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Why Is Silica Holdings (SLCA) Up 29.2% Since Last Earnings Report?

Zacks Equity Research
·3 mins read

A month has gone by since the last earnings report for Silica Holdings (SLCA). Shares have added about 29.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Silica Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

U.S. Silica's Q2 Earnings & Revenues Surpass Estimates

U.S. Silica reported a net loss of $32.4 million or 44 cents per share in second-quarter 2020 as against a net income of $6.2 million or 8 cents per share in the year-ago quarter.

Barring one-time items, adjusted loss per share was 9 cents, which was narrower than the Zacks Consensus Estimate of a loss of 55 cents.

U.S. Silica generated revenues of $172.5 million, down 56% year over year. However, the figure surpassed the Zacks Consensus Estimate of $144.9 million.

Segment Highlights

Revenues in the Oil & Gas division amounted to $72.5 million, down 73% year over year. Overall sales volume fell 72% year over year to 1.112 million tons. Oil & Gas contribution margin declined 20% sequentially and 63% year over year to $26.2 million or $23.53 per ton.

Revenues in the Industrial and Specialty Products division amounted to $100 million in the quarter, down 18% year over year. Overall sales volume fell 19% year over year to 0.792 million tons. The segment’s contribution margin was $35.1 million or $44.34 per ton in the quarter, down 19% sequentially and down 30% year over year.

Financials

At the end of the second quarter, the company’s cash and cash equivalents were $158.7 million, down 16.2% year over year. Long-term debt was $1,210.5 million, down 1.6% year over year.

Outlook

In the Oil & Gas segment, U.S. Silica predicts a mid-single-digit percentage rise in third-quarter proppant volumes and a meaningful increase in SandBox loads. Moreover, the company expects contribution margin from the unit to be down sequentially.

In the Industrial & Specialty Products segment, it sees a recovery in third-quarter whole grain and higher-margin ground silica volumes. Further, the company expects sustained strength in its diatomaceous earth and specialty clay business. As a result, it expects the contribution margin from the segment to be up 5-10% sequentially in the third quarter. Further, the company stated that it expects volumes and profitability for the fourth quarter to be similar to the levels of the third quarter.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 26.03% due to these changes.

VGM Scores

At this time, Silica Holdings has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Silica Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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