U.S. Silica's (SLCA) Earnings And Sales Beat Estimates In Q4

U.S. Silica Holdings, Inc. (NYSE:SLCA) reported net loss of $293.4 million or $3.99 per share in fourth-quarter 2019, wider than a loss of $256.1 million or $3.44 per share in the year-ago quarter.

Barring one-time items, adjusted loss per share was 53 cents, which was narrower than the Zacks Consensus Estimate of a loss of 56 cents.

U.S. Silica generated revenues of $339.1 million, down 5.1% year over year. Nevertheless, the figure beat the Zacks Consensus Estimate of $296.1 million.

2019 Highlights

The company reported net loss of $329.1 million or $4.49 per share in 2019, wider than net loss of $200.8 million or $2.63 in 2018.

Revenues fell 6.5% year over year to $1.47 billion in 2019.

Segment Highlights

Revenues in the Oil & Gas sand division amounted to $234.3 million, down 3.8% year over year. Overall sales volume fell 9% year over year to 3.362 million tons. Oil & Gas contribution margin increased 34% sequentially and 25% year over year to $68 million.

Revenues in the Industrial and Specialty Products division amounted to $104.8 million in the fourth quarter, down 8% year over year. Overall sales volume fell 10% year over year to 0.842 million tons. The segment’s contribution margin was $39.1 million in the quarter, down around 12% both sequentially and year over year.

Financials

At the end of 2019, the company’s cash and cash equivalents declined 8.3% year over year to $185.7 million. Long-term debt was $1,214 million, up 2.6% year over year.

The company also generated operating cash flow of $27.7 million in the fourth quarter.

Outlook

U.S. Silica is making substantial progress in repositioning its Oil & Gas business and right sizing its proppant volumes for matching the current and expected demand from well completions. In 2020, it expects proppant demand to rise around 5% year over year.

In 2019, the company’s last-mile business made considerable investments in next generation equipment for Sandbox. In 2020, U.S. Silica expects pricing pressure in Sandbox to persist.

For the Industrial and Specialty Products business, the company is shifting toward higher margin products. It is also pursuing many growth initiatives like using innovative technology in milling, which will expand its capabilities and differentiate products.

The company plans to increase the base Industrial and Specialty Products business through market share gains, price hikes, focus on new, higher-margin products and small, bolt-on acquisitions.

Price Performance

Shares of U.S. Silica have plunged 66% in the past year compared with the industry’s 8.9% 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 Daqo New Energy Corp (NYSE:DQ) , Sibanye Gold Limited (NYSE:SBSW) and Impala Platinum Holdings Limited (OTC:IMPUY) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has an expected long-term earnings growth rate of 29%. The company’s shares have surged 92.6% in the past year.

Sibanye has an expected long-term earnings growth rate of 20.4%. Its shares have returned 125.5% in the past year.

Impala Platinum has an expected long-term earnings growth rate of 26.5%. The company’s shares have surged 158.9% in the past year.

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