U.S. Silica (SLCA) 24 Apr 182018 Q1 Earnings call transcript

Greetings and welcome to the U.S. Silica first quarter 2018 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star, zero on your telephone keypad.

conference recorded. this reminder, a is being As I to your like to conference over turn the host, would now Mr. Michael Wilson, U.S. for and Corporate Vice President of Investor Relations Communications Silica. Michael, please go ahead.

U.S. you morning Vice With call. President Merril, Officer. Chief the Bryan Financial joining and Executive Good are on quarter thank and today President Thanks. us earnings Chief everyone me for Executive Shinn, Silica’s call conference Officer, first XXXX Don for and and

today will we uncertainties. participants comments Before I that subject are to would and forward-looking all remind include to begin, like risks which statements our certain

a and company’s you For complete documents SEC. we discussion and release risks of on the uncertainties, read with the these to our file encourage press

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

Finally, questions to would during all to today’s question may over you ask like to that, would Mr. to a call one Shinn. do who Bryan now a to limit the turn ensure wish I question CEO, we follow-up that ask With plus so. our and Bryan? answer session, your

for initiatives morning strategic today’s enterprise, that results, our including strong we then Thanks to everyone. first the I’ll Mike, top EP call Minerals. expect and significant quarter of our overview I’ll good begin by value additional our discussing acquisition give of create an

on up performance X% the the open positive the Merril revenue questions. then key your million Don we million comment of on company was will financial up X% of $XX.X outlook the EBITDA what first for sequentially. the also for color adjusted $XXX.X and call for for first additional I’ll looks sequentially our quarter quarter before for very Finally, like quarter provide markets. Total increased our

some by higher was conditions $XX.X in million quarter very a tons sand a We for strong driven oil X% to report and widespread our and volumes Sandbox. in by in gas weather not X.X network, the performance the up margin breadth our gas our we sequentially, contribution quarter record gas many of winter and depth pleased from due and mine quarter. that start of extreme adversely and oil million First a customers. sold some oil impacted to experienced the despite during and also that of I’m rail sluggish trans-load and industry the first were disruptions by

specialty and costs, XX% and up record price the financially. margin quarter by to small In costs X% for during flat million March the shipped. driven Our expenses continued maintenance on Based Sandbox by sequentially, expect well the higher Quarterly of offset year-over-year implemented volume extreme during increased a business up of and the higher price Momentum margin with $XX.X on operating very winter start volumes, XXXX price higher was was in quarter. the particularly increases a unit impact million all-time as QX year-over-year increases. positive with Revenue driven and weather a an contribution increase strategic good during very was setting contribution for growth basis essentially uptick quarter performed from a summary, business. products volumes. was Sandbox our lower we and significant strong industrial this $XX.X customer in of substantial loads on monthly interest, targeted basis

competitive our and drive to now key position, move enhance that initiatives and shareholders. value profits, our of our growth, create Let’s additional sources on diversify for update an will customers

That or to West at report I’m started first our County, QX. year million facility two XX% in-basin excited new very the per Texas. is It approximately about in we’re up per Texas good Crane of production tons currently drying in of expected a end its making year ramp tons our initially First, of the rate to progress is that QX. on mines X up lines capacity. permitted running by to at XXX,XXX line

the up million and start quarter the We of of full facility year will fourth remainder per rate continue that ton this the expect to X by year. run reach

facility Mesa, per in full June second Our in to million tons of of ramping Texas drying is tons year to track the on wet end with capacity commencing and X.X La in XXXX. produce by QX

is the work difficult our bringing demonstrating we timelines capacity the start-up behind of of for of are our new location. are proud originally very online many that team planned West facility, many the as doing, challenges I’m this While competitors, new our Texas in

continue and further sand tight predict, capacity, bring slower our much much grow believe many exacerbating local industry will that production that the online can than on very than to We market. will further faster current demand come

utilized in we sale cash. trans-loads During only located XX for Of owned. were three the and the Permian, these the quarter, that Ford we of trans-loads announced we basins Appalachian also today, the facilities in that Eagle million actually $XX the

quarter million on us In approximately invest Some the capital This speculated could third allowing that transaction first party where Sand, referendum an the be repurchased that was infrastructure, regard, nothing $XX Northern trans-load partners future total common of White of opportunistic during of to our asset-light further one of the higher for a with in a million. extension partners other this X.X company best sale from alternatives. focus on logistics logical our but strategy, was shares and the return thereby truth. a

under EP sources plan. about talking I’m with Minerals. comes like Minerals. time of of we combination There’s repurchased like our some lot business. to some acquisition million own to now volatility nature current completing business profits rare the us this March spend a cyclical enable will and strengths of shares, to the oil our of advantages and of smooth a and opportunity the out that that XXXX, from diversify of excited certainly about million gas EP to about our XX, As approximately very have I’d authorized X.X $XXX the the

our have to one ISP EP opportunities and structure in markets in EBITDA reliable very number player growth what in fits Also, it of diverse of segment. have projects very had First, number with robust historically over They we they pipeline mining of XX,XXX high U.S. possess two and On were a was customers and over top growth looking revenue. within a stages our and exactly adjacent as business an are a new every several year various development. Minerals margins attractive that, bolt-on double-digit attractive company. last for recurring decade globally. identified and strong flows. cash the with and the have logistics competencies core they They’ve market the

sharing on more We fronts, me believe and international expect Minerals numerous including work product development and and is going forward, such I with becomes sales leads practices I the combined adding mining, U.S. line there that providing in together by acquisition logistics. to ways areas find to more on also we’ll a new close be our as portfolio, EP to to our and broader portfolio. Silica next collaborate best processing bottom in for will cash in Silica The transformation company array as broad flow opportunities flexible cross-selling week becoming materials stronger, performance more establishes product and be with several think to value-add cycles. of throughout our EP a gas generation even acquisition another exposure and and markets company into will is consistent and a cash with greater financial minerals earnings flexibility flows, step growth strength. high resilient to Minerals The company. consistent allow a oil investing increasing Further, U.S. even to it and and comes also stable, opportunistic when us clearly

for additions. total pace length future, and extremely volumes, the contracts approximately throughout just frac outlook We more greater year continue from pad and tons of given our is services sand the driving and however, the than White, expect those we to longer supply. throughout well provide Northern sand. greater up me market are of Accordingly, have rate projected average to pump operating foot, to sand at expect to years; to the some extending as strong gas, as efficiencies delivery let year, that market we’ve oil weighted signed, tight is the we customers More the faster recently million market a several regional right. and today the well segments. and just than XXXX approached the per demand per into laterals, X.X In that upsizing demand oil demand us We’ve XXX capacity both frac ensure contracted local contracts gas sand over sand run Finally, and our and a Sandbox rigs, up per of and ramp estimate into drilling total and volumes adding XXXX. tight rig uninterrupted about see for remain XX% we

second these demand that will digit indexed spot to will in Based higher rig Given feedback, increase pricing quarter to dynamics, mid-single reset are of our count anticipate will which of rates, Northern strong White the that we well. the expect some sand customer we also to end and pricing at remain horizontal contract that our on through as continue volumes the year.

the increase we as and and from For improved increased in today. volumes volumes sand expect to per well quarter add benefit continue of pumped Sandbox, pricing, being we crews, pricing second the

whole in ISP, margins on with new volumes effect grain and For seasonality put price we and increases were strong positive X QX by products. driven a certain expect higher that April

automotive and and the driven building to over improvement our and customers, We the products, with strong extenders With the housing particularly call backdrop expect and in home strength Don. now forecasts based continue of we glass, should the I’ll expect to also we robust U.S. by Furthermore, economic Don? and attractive, markets to range in conversations in the growth X.X growth robust roofing growth X%. that, markets. in A continued turn foundry, business sector fillers GDP remains composites lines. believe on drive our

begin morning results will operating good and Bryan, gas industrial everyone. I and and of specialty and segments, two Thanks our oil the products. with

business were oil revenue $XX.XX of up increased the $XX.X ISP The gas quarter. that driven for from down the per-ton driven fourth sand volume $XX.XX of the fourth the and million, First contribution February. oil for and basis for margin compared $XX.XX volumes in margin quarter segment revenue by XXXX ISP higher from announced segment segment on with quarter activity. On previous above by increases in million, quarter of XXXX. the the was was was $XX.XX basis, gas per-ton slightly X% The price prior in primarily and the and quarter a a Sandbox revenue contribution was $XXX.X

fourth the headcount quarter quarter in increase look effective and for the up SG&A This result Selling, was of at our expansion $X.X of related West Texas some million our and million expense quarter development first a first our the of ended $XX.X million, general The were depletion to XX%. is capital business now expense expenses XXXX administrative XX, the due X% increased tax amortization Let’s March million. the to and $XX.X is in $XX.X expenditures quarter Interest new at total in XXXX. expenses. mines for and over company and increase existing results. mostly in Depreciation, three was rate the months the ongoing expense projects facilities. totaled

On $XXX.X the with compared March the equivalents and of XXXX. million of XXXX cash as cash sheet, XX, end million balance at was $XXX.X

As of million and revolving our $XX.X our $XXX.X available we working capital XXXX, March million credit XX, have facility. was under

XX, $XXX.X compared XXXX. our million with at March was December total XXXX, of $XXX.X debt XX, As million

announced share quarter, During completed first was November. authorization repurchase that the back we the in

a price, X,XXX,XXX repurchased $XX price, common including repurchased March million including common at an million of average have this stock. As shares common quarter we first shares fees, fees, total, of average X,XXX,XXX of total Of $XXX of at of during $XX.XX, were stock XXXX, the stock. an of for or of worth $XX.XX XX,

primarily improvement our cost quarter, maintenance projects we During the capital various million and $XX.X expenditures associated Sandbox as as of well projects. incurred Basin Permian other capital growth with and

$X.XX of EP continued capital expect in by million. million to anticipate expenditures end XXXX We closing range $XXX acquisition to million our the month. the this to Minerals We on of We of intend to $XXX $XXX be seven-year, revolving our our credit B finance that, and $XXX call debt new over million I’ll and facility. Bryan. credit refinance transaction Loan an to back expanded through committed term With the turn billion the current a facility

please you for lines would Operator, the Don. questions? up Thanks open

is instructions] first question Our Suisse. Wicklund from [Operator Credit from today James coming

live. now is line Your

But that beat capacity than you the are. be Good you’re see smarter look takeaway the the talking everybody What speak quarter. morning, everything bottlenecks bringing like guys, drivers tonnage they the Everybody Texas of and are what and congestion the thank talks Texas are specific making Can do bottlenecks for gas the about in and guys online? bringing us we West the you else. the and about for you to and really going Nothing you talk roads, to shortages about seeing today? particular and truck now tonnage? what West on on flaring we’re guys, of

a it’s Jim, question. Sure great

a up line Generally running year, of rate have we currently we’ve about as so I by with remarks, out the expect to couple Crane, essentially permitted run it’s that my and there. We’re the at our we’ll that started, end coming. in capacity ramped year seen I of said XXX,XXX in tons of that different kinds line issues have first prepared so do up a and its

in of these you issues, an type awful The first putting at steel up. there’s fabrication was lot just facilities and what’s vendor of when involved look

there fabrication Labor right out some bottlenecks and certainly think issue I into ran ourselves an there. now. is others just

it in as go more people else. work thing other other are things deposits is XX is his like one there’s Texas, lot like start-up most would other low resigns and especially we big every up and are like that who difficult West in, that a are environment really people contain are of challenges I in as us of somewhat properly clays difficult. muds then hiring the seems say a the to but water of low Unemployment They and bringing for of just somewhere all the site mines can, in this. all the running us for a process, the in Permian. that We’re to environment we hire, is fast challenging

in see ramping number up So it’s to is months thing things, It a it’s the seems we’re particular. here. like the number but in of any one working through not issues, there and a coming of site expect them

could, and for Okay, thank buyback. if the congratulations follow-up and the stock you I

great see that and of companies call buy might to executives investors companies stock point a really use other today, to at cash. any this listening back For your be want as

authorization, this cash industrial be flow free from What’s going big since to is behind Now to forward dedicated one you’ve and it, exhausted increasing buybacks, be the to here? stock another that dividends. a plan increased I’m going assuming you’ve made now there’s acquisition going

Sure, Jim.

be in the capacity we we and of next dollars is hundreds the think ramped this imagine, point that. and think how tremendous a amounts lot over meeting, a year expect a that years we As allocate and get robust I of we’ll you and and on I we up that. discussion would good cash, free gas few we’ll about the running. can as oil think Every uses here board around very cash, have important that will have carefully so quarters of of of we generating millions first cash coming

and think Sandbox our right lots opportunities think there’s business to continue market investments you EP as of grow. a growing, and minute the been as opportunities. of so want some The we’ll have well, then lot a ago, have so for example, generally now. categories take I that will that quite opportunities, I there been some starve think looking additional and a don’t board itself, and we there’s ISP mentioned at I Certainly the we’ve to Minerals three is has make we projects, we bit projects sure share growth make of return in growing growth in high of to growth we and there;

of to managing the our We second we’re category sure also want careful, leverage. in make that kind here,

I so at so said, some pretty between company, we’re to Then make debt EP $X.X refinancing dividend as Ironically, sure in our going our do the a that. returning completed is a cash through perhaps that the that $XXX think we that and recognize million buyback, anyway, all maintain we the have and be and I of with of want that plan. so investors to cash third, we’re need the cash to a interesting said that to forget that to have and you things returning very right people answering heavy is companies in taking level. we about to We’re question, managed begin some your good We conservative exposure with we million stays few the companies one the advantage of think pretty the on years. investors, to oilfield and to or I lots important of But we the existing oilfield us. over Minerals, can with think dividend in news that’s debt space, part we next as directly I downturn, to do the have just couple

you much. A high-class Gentlemen, very thank problem.

Thank you, and care. Jim, take

you. Thank

William Our Thompson from Barclays. from next question coming is today

now live. is line Your

Thank start plant, the your a the Permian capacity, oil actually much Then provide Northern morning, just and bit could we to follow-on overall maybe the of White around color excluding your how little shipped you, or capacity contracts. good Bryan. into Permian. that, Maybe with maybe gas are a more

gas of a White, sand contracted, X.X long-term You is Maybe regional versus incremental on years. at said mix mentioned XX% the few volumes contracts. you oil Northern contracted and

around Given seen confidence if and the we’ve highlighted downside? You’ve those why is what now on helpful. - be contract that’d enforceability the before historically about history contracts, prepayment

XX% questions, Sure, into tends given of Will. so one mimic that roughly we’re would would suppliers I Permian the volume kind industry, the consumption, the industry flows largest of all to say that be our about in of to guess. consumed that. mirror we’re our now sand XX%, there, our probably country, would I XX% so the of right frac a lot the White shipping that’s and Obviously about in would so sales Northern great

now. we’re supply as out sold completely the itself, right As far sand

last the literally and We’re had that of we number can make, we’ve that a several contracts everything quarters. have over we selling signed good

gas. that in We’re over XX now, oil contracts I and have we think,

really in our in remarks, latest few as that signed is a can whether contracts a we not. customers, involve more our volumes that, take you like a or their mentioned buy prepayments to from think lot I generation security The us customers gives we question, a of so I that earnings prorated a thing more As prepayment about said of your those in my on QX. I most them of basis, prepared in quarterly that portion

to other that take-or-pay as certainty of security a the and think whole traditional us compared more contracts. gives I level

That’s helpful.

own a You think and some you customers--your sold your owned that highlighted the alluded advantage, facilities, operate competitive the to of so trans-load. last fact that’s earlier, operated competitors have to the trans-load they and

around You helping on asset-light, sort about--you is mile last talk mentioned Sandbox real the of Can the you preference mentioned your had to that have also no be disruptions that logistics. you have you fact How Sandbox? really so do have through the control and obviously environment rails. in you is control but where the imperative operate this of last trans-load, don’t mile you logistics you of

so us perhaps and it���s difference interesting, a philosophy our think I competitors. Yes, in between it’s

rather, you the a for almost them XX and plus currently minus--or If of trans-loads the by of network look at out so know chosen owning establish we’ve the varying to opposed these well, a gas cycles we think coming. we asset-light, all partners. industry, trans-loads cyclical of move then and as we invest more operate, in use, we what contracts three have trusted don’t capital is facilities we is that We We sold were already utilize but of those are be parties, the currently that the or going really know run works let that to with because those to except third and assets. and flexibility suppliers. lengths when Being the to we that oil have

a that capital trans-loads it that and lot getting like of rather also better let activity for us. fracturing a our it’s than of that others We invested moves, we’ve locked know to do into, seems series into the

in best investing I’d Generally, and strategy return well. trans-loads, and take in of having be think we’re industry, has the I projects our regarded the instead rather think worked that strategy. the really capital other service best growth the investors. so to to able I picked we’ve that network invest as right it and, in

helpful, That’s thank you.

Will. Thanks

you. Thank

from is today question. your George Holt from coming Please with next O’Leary Pickering Company. question proceed & Tudor Our

Morning, guys.

guys. Morning,

in and in you remind could of little help breakdown have Just second you a you that oil oil color in to Piggybacking have and bit, the encouraging, on let’s kind between levered, curious we or and is, contract of hone margins on versus contracts? how question fixed activity gas around found the mix maybe exposure I percentage say, the price-indexed us Will’s what increased do pricing so that, quarter. much can any what prices

fixed remarks up my it XX% in so have I that next of in see mentioned actually we’ve so to bit counts rig maybe most have if I would go count, that signed that give contract, increases the contracts we to prepared should are see rig most we’ll price. relatively a the of clause contracts We do that up, have we expect would that the type that that of say we guess, that the I recently in of us price some, leveraged there, tailwind and actually in tier move that there. will are

the I last in just industry, back as the my think terms market been over I XXXX, generally it market looking is probably extremely I’ve tight industry. years seen I’ve nine that in in is years this and in points seen for save some strongest the of the as this I’ve in that would several the demand, or strong. eight is say

Great, that’s helpful.

be The was to Sandbox I again, the business. deployed? of Could on Could this for per many like some realize fleets expect you to well XXXX it maybe other gaining us larger, how a the--and part as increasing target get to it seems have but of earnings remind kind sounds the us power terms quarter steam have the the you of update continued fleet. business, you fleets in

about to fleets end We that. and fleets track hoped saw we’re XX QX. Sandbox on running, still the XX be year, think there we in fleets had deployed I around of the by out We Sure. running said that for

thinking currently that right to now. last to we’ll really the day there actually is in continue that a a discussions in of about momentum there, fleets mile We’ve variety other expect We of probably switching containerized know, customers--I fleets in lot is got, we’re customer was don’t increase a that strong talking and is that customers to solutions. XX the to with delivery, on--some interest XX Demand of a Sandbox, just so through particularly I XX QX. lot

I there, versus a systems. just savings the certainly there’s tremendous that think what pneumatic recognize is lot folks of

seeing XX% truck fewer the also of We’re customers we’ll so deliver containers maybe way trucks costs very see typically profit we powerful savings is about by those and a to but lot there, think a savings with a there’s and good customers drivers service. it reduced share the and pneumatic, versus so we improved It’s make the offering.

Great, much for thanks color, very the Bryan.

Thanks George.

Thank you.

today Michael LaMotte from next Guggenheim. Our is question coming from

is now live. Your line

Thanks, good guys. morning

Michael. Morning,

that maintenance White have back White is second really to that volume be midpoint that’s seems or on would question Northern more Hey circle could XX we’re If second math around or Is Crane which growing have Northern in question, else XX%? my I XXX,XXX the of tons to some will QX, about keeping Bryan, always I’d and quarter The there from governor a on that at - growth, a given anything in the the that’s coming looking volumes thought disruptions like to the sequentially. grown is quarter. be correct, increase. the of guidance sort for the half

Michael. No,

right out any so sold completely just We’re White volume. more there Northern really isn’t now,

more but Northern absolutely through we’re as sometimes trying that, facilities; just pushing we weather up obviously a can. now, the squeeze as and to White save for few get our at right can out as already everything we of warms capacity We’re tons can for and hard we mines

XX think just in It’s how Crane produce, we we the and terms guidance, for and supply we’re in of comes that In kind squeeze it’s gas, mostly of here out much can related purely at of XX% of demand County and system a how out QX. overall of the not market tight now. I purely factor much oil talking It’s with our right can volume maybe that’s being how much to about up all.

is good and you’re constraint is well capacity Okay, thing consistent for certainly with price, a seeing it there. what

The question on Sandbox. second is

competitors out market at you looking away look fleets, roll know XX at capacity, your are at but it’s looking and how and so be space to really growth bit going would initiatives asset on as mile I as As pneumatics technologies XXXX, the slow the a quickly focus we that Sandbox and as into final initiatives at--I the early of in have and as really curious efficiency asset I’m rate, of more and to I go kind turnover. the next turnover. year, suspect, would to shift on kinds and you the or at efficiency focus

Sure.

just determined is by XX that, market. premier next much next overall XX demand Sandbox moving in changes probably think I think more I for the which after today, converting of happen. Then solutions, to point as growth, your the to from of growth will as in around of pneumatics out last I solution just the we’ll the be mile away maybe there and months, industry the the generation so that think kind share see shift will to

technologies looking Sandbox also at on we’re noted efficiencies, intensity to in of opportunities to it; happy have as in going I there continue up, a sand help been to see number folks about interest that working are sand talk and there. the more improve per to we’re by We get if others, has an our team initiative and box, that but has think more so

looking a reengineering We’re flow also associated at--constantly to looking able of and driver to times product, dispatch with make and we’re looking our networking at shorten them the times variety systems some of at of equipment more technologies to and be other efficient.

going that say to but So over on share right our gaining I that the would we team market primary XX has play a focus the of things next months. XX now, in be and to penetration going is know lot is

sand How per box you you get? think much more do could

drops another You in working margins to every on right to top that is right know, you in for know, - That that comes could all in you additional diligently. pretty I XX% XX of team line. bottom the and percent there, get improved the of we terms get the probably all think there, sort off

continuing but which pretty think is is I the we admittedly there. already still to also looking improve of Sandbox, we’re think robust, there profitability at opportunity

That’s guys. great, thanks

Okay, thanks Michael.

you. Thank

question Mulvehill Research. from coming Wolfe today next Our from is Chase

live. Your now line is

good morning, Hey, Bryan.

Chase. Morning

if guess we know I your color oil for outlook little want margin bit, and contribution more can on kind if QX gas provide come you don’t of little bit guidance per to I a to ton. a

good oil on give maybe some You and gave but gas color in be quarter us and us for your first about expect beat quarter, that what margin outlook some per you contribution ton. color to you the XQ last for that;

Look, it’s at going what see. probably point, I think based on be flattish Okay. to we this

gas As in Hopefully I can as to and that. to think beat XX% constrained oil on number, in by we QX, ability we general we’ll volume going tons. mentioned but produce are that to earlier, see XX be our I about

thing White, say of things the little the the make in look sites, at the sand, - and in to see all right and for logistics like the easier our out, weather oil that so that even that working higher. flattish we typically obviously continue that improvements to better remarks the about QX, up terms our we’re drive customers QX worries but our with balance as me the serve do of region I exposed positives I it’s either for think in that. a and now only getting to of pricing. are little ton, for bit see talked some Northern XX% We sure that. just a cases warms in spot but would we��re to certainly kind takes, throughput in the behind when customers, would a supplying XX that’s we that. pricing, try we we’re really on manufacturing to other bit Crane other ton do spot so prepared costs gas digit Texas a of and I can will than increase all a associated in or from in some up, County see I side We my can’t if volumes is kind mid-single per to hard have puts say little margin we coin, CM increase some We we per in on positive bit, usually facilities in about as margins contribution that of

oil to that’s confirm, flattish and Sandbox, say inclusive you of gas, Just when correct?

Correct.

about couple year, that. follow-up. pretty quick questions so you’re of fundamentals like sand a around sounds this A positive It

adoption Given maybe outlook tons your for the backdrop, what’s - to and some Eagle expect you going be positive sand term, announcements Mesa there, lot view seen options slow, would Silica at down then or that quality? potentially La your just we the that a do think there. point in the we’ve X of you in-basin Should medium mines the Ford know, given million of be exploring that on should

gotten for You of a think know, questions, I lot we and Mesa. requests have demand really great La

online, soon that We have popular come think to to especially north for there, to I baited as up very location in that know going We breath particular a large of spot, plant waiting with midland. we’d the that that up in given a think possible. and up so number as we’ve running, its as as of that’s hard I we supply a contracts like get be obviously are push and couple that got customers

that? we’re What or you it. some talking from if step at way when there’s typically other it’s know regions, this lower a XK by crush, supply the it’s Permian universally other sort Ford overdone. think the and that lot now, not obviously, The Northern still is the some the particularly down As to just make main found mean to like are step maybe look I a of down step so I we’ve seen crush. this least it you and lot in at have XXX typically the as of mesh, have. commentary Eagle the that industry picked right almost XX% X think on Others and up in quality. that in your over bottom question, but which Well, a I very basins, customers X, are it’s way crush in big Permian, customers outside in-basin all on look quality, of But a we is work, is deposits reason, concerns of do I but interesting. don’t a far line down around the sand, the XK you White, another or sand

tend even more hardly touch services those talked that specifications, we’ve there, who we’re to As of to product of a energy want found companies them be haven’t watching out the around to and we flexible so number sand, any that that.

adoption couple the weeks last we is I of get the those but feel you the limit further a where sand We’re out sophisticated White to rate if you afield like, picked wave be of even contract. as very we that perhaps wanted enough, customer. frankly Permian the a large enough. quality--as sign--or the to to could gets could not some feels very asked is good going just us might looking further we up, are to good like at I they it’s the Eagle had This adoption quality generally though, the quality Marcellus, worse, question, they it many the even not lot other came customers--a in of the A to we’ve quality you and there sign mines of think use Northern cases going carefully, and like large opinions in areas number to we see in sand, from seen in much, Ford, is than there. the in really When going look, much coming be so to what Permian, a we’ve the point of there the Permian, Permian, and but kind products even it different this large quite purported have customer is your at thought with which to get up the that us said, is me

turn right, Bryan. it great back That’s color. I’ll All thanks over.

Okay, thanks Chase.

Thank you.

Our Bianchi is next question from Cowen Company. from coming Marc &

now Your line live. is

Back the included so contribution million first that that and that the a cost ton. for for in margin cited oil gas Did quarter, the was $X.X segment? that’s was adjusted number, a the was margin include that $XX.XX on EBITDA you. Thank in the contribution

that pulled adjusted we them capitalize expect issues about the out, our unforeseen give to you they’re took I we well number we plans, talked gas. so continue, at are get can’t a these related look rightfully so. and that margin, and right, expansion costs to them, them contribution in and out think Bryan that inventory-able, start-up Yes, better oil mean, don’t that we contribution to so are we margin of not that to vitality in to

did $X.X margin $XX.X did include I’m the of not contribution of for the contribution million then so not EBITDA, and cost? oil segment. quarter Okay, the first adjusted gas the or for in just million asking margin

Right, right. out taken was It of number. that

quarter, being Okay. things those on think should for flat any start-up in Then about that of second thoughts Bryan, your costs? excluding also we

you question? can repeat sorry, I’m that

contribution that of those that should margin thought it you also excluding the be one-time question, to The mentioned sequentially. Chase’s response costs? in flat Is

Yes.

You we’re assumes know, to our going we the that guidance QX, to have QX of have--we’re substantially less that in in QX. not costs start-up going saw in

tons. that than it like quarter? ramp Okay. of to delays to Crane obviously Then for--. the Would the the delayed to is third ramp at a in all. talking quarter been out you able that? of XX% over looking and quarter, Is growth I with Kind think we last a to there even get second some were volume the thought, the worked that or million I in level think and little more anticipate XX something X be have to reasonable

volume, that question? Four Marc? million tons of oil your Is and gas

right. Yes, that’s

Yes, we Yes. I can get that. think to

it turn back. much. I’ll so great. Thanks Okay,

Thanks.

you. Thank

question next Markets. from Keybanc is David coming Deckelbaum from Capital Our

now is line live. Your

Morning, for taking my Thanks guys. questions.

David. Morning,

going I but just have redundant questions of around know being bit a you quarter, for at pricing maybe guys a was next of little the clarity, sake the I answered lot looking into more here.

it would the price assume contracts, two-year is healthy that With be the digits? to are the legacy for those reset these in fair contracts so double that are rolling,

a We’ve roll given We of of lot actually term. signed a to terms a think new months, we’re XX the I so don’t contracts the capacity, lot the last meaningful in short see in have of rolling. going contracts of contracts don’t all in

I that single for of sort Okay, that wide corporate guess on pricing, gave so the basis, guidance low you you on a pricing then digits on spot then? just in sequentially think be per-ton should QX, average,

only average Spot digits. all controlled minus, going mid-single looks will probably by and than spot that itself said to be--spot Correct. you pricing digits. the is it average exposed is higher we to right XX% low that’s given contract, single But plus really when on of now, pricing, XX% strong so pricing be the across market, or

the one, about snuff. comments adoption I been made does wanted was necessarily of to in-basin the assume have Silica, peer’s to it’s sand Got in-basin How and using and the but curve up this you sand, for this fair of it. this that the about Was online have for sophisticated not I I a broadly there? guess a would large you coming very felt customer not that Silica’s? thinking guess to the volumes a that of sand some occurrence, some revisit necessarily recent

groups. It’s three good customers a and broad really I into fit our think question,

right, of clearly this; happy for in results, load results, war in the already and in be if the one tried the not, we’re customer I interested they’re will. tug they’re middle, some so and if the is to of of or It’ll a the to and large and the just wells, not business Northern there’s the going are or the then test kind which move done side middle move, say bit we done they’re that’s other. they’ve left looking for with to teams we they those stay will, White we’ll middle of is weren’t customer kind other we’re fairly and that waiting it you happy to with have side who percentage to in This like with the customers ground, or where middle waiting of to something work, you and to were that had or sit, got customers customers on go see it and lot between and results, really have think look, It’s the or either and happy of a their on sand. like a technical interesting well won’t they seeing, some of the which move all the probably have of that. either back You they customers to hard that but said, absolutely way the feels Then you���ve is bucket some see. said particular in enough results, that, think us, this to wait sand going base good so who what set,

the a product a like completion, there’s frequently disagreement around if as I think shouldn’t be is it think industry, from adopt of not takeaway so about everything seems terms this to is, you wide perfect is disagreement well. it. and there important what like which there’s is matter - and no technical the saying to is this nature everybody it Look of in I it’s spectrum that that of proppant almost on types we opinions, guess will use be surprised going

for sand and you there, this the a the solution use then to some a experience the is follow-up with as quick it of Northern guess customers or that using is they’ll that out to had don’t be one be want I do you this blending more ultimately that, that think like going with, crush White more all? we higher of it at and strength sand the in-basin on

to Northern that use tends a exclusively, been It be the way sand - sand. and of use that perhaps sands the for seen of lot local almost don’t the other regional long time. or customers they either they some and haven’t White they a like We have customers blending or one they or the using

many some miss while, here be is implications be able well and long-term of sand the will one a lower I think or no year takes this to it what in of in folks the for that performance, cases other maybe know terms quality is months some using sure point that. to that

won’t. and others will companies move chance Some the take and ahead,

much. guys. Thanks the I Sure. color very appreciate

questions. the for thanks Okay,

Thank you.

with Watson today question Company. coming next Our from Please proceed is question. Simmons John & your from

some morning, for during Good I do from your to that guidance and you been guys. industry, an pricing the it QX, level On of in spot rail but for higher quarter? the for expect is you, know issue hasn’t disruption rail, move contributing to

there’s supply companies, so high thing I down see but tight out. ironed be barges seems we’re disruptions in water QX It what’s John. that’s things at that going industry further flooding the Ohio all point, of Mississippi and freight and not appreciated dramatic system, a much as the and including going these Several rail. question, both this it’s the expect and may like demand it don’t right pretty ourselves, disruptions again, the that sure lot another of exacerbates think on has from the a that and see the but there and probably Mississippi, in barging. tremendous that River I more I’m have and Good a levels not yet now. to Rivers, it’s--once some of a so that Ohio on rail than lot is be I river rail River a seeing to in already may situation. We tied don’t it’s up been shipping waterway most from industry. gotten lane, one our think use of kind impact, could impact you’re that record up

QX Okay, look it. are ’XX on for margins and at ’XX? of Unrelated, Is watermark decent a for QX, higher. for got us of volumes to ISP moving QX

forecast QX ISP our for we’ll I that, think than now, pretty are for bit honestly. quite probably better be strong. and darn a little Right QX

just We we substantially. announced some start but actually we’re about to fully announced industrial be and additional the increase QX. in pretty come quarters for hit I in think obviously April customers, will very ISP in ahead. QX - that some to good see going I strong so feel had we through, seeing January which but to business price in up a increase come price pricing We’re another has and in expect margins volumes

Okay, great. Thanks, I’ll turn Bryan. it back.

Okay, thanks John.

you. Thank

Humphrey. is Ken next coming question Sill with Robinson Our from SunTrust

live. now is line Your

is Starling Hi, for good Ken. This morning, in guys. Terry

Terry. Morning,

My going Good revenue to contribution on question think Sandbox growth how to about and the forward. morning. is

we you [indiscernible] and fleets, keep forward? As the margins to to going increase adding higher more start just accretive volumes see should

crew we terms of some we you’ll leverage that fleets, that terms as One would think on down linear obviously. I have in of don’t add some additional fixed get out that cost the next of the that in there another to see way, hope a are scaling margin, a couple per add little that is costs I things. sort total a of basis; you goes one-for-one when you bit. because add just beyond crew, or revenue, fixed said

expect as to revenue think we and excited saw and pretty forward in and QX up margin some pretty we’ll we’ll XX%, we beyond. up QX there here I’m good and see QX example, - in continue XX% increases I momentum contribution go I nice see about for about that Sandbox.

with our bit and to when on lot can operations costs. overshoot dramatically Sandbox, hard sometimes you’re there, working had We’re We’ve the a scale scaling been you operations like a we’ve on costs.

think kind continue our to I of so trim we’ll that should help expenses, right-size profitability and well. that as

these it, pulling start something the what of the drying and initially mines, just out, lot they this testing and looking is that and material capacity isn’t proppant the you fairly that, the to thought the on it, Permian by question, I follow-up that drying ranks a amount with would of you sand sand believe crushed a delays Okay, equipment. the what mentioned follow-up of the thank rank of and deposits I in some guess you. in terms the in the wants, or area cleaning at quality a the or of once How kind noticed pervasive the material organic and issue is then with and you mine? customer the clay of start importance really guys versus the start in sand the that organic available of they

your that would that low imagine--let’s the a this and XX% be that. strength of XX% so to that a worst clay the because sand, scenario, have crush so in impurities, the strength, those no very, to you we other deposit and can much as of first product want muds, had was Sure, little typically you and question, just on things say in you very elements out to are clays, not crush so do sand and strip what case harder those different of something, take or up. nature the that clean is to we very Part the Texas before were and take of just product operate deposits in XXX it makes that at a all of fact best would did, industry some yes, after low we thought that problem I in out and that the the looking say you seen, environment, which know, the harder picked deposits don’t impurities, we I is that to West tend water it probably, pervasive. we’d ones because

available to actually understand think You that that some lens it sell The ultimately see ton tons to what’s has out would others of that more through assets the and might interesting as is X what’s there X It’s out a because the maybe just mean shipping the installed. do mine process, to effective a another up, they’ve effective actually nameplate capacity, we not been to look it - at point capacity million site industry announces capacity when mine back door, someone processing, lower in right, that’s the so million bit typically of equipment customers. different those the doesn’t difficult a and they’re of struggling that and be. put well a limit it and I

sand. you. not or Is well other causes volume Thank has How overall is because correct? you the an the--I material It’s the strength would organic material it of much reduces more that for organic of the so crush a rank impact issues? the guess

lower, so cause production up tremendous find really crush of to want the why well, smaller the materials well. just important. is strength in into they the they they not a the out that the ultimately they that you flow the other for because they’ll find in for small as what they flow crush grains fact inhibit does the customers when That’s pathways that up that crush clog particles It’s want crush, because it’s get don’t and clog the it and oil they under gas the or Well, crush form why want the issues to pressure when high sand. gets overall the high that’s crush is bore, crush that those particles well other down pathways can

Okay, that’s very helpful, thanks.

Terry. Thanks

you. Thank

today Our from David coming Smith is final question Heikkinen Energy. from

now is live. line Your

you good and Thank morning.

Hi David.

back circle to Wanted Sandbox. solid Pretty quarter. Hi. to

for how many with good us in I roughly tell you boxes or a per recent crew? that, think Wondering XX if crews QX. associated roughly said are boxes you could average maybe

say we’re that XX an but now. of it When we artefact the loads today, so many monitor or quarter. Sandbox, average about metric per a say progress like increase through we’re seen a that more would in that so and now just quarter, we news boxes; sand, of the I building box, is the XX, themselves, metric boxes crews Yes, and crew equals the internally deliver a are every we or XX one bought XX how many the number turn number actually our crews paid, that did averaging through the time the we than for circulating internal main probably use tremendous business, have so in was sand crews to right loads we’ve of good probably per more just sand probably load of how about we XX, and us that’s of talk that the boxes well. the that’s of and month a It’s are--or because get that we box,

or for your basis. whether great per steel about color. much Sandbox higher prices expectations how you, Also, Thank unit a impact for just would on curious capex

higher prices? of Sorry, kind what

prices. steel - Steel

the see Oh, question, boxes, go steel we’ve have on fabricators, we some equipment, tariffs already, a we a actually up. to for but steel. of specialized some tend and had discussions a it’s the we keep--at our pre-ordered keep the we of bit, fabrication so hand we and Yes, prices prices inventory drove back some pre-purchased that had up great we some use before so around steel recent that

of short the term a don’t think in see impact least from that. I anyway, at lot we’ll So

Great, so much. thank you

David. thanks Okay,

you. Thank

or any our We back I closing to over and question Bryan floor have further reached would answer comments. like the the session. end for turn to of

record to Okay, performance you thank a expect very reiterate company. I want think we close deliver positioned in I that call great start a have year to ever and everyone like for our and today’s thanking the XXXX, much, by XXXX and best everyone dialing who in, Thanks us day. to I’d Operator. certainly really we’re for helped across strong

teleconference. does That today’s conclude you. Thank

You time may line your this disconnect for We at participation have today. and you your wonderful a day. thank