U.S. Silica (SLCA) 30 Jul 192019 Q2 Earnings call transcript

Greetings, and welcome to the U.S. Silica Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

to conference like host, to now Mr. would turn over the your I President and Investor U.S. Lawson, of Michael Vice Relations Corporate for Communications Silica. Thank you.

may You begin.

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

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

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

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

your during today’s one question session, ask follow-up we do plus ask would Finally, you question-and-answer ensure all so. to who questions may a a wish to to that limit that

now I call Shinn. With over would CEO, Mr. that, turn Bryan to to Bryan? like our the

of the opportunity business enhancing as Gas our and start to time both sustainable remain by on and and I’ll model. second and Mike, everyone. we forward. to Industrial going that explain flow we prepared an making to my begin & cash the strong while we’re our amount then our with plans changes company performance grow drove excited priorities outlook I’ll today’s conclude segments continue about at diversify very to the our allocation market same remarks Thanks, quarter and Oil I’ll a and for morning, provide why highlights update call good reviewing an capital increasing our generate

For a improvement total X%. revenue represented of million sequential second $XXX.X company, quarter the of

$XX.X Solid million. better execution of EBITDA expected than generated from segments adjusted both operating

tons year-over-year XX% to in Products to from business $XX.X second Our quarter record and improvement declined delivered a the total margin XQXX in Industrial Specialty sold though X% contribution even XQXX. million

clearly relatively to value, that clearly remained is this volumes the margin higher double-digit our has last while have is over years. growing contribution believe why our illustrates at working. strategy We more flat, deliver This of margin higher been our products rates five repositioning

silica long-term at signing had our also also end EVERWHITE up long-term Initial and under new like Georgia including specialty began next cool heat produce supply We a launch. exciting products granules. consumer quarter of with value for for product generation started customer we ground product and Millen treated roof company industrials production of high quartz a countertops contract developments facility high a the to contract provide in new we several large to during products a leading custom of sales a our where new will and

due quarter Oil ton were Missouri Midwest, took & sequentially Festus, negatively X.X sold in which quarter annual we new Oil nearly & months. for up X.X our segment, Volumes the continue Texas offline the a record our in million Gas In at the our ramp to run Gas as tons, we in West exiting a two to capacity million rate. flooding affected X% the plant

sand and SandBox, Northern of due margin from & $XX.X last-mile White performance better industry-leading strong in Oil pricing. our a Gas contribution rebound was than solution, expected to million logistics

may in third quarter, in some not Texas of more experience West during which operational the We which offset continue pricing to was reduced repeat by than pressure quarter. costs, the

sequentially Northern performance quality White exit rebounding sand SandBox quarter and another an industry-leading signed two record through up distribution load demand new companies Oil sand We & including high White the network. contracts high. XX% for Gas volumes all of with energy during our several delivered the time June Northern quarter, illustrating hitting with for loads

to share the of delivered approximately market estimate with quarter sand. share market XX% We we grow ended that and continue

During a major over zero due while million accomplishment in quarter, loads delivering of X,XXX incidents the the the an value we safety well Quite time E&P also testament to for X.X SandBox jobs zero history completed driving nearly Texas, proposition. a volume of sand. the strength at non-performance miles and one highest SandBox with to and site in amazing the

taken We’ve record with balanced and I now when to Minerals, and and an cash. business managing uses acquisitions Silica’s approach provide back Logistics & of our successfully we plans. in invested with allocation such M&A update it we’ve you Oil think by have as to our SandBox very comes expanding on good we’ve strategically me invested Let U.S. Gas in EP track a capital our Historically, capacity. capital consistent and a the

consecutive cash strategy to We’ve last also diversification or years, we’re out repurchases we’ve a the quarters. growth generator consumer significant a a executing us successfully more and in to share cash will cash net meaningful a net a which as been either very transitioning through our XX now paid which diligent plan, returning growth to cash over After shareholders, a targeted dividend, for from three take company. quarterly

plan and in could to we flow cash $XX.X dividend free as generating CapEx payments. million after you example, of see For QX the begin of power cash generated this

investments minimal dividend sand, Going stable CapEx, & and lower we’re payments. modeling in Gas substantially Oil forward,

that reduce use Given have expect we free time. some the of debt cash over to to flow to our ability

growth. retirement ratio of debt by our gross and a a to through end targeting the times We’re leverage to three profitable of of XXXX less or EBITDA adjusted reduction combination debt

invest in powered We risks next and stands to in like intend boxes that low we’ll share. also continue to for business equipment and bigger like and to invest returns bolt-on our SandBox new have to solar for ISP high to facility Millen grow generation our projects type continue growth continue

currently more continue in debt sheet expect comes QX. prudent as start course that of to to share balance about we repurchases, to choosing when delever we will opportunistic two, the but the retiring be think We between to and it

Now market with starting conclude commentary with industrials. let me

demand analysts economic would that of ahead, difficulties warned or Some a recession. in have slowdown to shifts indicate we’ve recently yet customer see potential but imminent any

demand We’re our materials expand silica to and basic capacity coatings. continue across of both range and experiencing our and functional industries performance ground wide for in products a strong

last new introduction indicated drive earnings we’ve on Minerals above management I to entry historical and As into new market installed new growth our organic the products plan call, at rates EP through segments. and of

platforms example, industries. pharmaceutical, pursuing like growth in purity high and the filtration several polymers we’re rubber For areas in currently potential

slowdown a outlook for current for seasonal Our in normal a strong QX with QX. Industrials is

competitive market into the entrance market space. recent be continues for Moving new the with Energy, commentary a mile to last silo logistics to

gains reduce drive unit by Our Examples and substantial and improvements that customers. alike. full differentiated efficiency and for this our operators SandBox to bigger providing savings that service technological is operational companies continues driving include boxes, NPT boost a to service labor SandBox of make efficiency minimal cost. Moreover, offering

other We to oilfield also new continued and segments SandBox explore expansion. new industries for

outlook & Finally, turning Oil for the segment. to Gas our

Gas Third dollars flat. margin be quarter & are relatively to expected contribution Oil

White Permian, We overall pressure expect by stronger offset pricing some some in the rebound further maybe the sequential weakness pricing. sand Northern although volume that of with in

volumes services. is higher to partnering with within do at Our on customers curve continue U.S. differentiate the will activity value-added frac in and quarter, sand demand down, continue some to focus softening driving Texas. expect come our anticipated We to as levels living cost a fourth moderate ton cash especially as see flows. SandBox who need their oilfield producers are targeting and logistics for cost continued logistics, Silica the end the in we of sand per very low West business to to on

And with turn that, call the I’ll over to Don. now Don?

and Thanks, good morning Bryan, everyone.

First EBITDA to with the $XX.X we strong very company. improved delivering of adjusted reiterate quarter, I’d Bryan’s in operating a performance like which million on comments generated second across

As X% segment our Industrial for concerned, XXXX segment quarter quarter second the from million, compared last XX% of the quarter far results as and when was an first of Specialty revenue up year. same $XXX.X the increase to and are

X% was in tons an growth increase Specialty Gas of set due proppant contribution of operation increase & On the Oil the our XX% $XX.XX, first margin continued SandBox and Industrial representing a $XXX.X segment first record million, ton quarter sold. basis, per the and up XXXX, in in for mostly a from quarter. a to The segment revenue

margin per tons margin costs, normal the mix and Lower increases contribution the seasonal this during higher sold quarter in segment. price products of in plant the increase to contributed

two ahead, for second most similar the Looking in the margin very quarters profitable the historically, should quarter third contribution Industrial Specialty be of achieved and year. to are quarter, these as margins segment the the

reduced operating slightly a The not Gas segment the due in our Oil some SandBox $XX.XX largely repeat, which was per White of compared rebound quarter with offset XXXX, ton Northern West basis by on of to from weaker business, margin and for contribution partially $XX.XX pricing in sand strong performance first a pricing may costs, & Texas.

segments relatively dollars the second margin Bryan quarter As XXXX. to would expected noted, contribution be flat we of versus

now the company Selling, of due at XX% expense to from higher the an closure. were the XXXX. $XX.X and Frederick to results quarter general mostly The our compensation guidance actual and expenses administrative quarter look increase in increase quarter, first expenses related second Let’s results. total million, than facility represent given of office of last

first an the quarter SG&A quarter $XX.X compared of We second depletion increase and expenses our plant quarter Minerals. third the the capacity be to Depreciation, XXXX. of XXXX, expect X% totaled in driven from our similar EP expansion expense of of to acquisition second million, and the in when amortization by quarter

to DD&A compared to quarter. slightly expect up quarter the third to the second be when We flat in

benefit benefit including effective discrete will for the be a company rate tax about effective XX%. of full rate ended Our XX% our June XXXX, a items. of tax XX, was The quarter year believes

sheet. the on Moving to balance

versus cash during million XXXX, the in million cash liquidity under $XX.X million company a had quarter and the As for of million the The balance its equivalent company year. operations June $XX.X increased $XX.X and amount credit of available facilities reduced this of flow spending strong and $XXX.X $XXX.X million. total quarter by cash XX, cash to from due of capital first the

the of debt at Additionally, $X.X the net quarter. billion company’s end was under the

maintenance quarter in were and and project, expenditures Sandbox of of engineering, our near $XX.X totaled other at projects, mine million as we segment improvement in construction completion to projects. and operations, cost expand for growth primarily that second growth capital Industrial equipment mainly Lamesa, projects and several procurement our and our the Specialty Capital Texas

At this for capital year approximately we $XXX point, the XXXX. expenditures full expect million of

of past, will and our within As quarters be cash expected the remaining flow positive. operating to I’ve said cash the in flow expenditures the free year are these be

focus flexibility of XXXX. times three evolve more or stronger, to company, generation delever we should for of end it a balance leverage by make industrial lower sheet our we ratio cash even into and have target As the the the

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

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

this session. be question-and-answer At with first question line proceed the comes we’ll you. conducting Marc time, Instructions] Thank from question. Please with a your of Our Bianchi [Operator Cowen.

kind I’m kind maintenance the to closer Thank maybe to you. right, I I discussed and what thinking cash about start If looking the just guys level million per I’m wanted in $XXX a to million from year. like math million past discussing doing million the for looks that half plan. CapEx it think that of to But and in Could here about progression? for overall you the reduction year curious, maintenance the million you $XXX to quarter kind company. the the of are your at overall help this in by $XX of we’ve the think back plan how $XX for bridge you’re $XX of the XXXX?

Good for thanks morning, Marc, question. the and

at $XX we’re range. we typically in million the CapEx, As maintenance look more

that to forms will $XX facilities I $XX to obviously if that million look the $XX million to the business, to think to got the base, invest continue on you that of in XXXX, the of invest be as number SandBox of type that probably And is new bit $XX our I continue range. And few building we’ll in for I a contracts we’ll of things but the that So million probably of I currently We’ve CapEx. side need satisfy as would forward somewhere industrial range in say million a out kind well, we and that we’re developing. some think XXXX. in right still products to we’ll new

flat specifically I quarter looking the looking kind to guidance Okay. Bryan. $XX maybe more million essentially calculation basis. then expense EBITDA And third adjusted an and Thanks my here, right I Interest of if for that have about here, for is million. $XX you’re guess on

be any we we should considering. ops if have approximately million, So could cash $XX curious there from other things is

XXs the about low Or yielding being considering again right? CapEx we in then in free something cash thinking And third do the anything we third million Am else million to is for I bridge all those piece $XX there $XX quarter. the to be components the maybe as quarter? should of

as being what is usual probably you’re That case Gas markets with obviously it. our right think I on base & here, the they Marc that Oil are.

quarter know going You end third is how the up. to

I would side Oil extent, risk Gas to maybe on its and side. sand extent is say to & there in So the on the in deterioration a any volumes SandBox the lesser

As we of of pretty things well, back started part half into off quickly quarters the that of haven’t in the our pretty really that get but much so we the far, can quarter, the seen business. change

perspective. my that. the on So pretty But close I we’re keeping you way is described from think accurate a eye

come in I’ll Okay, jump on. others great. Thanks, let the queue. I’ll Bryan. back

Thanks, Marc.

you. Thank

Gruber question comes with question. proceed Citigroup. your the next with Scott of Please Our line from

Hey guys, good morning.

Scott. morning, Good

XQ mentioned quarter, are you margin for Can have well, some SandBox & activity, on about third that expect with of there that pricing, be pieces Oil how that’s the just in components and volumes different up volumes especially Thing would as a down you expected up. about dollars be & been be Gas the of is the flattish, moving contribution on Gas but around XX%. the still to Bryan, Oil volumes SandBox talk for sort to completion that, guide,

Sure.

you said, & Gas. up to So in expect as Oil volumes see we’ll

little I up think a in volumes be SandBox load should just bit.

deterioration would back get as the the We’re assuming here. bit as we things we’re perhaps talked about the worse pricing probably some of that a part that in the little with a fact Marc, just we be ago minute of sort baking that quarter get dicier to a

around As plays a seen street so that seems there’s lot deterioration in QX, I we’ll the how yet, of out. said, we it talk haven’t on like that see but some

quite thinking So and going sand volumes the White Oil generally, & that’s extremely actually Northern is how side we’re up strong volumes be But rebounding on Sand the to there. business well. Gas are up. it. about looks pretty SandBox frankly. seems are pricing

to I optimistic lot So a as think well. about be there’s

that’s Permian around primarily on or at And concern the Gas Oil there the so concern pricing pricing & in is this volumes logistic primarily point? any

of obviously on the Gas Not it’s logistics, the volatility. pricing locked have a more our under What sand business really just in we pricing down & Permian, side. spot will contracts lot do Oil

particularly But provides So to dramatically. spot feel a good in see some It Permian. move chunk stability though, prices can is pretty there. that of the I pricing, interesting starting like in we’re stability

you some If have competitors we reduced the them that mines. at at today, shifts their some of look there out of have

they ability teetering on deteriorate & That’s some out of actually on And just going pressure of to of QX. lot be that the generate as sort any I some We’re kind a perhaps put earnings of cash. are might mines think operate who in QX in to hearing of QX there might folks be really to the shutdown and there Permian in things particularly into Oil in typically the do tend Gas.

of So we I based constructive expect it’s will I we’ll see pricing to plays as how that out, consolidations go here. hearing, and and would on some out in Permian see some forward us kind a like be margins what the closures to mine mine landscape, feel which but we’re

flat just that lead than margin that of better sound lack kind of forecast. a visibility pieces the mean I to back, stepping Just dollars are you

caution that’s honestly. And of a it. think I piece just quite

other are in that worsen is things the of before in quarter. deterioration worse half that going earnings are listened seen talking QX, into us have the but in we’ve people to most gone year. haven’t calls just getting street about on back We here yet, And talk the the get the much things back half

conservative than So we I want bit feel in positioned like to most, our but we’re better be forecast. a

color. Okay. re-queue. the Appreciate you. I’ll Thank

Thanks, Okay. Scott.

you. Thank

Our question comes Stifel. line question. the with Stephen from of Please next with your Gengaro proceed

things or to two speak what is? mentioned you has spot on I And asked, extensions Northern morning, like gentlemen. quarter. the you of where during good you, new two kind and contracts market but White I versus the pricing believe looks are could that Thank really follow-ups guess been that what contract

to Sure, that, do Happy sure. Steve.

developments then for of We Two contracts had were were signed quarter on contracts that brand new, sand we have contracts already Oil were extensions large some two pretty that new two the energy we & this contracts exciting companies. brand Gas. and Northern White that with were direct

how definitely we’re innings that. debate early good White if about And And of so Northern around see think I a or lot is a that. the starting really to feel been going of make to fast comeback. There’s

like particularly they’re, use companies, of what is a they’re I my lot service terms that to work much obviously the we as have profit energy energy and to energy contracts a experience around as companies who sand going with that visibility for And White to companies. different in opposed signed Northern the better if companies move

it terms as indicator got starting can’t very contracts. that with specifics we make for White these these that bit of competitive a important but So in an of happy is signed I Northern to to here. that in comeback pricing, think contracts talk pricing two a me was that we’re definitely a Obviously, reasons, the

and Can if versus West going you they’re say South? East

basins, or mean? of what pricing, you do mean you terms In

Yes, basins. Yes, in terms in of of terms basins.

of East a lot in the point. South not contracts. So and It’s this West more it’s at in terms sort these of

of Northern White think that��s in other been the is Ford. I Eagle discussed items sand one the widely

shale energy the be starting companies into completions demand sand parts there. being are you quality’s a high the are local done of there. The interesting, stresses would It’s to in the not there signs are closure get White and very we’re pretty are where lot having good. several Northern not of darn of that if South success Texas, early So see some

we’ll that the kind think I in up next by White So Ford. be trend driven in Northern see leg of Eagle the demand

as you then us to sort I kind logistics think when side? of about SandBox, kind opportunity kind the hear positioning the transportation of follow-up, Thank just about it well you a Great. with on increasingly solutions. of that we of you. remind well Could site And as of pertains more larger just mean integration SandBox’s site

Sure.

service means we our you of if customers, and to we’re one everything popular at for which a customer. offering, SandBox basically So offerings range the most full positioned, wide essentially how but the look that’s have we provide is

sand. our drivers. go our it’s many on that with folks in site, have have people, our trucks the we that. to solution built it’s our we we It’s logistics well. well cases, the also So the backbone kind of our It’s And as

and we full think And this time either And only integrated we’re drive who’s or employees has on out that I company. And company efficiency, in helps also glove the hand the well crews. with energy us lower doing us gives visibility that costs with own company there literally, our work the service the for our site better tremendous which customers. the means in

you. Thank good. Very

Thanks, Steve.

Thank you.

line Connor Stanley. next proceed with your Please question Lynagh the Our from Morgan question. with comes of

guys. morning, Good Thanks.

Good morning, Connor.

if for could about we outlook sand particular. Wondering pricing talk a on little in more the Permian

further is quarter talking being gave third like effect pricing rate you already or quarter just expectations quarter, So versus of much that the pricing versus second you’re in in pricing second up about conservatism declines? of some how run when the that lower

on things to honestly. more it’s I quite think conservatism come So

feel the sort that our I from Connor. numbers. it’s on been things things QX already can opposed cooked solidified like to more as run have into of You already to come see rate

bit tracking do I of you And fair. that’s supplies. guys Okay, of a fair know

flat mean just supplies I through closures. at down year, as ramping they’re are and potential from of where your out more move the in point sort mine a you’re So supply But you pointing generally we if competition. Permian? we is the for to

certainly That’s not seen. what we’ve

come going direction. it’s supply I think in offline. I the we’re believe that other to going see

decision bit heard of produce. are of particularly to on going And As half of sites for actually for some those. make the little think a couple rumors difficult a they time in it’s tougher we’ll We’ve I back it current I competitors said time, get who actually already see some if period cash closed. mine a here losing every things earlier,

very So time of My that’s a when an environment. it becomes bill have to long experience don’t you every tough out. that attach $XX when operate continue people is that in kind ship to that you

That’s sense. fair. Makes Thanks, guys.

Thanks, Connor.

you. Thank

the line from Chase comes of of proceed America. with Please question. your question with next Mulvehill Bank Our

put there of to times Hey, gross out kind I leverage understand ratio little that wanted good the times help some what’s leverage sheet debt you ratio? morning. you back at come implied I and balance guess about the maybe a the XXXX. talk bit Could us of end three three in nice and target targets

let Look Don. detail a bit give thought me more it’s you little process the Chase, Yes. there. around

million between not to $XXX is to to range of right. our that And high see buy end the that assumption debt. cash Our going QX, somewhere we’re $XXX going available that we’re require assumes down and from million growth any

SandBox we So we rates the drive business ISP historical look at that our if what growth conservative. closer relatively side $XXX number and of that’s that’s in growth to million. lower think the business And

the at So of day, looking is at what that’s far debt. our as gross we’re the end as

That’s about one $X.X acquisition Okay. you’ve the related of and charges got million. in up few the charges that a with quarter, Appreciate follow-up, merger The color. showed helpful.

million highlight on did expansion go facility and of what cost, closure that away can when of kind do So then and XQ those kind you then to cost maybe and if actually of away? of in those kind $X.X startup go talk the and was the

Sure.

up M&A Minerals. approximately So on the charges step of million associated the that inventory when purchase EP through runs the P&L million, of charge the value that $X.X of a $X.X we with is

charge reduces margin. So it’s a non-cash overall artificially that

real of business. show to earnings that back the So we add that power

some roughly earlier, changes stated management there we that And put charges do well. Bryan line as at we as other million, severance some did Minerals. $X.X in that The were EP

value QX, of through quarter. step in goes inventory away million until the maybe that halfway Minerals probably around So that up first but $X.X EP sticks of

QX little in $X anticipate the that million – zero. QX, a then to go and in would go far lower then line in QX $X.X in million would range those maybe bit as as and charges So I

$X.X You inefficiencies in The capacity that’s also Lamesa the was our startup some million getting that just of plant still was up facility million of of that made Texas up. really asked things. We about charges two out charge plant about and different $X.X capacity. have

We are stages last in the of phases or that.

So which could some happy QX to in being half that with and I schedule see I’m gone And facility, QX. in we and costs had ahead roughly very cut the of budget. then also Millen startup in associated say came up under

a those done career only well there’s in very few that industrial team my was but on about, of the side. I can So talk very, by the

in And chose But charge we amount have facility up of And the about just with roughly to was stay closure. you other of mostly say relocate other the should facility QX. Voca we of it was people for the same who about Frederick, our facility. those We and Frederick our Frederick little to that – of QX. that here facility half in to closure. was bonuses question Katy. majority offer the in facility that’s had let’s should the I half all Office asked Voca that The to not closure very The great had to experience related Frederick to believe do related

that QX, into should we So and approaching when move be zero. again line

Okay, turn it back over. Thanks, I’ll all right. helpful. Very Don.

Yes.

you. Thank

Tudor proceed Holt. question. your with Pickering next Please Our of George with from comes question line O’Leary the

Good morning, guys.

Good morning, George.

quarter the out Oil volume where as third may pretty but impressive the frac direction. market just stands in & feels guidance for Gas it quarter, Good like wrong activity a had curious

experienced growth level SandBox the abating? get the to Is issues volume a Just of that because in that what curious drives kind the volume the is the XX% can quarter-over-quarter? good some So have out just did to number that growth June that Or in the guiding of an quarter. drivers drivers capture? to third there? share that you’re quarter second you confidence just that extrapolate primary the curious weather market of guys that you guys mostly Is you in impressive

a on particularly It’s side. sand number things, George, the volume of

think full We stayed basically Unlike continue rate we to at competitors our up is the in it. And we Texas, at pretty can have our fastest in And out can fully that’s crane sell a of testament almost close turn ton industry, the times the pretty much in so at to of ramp very that we West one. turn it’s of trucks Lamesa sites and I it. if times make location all a for Texas, quick we running some West the sold out. or to

Second there. QX. in which or water of of River, flooding Louis for actually impacted level weather just either two outlet is, is or as high site, St. months site because you was that example, three shutdown of of last mentioned year Missouri our the And us a Mississippi to Festus, is which outside primary was somewhat barges, for out the too the the the at ship out which our is

So in that towns are back of adds Northern White quality volume. high substantial amount good pretty Those demand. a alone sand. really in That’s

that confidence, lot So us give we of contracts those together two plus a taken things all have. the

So we those just sign, kicking the all are in. new contracts that

level. feel pretty So about volume our good we

said get we always we’ll pricing through bit so and quarter a outside closely the contracts as the uncertainty is of that earlier, I of here. As is watch

Thank Bryan. Okay. That’s then question super helpful. the you, on actually response. your second And of end my follows

quarter the versus saw – the White pricing? the trends your maybe boots fourth understanding as seen frac to year is for a thoughts around frac have Northern first so Northern a clearly in guys the you’ve on in of curious sand ground, there. basis you third on activity see last down, year. six front, what down quarter Just turn Would starting Our edge you we leading on far months really White the strong but given

Again, pricing strong you’re really Yes. seen. sand advantage. it pricing. a happened pretty Northern looks to in We up how not in X.X%, standpoint. I That’s were White think here. we’ve on be QX I And like, particularly QX from in feel X% depends what We situated logistics

more sign we the more we sand most contracts. than more and places also So And to competitors get of to that starting have. White can Northern we’re

think, so, And into better gives us, visibility pricing there. it the I

pretty volume good feeling into QX as sand pricing I’m for both Northern here. the about the head and White So we

sneak I’m I grades instance, basin seeing contracting seems could. you it. customers playing any where to White the to they’re certain one time It of stand to instances I’ll guys back Do once and can are away you great. actively out? that’s point that Are any that That’s and you specific Northern not shifting you can from as sand like upon for gave point maybe customers have more walked in in commentary at you certainly particular, out if promising. looking now where and away they in-basin a in from all is walking

I think in the it’s – one the where Eagle Well, starting Ford. is just

wells, earlier, us startups as As where Ford I And in if Northern one that Eagle sand think a actually the White look I the little the companies, QX. a volumes for of volumes mines bit declined that’s we’re to the and in sand starting recently. they’re Eagle the – in the Northern now for in of at to product happened mentioned customers saying response the you wells. conversations in sand want And to White Northern players Eagle that’s all the Ford and new that Ford, couple energy seeing had back big results they White that from that it like only feels tried with their in have their come we’ve particular,

rebound South White pretty Northern a Texas. like in make feel I definitely will So nice

Bryan. Good color, quarter. the for much very you Thank

Thanks, George.

you. Thank

Our comes John line proceed Energy. with next Simmons your with Please the question question. of Watson from

morning. Good you. Thank

Good morning, John.

you on tons SandBox new wondering in release you thought the you can I just increasing hold those boxes the and speak box presents? to the you also How if initiatives were opportunity out your the what of I interesting. Bryan, And on could mentioned. many size was did elaborate called bigger

hold will the more typically And So boxes XX% than fixed. our obviously, trucking expenses the some relatively XX% couple, older to your a there volume boxes. are benefits

have pay So amount for and the cab pay amount and same – driver, rent same all you the the the the you chassis to to that.

customers to goes also as we your you transporting cost, sand, for with down closely extent, of can sort to efficiencies as much dramatically. So And the it that you if cut times our fixed delivery possible. will, work sand increase improves around that the

much put together, preventing and it customers. to that cost our given you makes we’re all non-productive for when our that customers. the just possible about lowest efficient And time us all more So

of so the even there. you it our as a bigger gun and if really for go out I out lot a will, of us market arsenal, that to us another penetrate competitive versus a And offerings in makes to arsenal, another easy think, it having sort continue gives advantage and the

boxes that expect I of are to Right, grow time? loads it’s makes correct the low percentage assume sense. to am today you bigger a that over that in And

Yes, boxes that’s lot new We yet. deployed a don’t of have correct. the

have we So also sand a our with the we have boxes and stand. that set

box to parts, of of conveyor on sit has on the parts, essentially, which lower of potential few top And and boxes failure. sit the moving having so a to stand, build a the instead very moving lot a that boxes lower for had costs

now. box So that the and second we’re stands deploying right generation

I missed if to gears I ISP, Switching this. great. apologize Okay,

for site? I expecting I think contribution the But expecting a the of know heard be Don third should in And expecting type we be strong third I that What from quarter. volumes volume you’re Millen a I quarter? if heard specifically, number. we what don’t say, should

the you we slightly. little up I bit. ton in some in that to won’t think a of – customers they’re perhaps the kind in contribution to something maybe I that, which So you’ll surcharges one-time some the pass per quarter, some repeat look for be see We for going had – like ton, benefits or the third through volumes dollar margin down energy per QX. at when QX, And just just be think

when neutral. you net-net, on of it’s the that, sort it’s do So math

contribution we’ll margin flat So in dollars QX. mean, in industrials see I

We terms that we’ve Millen, started produce the initial facility just of to up. there. In started of tons some

So we see you’ll already don’t margin in selling contribution and were some you’ll these we a QX, get I going having to benefit think into I cases, whole there products, lot manufactured. we toll think, in of But forward, them QX Millen some now. QX. but from as were additional In see start

necessarily but down you’ll dramatically. having in not manufactured volumes see you’ll we see Europe. costs what cases, go these products So our In is, up, toll were come many

should can with have ship back raw cost deal imagine there, finish and materials added to the that. product So all to you

industrial on the of company. side I So cost some takeout good see think you’ll our

Thank Very helpful, Bryan. back. you. I’ll it turn

Thanks, John. Okay.

Thank you.

Lucas FBR. comes with with B.Riley Pipes proceed question question. line of Our Please from your next the

Hey, follow-up to difference makes on good there. mesh the that I stay be could Permian. in curve is Bryan, has assumed to and thoughts it that transportation, is bit is one you flat little as a cost I morning open think closures is everyone. it closing? going Is your the do pretty a between and has wanted to potential What pretty, the size, of share kind what going mine location? to not. you distinguishes

would appreciate your So thoughts.

Sure. great It’s Lucas. question, a

couple things a is the important location. I probably first think, there’s and that most of

of one things change you the that you can’t improve. that’s really can’t and So

of just of you it’s And well proximity, think hard so, to it’s you in activity, driving have distance. the pick wrong that. if proximity but in to fix location terms terms And not to the

you on trip round And substantial adds two the basis, it. as hour costs perceive ultimately so if to have to an that hours or customers extra your drive a offering,

sit truck has loaded, mine a up hour waiting emerge. or hour if customer the paying half also think turn that of terms site a through ability at quickly. the trucks because side and day, extra the I get in right be an at to end of an closely to are the looking your ends very at that, to for Customers now, them for

of also the if dustiness I the of the you the will, from inconsistent sites. kind think, a turbidity, measures cases, been sand not that good. which like has been some a In quality good, that, of number has we’ve operation seen pretty properties not some

just competitors the able figure of They And to it. some Maybe mining the that have their how down. of haven’t costs our instead aren’t out, structures get been competitive. very land to cost they leased bought

a $X on lease or that ton payment that. have have like per to and they maybe add $X things So

the of not’s. have So you things lot from said, there’s the have’s that differentiate as a

you to it production What then mesh some that. is do I production lastly, of to resurgence White, factors? opinion, a lot Thank a Thank And seeing you in that do in demand? a for size, helpful. Northern is Very And a mentioned that specific somewhat you region in your comeback. experiencing you’ve maybe seen thoughts. Northern in also expect you And of would other cuts, very think come you much. then it White, appreciate related that any of back? is is

Sure.

size. I mesh to wouldn’t So basin. particular a by different it’s It say tends be

DJ maybe if look the Bakken and XX, XX, if XX, Northeast, there, or very out or it’s into So XX Basin, say at, you XXX popular you the XX, and are mesh get the XX. let’s

of there, idled. Northern sand White it varies So kind capacity about we’ve seen already of in basins. And be terms by cuts tons capacity million of XX

of these million I as think, tons. they goes, one can X depending where on this either that is resurgence of non-competitive things are think have are competitive And we I mines, to XX to And come multiple perhaps out. so million different that here that tons stay the still be things of another we kind take or advantage how the and emphasize basins. to all those

things we’ve cultivated our lot to the also And broadly like do. one have It’s competitive. particular, in over of of hard them sites can be around. some these for lingering move of Northern have that We competitors industrial If White you a mine just site, businesses years. kind very

flex So in to just down mine focused, do. way you and in if Oil that you’re & things Gas & gives Oil us Gas a single up that, ability a can’t

best I all luck. and appreciate of helpful color Very the and

you. Thank

Thank you.

Please comes question. your with Our next Pant with line the Jefferies. Saurabh proceed from with question

Hi, morning. guys. Good

good morning. Hi,

SandBox. I wanted little about a talk to

guys number, strategy? Just or would think increasing you with your whatever, market the about right, some chase of of What of would competitive is assume you kind pricing half and speaking, how potential I strategically, would So market of set the about loss you that you rather will in would own down, pressures, lose be the XX% back if theoretically maintain backdrop, out talked pricing right, a temporary. bit down to to you that little and just willing like that the part year, X%, share pricing of share? raise do think right? a Because be do

Yes.

interesting containerized So it’s containerized pressure in the question. delivery. seeing really silo the It’s area, a not that more sand ironically competitive on is The we’re side.

new day, into going of entrance won’t at space. So is we’ve switch that seen prices, most really found will what customers that a sort would say end to general do they of they’re who we’ve containers in silos, to I but that like the pressuring maybe is threatened couple the it. sort of of but And that

our always way to to I the So customers a we we’ve in the want price, have that seen containerized think a lower can’t to some look offer silos customers pricing on pressure match. but value side really

more converting quarter. of that’s why picked We’ve so to points customers are more And up two another and share this silos.

So not really chasing I’m interested down. in price

with looked would value command that at price. a business they those started kind with potentially, I’ve that overall at the said, some accounts and that companies. With very have we of energy And to business large lower volumes doing bring do and of

with do And business they I the amount is between and of you expect. the a of so relationship price there know, customer type the

more we’re going silos opposed from a they think come and like side. low our at interested in that competitive in pressure just pricing maintain offer, that, think type We down. of looking want the as don’t SandBox something to I margins or ball of that’s So I that we’re chase to chasing on make to if the

those, color to helpful. the contracts you conditions side, Right, the have Halliburton SandBox don’t last But then, contracting release of And contract lot a year, okay. on early started again, lot of the know I a haven’t early the But contract given you press as won. color right. and we [indiscernible] large right. of that right. terms side, on year, That’s started this the the some again, you’ve of

other these of have of back the you potentially I’m next So that, right. right. you But potential that of coming the year, the year, some risk contracts we renewal, contracts for everything, half cannot up disclose over, should sensitive about some to of think signed how early and rolling

with along should some associated And think that, risk How right. pricing about that? we

contracts a our over last up ups remarkably given downs the the have and well, the year oilfield two. or So held in

they customers we by these have money And buying most back have the of we reservation us. have that capacity a if it either sand to you in fees paid is their bank, will. us. get already way think the I that, from And

of that then in with in pretty what a seeing pay is so most us structure both contracts or kept But well So And that’s secure. those that, also far contracts the a very a number take firm, aligned. has have customer’s of we penalties. we’re the

penalty like, or to pay the contract. that’s that. And a we collect But sort do lost take to year we feel do has have of purpose I of CRF. or really forfeit if the someone we Occasionally, both

together. had at structure that the we’re contract to looking the is the we’ve years that aligned think been best we work I I’ve U.S. in But, that ways attract have always for XX So and stay here Silica.

I pretty So feel good it. about

more SandBox Right. Bryan, more was the that assuming to I all the applies as contract just be SandBox to or right, am side, thinking of on clear, less well. I

believe harder on offering Yes. that is It’s it’s sand other somewhat thing SandBox, the more in an to we have similar, right? differentiate on I side, unique. some think that I is ways. the

sand We of end we But, the much have the and the have not day, better the is those and is it’s very in some sand sort right differentiated cases from relatively, animal. competitors. of things. our that all the SandBox at sand different network and a service

sorry, this the call, South in in It energy we release So for – have out the job, ever of And prepared in told release example, the been comments. the massive the in look, was done you. we press without a press one that’s a Texas called done us, not industry. biggest the big could – job in job that earnings ones company

your of the value way because and you that last bring. structured provider the mile is You’re only company

have only that this. the done one You’re could

customers want. about are contracts the business to the just assurance service to offering contracts we differentiate ability – as those side best what and at is of the compared do a continued is delight And on to probably our we continuing the of and else as a I our sand have can the I SandBox really things of that like kind business. our better we that relationships that. and one the in So side much no opposed think to But SandBox do have

for One or right, quickly, Texas West makes XX% on is continuing come than last of Right, correctly, down. your Texas If volume more pointed to lot right. West sense. I think XX% one under remember That a of the pricing contract. to you I me side,

think, just are the spot mid I’m to pricing to I’m assuming range, is trying teens low with at the your to getting right. compare mesh fall least that volume you quarters, in how spot much is, pricing pricing your couple risk getting where more of next are comes spot and that risk. closer least the the to the you assess just a So pricing over that worse trying down what’s significantly to right, that on higher to XXX than in for at

bit. value. is down moves again, So it above the to the spot, I a but around a bit say think comes the spot generally pricing I quite contract would And

and As Texas. very we have, in continue we reduce long the our working West teams command low turn the are the continue to there costs truck market. cost to say provider a as our as premium Also, continue as of the to in fastest long to times diligently be will kind

go to more on have that. we think I

my pressure even to pricing some hope that if take we’ll out cost. to continue so, time, downward is is able And there over be

margins stay relatively flat. So that our

Okay.

it turn I’ll helpful. you. That’s Thank back. Okay.

Thank you.

Mr. final to Shinn and I’ll Ladies session. you. back comments. Thank the turn gentlemen, our that any question-and-answer concludes floor for

like about the I’d and our generate committed in the cash free to day very quarters. discussed We with weeks. of today, prospects the have our excited call today’s I dialing our flow at to by conferences and strength company ability operator. discussing look for reducing Thanks that in to and a coming in business confidence we’ll leverage are our and in our Thanks, many plans the reemphasizing for coming analysts remain everyone. to our the be our and great forward as investors attending close

concludes Thank teleconference. today’s you. This

You your time. may at Thank lines this you your participation. for disconnect