Q2 2021 US Silica Holdings Inc Earnings Call
[music].
Good morning, and welcome to the U S. Silica second quarter 2021 earnings conference call. At this time, all participants are in a listen only mode.
A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
It is now and my pleasure to introduce you to 1 of your our host Mr. Don Merril Executive Vice President and Chief Financial Officer.
Thank you operator, I'd like to take the opportunity. This morning to announce the latest addition to our team I'm very happy to report that Patricia Gil has joined US as the new Vice President of Investor Relations at U S silica Patricia.
Patricia has over 15 years of financial experience, including Investor Relations and sell side equity research.
Bill brings ESG consulting experience and is a fundamentals of sustainability accounting credential holder from SaaS and welcome to our company, Patricia and with that I'll turn the call over to her.
Thank you Don and good morning, everyone I'd like to thank you for joining us today for U S silica second quarter 2021.
<unk> conference call, leading the call today are our Chief Executive Officer, Bryan Chen and Don Merril, Our executive Vice President and Chief Financial 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.
Each forward looking statements may include comments, 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 on file with the SEC.
Additionally, we may refer to the non-GAAP measures of adjusted.
Earnings and segment contribution margin during this call. Please refer to today's press release or our public filings for a full reconciliation of adjusted EBITDA to net income and the definition of segment contribution margin and with that I would like to turn the call over to our CEO, Mr. Bryan Shinn Bryan.
Thanks, Patricia and welcome to the U S silica team and good morning, everyone.
And I'm very pleased with our strong operational and financial performance during the second quarter.
Our results exceeded expectations and were supported by the broader market recovery, coupled with constructive commodity prices and outstanding execution.
By our team.
Before discussing our operating results in detail I want to give a bit of color on our recent agreement to settle a customer dispute.
In late June we came to an agreement with a customer regarding fees related to minimum purchase commitments that data from 2014 to 2020.
As.
As a result of this resolution, we received approximately $128 million of consideration, including $90 million and cash.
Half of the cash was received and the second quarter with a balance received in July.
This settlement along with the organic free cash flow generated during the quarter has reduced our net.
Net debt by approximately 10%.
Further last week, we used a portion of the settlement proceeds to pay off our $25 million outstanding revolver balance as we continue to deliver on our strategy to delever the balance sheet.
Turning now to second quarter operating results.
We reported strong performance across the company with sequential volumes and recurring adjusted EBITDA up 15% and 42% respectively.
And our industrial and specialty products segment volumes of $1.1 million tons were up 10% versus Q1, while contribution margin dollars increased 15.
18% sequentially due to pricing improvements manufacturing efficiency gains and increased new product sales.
And our oil and gas segment, we experienced robust demand during the second quarter as we continued to leverage our supply chain strength and numerous high quality customer relationships to take advantage of.
Commodity prices and strong U S completions activity.
We reported proppant sales volumes of 3 million tons, a 17% sequential increase sandbox delivered loads were up 16% versus the prior quarter.
Revenue and contribution margin dollars in this segment were positively impacted by the.
Previously mentioned customer settlement, various price increases and reduced manufacturing and distribution expenses.
Excluding the customer settlement revenues increased 19% and contribution margin dollars increased 57% sequentially.
Also during the quarter, our Permian operations team completed.
<unk> their first full service simultaneously setting a record for both sandbox and the customer with 222 loads or nearly 5000 tons delivered and a 24 hour period.
Overall, the second quarter was very strong for us silica across the board and Don will discuss more specifics and just a few minutes.
With the rest.
And this morning, I want to cover 3 additional topics.
I'll start by discussing our growing industrial portfolio, then I'll turn to the markets and our outlook and then finally I'll review the steps, we're taking to maximize cash flow.
So let's dive right into industrial first.
At U S silica we offer.
For our broad portfolio of industrial and specialty products that are rooted in a rich 121 year history.
And we've made strategic investments and new technology and solutions and we are a leader in the industrial minerals market, serving critical industries, such as construction food and beverage production Biopharma glass.
And energy.
And societies aspire to transition to cleaner energy, we are focused on high value industrial mineral offerings to help our customers meet their ESG goals.
To highlight a few of our specialty products that are essential components of the clean energy supply chain.
A rare low iron and silica sand.
Our highly effective from maximizing light transmission and solar panel glass.
We believe that our products are now used and approximately 50% of U S. Solar glass production and we are very well positioned to capture new business as the domestic solar panel industry expands.
We're also the sole supplier to most.
<unk> large U S producers of composite fiberglass used for wind turbine blade fabrication and we estimate that our products are used and over 80% of U S produced fiberglass composites for wind turbine blades.
Current forecast project that wind energy production will grow to over 10% of U S electricity generation by the.
Most of 2021.
Another important products that we sell into the clean energy supply chain as our menu still ultrafine silica, which is used and the production of gas and diesel particulate filters that helped vehicles meet stringent European and Asian emission regulations.
We're proud to support the growth.
Growth and these environmentally important areas. Additionally, U S silica should be a beneficiary of proposed us government infrastructure spending plans through our commercial construction foundry concrete additives and highway construction offerings.
Development of our industrial products portfolio was ongoing.
And on track during the second quarter, we signed 4 new customer contracts further spec ing in our high quality raw materials. The contract terms vary up to 5 years in length and further solidify our customer relationships.
These contracts that put us on track to realize continued growth and 2021 and strong growth and 2000.
2 and beyond.
Given the increased activity at our manufacturing locations, our commitment to safety remains Paramount.
Happy to report very strong safety and environmental performance again, this year, along with minimal unplanned facility downtime and our maintenance cost have remained within budget.
And.
And EMEA Investor presentation, we further outlined our compelling product development pipeline with more than $200 million and estimated annual contribution margin potential from new innovative products under development for targeted markets.
We expect new products to contribute $20 million to our 2021 run rate contribution margin.
Growing to $90 million by 2024.
This represents a compound annual growth rate of between 10% to 15% and our industrial profits over that 3 year time period.
Let's turn now to our new product pipeline I am pleased to report that the pipeline is very strong and that we continue to make progress as expected during.
The quarter for example, we commenced sales of our new limestone product line.
We entered the fourth round of customer testing for our new reinforced filler products.
We won business to treat pistachio crops in California, with our new defect organic insecticide <unk>.
We qualified a new cristobalite product at a key.
Customer and in response to customer demand in fact, very strong customer demand. We completed an expansion project at our Millen, Georgia plant, which tripled production capacity for our cool roof granules product line.
Lastly for industrials earlier this month this month, we announced our third price increase for this year pricing.
Price increases will range up to 15%, depending on the product and grade and are effective for shipments beginning September 1.
Price increases will help offset recent significant cost increases and energy transportation materials and manufacturing costs.
Let me now turn to our business and market outlook for the second.
2021 and 2022.
For the remainder of this year, we see stable or growing customer demand for most product lines Q.
Q3 is off to a good start and industrial demand is strong and almost back to pre pandemic levels and many sectors.
Proppant demand continues to be robust and Q3 volume should be.
Approximately flat sequentially.
With drilled and uncompleted well inventory is down over 30% and the first half of 2021 and the current supportive commodity prices, we believe that U S. U S activity moves slightly higher with drilling outpacing completions as operators buildup well inventory for 2022.
Second half, we're also continuing to increase pricing and sandbox and expect that we will see higher profitability per delivered load for the rest of the year.
Looking forward to 2022, we are well positioned for strong industrial and specialty products growth driven by GDP expansion, new opportunities and several fast growing and uses.
Including courts solid surfaces energy efficient roofing blood plasma filtration and green diesel and many others as well as continued gains and supply chain efficiency.
Given that we expect to deliver 10% to 15% sequential growth in 2022.
Annual ISP contribution margin dollars as planned.
And oil and gas we forecast very strong proppant demand for the first half of 2022 as energy company budgets reset and completions activity increases to higher levels consistent with supportive commodity prices.
Finally, we remain we remain committed to capital efficiency as we continue to execute on our long.
And growth strategy for 2021, we anticipate capital spending to be within our operating cash flow and we expect to deliver free cash flow leading to consistent net debt reduction.
We believe that we are well positioned to reduce and manage our debt with an expectation to reduce net leverage to between 3% and 4 times.
Long term by 2024 and.
And with that I will turn the call over to our CFO, Don Merril, who will discuss discuss our financial results in more detail and provide an update regarding our use of proceeds from the recent customer settlement Don.
Thanks, and good morning, everyone as Bryan stated, we delivered strong operational and financial.
Results and the second quarter, which exceeded our guidance and we're incrementally aided by the customer settlement.
In addition, this quarter was impacted by charges due to weather and costs related to facility closures as discussed on our press release.
During the second quarter, we reported adjusted EBITDA of $103.3 million or $54.4.
Excluding the customer settlement.
Compared to the prior quarter, our reported adjusted EBITDA increased to 170% sequentially or 42%, excluding the customer settlement.
Our strong second quarter results for the product of the broader market recovery constructive commodity prices new products and increased pricing.
Pricing.
And both of our segments.
Selling general and administrative expenses for the quarter increased 5% sequentially to $27.5 billion drill.
Driven mostly by recent hiring due to the market recovery.
Depreciation depletion and amortization expense totaled $41.2 million.
$4 million and the second quarter, which is flat when compared to the prior quarter our.
Our effective tax rate for the quarter ended June 32021 was 31% including discrete items.
Now let me begin with a detailed review of our operating segment results.
Our industrial and specialty products segment reported revenue.
$124 million and the second quarter and increase of 10% versus the first quarter.
Second quarter revenue growth for this segment exceeded GDP growth and was driven by the economic recovery along with increased new product sales and recently implemented price increases as volumes grew 10% and contribution margin expanded.
And at 15% versus the prior quarter.
On a per ton basis contribution margin for the industrial and specialty products segment was $42.50 per ton, which represents an increase of 4% when compared with the first quarter.
Oil and gas segment reported revenue of $193.3 million.
<unk> of second quarter, and increase of 59% when compared to the first quarter.
Excluding the customer settlement of $48.9 million.
Revenues increased 19% sequentially.
Volumes for the oil and gas segment increased 17% sequentially, while sandbox delivered loads increased 16% compared to the prior quarter.
But it's driven by strong completions activity, coupled with supportive commodity prices.
Excluding the customer settlement segment contribution margin increased 57% sequentially and benefited from improved pricing as well as the reduction in manufacturing and logistics costs.
Again, excluding the customer settlement and the oil.
Oil and gas segment contribution margin on a per ton basis was $11.17 and.
And increase of 34% when compared to the first quarter.
Turning to the cash flow statement I am pleased to report that we delivered meaningful cash flow from operations and the second quarter.
Subtracting $3.6 million of capital expenditures our.
Our free cash flow totaled $64.7 million.
Looking at the balance sheet the.
The company's cash and cash equivalents at June 30 increased 38% sequentially to $212.7 million.
And and Bryan stated, we have received the additional 45 billion from our customer settlement.
Also at.
And our $100 million revolver had $25 billion drawn which as stated earlier has been completely paid down leaving $78 million available under the credit facility today after allocating for letters of credit.
Our capital discipline and improvements in net debt and strong adjusted EBITDA results afforded us the.
The ability to deliver on our strategy to delever the balance sheet.
To recap as of today, we have received a total of $90 million of cash provided by the customer settlement half of this cash was received and the second quarter and the remaining balance was received earlier in July.
This week, we paid off our outstanding revolver.
At quarter balance of $25 million.
And are now below 4 times levered on a net debt to trailing 12 months EBITDA base.
This reduction and revolver balance will reduce our interest payments by approximately $1 million annually.
Also I'd like to remind you that we expect to receive the remaining balance of approximately 21 billion.
Of IRS refunds related to the cares act by the end of the year with.
With the assistance of the customer settlement, the IRS refunds and future organic cash flow generation, we continue to expect our leverage ratio between to be between 3 and 4 times in 2020.
Looking out to the second half of 2000.
Oliver we won we anticipate minimal adjustments to EBITDA for the year, we expect to remain disciplined around SG&A and forecast the single digit percent decrease in 2021 versus the prior year.
We expect depreciation depletion and amortization to be up slightly for the full year compared to 2020.
We also believe.
Full year effective tax rate will be a benefit of approximately 25%.
For the full year, we continue to expect our 2021 capital spending to be and the range of $30 million to $40 million and directed primarily towards maintenance and growth projects.
And our strategy for growth guided by returns capital discipline and cash generation is.
Coming to fruition with the broader market recovery underway, our new product offerings, coupled with our value added capabilities and strong underlying businesses, we expect to be free cash flow positive and plan to further reduce net debt by the end of the year and with that I'll turn the call back over to Bryan.
Thanks, Don.
We've had.
Had a strong year, so far and have delivered on our commitments to strengthen our balance sheet expand our industrial product portfolio and to sustainably grow bottom line profits across the enterprise I.
I believe that we are outperforming and out executing our competition and we continue to have a laser focus on improving efficiencies and delighting our customers.
Additionally, our demonstrated ability to quickly and effectively respond to changing market conditions has proven to be a unique advantage and positions us well to take advantage of future opportunities to create value for our stakeholders.
And with that operator would you. Please open the lines for questions.
Ladies and gentlemen, the floor is now open for the question and answer session. If you'd like to ask a question. Please press star 1 on your telephone keypad and confirmation tone will indicate your line is and the questions and Keith you.
You may price starting to if you like to remove your question from the queue.
For participants using speaker equipment and may be necessary to pick up your handset before pressing the star.
1 moment, please and while we pull for questions.
Our first question is from Steven and Jingle with Stifel. Please proceed with your question.
Thanks, Good morning.
Good morning, Steven.
So a couple of things.
And Oh.
I'd like to start just quickly with with this settlement on the oil and gas front and I was just curious if there was any additional color you could add or if theres anything else outstanding out there that you're you could potentially see.
Settle on and coming quarters or months.
If you don't want to think about and just making sure we're not missing anything else that might be out there.
Well thanks for the question Stephen I.
And I think the first comment I would make about this is that we certainly take our customer contracts very seriously and our philosophy is that we always try to uphold our commitments and we expect that our.
<unk> will do the same.
As we talked about and prepared remarks, we came to this agreement with a customer and late June.
And has the resolution of $180 million, I'm, sorry, $128 million of consideration with $90 million and cash.
Unfortunately, the settlement is confidential so I.
Just trying to share any further details but.
What I can say is that we generally try to work with customers to resolve these kind of differences and if we can't reach agreement, though and we're certainly willing to assert our rights and seek a cash payment.
I think everyone on the call is familiar with oil and gas knows.
Can't really there is a lot of pushing and shoving that happens as.
As markets go up and down in terms of contracts and.
And I can't really comment on other pending similar disputes on the advice of counsel.
Okay. Thanks, and then when we look at the.
The oil.
And the contribution margin.
If you strip out the settlement I think it was a little bit north of 11 Bucks and you guys did I think 9.8 to $8.35, and the prior quarter I think it's pricing on and also sandbox that's driving that.
How does that number.
<unk> going forward.
And I was always thinking kind of close to 9 or 10 Bucks.
Rule of thumb, but how do you think that looks and the second half and in 2020, 2 given maybe a little bit of pricing and the strength and the market.
So I would say in general we've given guidance that we think that contribution margin is probably in the.
$10 per ton range, plus or minus and as you mentioned things may go up or down on a quarterly basis.
Think all it takes us a few million dollars of cost or sort of issues, 1 way or the other and a quarter and can move at a plus or minus a dollar fairly easily so.
And I feel like will oscillate around that.
And that $10 number and perhaps Dan might give us some more color on what the second half and next year might look like.
I'd agree with Bryan look we've been pretty consistent here on the on the $10 per ton.
And I would disagree with Bryan on a go forward basis.
And again.
And what could move up and down if you take Q1 Q2 added divided by 2 you are right at that 10, so we've been pretty consistent.
Okay. Thanks, and then on the.
On the ISP side, you sort of you sort of highlighted the long term growth opportunities and this and the success of some of the <unk>.
For new product.
<unk> as well as price increases are you seeing and I'm, just thinking about us sort of a similar contribution margin per ton number, but maybe maybe I'll ask you are you seeing the pricing that you're you're pushing for are you getting net pricing improvements or is most of this offsetting offsetting cost inflation and I'm just trying to trying to figure.
After that margin per ton creeps up a little bit as we go forward.
So we are working very hard to offset whatever sort of cost inflation, we get Steven yes.
And there are times, where we had some some extra margin out of that and certainly that's an aspiration, but on the prime reason for pushing the price increase.
<unk> right now is to offset the increased cost that we've seen in labor and materials and transportation et cetera, and certainly I think our team is doing a very good job at that.
Okay. Thank you gentlemen.
Thanks Steven.
And our next question is from Jamie.
And with Citi. Please proceed with your question.
Good morning, guys.
Alright, Alright Debbie.
How are you first question is.
On the oil and gas items, just wondering like we've we've heard that there's been some capacity that's been coming back on line definitely in the Permian perhaps elsewhere.
Jamie.
Pricing may have been a little bit of a tailwind and <unk> I'm just wondering if you've if you've seen any pricing pressure now that you've seen some capacity coming back on line.
And that completion activity is going to be kind of flattish and <unk>.
From your commentary what are you guys thinking about pricing and Thats free cash.
So we.
We have definitely seen some pricing come back online over the last month or some capacity come back online over the last month or so.
I think what.
But what we're seeing at this point is that and.
And our case in particular, we've had and.
Have a number of really attractive contracts and.
I think what will happen as we go through the rest of the year as those contracts.
Finished and what I mean by that is we all know that everyone. In terms of op operators are going to stay within their budget. So when they finished their drilling and completions program for the year.
Those volumes that we are currently placing with them.
And then we'll have to move those out into the spot market. So I think we'll probably see the mix of spot tons go up a little bit higher as we get further into the second half year and given that the capacity that you mentioned and our spot tons are going at prices that are a little bit less and contracts. So I think in and sort.
Vein, we'll see a bit of a reduction perhaps and.
And.
And we expected that will happen as the year goes on we also talked about the fact that we're seeing a lot more drilling activity out there I think everyone knows that the DUC number of DUC wells has gone down substantially.
I think over 30% by our count in the first half of 2021 versus where we were at the end of 2020, and we're seeing operators ramp up drilling programs just looking the other day I think.
Drilling rigs are up about 40% now year to date and so we're also also watching carefully to see.
That balance is between the drilling and completions spending as the year goes forward. So we're looking at all those dynamics net net when we look at it I think we will be sort of flattish second.
Second half to first half in terms of total total volumes and total contribution margins, we do have the ability.
And <unk>.
If.
And if prices are a bit lower to to go get more more volume. We frequently turn have turned down volumes and stayed very disciplined but and we have the capacity and the cost footprint to do that so.
And I know, it's a kind of a long winded explanation to your.
To your question, but there is a lot.
<unk> net Arizona.
Yeah, No that's helpful.
Particularly about the spot.
And it's becoming a bigger percentage and the dynamics there.
Other question was just on the on the clean Tech side I'm.
I'm wondering if you guys can between San for solar panels and center and.
Turbine blades and maybe.
Biking, and cool roof granules for energy efficiency and whatever other products. You think are irrelevant, what what percentage of your of your on I guess of your total business, but if you want to just break it out and what percentage of the ISP business that stuff is today that would be helpful.
So I think we're somewhere around 8% of the.
And 3 business today when you when you add all that in and when you look at.
What's coming in the pipeline and the growth of those those sectors that you mentioned I think we can pretty easily double our <unk>.
Profits and clean energy over the next next few years solar panels are growing like crazy.
Wind wind turbine blade fabrication is going up but we really just started into the green diesel area and that I think he is going to become a major.
Major opportunity for us as well so I feel really good about where we are today and the trajectory of all of that JV.
Alright, great. Thanks, so much guys.
Thanks for the questions.
And our next question.
And as from and.
Net suite Morgan Stanley. Please proceed with your question.
Hey, Thanks, good morning.
Good morning, Dan.
And so I just wanted to ask.
And the ISP.
Segment, you guys have laid out some impressive organic growth targets on <unk>.
Just wondering to the extent that Youre looking I'm wondering if you're seeing any attractive M&A opportunities and your interest level and.
And any potential acquisition acquisitions, whether a bolt on or otherwise, but just any comments there would be great.
And thanks for the question Dan.
And I think our primary focus right now is in.
Basically developing the new applications that we have and making sure we have enough capacity to serve some of the growth that we talked about so things like solar panels cristobalite.
Cool roof granules et cetera, we're always looking at opportunities in terms of M&A, but I would say right now.
And at a less of a focus for us and we are.
So many and.
Organic growth opportunities in front of us.
I would say that the primary focus of the team today.
Yes sure.
Sure that makes sense and.
And then on the oil and gas side.
I just wanted to us.
Question around market share, both for property and sandbox and I.
And just at least on on our industry level demand numbers. It looks like your property and market share jumps a decent bit into Q and.
And just wondering if from.
If you guys think thats sustainable and and also comment around market share on <unk>.
Sandbox.
And it's still kind of and.
33% range or if there's any upside to that number but yeah, just any any comments around market share and.
Proppant and sandbox.
It would.
And would be great.
So on numbers that you quoted are pretty consistent with what we believe as well we think we're around 14% on plus or minus for the <unk>.
Sand market share into oil and gas and we definitely did take share in Q2 net no doubt.
That sandbox.
Sandbox has been pretty consistent and that sort of 30% to 35% market share range.
So I feel like both of those are sustainable and just given our cost position in and oil and gas, particularly and in the proppant side I feel like we'll hold that share and and there may be quarters, where we.
We actually jump up to a higher share as well as I was.
Responding to 1 of the questions earlier, we certainly have the ability.
To go and get more and more product volume, if we need to to maintain or grow profitability as is the markets ebb and flow.
Great. Thanks very much.
Much for the color I'll turn it back.
Thanks, Dan.
And our next question is from Samantha and Hollywood Evercore ISI. Please proceed with your question.
Hey, guys and thanks for taking my question I wanted to dig a little bit more into the solar.
On there.
Tony.
And.
Bryan you mentioned that it's growing like Crazy and I.
Was just wondering if you guys are starting to see some of the impact.
And if I and administration, perhaps scanning silicon imports from the Chinese company or for solar and talking about how theyre going to increase.
Domestic production.
And I realize it's a really small part of your overall business, but I was just wondering if some of those conversations are happening where you're expecting more of your domestic customer Chi.
Increasing demand from your products with us solar panels.
And so really really astute.
Observation Samantha we are definitely seeing that and if.
If I look at our our main solar panel customers and at least 1 of them is us looking at doubling their capacity potentially and I think we'll see more investment coming coming behind that as we said and our prepared remarks, we think we're already and about.
50% of North America, and solar glass production and I think that will continue to grow we have a great product, it's well positioned in terms of geography and nearby the producers and.
We've got a great great contracts, there and just sort of extending that you talked about the <unk>.
Accident and abide.
Curation and we're also watching this whole infrastructure.
Bill and it might be coming through the first 1 on and potentially the second 1 and I.
I think when you look at the opportunities there for us silica.
They're they're really amazing.
I was looking at the infrastructure Bill at least the proposal.
And admin and the other day and a couple of things caught my eye that they talked about fixing highways rebuilding bridges upgrading ports airports and transit systems, 1 and then 2.
Things like building preserving and retrofitting more than 2 million homes and commercial buildings, modernizing schools upgrading hospitals et cetera and.
If you.
The online and U S silica is portfolio and kind of and uses that we support.
We're big and residential and commercial construction, which seems to be a primary focus of this bill so things like roofing materials insulation paint.
CT surfaces tile grout window glass et cetera, we're also big and foundry.
But cash metal parts that go into the construction itself, but also for the heavy mobile equipment thats necessary to do a lot of these proposed activities.
Increase we have a lot of us.
Sand and high strength additives that go into that market.
Roads, we mentioned today that we have a new limestone business that we're starting.
And to grow limestone is a underlayment.
For that and then green diesel we have to power. All this heavy mobile equipment and I think a lot of the diesel that does it will be the green diesel so theres a lot for us as well and this whole infrastructure spending program, assuming that that gets approved.
And so on it that way.
And so everything else equal.
Customers.
Thanks for the lowest price.
Or when.
Yes.
We typically are number 1 and number 2 in and all of those markets domestically and Theres a lot.
Lot of stickiness as you said so there is product qualification.
Theres geographic proximity to typically were relatively proximate to our customers.
And there is a high switching costs for customers Big qualification periods. So kind of once we're in we're in but with all of those things that I just mentioned for example.
We're already supplying those end use markets those are not new and uses for US. It's just a question of how much growth could come in those end users.
Okay.
Don a quick question on just your cash balance.
And is there an opportunity to actually take out a chunk of some of.
Where are.
And you guys.
And maybe like retired and North America and.
And that's not very efficient and just keep letting the cash balance on the kind of.
Westwood and <unk>.
Closing.
And maybe on the tax will be other debt that you have on here.
Your next day.
Yes.
Your debt, we always look at that.
And we're gaining more and more confidence and the overall.
Cash flow for the company. So we did pay off the revolver as you saw so we're looking at potentially doing some more of that as we roll through the year.
And it will depend on what our forecast looks like but thats definitely a use of cash debt.
Okay.
Thank you.
Thanks Samantha.
And our next question is from Stephen <unk> with Stifel. Please proceed with your questions.
Thanks, just 2 quick ones.
Would you.
Do you have any comments on sort of the second half 'twenty, 1 consensus of around 100 million and EBITDA.
Okay.
Yes, I think look it.
We're not really giving guidance out there as you know.
So I would say its and its and the Zip code.
But other than that we really don't comment a whole lot.
And as far as guidance sales.
Okay. Thanks.
Thanks, Joe, but I figured I'd try.
And the.
Just the other question I wanted to just hit on us when we think about the ISP volumes and the mix.
And you've laid out sort of the roadmap here as we go forward.
And I'm fairly certain it's.
Sort of lower.
Volume, but higher contribution margin per ton.
But my question is around.
And any material capex necessary and.
And does any of this sort of cannibalize your ability to to continue making or you're already making.
So there is there is no cannibalization typically we're talking about brand new.
And sort of opportunities here, Stephen so a lot of us as white space and.
I think we can fund the kind of growth base growth that we've talked about the 10% to 15% per year, plus or minus within our existing capital spend now.
And we do have a fair amount of cash on the balance sheet now and.
We project to have somewhere between 275 to 3.
$300 million on the on the balance sheet by the end of the year. So if some of these applications hit and a bigger way than we thought we certainly would have the opportunity to sort of supercharge that that growth but.
By and large we're not talking about massive amounts of capital for the base plan of continuing.
10% to 15% per year.
Excellent. Thank you again.
Okay.
And again as a reminder, if anyone has any questions you May press star 1 on your telephone keypad and doing so ensure your spot into the question and answer queue.
And thank you at this time I would like to turn the floor back over to Mr. Shinn for closing comments.
Thank you operator, so as we bring the call to a close today I'd like to leave you all with 3 key thoughts first.
First we have a strong and diverse product portfolio that we're strategically enhancing.
And to grow to support a variety of rapidly growing environmentally important value chains that are driving the transition to cleaner energy and we talked about a number of those today on the call.
Second we are poised to benefit from the ongoing recovery and the U S economy as well as the proposed additional U S government infrastructure spending and are highlighted.
Several examples of the kind of products and end uses that are right and our sweet spot that could grow substantially with that additional spending.
And finally, our continued capital discipline and should provide us the ability to sustainably generate positive free cash flow and further strengthen our balance sheet.
Thank you again for dialing.
Moving into the call today, and we look forward to speaking with all of you again next quarter stay safe and be well.
Ladies and gentlemen, thank you for your participation and interest and U S. Silica and this concludes today's event you may do.
Disconnect your lines and log off the webcast at this time. Thank you.
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