U.S. Silica (SLCA) To Post Q1 Earnings: What's In Store?

U.S. Silica Holdings, Inc. (NYSE:SLCA) is set to release first-quarter 2018 results before the opening bell on Apr 24.

In the last reported quarter, the company delivered a negative earnings surprise of 7.3% by posting adjusted earnings of 51 cents per share, which trailed the Zacks Consensus Estimate of 55 cents.

However, revenues for the quarter witnessed a 98% year-over-year surge to $360.6 million, topping the Zacks Consensus Estimate of $359.2 million.

Notably, U.S. Silica beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, delivering an average positive surprise of 13.4%.

Can the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.

Factors to Consider

U.S. Silica, during fourth-quarter 2017, stated that it expects sequentially flat volumes and pricing in the Oil & Gas segment for the first quarter. Per the company, severe winter weather has resulted in delay in completion activities and also caused disruptions in the customer supply chain.

However, the company continues to witness strong demand for Sandbox services. U.S. Silica’s total revenues for the first quarter is projected to increase roughly 3.3% sequentially, as the Zacks Consensus Estimate for total revenues is currently pegged at $373 million. Notably, the projected sales figure represents a roughly 52.2% jump from the prior-year quarter’s reported figure of $245 million.

Revenues for the company’s Oil & Gas division for the first quarter is projected to increase roughly 1% sequentially as the Zacks Consensus Estimate is pegged at $309 million. Last quarter, revenues for this segment jumped a whopping 123% year over year while the overall sales volume soared 52% to around 3.171 million tons.

The Zacks Consensus Estimate for Industrial and Specialty Products division’s revenues is projected at $58 million for the first quarter, reflecting an estimated 5.5% increase on a sequential basis. Last quarter, the segment’s revenues jumped around 20% year over year while overall sales volume rose 7% to around 0.851 million tons.

U.S. Silica is likely to gain from its expansion actions in the Permian Basin. The Sandbox buyout is also expected to make a meaningful contribution in 2018.

However, U.S. Silica expects sequentially lower contribution margin in the first quarter of 2018, as the company expects a 5% sequential contribution margin erosion in the first quarter. Higher cost at Sandbox and increased plant and logistics costs affected contribution margin in the Oil & Gas unit in the last reported quarter.

U.S. Silica’s shares have lost 25.8% in the last three months, underperforming the 3.1% decline recorded by its industry.

Earnings Whispers

Our proven model does not conclusively show that U.S. Silica is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:

Zacks ESP: Earnings ESP for U.S. Silica for the first quarter is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are currently pegged at 47 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: U.S. Silica currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Allegheny Technologies Incorporated (NYSE:ATI) has an Earnings ESP of +9.38% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

FMC Corporation (NYSE:FMC) has an Earnings ESP of +1.43% and carries a Zacks Rank #2.

AK Steel Holding Corporation (NYSE:AKS) has an Earnings ESP of +22.50% and carries a Zacks Rank #3.

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