US Silica Holdings Inc (SLCA) 2023 Q4 法說會逐字稿

Good morning and welcome to the US Silica fourth quarter 2023 earnings conference call. (Operator Instruction) As reminder, this conference is being recorded.

早安，歡迎參加 US Silica 2023 年第四季財報電話會議。（操作員說明）溫馨提示，本次會議正在錄製中。

It is now my pleasure to introduce you to Patricia Gil, Vice President of Investor Relations and Sustainability.

現在我很高興向您介紹投資者關係和永續發展副總裁 Patricia Gil。

Thank you, and good morning, everyone. I'd like to thank you for joining us today for US Silica's fourth quarter 2023 earnings conference call. Leading the call today are Bryan Shinn, our Chief Executive Officer, and Kevin Hough, our Interim Executive Vice President and Chief Financial Officer.

謝謝大家，大家早安。我要感謝您今天加入我們 US Silica 的 2023 年第四季財報電話會議。今天主持電話會議的是我們的執行長 Bryan Shinn 和我們的臨時執行副總裁兼財務長 Kevin Hough。

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

在開始之前，我想提醒您注意我們對今天將發表的一些聲明的前瞻性性質的標準警告性評論。此類前瞻性陳述是關於未來事件的預測、預測或其他陳述，基於當前的預期和假設，存在一定的風險和不確定性。

For a complete discussion of these risks and uncertainties. We encourage you to read the company's press release and our documents on file with the SEC. We do not undertake any duty to update any forward-looking statements. Additionally, we have provided a supplemental fourth quarter earnings presentation on our website in the Investors section to accompany today's discussion.

對這些風險和不確定性進行完整的討論。我們鼓勵您閱讀公司的新聞稿以及我們存檔給 SEC 的文件。我們不承擔更新任何前瞻性陳述的責任。此外，我們還在網站的「投資者」部分提供了補充的第四季度收益演示，以配合今天的討論。

On today's call, we may refer to non-GAAP measures such as adjusted EBITDA segment contribution margin, net debt and net leverage ratio. Please refer to today's press release, our public filings or the accompanying earnings presentation for a full reconciliation and discussion of adjusted EBITDA segment contribution margin, net debt and the net leverage ratio.

在今天的電話會議上，我們可能會參考非公認會計準則衡量標準，例如調整後的 EBITDA 部門邊際貢獻率、淨債務和淨槓桿率。請參閱今天的新聞稿、我們的公開文件或隨附的收益報告，以了解調整後 EBITDA 部門邊際貢獻率、淨債務和淨槓桿率的全面對帳和討論。

I would now like to turn the call over to our CEO, Bryan Shinn.

我現在想將電話轉給我們的執行長 Bryan Shinn。

Thanks, Patricia, and good morning everyone. During the fourth quarter, we continued to strengthen our financial foundation and advance our growth strategy while closing out an exceptionally strong and historic year for the company. During 2023, we delivered on profit guidance with 24% year-over-year, adjusted EBITDA growth while increasing company contribution margin 16% and net income 88%.

謝謝，帕特里夏，大家早安。第四季度，我們繼續加強財務基礎並推進成長策略，同時為公司帶來了異常強勁且具有歷史意義的一年。2023 年，我們實現了同比增長 24% 的利潤指引，調整後的 EBITDA 增長，同時公司貢獻率提高了 16%，淨利潤提高了 88%。

We also generated $264 million of cash flow from operations. These impressive annual results were driven by a combination of strong customer demand and disciplined pricing in oil and gas and increased pricing and improved product mix in industrials, all supported by our optimized and lean cost structure. Furthermore, we repurchased and extinguished a total of $184 million of debt, improving our balance sheet and delivering a low net leverage ratio of approximately 1.4 times TTM EBITDA at year end.

我們也從營運中產生了 2.64 億美元的現金流。這些令人印象深刻的年度業績是由強勁的客戶需求和嚴格的石油和天然氣定價以及工業產品定價的提高和產品組合的改善共同推動的，所有這些都得到了我們優化和精益成本結構的支持。此外，我們回購並消除了總計 1.84 億美元的債務，改善了我們的資產負債表，並在年底實現了約 1.4 倍 TTM EBITDA 的低淨槓桿率。

It's also also worth noting that both business segments delivered record annual profitability during the year with annual sequential contribution margin dollar growth of 10% for ISP and 20% for oil and gas. During 2023, we also delivered many non-financial achievements, including our fourth year in a row of record employee safety performance, selling enough bleaching clay to purify 1.7 billion gallons of edible oil and selling and update commercial databases, aid to filter 13,000 Olympic size swimming pools worth of beer.

另外值得注意的是，這兩個業務部門在這一年中都實現了創紀錄的年度盈利能力，ISP 的年度貢獻利潤率增長了 10%，石油和天然氣的年度貢獻利潤率增長了 20%。2023 年，我們還取得了許多非財務成就，包括連續第四年創下員工安全績效紀錄、銷售了足夠淨化 17 億加侖食用油的漂白土、銷售和更新商業數據庫、援助過濾 13,000 名奧運選手游泳池值得啤酒。

For our purified product was used in blood plasma protein processing to produce roughly 9 million vials of albumin medicine serving millions of patients in the year. And finally, we completed 160 community events in 2023, including education for local students sponsoring multiple recreational sports leagues and local FFA and 4-H organizations, along with participating in numerous volunteer events across the country.

我們的純化產品用於血漿蛋白加工，當年生產了約 900 萬瓶白蛋白藥物，為數百萬患者提供服務。最後，我們在 2023 年完成了 160 項社區活動，包括贊助多個休閒運動聯盟以及當地 FFA 和 4-H 組織的當地學生教育，以及參加全國各地的眾多志工活動。

And all 2023 was a fantastic year and we certainly had a lot to be proud of, In corporate news, we appointed Gene Padgett as Vice President, Chief Accounting Officer and Controller of the company in late December. I'm very excited to welcome Gene to our leadership team and believe that his extensive accounting and financial expertise will be a key asset for the company as we continue to advance our growth strategy.

2023 年是美好的一年，我們確實有很多值得自豪的事情。我非常高興地歡迎吉恩加入我們的領導團隊，並相信他豐富的會計和財務專業知識將成為我們繼續推動成長策略的公司的關鍵資產。

I'd also like to provide an update on our CFO search. We've had the opportunity to meet with a number of talented, high-quality candidates with a broad range of backgrounds. I'm very pleased with the search process so far and expect to have our new CFO in place in the next few months.

我還想提供有關財務長搜尋的最新資訊。我們有機會見到了許多具有廣泛背景、才華橫溢、高素質的候選人。我對迄今為止的搜尋過程非常滿意，並希望在接下來的幾個月內找到我們的新財務長。

I'll now turn the call over to Kevin, who will discuss our financial results in more detail. Kevin?

我現在將把電話轉給凱文，他將更詳細地討論我們的財務表現。凱文？

Thanks Bryan and good morning, everyone. As Bryan mentioned, we reported six to historic levels of cash flow from operations and adjusted EBITDA for the full year 2023, driven by disciplined pricing in oil and gas and a higher value product mix and industrials. This was further supported by improved cost structures despite softer market activity for both segments.

謝謝布萊恩，大家早安。正如 Bryan 所提到的，在石油和天然氣嚴格定價以及更高價值的產品組合和工業的推動下，我們報告的 2023 年全年營運現金流達到了六倍歷史水平，並調整了 EBITDA。儘管這兩個領域的市場活動均較為疲軟，但成本結構的改善進一步支撐了這一點。

Looking at fourth quarter results when compared to the prior quarter, overall tons sold decreased 6% sequentially to $3.9 million. Total revenue decreased 8% to $336 million. Adjusted EBITDA decreased 13% to $88.6 million. Total company contribution margin decreased 10% to $116.9 million.

從第四季的業績來看，與上一季相比，總銷量較上季下降 6%，至 390 萬美元。總收入下降 8% 至 3.36 億美元。調整後 EBITDA 下降 13% 至 8,860 萬美元。公司邊際貢獻總額下降 10%，至 1.169 億美元。

Selling, general and administrative expenses for the quarter increased 8% sequentially to $31.7 million, driven primarily by the purchase of group annuity contracts covering company pension participants and beneficiaries in insurance costs in the quarter.

本季的銷售、一般和管理費用較上季成長 8%，達到 3,170 萬美元，主要是由於購買了涵蓋本季度公司退休金參與者和受益人保險成本的團體年金合約。

Depreciation, depletion and amortization expense decreased 9% sequentially to $32.5 million in the fourth quarter due to a non-recurring adjustment made in the prior quarter. Our effective tax rate for the quarter ended December 31, 2023 was 23.3%, including discrete items.

由於上一季進行的非經常性調整，第四季折舊、消耗和攤銷費用較上季下降 9% 至 3,250 萬美元。截至 2023 年 12 月 31 日的季度的有效稅率為 23.3%，包括離散項目。

As Bryan mentioned, in the fourth quarter we used excess cash on the balance sheet to extinguish an additional $25 million of outstanding debt at par since the second quarter of 2022, we have extinguished a total of $334 million of debt, incrementally reducing our debt service cost in today's high interest rate environment and providing an estimated $33.8 million of annual interest expense savings.

正如布萊恩所提到的，在第四季度，我們使用資產負債表上的多餘現金，以票面金額消除了額外的2500 萬美元的未償債務，自2022 年第二季度以來，我們總共消除了3.34 億美元的債務，逐步減少了我們的債務償還當今高利率環境下的成本，預計每年可節省 3,380 萬美元的利息費用。

At the end of the fourth quarter, our net debt to trailing 12 month adjusted EBITDA ratio remained at 1.4 times below our year-end target of 1.5 times. I will now walk you through our operating segment results. The oil and gas segment reported revenue of $200.6 million for the fourth quarter, the sequential decrease of 13%.

截至第四季末，我們的淨負債與過去 12 個月調整後 EBITDA 的比率仍為 1.4 倍，低於我們 1.5 倍的年終目標。我現在將向您介紹我們的營運部門業績。石油和天然氣部門第四季營收為 2.006 億美元，季減 13%。

Volumes for the oil and gas segment performed below our prior guidance, decreasing by 7% to 2.9 million tons, while Sandbox delivered loads decreased 5% compared to the third quarter. Segment contribution margin decreased 15% compared with the third quarter to $70.1 million which on a per ton basis was $24.13. These results were driven by sequential decline in US completions activity and lower pricing.

石油和天然氣領域的銷量低於我們先前的指導，下降 7% 至 290 萬噸，而 Sandbox 交付量與第三季度相比下降 5%。與第三季相比，該部門的利潤率下降了 15%，至 7,010 萬美元，每噸為 24.13 美元。這些結果是由美國竣工活動連續下降和定價下降所推動的。

Our Industrial and Specialty segment for ISP reported revenues of $135.5 million, which was flat compared to the prior quarter. Volumes for the ISP segment decreased 4% sequentially and totaled 958,000 tons. Segment contribution margin increased 1% on a sequential basis in total, $46.8 million, which on a per ton basis was $48.85.

我們的 ISP 工業和專業部門報告收入為 1.355 億美元，與上一季持平。ISP 部分的銷售量較上季下降 4%，總計 958,000 噸。分部貢獻利潤總額較上季成長 1%，達到 4,680 萬美元，每噸為 48.85 美元。

The sequential increase in results for the ISP segment was due to improved pricing and lower costs. On a year-over-year basis, contribution margin dollars increased 17% and contribution margin percentage expanded 11% due to pricing increases, high-grading of product mix and cost improvement initiatives.

ISP 部門的業績連續成長是由於定價的改善和成本的降低。與去年同期相比，由於定價上漲、產品組合的高等級和成本改善舉措，邊際貢獻美元增長了 17%，邊際貢獻百分比擴大了 11%。

Turning to the cash flow statement, we delivered strong cash flow from operations of $54.2 million in the fourth quarter, driven by strong earnings and efficient net working capital. During Q4, we invested $17.5 million of capital, primarily for facility maintenance, cost improvement and ISP growth project.

談到現金流量表，在強勁的獲利和高效的淨營運資本的推動下，我們第四季的營運現金流強勁，達到 5,420 萬美元。第四季度，我們投資了 1,750 萬美元的資金，主要用於設施維護、成本改善和 ISP 成長項目。

As of December 31, 2023, the company's cash and cash equivalents totaled $245.7 million, a sequential increase of 10%, which includes the impact of the $25 million loan extinguishment. At quarter end, our $150 million revolver had $0 drawn with $134.7 million available under the credit facility after allocating for letters of credit.

截至2023年12月31日，該公司的現金及現金等價物總計2.457億美元，季增10%，其中包括2,500萬美元貸款取消的影響。截至季末，我們的 1.5 億美元循環資金已提取 0 美元，在分配信用證後，信貸安排下的可用資金為 1.347 億美元。

Turning to guidance, the high level of profit. Customer contracts in our oil and gas segment, coupled with our consistent and varied customer base in the ISP segment, gives us reasonable confidence in our visibility for 2024. We expect strong operating cash flow generation this year.

談到指導，利潤水準較高。我們石油和天然氣領域的客戶合同，加上我們在 ISP 領域一致且多樣化的客戶群，使我們對 2024 年的能見度充滿信心。我們預計今年營運現金流將強勁。

And plan to direct our free cash flow to fund our growth capital needs. While we continue to reduce our net debt level. Our current net leverage ratio expectation is that it will remain below 1.5 times through the year. Regarding capital spending, we will continue to be disciplined in our investment allocations and will focus on maintaining operating levels at our facilities while pursuing profitable growth.

並計劃引導我們的自由現金流來滿足我們的成長資本需求。同時我們繼續降低淨債務水準。我們目前的淨槓桿率預期全年將維持在1.5倍以下。關於資本支出，我們將繼續嚴格投資分配，並將重點放在維持我們設施的營運水平，同時追求獲利成長。

For full year 2024, we are forecasting our capital spending to be approximately $60 million with the possibility for that to increase during the year as we opportunistically look to accelerate our high return potential capital investment projects.

對於 2024 年全年，我們預計我們的資本支出約為 6000 萬美元，並且隨著我們機會主義地尋求加速我們的高回報潛力資本投資項目，這一數字可能會在年內增加。

Finally, we are forecasting full year 2024 SG&A expense to be up approximately 5% year-over-year, driven primarily by investments in our workforce. The forecast for full year 2024 depreciation, depletion and amortization expense is down approximately 5%, given higher CapEx spending levels in prior years for assets that have become or are becoming fully depreciated. Our estimated effective tax rate for full year 2024 is approximately 26%.

最後，我們預計 2024 年全年 SG&A 費用將年增約 5%，這主要是由我們的勞動力投資所推動的。鑑於前幾年已完全折舊或即將完全折舊的資產的資本支出水準較高，預計 2024 年全年折舊、消耗和攤銷費用將下降約 5%。我們預計 2024 年全年的有效稅率約為 26%。

And with that, I'll turn the call back over to Bryan.

然後，我會將電話轉回布萊恩。

Thanks, Kevin. Next, let's review some of the trends that we saw during the quarter. Starting with our oil and gas segment. Demand for our proppant and Sandbox logistics offerings were off mid-single digits sequentially in Q4 as the US land energy complex experienced sequentially lower drilling and completions activity driven by weather and typical seasonality.

謝謝，凱文。接下來，讓我們回顧一下本季看到的一些趨勢。從我們的石油和天然氣部門開始。由於美國陸地能源綜合體受天氣和典型季節性影響，鑽井和完井活動連續減少，第四季度對我們支撐劑和沙盒物流產品的需求連續下降到個位數。

Due to our disciplined pricing approach. Our overall proppant price per ton was down less than $2 quarter over quarter. These efforts, coupled with our quick and flexible variable cost reduction initiatives, allowed us to deliver strong contribution margin of 35% for Q4. Additionally, due to our trusted market reputation, reliability and capability to deliver profit at scale. We signed four customer contract amendments and extensions in the quarter.

由於我們嚴格的定價方法。我們每噸支撐劑的總體價格環比下降了不到 2 美元。這些努力，加上我們快速且靈活的變動成本削減舉措，使我們能夠在第四季度實現 35% 的強勁邊際貢獻。此外，由於我們值得信賴的市場聲譽、可靠性和大規模創造利潤的能力。本季我們簽署了四份客戶合約修訂和延期協議。

Finally, our new patent-pending guarding Guardian frac fluid filtration system continues to perform well and gain momentum in the market with a total of 16 units installed to date. Customers continue to enjoy increased pump uptime and efficiency and decreased repair and maintenance costs. Given the strong customer acceptance and market adoption, we expect to double the systems in our fleet in 2024.

最後，我們正在申請專利的全新 Guard Guardian 壓裂流體過濾系統繼續表現良好，並在市場上獲得發展勢頭，迄今為止已安裝了 16 套。客戶將繼續享受泵浦正常運作時間和效率的增加以及維修和維護成本的降低。鑑於客戶的強烈接受度和市場採用率，我們預計到 2024 年將我們機隊中的系統數量增加一倍。

In our ISP segment, as we guided on last quarter's call, volumes declined on a year-over-year basis. This was due to a combination of normal seasonal demand reduction, customer facility maintenance and customer year-end inventory management, particularly for fiberglass, industrial oil and recreation products.

在我們的 ISP 領域，正如我們在上季度電話會議中所指出的那樣，交易量比去年同期下降。這是由於正常的季節性需求減少、客戶設施維護和客戶年終庫存管理，特別是玻璃纖維、工業油和娛樂產品的綜合影響。

Despite these lower activity levels, we benefited from ongoing structural cost reductions, price increases and greater sales from advanced materials, which afforded us the improved sequential and year-over-year of profitability and a 27% increase in contribution margin on a per ton basis.

儘管活動水準較低，但我們仍受益於持續的結構性成本降低、價格上漲和先進材料銷量的增加，這使我們的盈利能力環比和同比有所改善，每噸貢獻邊際增加了 27% 。

I will now provide updates on key developments in our industrial portfolio and then finish with a summary of our outlook for the first quarter of 2024. During the fourth quarter, we made significant progress on all three key strategic growth elements of our ISP business.

我現在將提供有關我們工業投資組合主要發展的最新信息，然後總結我們對 2024 年第一季度的展望。第四季度，我們在 ISP 業務的所有三個關鍵策略成長要素上都取得了重大進展。

Our first element is increasing the profitability of our base business at a GDP-plus rate. With that goal in mind, we continued to capture savings from reduced logistics costs improved plant reliability, automation, cost efficiency projects and lower natural gas prices. We're also committed to raising and maintaining product pricing to help offset increased costs.

我們的第一個要素是以GDP+的速度提高我們基礎業務的獲利能力。考慮到這一目標，我們繼續透過降低物流成本、提高工廠可靠性、自動化、成本效益項目和降低天然氣價格來節省成本。我們也致力於提高和維持產品定價，以幫助抵消增加的成本。

Our most recent price increase of up to 20% for numerous non-contracted ISP products went into effect for shipments beginning January 1. The second element of our ISP strategy is to substantially grow our current high-value differentiated products such as ground silica side, [tenacious or powders], and fine fillers and high purity filtration substrates. Q4 was a very productive quarter in this regard.

我們最近對眾多非簽約 ISP 產品提價高達 20%，並於 1 月 1 日起出貨。我們的 ISP 策略的第二個要素是大幅發展我們目前的高價值差異化產品，例如研磨二氧化矽、[黏性或粉末]以及精細填料和高純度過濾基材。在這方面，第四季是一個非常有成效的季度。

During the quarter, we finalized and amended nine key customer contracts with improved pricing and volume commitments. [Floor] and silica demand for solar glass remained strong and is growing with the domestic industry. We estimate that US solar panel manufacturers announced an additional $1.8 billion of capacity expansion projects during the quarter, bringing total domestic announced solar panel investment to $11.4 billion since the passage of the IRA, to support industry growth.

在本季度，我們最終確定並修訂了九份主要客戶合同，並改進了定價和銷售承諾。太陽能玻璃的[地板]和二氧化矽需求依然強勁，並且隨著國內產業的成長而成長。我們估計，美國太陽能板製造商在本季度宣布了額外 18 億美元的產能擴張項目，使自 IRA 通過以來國內宣布的太陽能電池板投資總額達到 114 億美元，以支持行業增長。

We have developed the capability to produce low iron silica from a second US Silica mine and have recently signed a key customer supply contract for this product. Additionally, demand for our databases or catalyst products continues at high levels, and our natural DE powders remains sold out across facilities, given the strength of customer demand for these products, we are pursuing capacity expansion that will come online in early to mid 2025.

我們已經具備了從美國第二個二氧化矽礦生產低鐵二氧化矽的能力，並於最近簽署了該產品的主要客戶供應合約。此外，對我們的資料庫或催化劑產品的需求持續保持高水平，而且我們的天然DE 粉末在各個設施中仍然售罄，鑑於客戶對這些產品的需求強勁，我們正在尋求產能擴張，預計將於2025 年初至中期上線。

Our third strategic element is expanding our addressable markets and applications with sales of new high-value advanced materials such as Cristobalite heavyweight pigment and white armor solar reflective roofing materials. Sales of ever white pigment, our TiO2 partial replacement product continue to accelerate.

我們的第三個策略要素是透過銷售新的高價值先進材料（例如方英石重質顏料和白色裝甲太陽能反射屋頂材料）來擴大我們的潛在市場和應用。鈦白粉部分替代產品常白顏料的銷售持續加速。

We have line of sight to selling out our existing production capacity for this product and our expanded capacity, which is scheduled to come online early next year. Customer feedback remains positive as we move forward with multiple qualifications and production trials for several applications that would further expand our total addressable markets.

我們計劃出售該產品的現有產能以及計劃於明年初投產的擴大產能。隨著我們針對多種應用推進多項資格認證和生產試驗，客戶回饋仍然積極，這將進一步擴大我們的整體潛在市場。

During the quarter, we also launched and qualified a new cool roof granules product with improved solar reflectance. This increase in performance ensures that customers can continue to meet even the most stringent cool roofing codes across North America, plus we fully commissioned our new state-of-the-art innovation center in Rochelle Illinois, and we're receiving numerous inquiries from customers and distributors about processing new materials at this location.

在本季度，我們還推出了一種新型冷屋頂顆粒產品，該產品具有改進的太陽光反射率，並獲得了資格。性能的提高確保客戶能夠繼續滿足北美最嚴格的冷屋頂規範，此外，我們全面啟用了位於伊利諾伊州羅謝爾的最先進的新創新中心，並且我們收到了來自客戶的大量詢問以及經銷商關於在該地點加工新材料的資訊。

Turning now to our business and market outlook. As Kevin noted, we anticipate that we'll generate robust operating cash flow again this year and maintain a net leverage ratio below 1.5 times. Our oil and gas segment is attractively positioned to maximize through-cycle earnings due to our cost reduction and variabilization efforts over the past few years, which have cut our annual fixed costs substantially.

現在談談我們的業務和市場前景。正如 Kevin 指出的，我們預計今年將再次產生強勁的營運現金流，並將淨槓桿率維持在 1.5 倍以下。由於過去幾年我們在降低成本和穩定化方面所做的努力，我們的石油和天然氣部門處於有利地位，可以最大限度地提高整個週期的收益，這大大降低了我們的年度固定成本。

These actions have had the effect of raising our annual earnings floor in a softer market by up to $70 million without sacrificing upside in a peak markets. We repositioned the segment and improved our contribution margin percent to the mid 30s and forecast that our contribution margin on a per ton basis will average in the low $20 per ton level for the year.

這些行動使我們在市場疲軟時的年獲利下限提高了 7,000 萬美元，同時又不犧牲市場高峰時的上漲空間。我們重新定位了該細分市場，並將我們的邊際貢獻率提高到了 30 多美元，並預測今年每噸的貢獻邊際平均將保持在每噸 20 美元的低水平。

For the first quarter, we anticipate that volumes will be flat to slightly up sequentially, with contribution margin dollars down 5% to 10% due to continued pricing pressures from a slightly oversupplied profit market. Q1 has started off well with stronger than anticipated January sales as we just recorded our second best month for West Texas sales volumes.

對於第一季度，我們預計銷量將與上一季度持平或略有上升，由於利潤市場略顯過剩帶來的持續定價壓力，貢獻利潤率將下降 5% 至 10%。第一季開局良好，一月份的銷售量強於預期，因為我們剛剛創下了西德克薩斯州銷售量第二好的月份。

The harsh winter weather in the Permian Basin proved beneficial for US Silica as competitor, many mines were negatively impacted and customers reached out to us for additional profit supply to maintain ongoing completions. Overall, this business segment remains well positioned to capitalize on the current multiyear energy upcycle with expectations for constructive commodity prices and healthy demand for proppant and last-mile logistics.

事實證明，二疊紀盆地的嚴酷冬季天氣對 US Silica 作為競爭對手有利，許多礦場受到了負面影響，客戶向我們尋求額外的利潤供應，以維持持續的完工。總體而言，該業務部門仍然處於有利地位，可以充分利用當前的多年能源升級週期，並對大宗商品價格具有建設性的預期以及對支撐劑和最後一英里物流的健康需求。

We're maintaining pricing discipline and continue to have strong contractual commitments for our sand with approximately 80% of production capacity committed for 2024. We continue to believe that the recent operator consolidation should lead to better acreage position and increased lateral length, requiring greater service intensity and translating to more sand for well completions.

我們維持定價紀律，並繼續對砂子做出強有力的合約承諾，承諾在 2024 年實現約 80% 的產能。我們仍然認為，最近的營運商整合應該會帶來更好的面積位置和增加的橫向長度，需要更大的服務強度，並轉化為更多的砂子用於完井。

To reiterate, demand for sand proppant remains healthy and strong, and we plan to remain heavily contracted and disciplined on pricing while maximizing our profit margins. Moving to our Industrial and Specialty Products segment, we are well positioned to achieve another year of profitability growth in 2024 due to the strength of the numerous current and emerging end markets that we serve.

重申一下，對砂支撐劑的需求仍然健康強勁，我們計劃在定價方面保持嚴格的合約和紀律，同時最大限度地提高我們的利潤率。轉向我們的工業和特種產品領域，由於我們服務的眾多當前和新興終端市場的實力，我們有能力在 2024 年實現另一個盈利增長。

Furthermore, we expect to continue expanding profit margins through structural cost reductions, price increases and investments in product development. These initiatives, coupled with customer investments in domestic manufacturing, should continue to offset any potential near-term market weakness. For the first quarter year-over-year volumes are forecasted to be down low single digits due to product demand mix.

此外，我們預計將透過結構性成本削減、價格上漲和產品開發投資繼續擴大利潤率。這些舉措，加上客戶對國內製造業的投資，應該會繼續抵消任何潛在的近期市場疲軟。由於產品需求組合，預計第一季銷售量將年減個位數。

However, we expect contribution margin in industrials to increase 5% to 10% on a year-over-year basis due to improved pricing, favorable product mix and ongoing operational and supply chain efficiency improvements.

然而，由於定價改善、有利的產品組合以及持續的營運和供應鏈效率改進，我們預計工業領域的邊際貢獻將年增 5% 至 10%。

Additionally, I'd like to update you on a change to our business alignment and segment reporting going forward. After careful consideration, we are moving the management and reporting of our oil field Northern White sand offerings from the oil and gas business segment to the Industrial and Specialty Products segment, beginning with first quarter results in 2024. Given how the oil field Northern white sand business has evolved over the years, we believe that it's better positioned today as an offering with an ISP.

此外，我想向您通報我們未來業務調整和分部報告的變更。經過仔細考慮，我們將從 2024 年第一季業績開始，將北白沙油田產品的管理和報告從石油和天然氣業務部門轉移到工業和特種產品部門。鑑於北方白沙油田業務多年來的發展，我們相信它如今作為 ISP 的產品定位更佳。

This change will streamline our business operations, reduce costs and allow us to maximize value as we will now have all white sand based offerings in one business unit who will discuss this further on our next earnings call, and I'll offer historical financial examples to bridge prior quarter results to the new reporting alignment.

這項變更將簡化我們的業務運營，降低成本，並使我們能夠實現價值最大化，因為我們現在將在一個業務部門中提供所有基於白沙的產品，該部門將在我們的下一次財報電話會議上進一步討論這一點，我將提供歷史財務範例將上一季的業績與新的報告調整相結合。

So to summarize, in the fourth quarter, we continued to strengthen our balance sheet through incremental debt extinguishment and further cost reductions. We're making strong progress on growing the company in several areas, including signing numerous contracts at attractive prices in both of our business segments developing and launching a second source of (inaudible) and silica to meet the growing needs of the domestic solar panel industry.

總而言之，在第四季度，我們透過逐步消除債務和進一步降低成本，繼續強化我們的資產負債表。我們在多個領域的公司發展方面取得了巨大進展，包括在我們的兩個業務領域以有吸引力的價格簽署了大量合同，開發和推出第二個（聽不清）和二氧化矽來源，以滿足國內太陽能板產業不斷增長的需求。

Beginning a capacity increase plan for our sold-out databases or a powders line, which will be come on coming online in early to mid 2025. Continuing capacity expansion for our new ever white pigment product line, which will come online early next year, launching a new and improved core granule product, and finally, maximizing cost optimization and efficiency efforts across the company.

開始針對已售罄的資料庫或粉末生產線製定產能增加計劃，該計劃將於 2025 年初至中期上線。繼續擴大我們新的常白顏料產品線的產能，該產品線將於明年初上線，推出新的和改進的核心顆粒產品，最後，最大限度地優化整個公司的成本和效率。

We expect that the actions that we are taking to increase capacity, expand our contracts with blue-chip customers and improve our operations and efficiency can help unlock transformational growth for the company and enhance stakeholder value.

我們預計，我們正在採取的增加產能、擴大與藍籌客戶的合約以及改善營運和效率的行動將有助於實現公司的轉型成長並提高利害關係人的價值。

And with that, operator, we please open the lines for questions.

那麼，接線員，請打開提問線路。

(Operator Instruction)

（操作員說明）

Stephen Gengaro, Stifel.

史蒂芬·根加羅，斯蒂菲爾。

Thanks and good morning, everybody. So a couple of things jump out for me. Just to start with you mentioned the ISP segment. I know market dynamics are evolving. You had suggested 8% to 10% contribution margin growth as a trend. During the analyst event you held that favorable to '24?

謝謝大家，早安。所以我突然想到了一些事情。首先，您提到了 ISP 部分。我知道市場動態正在不斷變化。您曾建議將 8% 到 10% 的邊際貢獻率成長作為趨勢。在分析師活動期間，您對「24」持樂觀態度嗎？

Yes, we expect to be in that window and average that as our growth kegger going forward Stephen.

是的，我們希望進入這個窗口，並將其平均為我們未來的成長動力，史蒂芬。

Great. Thank you. And when we think about the reallocation of capacity, what does that mean for average contribution margin per ton in oil and gas over time? And what is the sort of current year nameplate or accessible oil and gas frac sand capacity right now?

偉大的。謝謝。當我們考慮產能的重新分配時，隨著時間的推移，這對每噸石油和天然氣的平均貢獻邊際意味著什麼？今年的銘牌或目前可用的石油和天然氣壓裂砂產能是多少？

So when you talk about the reallocation, are you talking about the sort of geographic change of Northern White sand or are you talking about something else?

那麼，當您談論重新分配時，您是在談論北白沙的地理變化還是在談論其他事情？

Yeah. When you said you are reclassifying your Northern White into ISP., Does that mean you're not selling it into oil and gas anymore? It will be used for industrial applications?

是的。當您說您將把您的北白葡萄酒重新分類為 ISP 時，這是否意味著您不再將其出售為石油和天然氣？它將用於工業應用嗎？

No, no. But basically, what that means is that we're going to have the industrial team manage all of the Northern White sand. So I think and maybe there's a little bit of confusion around Northern White sand. And internally, when we think about Northern White sand, we think about all of the sand that meets that sort of technical description and we sell some of that into the oilfield and some into industrial applications like glass, manufacturing, foundry, et cetera.

不，不。但基本上，這意味著我們將讓工業團隊管理所有的北部白沙。所以我認為北部白沙可能有點混亂。在內部，當我們考慮北方白沙時，我們會考慮所有符合此類技術描述的沙子，我們將其中一些出售給油田，一些出售給玻璃、製造、鑄造等工業應用。

And so what we're doing is we're bringing all that together and having that managed by the industrial team within the company. And the reality is that's kind of in line with how we run the company in some ways anyway. And basically by doing this, it will allow one management team in the company to optimize are the profitability and the sort of ongoing logistics and management efficiency of that supply chain.

因此，我們正在做的是將所有這些整合在一起，並由公司內部的工業團隊進行管理。現實情況是，無論如何，這在某種程度上與我們經營公司的方式是一致的。基本上，透過這樣做，公司的一個管理團隊將能夠優化該供應鏈的獲利能力以及持續的物流和管理效率。

Today, we've got two management teams kind of buying for that capacity. And I think long term, we just optimize profits for the company if we have that under one team. So I still expect that we'll sell a lot of sand into the oilfield. But the management of that and the allocation of that capacity will be done by the industrial team. If that makes sense.

今天，我們有兩個管理團隊正在購買這種容量。我認為從長遠來看，如果我們在一個團隊的領導下，我們只會優化公司的利潤。所以我仍然預計我們會向油田出售大量沙子。但其管理和產能分配將由工業團隊完成。如果這是有道理的話。

Okay. That makes. I was I was a little I've misread that. I thought you're basically hedging the Northern White oil and gas business, which should not. Okay, that's all.

好的。這使得。我是我有點誤讀了。我以為你們基本上是在對沖北方懷特石油和天然氣業務，其實不應該。好吧，就這些了。

And then just the final for me and I'll get back in line. There was there was a big acquisition announced earlier this morning. So I think it consolidates the Permian quite a bit with I think the combined entity kind of probably close to 30%, maybe high 20s of the industry capacity.

然後對我來說就是決賽，我會重新排隊。今天早上早些時候宣布了一項重大收購。因此，我認為它在很大程度上整合了二疊紀盆地，我認為合併後的實體可能接近產業產能的 30%，甚至高達 20%。

So there was a couple of things that I that jumped out to me was the consolidation and then kind of the valuation paid for that, which seemed a little low. But can you just talk about the potential impact of that consolidation and how that potentially helps the supply demand and pricing dynamic in the Permian?

因此，我突然想到了一些事情，那就是整合，然後是為此付出的估值，這似乎有點低。但您能否談談這種整合的潛在影響以及這對二疊紀盆地的供應需求和定價動態有何潛在幫助？

Sure. So first off, congratulations to both companies. It's tough to always tough to pull an acquisition off and hats off to them for doing it. As I step back and look at this, I think it's a real positive for our industry, Stephen, but we all know that the the frac sand value chain is pretty fragmented.

當然。首先，祝賀兩家公司。完成收購總是很困難，我們要向他們致敬。當我退後一步來看這一點時，我認為這對我們的行業來說是一個真正的積極因素，史蒂芬，但我們都知道壓裂砂價值鏈相當分散。

And when you look at it compared to a lot of the other parts of the oilfield industry, our industry is very sort of fragmented and de-consolidated. And if this can start a chain of consolidations within the industry, I think that's definitely a positive.

與油田行業的許多其他部分相比，我們的行業非常分散且分散。如果這能夠啟動行業內的一系列整合，我認為這絕對是積極的。

And it should bring more discipline and stability overall to the frac sand value chain, which I think will be basically accretive to valuations for the sector long term. But we've all talked on our earnings calls in all kinds of meetings around the industry about needing to get some consolidation in this industry. And so it's really great to see it it happening.

它應該為壓裂砂價值鏈帶來更多的紀律和穩定性，我認為這基本上會增加該行業的長期估值。但我們在業界各種會議的財報電話會議上都談到了需要在這個行業進行一些整合。所以很高興看到它發生。

Okay, great. Thank you.

好的，太好了。謝謝。

Thanks, Stephen.

謝謝，史蒂芬。

John Daniel, Daniel Energy.

約翰·丹尼爾，丹尼爾·能源。

Hey guys. Good morning. Thanks [for a job anymore]. So I just want to follow on to Stephen's questions and then all else being equal world, would you rather pursue consolidation in oil and gas or in the industrial?

大家好。早安.謝謝[不再為了工作]。所以我只想繼續回答史蒂芬的問題，然後在其他條件相同的情況下，您願意在石油和天然氣領域還是在工業領域進行整合？

Well, I think we've talked a lot about the strategy of both parts of the company, and we're fortunate enough to have the optionality to look across that. We're certainly investing our growth capital and growth energy disproportionately towards the industrial side of the company because we think we have so many, really cool opportunities over there. That said, we invest a lot of kind of mental energy in managing the oil and gas part of the company.

嗯，我認為我們已經就公司兩個部門的策略進行了很多討論，我們很幸運能夠選擇對此進行研究。我們肯定會不成比例地將我們的成長資本和成長精力投入到公司的工業方面，因為我們認為我們在那裡有很多非常酷的機會。也就是說，我們在管理公司的石油和天然氣部門方面投入了大量的精力。

And we like that part as well generates cash, and it plays an important part in the company's overall strategy. I would say, if you look at the dynamics of the two businesses, certainly on the industrial side, there's more of a moat around that business more technically specified. We rarely see new entrants into the sort of industrial, silica and database-as-a-service and different minerals that we have there. So that's why that part of the company certainly commands a premium valuation.

我們喜歡這部分也能產生現金，它在公司的整體策略中扮演重要角色。我想說的是，如果你看看這兩家企業的動態，當然在工業方面，那麼圍繞著該企業有更多的護城河，技術上更具體。我們很少看到新進業者進入工業、二氧化矽和資料庫即服務以及我們擁有的不同礦物領域。因此，這就是為什麼該公司的這一部分肯定會獲得溢價估值。

And if you look kind of how the stock is valued today for every dollar we generate on the industrial side of EBITDA, we probably get 4 times the EV ultimately dropping through to the share price than if we generated that same dollar on the oilfield side. So I think we gave the appropriate amount of efforts of both of the businesses and we like the two industries that we're in.

如果你看看我們今天在工業方面產生的每一美元的 EBITDA 的股票估值如何，我們最終獲得的電動車價值可能是我們在油田方面產生同樣的美元時的 4 倍。因此，我認為我們為兩家企業付出了適當的努力，我們喜歡我們所處的兩個行業。

Okay. One more if I may. When you as you think about growth through acquisition, can you I'm assuming you see more opportunities within oil and gas or consolidation or is that not being recognized?

好的。如果可以的話，再來一張。當您考慮透過收購實現成長時，您是否可以假設您在石油和天然氣或整合領域看到了更多機會，或者說這並沒有被認識到？

Well, I think there are definitely opportunities. And as you can imagine that over the years, we've had a number of different conversations with parties on both sides of a transaction or I feel like the as you know, well, the issue in the oilfield is there's usually not much time where we're buyer and seller expectations actually overlap in terms of valuation.

嗯，我認為肯定有機會。正如你可以想像的那樣，多年來，我們與交易雙方進行了多次不同的對話，或者我覺得你知道，油田的問題是通常沒有太多時間我們買家和賣家的預期在估值方面實際上是重疊的。

And depending on where the cycle is, one side of the other fields like they're not going to get a good deal so I think that's been the biggest issue, quite frankly, to getting something done here and frac sand in particular has been up and down over the years in terms of valuation, but makes it doubly hard to do that.

根據週期的情況，其他領域的一側不會得到很好的交易，所以坦白說，我認為這是最大的問題，尤其是壓裂砂。一點變得更加困難。

Hopefully, this will show a path towards getting things done. It certainly establishes some expectations around what what things might be worth. So sometimes that would it take what kind of light the fuse, if you will, to get more done. And I am really hopeful that we do see more consolidation in that part of our business.

希望這將為完成工作指明一條道路。它肯定會圍繞著事物的價值建立一些期望。所以有時候，如果你願意的話，需要什麼樣的光來完成更多的工作。我真的希望我們能看到這部分業務的更多整合。

And thank you for including me.

感謝您邀請我加入。

Thank you, John.

謝謝你，約翰。

(Operator Instruction)

（操作員說明）

Stephen Gengaro, Stifel.

史蒂芬·根加羅，斯蒂菲爾。

And thanks, Bryan just two quick follow-ups. You mentioned I think 80% of our San in the oil and gas business contracted for 2024. It does what I assume what underlies that is supported on the contribution margin time you obviously provided. But what is the pricing situation right now? Fairly stable? You think I mean, you did mention slight overcapacity right now. How do we think about that? Why demand dynamics for frac sand right now?

謝謝，布萊恩只是兩次快速跟進。你提到我認為我們 80% 的石油和天然氣業務 San 都簽訂了 2024 年合約。它的作用符合我的假設，即您顯然提供的邊際貢獻時間所支持的基礎。但現在的定價情況如何？還算穩定嗎？你認為我的意思是，你現在確實提到了輕微的產能過剩。我們對此有何看法？為什麼現在對壓裂砂的需求動態？

It's a great, great question. And as I said in my prepared remarks, because a slight oversupply right now, of capacity, and we'll see prices down a couple of dollars a ton versus where we exited from Q4. So if you look at 2024 to Q4, of last year, things will be down just a bit on pricing, but I do feel like things have stabilized and we see pretty consistent pricing out in the market today as always as spot prices, a few dollars, it less than the contract.

這是一個非常非常好的問題。正如我在準備好的演講中所說，由於目前產能略有過剩，我們將看到價格比第四季退出時每噸下降幾美元。因此，如果你看看 2024 年到去年第四季度，定價會略有下降，但我確實覺得情況已經穩定下來，我們看到今天市場上的定價一如既往地與現貨價格相當一致，一些美元，比合同上的少。

But I think we've stabilized in the market in a in a very healthy, but particularly relative to history and I think that's how you have to view this 2023 with a really strong year of 2024. I think for us, most of us around to melting anywhere in the service company changed probably there will be a little bit off versus '23. But again, it was kind of a historic year for many, many companies.

但我認為我們的市場已經穩定在一個非常健康的狀態，但特別是相對於歷史而言，我認為這就是你如何看待 2023 年和 2024 年的強勁表現。我認為對我們來說，我們中的大多數人都會在服務公司的任何地方發生變化，與 23 世紀相比，可能會有一些偏差。但對很多很多公司來說，這又是歷史性的一年。

I think, but I still feel really, really good about where we are in '24 and like the pricing in the contracts that we've signed and continuing to be able to have plus or minus 80%. And our capacity under long-term contract really gives us that, that visibility and that confidence. But we're going to have a very good year here in '24.

我想，但我仍然對我們在 24 年的處境感到非常非常好，並且喜歡我們已經簽署的合約中的定價，並且繼續能夠有正負 80% 的幅度。我們的長期合約能力確實給了我們這樣的可見度和信心。但我們將在 24 年在這裡度過非常美好的一年。

Great. And then just the second quick one is when you think about capital allocation and I know John asked a lot about about M&A, et cetera, but what do you think about the balance between dividends, buybacks and reducing debt. So where are you sort of ultra comfortable with the debt levels where more of the cash would start to flow directly back to shareholders through buybacks and dividends?

偉大的。然後，第二個快速問題是當你考慮資本配置時，我知道約翰問了很多有關併購等的問題，但你如何看待股息、回購和減少債務之間的平衡。那麼，您對債務水平感到非常滿意嗎？

So I think just backing up and looking at capital allocations are the first thing that we want to do is make sure that our industrial growth needs are fully funded. So that's kind of priority one for us. And then we look at the things that you mentioned. Obviously, we've reduced a lot of debt over the last couple of years, about $334 million. I think since Q2 of '22, I would say that given the still relatively high interest rates that we and others have out there.

因此，我認為我們要做的第一件事就是支持和研究資本配置，確保我們的工業成長需求得到充分資助。所以這是我們的首要任務。然後我們看看你提到的事情。顯然，我們在過去幾年中減少了大量債務，約 3.34 億美元。我認為自 22 年第二季以來，考慮到我們和其他人的利率仍然相對較高，我會這麼說。

We always have to look hard at debt repurchases. I'm thinking about like leverage levels kind of specifically to your question. We finished the last year about 1.4 times net debt. And at the TTM EBITDA basis, that's a good place to start. And I think we might go a little bit lower there. We're sitting about well just under 2 times growth levered.

我們始終必須認真考慮債務回購。我正在考慮專門針對您的問題的槓桿水平。去年我們完成了約 1.4 倍的淨債務。以迅達 EBITDA 為基礎，這是一個很好的起點。我認為我們可能會降低一點。我們的成長槓桿率略低於兩倍​​。

And so I think there's room to still take that down a bit more. And I tend to think about through the cycle, where do we want to be? And so if we can stay, let's say, under 3 times net levered through through a cycle, that feels like a pretty good place to be as well.

所以我認為還有進一步降低的空間。我傾向於思考整個週期，我們想要達到什麼程度？因此，如果我們能夠在一個週期中保持淨槓桿率低於 3 倍，那感覺也是一個非常好的地方。

So we have a lot of different metrics that we look at, even just thinking about where we want to go and we'll be opportunistic in making those calls. We chat with the Board every quarter and think about exactly what decisions we want to make with us for their cash. So we'll constantly monitor that. And pick the right choices for our investors and all our stakeholders.

因此，我們有很多不同的指標需要考慮，即使只是考慮我們想要去往的地方，我們也會抓住機會做出這些決定。我們每季都會與董事會交談，並思考我們希望與我們一起為他們的現金做出哪些決定。所以我們將不斷監控這一情況。並為我們的投資者和所有利害關係人做出正確的選擇。

Great, thanks for the color,

太棒了，謝謝你的顏色

Thanks Stephen.

謝謝史蒂芬。

Thank you. We have reached the end of the question-and-answer session. Now back over to CEO, Bryan Shinn for closing remarks.

謝謝。我們的問答環節已經結束。現在請執行長 Bryan Shinn 致閉幕詞。

Thank you very much, operator. So as we begin this new year here in 2024, we are very confident in our business strategy and we believe that our industry-leading current and new offerings, the free cash flow visibility and our commitment to further grow earnings, we'll deliver substantial value for our shareholders and other stakeholders. As we've talked about already on the call today.

非常感謝您，接線生。因此，當我們在2024 年開始新的一年時，我們對我們的業務策略非常有信心，我們相信，我們行業領先的當前和新產品、自由現金流的可見性以及我們對進一步增長收益的承諾，我們將實現實質的成長為我們的股東和其他利害關係人創造價值。正如我們今天在電話會議中已經討論過的那樣。

So I do want to thank you all again for for joining us, and we look forward to speaking with you all again next quarter. Stay safe, everyone and be well.

因此，我想再次感謝大家加入我們，我們期待下個季度再次與你們交談。大家注意安全，一切順利。

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

今天的會議到此結束，大家可以掛斷電話了。感謝您的參與。