Hot Stock Analysis: U.S. Silica Holdings Inc. (NYSE: SLCA)

KATY, Texas, May 16, 2020 – Shares of U.S. Silica Holdings Inc. (NYSE: SLCA) declined -5.61% to $1.85. The stock grabbed the investor’s attention and traded 1.644M shares as compared to its average daily volume of 2.50M shares. The stock’s institutional ownership stands at 95.30%.

U.S. Silica Holdings Inc. (NYSE: SLCA) reported revenue of $361.80M for the third quarter of 2019 contrast with $394.90M in the second quarter of 2019, down 8% sequentially and down 14% from the third quarter of 2018.

Third Quarter 2019 Highlights:

Total Company

  • Overall tons sold of 4.850M for the third quarter of 2019 contrast with 4.904M tons sold in the second quarter of 2019, down 1% sequentially and up 1% from the third quarter of 2018.
  • Contribution margin of $95.00M for the third quarter of 2019 contrast with $121.60M in the second quarter of 2019, down 22% sequentially and down 31% from the third quarter of 2018.
  • Net loss of $23.00M, or $(0.31) per basic and diluted share, for the third quarter of 2019, contrast with net income of $6.30M, or $0.08 per basic and diluted share, for the third quarter of 2018.
  • Adjusted EBITDA of $58.40M for the third quarter of 2019 contrast with $85.50M in the second quarter of 2019, down 32% sequentially and down 45% from the third quarter of 2018.

Industrial and Specialty Products:

  • Revenue of $119.10M for the third quarter of 2019 contrast with $121.80M in the second quarter of 2019, down 2% sequentially and down 1% from the third quarter of 2018.
  • Tons sold totaled 0.954M for the third quarter of 2019 contrast with 0.972M tons sold in the second quarter of 2019, down 2% sequentially and down 3% from the third quarter of 2018.
  • Segment contribution margin of $44.40M, or $46.52 per ton, for the third quarter of 2019 contrast with $50.10M in the second quarter of 2019, down 11% sequentially and down 9% from the third quarter of 2018.

The Industrial & Specialty Products segment practiced an 11% sequential decline in contribution margin. A combination of unfavorable product volume and mix, coupled with higher plant costs, counting an inventory write off of $1.30M dollars, negatively influenced the third quarter of 2019. The Company continues to focus on accelerating the organic growth of the Industrial & Specialty Products business. For example, the Company recently signed a five-year contract with a global fiberglass manufacturer, supported by the expansion of fine-ground capacity at the Columbia, South Carolina facility.

Oil & Gas

  • Revenue of $242.70M for the third quarter of 2019 contrast with $273.10M in the second quarter of 2019, down 11% sequentially and down 20% from the third quarter of 2018.
  • Tons sold of 3.8960M for the third quarter of 2019 contrast with 3.9320M tons sold in the second quarter of 2019, down 1% sequentially and up 2% from the third quarter of 2018.
  • Segment contribution margin of $50.60M, or $12.98 per ton, for the third quarter of 2019 contrast with $71.50M in the second quarter of 2019, down 29% sequentially and down 44% from the third quarter of 2018.

In the Oil & Gas segment, the Company sold 3.90M tons in the third quarter, down 1% percent from the prior quarter.  Per ton pricing was negatively influenced in the third quarter as multiple new mines came fully online in West Texas, exacerbating an already oversupplied sand market.  In Addition To, demand deteriorated, because of slowing well completion activity, prompted by E&P budget exhaustion.  These factors, combined with lower SandBox load volumes, led to a 29% sequential decline in contribution margin.  While the result was negative, the Company is happy to have added 15 new customers in the third quarter, six of which are also utilizing SandBox, our industry leading last-mile logistics solution.

Capital Update:

As of September 30, 2019, the Company had $187.30M in cash and cash equivalents and $93.50M available under its credit facilities. Total debt outstanding under our credit facilities as of September 30, 2019 was $1.2510B.

During the third quarter, the Company accomplished a voluntary loan repurchase offer for $10.00M of principal of the term loan portion of its senior secured credit facility. The debt was stepped down at a discount to par mostly using excess cash on hand.

Capital expenditures in the third quarter totaled $19.50M and were mainly for engineering, procurement and construction of the Company’s growth projects, mainly at the Lamesa, Texas mine; equipment to expand SandBox operations; several growth projects in its Industrial & Specialty Products segment; and other maintenance and cost improvement capital projects. During the third quarter, the Company generated $33.90M in cash flow from operations.

The Company’s forecast of capital expenditures for the full year 2019 is anticipated to be less than the $125.0M formerly expected.

SLCA has a market value of $135.91M while its EPS was booked as $-5.21 in the last 12 months. The stock has 73.47M shares outstanding. In the profitability analysis, the company has gross profit margin of 24% while net profit margin was -28.00%. Beta value of the company was 2.56; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 3.30.

Robert  Campbell

I am Robert Campbell and I’m passionate about capitalism and news with over 4 years in the industry starting as a writer working my way up into senior positions. I am the driving force behind Liberty Headquarters with a vision to broaden the company’s readership throughout 2016. I am an editor and reporter of free markets, conservative news and gun rights category. Address: 3516 Candlelight Drive, Houston, TX 77042, USA Phone: (+1) 281-430-8376 Email: robertcampbell@libertyheadquarters.com

Robert  Campbell

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