U.S. SILICA INVESTOR DAY September 10, 2014 INVESTOR DAY 2014
WELCOME MIKE LAWSON Director of Investor Relations & Corporate Communications INVESTOR DAY 2014
Todays Agenda SLCA OVERVIEW Bryan Shinn AND STRATEGY President & CEO OIL AND GAS UPDATE Don Weinheimer Vice President & General Manager, AND TOP PRIORITIES Oil & Gas OPERATIONS UPDATE Mike Winkler AND TOP PRIORITIES Vice…
BRYAN SHINN President & Chief Executive Officer INVESTOR DAY 2014
Unprecedented Frac Sand Demand The race to drill for oil in the U.S. is creating another boomin sand, a key ingredient in fracking Sand prices are rising and companies are racing to build new mines in South Dakota and other…
Key Messages Today Delivering double digit growth, Strong ahead of plan. Expect continued Performance strength across the enterprise. Goal: Substantial Adjusted EBITDA Growth Industry leader with low costs, Differentiated…
We Are Delivering Against Our Growth Plan 2013 Investor Day (Actions by 2016) Results Double EBITDA by 2016 Expect to achieve in 2015 Sell out Sparta 1.7M tons Sparta now sold out Add and sell-out an additional greenfield Utica…
AGENDA Our platform for growth Our strategy and goals INVESTOR DAY 2014
Record of Strong Performance Revenue Adjusted Volume EBITDA (1) 546 8,161 161 5,965 2X+ 2X+ 1.3X+ 245 72 INVESTOR DAY 2014 2010 2013 2010 2013 2010 2013 (1) See Appendix for reconciliations to GAAP 10
Building on Two Strong, Complimentary Business Segments OIL & GAS INDUSTRIAL & SPECIALTY 40 1700+ 10 25+ 7 10 35 transloads expanding to Extensive new product 50+ by 2020 pipeline INVESTOR DAY 2014 5,000 leased rail…
Driving Success with Speed, Scale & Strength SPEED SCALE STRENGTH Rapidly expanding Scale matters Balance sheet our logistics flexibility footprint Developing one new 3M ton site Talented & capable Aggressively every year…
Key Strengths that Set Us Apart 1 Low cost leader 2 Advantaged logistics network Strong and sustained 3 Strong financial position competitive advantages 4 Clear growth opportunities INVESTOR 5 Balanced mix of…
Keeping Pace with Surging Demand 800K Ton Per Year Pacific Old vs. New Well Completion Sand Intensity Plant Expansion 2,500 Sand Intensity Increase: 80% ROR Increase: 40%/well Driven by market shift NPV Increase: 2 M/well 33M…
AGENDA Our platform for growth Our strategy and goals INVESTOR DAY 2014
Continuing to Execute Successful Strategy Key Drivers 1 Potential to aggressively expand capacity for Oil & Gas segment 2 Rapidly build out logistics network Our long-term 3 Grow margins by expanding value added capabilities…
New Goal: Adjusted EBITDA Goal of 550-600M by 2017 550 - 600 230 - 240 2014P Full Utica Full Cadre Full Pacific Fairchild Potential ISP New 2017P INVESTOR DAY 2014 run-rate run-rate Rochelle expansion Greenfield Products…
We Expect to Continue to Gain 1-2 Points of Share Per Year New plant acquired or comes online Potential Greenfield 2 Fairchild Pacific Voca Utica Sparta INVESTOR DAY 2014 Sources: 21.9% growth rates based on…
Initiatives to Achieve New Goal of 550M-600M of Adjusted EBITDA in 2017 Segment Strategic Goal Key Actions & Triggers Roles of M&A Build New mines Sell out Utica - 1.5M tons Sell out Pacific expansion 0.8M tons Increase Sell out…
Looking Beyond 2017- Our Goal is Adjusted EBITDA of 900M-1B by 2020 900 1,000 550 - 600 INVESTOR DAY 2014 2017P Greenfield 3 Greenfield 4 Greenfield 5 Modest ISP New 2020P acquisition Products & Growth 20
Key Messages Today Delivering double digit growth, Strong ahead of plan. Expect continued Performance strength across the enterprise. Goal: Substantial Adjusted EBITDA Growth Industry leader with low costs, Differentiated…
QUESTIONS INVESTOR DAY 2014
DON WEINHEIMER Vice President & General Manager, Oil & Gas INVESTOR DAY 2014
AGENDA Recent developments Our top 3 priorities going forward INVESTOR DAY 2014
Step Change in Demand: Rig Count Unconventional Rig Stages per Proppant Proppant demand rig count efficiency well per stage U.S. Rig Count U.S Rig Count % Horizontal Rigs (area) (line) 2,500 80% 70% 2,000 60% 50%…
Step Change in Demand: Well Count Unconventional Rig Stages per Proppant Proppant demand rig count efficiency well per stage U.S. Horizontal Wells 25,000 20,000 15,000 10,000 5,000 INVESTOR DAY 2014 0…
Step Change in Demand: Proppant Per Well Unconventional Rig Stages per Proppant Proppant demand rig count efficiency well per stage Permian Eagle Ford Bakken Marcellus +183% on Adopting proppant Eagle Ford Majors +55% on…
Step Change in Demand: New Well Design New Well Design Higher number of stages, often double for equivalent lateral length Higher proppant per stage, some as much as 100% Result: Increased proppant per linear foot of lateral…
Why We Like Long-Term Contracts North American Proppant Demand Model Currently have 70% (Built on a Play-by-Play Analysis) under contract Lock in volumes at attractive margins Gain efficiencies in production and supply chain…
Becoming Even Easier to Do Business With Customer Portal INVESTOR DAY 2014 30
AGENDA Recent developments Our top 3 priorities going forward INVESTOR DAY 2014
Top 3 Priorities in Oil & Gas Grow as fast as we can Build Out Infrastructure Expand in existing markets and markets with small share Skate to where the puck will be Increase throughput to accommodate customers Increase Velocity…
QUESTIONS INVESTOR DAY 2014
MIKE WINKLER Vice President & Chief Operating Officer INVESTOR DAY 2014
AGENDA Recent developments Our top 3 priorities going forward INVESTOR DAY 2014
Overview of Current Operations Mauricetown Fairchild Mapleton Operational Highlights Rockwood 17 operating facilities and 1 greenfield Sparta 366M tons of high Rochelle quality reserves Ottawa 8.2M tons sold in 2013 Utica…
25% of Cont. Margin Improvements from 1H14 Came from Cost Reductions 1. Structural 2. Debottlenecking The lowest cost/ton in 3. Lean the history of SLCA 4. Logistics Utilization INVESTOR 5.…
Bringing new supply to market Mining the sand Securing railcars Getting to market Challenges: Challenges: Challenges: Large, contiguous plot of land 24 month lead time Railroad congestion Coarse, API spec deposit Long leases and…
Pacific Expansion Highlights Adding new 150 tons/hr dryer to Pacific, MO plant, increasing production by 800K tons/year Focused on supplying the Permian, Eagle Ford, and Marcellus On the Union Pacific and BNSF railroads Barge…
Utica, IL Plant Update 1.5MM tons of annual frac sand capacity Start up in July 2014 Access to 3 Class 1 rail roads as well as barging Construction completed in 7 months 40
Focus on Sustainability PEOPLE PLANET PROSPERITY GHG emissions per Sales growth of 23%+ Reduced our total ton of sand were reportable incident rate reduced by more than by 25% Expanded transload 3% network by 17 sites…
AGENDA Recent developments Our top 3 priorities going forward INVESTOR DAY 2014
Top 3 Priorities in Operations Maintain active pipeline of potential new sites Add Capacity Expand existing production and load out capacity Fill out the team and tool up to grow More unit trains Increase Velocity More in-basin…
QUESTIONS INVESTOR DAY 2014
JASON TEDROW Vice President of Supply Chain, Growth & Development INVESTOR DAY 2014
AGENDA Recent developments Our top 3 priorities going forward INVESTOR DAY 2014
Current Logistics Challenges and Opportunities Challenges Opportunities Tight rail car market, lead time for new Continue aggressive car acquisition covered hoppers is 18-24 months strategy, equipment required to support 2015 and 2016…
New Well Design has Multiplicative Effect on Supply Chain Needs = 10 railcars = 10 trucks Old New Railcars and trucks needed to Railcars and trucks needed complete one well, volume sold to complete one well, volume through TLs sold…
Not All Transload Sites are Created Equal Rail to Truck High Velocity Unit Train Facility 30+ minutes to load a 25 ton truck 6 minutes to load a 25 ton truck Limited throughput capacity Efficient railcar utilization Railcars used…
High Velocity Transload Facility Integrated dust collection for 15K tons of clean loading and 700 ton/hour bucket silo storage unloading elevator can unload 100 car unit train less than 24 hours Loop track can Multiple silos…
San Antonio Expansion and Odessa San Antonio Facility Expansion Odessa Transload Facility Adding 10K tons of storage for a total of New state of the art terminal with 20K tons 25K tons and ability to receive 2 unit trains of storage…
AGENDA Recent developments Our top 3 priorities going forward INVESTOR DAY 2014
Top 3 Priorities for Supply Chain Identifying the next Greenfield sites for plants and transloads Ensure Room to Grow Ensuring we have enough railcars to support our growth strategy Increase depth, breadth and scope of transload…
QUESTIONS INVESTOR DAY 2014
DON MERRIL Vice President & Chief Financial Officer INVESTOR DAY 2014
AGENDA Financial review Guidance update INVESTOR DAY 2014
Our Capital Allocation Priorities Reinvest in the Business Best in Mergers & Acquisitions Class Total Shareholder Returns Dividends and Share Buybacks INVESTOR DAY 2014 57
Reinvesting Back in the Business Strong Balance Sheet to Fund Growth Initiatives 150 M Strong operating cash flows Relatively unlevered balance sheet 100 Cash Flow 46.7M available under revolver Capex Total liquidity of 227.7M as…
Making Accretive Acquisitions: Regional frac sand producer located in Voca, Texas Fully-automated, state-of-the-art facility opened in 2011 Products shipped by truck to the fast-growing Permian Basin Over 65 years of high quality…
U.S. Silica Performance 2009-2014 U.S. Silica - Revenue & Earnings HIGHLIGHTS Strong demand for 600,000 10,000 products Growth initiatives driving results 8,000 New pricing and more 400,000 value-added products 6,000 resulting in…
AGENDA Financial review Guidance update INVESTOR DAY 2014
Updating FY 2014 Adjusted EBITDA Guidance Press release issued this morning before market open Increasing our FY 2014 Adjusted EBITDA guidance Previous FY 2014 range of 215M to 225M Now anticipate Adjusted EBITDA in the range of 230M…
QUESTIONS INVESTOR DAY 2014
APPENDIX
Reconciliation (Adjusted EBITDA to Net Income) The following table sets forth a reconciliation of net income, the most directly comparable GAAP financial measure, to Adjusted EBITDA. Year Ended December 31, 2013 2012 2011 Net income…
MATTHEW K. ROSE Executive Chairman, BNSF Railway INVESTOR DAY 2014
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