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U.S. Silica (SLCA) Beats Q2 Earnings, Lags Sales Estimates

Zacks Equity Research

U.S. Silica Holdings, Inc.’s SLCA net income declined year over year in second-quarter 2019.  The company logged profits of $6.2 million or 8 cents per share compared with net income of $17.6 million or 22 cents in the year-ago quarter.  

Barring one-time items, adjusted earnings were 14 cents per share, which beat the Zacks Consensus Estimate of breakeven per share.

U.S. Silica generated revenues of $394.9 million, down around 7.6% year over year. The figure trailed the Zacks Consensus Estimate of $397.6 million.

Per the company, the Industrial and Specialty Products segment delivered record contribution margin in the reported quarter. Moreover, Sandbox had all-time record delivered loads.

U.S. Silica Holdings, Inc. Price, Consensus and EPS Surprise

 

U.S. Silica Holdings, Inc. Price, Consensus and EPS Surprise

U.S. Silica Holdings, Inc. price-consensus-eps-surprise-chart | U.S. Silica Holdings, Inc. Quote

 

Segment Highlights

Revenues in the Oil & Gas division came in at $273.1 million, down 16% year over year. Overall sales volume rose 13% year over year to 3.932 million tons. Oil & Gas contribution margin declined 38% year over year to $71.5 million or $18.17 per ton.

Revenues in the Industrial and Specialty Products (“ISP”) division were $121.8 million in the quarter, up 18% year over year. Overall sales volume fell 5% year over year to 0.972 million tons. ISP contribution margin was $50.1 million or $51.61 per ton in the quarter under review, up 21% year over year.

Financials

At the end of the second quarter, cash and cash equivalents were down 41.2% year over year to $189.4 million. Long-term debt was roughly $1,229.8 million in the quarter, down 1.9% year over year.

The company also generated operating cash flow of $71.6 million during the quarter.

Outlook

U.S. Silica projects capital expenditures to be around $125 million for 2019.

For Oil & Gas proppants, the company expects volumes to increase roughly 10% sequentially in the third quarter. However, it expects softer volumes during the fourth quarter due to stretched production and exploration budgets as well as decline in activity levels.

Per the company, SandBox is making efficiency gains that is driving more savings with customers. It believes that this will offset margin pressure. Minimal non-productive time, bigger boxes and technological improvements are boosting operational efficiency as well as labor cost effectiveness. The company stated that it is actively engaged in exploring new applications for the SandBox technology in other new oilfield segments and industries.

Price Performance

Shares of U.S. Silica have plunged 52.6% in the past year compared with the industry’s 2% decline.



Zacks Rank & Other Key Picks

U.S. Silica currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are SSR Mining Inc. SSRM, Kinross Gold Corporation KGC and Arconic Inc. ARNC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SSR Mining has an expected earnings growth rate of 134.8% for 2019. The company’s shares have surged 59% in the past year.

Kinross has projected earnings growth rate of 100% for the current year. The company’s shares have gained 18.6% in a year’s time.

Arconic has an estimated earnings growth rate of 38.2% for the current year. Its shares have moved up 15.9% in the past year.

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