Fracking Sands U.S. Silica $SLCA Shares Pummeled 7.5 % After Earning Miss

U.S. Silica Holdings Inc. $SLCA shares were pummeled over 7.5 % after it’s second quarter earnings missed expectations. The stocks have been under pressure with frac sand overcapacity concerns.

U.S. Silica Holdings Inc. $SLCA shares were pummeled over 7.5 % after it’s second quarter earnings missed expectations. The U.S. Silica stock price has been falling since the start of the year when it ran up to $61.49 ahead of earnings to the highest price since 2014 as drilling and fracking picked up.

$SLCA reported a large jump in frack sand sales but booming sales had lagged to produce a profit.  Like many plays in the Shale and fracking sectors prices got way ahead of themselves. SLCA rival frac sand provider is Hi-Crush $HCLP has had a similar experience falling over 50% in the same period.

Earnings:  Net income of $29.5 million, or 36 cents a share, compared with a loss of $11.8 million, or 19 cents a share, in the year-ago period. Adjusted earnings were 38 cents a share. Revenue rose to $290.5 million from $117 million in the year-ago period. Analysts surveyed by FactSet had estimated 39 cents a share on revenue of $316.43 million. Compared to the same quarter last year revenue was up 148.3%.

Reaction: U.S. Silica Holdings Inc NYSE: SLCA After-hours26.93 –2.20 (-7.55%)

Just last week the two stocks were crushed after Fairmount Santrol Holdings $FMSA said they would join its rivals and open a new sand mine in the Permian basin. The concern is all this expansion could lead to overcapacity when the mines come online over coming months. Haliburton $HAL also warned in its earnings report that fracking were “putting ion the breaks”

Highlights

  • Overall tons sold totaled 3.638 million, up 63% compared with 2.237 million tons sold in the second quarter of 2016 and an increase of 7% sequentially from the first quarter of 2017.
  • Contribution margin for the quarter was $94.5 million, up 510% compared with $15.5 million in the same period of the prior year and up 60% sequentially from the first quarter of 2017.
  • Adjusted EBITDA was $75.1 million compared with Adjusted EBITDA of $5.4 million for the same period last year and $42.7 millionfor the first quarter of 2017.

Capital Update

As of June 30, 2017, the Company had $598.5 million in cash and cash equivalents and $46.0 million available under its credit facilities. Total debt at June 30, 2017 was $511.1 million. Capital expenditures in the second quarter totaled $135.2 million and were associated largely with engineering, procurement and construction of the Company’s growth projects and maintenance and cost improvement capital projects.

Outlook and Guidance

The Company is updating its full year guidance for capital expenditures. The Company now anticipates that its capital expenditures for the full year 2017 will be in the range of $325 million to $375 million.

About U.S. Silica

U.S. Silica Holdings, Inc., a member of the Russell 2000, is a leading producer of commercial silica used in the oil and gas industry, and in a wide range of industrial applications. Over its 117-year history, U.S. Silica has developed core competencies in mining, processing, logistics and materials science that enable it to produce and cost-effectively deliver over 240 products to customers across our end markets. The Company currently operates nine industrial sand production plants and eight oil and gas sand production plants. The Company is headquartered in Frederick, Maryland and also has offices located in Chicago, Illinois, and Houston, Texas.

Source: http://phx.corporate-ir.net/phoenix.zhtml?c=247793&p=irol-newsArticle&cat=news&id=2290312

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