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Hi-Crush (HCR) Surpasses Q2 Earnings and Revenue Estimates

Zacks Equity Research

Hi-Crush Inc. HCR posted net loss of $117.5 million or $1.16 cents per share in second-quarter 2019, against net income of nearly $67 million or 67 cents in the year-ago quarter.

Barring one-time items, adjusted loss per share of 2 cents was narrower than the Zacks Consensus Estimate of a loss of 5 cents.

Revenues tumbled 28.4% year over year to $178 million. The figure, however, beat the Zacks Consensus Estimate of $170.1 million.

Total frac sand sold during the quarter was 2,662,086 tons, down 12.4% year over year. Total sales from frac sand rose 9% sequentially to $125.9 million in the second quarter.

Contribution margin per ton sold slumped 55.4% year over year to $13.80 but rose 13.2% sequentially in the second quarter. Average sales price was $47 per ton, modestly down from $48 per ton in the first quarter.

Hi-Crush Price, Consensus and EPS Surprise

 

Hi-Crush Partners LP Price, Consensus and EPS Surprise

Hi-Crush price-consensus-eps-surprise-chart | Hi-Crush Quote

 

Operational Update

Post the acquisitions of Pronghorn Logistics, the PropDispatch software and FB Industries as well as their integration in the PropStream business, Hi-Crush consolidated its wellsite and logistics operations under the name Pronghorn Energy Services. The equipment business that supports Pronghorn Energy Services will lease and sell equipment to third parties under the name NexStage Equipment Systems. However, sand production and sales will be handled under the name ‘Hi-Crush Inc’.

The branding of equipment sales and leasing under the name NexStage Equipment Systems indicates the company’s effort toward development of differentiated set of equipment solutions.

Financial Position

At the end of the second quarter, the company had $52.8 million in cash and $59.2 million in available capacity under the revolving credit facility.

In June 2019, Hi-Crush's board of directors approved a stock repurchase program of up to $25 million, which is effective on that date and authorized through June 2020.

As of Jun 30, 2019, Hi-Crush has repurchased 1,177,731 common shares for a total cost of $3.2 million.

Outlook

Hi-Crush projects total sales volumes in the range of 2.4-2.7 million tons for third-quarter 2019. It expects continued deployment of last mile systems in the second half of 2019.

Per management, the potential for E&P budget exhaustion in the latter half of 2019 may lead to modest reduction in activity levels late in the third quarter. The company has undertaken steps to lower cost structure and leverage operational flexibility to respond to changes in operating environment and maintaining focus on customer service as well as safety.

Zacks Rank & Key Picks

Hi-Crush currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are SSR Mining Inc SSRM, Alamos Gold Inc AGI 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 64.8% in the past year.

Alamos Gold has projected earnings growth rate of 260% for the current year. The company’s shares have gained 48.7% in a year’s time.

Arconic has an estimated earnings growth rate of 38.2% for the current year. Its shares have moved up 17.5% in the past year.

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