Q3 2023 US Silica Holdings Inc Earnings Call
Participants
Bryan A. Shinn; CEO & Director; U.S. Silica Holdings, Inc.
Kevin Hough; Interim Executive VP, CFO & CAO; U.S. Silica Holdings, Inc.
Patricia Gil; VP of IR; U.S. Silica Holdings, Inc.
Derek John Podhaizer; Equity Research Analyst; Barclays Bank PLC, Research Division
John Daniel
Stephen David Gengaro; MD & Senior Analyst; Stifel, Nicolaus & Company, Incorporated, Research Division
Presentation
Operator
Good morning, and welcome to the U.S. Silica Third Quarter 2023 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.
It's now my pleasure to introduce your host, Patricia Gil, Vice President of Investor Relations and Sustainability. Thank you. You may begin.
Patricia Gil
Thank you, and good morning, everyone. I'd like to thank you for joining us today for U.S. Silica's third quarter 2023 earnings conference call. Leading the call today are Bryan Shinn, our Chief Executive Officer; and Kevin Hough, our Interim Executive Vice President, Chief Financial Officer and Chief Accounting Officer.
Before we begin, I would like to remind you of our standard cautionary remarks regarding the forward-looking nature of some of the statements that will be made today. Such forward-looking statements, which are predictions, projections or other statements about future events, are based on current expectations and assumptions which are subject to certain risks and uncertainties. For a complete discussion of these risks and uncertainties, we encourage you to read the company's press release and our documents file with the SEC. We do not undertake any duty to update any forward-looking statements.
Additionally, we have provided a supplemental third quarter earnings presentation on our website in the Investors section to accompany today's discussion. On today's call, we may refer to non-GAAP measures such as adjusted EBITDA, segment contribution margin, net debt and net leverage ratio. Please refer to today's press release, our public filings or the accompanying earnings presentation for a full reconciliation and discussion of adjusted EBITDA, segment contribution margin, net debt and the net leverage ratio.
I would now like to turn the call over to our CEO, Bryan Shinn.
Bryan A. Shinn
Thanks, Patricia, and good morning, everyone. During the third quarter, we continued to advance our growth strategy while strengthening our financial foundation. We generated healthy cash flow from operations and adjusted EBITDA, driven by strong margins enabled by our lean cost structure. We also repurchased and extinguished an additional $25 million of debt, improving our balance sheet and net leverage ratio. At the same time, our growth investments continue to position us to capitalize on market opportunities with innovative and differentiated products for our markets and customers.
As part of our overall corporate strategy, we continue to successfully execute the 3 key elements of our industrial's growth plan during the quarter, specifically increasing the profitability of our base business at a GDP plus rate, substantially growing existing high-margin differentiated ISP products and expanding our addressable markets with new high-value advanced materials such as EverWhite Pigment. I will walk you through the recent progress in these areas a bit later in the call.
In corporate news, we've recently announced a few changes and additions to our leadership team. In August, we appointed Jay Moreau as our Executive Vice President and Chief Operating Officer. Jay succeeds Mike Winkler as COO. Mike has retired, but will remain in a consulting role with the company. I'm excited to welcome Jay to our executive leadership team as he brings extensive industrial markets experience, a reputation for operational excellence and a strategic mindset. We look forward to the benefits of his efforts and leadership going forward.
Additionally, we have appointed Kevin Hough as Interim Executive Vice President, Chief Financial Officer and Chief Accounting Officer. Kevin has served as the company's Vice President and Corporate Controller since 2016 and joined the company back in 2011. Kevin plans to retire in 2024, so a search for a permanent Chief Financial Officer is underway. I'm excited to welcome Kevin to his new role and firmly believe that his experience, financial skill set and deep knowledge of the company make him ideally suited to serve as our interim CFO.
I'll now turn the call over to Kevin, who will discuss our financial results in a bit more detail. Kevin?
Kevin Hough
Thanks, Brian, and good morning, everyone. As Brian mentioned, we reported healthy cash flow from operations and adjusted EBITDA for the third quarter, driven by strong performance in Oil & Gas and higher value product mix in Industrials. This was further supported by improved cost structure despite softer market activity for both segments. Compared to the prior quarter, overall tons sold decreased 8% sequentially to $4.1 million. Total revenue decreased 10% to $367 million. Adjusted EBITDA decreased 17% to $102.1 million and total company contribution margin decreased 14% to $129.2 million.
Selling, general and administrative expenses for the quarter increased 2% sequentially to $29.3 million, driven by slightly higher spending across the category in the quarter. Depreciation, depletion and amortization expense increased 7% sequentially to a total of $35.8 million in the third quarter due to a nonrecurring adjustment made in the quarter, coupled with lower volumes sold. Our effective tax rate for the quarter ended September 30, 2023, was 31%, including discrete items.
As Brian mentioned, in the third quarter, we used excess cash on the balance sheet to extinguish an incremental $25 million of outstanding debt at par. Since the second quarter of 2022, we have reduced our outstanding term loan balance by 26% or $320.1 million through repurchases and normal principal payments. At the end of the third quarter, our net leverage ratio improved to 1.4x and remained below our year-end target of 1.5x.
I will now walk you through our operating segment results. The Oil & Gas segment reported revenue of $231.4 million for the third quarter, a decrease of 12% when compared to the sequential second quarter. Volumes for the Oil & Gas segment performed slightly better than our previous guidance, decreasing by 9% to total 3.1 million tons, while SandBox delivered loads decreased 8% compared to the sequential second quarter. Segment contribution margin decreased 16% compared with the second quarter to $82.9 million, which on a per ton basis was $26.55. These results were driven by the sequential decline in U.S. completions activity, proppant mix, lower pricing and reduced fixed cost absorption.
Our Industrial and Specialty Products segment reported revenues of $135.5 million, which was a 6% decrease compared to the prior quarter. Volumes for the ISP segment decreased 4% sequentially and totaled 999,000 tons. Segment contribution margin decreased 10% on a sequential basis and totaled $46.3 million, which on a per ton basis was $46.39. The sequential decrease in the results for the ISP segment was due to reduced volumes for building products, DE fillers and filtration and glass. On a year-over-year basis, contribution margin dollars were flat and contribution margin percentage expanded 11% due to pricing increases and cost improvement initiatives.
Turning to the cash flow statement. We delivered strong cash flow from operations of $76.7 million in the third quarter, driven by strong earnings and efficient net working capital. During Q3, we invested $13.6 million of capital, primarily for facility maintenance, cost improvement and ISP growth projects. As of September 30, 2023, the company's cash and cash equivalents totaled $222.4 million, a sequential increase of 19%, which includes the impact of the $25 million loan extinguishment along with associated fees, as mentioned earlier. At quarter end, our $150 million revolver had $0 drawn with $129.2 million available under the credit facility after allocating for letters of credit.
Looking out to the fourth quarter. The high level of proppant customer contracts in our Oil & Gas segment, coupled with our sticky and diverse customer base in the Industrial & Specialty Products segment gives us reasonable confidence in our visibility for the remainder of this year. We continue to expect strong operating cash flow generation for the balance of 2023, and we plan to direct our free cash flow to fund our growth capital needs while we continue to reduce our net debt level. Our current net leverage ratio expectation is that it will be below 1.5x through the remainder of the year.
Regarding capital spending, we will continue to be disciplined in our investments and focus on maintaining operating levels at our facilities while pursuing profitable growth. For full year 2023, we are revising our capital spending forecast to $60 million to $65 million as we have accelerated our capital investment for industrial growth projects.
Finally, we are lowering our forecast for the full year 2023 SG&A expense, which is now expected to be down approximately 10% to 15% year-over-year, reflecting a supplier contract termination and M&A-related expenses that took place during the prior year, along with ongoing cost control measures. The forecast for the full year 2023 depreciation, depletion and amortization expense continues to be flat to down 5% given higher CapEx spending levels in prior years for assets that have become fully depreciated. Our estimated effective tax rate for full year 2023 is approximately 26%.
And with that, I'll turn the call back over to Brian.
Bryan A. Shinn
Thanks, Kevin. I'll now review some of the trends that we saw during the quarter, starting with our Oil & Gas segment. The U.S. land energy complex experienced sequentially lower drilling and completions activity as expected in Q3. Our quarterly financial results were strong compared to historical averages, but down sequentially due to lower market demand as guided on our last earnings call.
Pricing remained attractive and was down slightly versus Q2. Our margins stayed strong, however, with Q3 contribution margin dollars per ton higher than any quarter of 2022. I want to thank and congratulate our Oil & Gas sales, operations and supply chain teams for their outstanding efforts to deliver these results.
And finally, our new patent pending Guardian frac fluid filtration system is performing well and gaining momentum in the market. Customers are experiencing positive outcomes through increased pump uptime and efficiency and decreased repair and maintenance costs. In our industrial segment, volumes were down a bit more on a year-over-year basis than guided on last quarter's earnings call. While we anticipated the mild economic softness for building products and seasonal order patterns for diatomaceous earth, fillers and filtration, a few glass customers also took down production lines for maintenance issues after several years of high demand.
Despite these lower activity levels, we benefited from ongoing structural cost reductions, improved product mix as well as price increases, which enabled us to maintain flat year-over-year profitability with a 12% increase in contribution margin per ton. Thanks to our industrial sales, operations and supply chain teams as well for their outstanding efforts to deliver these results.
I also want to highlight that during the quarter, our Colado diatomaceous earth mine outside of Reno, Nevada received the Nevada Mining Association's Top Annual Mine Safety Award. I'm very proud of the Colado team for their strong performance and commitment to safety excellence.
I will now provide updates on key developments in our industrial portfolio and then finish with a summary of our outlook for the fourth quarter. During the third quarter, we made significant progress on all 3 elements of our industrials business strategy. For example, our first element is increasing the profitability of our base business at a GDP-plus rate. With that in mind, we continue to capture savings from reduced logistics costs, improve plant reliability, automation, cost efficiency projects and lower natural gas prices. We also benefited from recent price increases to help offset higher costs. We will continue to be active on this front. For example, we announced price increases effective January 1, 2024, of up to 20% for many noncontract ISP customers earlier this week.
The second element of our ISP strategy is to substantially grow our current high-value differentiated products such as ground silica, diatomaceous earth powders and fine fillers and high-purity filtration substrates. Q3 was a very eventful and productive quarter in this area. During the quarter, we executed 5 new customer contracts, including 2 for renewable diesel customers with improved pricing and volume commitments. We also entered into a strategic relationship with a European distribution and services partner for our industrial fine filler products. This will expand business development opportunities in applications such as paints, adhesives, rubber, plastics and building materials.
Due to strong catalyst demand, our diatomaceous earth powders production facility in Clark Nevada is now sold out, and we're considering investment in additional capacity. We've also successfully developed new applications for specialized whole grain and ground silica products and building materials, further displacing imported not-in-kind competitive materials.
Our third strategic element in Industrials is expanding our addressable markets and applications with sales of new high-value advanced materials such as cristobalite, EverWhite pigment and White Armor solar reflective roofing materials. Sales of EverWhite pigment, our TiO2 replacement product continued to accelerate with new orders through direct and distribution channels into markets that include plastics, grouts and mortars. We continue to receive positive feedback from new customer application testing, and we are aggressively marketing our products through trade shows, conferences and industry publications.
In addition, our new state-of-the-art innovation center in Rochelle, Illinois is scheduled to open in early December, and we're already receiving inquiries from customers and distributors about producing products at this site.
Turning now to our business and market outlook. We reaffirm our full year 2023 adjusted EBITDA guidance of an increase of approximately 25% year-over-year. Our guidance is supported by the strong results reported year-to-date, the positive visibility of customer contracts across the company and expected additional cost and productivity improvements during the remainder of the year. We continue to anticipate that we'll generate robust operating cash flow of about $265 million this year with our net leverage ratio remaining below 1.5x at year-end.
Our Oil & Gas segment is attractively positioned to maximize through-cycle earnings from recent work that we've done to reduce and variablize our annual fixed cost by over $70 million. These actions have had the effect of raising our earnings floor in a softer market without sacrificing upside in a peak market. We have repositioned this segment and improved our contribution margin percent to the mid-30s, and our contribution margin on a per ton basis is holding strong at the mid-$20 level per ton.
For the fourth quarter, we anticipate that volumes will be flat to slightly up sequentially, with contribution margin dollars down mid-single digits quarter-over-quarter due to slightly lower pricing. I am pleased to report that Q4 has started well with stronger-than-anticipated October sales as we recently achieved a new daily sales volume record in the Permian Basin. Overall, this business segment remains well positioned to capitalize on the current multiyear energy cycle with expectations for constructive commodity prices and healthy demand for proppant and last mile logistics carrying into 2024.
We're staying disciplined on pricing and continue to have strong contractual commitments for our sand with over 85% of our production capacity committed for this year, and we expect to maintain a contracted position of approximately 80% to 85% in 2024. We also believe that recent domestic energy company M&A could prove positive for U.S. Silica as the industry consolidates further and larger customers choose to work with larger, more stable and reliable suppliers like U.S. Silica. Consolidation could be favorable for the industry long term as well and provide more steady demand for oilfield products and services. Also, operator consolidation should lead to better acreage positions and enable continued beneficial increases in well lateral lengths and well service intensity.
Moving to our Industrial and Specialty Products segment, we are well positioned to achieve meaningful year-over-year contribution margin growth here in 2023 due to our best-in-class offerings and the strong and diverse end markets that we serve. Moreover, our structural cost reduction, price increases and investments in product development are paying dividends in the form of profit margin expansion. These efforts, coupled with customer investments in domestic manufacturing should continue to offset any potential near-term market weakness.
For the fourth quarter, year-over-year volumes are forecasted to be down high single digits due to a combination of normal seasonal demand reduction, customer facility maintenance and customer year-end inventory management. However, we expect contribution margin dollars in industrials to increase 5% to 10% on a year-over-year basis in Q4 due to improved pricing, favorable product mix and ongoing improvements in operational and supply chain efficiencies.
And finally, we've received a lot of questions from current and potential investors wanting to know more about our industrial products, including the end markets that we serve, the competitive landscape and our participation in sustainable product value chains. As a result, we're planning to host an industrial and specialty products showcase. This virtual event will take place in early December. So please stay tuned for more details on that.
So to summarize, in the third quarter, we continued to strengthen our balance sheet through incremental debt extinguishment and position the company for growth with strategic capital investments and further cost reductions. We're committed to securing future cash flow visibility through strong contracts at competitive prices in Oil and Gas, enhanced ISP offerings and additional cost optimization and efficiency efforts across the enterprise. These steps can help unlock transformational growth pathways for the company to create value with our improved balance sheet and strong expected operating cash flow.
And with that, operator, will you please open the lines for questions.
Question and Answer Session
Operator
(Operator Instructions) Our first question comes from the line of Derek Podhaizer with Barclays.
Derek John Podhaizer
Just wanted to ask about the fourth quarter guide for Oil and Gas. The volumes flat to slightly up. Sounds pretty impressive. I mean we've been hearing a lot of commentary around seasonality from the big pressure pumper. So could you help square that comment from what we're hearing out there, just the fleets that are being laid down or maybe some work that's being pushed out to 2024. Is it a spot market thing? Is it customer-specific thing, basin thing? Just maybe some more color around that.
Bryan A. Shinn
Good morning, Derek, and thanks for the question. I think there's a couple of things that are happening. We started off really strong in October in the oilfield. So that gives us a good feel for how Q4 might play out. I would say it's generally strong across the board for us in the Permian. We've had several customers asking for additional volumes. And of course, we're highly contracted. So I think that helps out as well.
We've got about 85% of our volume here in 2023 under contract as you and others know. So is the customer base we have, the blue-chip customers are out there working very hard right now and are asking for more sand. So we're pretty optimistic that Q4 will finish well at this point, at least from our customer base, we're not hearing anything about budget exhaustion or extended holiday downtime or anything like that. So we feel pretty good.
Derek John Podhaizer
Got it. I appreciate the color there. Maybe just thinking about 2024, maybe just some more color around contracting and pricing. I know in your prepared remarks, targeting at 80% to 85% contracted volumes for '24. I guess where are you now? And then how is that progressing towards that level? And maybe if you can get into some pricing trends, it would be helpful.
Bryan A. Shinn
So in terms of contracting, I think historically, we've maintained a pretty significant contract position and something like 80% to 85% feels like a good number for us, and we expect to continue that strategy. I think if you look across our portfolio, we have a really diversified number of customer contracts.
And each of those contracts is a bit different, and the mix taken in total is really tailored to give us a lot of stability without giving up tremendous upside either. So we feel good about the portfolio. I think we'll be in that same range for 2024. Right now, we've got approximately 80% of our capacity for 2024, either contracted or committed. We may add a few more contracts. We've had a lot of requests coming in from customers. And of that total volume for the year, 70% of it -- of those contracts are take-or-pay or other similarly situated contracts. So they're really good, really solid contracts.
I would say, in terms of pricing. We're seeing pricing down a little bit, but there's been all kinds of wild rumors out there that pricing has cratered or collapsed or something. We're seeing a dollar or two here and there. Obviously, things may be a bit softer right now, and that's driving some of that. But we feel really good about the pricing that we're getting for our new contracts and the margins that, that will generate.
Derek John Podhaizer
Got it. And just one last follow-up. As far as the contribution margin per ton, how should we think about that for 2040, do you still feel like you'll be in that mid-20-ish range. Is that still a good starting point?
Bryan A. Shinn
So that's certainly our target. I feel really good about that. We variabilized a lot of the costs in our business. We've talked about that for the last few quarters. And I think you're starting to see that in terms of how our margins are holding up. We're in the mid-20s right now in spite of a quarter where there was some pricing pressure and certainly volume pressure, but us being able to hold those kind of margins is certainly our objective.
Operator
Our next question comes from the line of Stephen Gengaro with Stifel.
Stephen David Gengaro
A couple for me. Bryan, I'm not sure you can comment on this or not, but Don was well liked. Any comments on just kind of -- we get a lot of questions about this as far as financial controls, everything is strong with the company. I mean we think it is, but anything you can add just to address that?
Bryan A. Shinn
Sure, Stephen. And I certainly understand your comment there. We can't really provide any additional information as we don't talk about employee matters publicly. But I would refer everyone to the 8-K that we filed. And so if you look at that document, we said specifically in there that there's no disagreement or issues with the company's financial reporting, accounting policies, procedures, estimates, judgments, et cetera. So I think you can infer by that, that there's no issues of that sort.
Stephen David Gengaro
Okay. So when we think about the Oil and Gas business, can you just give us a sense for where Guardian stands? Are we seeing it in the numbers yet? And when you think we'll start to potentially see a more significant impact on price per ton or contribution margin per ton, however you want to phrase it.
Bryan A. Shinn
So that's not really in the numbers much at this point. We have some commercial units out, and we have a lot of units out under trial. And I think there's a couple of big end users who are looking at potentially taking this technology across their entire system. So I think we'll have some success there. And as we look into 2024, I believe we'll definitely see some meaningful bumps there. But just to be realistic when you think about the offerings we have, though, obviously, the sand piece is #1 in terms of margins. SandBox is #2. And so this would be kind of a third behind SandBox. But I still think it would be something that will be meaningful, and we'll be able to talk more about that as we hopefully get some contracts inked up here in the coming months for Guardian.
Stephen David Gengaro
And then just one final one. Just your sort of current view on frac sand supply and demand and what you see as you sort of think about 2024?
Bryan A. Shinn
So I think we'll definitely see some additional capacity come online. One of our competitors has announced 5 million tons coming online, and we'll see a few more mobile mines come. I think one of the interesting dynamics around the supply side, though, is that a lot of the new capacity is focused at the Delaware Basin. And for us specifically, we have most of our operations on the Midland side of the Permian.
And so I believe the capacity that's coming online in 2024 is going to have a much less impact on us just because of where our mines and where our customers are located. And actually, we're seeing some big operators switching their focus for 2024 and beyond more towards the Midland side of the Permian. And again, I think that will be a positive for us.
I think demand next year is relatively flat, all in, just given the appetite of our customers to sign contracts, I'm pretty bullish about demand overall and especially some of the operators who are moving towards the Midland side, that's definitely an advantage for us.
Operator
Our next question comes from the line of John Daniel with Daniel Energy.
John Daniel
Brian, this might be a dumb question, but can you remind me what your exposure is within Oil and Gas to Canada? And if you have much speak to the outlook step made a comment about record volumes expected in Q1. So just your thoughts?
Bryan A. Shinn
Yes. So we don't sell into Canada. We used to do a little bit there, but we don't do anything to the best of my knowledge in Canada right now.
John Daniel
Okay. So thanks for reminding me, I apologize. And then I think you said something about and I wish -- I think I heard it correctly, the desire of some of the larger E&P customers are consolidating to work with larger suppliers and vendors and that makes sense. I'm just curious, how does that desire potentially translate into the need for more consolidation within your space?
Bryan A. Shinn
So I think it's a very interesting question. It could perhaps enable that. But what we've seen so far is that, as I mentioned in the prepared remarks, the bigger the customer, the bigger supplier they want to deal with. And I think there are a lot of other knock-on effects of that as well. I feel like we'll see service intensity continue to increase.
We think we all know as consolidation happens, and there's more contiguous acres out there, lateral lengths will increase over time. And all that is, I think, beneficial for larger sand providers and logistics providers like us because at the end of the day, a lot of the smaller guys just can't support the huge silo fracs that are out there today. So it may well necessitate consolidation, John. So we'll see. It hasn't really happened yet, but I think that could be on the horizon at some point here.
John Daniel
Fair enough. And it hasn't happened, but I'm curious if you would people answer this question. Some of the smaller competitors that may have sort of supplied primarily the smaller E&P companies that are victims, if you will, of the consolidation. I would suspect some of them might be nervous. And I'm curious if any of them have had gentle outreaches to larger players like you to have discussions.
Bryan A. Shinn
So we really can't comment on anything specific. But we've talked in the past about us being a potential logical consolidator. And so as you can imagine, over the past few years, there's been all kinds of conversations in and amongst some of the smaller players and folks like ourselves. I think the challenge is pretty consistently has been finding a point in time where both buyers and sellers feel like they're getting a fair deal.
And here, we've had a really strong year in 2024 for a lot of the sand companies and some people are probably a bit too bullish on what their outlook will be -- sorry, a strong year in '23, they're a bit too bullish on what their outlook might be in '24. So you can imagine that people still have stars in their eyes in terms of valuation. So I think there has to be some kind of expectation resetting. And that will just take a bit of time to get into the industry.
John Daniel
That makes sense. I just -- I wasn't sure if you had maybe seeing an acceleration of interest in the last month or 2. So but it doesn't sound like it.
Bryan A. Shinn
No, not particularly, but it's been an ongoing theme for the industry for the last couple of years, as you know.
Operator
(Operator Instructions) Our next question is a follow-up from the line of Stephen Gengaro with Stifel.
Stephen David Gengaro
So 2 things I wanted to follow up on. One, just following up on John's question. When you think about the balance sheet and you've been reducing debt, if you were going to enter into some consolidation, what level of leverage are you ultimately comfortable with?
Bryan A. Shinn
So it's a great question. And I would sort of distance separate those 2 questions. So I think, overall, we like the kind of leverage level that we've gotten to right now. We're at 1.4x net. I think that's a good place for us to be, but think about that on a sort of through-the-cycle basis. So I feel very comfortable with that level of leverage. Levering up to do oilfield consolidation, we'd have to really look hard at that. I think it's one of the reasons that we haven't seen consolidation yet because companies like us who would be a logical consolidator, we don't really have a good currency to do that.
Being a sort of a blended stock valuation here at U.S. Silica between ISP and our oilfield business our multiple is probably higher than where oilfield multiples are today. And I'm not sure what kind of credit we'd get even if we did consolidation there. And so there's no good sort of pure-play currency out there today that can facilitate the consolidation. So I think that's been one of the challenges, Stephen, and going out and taking on debt to do consolidation, I think, is a bit challenging just given the unpredictability of the oilfield.
Stephen David Gengaro
Great. And the follow-up to that was simply, when you look at the landscape, at least what you've seen so far, is consolidation more likely in the oil patch or in the ISP business?
Bryan A. Shinn
Well, in the ISP side, it's a little bit tough because there really aren't a lot of players. It's a much smaller field. I would say, just because of the numbers, consolidation is probably more likely in the oilfield, but valuation expectations have to get to a more reasonable place.
And the consolidated tours have to have the right currency. I think those of us in the services space are perhaps not like those in the operator world where they have a ton of cash, and they can just use that cash to go out and do some of these consolidations and they have an appropriately valued share price as well. I think we were in a bit of a different spot there. So it makes it much harder to get something done in terms of consolidation, in my opinion.
Operator
Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Shinn for any final comments.
Bryan A. Shinn
Thanks, operator. As we look to close out this year of record profitability for U.S. Silica, we remain confident in our strategy, and we believe that our industry-leading business segments, market and capital discipline, operating cash flow visibility and commitment to further strengthening our balance sheet will deliver substantial value for our shareholders and other stakeholders in the coming quarters.
Speaking of which, we appreciate you joining our call today and look forward to speaking with all of you again next quarter. Everyone, stay safe and be well.
Operator
Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
