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U.S. Silica (SLCA) Raises Prices of ISP Segment Products

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Zacks Equity Research
·3 min read
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U.S. Silica Holdings, Inc.’s SLCA Industrial and Specialty Products (“ISP”) segment will raise prices for most of its non-contracted silica sand, perlite, diatomaceous earth, cellulose and clay products. These are mainly used in glass, filtration, foundry, coatings, paints, elastomers, chemicals, roofing, building products, recreation, agricultural and other applications.

The company stated that depending on the product and grade, the price increases will range up to 15%. The price hike is effective for shipments starting Jan 1, 2021.

Per U.S. Silica, the latest increase in prices will support its continued investments in upgrading capacity for the growing demand of its products and offset increasing production costs.

Shares of U.S. Silica have lost 1.6% in the past year against the industry’s 17.3% growth.

U.S. Silica provided guidance for the fourth quarter in its third-quarter 2020 earnings call.

In the Oil & Gas segment, the company expects sales volumes for the fourth quarter to rise 20-30% sequentially on the back of an expected increase in completion activities. Moreover, the company expects contribution margin from the unit to rise 5-10% sequentially.

In the ISP segment, the company expects volumes to fall 5-10% sequentially due to usual business seasonality. Contribution margin of the unit is expected to decline around 10%, excluding third-quarter benefits from the re-measurement of railcar leases.

Zacks Rank & Key Picks

U.S. Silica currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Pretium Resources, Inc. PVG, BHP Group BHP and Silvercorp Metals Inc. SVM, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Pretium Resources has an expected earnings growth rate of 25.5% for 2020. Its shares have returned 10.5% in the past year.

BHP Group has an expected earnings growth rate of 31.3% for fiscal 2021. The company’s shares have gained 13.5% in the past year.

Silvercorp Metals has an expected earnings growth rate of 40% for fiscal 2021. The company’s shares have increased 19.2% in the past year.

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