10-Q 1 slca-20240331.htm 10-Q slca-20240331
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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, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-35416
 usslogo2q15a36.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 19, 2024, 78,133,202 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, 2024
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
(Dollars in thousands except share information)
UnauditedAudited
March 31,
2024
December 31,
2023
ASSETS
Current Assets:
Cash and cash equivalents$234,481 $245,716 
Accounts receivable, net189,506 185,917 
Inventories, net139,535 149,429 
Prepaid expenses and other current assets15,124 19,682 
Total current assets578,646 600,744 
Property, plant and mine development, net1,107,352 1,125,220 
Lease right-of-use assets41,678 41,095 
Goodwill185,649 185,649 
Intangible assets, net129,033 131,384 
Other assets12,701 12,501 
Total assets$2,055,059 $2,096,593 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses$122,588 $147,479 
Current portion of operating lease liabilities17,753 18,569 
Current portion of long-term debt12,708 16,367 
Current portion of deferred revenue1,226 3,124 
Income tax payable5,697 311 
Total current liabilities159,972 185,850 
Long-term debt, net796,755 823,670 
Deferred revenue12,456 12,388 
Liability for pension and other post-retirement benefits24,679 28,715 
Deferred income taxes, net100,452 100,458 
Operating lease liabilities53,912 55,089 
Other long-term liabilities 36,508 34,896 
Total liabilities1,184,734 1,241,066 
Commitments and Contingencies (Note N)
Stockholders’ Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; zero issued and outstanding at March 31, 2024 and December 31, 2023
  
Common stock, $0.01 par value, 500,000,000 shares authorized; 89,403,532 issued and 78,090,519 outstanding at March 31, 2024; 87,970,110 issued and 77,192,239 outstanding at December 31, 2023
891 877 
Additional paid-in capital1,253,497 1,249,460 
Retained deficit(190,471)(204,159)
Treasury stock, at cost, 11,313,013 and 10,777,871 shares at March 31, 2024 and December 31, 2023, respectively
(202,363)(196,745)
Accumulated other comprehensive income (loss)2,623 (125)
Total U.S. Silica Holdings, Inc. stockholders’ equity864,177 849,308 
Non-controlling interest6,148 6,219 
Total stockholders' equity870,325 855,527 
Total liabilities and stockholders’ equity$2,055,059 $2,096,593 
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,
 20242023
Sales:
Product$261,794 $344,014 
Service64,148 98,226 
Total sales325,942 442,240 
Cost of sales (excluding depreciation, depletion and amortization):
Product178,714 225,894 
Service45,010 67,239 
Total cost of sales (excluding depreciation, depletion and amortization)223,724 293,133 
Operating expenses:
Selling, general and administrative30,754 29,163 
Depreciation, depletion and amortization31,368 35,386 
Total operating expenses62,122 64,549 
Operating income40,096 84,558 
Other (expense) income:
Interest expense(24,263)(24,061)
Other income (expense), net, including interest income2,523 (2,352)
Total other expense(21,740)(26,413)
Income before income taxes18,356 58,145 
Income tax expense(4,775)(13,573)
Net income$13,581 $44,572 
Less: Net loss attributable to non-controlling interest(107)(76)
Net income attributable to U.S. Silica Holdings, Inc. $13,688 $44,648 
Earnings per share attributable to U.S. Silica Holdings, Inc.:
Basic$0.18 $0.58 
Diluted$0.17 $0.57 
Weighted average shares outstanding:
Basic77,671 76,517 
Diluted79,032 78,292 
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,
 20242023
Net income$13,581 $44,572 
Other comprehensive income (loss):
Unrealized gain (loss) on derivatives (net of tax of $27 and $(309)) for the three months ended March 31, 2024 and 2023, respectively.
84 (969)
Foreign currency translation adjustment (net of tax of $(45) and $71) for the three months ended March 31, 2024 and 2023, respectively.
(144)222 
Pension and other post-retirement benefits liability adjustment (net of tax of $895 and $7) for the three months ended March 31, 2024 and 2023, respectively.
2,808 22 
Comprehensive income$16,329 $43,847 
Less: Comprehensive loss attributable to non-controlling interest(107)(76)
Comprehensive income attributable to U.S. Silica Holdings, Inc.$16,436 $43,923 
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)
Common
Stock
Treasury
Stock
Additional
Paid-In
Capital
Retained
Deficit
Accumulated
Other
Comprehensive (Loss) Income
Total U.S. Silica Holdings Inc., Stockholders’
Equity
Non-controlling InterestTotal
Stockholders’
Equity
Balance at December 31, 2023$877 $(196,745)$1,249,460 $(204,159)$(125)$849,308 $6,219 $855,527 
Net income (loss)— — — 13,688 — 13,688 (107)13,581 
Unrealized gain on derivatives— — — — 84 84 — 84 
Foreign currency translation adjustment— — — — (144)(144)— (144)
Pension and post-retirement liability— — — — 2,808 2,808 — 2,808 
Contributions from non-controlling interest— — — — — — 36 36 
Common stock-based compensation plans activity:
Equity-based compensation— — 4,051 — — 4,051 — 4,051 
Tax payments related to shares withheld for vested restricted stock and stock units14 (5,618)(14)— — (5,618)— (5,618)
Balance at March 31, 2024$891 $(202,363)$1,253,497 $(190,471)$2,623 $864,177 $6,148 $870,325 
Balance at December 31, 2022$854 $(186,196)$1,234,834 $(351,084)$(1,723)$696,685 $8,009 $704,694 
Net income (loss)— — — 44,648 — 44,648 (76)44,572 
Unrealized loss on derivatives— — — — (969)(969)— (969)
Foreign currency translation adjustment— — — — 222 222 — 222 
Pension and post-retirement liability— — — — 22 22 — 22 
Distributions to non-controlling interest— — — — — — (350)(350)
Common stock-based compensation plans activity:
Equity-based compensation— — 3,286 — — 3,286 — 3,286 
Tax payments related to shares withheld for vested restricted stock and stock units22 (9,920)(22)— — (9,920)— (9,920)
Balance at March 31, 2023$876 $(196,116)$1,238,098 $(306,436)$(2,448)$733,974 $7,583 $741,557 

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,
 20242023
Operating activities:
Net income$13,581 $44,572 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization31,368 35,386 
Debt issuance amortization615 1,131 
Original issue discount amortization1,015 220 
Deferred income taxes(883)8,899 
Deferred revenue(1,700)(5,569)
Loss on disposal of property, plant and equipment184 264 
Equity-based compensation4,051 3,286 
Allowance for credit losses, net of recoveries(1,028)(186)
Other8,212 8,024 
Changes in operating assets and liabilities:
Accounts receivable(2,561)(17,578)
Inventories9,895 (4,763)
Prepaid expenses and other current assets4,561 3,657 
Income taxes5,386 4,308 
Accounts payable and accrued expenses(20,700)(32,709)
Operating lease liabilities(6,609)(6,503)
Liability for pension and other post-retirement benefits(4,037)(433)
Other noncurrent assets and liabilities(492)(1,104)
Net cash provided by operating activities40,858 40,902 
Investing activities:
Capital expenditures(12,410)(18,929)
Capitalized intellectual property costs(74)(107)
Proceeds from sale of property, plant and equipment169 105 
Net cash used in investing activities(12,315)(18,931)
Financing activities:
Dividends paid (1)
Tax payments related to shares withheld for vested restricted stock and stock units(5,618)(9,920)
Payments on short-term debt(3,235)(2,814)
Payments on long-term debt(27,188)(109,062)
Financing fees paid(3,350)(40,949)
Contributions from (distributions to) non-controlling interest36 (350)
Principal payments on finance lease obligations(423)(226)
Net cash used in financing activities(39,778)(163,322)
Net decrease in cash and cash equivalents(11,235)(141,351)
Cash and cash equivalents, beginning of period245,716 280,845 
Cash and cash equivalents, end of period$234,481 $139,494 



6


U.S. SILICA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited; dollars in thousands)
 Three Months Ended 
 March 31,
 20242023
Supplemental cash flow information:
Cash paid during the period for:
Interest$21,895 $21,401 
Taxes, net of refunds$122 $354 
Non-cash items:
Accrued capital expenditures$4,505 $4,793 
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 124-year history, we have developed core competencies in mining, processing, logistics and materials science that enable us to produce and cost-effectively deliver products to customers across our end markets. Our operations are organized into two reportable segments based on end markets served: (1) Oil & Gas Proppants and (2) Industrial & Specialty Products. See Note T - Segment Reporting for more information on our reportable segments.
Basis of Presentation and Consolidation
The accompanying unaudited Condensed Consolidated Financial Statements as of and for the three months ended March 31, 2024 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, 2023; 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, 2024 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024. 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 November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this Update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this Update do not change or remove current disclosure requirements as required by Topic 280. The amendments in this Update also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Public entities will be required to apply the amendments in this Update retrospectively to all prior periods presented in the financial statements. We are currently evaluating the effect this guidance will have on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this Update related to the rate reconciliation and income taxes paid disclosures improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The amendments allow investors to better assess, in their capital allocation decisions, how an entity’s worldwide operations and related tax risks and tax planning and operational opportunities affect its income tax rate and prospects for future cash flows. The other amendments in this Update improve the effectiveness and comparability of disclosures by (1) adding disclosures of pretax income (or loss) and income tax expense (or benefit) to be consistent with U.S. Securities and Exchange Commission (SEC) Regulation S-X 210.4-08(h), Rules of General Application—General Notes to Financial Statements: Income Tax Expense, and (2) removing disclosures that no longer are considered cost beneficial or relevant. The amendments in this Update are effective for annual periods beginning after December 15, 2024. We are currently evaluating the effect this guidance will have on our disclosures.


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,
 20242023
Numerator:
Net income attributable to U.S. Silica Holdings, Inc.$13,688 $44,648 
Denominator:
Weighted average shares outstanding77,671 76,517 
Diluted effect of stock awards1,361 1,775 
Weighted average shares outstanding assuming dilution79,032 78,292 
Earnings per share attributable to U.S. Silica Holdings, Inc.:
Basic earnings per share$0.18 $0.58 
Diluted earnings per share$0.17 $0.57 
9


Potentially dilutive shares are excluded from the calculation of diluted weighted average shares outstanding and diluted earnings per share if we are 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,
 20242023
Potentially dilutive shares excluded   
Stock options excluded349 445 
Restricted stock and performance share unit awards excluded50 50 
NOTE D—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 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, 2024
 Unrealized (loss) gain on natural gas swapsForeign currency translation adjustmentsPension and other post-retirement benefits liabilityTotal
Beginning Balance$(1,460)$(981)$2,316 $(125)
Other comprehensive income (loss) before reclassifications84 (144)3,311 3,251 
Amounts reclassified from accumulated other comprehensive income  (503)(503)
Ending Balance$(1,376)$(1,125)$5,124 $2,623 
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,
2024
December 31,
2023
Trade receivables$192,998 $190,189 
Less: Allowance for credit losses(4,324)(5,323)
Net trade receivables188,674 184,866 
Other receivables832 1,051 
Total accounts receivable$189,506 $185,917 

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, 2023$3,823 $1,500 $5,323 
Allowance for credit losses(700)(328)(1,028)
Recoveries47  47 
Write-offs(18) (18)
Ending balance, March 31, 2024$3,152 $1,172 $4,324 
Our ten largest customers accounted for 47% and 45% of total sales for the three months ended March 31, 2024 and 2023, respectively. No customer accounted for 10% or more of our total sales for the three months ended March 31, 2024 or 2023. At March 31, 2024 and December 31, 2023, 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, 2024December 31, 2023
Supplies$65,086 $65,422 
Raw materials and work in process53,315 54,142 
Finished goods21,134 29,865 
Total inventories$139,535 $149,429 


NOTE G—PROPERTY, PLANT AND MINE DEVELOPMENT
Property, plant and mine development (in thousands) consisted of the following:
March 31,
2024
December 31,
2023
Mining property and mine development$799,120 $793,582 
Asset retirement cost16,550 14,728 
Land53,100 53,100 
Land improvements87,618 87,618 
Buildings77,294 76,691 
Machinery and equipment1,259,972 1,253,734 
Furniture and fixtures3,017 2,841 
Construction-in-progress48,992 54,186 
2,345,663 2,336,480 
Accumulated depreciation, depletion, amortization and impairment charges(1,238,311)(1,211,260)
Total property, plant and mine development, net$1,107,352 $1,125,220 
Depreciation, depletion, and amortization expense related to property, plant and mine development was $28.1 million and $32.3 million for the three months ended March 31, 2024 and 2023, 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 SegmentTotal
Balance at December 31, 2023$ $185,649 $185,649 
Impairment loss   
Balance at March 31, 2024$ $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 2024, therefore, no impairment charges were recorded related to goodwill or trade names for the three months ended March 31, 2024.
The changes in the carrying amount of intangible assets (in thousands) consisted of the following:
 March 31, 2024December 31, 2023
 Gross Carrying AmountAccumulated AmortizationNetGross Carrying AmountAccumulated AmortizationNet
Technology and intellectual property$72,015 $(36,123)$35,892 $71,936 $(34,894)$37,042 
Customer relationships66,999 (38,798)28,201 66,999 (37,597)29,402 
 Total definite-lived intangible assets:$139,014 $(74,921)$64,093 $138,935 $(72,491)$66,444 
Trade names64,240 — 64,240 64,240 — 64,240 
Other700 — 700 700 — 700 
Total intangible assets:$203,954 $(74,921)$129,033 $203,875 $(72,491)$131,384 

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, 2024 and 2023.

The estimated amortization expense related to definite-lived intangible assets (in thousands) for the five succeeding years is as follows:
2024 (remaining nine months)$7,293 
2025$9,721 
2026$9,721 
2027$9,721 
2028$9,682 
12


NOTE I—DEBT
Debt (in thousands) consisted of the following:
March 31,
2024
December 31,
2023
Senior secured credit facility:
Revolver expiring March 23, 2028 (10.18% at March 31, 2024 and 10.21% at December 31, 2023)
$ $ 
Term Loan—final maturity March 23, 2030 (9.33% at March 31, 2024 and 10.21% at December 31, 2023)
840,875 868,063 
Less: Unamortized original issue discount(24,598)(24,183)
Less: Unamortized debt issuance cost(12,733)(13,421)
Insurance financing notes payable3,235 6,470 
Finance leases (See Note P - Leases)2,684 3,108 
Total debt809,463 840,037 
Less: current portion(12,708)(16,367)
Total long-term portion of debt$796,755 $823,670 
Senior Secured Credit Facility
On March 23, 2023, we entered into the Fourth Amended and Restated Credit Agreement (the "Credit Agreement"), by entering into a new $1.1 billion senior secured credit facility, consisting of a $950 million Term Loan (the "Term Loan") and a $150 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 or the revolving credit facility 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, based on the Term Secured Overnight Financing Rate ("SOFR") 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 commitment fee to revolving lenders 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 March 23, 2030, and the Revolver expires March 23, 2028. We capitalized $45.9 million in debt issuance costs and original issue discount as a result of the Credit Agreement. Additionally, as a result of the exit of certain lending parties, a portion of debt issuance and original discount costs were written off which resulted in additional expense of approximately $4.3 million. This was recorded as a loss on the extinguishment of debt, which was recorded in Other (expense) income, net, including interest income in the Condensed Consolidated Statements of Operations.
During the first quarter of 2024, we entered into Amendment No. 1 to the Credit Agreement (the “Repricing Amendment”), which amends certain terms of the Credit Agreement. The Repricing Amendment reduces the applicable interest rate margins on the Term Loans by 75 basis points to 3.00% (for the Term Loans bearing interest at rates based on the base rate) and to 4.00% (for the Term Loans bearing interest at rates based on the SOFR). The Repricing Amendment also allows us to enter into a repricing transaction without prepayment premium if such repricing transaction occurs after September 25, 2024. The maturity dates of March 23, 2030 with respect to the Term Loans and March 23, 2028 with respect to the revolving credit facility and all other material provisions under the Credit Agreement remain unchanged. We capitalized approximately $2.4 million of debt issuance costs and original issue discount as a result of the Repricing Amendment.
In conjunction with the Repricing Amendment, we completed a voluntary Term Loan principal repayment of $25 million. A proportionate share of debt issuance and original discount costs were written off in conjunction with the prepayments of this debt which resulted in additional expense of $1.0 million. These expenses were recorded in Other (expense) income, net, including interest income in the Consolidated Statements of Operations.
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 4.00:1.00 as of the last day of any fiscal quarter whenever usage of the Revolver (other than certain undrawn letters of credit) exceeds 35% 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, 2024 and December 31, 2023, we were in compliance with all covenants in accordance with our senior secured Credit Facility.
13


Term Loan
At March 31, 2024, contractual maturities of our Term Loan (in thousands) are as follows:
2024 (remaining nine months)$6,375 
20258,500 
20268,500 
20278,500 
20288,500 
Thereafter800,500 
Total$840,875 
Revolving Line-of-Credit
We have a $150.0 million Revolver with zero drawn and $15.3 million allocated for letters of credit as of March 31, 2024, leaving $134.7 million available under the Revolver. Based on our consolidated leverage ratio of 2.07:1.00 as of March 31, 2024, we have access to the full availability of the Revolver.

Insurance Financing Notes Payable

During the third quarter of 2023, we renewed our insurance policies and financed the payments through notes payable with a stated interest rate of 6.6%. These payments will be made in installments throughout a nine-month period and, as such, have been classified as current debt. As of March 31, 2024, the notes payable had a balance of $3.2 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 at the expected abandonment date. 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,
20242023
Beginning balance$30,414 $20,732 
Accretion612 512 
Additions and revisions of estimates1,469  
   Payments (14)
Ending balance$32,495 $21,230 
NOTE K—FAIR VALUE ACCOUNTING
Fair value is defined as the 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 approximated their reported carrying values, therefore we have classified our cash equivalents as Level 1 of the fair value hierarchy.
Long-Term Debt, Including Current Maturities
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, therefore we have classified our long-term debt as Level 1 of the fair value hierarchy.
Derivative Instruments
The estimated fair value of our derivative instruments is recorded at each reporting period and is determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Therefore, we have classified these swap agreements as Level 2 of the fair value hierarchy.
15


NOTE L—DERIVATIVE INSTRUMENTS
Cash Flow Hedges of Natural Gas Price Risk
Natural gas is the primary fuel source used for drying in the commercial silica production process. In the past, the price of natural gas has been volatile, and we believe this volatility may continue. In order to manage our exposure to natural gas price increases, we entered into natural gas swaps. The derivative instruments are recorded on the balance sheet within other current or long-term assets or liabilities based on maturity dates at their fair values. As of March 31, 2024, the fair value of our natural gas swaps was a liability of $1.8 million, of which $1.7 million was classified within accounts payable and accrued liabilities on our balance sheet and $0.1 million was classified within other long-term obligations on our balance sheet. At December 31, 2023, the fair value of our natural gas swaps was a liability of $1.9 million, of which $1.8 million was classified within accounts payable and accrued liabilities on our balance sheet and $0.1 million was classified within other long-term obligations on our balance sheet.
We designated the natural gas swap agreements as qualified cash flow hedges. Accordingly, the effective portion of the gain or loss on the derivative instrument was 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.
The following table summarizes the fair values of our derivative instruments (in thousands, except contract/notional amount). See Note K - Fair Value Accounting for more information regarding the estimated fair values of our derivative instruments.
 March 31, 2024December 31, 2023
 Maturity
Date
Contract/Notional
Amount (MMBtu)
Carrying
Amount
Fair
Value
Maturity DateContract/Notional
Amount (MMBtu)
Carrying
Amount
Fair
Value
Natural Gas - W. Texas (WAHA) - Inside FERC2024870,000 $(1,475)$(1,475)2024870,000 $(1,542)$(1,542)
Natural Gas - W. Texas (WAHA) - Inside FERC2024750,000 $ $ 2024750,000 $(11)$(11)
Natural Gas - Henry Hub - NYMEX2024120,000 $(218)$(218)2024120,000 $(258)$(258)
Natural Gas - Henry Hub - NYMEX202590,000 $(121)$(121)202590,000 $(115)$(115)
During the three months ended March 31, 2024, we had no ineffectiveness for the natural gas swap derivatives.
The following table summarizes the effect of derivative instruments (in thousands) on our income statements and our consolidated statements of comprehensive income:
Three Months Ended 
 March 31,
20242023
Deferred losses from derivatives in OCI, beginning of period$(1,460)$(2,342)
Gain (loss) recognized in OCI from derivative instruments84 (969)
Deferred losses from derivatives in OCI, end of period$(1,376)$(3,311)
NOTE M—EQUITY-BASED COMPENSATION
In July 2011, we adopted the U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan (the “2011 Plan”), which was amended and restated effective May 2015, amended and restated effective February 1, 2020, amended and restated effective May 13, 2021, amended and restated effective May 12, 2022 and amended and restated effective May 11, 2023. 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.
16


Stock Options

The following table summarizes the status of, and changes in, our stock option awards during the three months ended March 31, 2024:
Number of
Shares
Weighted
Average
Exercise Price
Weighted
Average
Remaining Contractual Term in Years
Outstanding at December 31, 2023349,080 $37.24 1.1 years
Granted $ 
Exercised $ 
Forfeited  $ 
Expired $ 
Outstanding at March 31, 2024349,080 $37.24 0.9 years
Exercisable at March 31, 2024349,080 $37.24 0.9 years
There were no grants of stock options during the three months ended March 31, 2024 and 2023.
There was no stock option exercise activity during the three months ended March 31, 2024 and 2023.
As of March 31, 2024 and 2023, 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, 2024:
Number of SharesGrant Date Weighted
Average Fair Value
Unvested, December 31, 20231,253,979 $11.33 
Granted832,615 $10.76 
Vested(457,134)$10.49 
Forfeited(2,279)$11.73 
Unvested, March 31, 20241,627,181 $11.27 
We granted 832,615 and 493,934 restricted stock and restricted stock unit awards during the three months ended March 31, 2024 and 2023, respectively. The fair value of the awards was based on the market price of our stock at date of grant.
We recognized $2.2 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, 2024 and 2023, respectively. As of March 31, 2024, there was $15.2 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 2.3 years.
We also granted cash awards during the three months ended March 31, 2020. These awards vested over a period of three years and were settled in cash. As such, these awards were classified as liability instruments. We recognized zero and $0.3 million of expense related to these awards for the three months ended March 31, 2024 and 2023, respectively. The liability for these awards was included in accounts payable and other accrued expenses on our balance sheets. These awards were remeasured at fair value each reporting period with resulting changes reflected in our income statements. As of March 31, 2024, there was no unrecognized expense related to these awards.
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Performance Share Unit Awards
The following table summarizes the status of, and changes in, our performance share unit awards during the three months ended March 31, 2024:
Number of SharesGrant Date Weighted
Average Fair Value
Unvested, December 31, 20231,874,060 $11.73 
Granted1,107,359 $11.59 
Vested(973,529)$10.53 
Forfeited/Cancelled(74,572)$15.86 
Unvested, March 31, 20241,933,318 $12.10 
We granted 1,107,359 and 1,289,980 performance share unit awards during the three months ended March 31, 2024 and 2023, 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 $11.59 and $9.53 for the three months ended March 31, 2024 and 2023, 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, 2024 through December 31, 2026 for the 2024 grant, January 1, 2023 through December 31, 2025 for the 2023 grant, and January 1, 2022 through December 31, 2024 for the 2022 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 $1.9 million and $1.7 million of compensation expense related to performance share unit awards during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, there was $15.3 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 vested over a period of three years and were settled in cash. As such, these awards were classified as liability instruments. We recognized zero and $0.1 million of expense related to these awards for the three months ended March 31, 2024 and 2023, respectively. The liability for these awards was included in accounts payable and other accrued expenses on our balance sheets. These awards were remeasured at fair value each reporting period with resulting changes reflected in our income statements. As of March 31, 2024, there was no unrecognized expense related to these awards.
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NOTE N—COMMITMENTS AND CONTINGENCIES
Future Minimum Annual Commitments at March 31, 2024 (in thousands):
Minimum Purchase Commitments
2024 (remaining nine months)$8,730 
20256,661 
20264,520 
20272,048 
20281,648 
Thereafter1,600 
Total future purchase commitments$25,207 
Minimum Purchase Commitments
We enter into service agreements with our transload and transportation providers as well as commodity suppliers. 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, 2024, no new claims were brought against U.S. Silica. As of March 31, 2024, there were 39 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 and an estimate of future recoveries under insurance in other assets on our consolidated balance sheets. For both March 31, 2024 and December 31, 2023, other non-current assets included zero for insurance for third-party product liability claims. As of both March 31, 2024 and December 31, 2023 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, 2024, there was $55.8 million in bonds outstanding, of which $51.8 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.
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NOTE O—PENSION AND POST-RETIREMENT BENEFITS
We maintain a single-employer noncontributory defined benefit pension plan covering certain employees. The plan is frozen to all new employees. The plan provides benefits based on each covered employee’s years of qualifying service. Our funding policy is to contribute amounts within the range of the minimum required and maximum deductible contributions for the plan consistent with a goal of appropriate minimization of the unfunded projected benefit obligations. The pension plan uses a benefit level per year of service for covered hourly employees and a final average pay method for covered salaried employees. The plan uses the projected unit credit cost method to determine the actuarial valuation.
In addition, we provide defined benefit post-retirement health care and life insurance benefits to some employees. Covered employees become eligible for these benefits at retirement after meeting minimum age and service requirements. The projected future cost of providing post-retirement benefits, such as healthcare and life insurance, is recognized as an expense as employees render services. In general, retiree health benefits are paid as covered expenses are incurred. Expenses incurred other than service costs are reported in Other (expense) income in our Condensed Consolidated Statements of Operations.
Net pension benefit cost (in thousands) consisted of the following:
 Three Months Ended 
 March 31,
 20242023
Service cost$483 $573 
Interest cost1,084 1,248 
Expected return on plan assets(1,159)(1,519)
Net amortization and deferral13 (2)
Net pension benefit costs$421 $300 
Net post-retirement benefit cost (in thousands) consisted of the following:
 Three Months Ended 
 March 31,
 20242023
Service cost$2 $4 
Interest cost79 80 
Unrecognized prior service cost(516)(516)
Unrecognized net gain(166)(131)
Net post-retirement benefit income$(601)$(563)
We made no contributions to the qualified pension plan for the three months ended March 31, 2024 and 2023. Our best estimates of expected required contributions to the pension and post-retirement medical benefit plans for the 2024 fiscal year are $4.8 million and $0.9 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, 2024 and 2023. 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 $2.8 million and $2.1 million for the three months ended March 31, 2024 and 2023, respectively.
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NOTE P— 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,
2024
December 31, 2023
Assets
OperatingLease right-of-use assets$38,859 $37,890 
FinanceLease right-of-use assets2,819 3,205 
Total leased assets$41,678 $41,095 
Liabilities
Current
OperatingCurrent portion of operating lease liabilities$17,753 $18,569 
Finance Current portion of long-term debt973 1,147 
Non-current
OperatingOperating lease liabilities53,912 55,089 
FinanceLong-term debt, net1,711 1,961 
Total lease liabilities$74,349 $76,766 
Lease Term and Discount Rate
Weighted average remaining lease term:
Operating 6.1 years6.2 years
Finance5.1 years4.8 years
Weighted average discount rate:
Operating7.0%6.3%
Finance8.0%6.6%
The components of lease expense (in thousands) were as follows:
Lease CostsClassificationThree Months Ended 
 March 31, 2024
Three Months Ended 
 March 31, 2023
Operating lease costs(1)
Cost of sales$9,108 $10,443 
Operating lease costs(2)
Selling, general and administrative419 595 
Total (3)
$9,527 $11,038 
    
(1) Included short-term operating lease costs of $4.9 million and $6.8 million for the three months ended March 31, 2024 and 2023, respectively.
(2) Included short-term operating lease costs of $0.1 million and $0.3 million for the three months ended March 31, 2024 and 2023 respectively.
(3) Not included were expenses for finance leases of $0.3 million and $0.2 million for the three months ended March 31, 2024 and 2023,respectively.
Supplemental cash flow information (in thousands) related to leases was as follows:
Three Months Ended 
 March 31, 2024
Three Months Ended 
 March 31, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$6,609 $6,503 
Financing cash flows for finance leases$478 $268 
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases$5,085 $472 
Finance leases$ $ 
Maturities of lease liabilities (in thousands) as of March 31, 2024:
Operating leasesFinance leases
2024 (remaining nine months)$17,349 $863 
202517,960 1,060 
202614,089 896 
202710,497 46 
20288,255 46 
Thereafter21,687 144 
Total lease payments$89,837 $3,055 
Less: Interest16,540 371 
Less: Other operating expenses1,632  
Total$71,665 $2,684 
NOTE Q— INCOME TAXES
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.
For the three months ended March 31, 2024 and 2023, we had tax expense of $4.8 million and $13.6 million, respectively. The effective tax rates were 26% and 23% for the three months ended March 31, 2024 and 2023, respectively. Without discrete items, which primarily consist of the tax impact of non-US income taxes, the effective tax rates for the three months ended March 31, 2024 and 2023 would have been 24% and 26%, respectively.
During the three months ended March 31, 2024 and 2023, we recorded tax expense of zero and a tax benefit of $2.3 million, respectively, related to equity compensation.
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. For the three months ended March 31, 2024, the benefit received from statutory percentage depletion allowances was offset by nondeductible executive compensation and state income taxes.

NOTE R— REVENUE
We consider sales disaggregated at the product and service level by business 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 (in thousands):
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Three Months Ended 
 March 31, 2024
Three Months Ended 
 March 31, 2023
CategoryOil & Gas ProppantsIndustrial & Specialty ProductsTotal SalesOil & Gas ProppantsIndustrial & Specialty ProductsTotal Sales
Product$119,024 $142,770 $261,794 $201,787 $142,227 $344,014 
Service64,148  64,148 98,226  98,226 
Total Sales$183,172 $142,770 $325,942 $300,013 $142,227 $442,240 
The following tables reflect the changes in our contract assets, which we classify as unbilled receivables and our contract liabilities, which we classify as deferred revenues, for the three months ended March 31, 2024 and 2023 (in thousands):
Unbilled Receivables
March 31, 2024March 31, 2023
Beginning Balance$ $ 
Reclassifications to billed receivables  
Revenues recognized in excess of period billings159  
Ending Balance$159 $ 
    
Deferred Revenue
March 31, 2024March 31, 2023
Beginning Balance$15,512 $30,752 
Revenues recognized from balances held at the beginning of the period (1,830)(5,569)
Revenues deferred from period collections on unfulfilled performance obligations  
Revenues recognized from period collections   
Ending Balance$13,682 $25,183 
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.
Foreign Operations
The following table includes information related to our foreign operations (in thousands):
Three Months Ended 
 March 31, 2024
Three Months Ended 
 March 31, 2023
Total Sales$21,470 $29,932 
Pre-tax income$6,947 $6,902 
Net income$5,488 $5,452 
Foreign operations constituted approximately $18.0 million and $36.9 million of consolidated assets as of March 31, 2024 and 2023, respectively.

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NOTE S— RELATED PARTY TRANSACTIONS
There were no related party transactions during the three months ended March 31, 2024 or 2023.
NOTE T— 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 800 product types 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 selling, general, and administrative costs, depreciation, depletion and amortization, corporate costs, plant capacity expansion expenses, and facility closure costs. We believe that segment contribution margin, as defined above, is an appropriate measure for evaluating the operating performance of our segments. However, segment contribution margin is a non-GAAP measure and 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 GAAP. The other accounting policies of each of the two reportable segments are the same as those in Note B - Summary of Significant Accounting Policies to the Consolidated Financial Statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
The following table presents sales and segment contribution margin (in thousands) for the reportable segments and other operating results not allocated to the reportable segments:
 Three Months Ended 
 March 31,
 20242023
Sales:
Oil & Gas Proppants$183,172 $300,013 
Industrial & Specialty Products142,770 142,227 
Total sales325,942 442,240 
Segment contribution margin:
Oil & Gas Proppants59,515 109,897 
Industrial & Specialty Products45,949 42,929 
Total segment contribution margin105,464 152,826 
Operating activities excluded from segment cost of sales(3,246)(3,719)
Selling, general and administrative(30,754)(29,163)
Depreciation, depletion and amortization(31,368)(35,386)
Interest expense(24,263)(24,061)
Other income (expense), net, including interest income2,523 (2,352)
Income tax expense(4,775)(13,573)
Net income$13,581 $44,572 
Less: Net loss attributable to non-controlling interest(107)(76)
Net income attributable to U.S. Silica Holdings, Inc. $13,688 $44,648 
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 both March 31, 2024 and December 31, 2023, goodwill of $185.6 million has been allocated to these segments with zero allocated to Oil & Gas Proppants and $185.6 million to Industrial & Specialty Products.
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NOTE U— SUBSEQUENT EVENTS
On April 26, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Star Holding LLC, a Delaware limited liability company (“Parent”), and Star Merger Co., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which Parent will acquire all of the Company’s outstanding common shares, par value $0.01 per share (the “Common Stock”). Parent and Merger Sub are affiliates of funds managed by affiliates of Apollo Global Management, Inc.
Pursuant to the transactions contemplated by the Merger Agreement, each outstanding share of the Company’s Common Stock (other than certain shares specified in the Merger Agreement) will be converted into the right to receive $15.50 per share of Common Stock in cash, without interest and less any required withholding taxes (the “Merger Consideration”). Consummation of the Merger is subject to certain customary conditions, including approval by the Company’s stockholders and receipt of required regulatory approvals.
The Merger Agreement contains customary termination rights for the Company and Parent, which were described in the Company’s Current Report on Form 8-K filed on April 26, 2024. The Merger Agreement also contains customary representations, warranties and covenants of the Company, including covenants to conduct its business in the ordinary course during the interim period between the execution of the Merger Agreement and consummation of the Merger and not to engage in certain types of transactions during this interim period without the prior written consent of Parent.
The terms of the Merger Agreement do not impact the Company’s consolidated financial statements as of and for the quarter ended March 31, 2024.
We evaluated subsequent events through the date the consolidated financial statements were available for issuance and did not identify any additional events requiring disclosure.

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited condensed consolidated financial statements and the accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q as well as the consolidated financial statements, the accompanying notes and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 Annual Report").

Adjusted EBITDA and segment contribution margin as used herein are non-GAAP measures. For a detailed description of Adjusted EBITDA and segment contribution margin and reconciliations to their most comparable GAAP measures, please see the discussion below under “How We Evaluate Our Business.

Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933, as amended. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “could,” “can have,” “likely” and other words and terms of similar meaning.

For example, all statements we make relating to our estimated and projected costs and cost reduction programs; the impact on our costs of heightened levels of inflation and rising interest rates; reserve and finished products estimates; demand for our products; the strategies of our customers; anticipated expenditures, cash flows, growth rates and financial results; our plans and objectives for future operations, growth or initiatives; strategies and their anticipated effect on our performance and liquidity; and the expected outcome or impact of pending or threatened litigation are forward-looking statements.

All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expect, including but not limited to: global economic conditions; fluctuations in demand for commercial silica, diatomaceous earth, perlite, clay and cellulose; fluctuations in demand for frac sand or the development of either effective
24


alternative proppants or new processes to replace hydraulic fracturing; changes in production spending by companies in the oil and gas industry and changes in the level of oil and natural gas exploration and development; general economic, political and business conditions in key regions of the world including the ongoing conflicts between Russia and Ukraine and between Israel and Hamas; pricing pressure; cost inflation; weather and seasonal factors; the cyclical nature of our customers’ business; our inability to meet our financial and performance targets and other forecasts or expectations; our substantial indebtedness and pension obligations, including restrictions on our operations imposed by our indebtedness; operational modifications, delays or cancellations; prices for electricity, natural gas and diesel fuel; our ability to maintain our transportation network; changes in government regulations and regulatory requirements, including those related to mining, explosives, chemicals, and oil and gas production; silica-related health issues and corresponding litigation; and other risks and uncertainties detailed in this Quarterly Report on Form 10-Q and our most recent Forms 10-K, 10-Q, and 8-K filed with or furnished to the U.S. Securities and Exchange Commission (“SEC”).

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of the known factors described above, and it is impossible for us to anticipate all factors that could affect our actual results. As a result, forward-looking statements are not guarantees of future performance, and you should not place undue reliance on any forward-looking statements we make. If one or more of the risks described above or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. We disclaim any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other filings with the SEC, and our other public communications.
Overview
We are 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 124-year history, we have developed core competencies in mining, processing, logistics and materials science that enable us to produce and cost-effectively deliver over 800 diversified product types to customers across our end markets. As of March 31, 2024, we had 26 operating mines and processing facilities and two additional exploration stage properties across the United States. We control 474 million tons of reserves of commercial silica, which we believe can be processed to make 175 million tons of finished products that meet API frac sand specifications, and 81 million tons of reserves of diatomaceous earth, perlite, and clays.
Our operations are organized into two reportable segments based on end markets served and the manner in which we analyze our operating and financial performance: (1) Oil & Gas Proppants and (2) Industrial & Specialty Products. We believe our segments are complementary because our ability to sell to a wide range of customers across end markets in these segments allows us to maximize recovery rates in our mining operations and optimize our asset utilization.
Recent Trends and Outlook
Oil and gas proppants end market trends

Our operations in our Oil & Gas Proppants segment are materially dependent on the levels of activity in natural gas and oil exploration, development and production, which are affected by trends in natural gas and oil prices. In recent years, natural gas and oil prices and, therefore, the level of exploration, development and production activity, have experienced significant volatility.
During 2020, the COVID-19 pandemic and related economic repercussions, coupled with an inadequate supply response and exacerbated by the lack of global storage capacity, resulted in a precipitous decline in crude oil prices. Demand for our proppant and logistics services declined as our customers reduced their capital spending budgets and drilling and completion operations in response to lower oil prices. Crude oil prices began to rebound from 2020 levels, with the West Texas Intermediate price of crude oil increasing as much as 52% during 2022 and as much as 17% in 2023. Though prices declined slightly at the end of the year in 2023, they have rebounded approximately 16% in the first quarter of 2024.

25


Recent international conflicts, including between Russia and Ukraine and between Israel and Hamas have increased the disruption, instability and volatility in global markets and industries. As our operations are significantly U.S. based, we have not been, to date, materially impacted by these conflicts. We continue to monitor the uncertainty surrounding the extent and duration of the current international conflicts and the impact that these conflicts may have on the global economy and on our business.

Heightened levels of inflation present risk for us in terms of increased labor costs, transportation costs and energy costs that may not be able to be passed on to customers through increased pricing. In addition, rising interest rates have increased our borrowing costs on our outstanding debt.

Sales decreased by 9% or $17.4 million in our Oil & Gas Proppants segment during the three months ended March 31, 2024 compared to the three months ended December 31, 2023. This was due primarily to a 13% decrease in average selling price per ton partially offset by a 5% increase in tons sold. Sales decreased by 13% or $30.9 million in our Oil & Gas Proppants segment during the three months ended December 31, 2023 compared to the three months ended September 30, 2023. This was due primarily to a 7% decrease in tons sold and a 7% decrease in average selling price per ton. Our results for the three-month period ended March 31, 2024 in this segment are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024.
Amounts in thousands, except per ton dataThree Months Ended Percentage Change
Oil & Gas ProppantsMarch 31,
2024
December 31, 2023September 30, 2023March 31, 2024 vs. December 31, 2023December 31, 2023 vs. September 30, 2023
Sales$183,172 $200,552 $231,426 (9)%(13)%
Tons Sold3,042 2,907 3,122 %(7)%
Average Selling Price per Ton$60.21 $68.99 $74.13 (13)%(7)%

If oil and gas drilling and completion activity is not sustained, or if frac sand supply remains greater than demand, then we may sell fewer tons, sell tons at lower prices, or both. If we sell less frac sand or sell frac sand at lower prices, our revenue, net income, cash generated from operating activities, and liquidity would be adversely affected, and we could incur material asset impairments. If these events occur, we may evaluate further actions to reduce costs and improve liquidity.
Industrial and specialty products end market trends
Demand in the industrial and specialty products end markets has been relatively stable in recent years and is primarily influenced by key macroeconomic drivers such as the housing market, population growth, light vehicle sales, beer and wine production, repair and remodel activity and industrial production. The primary end markets served by our Industrial & Specialty Products segment are building and construction products, fillers and extenders, filtration, glassmaking, absorbents, foundry, and sports and recreation. We have been increasing our value-added product offerings in the industrial and specialty products end markets organically as well as through acquisitions, such as White Armor® and EPM. Additionally, we have increased our focus on the alternative energy markets and products necessary for the supply chains of solar panels, renewable diesel and wind turbines. Sales of these new higher margin products have increased our Industrial & Specialty Products segment's profitability.
Heightened levels of inflation present risk for us in terms of increased labor costs, transportation costs and energy costs that may not be able to be passed on to customers through increased pricing. In addition, rising interest rates have increased our borrowing costs on our outstanding debt. Additionally, we continue to monitor the uncertainty surrounding the extent and duration of the Russia and Ukraine and Israel and Hamas conflicts on our business as discussed above.
Our Business Strategy
The key drivers of our growth strategy include:
increasing our presence and new product development in specialty products end markets;
optimizing our product mix and further developing value-added capabilities to maximize margins;
effectively positioning our Oil & Gas Proppants facilities to optimally serve our customers;
optimizing our supply chain network and leveraging our logistics capabilities to meet our customers’ needs;
evaluating both Greenfield and Brownfield expansion opportunities and other acquisitions; and
maintaining financial strength and flexibility.
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How We Generate Our Sales
    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 the price of the product, transportation, surcharges, and 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.    
Services
    We derive our service sales 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 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 customer utilized our labor services in the billing period. We typically invoice our customers weekly or bi-weekly; however, some customers receive invoices monthly or upon well-site operation completion, depending on terms established in contracts or work orders. Standard collection terms are net 30 days, although extended terms are offered in competitive situations.
    Our ten largest customers accounted for 47% and 45% of total sales for the three months ended March 31, 2024 and 2023, respectively. No customer accounted for 10% or more of our total sales for the three months ended March 31, 2024 or 2023. At March 31, 2024 and December 31, 2023, none of our customers' accounts receivable represented 10% or more of our total trade accounts receivable.
    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, particularly in volatile market conditions. When these negotiations occur, we may deliver our product at prices or at volumes below the requirements in our existing supply agreements. 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. Selling more tons under supply contracts enables us to be more efficient from a production, supply chain and logistics standpoint. As discussed in Part I, Item 1A., Risk Factors of our 2023 Annual Report, these customers may not continue to purchase the same levels of product in the future due to a variety of reasons, contract requirements notwithstanding.
    As of March 31, 2024, we had nine minimum purchase supply agreements in the Oil & Gas Proppants segment with initial terms expiring between 2024 and 2034. As of March 31, 2023, we had 12 minimum purchase supply agreements in the Oil & Gas Proppants segment with initial terms expiring between 2023 and 2034. Collectively, sales to customers with minimum purchase supply agreements accounted for 64% and 54% of Oil & Gas Proppants segment sales during the three months ended March 31, 2024 and 2023, respectively.
    In the industrial and specialty products end markets we have not historically entered into long-term minimum purchase supply agreements with our customers because of the high cost to our customers of switching providers. We may periodically do so when capital or other investment is required to meet customer needs. Instead, we often enter into supply agreements with our customers with targeted volumes and terms of one to five years. Prices under these agreements are generally fixed and subject to annual increases.
The Costs of Conducting Our Business
    The principal expenses involved in conducting our business are transportation costs, labor costs, electricity and drying fuel costs, and maintenance and repair costs for our mining and processing equipment and facilities. Transportation and related costs include freight charges, fuel surcharges, transloading fees, switching fees, railcar lease costs, demurrage costs, storage fees and labor costs. Our operating costs can vary significantly based on the volume of product produced and current economic
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conditions. We benefit from owning the majority of the mineral deposits that we mine and having long-term mineral rights leases or supply agreements for our other primary sources of raw material, which limits royalty payments.
    Additionally, we incur expenses related to our corporate operations, including costs for sales and marketing; research and development; and the finance, legal, human resources, information technology, and environmental, health and safety functions of our organization. These costs are principally driven by personnel expenses.
How We Evaluate Our Business
    Our management team evaluates our business using a variety of financial and operating metrics. We evaluate the performance of our two segments based on their tons sold, average selling price and contribution margin earned. Additionally, we consider a number of factors in evaluating the performance of our business as a whole, including total tons sold, average selling price, total segment contribution margin, and Adjusted EBITDA. We view these metrics as important factors in evaluating our profitability and review these measurements frequently to analyze trends and make decisions, and we believe the presentation of these metrics provides useful information to our investors regarding our financial condition and results of operations for the same reasons.
Segment Contribution Margin
    Segment contribution margin, a non-GAAP measure, is a key metric that management uses to evaluate our operating performance and to determine resource allocation between segments. Segment contribution margin excludes selling, general, and administrative costs, corporate costs, plant capacity expansion expenses, and facility closure costs.
    Segment contribution margin is not a measure of our financial performance under GAAP and should not be considered as an alternative or superior to measures derived in accordance with GAAP. Our measure of segment contribution margin is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation. For more information about segment contribution margin, including a reconciliation of this measure to its most directly comparable GAAP financial measure, net income (loss), see Note T - Segment Reporting to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.
Adjusted EBITDA
    Adjusted EBITDA, a non-GAAP measure, is included in this report because it is a key metric used by management to assess our operating performance and by our lenders to evaluate our covenant compliance. Adjusted EBITDA excludes certain income and/or costs, the removal of which improves comparability of operating results across reporting periods. Our target performance goals under our incentive compensation plan are tied, in part, to our Adjusted EBITDA.
    Adjusted EBITDA is not a measure of our financial performance or liquidity under GAAP and should not be considered as an alternative or superior to net income (loss) as a measure of operating performance, cash flows from operating activities as a measure of liquidity or any other performance measure derived in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized, and excludes certain charges that may recur in the future. Management compensates for these limitations by relying primarily on our GAAP results and by using Adjusted EBITDA only supplementally. Our measure of Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.
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    The following table sets forth a reconciliation of net income, the most directly comparable GAAP financial measure, to Adjusted EBITDA:
(amounts in thousands)Three Months Ended 
 March 31,
 20242023
Net income attributable to U.S. Silica Holdings, Inc.$13,688 $44,648 
Total interest expense, net of interest income20,673 21,568 
Provision for taxes4,775 13,573 
Total depreciation, depletion and amortization expenses31,368 35,386 
EBITDA70,504 115,175 
Non-cash incentive compensation (1)
4,051 3,335 
Post-employment expenses (excluding service costs) (2)
(664)(839)
Merger and acquisition related expenses (3)
361 224 
Plant capacity expansion expenses (4)
47 66 
Business optimization projects (5)
(77)956 
Facility closure costs (6)
345 81 
Other adjustments allowable under the Credit Agreement (7)
2,565 5,637 
Adjusted EBITDA$77,132 $124,635 
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(1)
Reflects equity-based and other equity-related 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 because 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 O - Pension and Post-Retirement Benefits to our Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.
(3)
Merger and acquisition related expenses include legal fees, professional fees, bank fees, severance costs, and other employee related costs. 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 $2 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 if we continue to pursue future plant capacity expansions.
(5)
Reflects costs incurred related to business optimization projects within our corporate center, which aim to measure and improve the efficiency, productivity and performance of our organization. While these costs are not operational in nature and are not expected to continue for any singular project on an ongoing basis, similar types of expenses may recur in the future.
(6)

Reflects costs incurred related to idled sand facilities and closed corporate offices, including severance costs and remaining contracted costs such as office lease costs, maintenance, and utilities. While these costs are not operational in nature and are not expected to continue for any singular event on an ongoing basis, similar types of expenses may recur in the future.
(7)
Reflects miscellaneous adjustments permitted under the Credit Agreement, such as recruiting fees and relocation costs. The three months ended March 31, 2024 also included costs related to severance restructuring of $0.1 million, $0.3 million of sales of assets, and $2.0 million related to the loss on extinguishment of debt. The three months ended March 31, 2023 also included costs related to severance restructuring of $0.8 million, an adjustment to non-controlling interest of $0.2 million and $5.3 million related to the loss on extinguishment of debt, offset by an insurance recovery of $0.8 million.
    Adjusted EBITDA-Trailing Twelve Months
    Our revolving credit facility (the "Revolver") contains a consolidated leverage ratio of no more than 4.00:1.00 that, unless we have the consent of our lenders, we must meet as of the last day of any fiscal quarter whenever usage of the Revolver (other than certain undrawn letters of credit) exceeds 35% of the Revolver commitment. This ratio is calculated based on our Adjusted EBITDA for the trailing twelve months. Noncompliance with this financial ratio covenant could result in the acceleration of our obligations to repay all amounts outstanding under the Revolver and the Term Loan (the "Term Loan") (collectively the "Credit Facility"). Moreover, the Revolver and the Term Loan contain covenants that restrict, subject to certain exceptions, our ability to make permitted acquisitions, incur additional indebtedness, make restricted payments (including dividends) and retain excess cash flow based, in some cases, on our ability to meet leverage ratios calculated based on our Adjusted EBITDA for the trailing twelve months.
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    See the description under “Adjusted EBITDA” above for certain important information about Adjusted EBITDA-trailing twelve months, including certain limitations and management’s use of this metric in light of its status as a non-GAAP measure.
    As of March 31, 2024, we were in compliance with all covenants under our Credit Facility, and our Revolver usage was zero (not including $15.3 million allocated for letters of credit). Since the Revolver usage did not exceed 35% of the Revolver commitment, the consolidated leverage ratio covenant did not apply. Based on our consolidated leverage ratio of 2.07:1.00 as of March 31, 2024, we have access to the full availability of the Revolver. The calculation of the consolidated leverage ratio incorporates the Adjusted EBITDA-trailing twelve months as follows:
(All amounts in thousands, except calculated ratio)March 31, 2024
Total debt $806,779 
Finance leases2,684 
Total consolidated debt$809,463 
Adjusted EBITDA-trailing twelve months$391,497 
Pro forma Adjusted EBITDA including impact of acquisitions (1)
— 
Other adjustments for covenant calculation (2)
252 
Total Adjusted EBITDA-trailing twelve months for covenant calculation$391,749 
Consolidated leverage ratio(3)
2.07 

(1)
Covenant calculation allows for the Adjusted EBITDA-trailing twelve months to include the impact of acquisitions on a pro forma basis.
(2)
Covenant calculation excludes activity at legal entities above the operating company, which is mainly interest income offset by public company operating expenses.
(3)

Calculated by dividing total consolidated debt by total Adjusted EBITDA-trailing twelve months for covenant calculation.
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Results of Operations for the Three Months Ended March 31, 2024 and 2023
Sales
(In thousands except per ton data)