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U.S. Silica's (SLCA) Earnings Top, Sales Miss Estimates in Q1

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·4 min read
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  • SLCA
  • AEM
  • FNV

U.S. Silica Holdings, Inc. SLCA reported net loss of $72.3 million or 98 cents per share in first-quarter 2020, wider than a loss of $19.3 million or 26 cents in the year-ago quarter.

Barring one-time items, adjusted loss per share was 3 cents, which was narrower than the Zacks Consensus Estimate of a loss of 46 cents.

U.S. Silica generated revenues of $269.6 million, down 28.8% year over year. The figure also trailed the Zacks Consensus Estimate of $352.6 million.

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 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 amounted to $155.7 million, down around 40% year over year. Overall sales volume fell around 17% year over year to 3.202 million tons. Oil & Gas contribution margin declined 52% sequentially and 44% year over year to $32.9 million or $10.27 per ton.

Revenues in the Industrial and Specialty Products division amounted to $113.9 million in the quarter, down 4% year over year. Overall sales volume fell 1% year over year to 0.959 million tons. The segment’s contribution margin was $43.3 million or $45.20 per ton in the quarter, up around 11% sequentially and down 3% year over year.

Financials

At the end of the first quarter, the company’s cash and cash equivalents declined 10.7% year over year to $144.7 million. Long-term debt was $1,212.3 million, down 13% year over year.

Outlook

U.S. Silica expects Oil & Gas segment sales to decline significantly in the second quarter due to sharp decline in prices of crude oil and expected slowdown in well completion activities. The company’s cost in the segment is highly variable and it is likely to right-size operations accordingly. U.S. Silica has undertaken various steps in response to challenging macro-economic environment. This includes idling or curtailing production at several facilities as well as lowering its annual Oil & Gas production capacity to 6 million tons from 24 million tons.

In the Industrial & Specialty Products segment, the company expects the impact on sales volumes to be limited. It expects a decline in the segment's sales in the second quarter due to the temporary shutdowns by some customers in April and May related to the coronavirus pandemic and a slowing demand environment in certain end markets, including automotive and building products. However, the company stated that demand for other products, including diatomaceous earth and specialty clays, are expected to remain comparatively strong.

Price Performance

Shares of U.S. Silica have plunged 84.3% in the past year compared with the industry’s 13.3% decline.



Zacks Rank & Key Picks

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

Some better-ranked stocks in the basic materials space are Agnico Eagle Mines Limited AEM, Barrick Gold Corporation GOLD and Franco-Nevada Corporation FNV, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Agnico Eagle has an expected earnings growth rate of 58.8% for 2020. The company’s shares have surged 53% in the past year.

Barrick has an expected earnings growth rate of 70.6% for 2020. Its shares have returned 121.6% in the past year.    

Franco-Nevada has an expected earnings growth rate of 22% for 2020. The company’s shares have surged 105.1% in the past year.

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