Petroleum Connection Logo
Layout Options

Tudor Pickering Holt Energy Notes Excerpt From March 23, 2018: U.S. Silica Announces $750Mm Acquisition

As SLCA looks to smooth out the volatility inherent in energy cycles, the company made it clear a large industrial acquisition was on the radar and they've now put their money where their mouth is; this will make SLCA look more like the combined FMSA/Unimin, which we view as an overall positive despite the lofty sticker price and valuation. US SLCA paying $750mm (financed with term loan debt) or ~12.5x TTM EBITDA to acquire EP Minerals ($200mm TTM revenue, ~$60mm EBITDA, ~25% EBITDA margins)...optically high valuation multiple but the stable nature of industrial miners' cash flows keeps the multiple in-line with public industrial peers (SLCA ~4.9x 2018 EV/EBITDA, comps trade ~10-13x EV/EBITDA). We certainly won't be the experts here but EP Minerals mines diatomaceous earth (DE), bentonite and perlite filter aids, absorbents and functional additives which flow into a variety of industries (e.g. filtration -- 50% of revenue, absorbents, catalysts, additives). The company's revenues are 72% N. America, 28% international, and its operations appear fairly (or very) similar to sand mining.


Well telegraphed, SLCA doubles down on ISP for 12.5x EV/EBITDA

Sector: Oil Service | Ticker: SLCA | Recommendation: BUY | Target: NA | Close: $26.63



Other Posts You May Be Interested In

In-Basin Sand Mines Reshaping Proppant Supply Fundamentals

Posted on July 10, 2018

The frac sand industry is in a transition phase with significant new capacity being built out across most major shale plays in the US. Frac...

The Petroleum Connection Sells Out the Exhibit Hall, Adds Bronze Sponsorship Option for the 7th Annual Frac Sand Supply & Logistics Conference

Posted on July 03, 2018

I’ve got some bad news and some good news. First the bad news. The Platinum, Golf, Gold, and Silver Sponsorships have...

Early Registration Discount for the 7th Annual Frac Sand Supply & Logistics Conference Ends July 7th

Posted on July 02, 2018

Early registration will soon be ending for the 7th Annual Frac Sand Supply & Logistics Conference. ...