit cost (in thousands) consisted of the following:
 Three Months Ended 
 March 31,
 20222021
Service cost$689 $805 
Interest cost689 739 
Expected return on plan assets(1,418)(1,429)
Net amortization and deferral499 950 
Net pension benefit costs$459 $1,065 
Net post-retirement benefit cost (in thousands) consisted of the following:
 Three Months Ended 
 March 31,
 20222021
Service cost$6 $19 
Interest cost36 102 
Unrecognized prior service cost(516) 
Unrecognized net (gain)/loss(34) 
Net post-retirement benefit costs(508)$121 
We contributed zero and $1.3 million to the qualified pension plan for the three months ended March 31, 2022 and 2021, respectively. Our best estimates of expected contributions to the pension and post-retirement medical benefit plans for the 2022 fiscal year are zero and $1.1 million, respectively.
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 for the three months ended March 31, 2022 and 2021. Additionally, our contributions to multiemployer post-retirement benefit plans were immaterial for all periods presented in the accompanying condensed consolidated financial statements.
We also sponsor a defined contribution plan covering certain employees. We contribute to the plan in two ways. For certain employees not covered by the defined benefit plan, we make a contribution equal to 4% of their salary. For all other eligible employees, we make a contribution up to 6% of eligible earnings. Contributions were $1.8 million and $1.5 million for the three months ended March 31, 2022 and 2021, respectively.
19


NOTE O— LEASES
We lease railroad cars, office space, mining property, mining/processing equipment and transportation and other equipment. The majority of our leases have remaining lease terms of approximately one year to 20 years. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We have lease agreements with lease and non-lease components, the latter of which are generally accounted for separately.
Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount rate):
LeasesClassificationMarch 31,
2022
December 31, 2021
Assets
OperatingLease right-of-use assets$37,417 $38,793 
FinanceLease right-of-use assets4,334 3,448 
Total leased assets$41,751 $42,241 
Liabilities
Current
OperatingCurrent portion of operating lease liabilities$13,158 $14,469 
Finance Current portion of long-term debt1,291