UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~September 30, 2021~~March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-35416

U.S. Silica Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware						26-3718801
(State or other jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

24275 Katy Freeway, Suite 600

Katy, Texas 77494

(Address of Principal Executive Offices) (Zip Code)

(281) 258-2170

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value

SLCA

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

¨þ

Accelerated filer

þ¨

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No þ

As of ~~October~~April 22, ~~2021, 74,571,246~~2022, 75,477,339 shares of common stock, par value $0.01 per share, of the registrant were outstanding.

U.S. SILICA HOLDINGS, INC.

FORM 10-Q

For the Quarter Ended ~~September 30, 2021~~March 31, 2022

TABLE OF CONTENTS


		Page
PART I	Financial Information (Unaudited):
Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	76
	Notes to Condensed Consolidated Financial Statements	98
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2624
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4137
Item 4.	Controls and Procedures	4339

PART II	Other Information:
Item 1.	Legal Proceedings	4440
Item 1A.	Risk Factors	4440
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4541
Item 3.	Defaults Upon Senior Securities	4642
Item 4.	Mine Safety Disclosures	4642
Item 5.	Other Information	4642
Item 6.	Exhibits	4642
Signatures		S-1

PART I-FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; dollars in thousands)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	250,587	$	150,920	Cash and cash equivalents	$	239,768	$	239,425
Accounts receivable, net	Accounts receivable, net	176,759		206,934		Accounts receivable, net	198,835		202,759
Inventories, net	Inventories, net	116,405		104,684		Inventories, net	123,784		115,713
Prepaid expenses and other current assets	Prepaid expenses and other current assets	29,204		23,147		Prepaid expenses and other current assets	14,525		18,018
Income tax deposits		—		628

Total current assets	Total current assets	572,955		486,313		Total current assets	576,912		575,915
Property, plant and mine development, net	Property, plant and mine development, net	1,277,133		1,368,092		Property, plant and mine development, net	1,228,071		1,258,646
Lease right-of-use assets	Lease right-of-use assets	44,866		37,469		Lease right-of-use assets	41,751		42,241
Goodwill	Goodwill	185,649		185,649		Goodwill	185,649		185,649
Intangible assets, net	Intangible assets, net	152,445		159,582		Intangible assets, net	147,694		150,054
Other assets	Other assets	7,567		9,842		Other assets	7,620		7,095
Total assets	Total assets	$	2,240,615	$	2,246,947	Total assets	$	2,187,697	$	2,219,600
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:	Current Liabilities:					Current Liabilities:
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	157,082	$	121,920	Accounts payable and accrued expenses	$	162,970	$	167,670
Current portion of operating lease liabilities	Current portion of operating lease liabilities	15,846		17,388		Current portion of operating lease liabilities	13,158		14,469
Current portion of long-term debt	Current portion of long-term debt	20,484		42,042		Current portion of long-term debt	16,303		18,285
Current portion of deferred revenue	Current portion of deferred revenue	6,744		13,545		Current portion of deferred revenue	2,643		4,247
Income tax payable						Income tax payable	8,866		1,200
Total current liabilities	Total current liabilities	200,156		194,895		Total current liabilities	203,940		205,871
Long-term debt, net	Long-term debt, net	1,195,092		1,197,660		Long-term debt, net	1,191,980		1,193,135
Deferred revenue	Deferred revenue	17,045		20,147		Deferred revenue	16,491		16,494
Liability for pension and other post-retirement benefits	Liability for pension and other post-retirement benefits	38,923		48,169		Liability for pension and other post-retirement benefits	28,843		32,935
Deferred income taxes, net	Deferred income taxes, net	48,033		49,386		Deferred income taxes, net	30,388		44,774
Operating lease liabilities	Operating lease liabilities	76,806		76,361		Operating lease liabilities	71,355		75,130
Other long-term liabilities	Other long-term liabilities	36,552		33,538		Other long-term liabilities	33,906		37,178
Total liabilities	Total liabilities	1,612,607		1,620,156		Total liabilities	1,576,903		1,605,517
Commitments and Contingencies (Note N)		0		0
Commitments and Contingencies (Note M)						Commitments and Contingencies (Note M)	0		0
Stockholders’ Equity:	Stockholders’ Equity:					Stockholders’ Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; zero issued and outstanding at September 30, 2021 and December 31, 2020		—		—
Common stock, $0.01 par value, 500,000,000 shares authorized; 83,977,121 issued and 74,571,246 outstanding at September 30, 2021; 83,143,176 issued and 73,986,566 outstanding at December 31, 2020		837		827
Preferred stock, $0.01 par value, 10,000,000 shares authorized; zero issued and outstanding at March 31, 2022 and December 31, 2021						Preferred stock, $0.01 par value, 10,000,000 shares authorized; zero issued and outstanding at March 31, 2022 and December 31, 2021	—		—
Common stock, $0.01 par value, 500,000,000 shares authorized; 85,341,383 issued and 75,434,553 outstanding at March 31, 2022; 84,746,194 issued and 75,033,352 outstanding at December 31, 2021						Common stock, $0.01 par value, 500,000,000 shares authorized; 85,341,383 issued and 75,434,553 outstanding at March 31, 2022; 84,746,194 issued and 75,033,352 outstanding at December 31, 2021	851		845
Additional paid-in capital	Additional paid-in capital	1,213,165		1,200,023		Additional paid-in capital	1,222,780		1,218,575
Retained deficit	Retained deficit	(410,233)		(395,496)		Retained deficit	(437,641)		(429,260)
Treasury stock, at cost, 9,405,875 and 9,156,610 shares at September 30, 2021 and December 31, 2020, respectively		(183,483)		(181,615)
Accumulated other comprehensive loss		(2,562)		(8,479)
Treasury stock, at cost, 9,906,830 and 9,712,842 shares at March 31, 2022 and December 31, 2021, respectively						Treasury stock, at cost, 9,906,830 and 9,712,842 shares at March 31, 2022 and December 31, 2021, respectively	(188,092)		(186,294)
Accumulated other comprehensive income						Accumulated other comprehensive income	3,502		349
Total U.S. Silica Holdings, Inc. stockholders’ equity	Total U.S. Silica Holdings, Inc. stockholders’ equity	617,724		615,260		Total U.S. Silica Holdings, Inc. stockholders’ equity	601,400		604,215
Non-controlling interest	Non-controlling interest	10,284		11,531		Non-controlling interest	9,394		9,868
Total stockholders' equity	Total stockholders' equity	628,008		626,791		Total stockholders' equity	610,794		614,083
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	2,240,615	$	2,246,947	Total liabilities and stockholders’ equity	$	2,187,697	$	2,219,600

The accompanying notes are an integral part of these financial statements.

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; dollars in thousands, except per share amounts)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Sales:	Sales:									Sales:
Product	Product	$	216,134	$	159,637	$	675,611	$	541,998	Product	$	233,234	$	191,390
Service	Service	51,164		16,835		143,404		76,610		Service	71,653		43,026
Total sales	Total sales	267,298		176,472		819,015		618,608		Total sales	304,887		234,416
Cost of sales (excluding depreciation, depletion and amortization):	Cost of sales (excluding depreciation, depletion and amortization):									Cost of sales (excluding depreciation, depletion and amortization):
Product	Product	168,212		93,747		464,971		373,373		Product	173,608		142,797
Service	Service	39,236		13,845		112,421		60,279		Service	53,261		34,192
Total cost of sales (excluding depreciation, depletion and amortization)	Total cost of sales (excluding depreciation, depletion and amortization)	207,448		107,592		577,392		433,652		Total cost of sales (excluding depreciation, depletion and amortization)	226,869		176,989
Operating expenses:	Operating expenses:									Operating expenses:
Selling, general and administrative	Selling, general and administrative	30,956		27,216		84,689		96,394		Selling, general and administrative	40,110		26,224
Depreciation, depletion and amortization	Depreciation, depletion and amortization	39,981		40,069		122,494		115,604		Depreciation, depletion and amortization	37,749		41,348
Goodwill and other asset impairments	Goodwill and other asset impairments	11		222		49		108,044		Goodwill and other asset impairments	—		38
Total operating expenses	Total operating expenses	70,948		67,507		207,232		320,042		Total operating expenses	77,859		67,610
Operating (loss) income		(11,098)		1,373		34,391		(135,086)
Operating income (loss)										Operating income (loss)	159		(10,183)
Other (expense) income:	Other (expense) income:									Other (expense) income:
Interest expense	Interest expense	(17,796)		(19,274)		(53,425)		(63,730)		Interest expense	(17,173)		(17,711)
Other income (expense), net, including interest income		2,580		(409)		4,999		15,592
Other income, net, including interest income										Other income, net, including interest income	1,531		2,605
Total other expense	Total other expense	(15,216)		(19,683)		(48,426)		(48,138)		Total other expense	(15,642)		(15,106)
Loss before income taxes	Loss before income taxes	(26,314)		(18,310)		(14,035)		(183,224)		Loss before income taxes	(15,483)		(25,289)
Income tax benefit (expense)		6,140		4,094		(1,172)		63,785
Income tax benefit										Income tax benefit	6,969		4,354
Net loss	Net loss	$	(20,174)	$	(14,216)	$	(15,207)	$	(119,439)	Net loss	$	(8,514)	$	(20,935)
Less: Net loss attributable to non-controlling interest	Less: Net loss attributable to non-controlling interest	(179)		(254)		(462)		(778)		Less: Net loss attributable to non-controlling interest	(121)		(157)
Net loss attributable to U.S. Silica Holdings, Inc.	Net loss attributable to U.S. Silica Holdings, Inc.	$	(19,995)	$	(13,962)	$	(14,745)	$	(118,661)	Net loss attributable to U.S. Silica Holdings, Inc.	$	(8,393)	$	(20,778)
Loss per share attributable to U.S. Silica Holdings, Inc.:	Loss per share attributable to U.S. Silica Holdings, Inc.:									Loss per share attributable to U.S. Silica Holdings, Inc.:
Basic	Basic	$	(0.27)	$	(0.19)	$	(0.20)	$	(1.61)	Basic	$	(0.11)	$	(0.28)
Diluted	Diluted	$	(0.27)	$	(0.19)	$	(0.20)	$	(1.61)	Diluted	$	(0.11)	$	(0.28)
Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	74,523		73,688		74,267		73,601		Basic	75,240		73,927
Diluted	Diluted	74,523		73,688		74,267		73,601		Diluted	75,240		73,927
Dividends declared per share	Dividends declared per share	$	—	$	—	$	—	$	0.02	Dividends declared per share	$	—	$	—

The accompanying notes are an integral part of these financial statements.

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited; dollars in thousands)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net loss	Net loss	$	(20,174)	$	(14,216)	$	(15,207)	$	(119,439)	Net loss	$	(8,514)	$	(20,935)
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Unrealized gain on derivatives (net of tax of zero and $231 for the three months ended September 30, 2021 and 2020, respectively, and zero and $973 for the nine months ended September 30, 2021 and 2020, respectively)		—		725		—		3,053
Foreign currency translation adjustment (net of tax of $(260) and $202 for the three months ended September 30, 2021 and 2020, respectively, and $(224) and $212 for the nine months ended September 30, 2021 and 2020, respectively)		(251)		631		(707)		662
Pension and other post-retirement benefits liability adjustment (net of tax of $1,491 and $(1,048) for the three months ended September 30, 2021 and 2020, respectively, and $2,110 and $(2,773) for the nine months ended September 30, 2021 and 2020, respectively)		(5,472)		(3,287)		6,624		(8,702)

Foreign currency translation adjustment (net of tax of $(98) and $(180)) for the three months ended March 31, 2022 and 2021, respectively.										Foreign currency translation adjustment (net of tax of $(98) and $(180)) for the three months ended March 31, 2022 and 2021, respectively.	(309)		(569)
Pension and other post-retirement benefits liability adjustment (net of tax of $1,084 and $3,234) for the three months ended March 31, 2022 and 2021, respectively.										Pension and other post-retirement benefits liability adjustment (net of tax of $1,084 and $3,234) for the three months ended March 31, 2022 and 2021, respectively.	3,462		10,151
Comprehensive loss	Comprehensive loss	$	(25,897)	$	(16,147)	$	(9,290)	$	(124,426)	Comprehensive loss	$	(5,361)	$	(11,353)
Less: Comprehensive loss attributable to non-controlling interest	Less: Comprehensive loss attributable to non-controlling interest	(179)		(254)		(462)		(778)		Less: Comprehensive loss attributable to non-controlling interest	(121)		(157)
Comprehensive loss attributable to U.S. Silica Holdings, Inc.	Comprehensive loss attributable to U.S. Silica Holdings, Inc.	$	(25,718)	$	(15,893)	$	(8,828)	$	(123,648)	Comprehensive loss attributable to U.S. Silica Holdings, Inc.	$	(5,240)	$	(11,196)

The accompanying notes are an integral part of these financial statements.

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited; dollars in thousands, except per share amounts)


		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Income (Loss)		Total U.S. Silica Holdings Inc., Stockholders’ Equity		Non-controlling Interest		Total Stockholders’ Equity			Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Income (Loss)		Total U.S. Silica Holdings Inc., Stockholders’ Equity		Non-controlling Interest		Total Stockholders’ Equity
Balance at June 30, 2021		$	837	$	(183,420)	$	1,207,670	$	(390,238)	$	3,161	$	638,010	$	10,729	$	648,739
Balance at December 31, 2021																		Balance at December 31, 2021	$	845	$	(186,294)	$	1,218,575	$	(429,260)	$	349	$	604,215	$	9,868	$	614,083
Net loss	Net loss	—		—		—		(19,995)		—		(19,995)		(179)		(20,174)		Net loss	—		—		—		(8,393)		—		(8,393)		(121)		(8,514)

Foreign currency translation adjustment	Foreign currency translation adjustment	—		—		—		—		(251)		(251)		—		(251)		Foreign currency translation adjustment	—		—		—		—		(309)		(309)		—		(309)
Pension and post-retirement liability	Pension and post-retirement liability	—		—		—		—		(5,472)		(5,472)		—		(5,472)		Pension and post-retirement liability	—		—		—		—		3,462		3,462		—		3,462

Cash dividends																		Cash dividends	—		—		—		12		—		12		—		12
Distributions to non-controlling interest	Distributions to non-controlling interest	—		—		—		—		—		—		(266)		(266)		Distributions to non-controlling interest	—		—		—		—		—		—		(353)		(353)
Common stock-based compensation plans activity:	Common stock-based compensation plans activity:																	Common stock-based compensation plans activity:
Equity-based compensation	Equity-based compensation	—		—		5,495		—		—		5,495		—		5,495		Equity-based compensation	—		—		4,382		—		—		4,382		—		4,382
Proceeds from options exercised																		Proceeds from options exercised	—		254		(171)		—		—		83		—		83
Tax payments related to shares withheld for vested restricted stock and stock units	Tax payments related to shares withheld for vested restricted stock and stock units	—		(63)		—		—		—		(63)		—		(63)		Tax payments related to shares withheld for vested restricted stock and stock units	6		(2,052)		(6)		—		—		(2,052)		—		(2,052)
Balance at September 30, 2021		$	837	$	(183,483)	$	1,213,165	$	(410,233)	$	(2,562)	$	617,724	$	10,284	$	628,008
Balance at March 31, 2022																		Balance at March 31, 2022	$	851	$	(188,092)	$	1,222,780	$	(437,641)	$	3,502	$	601,400	$	9,394	$	610,794

Balance at June 30, 2020		$	826	$	(181,413)	$	1,192,068	$	(386,110)	$	(22,910)	$	602,461	$	10,807	$	613,268
Balance at December 31, 2020																		Balance at December 31, 2020	$	827	$	(181,615)	$	1,200,023	$	(395,496)	$	(8,479)	$	615,260	$	11,531	$	626,791
Net loss	Net loss	—		—		—		(13,962)		—		(13,962)		(254)		(14,216)		Net loss	—		—		—		(20,778)		—		(20,778)		(157)		(20,935)
Unrealized gain on derivatives		—		—		—		—		725		725		—		725

Foreign currency translation adjustment	Foreign currency translation adjustment	—		—		—		—		631		631		—		631		Foreign currency translation adjustment	—		—		—		—		(569)		(569)		—		(569)
Pension and post-retirement liability	Pension and post-retirement liability	—		—		—		—		(3,287)		(3,287)		—		(3,287)		Pension and post-retirement liability	—		—		—		—		10,151		10,151		—		10,151
Cash dividends		—		—		—		11		—		11		—		11
Contributions from non-controlling interest		—		—		—		—		—		—		1,266		1,266
Cash dividend declared																		Cash dividend declared	—		—		—		7		—		7		—		7
Distributions to non-controlling interest																		Distributions to non-controlling interest	—		—		—		—		—		—		(174)		(174)
Common stock-based compensation plans activity:	Common stock-based compensation plans activity:																	Common stock-based compensation plans activity:
Equity-based compensation	Equity-based compensation	—		—		5,397		—		—		5,397		—		5,397		Equity-based compensation	—		—		4,143		—		—		4,143		—		4,143
Proceeds from options exercised																		Proceeds from options exercised	—		344		(239)		—		—		105		—		105
Tax payments related to shares withheld for vested restricted stock and stock units	Tax payments related to shares withheld for vested restricted stock and stock units	1		(129)		(1)		—		—		(129)		—		(129)		Tax payments related to shares withheld for vested restricted stock and stock units	5		(1,244)		(5)		—		—		(1,244)		—		(1,244)

Balance at September 30, 2020		$	827	$	(181,542)	$	1,197,464	$	(400,061)	$	(24,841)	$	591,847	$	11,819	$	603,666
Balance at March 31, 2021																		Balance at March 31, 2021	$	832	$	(182,515)	$	1,203,922	$	(416,267)	$	1,103	$	607,075	$	11,200	$	618,275

The accompanying notes are an integral part of these financial statements.

Common
Stock Treasury
Stock Additional
Paid-In
Capital Retained
Deficit Accumulated
Other
Comprehensive
Loss Total U.S. Silica Holdings Inc., Stockholders’
Equity Non-controlling Interest Total
Stockholders’
Equity
Balance at December 31, 2020 $ 827 $ (181,615) $ 1,200,023 $ (395,496) $ (8,479) $ 615,260 $ 11,531 $ 626,791
Net loss — — — $ (14,745) — (14,745) (462) (15,207)
Foreign currency translation adjustment — — — — (707) (707) — (707)
Pension and post-retirement liability — — — — 6,624 6,624 — 6,624
Cash dividends — — — 8 — 8 — 8
Distributions to non-controlling interest — — — — — — (785) (785)
Common stock-based compensation plans activity:
Equity-based compensation — — 13,391 — — 13,391 — 13,391
Proceeds from options exercised — 344 (239) — — 105 — 105
Tax payments related to shares withheld for vested restricted stock and stock units 10 (2,212) (10) — — (2,212) — (2,212)
Balance at September 30, 2021 $ 837 $ (183,483) $ 1,213,165 $ (410,233) $ (2,562) $ 617,724 $ 10,284 $ 628,008

Balance at December 31, 2019 $ 823 $ (180,912) $ 1,185,116 $ (279,956) $ (19,854) $ 705,217 $ 11,363 $ 716,580
Net loss — — — (118,661) — (118,661) (778) (119,439)
Unrealized gain on derivatives — — — — 3,053 3,053 — 3,053
Foreign currency translation adjustment — — — — 662 662 — 662
Pension and post-retirement liability — — — — (8,702) (8,702) — (8,702)
Cash dividends — — — (1,444) — (1,444) — (1,444)
Contributions from non-controlling interest — — — — — — 1,234 1,234
Common stock-based compensation plans activity:
Equity-based compensation — — 12,352 — — 12,352 — 12,352
Tax payments related to shares withheld for vested restricted stock and stock units 4 (630) (4) — — (630) — (630)
Balance at September 30, 2020 $ 827 $ (181,542) $ 1,197,464 $ (400,061) $ (24,841) $ 591,847 $ 11,819 $ 603,666

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; dollars in thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Operating activities:	Operating activities:					Operating activities:
Net loss	Net loss	$	(15,207)	$	(119,439)	Net loss	$	(8,514)	$	(20,935)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:					Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization	Depreciation, depletion and amortization	122,494		115,604		Depreciation, depletion and amortization	37,749		41,348
Goodwill and other asset impairments	Goodwill and other asset impairments	49		108,044		Goodwill and other asset impairments	—		38

Debt issuance amortization	Debt issuance amortization	3,801		3,855		Debt issuance amortization	1,253		1,271
Original issue discount amortization	Original issue discount amortization	771		778		Original issue discount amortization	255		258
Deferred income taxes	Deferred income taxes	(3,239)		(65,645)		Deferred income taxes	(15,312)		(4,869)
Deferred revenue	Deferred revenue	(14,264)		(6,292)		Deferred revenue	(873)		(5,132)
Gain on disposal of property, plant and equipment	Gain on disposal of property, plant and equipment	(406)		(1,785)		Gain on disposal of property, plant and equipment	(375)		(35)

Equity-based compensation	Equity-based compensation	13,391		12,352		Equity-based compensation	4,382		4,143
Allowance for credit losses, net of recoveries	Allowance for credit losses, net of recoveries	(948)		1,381		Allowance for credit losses, net of recoveries	286		10
Gain on remeasurement of leases		—		(24,415)

Other	Other	23,696		(2,381)		Other	8,329		18,456
Changes in operating assets and liabilities, net of effects of acquisitions:	Changes in operating assets and liabilities, net of effects of acquisitions:					Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	Accounts receivable	31,216		81,234		Accounts receivable	4,088		(4,917)
Inventories	Inventories	(11,721)		15,218		Inventories	(7,882)		(1,467)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,185		(19,639)		Prepaid expenses and other current assets	3,493		(568)
Income taxes	Income taxes	1,789		804		Income taxes	7,666		218
Accounts payable and accrued expenses	Accounts payable and accrued expenses	36,824		(102,449)		Accounts payable and accrued expenses	(5,197)		9,053

Operating lease liabilities	Operating lease liabilities	(19,728)		(51,859)		Operating lease liabilities	(7,518)		(8,159)
Liability for pension and other post-retirement benefits	Liability for pension and other post-retirement benefits	(11,119)		9,053		Liability for pension and other post-retirement benefits	(4,740)		(13,602)
Other noncurrent assets and liabilities	Other noncurrent assets and liabilities	(1,802)		16,883		Other noncurrent assets and liabilities	(2,011)		(1,469)
Net cash provided by (used in) operating activities		156,782		(28,698)
Net cash provided by operating activities						Net cash provided by operating activities	15,079		13,642
Investing activities:	Investing activities:					Investing activities:
Capital expenditures	Capital expenditures	(15,394)		(27,751)		Capital expenditures	(7,030)		(3,511)
Capitalized intellectual property costs	Capitalized intellectual property costs	(210)		(531)		Capitalized intellectual property costs	(67)		(95)
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	644		2,749		Proceeds from sale of property, plant and equipment	714		72
Net cash used in investing activities	Net cash used in investing activities	(14,960)		(25,533)		Net cash used in investing activities	(6,383)		(3,534)
Financing activities:	Financing activities:					Financing activities:
Dividends paid	Dividends paid	(41)		(6,169)		Dividends paid	(151)		—
Proceeds from options exercised	Proceeds from options exercised	105		—		Proceeds from options exercised	83		105
Tax payments related to shares withheld for vested restricted stock and stock units	Tax payments related to shares withheld for vested restricted stock and stock units	(2,212)		(630)		Tax payments related to shares withheld for vested restricted stock and stock units	(2,052)		(1,244)
(Payments on) proceeds from draw down of the Revolver		(25,000)		25,000

Payments on short-term debt	Payments on short-term debt	(4,184)		(5,745)		Payments on short-term debt	(2,212)		(2,077)
Payments on long-term debt	Payments on long-term debt	(9,600)		(10,235)		Payments on long-term debt	(3,338)		(3,200)
(Distributions to) contributions from non-controlling interest		(785)		1,234
Distributions to non-controlling interest						Distributions to non-controlling interest	(353)		(174)
Principal payments on finance lease obligations	Principal payments on finance lease obligations	(438)		(41)		Principal payments on finance lease obligations	(330)		(27)
Net cash (used in) provided by financing activities		(42,155)		3,414
Net increase (decrease) in cash and cash equivalents		99,667		(50,817)
Net cash used in financing activities						Net cash used in financing activities	(8,353)		(6,617)
Net increase in cash and cash equivalents						Net increase in cash and cash equivalents	343		3,491
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	150,920		185,740		Cash and cash equivalents, beginning of period	239,425		150,920
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	250,587	$	134,923	Cash and cash equivalents, end of period	$	239,768	$	154,411

U.S. SILICA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited; dollars in thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Supplemental cash flow information:	Supplemental cash flow information:					Supplemental cash flow information:
Cash paid (received) during the period for:	Cash paid (received) during the period for:					Cash paid (received) during the period for:
Interest	Interest	$	48,538	$	57,107	Interest	$	15,702	$	16,104
Taxes, net of refunds	Taxes, net of refunds	$	(13,324)	$	(35,676)	Taxes, net of refunds	$	(20,403)	$	(15,889)
Non-cash items:	Non-cash items:					Non-cash items:
Accrued capital expenditures	Accrued capital expenditures	$	2,592	$	15,111	Accrued capital expenditures	$	121	$	792
Net assets assumed in business acquisition	Net assets assumed in business acquisition	$	68	$	8,241	Net assets assumed in business acquisition	$	—	$	68

The accompanying notes are an integral part of these financial statements.

U.S. SILICA HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; dollars in thousands, except per share amounts)

NOTE A—ORGANIZATION AND BASIS OF PRESENTATION

Organization

U.S. Silica Holdings, Inc. (“Holdings,” and together with its subsidiaries “we,” “us” or the “Company”) is a global performance materials company and a leading producer of commercial silica used in the oil and gas industry and in a wide range of industrial applications. In addition, through our subsidiary EP Minerals, LLC ("EPM"), we are an industry leader in the production of industrial minerals, including diatomaceous earth, clay (calcium bentonite and calcium montmorillonite) and perlite. During our ~~121-year~~122-year history, we have developed core competencies in mining, processing, logistics and materials science that enable us to produce and cost-effectively deliver products to customers across our end markets. Our operations are organized into 2 reportable segments based on end markets served: (1) Oil & Gas Proppants and (2) Industrial & Specialty Products. See Note TS - Segment Reporting for more information on our reportable segments.

Basis of Presentation and Consolidation

The accompanying unaudited Condensed Consolidated Financial Statements for the quarter ended ~~September 30, 2021~~March 31, 2022 included in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the U.S. Securities and Exchange Commission (“SEC”). They do not contain certain information included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020;~~2021; therefore, the unaudited Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K. Operating results for the ~~nine-month~~three-month period ended ~~September 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, ~~2021.~~2022. In the opinion of management, all adjustments necessary for a fair presentation have been included. Such adjustments are of a normal, recurring nature.

The unaudited Condensed Consolidated Financial Statements include the accounts of Holdings and its direct and indirect wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Throughout this report we refer to (i) our unaudited Condensed Consolidated Balance Sheets as our “Balance Sheets,” (ii) our unaudited Condensed Consolidated Statements of Operations as our “Income Statements,” and (iii) our unaudited Condensed Consolidated Statements of Cash Flows as our “Cash Flows.”

~~Reclassifications~~

~~Certain reclassifications of prior period presentations were made to conform to the current period presentation.~~

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates and Assumptions

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The areas requiring the use of management estimates and assumptions relate to the purchase price allocation for businesses acquired; mineral reserves that are the basis for future cash flow estimates utilized in impairment calculations and units-of-production amortization calculations; environmental, reclamation and closure obligations; estimates of recoverable minerals; estimates of allowance for credit losses; estimates of fair value for certain reporting units and asset impairments (including impairments of goodwill, intangible assets and other long-lived assets); write-downs of inventory to net realizable value; equity-based compensation expense; post-employment, post-retirement and other employee benefit liabilities; valuation allowances for deferred tax assets; contingent considerations; reserves for contingencies and litigation and the fair value and accounting treatment of financial instruments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.

New Accounting Pronouncements Recently Adopted

None.

New Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting followed by ASU 2021-01, Reference Rate Reform (Topic 848): Scope, issued in January 2021 to provide clarifying guidance regarding the scope of Topic 848. ASU 2020-04 was issued to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Generally, the guidance is to be applied as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. ASU 2020-04 and ASU 2021-01 are effective for all entities through December 31, 2022. As of ~~September 30, 2021,~~March 31, 2022, we have not elected to use the optional guidance and continue to evaluate the options provided by ASU 2020-04 and ASU 2021-01. See Note JI - Debt for discussion of the use of the adjusted LIBOR rate in connection with borrowings under our senior secured revolving credit facility.

NOTE C—EARNINGS PER SHARE

Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is computed similarly to basic earnings per common share except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.

Diluted net earnings per share assumes the conversion of contingently convertible securities and stock options under the treasury stock method, if dilutive. Contingently convertible securities and stock options are excluded from the calculation of fully diluted earnings per share if they are anti-dilutive, including when we incur a loss from continuing operations.

The following table shows the computation of basic and diluted earnings per share:


In thousands, except per share amounts	In thousands, except per share amounts	Three Months Ended September 30,				Nine Months Ended September 30,				In thousands, except per share amounts	Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Numerator:	Numerator:									Numerator:
Net loss attributable to U.S. Silica Holdings, Inc.	Net loss attributable to U.S. Silica Holdings, Inc.	$	(19,995)	$	(13,962)	$	(14,745)	$	(118,661)	Net loss attributable to U.S. Silica Holdings, Inc.	$	(8,393)	$	(20,778)

Denominator:	Denominator:									Denominator:
Weighted average shares outstanding	Weighted average shares outstanding	74,523		73,688		74,267		73,601		Weighted average shares outstanding	75,240		73,927
Diluted effect of stock awards	Diluted effect of stock awards	—		—		—		—		Diluted effect of stock awards	—		—
Weighted average shares outstanding assuming dilution	Weighted average shares outstanding assuming dilution	74,523		73,688		74,267		73,601		Weighted average shares outstanding assuming dilution	75,240		73,927

Loss per share attributable to U.S. Silica Holdings, Inc.:	Loss per share attributable to U.S. Silica Holdings, Inc.:									Loss per share attributable to U.S. Silica Holdings, Inc.:
Basic loss per share	Basic loss per share	$	(0.27)	$	(0.19)	$	(0.20)	$	(1.61)	Basic loss per share	$	(0.11)	$	(0.28)
Diluted loss per share	Diluted loss per share	$	(0.27)	$	(0.19)	$	(0.20)	$	(1.61)	Diluted loss per share	$	(0.11)	$	(0.28)

109

Potentially dilutive shares were excluded from the calculation of diluted weighted average shares outstanding and diluted earnings per share because we were in a net loss position. Certain stock options, restricted stock awards and performance share units were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. Such potentially dilutive shares and stock awards excluded from the calculation of diluted earnings per common share were as follows:


In thousands	In thousands	Three Months Ended September 30,		Nine Months Ended September 30,		In thousands	Three Months Ended March 31,
		2021	2020	2021	2020		2022	2021
Potentially dilutive shares excluded	Potentially dilutive shares excluded	1,523	348	1,706	173	Potentially dilutive shares excluded	1,808	1,852
Stock options excluded	Stock options excluded	667	826	584	826	Stock options excluded	541	608
Restricted stock and performance share unit awards excluded	Restricted stock and performance share unit awards excluded	92	2,667	67	4,103	Restricted stock and performance share unit awards excluded	12	50

NOTE D—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) consists of fair value adjustments associated with accumulated adjustments for net experience losses and prior service costs related to employee benefit plans and foreign currency translation adjustments, net of tax. The following table presents the changes in accumulated other comprehensive income (loss) by component (in thousands):


		For the Nine Months Ended September 30, 2021							For the Three Months Ended March 31, 2022
		Foreign currency translation adjustments		Pension and other post-retirement benefits liability		Total			Foreign currency translation adjustments		Pension and other post-retirement benefits liability		Total
Beginning Balance	Beginning Balance	$	583	$	(9,062)	$	(8,479)	Beginning Balance	$	(417)	$	766	$	349
Other comprehensive (loss) gain before reclassifications	Other comprehensive (loss) gain before reclassifications	(707)		6,029		5,322		Other comprehensive (loss) gain before reclassifications	(309)		3,494		3,185
Amounts reclassified from accumulated other comprehensive loss		—		595		595
Amounts reclassified from accumulated other comprehensive income								Amounts reclassified from accumulated other comprehensive income	—		(32)		(32)
Ending Balance	Ending Balance	$	(124)	$	(2,438)	$	(2,562)	Ending Balance	$	(726)	$	4,228	$	3,502

~~Amounts~~Any amounts reclassified from accumulated other comprehensive income (loss) related to pension and other post-retirement benefits are included in the computation of net periodic benefit costs at their pre-tax amounts.

NOTE E—~~BUSINESS COMBINATIONS~~

During the first quarter of 2020, we settled multiple intellectual property and contractual lawsuits involving our SandBox Logistics unit and Arrows Up, LLC. As part of the settlement, SandBox Logistics took control of Arrows Up's existing business, including all equipment and sand logistics contracts, while also receiving a cash payment.

We accounted for the acquisition of Arrows Up, LLC under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Estimates of fair value included in the Condensed Consolidated Financial Statements represented our best estimates and valuations. In accordance with the acquisition method of accounting, the fair values were subject to adjustment until we completed our analysis, which was during the first quarter of 2021. This business combination resulted in a bargain purchase pursuant to ASC 805-30-25 because no consideration was paid for the fair value of assets acquired and liabilities assumed. The fair value of assets acquired, which included cash, accounts receivable, inventories, lease right-of-use assets, and property plant, and equipment, was $20.1 million. The fair value of liabilities assumed, which included lease liabilities and other long-term liabilities, was $2.5 million. A gain on bargain purchase of $17.6 million was recorded in "Other income, net, including interest income" in the Condensed Consolidated Statement of Operations.

In the three months ended March 31, 2021, we recorded a $0.1 million increase to accounts receivable, which was our final adjustment to the purchase price. The total adjustments during the measurement period of $2.4 million were recorded as a net decrease to the initial gain on bargain purchase and recorded in "Other (expense) income, net, including interest income" in the Condensed Consolidated Statement of Operations.

~~NOTE F—~~ACCOUNTS RECEIVABLE

Accounts receivable are recorded when billed or accrued and represent claims against third parties that will be settled in cash. The carrying value of our accounts receivable, net of the allowance for credit losses, represents their estimated net realizable value. Accounts receivable (in thousands) consisted of the following:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Trade receivables	Trade receivables	$	157,406	$	171,230	Trade receivables	$	201,081	$	182,992
Less: Allowance for credit losses	Less: Allowance for credit losses	(4,878)		(6,604)		Less: Allowance for credit losses	(5,511)		(5,248)
Net trade receivables	Net trade receivables	152,528		164,626		Net trade receivables	195,570		177,744
Other receivables(1)	Other receivables(1)	24,231		42,308		Other receivables(1)	3,265		25,015
Total accounts receivable	Total accounts receivable	$	176,759	$	206,934	Total accounts receivable	$	198,835	$	202,759

(1)

~~At September 30, 2021~~Other receivables included $0.4 million and $21.5 million at March 31, 2022 and December 31, ~~2020, other receivables included $21.5 million and $37.4 million,~~2021, respectively, of refunds related to NOL carryback claims filed for various tax years in accordance with certain provisions of the CARES Act.

We classify our trade receivables into the following portfolio segments: Oil & Gas Proppants and Industrial & Specialty Products, which also aligns with our reporting segments. We estimate the allowance for credit losses based on historical collection trends, the age of outstanding receivables, risks attributable to specific customers, such as credit history, bankruptcy or other going concern issues, and current economic and industry conditions. If events or circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past due balances are written off when we have exhausted our internal and external collection efforts and have been unsuccessful in collecting the amount due.

The following table reflects the change of the allowance for credit losses (in thousands):


		Oil & Gas Proppants		Industrial & Specialty Products		Total			Oil & Gas Proppants		Industrial & Specialty Products		Total
Beginning balance, December 31, 2020		$	5,684	$	920	$	6,604
Beginning balance, December 31, 2021								Beginning balance, December 31, 2021	$	4,625	$	623	$	5,248
Allowance for credit losses	Allowance for credit losses	(1,000)		52		(948)		Allowance for credit losses	—		286		286
Write-offs	Write-offs	(16)		(762)		(778)		Write-offs	—		(23)		(23)
Ending balance, September 30, 2021		$	4,668	$	210	$	4,878
Ending balance, March 31, 2022								Ending balance, March 31, 2022	$	4,625	$	886	$	5,511

Our ten largest customers accounted for ~~30%~~40% and 42% of total sales for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and 23% and 32% for the three and nine months ended September 30, 2020,~~ respectively. No customers accounted for 10% or more of our total sales for the three ~~or nine~~ months ended ~~September 30, 2021~~March 31, 2022 or ~~2020.~~2021. At ~~September 30,~~March 31, 2022 and December 31, 2021, none of our customers' accounts receivable represented 10% or more of our total trade accounts receivable. ~~At December 31, 2020, one of our customer's accounts receivable represented 24% of our total trade accounts receivable.~~

NOTE G—F—INVENTORIES

Inventories (in thousands) consisted of the following:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Supplies	Supplies	$	44,618	$	42,329	Supplies	$	49,224	$	45,605
Raw materials and work in process	Raw materials and work in process	37,752		33,723		Raw materials and work in process	36,542		36,529
Finished goods	Finished goods	34,035		28,632		Finished goods	38,018		33,579
Total inventories	Total inventories	$	116,405	$	104,684	Total inventories	$	123,784	$	115,713

During 2020, there was an unprecedented drop in global demand combined with the breakdown of the Organization of the Petroleum Exporting Countries and other oil producing nations ("OPEC+") agreement to restrict oil production that led to one of the largest annual crude oil inventory builds in history. This led to sharp reductions in global crude oil prices. Containment measures and other economic, travel, and business disruptions caused by COVID-19 also affected refinery activity and future demand for crude oil, and consequently, the services and products of our Oil & Gas Proppants segment. As a result of these events, we recorded impairment charges of zero and $6.7 million for the three and nine months ended September 30, 2020, respectively, primarily related to unused inventory at idled plants. These charges related to the Oil & Gas Proppants segment and were recorded in "Goodwill and other asset impairments" in the Condensed Consolidated Statements of Operations. No impairment charges were recorded related to inventory for the nine months ended September 30, 2021.

NOTE H—G—PROPERTY, PLANT AND MINE DEVELOPMENT

Property, plant and mine development (in thousands) consisted of the following:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Mining property and mine development	Mining property and mine development	$	788,415	$	788,287	Mining property and mine development	$	788,441	$	789,122
Asset retirement cost	Asset retirement cost	19,103		15,985		Asset retirement cost	19,937		22,283
Land	Land	55,275		54,710		Land	55,551		55,541
Land improvements	Land improvements	76,248		76,002		Land improvements	76,248		76,248
Buildings	Buildings	70,309		69,841		Buildings	72,252		72,207
Machinery and equipment	Machinery and equipment	1,178,631		1,171,382		Machinery and equipment	1,193,025		1,189,548
Furniture and fixtures	Furniture and fixtures	3,932		4,071		Furniture and fixtures	3,932		3,932
Construction-in-progress	Construction-in-progress	35,150		27,216		Construction-in-progress	36,264		35,060
		2,227,063		2,207,494			2,245,650		2,243,941
Accumulated depreciation, depletion, amortization and impairment charges	Accumulated depreciation, depletion, amortization and impairment charges	(949,930)		(839,402)		Accumulated depreciation, depletion, amortization and impairment charges	(1,017,579)		(985,295)
Total property, plant and mine development, net	Total property, plant and mine development, net	$	1,277,133	$	1,368,092	Total property, plant and mine development, net	$	1,228,071	$	1,258,646

Depreciation, depletion, and amortization expense related to property, plant and mine development was ~~$37.1~~$34.8 million and ~~$37.3~~$38.6 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $114.0 million and $106.6 million for the nine months ended September 30, 2021 and 2020,~~ respectively.

During 2020, there was an unprecedented drop in global demand combined with the breakdown of the OPEC+ agreement to restrict oil production that led to one of the largest annual crude oil inventory builds in history. This led to sharp reductions in global crude oil prices. Containment measures and other economic, travel, and business disruptions caused by COVID-19 also affected refinery activity and future demand for crude oil, and consequently, the services and products of our Oil & Gas Proppants segment. As a result of these events, we recorded impairment charges of zero and $11.6 million for the three and nine months ended September 30, 2020, respectively, related primarily to our Kosse, Texas facility, which was idled. These impairment charges related to the Oil & Gas Proppants segment and were recorded in "Goodwill and other asset impairments" in the Condensed Consolidated Statements of Operations. No material impairment charges were recorded related to property, plant and mine development for the nine months ended September 30, 2021.

NOTE I—H—GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill (in thousands) by business segment consisted of the following:

Oil & Gas Proppants Segment Industrial & Specialty Products Segment Totals
Balance at December 31, 2020 $ — $ 185,649 $ 185,649
Impairment loss — — —
Balance at September 30, 2021 $ — $ 185,649 $ 185,649


	Oil & Gas Proppants Segment		Industrial & Specialty Products Segment		Totals
Balance at December 31, 2021	$	—	$	185,649	$	185,649
Impairment loss	—		—		—
Balance at March 31, 2022	$	—	$	185,649	$	185,649

Goodwill and trade names are evaluated for impairment annually as of October 31, or more frequently when indicators of impairment exist. We evaluated events and circumstances since the date of our last qualitative assessment, including macroeconomic conditions, industry and market conditions, and our overall financial performance.

During 2020, there was an unprecedented drop in global demand combined with the breakdown of the OPEC+ agreement to restrict oil production that led to one of the largest annual crude oil inventory builds in history. This led to sharp reductions in global crude oil prices. Containment measures and other economic, travel, and business disruptions caused by COVID-19 also affected refinery activity and future demand for crude oil, and consequently, the services and products of our Oil & Gas Proppants segment. As a result of these triggering events, we performed a quantitative analysis and determined that the goodwill of our Oil & Gas reporting unit was impaired. We recognized goodwill impairment charges of $86.1 million during the first quarter of 2020, which were recorded in "Goodwill and other asset impairments" in the Condensed Consolidated Statements of Operations. There were no triggering events during the first ~~nine~~three months of ~~2021,~~2022, therefore, no impairment charges were recorded related to goodwill or trade names for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

The changes in the carrying amount of intangible assets (in thousands) consisted of the following:


		September 30, 2021								December 31, 2020									March 31, 2022								December 31, 2021
		Gross Carrying Amount		Accumulated Amortization		Impairments		Net		Gross Carrying Amount		Accumulated Amortization		Impairments		Net			Gross Carrying Amount		Accumulated Amortization		Impairments		Net		Gross Carrying Amount		Accumulated Amortization		Impairments		Net

Technology and intellectual property	Technology and intellectual property	$	71,177	$	(23,886)	$	—	$	47,291	$	71,052	$	(18,854)	$	(1,373)	$	50,825	Technology and intellectual property	$	71,270	$	(26,329)	$	—	$	44,941	$	71,209	$	(25,069)	$	(38)	$	46,102
Customer relationships	Customer relationships	66,999		(26,785)		—		40,214		66,999		(23,182)		—		43,817		Customer relationships	66,999		(29,186)		—		37,813		66,999		(27,987)		—		39,012
Total definite-lived intangible assets:	Total definite-lived intangible assets:	$	138,176	$	(50,671)	$	—	$	87,505	$	138,051	$	(42,036)	$	(1,373)	$	94,642	Total definite-lived intangible assets:	$	138,269	$	(55,515)	$	—	$	82,754	$	138,208	$	(53,056)	$	(38)	$	85,114
Trade names	Trade names	64,240		—		—		64,240		65,390		—		(1,150)		64,240		Trade names	64,240		—		—		64,240		64,240		—		—		64,240
Other	Other	700		—		—		700		700		—		—		700		Other	700		—		—		700		700		—		—		700
Total intangible assets:	Total intangible assets:	$	203,116	$	(50,671)	$	—	$	152,445	$	204,141	$	(42,036)	$	(2,523)	$	159,582	Total intangible assets:	$	203,209	$	(55,515)	$	—	$	147,694	$	203,148	$	(53,056)	$	(38)	$	150,054

Estimated useful life of technology and intellectual property is 15 years. Estimated useful life of customer relationships is a range of 13 - 20 years.

Amortization expense was $2.4 million ~~and $7.3 million~~ for both the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and $2.5 million and $7.9 million for the three and nine months ended September 30, 2020,~~ respectively.

The estimated amortization expense related to definite-lived intangible assets (in thousands) for the five succeeding years is as follows:


2021 (remaining three months)		$	2,422
2022		9,669
2022 (remaining nine months)				2022 (remaining nine months)	$	7,249
2023	2023	9,664		2023	$	9,665
2024	2024	9,665		2024	$	9,665
2025	2025	9,664		2025	$	9,665
2026				2026	$	9,665

1412

NOTE J—I—DEBT

Debt (in thousands) consisted of the following:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Senior secured credit facility:	Senior secured credit facility:					Senior secured credit facility:
Revolver expiring May 1, 2023 (4.13% at September 30, 2021 and 4.19% at December 31, 2020)		$	—	$	25,000
Term Loan—final maturity May 1, 2025 (5.00% at September 30, 2021 and 5.00% at December 31, 2020)		1,225,200		1,234,800
Revolver expiring May 1, 2023 (4.50% at March 31, 2022 and 4.13% at December 31, 2021)						Revolver expiring May 1, 2023 (4.50% at March 31, 2022 and 4.13% at December 31, 2021)	$	—	$	—
Term Loan—final maturity May 1, 2025 (5.00% at March 31, 2022 and 5.00% at December 31, 2021)						Term Loan—final maturity May 1, 2025 (5.00% at March 31, 2022 and 5.00% at December 31, 2021)	1,218,662		1,222,000
Less: Unamortized original issue discount	Less: Unamortized original issue discount	(3,605)		(4,376)		Less: Unamortized original issue discount	(3,095)		(3,350)
Less: Unamortized debt issuance cost	Less: Unamortized debt issuance cost	(16,458)		(20,259)		Less: Unamortized debt issuance cost	(13,947)		(15,200)
Insurance financing notes payable	Insurance financing notes payable	6,636		4,187		Insurance financing notes payable	2,212		4,424
Finance leases (See Note P - Leases)		3,803		350
Finance leases (See Note O - Leases)						Finance leases (See Note O - Leases)	4,451		3,546
Total debt	Total debt	1,215,576		1,239,702		Total debt	1,208,283		1,211,420
Less: current portion	Less: current portion	(20,484)		(42,042)		Less: current portion	(16,303)		(18,285)
Total long-term portion of debt	Total long-term portion of debt	$	1,195,092	$	1,197,660	Total long-term portion of debt	$	1,191,980	$	1,193,135

Senior Secured Credit Facility

On May 1, 2018, we entered into a Third Amended and Restated Credit Agreement (the "Credit Agreement"), which increased our existing senior debt by entering into a new $1.380 billion senior secured credit facility, consisting of a $1.280 billion term loan (the "Term Loan") and a $100 million revolving credit facility (the "Revolver") (collectively the "Credit Facility) that may also be used for swingline loans or letters of credit, and we may elect to increase the term loan in accordance with the terms of the Credit Agreement. Borrowings under the Credit Agreement will bear interest at variable rates as determined at our election, at LIBOR or a base rate, in each case, plus an applicable margin. In addition, under the Credit Agreement, we are required to pay a per annum facility fee and fees for letters of credit. The Credit Agreement is secured by substantially all of our assets and of our domestic subsidiaries' assets and a pledge of the equity interests in such entities. The Term Loan matures on May 1, 2025, and the Revolver expires May 1, 2023. We capitalized $38.7 million in debt issuance costs and original issue discount as a result of the ~~new~~ Credit Agreement.

The Credit Facility contains covenants that, among other things, limit our ability, and certain of our subsidiaries' abilities, to create, incur or assume indebtedness and liens, to make acquisitions or investments, to sell assets and to pay dividends. The Credit Agreement also requires us to maintain a consolidated leverage ratio of no more than 3.75:1.00 as of the last day of any fiscal quarter whenever usage of the Revolver (other than certain undrawn letters of credit) exceeds 30% of the Revolver commitment. These covenants are subject to a number of important exceptions and qualifications. The Credit Agreement includes events of default and other affirmative and negative covenants that are usual for facilities and transactions of this type. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we are in compliance with all covenants in accordance with our senior secured Credit Facility.

1513

Term Loan

At ~~September 30, 2021,~~March 31, 2022, contractual maturities of our Term Loan (in thousands) are as follows:


2021 (remaining three months)		$	3,200
2022		12,800
2022 (remaining nine months)				2022 (remaining nine months)	$	9,600
2023	2023	12,800		2023	12,800
2024	2024	12,800		2024	12,800
2025	2025	1,183,600		2025	1,183,462
2026				2026	—
Thereafter	Thereafter	—		Thereafter	—
Total	Total	$	1,225,200	Total	$	1,218,662

Revolving Line-of-Credit

We have a $100.0 million Revolver with zero drawn and ~~$22.2~~$21.6 million allocated for letters of credit as of ~~September 30, 2021,~~March 31, 2022, leaving ~~$77.8~~$78.4 million available under the Revolver.

Based on our consolidated leverage ratio of ~~4.96:~~5.07:1.00 as of ~~September 30, 2021,~~March 31, 2022, we may draw up to approximately $30.0 million without the consent of our lenders. With the consent of our lenders, we have access to the full availability of the Revolver.

Insurance Financing Notes Payable

During the third quarter of 2021, we renewed our insurance policies and financed the payments through notes payable with a stated interest rate of 2.9%. These payments will be made in installments throughout a nine-month period and, as such, were classified as current debt. As of ~~September 30, 2021,~~March 31, 2022, the notes payable had a balance of ~~$6.6~~$2.2 million.

1614

NOTE K—J—ASSET RETIREMENT OBLIGATIONS

Mine reclamation or future remediation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the costs expected to be incurred at such site. Such cost estimates include, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimates at inactive mines are reflected in earnings in the period an estimate is revised. Liabilities related to our asset retirement obligations are reflected in other long-term liabilities on our balance sheets. Changes in the asset retirement obligations (in thousands) are as follows:


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Beginning balance	Beginning balance	$	24,717	$	25,825	Beginning balance	$	32,049	$	24,717
Accretion	Accretion	1,046		1,098		Accretion	374		342
Additions and revisions of estimates	Additions and revisions of estimates	3,397		(890)		Additions and revisions of estimates	(3,126)		279
Ending balance	Ending balance	$	29,160	$	26,033	Ending balance	$	29,297	$	25,338

NOTE L—K—FAIR VALUE ACCOUNTING

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

Cash Equivalents

Due to the short-term maturity, we believe our cash equivalent instruments at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, approximated their reported carrying values.

Long-Term Debt, Including Current Maturities

We believe that the fair values of our long-term debt, including current maturities, approximated their carrying values based on their effective interest rates compared to current market rates.

NOTE M—L—EQUITY-BASED COMPENSATION

In July 2011, we adopted the U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan (the “2011 Plan”), which was amended and restated effective May 2015, amended and restated effective February 1, 2020, and amended and restated effective May 13, 2021. The 2011 Plan provides for grants of stock options, restricted stock, performance share units and other incentive-based awards. We believe our 2011 Plan aligns the interests of our employees and directors with those of our common stockholders. ~~At September 30, 2021, we had 2,581,828 shares of common stock that may be issued under the 2011 Plan.~~ We use a combination of treasury stock and new shares if necessary to satisfy option exercises or vesting of restricted awards and performance share units.

1715

Stock Options

The following table summarizes the status of, and changes in, our stock option awards during the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:


		Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years
Outstanding at December 31, 2020		826,215	$	29.05	3.1 years
Outstanding at December 31, 2021						Outstanding at December 31, 2021	666,718	$	30.84	2.4 years
Granted	Granted	—	$	—		Granted	—	$	—
Exercised	Exercised	(10,164)	$	10.33		Exercised	(7,500)	$	11.08
Forfeited	Forfeited	(113,333)	$	24.76		Forfeited	—	$	—
Expired	Expired	(36,000)	$	14.58		Expired	(35,695)	$	20.06
Outstanding at September 30, 2021		666,718	$	30.84	2.7 years
Exercisable at September 30, 2021		666,718	$	30.84	2.7 years
Outstanding at March 31, 2022						Outstanding at March 31, 2022	623,523	$	31.70	2.3 years
Exercisable at March 31, 2022						Exercisable at March 31, 2022	623,523	$	31.70	2.3 years

There were no grants of stock options during the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

There were ~~zero~~7,500 and 10,164 stock options exercised during the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022 and 2021, respectively. The total intrinsic value of stock options exercised was $25 thousand and $44 thousand for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022 and 2021, respectively. Cash received from stock options exercised during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 was $83 thousand and $105 ~~thousand.~~thousand, respectively. The tax ~~benefit~~benefits realized from stock option exercises ~~was~~were $6 thousand and $11 thousand for the ~~nine~~three months ended ~~September 30, 2021. There were no stock options exercised during the three~~March 31, 2022 and ~~nine months ended September 30, 2020.~~2021, respectively.

As of ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ there was no unrecognized compensation expense related to these options. We account for forfeitures as they occur.

Restricted Stock and Restricted Stock Unit Awards

The following table summarizes the status of, and changes in, our unvested restricted stock awards during the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:


		Number of Shares	Grant Date Weighted Average Fair Value			Number of Shares	Grant Date Weighted Average Fair Value
Unvested, December 31, 2020		1,779,826	$	6.22
Unvested, December 31, 2021					Unvested, December 31, 2021	1,144,310	$	8.37
Granted	Granted	748,844	$	10.04	Granted	588,492	$	9.81
Vested	Vested	(971,934)	$	5.45	Vested	(111,829)	$	11.36
Forfeited	Forfeited	(19,299)	$	11.81	Forfeited	(1,058)	$	13.56
Unvested, September 30, 2021		1,537,437	$	8.34
Unvested, March 31, 2022					Unvested, March 31, 2022	1,619,915	$	8.68

We granted ~~53,383~~588,492 and ~~748,844~~633,973 restricted stock and restricted stock unit awards during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively. We granted 49,696 and 1,541,473 restricted stock and restricted stock units during the three and nine months ended September 30, 2020,~~ respectively. The fair value of the awards was based on the market price of our stock at date of grant.

We recognized ~~$1.7~~$1.6 million and ~~$5.0~~$1.6 million of equity-based compensation expense related to restricted stock and restricted stock units during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, respectively. We recognized $2.7 million and $6.6 million of equity-based compensation expense related to restricted stock and restricted stock units during the three and nine months ended September 30, 2020, respectively. As of ~~September 30, 2021,~~March 31, 2022, there was ~~$8.8~~$11.6 million of unrecognized compensation expense related to these restricted stock and restricted stock units, which is expected to be recognized over a weighted-average period of ~~1.9~~2.2 years.

We also granted cash awards during the ~~nine~~three months ended ~~September 30,~~March 31, 2020. These awards will vest over a period of three years and will be settled in cash. As such, these awards have been classified as liability instruments. We recognized ~~$39.0 thousand~~$0.3 million and ~~$0.6~~$0.4 million of expense related to these awards for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively. We recognized $0.1 million and $0.2 million of expense related to these awards for the three and nine months ended September 30, 2020,~~ respectively. The liability for these awards is included in accounts payable and other accrued expenses on our balance sheets. These awards will be remeasured at fair value each reporting period with resulting changes

reflected in our income statements. Estimated unrecognized expense related to these awards is ~~$0.8~~$1.2 million over a period of ~~1.3 years.~~one year.

Performance Share Unit Awards

The following table summarizes the status of, and changes in, our performance share unit awards during the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:


		Number of Shares	Grant Date Weighted Average Fair Value			Number of Shares	Grant Date Weighted Average Fair Value
Unvested, December 31, 2020		1,513,648	$	12.36
Unvested, December 31, 2021					Unvested, December 31, 2021	1,914,589	$	9.77
Granted	Granted	776,153	$	11.52	Granted	920,681	$	11.79
Vested	Vested	(17,352)	$	31.24	Vested	(497,401)	$	14.56
Forfeited/Cancelled	Forfeited/Cancelled	(185,876)	$	29.74	Forfeited/Cancelled	(658)	$	13.86
Unvested, September 30, 2021		2,086,573	$	10.36
Unvested, March 31, 2022					Unvested, March 31, 2022	2,337,211	$	9.54

We granted ~~zero~~920,681 and ~~776,153~~773,023 performance share unit awards during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, respectively. ~~We granted zero~~A portion of these awards was measured against total shareholder return ("TSR"), and ~~1,020,161 performance share unit~~a portion was measured against adjusted free cash flow ("ACF") targets. The grant date weighted average fair value of these awards ~~during~~was estimated to be $11.79 and $11.46 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, respectively.

The number of TSR measured units that will vest will depend on the percentage ranking of our TSR compared to the TSR for each of the companies in the peer group over the three year period from January 1, 2022 through December 31, 2024 for the 2022 grant, January 1, 2021 through December 31, 2023 for the 2021 grant, and from January 1, 2020 ~~respectively.~~ through December 31, 2022 for the 2020 grant. The number of ACF measured units that will vest will be based on ACF achievement versus target. The ACF targets are set annually and are approved by the Board of Directors. The related compensation expense is recognized on a straight-line basis over the vesting period.

The grant date fair value for ~~these~~the TSR awards was estimated using a Monte Carlo simulation model. The Monte Carlo simulation model requires the use of highly subjective assumptions. Our key assumptions in the model included the price and the expected volatility of our common stock and our self-determined peer group companies’ stock, risk-free rate of interest, dividend yields and cross-correlations between our common stock and our self-determined peer group companies' stock.

We recognized ~~$3.8~~$2.8 million and ~~$8.4~~$2.5 million of compensation expense related to performance share unit awards during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively. We recognized $2.7 million and $5.7 million of compensation expense related to performance share unit awards during the three and nine months ended September 30, 2020,~~ respectively. As of ~~September 30, 2021,~~March 31, 2022, there was ~~$10.3~~$14.6 million of unrecognized compensation expense related to these performance share unit awards, which is expected to be recognized over a weighted-average period of ~~1.9~~2.3 years.

We also granted cash awards during the ~~nine~~three months ended ~~September 30,~~March 31, 2020. These awards will vest over a period of three years and will be settled in cash. As such, these awards have been classified as liability instruments. We recognized ~~$0.5~~$0.2 million and ~~$0.7~~$0.2 million of expense related to these awards for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The liability for these awards is included in accounts payable and other accrued expenses on our balance sheets. These awards will be remeasured at fair value each reporting period with resulting changes reflected in our income statements. Estimated unrecognized expense related to these awards is ~~$0.7~~$0.4 million over a period of ~~1.3 years.~~one year.

1917

NOTE N—M—COMMITMENTS AND CONTINGENCIES

Future Minimum Annual Commitments at ~~September 30, 2021~~March 31, 2022 (in thousands):


		Minimum Purchase Commitments			Minimum Purchase Commitments
2021 (remaining three months)		$	5,825
2022		11,908
2022 (remaining nine months)				2022 (remaining nine months)	$	6,537
2023	2023	9,986		2023	5,976
2024	2024	4,997		2024	4,295
2025	2025	2,486		2025	2,886
2026				2026	2,180
Thereafter	Thereafter	11,092		Thereafter	9,288
Total future purchase commitments	Total future purchase commitments	$	46,294	Total future purchase commitments	$	31,162

Minimum Purchase Commitments

We enter into service agreements with our transload and transportation service providers. Some of these agreements require us to purchase a minimum amount of services over a specific period of time. Any inability to meet these minimum contract requirements requires us to pay a shortfall fee, which is based on the difference between the minimum amount contracted for and the actual amount purchased.

Contingent Liability on Royalty Agreement

On May 17, 2017, we purchased reserves in Crane County, Texas, for $94.4 million cash ~~consideration~~ plus contingent consideration. The contingent consideration is a royalty that is based on the tonnage shipped to third-parties. Because the contingent consideration is dependent on future tonnage sold, the amounts of which are uncertain, it is not currently possible to estimate the fair value of these future payments. The contingent consideration will be capitalized at the time a payment is probable and reasonably estimable, and the related depletion expense will be adjusted prospectively.

Other Commitments and Contingencies

Our operating subsidiary, U.S. Silica Company (“U.S. Silica”), has been named as a defendant in various product liability claims alleging silica exposure causing silicosis. During the ~~nine~~three months ended ~~September 30, 2021, 2~~March 31, 2022, zero new claims were brought against U.S. Silica. As of ~~September 30, 2021,~~March 31, 2022, there were 4442 active silica-related product liability claims pending in which U.S. Silica is a defendant. Although the outcomes of these claims cannot be predicted with certainty, in the opinion of management, it is not reasonably possible that the ultimate resolution of these matters will have a material adverse effect on our financial position or results of operations that exceeds the accrual amounts.

We have recorded estimated liabilities for these claims in other long-term liabilities as well as estimated recoveries under the indemnity agreement and an estimate of future recoveries under insurance in other assets on our consolidated balance sheets. As of both ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, other non-current assets included zero for insurance for third-party product liability claims. As of ~~September 30, 2021~~both March 31, 2022 and December 31, ~~2020~~2021 other long-term liabilities included $0.9 million ~~and $1.0 million, respectively,~~ for third-party product liability claims.

Obligations under Guarantees

We have indemnified our insurers against any loss they may incur in the event that holders of surety bonds, issued on our behalf, execute the bonds. As of ~~September 30, 2021,~~March 31, 2022, there was ~~$36.8~~$40.2 million in bonds outstanding, of which ~~$32.8~~$36.2 million related to reclamation requirements issued by various governmental authorities. Reclamation bonds remain outstanding until the mining area is reclaimed and the authority issues a formal release. The remaining bonds relate to licenses, permits, and tax collection.

2018

NOTE O—N—PENSION AND POST-RETIREMENT BENEFITS

We maintain a single-employer noncontributory defined benefit pension plan covering certain employees. The plan is frozen to all new employees. The plan provides benefits based on each covered employee’s years of qualifying service. Our funding policy is to contribute amounts within the range of the minimum required and maximum deductible contributions for the plan consistent with a goal of appropriate minimization of the unfunded projected benefit obligations. The pension plan uses a benefit level per year of service for covered hourly employees and a final average pay method for covered salaried employees. The plan uses the projected unit credit cost method to determine the actuarial valuation.

In addition, we provide defined benefit post-retirement health care and life insurance benefits to some employees. Covered employees become eligible for these benefits at retirement after meeting minimum age and service requirements. The projected future cost of providing post-retirement benefits, such as healthcare and life insurance, is recognized as an expense as employees render services. In general, retiree health benefits are paid as covered expenses are incurred. Expenses incurred other than service costs are reported in Other income (expense) in our Condensed Consolidated Statements of Operations.

Net pension benefit cost (in thousands) consisted of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Service cost	Service cost	$	585	$	199	$	2,196	$	1,515	Service cost	$	689	$	805
Interest cost	Interest cost	532		356		2,012		2,349		Interest cost	689		739
Expected return on plan assets	Expected return on plan assets	(1,509)		(531)		(4,369)		(3,394)		Expected return on plan assets	(1,418)		(1,429)
Net amortization and deferral	Net amortization and deferral	567		276		2,468		2,078		Net amortization and deferral	499		950
Net pension benefit costs	Net pension benefit costs	$	175	$	300	$	2,307	$	2,548	Net pension benefit costs	$	459	$	1,065

Net post-retirement benefit cost (in thousands) consisted of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Service cost	Service cost	$	(21)	$	28	$	18	$	65	Service cost	$	6	$	19
Interest cost	Interest cost	(99)		235		106		426		Interest cost	36		102
Unrecognized prior service cost	Unrecognized prior service cost	(1,547)		—		(1,547)		—		Unrecognized prior service cost	(516)		—
Unrecognized net (gain)/loss	Unrecognized net (gain)/loss	(106)		—		(106)		—		Unrecognized net (gain)/loss	(34)		—

Net post-retirement benefit costs	Net post-retirement benefit costs	(1,773)		$	263	$	(1,529)	$	491	Net post-retirement benefit costs	(508)		$	121

We contributed ~~$0.2 million~~zero and ~~$2.8~~$1.3 million to the qualified pension plan for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and $2.2 million and $4.2 million for the three and nine months ended September 30, 2020,~~ respectively. Our best estimates of expected contributions to the pension and post-retirement medical benefit plans for the ~~2021~~2022 fiscal year are ~~$2.8 million~~zero and ~~$1.2~~$1.1 million, respectively.

We contribute to 3 multiemployer defined benefit pension plans under the terms of collective-bargaining agreements for union-represented employees. A multiemployer plan is subject to collective bargaining for employees of two or more unrelated companies. These plans allow multiple employers to pool their pension resources and realize efficiencies associated with the daily administration of the plan. Multiemployer plans are generally governed by a board of trustees composed of management and labor representatives and are funded through employer contributions. However, in most cases, management is not directly represented. Our contributions to individual multiemployer pension funds did not exceed 5% of the fund’s total contributions for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021. Additionally, our contributions to multiemployer post-retirement benefit plans were immaterial for all periods presented in the accompanying condensed consolidated financial statements.

We also sponsor a defined contribution plan covering certain employees. We contribute to the plan in two ways. For certain employees not covered by the defined benefit plan, we make a contribution equal to 4% of their salary. For all other eligible employees, we make a contribution up to 6% of eligible earnings. Contributions were ~~$1.5~~$1.8 million and ~~$4.4~~$1.5 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and $0.8 million and $3.6 million for the three and nine months ended September 30, 2020,~~ respectively.

2119

NOTE P—O— LEASES

We lease railroad cars, office space, mining property, mining/processing equipment and transportation and other equipment. The majority of our leases have remaining lease terms of approximately one year to 20 years. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We have lease agreements with lease and non-lease components, the latter of which are generally accounted for separately.

Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount rate):

Leases Classification September 30,
2021 December 31, 2020
Assets
Operating Lease right-of-use assets $ 41,136 $ 37,130
Finance Lease right-of-use assets 3,730 339
Total leased assets $ 44,866 $ 37,469
Liabilities
Current
Operating Current portion of operating lease liabilities $ 15,846 $ 17,388
Finance Current portion of long-term debt 1,048 55
Non-current
Operating Operating lease liabilities 76,806 76,361
Finance Long-term debt, net 2,755 295
Total lease liabilities $ 96,455 $ 94,099
Lease Term and Discount Rate
Weighted average remaining lease term:
Operating 6.9 years 6.9 years
Finance 3.6 years 2.9 years
Weighted average discount rate:
Operating 5.7% 5.8%
Finance 5.1% 5.0%

During 2020, there was an unprecedented drop in global demand combined with the breakdown of the OPEC+ agreement to restrict oil production that led to one of the largest annual crude oil inventory builds in history. This led to sharp reductions in global crude oil prices. Containment measures and other economic, travel, and business disruptions caused by COVID-19 also affected refinery activity and future demand for crude oil, and consequently, the services and products of our Oil & Gas Proppants segment. As a result of these events, we recorded impairment charges of $0.2 million and $3.4 million for the three and nine months ended September 30, 2020, respectively, primarily related to railcar leases, various equipment leases, and an office building lease. These charges related to the Oil & Gas Proppants segment and were recorded in "Goodwill and other asset impairments" in the Condensed Consolidated Statements of Operations. No impairment charges were recorded related to leased assets for the nine months ended September 30, 2021.


Leases	Classification	March 31, 2022		December 31, 2021
Assets
Operating	Lease right-of-use assets	$	37,417	$	38,793
Finance	Lease right-of-use assets	4,334		3,448
Total leased assets		$	41,751	$	42,241
Liabilities
Current
Operating	Current portion of operating lease liabilities	$	13,158	$	14,469
Finance	Current portion of long-term debt	1,291		1,061
Non-current
Operating	Operating lease liabilities	71,355		75,130
Finance	Long-term debt, net	3,160		2,485
Total lease liabilities		$	88,964	$	93,145

Lease Term and Discount Rate
Weighted average remaining lease term:
Operating		6.7 years		6.9 years
Finance		4.2 years		3.6 years

Weighted average discount rate:
Operating		5.7%		5.7%
Finance		5.0%		5.1%

The components of lease expense (in thousands) were as follows:


Lease Costs	Lease Costs	Classification	Three Months Ended September 30, 2021		Three Months Ended September 30, 2020		Nine Months Ended September 30, 2021		Nine Months Ended September 30, 2020		Lease Costs	Classification	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
Operating lease costs(1)	Operating lease costs(1)	Cost of sales	$	8,097	$	5,711	$	24,994	$	21,417	Operating lease costs(1)	Cost of sales	$	7,628	$	8,137
Operating lease costs(2)	Operating lease costs(2)	Selling, general and administrative	447		415		1,468		1,420		Operating lease costs(2)	Selling, general and administrative	354		528
Total (3)	Total (3)		$	8,544	$	6,126	$	26,462	$	22,837	Total (3)		$	7,982	$	8,665


(1) Included short-term operating lease costs of ~~$4.6~~$4.7 million and ~~$12.9~~$3.7 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively. Included short-term operating lease costs of $0.3 million and $7.5 million for the three and nine months ended September 30, 2020,~~ respectively.
(2) Included short-term operating lease costs of $0.1 million ~~and $0.3 million~~ for both the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively. Included short-term operating lease costs of $0.1 million and $0.3 million for the three and nine months ended September 30, 2020,~~ respectively.
(3) Not included were expenses for finance leases of ~~$0.6~~$0.4 million and ~~$0.9 million~~$45 thousand for the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022 and 2021, respectively.

Supplemental cash flow information (in thousands) related to leases was as follows:


		Nine Months Ended September 30, 2021		Nine Months Ended September 30, 2020			Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	Operating cash flows for operating leases	$	19,728	$	51,859	Operating cash flows for operating leases	$	7,518	$	8,159
Financing cash flows for finance leases	Financing cash flows for finance leases	$	456	$	—	Financing cash flows for finance leases	$	330	$	45

Right-of-use assets obtained in exchange for new lease liabilities:	Right-of-use assets obtained in exchange for new lease liabilities:					Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	Operating leases	$	15,444	$	10,650	Operating leases	$	1,188	$	1,306
Finance leases	Finance leases	$	3,834	$	—	Finance leases	$	2,102	$	843

Maturities of lease liabilities (in thousands) as of ~~September 30, 2021:~~March 31, 2022:


		Operating leases		Finance leases			Operating leases		Finance leases
2021 (remaining three months)		$	5,554	$	302
2022		21,455		1,209
2022 (remaining nine months)						2022 (remaining nine months)	$	13,004	$	1,109
2023	2023	20,869		1,199		2023	20,958		1,469
2024	2024	17,061		764		2024	17,014		1,154
2025	2025	13,583		605		2025	13,347		805
2026						2026	11,474		271
Thereafter	Thereafter	41,752		71		Thereafter	31,855		33
Total lease payments	Total lease payments	$	120,274	$	4,150	Total lease payments	$	107,652	$	4,841
Less: Interest	Less: Interest	23,614		347		Less: Interest	19,696		390
Less: Other operating expenses	Less: Other operating expenses	4,008		—		Less: Other operating expenses	3,443		—
Total	Total	$	92,652	$	3,803	Total	$	84,513	$	4,451

NOTE Q—P— INCOME TAXES

For interim period reporting, we record income taxes using an estimated annual effective tax rate based upon projected annual income, forecasted permanent tax differences, discrete items and statutory rates in states in which we operate. At the end of each interim period, we update the estimated annual effective tax rate, and if the estimated tax rate changes based on new information, we make a cumulative adjustment in the period. We record the tax effect of an unusual or infrequently occurring item in the interim period in which it occurs as a discrete item of tax.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES” Act) was enacted and signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, permitted NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning after 2017 and before 2021. In addition, the CARES Act allowed NOLs generated after 2017 and before 2021 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. As a result, during 2020, we carried the NOL generated in 2019 back to offset the taxable income in the 2014 tax year ~~generating~~which generated a refund of $36.6 million. This refund was received during the second quarter of 2020. We also amended our 2018 tax return to generate an NOL by electing bonus depreciation. We then carried the NOL generated in 2018 back to offset the taxable income in prior years ~~generating~~which generated a refund of $26.3 million, of which $4.9 million was received during the fourth quarter of ~~2020.~~2020 and $21.1 million was received during the first quarter of 2022. At ~~September 30, 2021,~~March 31, 2022, the remaining ~~$21.5~~$0.4 million of this refund was included in accounts receivable in our balance sheets. The deferred tax assets related to the NOLs generated in 2018 and 2019 were recorded at the statutory income tax rate for 2018 and 2019, which was 21% for both years. As a result of the carry back of these NOLs to prior years, the NOLs will be utilized at the statutory income tax rate for pre-2018, which was 35%. This increase in the tax rate at which the 2018 and 2019 NOLs will be utilized results in a deferred tax benefit. Accordingly, for the

year ended December 31, 2020, we recorded a deferred tax benefit of $22.3 million. Pursuant to ASC 740, this was recorded as a discrete component of the tax benefit.

The CARES Act also accelerated the ability of companies to receive refunds of alternative minimum tax (“AMT”) credits related to tax years beginning in 2018 and 2019. AMT credits were presented as a receivable or a deferred tax asset in the prior period balance sheets. The presentation of refundable AMT credits in the balance sheet was reclassified during 2020 from deferred tax assets to accounts receivable to reflect the timing of when the credits were expected to be monetized. AMT credits in the amount of $16.0 million were included in accounts receivable on our balance sheets as of December 31, 2020, and were received in full during the first quarter of 2021.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~we had a tax benefit of $6.1 million and tax expense of $1.2 million, respectively. For the three and nine months ended September 30, 2020,~~ we had tax benefits of ~~$4.1~~$7.0 million and ~~$63.8~~$4.4 million, respectively. The effective tax rates were ~~23%~~45% and ~~(8)%~~17% for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively. The effective tax rates were 22% and 35% for the three and nine months ended September 30, 2020,~~ respectively. Without discrete items, which primarily consist of tax expense related to equity compensation and ~~state~~ tax ~~expense,~~benefits related to the ~~effective tax rates for both the three and nine months ended September 30, 2021 would have been 24%. Without discrete items,~~carryback of NOLs described above, the effective tax rates for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2022 and 2021 would have been ~~26%~~48% and 24%, respectively.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~we recorded tax expense related to equity compensation of zero and $0.5 million, respectively. During the three and nine months ended September 30, 2020,~~ we recorded tax expense related to equity compensation of $0.3 million and ~~$1.7~~$1.4 million, respectively.

NOTE R—Q— REVENUE

We consider sales disaggregated at the product and service level by business segment to depict how the nature, amount, timing and uncertainty of revenues and cash flow are impacted by changes in economic factors. The following table disaggregates our sales by major source (in thousands):


		Three Months Ended September 30, 2021						Three Months Ended September 30, 2020							Three Months Ended March 31, 2022						Three Months Ended March 31, 2021
Category	Category	Oil & Gas Proppants		Industrial & Specialty Products		Total Sales		Oil & Gas Proppants		Industrial & Specialty Products		Total Sales		Category	Oil & Gas Proppants		Industrial & Specialty Products		Total Sales		Oil & Gas Proppants		Industrial & Specialty Products		Total Sales
Product	Product	$	90,684	$	125,450	$	216,134	$	49,508	$	110,129	$	159,637	Product	$	104,591	$	128,643	$	233,234	$	78,671	$	112,719	$	191,390
Service	Service	51,164		—		51,164		16,835		—		16,835		Service	71,653		—		71,653		43,026		—		43,026
Total Sales	Total Sales	$	141,848	$	125,450	$	267,298	$	66,343	$	110,129	$	176,472	Total Sales	$	176,244	$	128,643	$	304,887	$	121,697	$	112,719	$	234,416

Nine Months Ended
September 30, 2021 Nine Months Ended
September 30, 2020
Category Oil & Gas Proppants Industrial & Specialty Products Total Sales Oil & Gas Proppants Industrial & Specialty Products Total Sales
Product $ 313,438 $ 362,173 $ 675,611 $ 217,943 $ 324,055 $ 541,998
Service 143,404 — 143,404 76,610 — 76,610
Total Sales $ 456,842 $ 362,173 $ 819,015 $ 294,553 $ 324,055 $ 618,608

The following tables reflect the changes in our contract assets, which we classify as unbilled receivables and our contract liabilities, which we classify as deferred revenues, for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands):


		Unbilled Receivables					Unbilled Receivables
		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Beginning Balance	Beginning Balance	$	47,982	$	20,144	Beginning Balance	$	1,957	$	47,982
Reclassifications to billed receivables	Reclassifications to billed receivables	(94,273)		(350)		Reclassifications to billed receivables	(1,957)		(512)
Revenues recognized in excess of period billings	Revenues recognized in excess of period billings	57,323		1,226		Revenues recognized in excess of period billings	2,500		1,647
Ending Balance	Ending Balance	$	11,032	$	21,020	Ending Balance	$	2,500	$	49,117


		Deferred Revenue					Deferred Revenue
		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Beginning Balance	Beginning Balance	$	33,692	$	50,634	Beginning Balance	$	20,741	$	33,692
Revenues recognized from balances held at the beginning of the period	Revenues recognized from balances held at the beginning of the period	(11,162)		(7,259)		Revenues recognized from balances held at the beginning of the period	(1,653)		(4,256)
Revenues deferred from period collections on unfulfilled performance obligations	Revenues deferred from period collections on unfulfilled performance obligations	4,361		4,782		Revenues deferred from period collections on unfulfilled performance obligations	450		3,368
Revenues recognized from period collections	Revenues recognized from period collections	(3,102)		(3,815)		Revenues recognized from period collections	(404)		(876)
Ending Balance	Ending Balance	$	23,789	$	44,342	Ending Balance	$	19,134	$	31,928

We have elected to use the practical expedients allowed under ASC 606-10-50-14, pursuant to which we have excluded disclosures of transaction prices allocated to remaining performance obligations and when we expect to recognize such revenue. The majority of our remaining performance obligations are primarily comprised of unfulfilled product, transportation service, and labor service orders, all of which hold a remaining duration of less than one year. The long-term portion of deferred revenue primarily represents a combination of refundable and nonrefundable customer prepayments for which related current performance obligations do not yet exist, but are expected to arise, before the expiration of the contract. Our residual unfulfilled performance obligations are comprised primarily of long-term equipment rental arrangements in which we recognize revenues equal to what we have a right to invoice. Generally, no variable consideration exists related to our remaining performance obligations and no consideration is excluded from the associated transaction prices.

During the second quarter of 2021, we entered into an agreement to settle a customer dispute regarding fees related to minimum purchase commitments from 2014-2020. As a result of this settlement, we recognized approximately $49.0 million in revenue as of June 30, 2021. As of June 30, 2021, $43.9 million was included in unbilled receivables and $1.1 million was included in billed receivables related to this settlement. These amounts were received in full during the third quarter of 2021.

Foreign Operations

The following table includes information related to our foreign operations (in thousands):


		Three Months Ended September 30, 2021		Three Months Ended September 30, 2020		Nine Months Ended September 30, 2021		Nine Months Ended September 30, 2020			Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
Total Sales	Total Sales	$	23,781	$	22,084	$	71,133	$	65,948	Total Sales	$	25,254	$	21,696
Pre-tax income	Pre-tax income	$	2,852	$	3,220	$	12,024	$	11,299	Pre-tax income	$	4,813	$	4,138
Net income	Net income	$	2,253	$	2,544	$	9,499	$	8,927	Net income	$	3,802	$	3,269

Foreign operations constituted approximately ~~$31.8~~$34.2 million and ~~$32.8~~$27.6 million of consolidated assets as of ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

2422

NOTE S—R— RELATED PARTY TRANSACTIONS

There were no related party transactions during the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 or ~~2020.~~2021.

NOTE T—S— SEGMENT REPORTING

Our business is organized into 2 reportable segments, Oil & Gas Proppants and Industrial & Specialty Products, based on end markets. The reportable segments are consistent with how management views the markets that we serve and the financial information reviewed by the chief operating decision maker. We manage our Oil & Gas Proppants and Industrial & Specialty Products businesses as components of an enterprise for which separate information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assess performance.

In the Oil & Gas Proppants segment, we serve the oil and gas recovery market primarily by providing and delivering fracturing sand, or “frac sand,” which is pumped down oil and natural gas wells to prop open rock fissures and increase the flow rate of oil and natural gas from the wells.

The Industrial & Specialty Products segment consists of over 600 product types and materials used in a variety of industries, including container glass, fiberglass, specialty glass, flat glass, building products, fillers and extenders, foundry products, chemicals, recreation products and filtration products.

An operating segment’s performance is primarily evaluated based on segment contribution margin, which excludes selling, general, and administrative costs, corporate costs, plant capacity expansion expenses, and facility closure costs. We believe that segment contribution margin, as defined above, is an appropriate measure for evaluating the operating performance of our segments. However, segment contribution margin is a non-GAAP measure and should be considered in addition to, not a substitute for, or superior to, net income (loss) or other measures of financial performance prepared in accordance with GAAP. The other accounting policies of each of the 2 reportable segments are the same as those in Note B - Summary of Significant Accounting Policies to the Consolidated Financial Statements in Item 8 of our ~~2020~~2021 Annual Report on Form 10-K.

2523

The following table presents sales and segment contribution margin (in thousands) for the reportable segments and other operating results not allocated to the reportable segments:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Sales:	Sales:									Sales:
Oil & Gas Proppants	Oil & Gas Proppants	$	141,848	$	66,343	$	456,842	$	294,553	Oil & Gas Proppants	$	176,244	$	121,697
Industrial & Specialty Products	Industrial & Specialty Products	125,450		110,129		362,173		324,055		Industrial & Specialty Products	128,643		112,719
Total sales	Total sales	267,298		176,472		819,015		618,608		Total sales	304,887		234,416
Segment contribution margin:	Segment contribution margin:									Segment contribution margin:
Oil & Gas Proppants	Oil & Gas Proppants	25,723		31,478		129,937		90,540		Oil & Gas Proppants	44,753		21,540
Industrial & Specialty Products	Industrial & Specialty Products	41,003		42,353		126,981		120,821		Industrial & Specialty Products	37,834		40,038
Total segment contribution margin	Total segment contribution margin	66,726		73,831		256,918		211,361		Total segment contribution margin	82,587		61,578
Operating activities excluded from segment cost of sales	Operating activities excluded from segment cost of sales	(6,876)		(4,951)		(15,295)		(26,405)		Operating activities excluded from segment cost of sales	(4,569)		(4,151)
Selling, general and administrative	Selling, general and administrative	(30,956)		(27,216)		(84,689)		(96,394)		Selling, general and administrative	(40,110)		(26,224)
Depreciation, depletion and amortization	Depreciation, depletion and amortization	(39,981)		(40,069)		(122,494)		(115,604)		Depreciation, depletion and amortization	(37,749)		(41,348)
Goodwill and other asset impairments	Goodwill and other asset impairments	(11)		(222)		(49)		(108,044)		Goodwill and other asset impairments	—		(38)
Interest expense	Interest expense	(17,796)		(19,274)		(53,425)		(63,730)		Interest expense	(17,173)		(17,711)
Other income (expense), net, including interest income		2,580		(409)		4,999		15,592
Income tax benefit (expense)		6,140		4,094		(1,172)		63,785
Other income, net, including interest income										Other income, net, including interest income	1,531		2,605
Income tax benefit										Income tax benefit	6,969		4,354
Net loss	Net loss	$	(20,174)	$	(14,216)	$	(15,207)	$	(119,439)	Net loss	$	(8,514)	$	(20,935)
Less: Net loss attributable to non-controlling interest	Less: Net loss attributable to non-controlling interest	(179)		(254)		(462)		(778)		Less: Net loss attributable to non-controlling interest	(121)		(157)
Net loss attributable to U.S. Silica Holdings, Inc.	Net loss attributable to U.S. Silica Holdings, Inc.	$	(19,995)	$	(13,962)	$	(14,745)	$	(118,661)	Net loss attributable to U.S. Silica Holdings, Inc.	$	(8,393)	$	(20,778)

Asset information, including capital expenditures and depreciation, depletion, and amortization, by segment is not included in reports used by management in its monitoring of performance and, therefore, is not reported by segment. At both ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, goodwill of $185.6 million has been allocated to these segments with zero ~~assigned~~allocated to Oil & Gas Proppants and $185.6 million to Industrial & Specialty Products.

NOTE U—T— SUBSEQUENT EVENTS

~~We evaluated subsequent events through~~Subsequent to quarter end, we executed a minimum purchase supply agreement with an Oil & Gas Proppants segment customer. This agreement included a $20.0 million capacity reservation fee, which we will receive in cash during the ~~date the consolidated financial statements were available for issuance and did not identify any events requiring disclosure.~~second quarter.


ITEM 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited condensed consolidated financial statements and the accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q as well as the consolidated financial statements, the accompanying notes and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contained in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 (the ~~"2020~~"2021 Annual Report").

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

Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933, as

amended. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are ~~forward-~~

~~looking~~forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “could,” “can have,” “likely” and other words and terms of similar meaning.

For example, all statements we make relating to our estimated and projected costs; the impact of the COVID-19 pandemic on our future plans and results of operations; reserve and finished products estimates; demand for our products; the strategies of our customers; anticipated expenditures, cash flows, growth rates and financial results; our plans and objectives for future operations, growth or initiatives; strategies and their anticipated effect on our performance and liquidity; and the expected outcome or impact of pending or threatened litigation are forward-looking statements.

All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expect, including but not limited to: global economic conditions; fluctuations in demand for commercial silica, diatomaceous earth, perlite, clay and cellulose; fluctuations in demand for frac sand or the development of either effective alternative proppants or new processes to replace hydraulic fracturing; changes in production spending by companies in the oil and gas industry and changes in the level of oil and natural gas exploration and development; general economic, political and business conditions in key regions of the world; ongoing effects of the COVID-19 pandemic on our customers and end users of our products; pricing pressure; weather and seasonal factors; the cyclical nature of our customers’ business; our inability to meet our financial and performance targets and other forecasts or expectations; our substantial indebtedness and pension obligations, including restrictions on our operations imposed by our indebtedness; operational modifications, delays or cancellations; prices for electricity, natural gas and diesel fuel; our ability to maintain our transportation network; changes in government regulations and regulatory requirements, including those related to mining, explosives, chemicals, and oil and gas production; silica-related health issues and corresponding litigation; and other risks and uncertainties detailed in this Quarterly Report on Form 10-Q and our most recent Forms 10-K, 10-Q, and 8-K filed with or furnished to the U.S. Securities and Exchange Commission (“SEC”).

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of the known factors described above, and it is impossible for us to anticipate all factors that could affect our actual results. As a result, forward-looking statements are not guarantees of future performance, and you should not place undue reliance on any forward-looking statements we make. If one or more of the risks described above or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. We disclaim any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other filings with the SEC, and our other public communications.

Overview

We are a global performance materials company and a leading producer of commercial silica used in the oil and gas industry and in a wide range of industrial applications. In addition, through our subsidiary EP Minerals, LLC ("EPM"), we are an industry leader in the production of industrial minerals, including diatomaceous earth, clay (calcium bentonite and calcium montmorillonite) and perlite.

During our ~~121-year~~122-year history, we have developed core competencies in mining, processing, logistics and materials science that enable us to produce and cost-effectively deliver over 600 diversified product types to customers across our end markets. As of ~~September 30, 2021,~~March 31, 2022, we operated 24 production facilities across the United States. We control ~~504~~483 million tons of reserves of commercial silica, which we believe can be processed to make ~~207~~193 million tons of finished products that meet API frac sand specifications, and 8382 million tons of reserves of diatomaceous earth, perlite, and clays.

Our operations are organized into two reportable segments based on end markets served and the manner in which we analyze our operating and financial performance: (1) Oil & Gas Proppants and (2) Industrial & Specialty Products. We believe our segments are complementary because our ability to sell to a wide range of customers across end markets in these segments allows us to maximize recovery rates in our mining operations and optimize our asset utilization.

~~Acquisitions~~

For a description of our key business acquisitions during the periods presented, see Note E - Business Combinations to our Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

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Recent Trends and Outlook

Oil and gas proppants end market trends

Our operations in our Oil & Gas Proppants segment are materially dependent on the levels of activity in natural gas and oil exploration, development and production, which are affected by trends in natural gas and oil prices. In recent years, natural gas and oil prices and, therefore, the level of exploration, development and production activity, have experienced significant volatility.

During 2020, the COVID-19 pandemic and related economic repercussions, coupled with an inadequate supply response and exacerbated by the lack of global storage capacity, resulted in a precipitous decline in crude oil prices. Demand for our proppant and logistics services declined as our customers reduced their capital budgets and drilling operations in response to lower oil prices. ~~In response to~~During 2021, crude oil prices rebounded from 2020, with the ~~effects~~West Texas Intermediate price of crude oil increasing 55% during the ~~pandemic on~~year. This resulted in strong well completion activity and improved pricing for our Oil & Gas Proppants segment. Strong customer demand and favorable pricing in this segment ~~we took a number~~have continued through the first quarter of ~~steps to reduce our costs of operations. We dramatically reduced all discretionary spending, lowered headcount, and closed or idled facilities as appropriate.~~

These events negatively affected, and could continue to negatively affect, our Oil & Gas Proppants segment in the future. The extent to which our business will continue to be affected by the COVID-19 pandemic will depend on various factors and consequences beyond our control, including the possibility of a resurgence in cases or new variants to the virus, the rate and effectiveness of vaccinations, additional actions by businesses and governments in response to the pandemic, and consumer sentiment and its effect on oil prices on the global economy generally. In addition, our operations and those of our customers have been negatively affected by global logistical and supply chain constraints related to the pandemic. While we believe these conditions are temporary, prolonged constraints or increased costs related to transportation of goods could have a material effect on our results of operations. These factors could also aggravate the risk factors identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. However, vaccinations have become more prevalent and businesses are continuing to re-open.2022.

Sales ~~decreased~~increased by ~~27%~~11% or ~~$51.5~~$17.6 million in our Oil & Gas Proppants segment during the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~June 30, 2021. Sales increased by 59% or $71.6 million during the three months ended June 30, 2021 compared to the three months ended March~~December 31, 2021. ~~Both were~~This was due primarily to ~~approximately $49.0 million of shortfall fees recognized during the second quarter which did not recur.~~higher energy prices and a rebound in overall well completion activity. Our results for the three month period ended ~~September 30, 2021~~March 31, 2022 in this segment are not necessarily indicative of the results that may be expected for the full year ending December 31, ~~2021.~~2022.


Amounts in thousands, except per ton data	Amounts in thousands, except per ton data	Three Months Ended						Percentage Change				Amounts in thousands, except per ton data	Three Months Ended				Percentage Change
Oil & Gas Proppants	Oil & Gas Proppants	September 30, 2021		June 30, 2021		March 31, 2021		September 30, 2021 vs. June 30, 2021		June 30, 2021 vs. March 31, 2021		Oil & Gas Proppants	March 31, 2022		December 31, 2021			March 31, 2022 vs. December 31, 2021
Sales	Sales	$	141,848	$	193,298	$	121,697	(27)	%	59	%	Sales	$	176,244	$	158,606		11	%
Tons Sold	Tons Sold	2,912		3,024		2,577		(4)	%	17	%	Tons Sold	3,060		3,096			(1)	%
Average Selling Price per Ton	Average Selling Price per Ton	$	48.71	$	63.92	$	47.22	(24)	%	35	%	Average Selling Price per Ton	$	57.60	$	51.23		12	%

If oil and gas drilling and completion activity does not grow, or if frac sand supply remains greater than demand, then we may sell fewer tons, sell tons at lower prices, or both. If we sell less frac sand or sell frac sand at lower prices, our revenue, net income, cash generated from operating activities, and liquidity would be adversely affected, and we could incur material asset impairments. If these events occur, we may evaluate further actions to reduce cost and improve liquidity.

Industrial and specialty products end market trends

Demand in the industrial and specialty products end markets has been relatively stable in recent years and is primarily influenced by key macroeconomic drivers such as housing starts, population growth, light vehicle sales, beer and wine production, repair and remodel activity and industrial production. The primary end markets served by our Industrial & Specialty Products segment are building and construction products, fillers and extenders, filtration, glassmaking, absorbents, foundry, and sports and recreation. We have been increasing our value-added product offerings in the industrial and specialty products end markets organically as well as through acquisitions, such as White Armor and EPM. Additionally, we have increased our focus on the alternative energy markets and products necessary for the supply chains of solar panels, ~~green~~renewable diesel and wind turbines. Sales of these new higher margin products have increased our Industrial & Specialty Products segment's profitability.

The COVID-19 pandemic has caused severe economic, market and other disruptions worldwide, which began to affect our Industrial & Specialty Products segment in the second quarter of 2020. ~~After~~Even as the COVID-19 pandemic ~~has subsided,~~subsides, we may continue to experience adverse impacts in this segment as a result of any long-term impacts resulting from the pandemic in the relevant markets.

Review of Strategic Alternatives

On October 6, 2021, we announced that we had initiated a review of strategic alternatives for our Industrial & Specialty Products ("ISP") segment to maximize value for shareholders and other stakeholders. We stated that a "range of options are under consideration, including a potential sale or separation of the ISP segment." There can be no assurance the review of strategic alternatives will result in any transaction, and the process of exploring strategic alternatives will involve the dedication of significant resources and the incurrence of significant costs and expenses.

Our Business Strategy

The key drivers of our growth strategy include:

•increasing our presence and new product development in specialty products end markets;

•optimizing our product mix and further developing value-added capabilities to maximize margins;

•effectively positioning our Oil & Gas Proppants facilities to optimally serve our customers;

•optimizing our supply chain network and leveraging our logistics capabilities to meet our customers’ needs;

•evaluating both Greenfield and Brownfield expansion opportunities and other acquisitions;

•maintaining financial strength and flexibility; and

•pursuing strategic alternatives including, but not limited to, a sale or separation of the ISP business.

How We Generate Our Sales

Products

We derive our product sales by mining and processing minerals that our customers purchase for various uses. Our product sales are primarily a function of the price per ton and the number of tons sold. We primarily sell our products through individual purchase orders executed under short-term price agreements or at prevailing market rates. The amount invoiced reflects the price of the product, transportation, surcharges, and additional handling services as applicable, such as storage, transloading the product from railcars to trucks and last mile logistics to the customer site. We invoice most of our product customers on a per shipment basis, although for some larger customers we consolidate invoices weekly or monthly. Standard collection terms are net 30 days, although extended terms are offered in competitive situations.

Services

We derive our service sales primarily through the provision of transportation, equipment rental, and contract labor services to companies in the oil and gas industry. Transportation services typically consist of transporting customer proppant from storage facilities to proximal well-sites and are contracted through work orders executed under established pricing agreements. The amount invoiced reflects transportation services rendered. Equipment rental services provide customers with use of either dedicated or nonspecific wellhead proppant delivery equipment solutions for contractual periods defined either through formal lease agreements or executed work orders under established pricing agreements. The amounts invoiced reflect the length of time the equipment set was utilized in the billing period. Contract labor services provide customers with proppant delivery equipment operators through work orders executed under established pricing agreements. The amounts invoiced reflect the amount of time our labor services were utilized in the billing period. We typically invoice our customers on a weekly or monthly basis; however, some customers receive invoices upon well-site operation completion. Standard collection terms are net 30 days, although extended terms are offered in competitive situations.

Our ten largest customers accounted for ~~30%~~40% and 42% of total sales for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and 23% and 32% for the three and nine months ended September 30, 2020,~~ respectively. No customers accounted for 10% or more of our total sales for the three ~~or nine~~ months ended ~~September 30, 2021~~March 31, 2022 or ~~2020.~~2021. At ~~September 30,~~March 31, 2022 and December 31, 2021, none of our customers' accounts receivable represented 10% or more ~~of our total trade accounts receivable. At December 31, 2020, one of our customer's accounts receivable represented 24%~~ of our total trade accounts receivable.

For a limited number of customers, we sell under long-term, minimum purchase supply agreements. These agreements define, among other commitments, the volume of product that our customers must purchase, the volume of product that we must provide and the price that we will charge and that our customers will pay for each product. Prices under these agreements are generally fixed and subject to certain contractual adjustments. Sometimes these agreements may undergo negotiations regarding pricing and volume requirements, particularly in volatile market conditions. When these negotiations occur, we may deliver sand at prices or at volumes below the requirements in our existing supply agreements. An executed order specifying the type and quantity of product to be delivered, in combination with the noted agreements, comprise our contracts in these arrangements. Selling more tons under supply contracts enables us to be more efficient from a production, supply chain and logistics standpoint. As discussed in Part I, Item 1A., Risk Factors of our ~~2020~~2021 Annual Report, these customers may not continue to purchase the same levels of product in the future due to a variety of reasons, contract requirements notwithstanding.

As of ~~September 30, 2021,~~March 31, 2022, we had ~~eight~~seven minimum purchase supply agreements in the Oil & Gas Proppants segment with initial terms expiring between ~~2021~~2022 and 2034. As of ~~September 30, 2020,~~March 31, 2021, we had 11 minimum purchase supply agreements in the Oil & Gas Proppants segment with initial terms expiring between 2021 and 2034. Collectively, sales to customers with minimum purchase supply agreements accounted for ~~35%~~31% and ~~40%~~55% of Oil & Gas Proppants segment sales during the three months ended March 31, 2022 and 2021, respectively.

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~~during the three and nine months ended September 30, 2021, respectively, and 34% and 57% for the three and nine months ended September 30, 2020, respectively.~~

In the industrial and specialty products end markets we have not historically entered into long-term minimum purchase supply agreements with our customers because of the high cost to our customers of switching providers. We may periodically do so when capital or other investment is required to meet customer needs. Instead, we often enter into supply agreements with our customers with targeted volumes and terms of one to five years. Prices under these agreements are generally fixed and subject to annual increases.

The Costs of Conducting Our Business

The principal expenses involved in conducting our business are transportation costs, labor costs, electricity and drying fuel costs, and maintenance and repair costs for our mining and processing equipment and facilities. Transportation and related costs include freight charges, fuel surcharges, transloading fees, switching fees, railcar lease costs, demurrage costs, storage fees and labor costs. Our operating costs can vary significantly based on the volume of product produced and current economic conditions. We benefit from owning the majority of the mineral deposits that we mine and having long-term mineral rights leases or supply agreements for our other primary sources of raw material, which limits royalty payments.

Additionally, we incur expenses related to our corporate operations, including costs for sales and marketing; research and development; and the finance, legal, human resources, information technology, and environmental, health and safety functions of our organization. These costs are principally driven by personnel expenses.

How We Evaluate Our Business

Our management team evaluates our business using a variety of financial and operating metrics. We evaluate the performance of our two segments based on their tons sold, average selling price and contribution margin earned. Additionally, we consider a number of factors in evaluating the performance of our business as a whole, including total tons sold, average selling price, total segment contribution margin, and Adjusted EBITDA. We view these metrics as important factors in evaluating our profitability and review these measurements frequently to analyze trends and make decisions, and we believe the presentation of these metrics provides useful information to our investors regarding our financial condition and results of operations for the same reasons.

Segment Contribution Margin

Segment contribution margin, a non-GAAP measure, is a key metric that management uses to evaluate our operating performance and to determine resource allocation between segments. Segment contribution margin excludes selling, general, and administrative costs, corporate costs, plant capacity expansion expenses, and facility closure costs.

Segment contribution margin is not a measure of our financial performance under GAAP and should not be considered as an alternative or superior to measures derived in accordance with GAAP. Our measure of segment contribution margin is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation. For more information about segment contribution margin, including a reconciliation of this measure to its most directly comparable GAAP financial measure, net income (loss), see Note TS - Segment Reporting to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Adjusted EBITDA

Adjusted EBITDA, a non-GAAP measure, is included in this report because it is a key metric used by management to assess our operating performance and by our lenders to evaluate our covenant compliance. Adjusted EBITDA excludes certain income and/or costs, the removal of which improves comparability of operating results across reporting periods. Our target performance goals under our incentive compensation plan are tied, in part, to our Adjusted EBITDA.

Adjusted EBITDA is not a measure of our financial performance or liquidity under GAAP and should not be considered as an alternative or superior to net income (loss) as a measure of operating performance, cash flows from operating activities as a measure of liquidity or any other performance measure derived in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized, and excludes certain charges that may recur in the future. Management compensates for these limitations by relying primarily on our GAAP results and by using Adjusted EBITDA only supplementally. Our measure of Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.

The following table sets forth a reconciliation of net income (loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA:


(amounts in thousands)	(amounts in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,				(amounts in thousands)	Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net loss attributable to U.S. Silica Holdings, Inc.	Net loss attributable to U.S. Silica Holdings, Inc.	$	(19,995)	$	(13,962)	$	(14,745)	$	(118,661)	Net loss attributable to U.S. Silica Holdings, Inc.	$	(8,393)	$	(20,778)
Total interest expense, net of interest income	Total interest expense, net of interest income	17,778		19,801		51,483		63,290		Total interest expense, net of interest income	17,153		15,803
Provision for taxes	Provision for taxes	(6,140)		(4,094)		1,172		(63,785)		Provision for taxes	(6,969)		(4,354)
Total depreciation, depletion and amortization expenses	Total depreciation, depletion and amortization expenses	39,981		40,069		122,494		115,604		Total depreciation, depletion and amortization expenses	37,749		41,348
EBITDA	EBITDA	31,624		41,814		160,404		(3,552)		EBITDA	39,540		32,019
Non-cash incentive compensation (1)	Non-cash incentive compensation (1)	5,450		5,523		13,978		12,758		Non-cash incentive compensation (1)	4,657		4,574
Post-employment expenses (excluding service costs) (2)	Post-employment expenses (excluding service costs) (2)	(2,140)		161		(1,414)		1,301		Post-employment expenses (excluding service costs) (2)	(701)		363
Merger and acquisition related expenses (3)	Merger and acquisition related expenses (3)	504		285		807		1,280		Merger and acquisition related expenses (3)	1,868		194
Plant capacity expansion expenses (4)	Plant capacity expansion expenses (4)	782		744		842		5,324		Plant capacity expansion expenses (4)	46		41

Contract termination expenses (5)										Contract termination expenses (5)	6,500		—
Goodwill and other asset impairments ~~(5)~~(6)	Goodwill and other asset impairments ~~(5)~~(6)	11		222		49		108,044		Goodwill and other asset impairments ~~(5)~~(6)	—		38
Business optimization projects ~~(6)~~(7)	Business optimization projects ~~(6)~~(7)	33		24		76		39		Business optimization projects ~~(6)~~(7)	11		39
Facility closure costs ~~(7)~~(8)	Facility closure costs ~~(7)~~(8)	218		1,881		1,210		5,716		Facility closure costs ~~(7)~~(8)	490		502

Other adjustments allowable under the Credit Agreement ~~(8)~~(9)	Other adjustments allowable under the Credit Agreement ~~(8)~~(9)	3,279		675		5,411		9,431		Other adjustments allowable under the Credit Agreement ~~(8)~~(9)	492		546
Adjusted EBITDA	Adjusted EBITDA	$	39,761	$	51,329	$	181,363	$	140,341	Adjusted EBITDA	$	52,903	$	38,316

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(1)			Reflects equity-based and other equity-related compensation expense.
(2)			Includes net pension cost and net post-retirement cost relating to pension and other post-retirement benefit obligations during the applicable period, but in each case excluding the service cost relating to benefits earned during such period. Non-service net periodic benefit costs are not considered reflective of our operating performance because these costs do not exclusively originate from employee services during the applicable period and may experience periodic fluctuations as a result of changes in non-operating factors, including changes in discount rates, changes in expected returns on benefit plan assets, and other demographic actuarial assumptions. See Note ON - Pension and Post-Retirement Benefits to our Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.
(3)			Merger and acquisition related expenses include legal fees, ~~consulting~~professional fees, bank fees, severance costs, ~~certain purchase accounting items such as the amortization of inventory fair value step-up, information technology integration costs~~ and ~~similar charges.~~other employee related costs. While these costs are not operational in nature and are not expected to continue for any singular transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in the future as we continue to integrate prior acquisitions and pursue any future acquisitions.
(4)			Plant capacity expansion expenses include expenses that are not inventoriable or capitalizable as related to plant expansion projects greater than $5 million in capital expenditures or plant start up projects. While these expenses are not operational in nature and are not expected to continue for any singular project on an ongoing basis, similar types of expenses have occurred in prior periods and may recur in the future if we continue to pursue future plant capacity expansions.
(5)			Reflects contract termination expenses related to strategically exiting a supplier service contract. While these expenses are not operational in nature and are not expected to continue for any singular event on an ongoing basis, similar types of expenses have occurred in prior periods and may recur in the future as we continue to strategically evaluate our contracts.
~~(5)~~(6)			The three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2022 and 2021 reflect ~~$0.2 million~~zero and ~~$108.0 million~~$38 thousand of asset impairments related to goodwill, long-lived assets, operating lease right-of-use assets and inventory related to idled facilities in our Oil & Gas Proppants segment. See Note G - Inventories, Note H - Property, Plant and Mine Development, Note I - Goodwill and Intangible Assets, and Note P - Leases to our Condensed Consolidated Financial Statements in Part I, Item 1 of our Quarterly Report on Form 10-Q for more information.impairments.
~~(6)~~(7)			Reflects costs incurred related to business optimization projects within our corporate center, which aim to measure and improve the efficiency, productivity and performance of our organization. While these costs are not operational in nature and are not expected to continue for any singular project on an ongoing basis, similar types of expenses may recur in the future.
~~(7)~~(8)			Reflects costs incurred related to idled sand facilities and closed corporate offices, including severance costs and remaining contracted costs such as office lease costs, maintenance, and utilities. While these costs are not operational in nature and are not expected to continue for any singular event on an ongoing basis, similar types of expenses may recur in the future.

~~(8)~~(9)			Reflects miscellaneous adjustments permitted under the Credit Agreement, such as recruiting fees and relocation costs. The three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 also included costs related to weather events and supplier and logistical issues of $0.8 million, severance restructuring of $0.1 million, an adjustment to non-controlling interest of $0.1 million, partially offset by proceeds of the sale of assets of $0.5 million. The three months ended March 31, 2021 also included ~~$3.3 million of transload shortfall and exit fees, $1.8~~$0.8 million related to expenses incurred with severe winter storms during the first quarter, ~~costs related to a power interruption at a plant location of $0.7 million,~~ partially offset by $0.1 million for a measurement period adjustment related to the Arrows Up bargain purchase. The nine months ended September 30, 2020 also included $2.2 million in transload shortfall and exit fees, $4.4 million in inventory adjustments, $5.7 million in severance costs, and $11.8 million in legal expense due to unsuccessful defense of a small number of our patents, offset by $15.2 million related to the gain attributable to the bargain purchase of Arrows Up. See Note E - Business Combinations to our Condensed Consolidated Financial Statements in Part I, Item 1 of our Quarterly Report on Form 10-Q for more information.

Adjusted EBITDA-Trailing Twelve Months

Our revolving credit facility (the "Revolver") contains a consolidated total net leverage ratio of no more than 3.75:1.00 that, unless we have the consent of our lenders, we must meet as of the last day of any fiscal quarter whenever usage of the Revolver (other than certain undrawn letters of credit) exceeds 30% of the Revolver commitment. This ratio is calculated based on our Adjusted EBITDA for the trailing twelve months. Noncompliance with this financial ratio covenant could result in the acceleration of our obligations to repay all amounts outstanding under the Revolver and the term loan (the "Term Loan") (collectively the "Credit Facility"). Moreover, the Revolver and the Term Loan contain covenants that restrict, subject to certain exceptions, our ability to make permitted acquisitions, incur additional indebtedness, make restricted payments (including dividends) and retain excess cash flow based, in some cases, on our ability to meet leverage ratios calculated based on our Adjusted EBITDA for the trailing twelve months.

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See the description under “Adjusted EBITDA” above for certain important information about Adjusted EBITDA-trailing twelve months, including certain limitations and management’s use of this metric in light of its status as a non-GAAP measure.

As of ~~September 30, 2021,~~March 31, 2022, we were in compliance with all covenants under our Credit Facility, and our Revolver usage was zero (not including ~~$22.2~~$21.6 million allocated for letters of credit). Since the Revolver usage did not exceed 30% of the Revolver commitment, the consolidated leverage ratio covenant did not apply. Based on our consolidated leverage ratio of ~~4.96:~~5.07:1.00 as of ~~September 30, 2021,~~March 31, 2022, we may draw up to approximately $30.0 million without the consent of our lenders. With the consent of our lenders, we have access to the full availability of the Revolver. The calculation of the consolidated leverage ratio incorporates the Adjusted EBITDA-trailing twelve months as follows:


(All amounts in thousands, except calculated ratio)	~~September 30, 2021~~March 31, 2022

Total debt	$	~~1,211,773~~1,203,832
Finance leases	~~3,803~~4,451
Total consolidated debt	$	~~1,215,576~~1,208,283

Adjusted EBITDA-trailing twelve months	$	~~244,945~~238,063
Pro forma Adjusted EBITDA including impact of acquisitions (1)	—
Other adjustments for covenant calculation (2)	252
Total Adjusted EBITDA-trailing twelve months for covenant calculation	$	~~245,197~~238,315

Consolidated leverage ratio(3)	~~4.96~~5.07



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

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Results of Operations for the Three Months Ended ~~September 30, 2021~~March 31, 2022 and ~~2020~~2021

Sales


(In thousands except per ton data)	(In thousands except per ton data)	Three Months Ended September 30,				Percent Change		(In thousands except per ton data)	Three Months Ended March 31,				Percent Change
		2021		2020		'21 vs.'20			2022		2021		2022 vs. 2021
Sales:	Sales:							Sales:
Oil & Gas Proppants	Oil & Gas Proppants	$	141,848	$	66,343	114	%	Oil & Gas Proppants	$	176,244	$	121,697	45	%
Industrial & Specialty Products	Industrial & Specialty Products	125,450		110,129		14	%	Industrial & Specialty Products	128,643		112,719		14	%
Total sales	Total sales	$	267,298	$	176,472	51	%	Total sales	$	304,887	$	234,416	30	%
Tons:	Tons:							Tons:
Oil & Gas Proppants	Oil & Gas Proppants	2,912		1,282		127	%	Oil & Gas Proppants	3,060		2,577		19	%
Industrial & Specialty Products	Industrial & Specialty Products	1,077		957		13	%	Industrial & Specialty Products	1,074		984		9	%
Total Tons	Total Tons	3,989		2,239		78	%	Total Tons	4,134		3,561		16	%
Average Selling Price per Ton:	Average Selling Price per Ton:							Average Selling Price per Ton:
Oil & Gas Proppants	Oil & Gas Proppants	$	48.71	$	51.75	(6)	%	Oil & Gas Proppants	$	57.60	$	47.22	22	%
Industrial & Specialty Products	Industrial & Specialty Products	$	116.48	$	115.08	1	%	Industrial & Specialty Products	$	119.78	$	114.55	5	%
Overall Average Selling Price per Ton	Overall Average Selling Price per Ton	$	67.01	$	78.82	(15)	%	Overall Average Selling Price per Ton	$	73.75	$	65.83	12	%

Total sales increased ~~51%~~30% for the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020,~~March 31, 2021, driven by a ~~78%~~16% increase in total tons sold ~~partially offset by~~and a ~~15% decrease~~12% increase in overall average selling price.

The increase in total sales was mainly driven by Oil & Gas Proppants sales, which increased ~~114%~~45% for the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020.~~March 31, 2021. Oil & Gas Proppants average selling price ~~decreased 6%~~increased 22% and tons sold increased ~~127%~~19%. This increase is due to higher energy prices and a rebound in overall ~~improved economic conditions.~~well completion activity.

The increase in total sales was also partially driven by Industrial & Specialty Products sales, which increased 14% for the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020.~~March 31, 2021. Industrial & Specialty Products tons sold increased ~~13%~~9% and average selling price increased by 1%5%. The increase is due to overall improved economic conditions.

Cost of Sales (excluding depreciation, depletion, and amortization)

Cost of sales increased by ~~$99.8~~$49.9 million, or ~~93%~~28%, to ~~$207.4~~$226.9 million for the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$107.6~~$177.0 million for the three months ended ~~September 30, 2020.~~March 31, 2021. These changes ~~result~~resulted from the main components of cost of sales as discussed below. As a percentage of sales, cost of sales represented ~~78%~~74% for the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~61%~~76% for the same period in ~~2020.~~2021.

We incurred ~~$88.7~~$100.3 million and ~~$35.5~~$78.2 million of transportation and related costs for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The ~~$53.2~~$22.1 million increase was mainly due to increased volumes, increased carrier costs for SandBox and increased rail car and barge rates. As a percentage of sales, transportation and related costs represented 33% for both the three months ended ~~September 30, 2021 compared to 20% for the same period in 2020.~~March 31, 2022 and 2021.

We incurred ~~$38.7~~$39.9 million and ~~$26.0~~$34.1 million of operating labor costs for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The ~~$12.7~~$5.8 million increase in labor cost was mainly due to increased headcount to support increased production and cost of living and merit increases. As a percentage of sales, operating labor costs represented ~~14%~~13% for the three months ended ~~September 30, 2021~~March 31, 2022 compared to 15% for the same period in ~~2020.~~2021.

We incurred ~~$14.3~~$18.6 million and ~~$7.9~~$12.0 million of electricity and drying fuel (principally natural gas) costs for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The ~~$6.4~~$6.6 million increase in electricity and drying fuel costs was mainly

3432

~~mainly~~ due to increased volumes produced and increased natural gas prices. As a percentage of sales, electricity and drying fuel costs represented 5%6% and 4%5% for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

We incurred ~~$17.8~~$19.6 million and ~~$11.0~~$14.0 million of maintenance and repair costs for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The ~~$6.8~~$5.6 million increase in maintenance and repair costs is mainly due to an increase in maintenance projects as production increased. As a percentage of sales, maintenance and repair costs represented ~~7% and~~ 6% for both the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

Segment Contribution Margin

Industrial & Specialty Products contribution margin decreased by ~~$1.4~~$2.2 million to ~~$41.0~~$37.8 million for the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$42.4~~$40.0 million for the three months ended ~~September 30, 2020,~~March 31, 2021, driven by ~~a $16.7~~an $18.1 million increase in cost of sales, offset by a ~~$15.3~~$15.9 million increase in revenue.

Oil & Gas Proppants contribution margin ~~decreased~~increased by ~~$5.8~~$23.3 million to ~~$25.7~~$44.8 million for the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$31.5~~$21.5 million for the three months ended ~~September 30, 2020,~~March 31, 2021, driven by ~~an $81.3~~a $54.5 million increase in ~~cost of~~ sales, offset by a ~~$75.5 million increase in sales.~~

~~Selling, General and Administrative Expenses~~

Selling, general and administrative expenses increased by $3.8 million, or 14%, to $31.0 million for the three months ended September 30, 2021 compared to $27.2 million for the three months ended September 30, 2020. The increase was primarily due to an increase in stock compensation expense and legal fees.

~~In total, our selling, general and administrative expenses represented approximately 12% and 15% of our sales for the three months ended September 30, 2021 and 2020, respectively.~~

~~Depreciation, Depletion and Amortization~~

Depreciation, depletion and amortization expense decreased by $0.1 million, or 0%, to $40.0 million for the three months ended September 30, 2021 compared to $40.1 million for the three months ended September 30, 2020. Depreciation, depletion and amortization expense represented approximately 15% and 23% of our sales for the three months ended September 30, 2021 and 2020, respectively.

~~Goodwill and Other Asset Impairments~~

During the three months ended September 30, 2021, we recorded $11 thousand of asset impairment charges. During the three months ended September 30, 2020, we recorded $0.2 million of asset impairment charges.

~~Operating Income (Loss)~~

Operating loss for the three months ended September 30, 2021 was $11.1 million compared to operating income of $1.4 million for the three months ended September 30, 2020. The change was mainly driven by a 93% increase in cost of sales and a 14% increase in selling, general and administrative expenses, partially offset by a 51% increase in sales.

~~Interest Expense~~

Interest expense decreased by $1.5 million, or 8%, to $17.8 million for the three months ended September 30, 2021 compared to $19.3 million for the three months ended September 30, 2020, primarily due to expiration of the derivatives and a decrease in interest expense due to payoff of the revolver balance.

~~Other (Expense) Income, Net, Including Interest Income~~

Other income (expense), net, decreased by $3.0 million, to income of $2.6 million for the three months ended September 30, 2021 compared to expense of $0.4 million for the three months ended September 30, 2020, due to a decrease in interest income and an adjustment in non-service pension costs.

~~Provision for Income Taxes~~

For the three months ended September 30, 2021 and 2020, we had tax benefits of $6.1 million and $4.1 million, respectively. The effective tax rates were 23% and 22% for the three months ended September 30, 2021 and 2020, respectively. Without discrete items, which primarily consist of tax expense related to equity compensation and state tax expense, the effective tax rates for the three months ended September 30, 2021 and 2020 would have been 24% and 26%, respectively.

~~During the three months ended September 30, 2021 and 2020, we recorded tax expense related to equity compensation of zero and tax expense of $0.3 million related to equity compensation, respectively.~~

~~Net Income (Loss)~~

Net income (loss) attributable to U.S. Silica Holdings, Inc., were net losses of $20.0 million and $14.0 million for the three months ended September 30, 2021 and 2020, respectively. The year over year changes were due to the factors noted above.

~~Results of Operations for the Nine Months Ended September 30, 2021and 2020~~

~~Sales~~

(In thousands except per ton data) Nine Months Ended
September 30, Percent Change
2021 2020 '21 vs.'20
Sales:
Oil & Gas Proppants $ 456,842 $ 294,553 55 %
Industrial & Specialty Products 362,173 324,055 12 %
Total sales $ 819,015 $ 618,608 32 %
Tons:
Oil & Gas Proppants 8,513 5,596 52 %
Industrial & Specialty Products 3,141 2,708 16 %
Total Tons 11,654 8,304 40 %
Average Selling Price per Ton:
Oil & Gas Proppants $ 53.66 $ 52.64 2 %
Industrial & Specialty Products $ 115.30 $ 119.67 (4) %
Overall Average Selling Price per Ton $ 70.28 $ 74.50 (6) %

Total sales increased 32% for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, driven by a 40% increase in total tons sold, offset by a 6% decrease in overall average selling price.

The increase in total sales was mainly driven by Oil & Gas Proppants sales, which increased 55% for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. Oil & Gas Proppants average selling price increased 2% and tons sold increased 52%. This increase is due to overall improved economic conditions and recognition of approximately $49.0 million of shortfall fees.

The increase in total sales was also driven by Industrial & Specialty Products sales, which increased 12% for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. Industrial & Specialty Products average selling price decreased 4% and tons sold increased by 16%. The increase is due to overall improved economic conditions.

~~Cost of Sales (excluding depreciation, depletion, and amortization)~~

Cost of sales increased by $143.7 million, or 33%, to $577.4 million for the nine months ended September 30, 2021 compared to $433.7 million for the nine months ended September 30, 2020. These changes result from the main components of cost of sales as discussed below. As a percentage of sales, cost of sales represented 70% for both the nine months ended September 30, 2021 and 2020.

We incurred $253.4 million and $149.3 million of transportation and related costs for the nine months ended September 30, 2021 and 2020, respectively. The $104.1 million increase was mainly due to increased volumes, increased carrier costs for SandBox and increased rail car and barge rates. As a percentage of sales, transportation and related costs represented 31% for the nine months ended September 30, 2021 compared to 24% for the same period in 2020.

We incurred $109.2 million and $93.0 million of operating labor costs for the nine months ended September 30, 2021 and 2020, respectively. The $16.2 million increase in labor costs incurred was mainly due to increased headcount to support increased production and cost of living and merit increases. As a percentage of sales, operating labor costs represented 13% for the nine months ended September 30, 2021 compared to 15% for the same period in 2020.

We incurred $38.8 million and $25.8 million of electricity and drying fuel (principally natural gas) costs for the nine months ended September 30, 2021 and 2020, respectively. The $13.0 million increase in electricity and drying fuel costs incurred was mainly due to increased volumes, costs related to severe winter storms during the first quarter of 2021 and increased natural gas prices. As a percentage of sales, electricity and drying fuel costs represented 5% and 4% for the nine months ended September 30, 2021 and 2020, respectively.

We incurred $49.0 million and $36.4 million of maintenance and repair costs for the nine months ended September 30, 2021 and 2020, respectively. The $12.6 million increase in maintenance and repair costs is primarily due to an increase in maintenance projects as production increased. As a percentage of sales, maintenance and repair costs represented 6% for both the nine months ended September 30, 2021 and 2020, respectively.

~~Segment Contribution Margin~~

Industrial & Specialty Products contribution margin increased by $6.2 million to $127.0 million for the nine months ended September 30, 2021 compared to $120.8 million for the nine months ended September 30, 2020, driven by a $38.1 million increase in revenue, partially offset by a $32.0 million increase in cost of sales.

Oil & Gas Proppants contribution margin increased by $39.4 million to $129.9 million for the nine months ended September 30, 2021 compared to $90.5 million for the nine months ended September 30, 2020, driven by a $162.3 million increase in sales, which included approximately $49.0 million in shortfall fees, partially offset by a $122.9$31.3 million increase in cost of sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ~~decreased~~increased by ~~$11.7~~$13.9 million, or ~~12%~~53%, to ~~$84.7~~$40.1 million for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$96.4~~$26.2 million for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. The ~~net decrease~~increase was primarily due to ~~expensing $11.8 million of capitalized legal~~ fees ~~in the 2020 period~~ related to the ~~unsuccessful defense~~termination of a ~~small number of our patents not recurring during 2021.~~supplier contract, increased legal expenses, and increases in compensation due to merit increases and headcount increased due to increased business activity.

In total, our selling, general and administrative expenses represented approximately ~~10%~~13% and ~~16%~~11% of our sales for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization expense ~~increased~~decreased by ~~$6.9~~$3.6 million, or 6%9%, to ~~$122.5~~$37.7 million for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$115.6~~$41.3 million for the ~~nine~~three months ended ~~September 30, 2020. The increase was mainly driven by accelerated depreciation of~~March 31, 2021 primarily due to certain assets ~~offset by reduced capital spending.~~fully depreciating at the end of 2021. Depreciation, depletion and amortization expense represented approximately ~~15%~~12% and ~~19%~~18% of our sales for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

Goodwill and Other Asset Impairments

During the ~~nine~~three months ended ~~September 30,~~March 31, 2022, we recorded no asset impairment charges. During the three months ended March 31, 2021, we recorded ~~$49.0~~$38.0 thousand of asset impairment charges. During the nine months ended September 30, 2020, we recorded $108.0 million of asset impairment charges for long-lived assets and inventories of idled plants, operating right-of-use assets, and goodwill related to the Oil & Gas Proppants segment.

Operating Income (Loss)

Operating income ~~(loss) increased by $169.5 million to operating income of $34.4 million~~ for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was $0.2 million compared to operating loss of ~~$135.1~~$10.2 million for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. The ~~increase~~

change was mainly driven by a ~~32%~~30% increase in sales and a ~~12%~~9% decrease ~~in selling, general and administrative expenses, partially offset by a 6% increase~~ in depreciation, depletion and amortization expense, ~~and~~partially offset by a ~~33%~~28% increase in cost of sales ~~during the nine months ended September 30, 2021.~~and a 53% increase in selling, general and administrative expenses.

Interest Expense

Interest expense decreased by ~~$10.3~~$0.5 million, or ~~16%~~3%, to ~~$53.4~~$17.2 million for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$63.7~~$17.7 million for the ~~nine~~three months ended ~~September 30, 2020, mainly~~March 31, 2021, primarily due to the ~~expiration of the derivatives, a decrease in interest rates, and a decrease in interest expense due to~~ payoff of the revolver balance.

Other (Expense) Income, ~~(Expense),~~ Net, Including Interest Income

Other income, net, decreased by ~~$10.6~~$1.1 million, to ~~$5.0~~$1.5 million for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$15.6~~$2.6 million for the ~~nine~~three months ended ~~September 30, 2020. The decrease~~March 31, 2021, due primarily ~~related~~ to ~~the gain on bargain purchase price of $15.2 million not recurring in 2021, offset partially by~~ a decrease in interest ~~income.~~income, partially offset by an adjustment in non-service pension costs.

Provision for Income Taxes

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, we had tax ~~expense~~benefits of ~~$1.2 million. For the nine months ended September 30, 2020, we had a tax benefit of $63.8 million.~~$7.0 million and $4.4 million, respectively. The effective tax rates were ~~(8)%~~45% and ~~35%~~17% for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. Without discrete items, which primarily consist of tax expense related to equity compensation and ~~state~~ tax ~~expense,~~benefits related to the carryback of NOLs, the effective tax rates for ~~both~~ the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ would have been 48% and 24%., respectively.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we recorded tax expense related to equity compensation of ~~$0.5~~$0.3 million and ~~$1.7~~$1.4 million, respectively.

Net Income (Loss)

Net income (loss) attributable to U.S. Silica Holdings, Inc., were net losses of ~~$14.7~~$8.4 million and ~~$118.7~~$20.8 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The year over year changes were due to the factors noted above.

Liquidity and Capital Resources

Overview

Our principal liquidity requirements have historically been to service our debt, to meet our working capital, capital expenditure and mine development expenditure needs, to return cash to our stockholders, and to pay for acquisitions. We have historically met our liquidity and capital investment needs with funds generated through operations. We have historically funded our acquisitions through cash on hand, borrowings under our credit facilities, or equity issuances. Our working capital is the amount by which current assets exceed current liabilities and is a measure of our ability to pay our liabilities as they become due. As of ~~September 30, 2021,~~March 31, 2022, our working capital was ~~$372.8~~$373.0 million and we had ~~$77.8~~$78.4 million of availability under the Revolver. Based on our consolidated leverage ratio of ~~4.96:~~5.07:1.00 as of ~~September 30, 2021,~~March 31, 2022, we may draw up to approximately $30.0 million without the consent of our lenders. With the consent of our lenders, we have access to the full availability of the Revolver. Additionally, at September 30, 2021, other receivables included $21.5 million of refunds related to NOL carryback claims filed for various tax years in accordance with certain provisions of the CARES Act, which we expect to receive during 2021.

In connection with the EPM acquisition, on May 1, 2018, we entered into the Credit Agreement with BNP Paribas, as administrative agent, and the lenders named therein. The Credit Agreement increased our existing senior debt by entering into a new $1.380 billion senior secured Credit Facility, consisting of a $1.280 billion Term Loan and a $100 million Revolver that may also be used for swingline loans or letters of credit, and we may elect to increase the Term Loan in accordance with the terms of the Credit Agreement. The amounts owed under the Credit Agreement use LIBOR as a benchmark for establishing the rate at which interest accrues. LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressures may cause LIBOR to disappear entirely or to perform differently than in the past. The consequences of these developments cannot be entirely predicted but could include an increase in the cost to us of this indebtedness.

Management and our Board of Directors remain committed to evaluating additional ways of creating shareholder value. Any determination to pay dividends or other distributions in cash, stock, or property in the future or otherwise return capital to our

stockholders, including decisions about existing or new share repurchase programs, will be at the discretion of our Board of Directors and will be dependent on then-existing conditions, including industry and market conditions, our financial condition, results of operations, liquidity and capital requirements, contractual restrictions including restrictive covenants contained in debt agreements, and other factors. Additionally, because we are a holding company, our ability to pay dividends on our common stock may be limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us, including restrictions under the terms of the agreements governing our indebtedness. During the second quarter of 2020, our Board of Directors determined that it was not in the best interest of our shareholders to issue a dividend ~~subsequent to the second quarter~~ and ~~for the remainder of the year.~~we have not issued dividends subsequently. We do not have plans to resume issuing ~~dividends~~dividends.

Net Debt (non-GAAP measure)

Net debt is a non-GAAP measure and is included in this report because we believe net debt is meaningful to investors as we consider net debt and its components to be important indicators of liquidity and financial position. Net debt may not be computed the ~~near term.~~same as similarly titled measures used by other companies. We define net debt as total debt less cash and cash equivalents. Net debt should not be considered as an alternative or superior to other performance measures derived in accordance with GAAP.

The following table provides net debt (in thousands):


	March 31, 2022		December 31, 2021
Total Debt	$	1,208,283	$	1,211,420
Less:
Cash and cash equivalents	239,768		239,425
Net Debt	$	968,515	$	971,995

Total Debt:

Total debt was $1.21 billion and $1.21 billion as of March 31, 2022 and December 31, 2021, respectively. The decrease was primarily due to principal payments of the Term Loan and insurance financing notes payable, offset partially by an increase in finance leases.

Cash and Cash Equivalents:

Cash and cash equivalents were $239.8 million and $239.4 million as of March 31, 2022 and December 31, 2021, respectively.

Cash Flow Analysis

A summary of operating, investing and financing activities (in thousands) is shown in the following table:


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Net cash provided by (used in):	Net cash provided by (used in):					Net cash provided by (used in):
Operating activities	Operating activities	$	156,782	$	(28,698)	Operating activities	$	15,079	$	13,642
Investing activities	Investing activities	(14,960)		(25,533)		Investing activities	(6,383)		(3,534)
Financing activities	Financing activities	(42,155)		3,414		Financing activities	(8,353)		(6,617)

Net Cash Provided by / Used in Operating Activities

Operating activities consist primarily of net income (loss) adjusted for certain non-cash and working capital items. Adjustments to net income or loss for non-cash items include depreciation, depletion and amortization, deferred revenue, deferred income taxes, equity-based compensation and allowance for credit losses. In addition, operating cash flows include the effect of changes in operating assets and liabilities, principally accounts receivable, inventories, prepaid expenses and other current assets, income taxes payable and receivable, accounts payable and accrued expenses.

Net cash provided by operating activities was ~~$156.8~~$15.1 million for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. This was mainly due to ~~a $15.2~~an $8.5 million net loss adjusted for non-cash items, including ~~$122.5~~$37.7 million in depreciation, depletion and amortization, ~~$3.2~~$15.3 million in deferred income taxes, ~~$13.4~~$4.4 million in equity-based compensation, ~~$14.3~~$0.9 million in deferred revenue, and ~~$27.0~~$9.7 million in other miscellaneous non-cash items. Also contributing to the change was a ~~$31.2~~$4.1 million decrease in accounts receivable, ~~an $11.7~~a $7.9 million increase in inventories, a ~~$1.2~~$3.5 million decrease in prepaid expenses and other current assets, a ~~$36.8~~$5.2 million ~~increase~~decrease in accounts payable and accrued liabilities, a ~~$19.7~~$7.5 million decrease in lease liabilities, and ~~an $11.1~~a $0.9 million change in other operating assets and liabilities.

Net cash ~~used in~~provided by operating activities was ~~$28.7~~$13.6 million for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. This was mainly due to a ~~$119.4~~$20.9 million net loss adjusted for non-cash items, including ~~$115.6~~$41.3 million in depreciation, depletion and amortization, ~~$108.0 million in goodwill and other asset impairments, $65.6~~$4.9 million in deferred income taxes, ~~$12.4~~$4.1 million in equity-based compensation, ~~$6.3~~$5.1 million in deferred revenue, ~~$24.4 million in gain on remeasurement of leases,~~ and ~~$1.8~~$20.0 million in other miscellaneous non-cash items. Also contributing to the change was ~~an $81.2~~a $4.9 million ~~decrease~~increase in accounts receivable, a ~~$15.2~~$1.5 million ~~decrease~~increase in inventories, a ~~$19.6~~$0.6 million increase in prepaid expenses and other current assets, a ~~$102.4~~$9.1 million ~~decrease~~increase in accounts payable and accrued liabilities, ~~a $51.9~~an $8.2 million decrease in lease liabilities, and a ~~$26.7~~$14.9 million change in other operating assets and liabilities.

Net Cash Used in / Provided by Investing Activities

Investing activities consist primarily of cash consideration paid to acquire businesses and capital expenditures for growth and maintenance.

Net cash used in investing activities was ~~$15.0~~$6.4 million for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. This was ~~mainly~~ due to capital expenditures of ~~$15.4 million and capitalized intellectual property costs of $0.2~~$7.0 million offset by ~~$0.6~~$0.7 million in proceeds from the sale of property, plant and equipment. Capital expenditures for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 were primarily related to ~~improvements and expansions at our industrial facilities in Millen, Georgia,~~ facility improvement and maintenance projects, and other environmental and health and safety projects.

Net cash used in investing activities was ~~$25.5~~$3.5 million for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. This was mainly due to capital expenditures of ~~$27.8~~$3.5 million and capitalized intellectual property costs of ~~$0.5~~$0.1 million, offset by ~~$2.7~~$0.1 million in proceeds from the sale of property, plant and equipment. Capital expenditures for the nine months ended September 30, 2020 were primarily related to the payment of capital expenditures accrued in 2019 and improvements and expansions at our industrial facilities in Millen, Georgia, and Columbia, South Carolina and maintenance and other capital projects.

Subject to our continuing evaluation of market conditions, we anticipate that our capital expenditures in ~~2021~~2022 will be approximately ~~$25.0~~$40 million to $60 million, which will primarily be associated with maintenance, ~~and~~ cost improvement capital projects, and ~~near-term payback~~various growth projects. We expect to fund our capital expenditures through cash on our balance sheet, cash generated from our operations, and cash generated from financing activities.

Net Cash Used in / Provided by Financing Activities

Financing activities consist primarily of equity issuances, dividend payments, share repurchases, borrowings and repayments related to the Revolver and Term Loan, as well as fees and expenses paid in connection with our credit facilities.

Net cash used in financing activities was ~~$42.2~~$8.4 million for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. This was mainly due to ~~$4.2~~$2.2 million of short-term debt payments, ~~$9.6~~$3.3 million of long-term debt payments, ~~$25.0 million payment on the Revolver, $0.8~~$0.3 million of distributions to a non-controlling interest, ~~$0.4~~$0.3 million of principal payments on finance leases, and ~~$2.2~~$2.1 million of tax payments related to shares withheld for vested restricted stock and stock units.

Net cash ~~provided by~~used in financing activities was ~~$3.4~~$6.6 million for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. This was mainly due to ~~$5.7~~$2.1 million of short-term debt payments, ~~$10.2~~$3.2 million of long-term debt payments, ~~$6.2 million of dividends paid, $0.6~~and $1.2 million of tax payments related to shares withheld for vested restricted stock and restricted stock ~~units, offset by a $25.0 million draw down from the Revolver.~~units.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have a current material effect or are reasonably likely to have a future material effect on our financial condition, changes in financial condition, sales, expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations

There have been no significant changes outside of the ordinary course of business to our “Contractual Obligations” table in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our ~~2020~~2021 Annual Report. For more details on future minimum annual purchase commitments and operating leases commitments, please see accompanying Note NM - Commitments and Contingencies and Note PO - Leases to our Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Environmental Matters

We are subject to various federal, state and local laws and regulations governing, among other things, hazardous materials, air and water emissions, environmental contamination and reclamation and the protection of the environment and natural resources. We have made, and expect to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. As of ~~September 30, 2021,~~March 31, 2022, we had ~~$29.2~~$29.3 million accrued for future reclamation costs, as compared to ~~$24.7~~$32.0 million as of December 31, ~~2020.~~2021.

We discuss certain environmental matters relating to our various production and other facilities, certain regulatory requirements relating to human exposure to crystalline silica and our mining activity and how such matters may affect our

business in the future under Item 1, "Business", Item 1A, “Risk Factors”, Item 3, “Legal Proceedings” and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations-Environmental Matters" in our ~~2020~~2021 Annual Report.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported revenues and expenses during the reporting periods. We evaluate these estimates and assumptions on an ongoing basis and base our estimates on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Our actual results may materially differ from these estimates.

A summary of our significant accounting policies, including certain critical accounting policies and estimates, are included in Note B - Summary of Significant Accounting Policies to the Consolidated Financial Statements in Item 8 of our ~~2020~~2021 Annual Report on Form 10-K. Management believes that the application of these policies on a consistent basis enables us to provide the users of the Consolidated Financial Statements with useful and reliable information about our operating results and financial condition.

Recent Accounting Pronouncements

New accounting pronouncements that have been recently adopted are described in Note B - Summary of Significant Accounting Policies to our Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Availability of Reports; Website Access; Other Information

Our Internet address is http://www.ussilica.com. Through “Investors” — “Financial Information” on our home page, we make available free of charge our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our proxy statements, our current reports on Form 8-K, SEC Forms 3, 4 and 5 and any amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our reports filed with the SEC are also available on its website at http://www.sec.gov.

Stockholders may also request a free copy of these documents from: U.S. Silica Holdings, Inc., attn.: Investor Relations, 24275 Katy Freeway, Suite 600, Katy, Texas 77494.


ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

We are exposed to certain market risks, which exist as a part of our ongoing business operations. Such risks arise from adverse changes in market rates, prices and conditions. We address such market risks in “Recent Trends and Outlook” and "How We Generate Our Sales" in Item 2. ~~Management's Discussion and Analysis~~ of ~~Financial Condition and Results of Operations.~~this Quarterly Report on Form 10-Q.

Interest Rate Risk

We are exposed to interest rate risk arising from adverse changes in interest rates. As of ~~September 30, 2021,~~March 31, 2022, we had ~~$1.225~~$1.219 billion of debt outstanding under the Credit Agreement. Assuming LIBOR is greater than the 1.0% minimum base rate on the Term Loan, a hypothetical increase in interest rates by 1.0% would have changed our interest expense by ~~$12.3~~$12.2 million per year.

LIBOR is expected to be discontinued after 2021 and there can be no assurance as to what alternative base rate may replace LIBOR in the event it is discontinued, or whether such base rate will be more or less favorable to us. We intend to monitor the developments with respect to LIBOR and work with our lenders, including under the Credit Agreement, to ensure any transition away from LIBOR will have a minimal impact on our financial condition, but can provide no assurances regarding the impact of the discontinuation of LIBOR.

Credit Risk

We are subject to risks of loss resulting from nonpayment or nonperformance by our customers. We examine the creditworthiness of third-party customers to whom we extend credit and manage our exposure to credit risk through credit analysis, credit approval, credit limits and monitoring procedures, and for certain transactions, we may request letters of credit, prepayments or guarantees, although collateral is generally not required.

Despite enhancing our examination of our customers' creditworthiness, we may still experience delays or failures in customer payments. Some of our customers have reported experiencing financial difficulties. With respect to customers that may file for bankruptcy protection, we may not be able to collect sums owed to us by these customers and we also may be required to refund pre-petition amounts paid to us during the preference period (typically 90 days) prior to the bankruptcy filing.

4238


ITEM 4.			CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~September 30, 2021.~~March 31, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of ~~September 30, 2021,~~March 31, 2022, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Control over Financial Reporting

There were no changes in our existing internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended ~~September 30, 2021~~March 31, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4339

PART II—OTHER INFORMATION


ITEM 1.			LEGAL PROCEEDINGS

In addition to the matters described below, we are subject to various legal proceedings, claims, and governmental inspections, audits or investigations incidental to our business, which can cover general commercial, governmental regulations, antitrust and trade regulations, product liability, environmental, intellectual property, employment and other matters. Although the outcomes of these ordinary routine claims cannot be predicted with certainty, in the opinion of management, the ultimate resolution of these matters will not have a material adverse effect on our financial position or results of operations.

Prolonged inhalation of excessive levels of respirable crystalline silica dust can result in silicosis, a disease of the lungs. Breathing large amounts of respirable silica dust over time may injure a person’s lungs by causing scar tissue to form. Crystalline silica in the form of quartz is a basic component of soil, sand, granite and most other types of rock. Cutting, breaking, crushing, drilling, grinding and abrasive blasting of or with crystalline silica containing materials can produce fine silica dust, the inhalation of which may cause silicosis, lung cancer and possibly other diseases including immune system disorders such as scleroderma. Sources of exposure to respirable crystalline silica dust include sandblasting, foundry manufacturing, crushing and drilling of rock, masonry and concrete work, mining and tunneling, and cement and asphalt pavement manufacturing.

Since at least 1975, we and/or our predecessors have been named as a defendant, usually among many defendants, in numerous lawsuits brought by or on behalf of current or former employees of our customers alleging damages caused by silica exposure. Prior to 2001, the number of silicosis lawsuits filed annually against the commercial silica industry remained relatively stable and was generally below 100, but between 2001 and 2004 the number of silicosis lawsuits filed against the commercial silica industry substantially increased. This increase led to greater scrutiny of the nature of the claims filed, and in June 2005, the U.S. District Court for the Southern District of Texas issued an opinion in the former federal silica multi-district litigation remanding almost all of the 10,000 cases then pending in the multi-district litigation back to the state courts from which they originated for further review and medical qualification, leading to a number of silicosis case dismissals across the United States. In conjunction with this and other favorable court rulings establishing “sophisticated user” and “no duty to warn” defenses for silica producers, several states, including Texas, Ohio and Florida, have passed medical criteria legislation that requires proof of actual impairment before a lawsuit can be filed.

As a result of the above developments, the filing rate of new claims against us over the past few years has decreased to below pre-2001 levels, and we were named as a defendant in ~~one,~~two, one, and 20one new silicosis cases filed in 2021, 2020, and 2019, ~~and 2018,~~ respectively. ~~The main driver of the increase in cases filed in 2018 was 16 claims arising out of a single location in Mississippi.~~ During the ~~nine~~three months ended ~~September 30, 2021, two~~March 31, 2022, zero new claims were brought against U.S. Silica. As of ~~September 30, 2021,~~March 31, 2022, there were 4442 active silica-related product liability claims pending in which U.S. Silica is a defendant. Almost all of the claims pending against us arise out of the alleged use of our silica products in foundries or as an abrasive blast media and involve various other defendants. Prior to the fourth quarter of 2012, we had insurance policies for both our predecessors that cover certain claims for alleged silica exposure for periods prior to certain dates in 1985 and 1986 (with respect to certain insurance). As a result of a settlement with a former owner and its insurers in the fourth quarter of 2012, some of these policies are no longer available to us and we will not seek reimbursement for any defense costs or claim payments from these policies. Other insurance policies, however, continue to remain available to us and will continue to make such payments on our behalf.

The silica-related litigation brought against us to date has not resulted in material liability to us. However, we continue to have silica-related product liability claims filed against us, including claims that allege silica exposure for periods for which we do not have insurance coverage. Although the outcomes of these claims cannot be predicted with certainty, in the opinion of management, it is not reasonably possible that the ultimate resolution of these matters will have a material adverse effect on our financial position or results of operations that exceeds the accrual amounts.

For more information regarding silica-related litigation, see Part I, Item 1A. Risk Factors of our ~~2020~~2021 Annual Report on Form 10-K.


ITEM 1A.			RISK FACTORS

There have been no material changes from the risk factors disclosed in Item 1A. Risk Factors in our ~~2020~~2021 Annual Report on Form 10-K.

4440


ITEM 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Share Repurchase Program

The following table presents the total number of shares of our common stock that we repurchased during the ~~third~~first quarter of ~~2021,~~2022, the average price paid per share, the number of shares that we repurchased as part of our share repurchase program, and the approximate dollar value of shares that still could have been repurchased at the end of the applicable fiscal period pursuant to our share repurchase program:

Period
Total Number of Shares Withheld or Forfeited (2)
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Program(1)
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program(1)
July 1, 2021 - July 31, 2021 715 $ 10.35 — 126,540,060
August 1, 2021 - August 31, 2021 5,636 $ 9.72 — 126,540,060
September 1, 2021 - September 30, 2021 1,298 $ 10.38 — 126,540,060
Total 7,649 $ 9.73 —


Period	Total Number of Shares Withheld or Forfeited (2)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program(1)	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program(1)
January 1, 2022 - January 31, 2022	6,397	$	11.86	—	126,540,060
February 1, 2022 - February 28, 2022	195,091	$	10.13	—	126,540,060
March 1, 2022 - March 31, 2022	(7,500)	$	—	—	126,540,060
Total	193,988	$	10.19	—



(1)			In May 2018, our Board of Directors authorized and announced the repurchase of up to $200 million of our common stock from time to time on the open market or in privately negotiated transactions. Stock repurchases, if any, will be funded using our available liquidity. The timing and amount of stock repurchases will depend on a variety of factors, including the market conditions as well as corporate and regulatory considerations. As of ~~September 30, 2021,~~March 31, 2022, we have repurchased a total of 5,036,139 shares of our common stock at an average price of $14.59.
(2)			Shares withheld by U.S. Silica to pay taxes due upon the vesting of employee restricted stock and restricted stock units for the months ended ~~July~~January 31, ~~August~~February 28, and March 31, ~~and September 30, 2021,~~2022, respectively.

We did not repurchase any shares of common stock under our share repurchase program during the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022.

4541


ITEM 3.			DEFAULT UPON SENIOR SECURITIES

None.


ITEM 4.			MINE SAFETY DISCLOSURES

Safety is one of our core values and we strive to achieve a workplace free of injuries and occupational illnesses. Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this Quarterly Report filed on Form 10-Q.


ITEM 5.			OTHER INFORMATION

None.


ITEM 6.			EXHIBITS

4642

Incorporated by Reference

Exhibit

Number

Exhibit

Number

Description

Form

File No.

Exhibit

Filing Date

Exhibit

Number

Description

Form

File No.

Exhibit

Filing Date

3.1

Third Amended and Restated Certificate of Incorporation of U.S. Silica Holdings, Inc., effective May 4, 2017.

8-K

001-35416

3.1

May 10, 2017

3.1

Third Amended and Restated Certificate of Incorporation of U.S. Silica Holdings, Inc., effective May 4, 2017.

8-K

001-35416

3.1

May 10, 2017

3.2

Third Amended and Restated Bylaws of U.S. Silica Holdings, Inc., effective May 4, 2017.

8-K

001-35416

3.2

May 10, 2017

3.2

Third Amended and Restated Bylaws of U.S. Silica Holdings, Inc., effective May 4, 2017.

8-K

001-35416

3.2

May 10, 2017

10.1+*

Form of Restricted Stock Unit Agreement Pursuant to the Amended and Restated U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan

10.2+*

Form of Performance Share Unit Agreement (Relative TSR) Pursuant to the Amended and Restated U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan

10.3+*

Form of Performance Share Unit Agreement (Adjusted Cash Flow) Pursuant to the Amended and Restated U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan

31.1*

Rule 13a-14(a)/15(d)-14(a) Certification by Bryan A. Shinn, Chief Executive Officer.

31.1*

Rule 13a-14(a)/15(d)-14(a) Certification by Bryan A. Shinn, Chief Executive Officer.

31.2*

Rule 13a-14(a)/15(d)-14(a) Certification by Donald A. Merril, Chief Financial Officer.

31.2*

Rule 13a-14(a)/15(d)-14(a) Certification by Donald A. Merril, Chief Financial Officer.

32.1#

Section 1350 Certification by Bryan A. Shinn, Chief Executive Officer.

32.1#

Section 1350 Certification by Bryan A. Shinn, Chief Executive Officer.

32.2#

Section 1350 Certification by Donald A. Merril, Chief Financial Officer.

32.2#

Section 1350 Certification by Donald A. Merril, Chief Financial Officer.

95.1*

Mine Safety Disclosure.

95.1*

Mine Safety Disclosure.

101*

101.INS XBRL Instance - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101*

101.INS XBRL Instance - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH Inline XBRL Taxonomy Extension Schema

101.CAL Inline XBRL Taxonomy Extension Calculation

101.LAB Inline XBRL Taxonomy Extension Labels

101.PRE Inline XBRL Taxonomy Extension Presentation

101.DEF Inline XBRL Taxonomy Extension Definition

104*

Cover Page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 formatted in Inline XBRL (and contained in Exhibit 101)

104*

Cover Page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 formatted in Inline XBRL (and contained in Exhibit 101)



+			Management contract or compensatory plan/arrangement
*			Filed herewith
#			Furnished herewith

We will furnish to any of our stockholders a copy of any of the above exhibits upon the written request of such stockholder.

4743

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, this 29th day of ~~October 2021.~~April 2022.


			U.S. Silica Holdings, Inc.

			/s/ DONALD A. MERRIL
			Name:						Donald A. Merril
			Title:						Executive Vice President & Chief Financial Officer (Authorized Signatory and Principal Financial Officer)

S-1


Balance at December 31, 2019	$	823	$	(180,912)	$	1,185,116	$	(279,956)	$	(19,854)	$	705,217	$	11,363	$	716,580
Net loss	—		—		—		(118,661)		—		(118,661)		(778)		(119,439)
Unrealized gain on derivatives	—		—		—		—		3,053		3,053		—		3,053
Foreign currency translation adjustment	—		—		—		—		662		662		—		662
Pension and post-retirement liability	—		—		—		—		(8,702)		(8,702)		—		(8,702)
Cash dividends	—		—		—		(1,444)		—		(1,444)		—		(1,444)
Contributions from non-controlling interest	—		—		—		—		—		—		1,234		1,234
Common stock-based compensation plans activity:
Equity-based compensation	—		—		12,352		—		—		12,352		—		12,352
Tax payments related to shares withheld for vested restricted stock and stock units	4		(630)		(4)		—		—		(630)		—		(630)
Balance at September 30, 2020	$	827	$	(181,542)	$	1,197,464	$	(400,061)	$	(24,841)	$	591,847	$	11,819	$	603,666


(In thousands except per ton data)	Nine Months Ended September 30,				Percent Change
	2021		2020		'21 vs.'20
Sales:
Oil & Gas Proppants	$	456,842	$	294,553	55	%
Industrial & Specialty Products	362,173		324,055		12	%
Total sales	$	819,015	$	618,608	32	%
Tons:
Oil & Gas Proppants	8,513		5,596		52	%
Industrial & Specialty Products	3,141		2,708		16	%
Total Tons	11,654		8,304		40	%
Average Selling Price per Ton:
Oil & Gas Proppants	$	53.66	$	52.64	2	%
Industrial & Specialty Products	$	115.30	$	119.67	(4)	%
Overall Average Selling Price per Ton	$	70.28	$	74.50	(6)	%