All right, so joining me next is Bryan Shinn, CEO of U.S. Silica. We'll just be having a little fireside chat here. So thank you for joining us today, Bryan. Good afternoon, Derek. Thanks for the invitation. It's always great to be at the back of the Barclays. Great, great. So I'm kicking all these off with an activity update. Just what are you seeing out there in the market in, in terms of completion activity, for third quarter and for fourth quarter? I know the third quarter guide was volumes down 10%. Hearing a lot about white space affecting these frac fleets. Maybe just your overall thoughts on the back half of the year and how activity is trending. So when we think about activity, we tend to think about frac fleets. That's probably the closest correlation to our business on an ongoing basis, and I believe that we're somewhere around 235 active fleets out there today. I think in September, we'll hopefully reach a bottom for the year, maybe at 225, and then our belief is we'll come back through fourth quarter and the rest of 2024, and we'll see a pretty nice rebound in that, which will bring a lot of new activity, I believe. It's interesting, those numbers, the 235 and 225. What about in the Permian? Have you seen just more insulation as far as activity there, or just any color around the Permian itself? The activity has stayed pretty strong in the Permian, for sure. Obviously, things have dropped off substantially in the Haynesville. I think everyone knows that. We have decided, over the last few years not to have much exposure there. Right. So we have a few SandBox fleets, but no, no proppant sales to speak of there, so we really haven't been impacted by that. And then when I think about just the fourth quarter, how are you thinking about. We always hear about, like, budget exhaustion or seasonality. I mean, you obviously just talked about bottoming out in September. So preliminary views on fourth quarter, you think that we don't have some sort of a bad seasonality quarter, or do you think that just given where oil prices are today, that we'll see improvement in activity? You know, it's interesting. I think several years ago, we saw the seasonality and the kinda fall off around the holidays. We really haven't seen that as much for the last couple of years, and as we talk to customers, they're kinda preparing for some strength in the fourth quarter. I don't think it's gonna be a big jump from Q3, but I don't think we're gonna see it fall off either. So, we're looking for a kind of a moderately strong Q4, setting up for hopefully a really good Q1. As far as, can you maybe dive into that a little more about, like, basin mix or customer mix, private versus public, and then just oil versus gas as far as any sort of pockets of strength in the fourth quarter? So, the strength right now is definitely in the oilier side for us anyway. Permian remains strong. We've seen some pretty good trends in the Northeast, for sure, and we're actually seeing a bit of pickup for Northern White Sand out in the Bakken, which was a little bit unexpected. Okay. But, the demise of Northern White sand has not happened yet, so. I guess let's just jump over to pricing. You know, how are your talks around 2024 contracting and pricing progressed? Obviously, we've been hearing some weakness in the Permian spot market pricing. The view is that's gonna crater that, you know, contracted volumes for you and your peers in 2024. We've obviously heard a lot about the EMPs touting sand cost savings and even some of the drillers and some of the pumpers as well. Just overall, how is that affecting your 2024 pricing? So maybe talk about pricing and then contracted volumes as well. Sure. So if, if you think about our business, we've tried to remain pretty heavily contracted, which has insulated us from a lot of the pricing ups and downs. This year, we're about 85% contracted. We're already 70% contracted for next year, and so we're now in the discussions for that extra 15% to get us to 85 next year. We think that's a good number for 2024, where we'd like to be. And you know, things have softened just a little bit, but it's a dollar here or two dollars or something. I've seen a lot of reports out there in the press and some of the other industry sources that pricing has collapsed or something in the proppant industry, and certainly, we haven't seen that. Sure, there's some spot sales at, at low prices here and there, but, pricing is still relatively strong, and I expect that, any contract we sign, maybe it's a dollar or two less than where we were before, but not ten dollars less or something like that. So, pretty strong pricing, I think, for 2024 is our expectation. So, I mean, what are those areas of the weakness that we hear then? Because this seems to be one of the hardest things to reconcile, 'cause I agree, it's just all the reports that we hear and all the anecdotes that we hear in the spot market. It's just this massive spot market, and everything went to, like, $20 a ton, and it's gonna crater your, you know, you and the big boys, you and Atlas pricing for 2024. Right. Could you maybe help size us a spot market and really how impactful those anecdotes really are? So, you know, I think the real question is: Where's the misunderstanding? Right. Where's the disconnect, right? And, and for me, the disconnect is most people kinda outside in look at macro. So they look at the whole Permian, for example, or the supply and demand balance for sand in the United States, but that's not how the markets really work. Within the Permian, there are micro markets, several micro markets, and it's the supply and demand within those smaller markets that really dictates the pricing, and, and it kinda adds up to the total that's a basin pricing. So we're particularly advantaged with where our mine sites are and having SandBox logistics to be able to get sand out to the well in a very advantageous manner. So I think we're pretty well insulated from that, and I think the other thing that perhaps doesn't get taken into account enough is the big customers, the folks like Pioneer, who are out there doing massive simul-fracs. They need to match up with bigger suppliers who can supply those jobs in whole from one site, and they don't wanna have to piecemeal that to multiple sites. So as a result of that, they're willing to pay higher prices to someone like U.S. Silica, as opposed to some of the smaller mines that are out there. So there's a lot of different factors. As always, things are a bit more complex than when you get into the reality of the details as opposed to just the macro. So I think people are just looking at the macro and saying, "Oh, my gosh, you know, I heard, you know, somebody sold sand for $20 a ton over here." Well, you know, that doesn't mean that's what our prices are gonna be, right? So it's a very different situation, depending on how you're positioned, and I suspect Atlas is, is the same way. You know, they're a much larger provider like we are, and they have a set of customers who are very sort of freight logical for them, and so you can command a higher price when you have that. Yeah. No, I think they would echo your sentiment there. So I just wanted to go back to that. You're seeing obviously a little bit of softening, which makes sense, that $1-$2, but obviously a lot better than probably what people have initially anticipated. I guess, how do you try to offset that just from an internal perspective? I know you have a pretty good variable cost structure, so just maybe just talk about some of the, the costs that you would try to help offset that $1-$2. In order to keep that contribution margin per ton elevated. So it's a great question. Our team has done an amazing job since the pandemic of variabilizing our cost structure. We think we've taken out about $70 million of annual cost, and by taking out, I mean, either, actually taking out or variabilizing the cost. And so, just for example, we're now paying about $20 million a year less for railcar leases than we were just two years ago. We renegotiated those and got much better terms. The railcars themselves, a lot of those are much shorter-term leases, so if there is some kind of a downturn or a headwind, we can turn those railcars back in, and we don't need them. We have a big SandBox business, and if you've ever seen those SandBoxes, they're gigantic, gigantic pieces of equipment full of sand. Well, it takes a big forklift to move those around, and the forklift rentals used to be a three or four year contract. Now we have those on month-to-month leases, and we actually are getting a cheaper price. So there's just all the way through the system, we're taking out cost, we're minimizing commitments. We used to have all our own tractors to haul the SandBoxes around. Now we have zero. We use all third parties. So another way we can help with pricing across the enterprise is to go back to our providers, like the service providers that do the trucking, and negotiate lower prices with them, and we've been really successful at doing that. So lots of knobs we can turn if we lose a $1, a price here or there. The other side of the house, from the sand side, the SandBox, prices are actually going up, margins are going up, and I think there'll be some offset there to whatever kind of weakness there is in proppant pricing in 2024. I can't believe forklift contracts are three to four years. I've never heard that before. Yeah. But now you got it month to month. That's interesting. Just since you brought up SandBox, maybe explain why you're seeing higher pricing there and just improvement there. Just I guess if you just look at SandBox away from the sand mines. So we've done a really good job of working with our customers to make sure that we have the right kind of service and the right kind of delivery. And again, it goes back to the high-capacity wells. We've never had a well that we couldn't service with Sandbox. So I know it might be hard to believe, but moving these kind of large cubes of sand around the Permian is more efficient in many cases than the other alternatives, and customers are willing to pay for that. And I think our team has done a really good job of making sure that we target the customers who are gonna value that service. We've been pretty selective in who we serve, so it's worked out well for us. Gotcha. So a big theme that's unfolding over the last couple of days is just the continued efficiency gains that we're seeing from the EMPs and obviously supported by the services. So for completions, in particular, I think about more stages per well, increased proppant per stage, and obviously simul-frac. So what does this mean to you if we think that the North America landscape activity has structurally reset downward? If we don't need as many frac spreads as we needed in the past. But how do you-how does Silica plan to benefit in this increasing efficiency trend and capture value from it? Well, we're very different than our customers in many ways, particularly the service providers who were charging, you know, by pumping hour or by crew rates. We're selling sand by the ton, right? So if you look at the last couple of years of statistics, you'll see that in the last two years, sand per well has gone up about 15%, and of that 15%, about 12.5% is more sand per foot. So the industry is putting a lot more sand down per foot, and of course, the laterals are increasing as well. And so I think that helps us in terms of sand consumption overall. Then the other interesting thing, when you go back and look at how much sand a frac crew consumes. A couple of years ago in the Permian, it was about 250,000-300,000 tons per year. Now, the average is more like 600 or 650, so almost 2x or maybe more than 2x. We actually have some crews that we service that are consuming almost a million tons a year of sand per year. So it doesn't really matter if the crew number of crews shrink down because we're selling the sand on a per ton basis, right? And we can keep up with those big crews, and we're gonna continue to do that. So this kind of service intensity thing doesn't really make a difference to us. I think if anything, it's a positive because to really service a crew that's consuming 1 million tons a year, you've got to have a high-intensity mine site, you've got to have a huge load out, you've got to have storage facilities. We have six of the largest silos in the industry that are in our Lamesa site, so we always have sand for customers. We have the infrastructure to do that, and you'll see these mini mines or these local mines popping up. Those mines can't serve a simul-frac, right? So we do have some advantages that we have with our mine infrastructure, particularly in the Permian. Where do you, I mean, it's pretty remarkable, the 250-300,000 up to now 600-650, some consuming a million on that same old frac. I mean, where do you see that overall trend going? It just seems like there's, E&Ps are always tinkering with completion designs, and so how do you, how do you think that's gonna trend over the next couple of years as far as increasing that service intensity? So, I think the next thing that's gonna happen that we really haven't seen yet is operators get into the tier two and tier three wells. To get the same productivity and the same economics, they're gonna have to put even more sand into those wells. At least that's what we're seeing kind of in early days of those type of wells. So I think that may be the next trend to continue this tailwind that really goes back for many years now in terms of increasing sand usage per foot, and that's all gonna be accretive to us and the whole sand industry, quite honestly. Great. Let's move over to technology. I wanted to talk about some of the technology advancements within the proppant space. I mean, you recently announced your Guardian System, which filters debris from getting into the frac pumps. Maybe talk to us more about that particular development and maybe any other technology developments that you guys are working on right now. So the Guardian System is a really neat product, and it's one of these things that it seems so simple. You know, when we first thought of it, we were like, "Well, somebody must have already thought of this. This is, you know, this is too simple, too straightforward." But having the right kind of filtration device in front of the frac pumps, we're finding is preventing all kinds of issues. So basically, we're stopping debris and foreign materials from going through the frac pump and ultimately down the wellbore. And the crews that we have that are running this are pumping, on average, 25% more stages per day, and they've increased their maintenance time between pump failures about 30%. So it's a massive increase, and again, the equipment's really simple. The operators love it. In fact, we've taken one customer out to a crew where we were running this, and the company man for the company that was running it, he basically sold it to the customers. He spent 30 minutes talking about how good it was, and our sales guys didn't have to say a word, right? So customers really like it. It's easy, it's just very straightforward and got a patent in on it as well. It's one of those simple things that you can actually patent. I think, on the technology side, you know, probably less so in the oil field, we have a lot of things going on on the other side of the company, the industrial business, but, you know, Guardian's kind of the latest and greatest thing that we're pushing on the oil field side. Got it, and we'll get to ISP shortly. Competitive threats. Obviously, we're seeing some of some new technology come into the market. We touched upon the mobile mini mines a little bit. There's now wet sand, and obviously, one of your peers, Atlas, bringing out the Dune Express. So I guess just what's your take on all these new systems, and where, you know, how, how do you, how do you fit into all that, and do you see them as a big competitive threat, or is it more of just gonna be a, a coexisting type atmosphere? So I feel like there's all kinds of different solutions for almost anything in this industry, and sand is no exception. There are some folks who have decided they like wet sand, and that's fine. We sell wet sand, excess capacity, wet capacity that we have from our mine sites, but I think that's a fairly niche kind of product. The mini mines or the kind of more local, hyper local mines, I think there'll be a section of the market where that's a good option. But the challenge there is, you know, every couple of years, you're gonna have to relocate that mine to somewhere else because the deposits that those mines sit on are typically much smaller. And so you're gonna have to move it, and how many deposits are there out in West Texas that are minable, close enough to where the activity is going on, et cetera, et cetera? And we've heard a lot of kind of back-channel information that some of the folks that have those mines are now sort of scrambling around to go find the next spot to relocate the mine. So I think all of us have challenges. I think that will be their challenge: can you really keep that mine busy? Right. And then we've also got the Dunes Sagebrush Lizard potential listing. I think it may be more difficult for those mines to operate. Are they gonna join a conservancy? Is that even gonna work? Where are they gonna find sand that's not in a habitat, et cetera, right? So there are challenges there as well, but I think at the end of the day, wet sand and the local mines are probably here to stay, but in a relatively kind of small share position, if I had to guess. Gotcha. So I know you're selling excess capacity into the wet sand market. What do you need to see, or does it need to be a customer pull for you to start actually producing the wet sand, not just that it's just part of the excess and you sell, but actually, "Hey, we're gonna produce X amount of tons per year of wet sand because this amount of customer..." Like, just maybe walk me through like, how do you develop into the more of the wet sand market? So we're obviously exploring that, and I think to your comment, it'll be a customer pull. We've got capacity to do that. We have wet SandBoxes now, so we can transport wet sand in SandBoxes, and it works very well. So we have the ability to make it, to transport it, just a question of do the customers want it? And if we think about the assets that we would employ, can we make more money doing wet sand or dry sand with that? Can you talk, I'm just curious, the difference between dry and wet sand within the SandBox. What's the difference? Like, what do you need to do to the SandBox to move and deliver the wet sand? Is there, like, a retrofit? Is it capital intensive? Just maybe a little about around the different types of sand. It's a pretty cost-effective retrofit. We have to change the top and how the box fills, and we've basically changed the inside of the box. At the bottom of it, it has kind of walls that slope. You need a different slope for wet sand than dry, and then we've lined the box with a special material to make it more amenable to the sand flowing out. But it's not particularly expensive to do. Okay. So it wouldn't be a big, a heavy lift if, let's say, you just start getting more and more into the wet sand. That's just cost effective, easier to, to retrofit some of the- If the customer demand is there for it, we'll definitely do it. Okay, got it. Supply. So as we all know, back in the 2017 era, supply really hurt this industry as far as the rush down to West Texas. But what are you seeing on the supply side? Obviously, we know one of your main competitors is doing the expansion program. We have the mobile minis. I mean, is it as big of a threat as we saw back in that 2017 time frame? Is there anything that really worries you on the supply side of the equation for proppant? So, I think, back to what I was talking about earlier, around these kind of micro markets, you really have to analyze that and see where's the supply coming online. And so for, you know, Atlas, who I think you were referring to is adding a lot of capacity, that's targeted at the Northern Delaware. We don't, we don't sell any sand into that area because our, our two mines are set up to focus more on the Midland Basin, so that capacity doesn't really impact us at all. And, I think we've seen some of the, the mobile mine capacity come on, but I also think some of that's gonna be falling off, too, as they exhaust some of the deposits that they have. So, again, I'm not really too concerned about that. We, we don't see any major capacity increases coming from kind of well-funded, deep-pocketed competitors. Right. So nothing like what we saw back in 2017? We haven't seen that at this point, no. Let's go, let's go to the lizard. Let's go to the lizard. Let's go to the lizard. Here we go. The Dunes, the Dunes Sagebrush Lizard recently or proposed to be listed on the endangered species list. I guess, can you talk about how this may affect U.S. Silica, preventative steps that you're taking, and then just how this might affect the broader market? So when we looked for mine sites for Permian mines in 2017, 2016 and 2017, we were very thoughtful about that. This issue was around back then, and so we only chose sites that were not gonna have an issue. So we looked at more than 50 sites before we picked the ones that we did. Some of the ones that we chose not to purchase are sites that other people have subsequently purchased and put up mine sites, and we were concerned that there might be too much exposure there if the listing ever happened. So we're in great shape. I think the others will have to navigate their way through whatever the process is with Fish and Wildlife. I know there's a conservancy program out there that purportedly you could join. I'm not sure how that stands up to legal challenges. There's been a lot of noise from Fish and Wildlife, and we'll just have to wait and see how this administration wants to push this, quite honestly. Are you part of the CCA right now? We are not. What would make you join it? So, we're considering it, but we don't believe we have any issues. The Lamesa mine is in a no habitat zone, and the Crane mine is in a very low potential habitat zone. We've done a lot of surveys on the site. We paid people to come out and to try and find lizards, trap lizards. One of the local universities wanted to run an experiment. They said, "Can we release some lizards on your land at the Crane site?" And we said, "Sure." And within, like, seven days, they were all gone. Okay. Gone somewhere else or weren't still living. So, we think we're in pretty good shape around, around the lizard. All right. You worried me there for a second. Luckily, they're not on the site. Let's go over to ISP. So maybe just spend some time here. How is this trending against the macro or recessionary headwinds? I know it's more that GDP plus business. And then just as far as your view on the profitability expansion as you continue to raise pricing, as we keep saying. So what we have, a company portfolio, about two-thirds oil and gas, one-third industrials in terms of profitability, and, we, we have silica sand, we have diatomaceous earth, and we have two types of clays, so, a lot of different products. I would say that the most important thing to understand about our industrial business is we don't view ourselves as, in some ways, as a mining company there. We're making the transformation to an advanced materials company. So we don't wanna just compete against other companies that mine sand or mine diatomaceous earth. We wanna compete against the companies that are selling, TiO2 out into the marketplace. For example, one of our new, new products is a TiO2 replacement. Just to put that in context, in the U.S. alone, that's probably a $4 billion revenue market, completely white space for us. We have no, no business in that area now. So we have a number of those type of opportunities in the pipeline, where we're taking our minerals, processing them, we're doing something else to them, maybe adding some other ingredient and making a value-added product. You know, just to put it in context, you know, maybe we sell a ton of sand out in the oil field for $35, right? Or $40. Our TiO2 replacement product sells for $2,000-$3,000 a ton, right? Wow! So it's a different, it's a high-end specialty product. That's. I think products like that in our portfolio that we're developing are gonna take the industrial business to a completely different place compared to where it's been historically. So this TiO2, so I mean, I'm just obviously not familiar with it. Maybe just could you clarify, like, what types of... Like, what really, what is it- What is it? Yeah, exactly. Just a little more on that. So it's almost anywhere you look in society, whether it's white paint, grout, mortars, it's in the icing in your birthday cake. Any place you look and see white, chances are it's TiO2. It's a massive market. It's a little bit of TiO2 or a lot of TiO2 is in almost everything you could buy, any consumer product that is white. Okay. Any hard surface or coating, and it's just, it's sort of a ubiquitous product that, you know, people don't, don't talk about, but, it's very expensive. And we found a way to make a product that is starting out with our minerals, as opposed to the way TiO2 is made with a lot of nasty chemicals and environmental problems. And customers are just, are really excited about the product. We're finding that not only can we replace TiO2 in these formulations, but we have benefits that, that TiO2 doesn't have. So it's, it's pretty exciting. Yeah, it's nice. You know, over the next couple of years, we're gonna invest capital to build the facilities to be able to make these products. I look forward to, you know, coming back here within the next two years and being able to say we're getting a lot of that $4 billion revenue. Yeah. Could this be TiO2 behind you, this stage here? Probably is, yes. It's pretty cool. Yeah. The white paper that you have has got it in it too, so. Interesting. New energy products in ISP. I know a couple of years ago we've talked about the solar exposure, the wind turbine exposure. Maybe just an update on where we, where we are here. We haven't heard about that, that those product lines in, in a few quarters now. Right. Just update on that, where you're seeing it's trending, how impactful could it be on the financials? So we have a lot of cool things there as well, and we talk about growing the ISP business at a GDP plus rate. Well, the plus is those kind of products. So if you look at, let's say, the glass industry, you know, every place you see glass, think U.S. Silica, or silica sand is a big component of that. But there's some subsectors of that, like the glass for solar panels, of which we're the largest supplier in the U.S. You know, that's definitely growing at a GDP plus rate. So all the solar panels, you know, First Solar and the other folks here are making. It's got U.S. Silica sand in the glass there. In the chemicals and kind of refining space, we are selling both diatomaceous earth and especially clays into the renewable diesel market. So this is collecting waste oil streams and cleaning them up, and eventually producing diesel fuel out of that. And that's definitely a GDP plus grower for us. And then the other one that's really interesting is there's a lot of onshoring or reshoring, if you will, of building materials products and production. So for example, the quartz countertops that everyone has in their houses or wants in their houses, in their kitchens, fiberglass insulation, a number of other kind of building materials, the production is coming back to the U.S., and that's some of our bread-and-butter materials that we sell into with our silica sands. And I think that's another sort of GDP plus. So there are a lot of these things kinda sprinkled into different value chains, where it's not just, you know, growing 2%, 3%, or 4%. There's some actual tangible driver that's having that market in the U.S. for us grow at a multiple of GDP, and that's where we get the plus when we say GDP plus. So I know, in the past, you've talked about floating the idea of the oil and gas and ISP split up. You guys went through your strategic review. I think you concluded about a little over a year now that you're, you're better together. How are you still feeling about that? Do you think that could possibly come up for, for looking at that again? And maybe what would need to happen in both of those industries for it to make sense for you, for the shareholders, to split up the company and to have a more pure-play ISP and a more pure-play oil and gas? So I think one of the, one of the issues that we've dealt with over the last few years, after we did a big acquisition in 2018 of EP Minerals, is that our debt has been relatively high. And what we've been doing is reducing that debt. We've been taking, taking out, extinguishing debt, and we've bought back almost three hundred million dollars of debt in the last 12 months. And as we bring that debt load down, I believe it opens up other strategic options for us as a company. That said, I personally kinda like the structure that we have, having a really solid and growing industrial business bolted onto a more volatile oil and gas business. If it was my own private company, I think I would like that. I think the challenge is that structure gonna help us maximize value for our shareholders? And so that's really what we're gonna explore as we go forward here. How do we maximize value for shareholders? And that was really what the strategic review was about a couple of years ago when we looked at the industrial business. Got it. Okay, no, that's helpful. So last question for you here, and this kind of leads into the capital allocation. Obviously, you're deleveraging the balance sheet. How do you feel where it is today? How much further do you need to go really to get us to a point where we could see a shareholder return program out of Silica? So, I think we made a lot of progress. By year-end, I'd expect we'll be, you know, less than 1.5x net levered, and probably maybe just a little bit more, a little bit over 2x on a growth basis. Okay. That's starting to get to be, you know, pretty, pretty good. We'll have to see if that's where we want to end up or if we wanna do a little bit more in terms of debt repurchases. I think one of the places that we're gonna invest for sure is in some of these high-return industrial projects. You know, the IRRs on those are just, just out of sight, right? So we always wanna make sure we fund those. We'll probably continue purchasing some debt back, and then at that point, we'll see. You know, we're sensitive to the call for shareholder returns, but you know, most of the shareholders we met with in this meeting and other meetings, people are encouraging us to invest in those high-return projects as well. So we wanna balance that. I think we'll see a program next year in 2024. Is that a fair assumption? We're certainly gonna take a look at it. Okay, great. Well, that's all the time we have. Bryan Shinn, CEO of U.S. Silica. Thank you. Thank you very much. Appreciate it. Yeah. Thank you.