U.S. Silica Earnings Hit By Permian Bottlenecks and Budget Constraints

U.S. Silica Holdings shares were pummeled over 10.5 % after it’s third quarter earnings missed expectations. The stocks have been under pressure with frac sand overcapacity concerns and pipeline bottlenecks and budget constraints hurt $SLCA.

U.S. Silica Holdings shares were pummeled over 10.5 % after it’s third quarter earnings missed expectations. The stocks have been under pressure with frac sand overcapacity concerns and pipeline bottlenecks and budget constraints hurt $SLCA.

US Silica Plant

Image: U.S. Silica’s Tyler, Texas Plant

U.S. Silica Holdings Inc NYSE: SLCA Q3 Earnings Miss

$0.08 Missed Exp $0.64 EPS on $423.2 Mil Missed $472.43 Million Revenue Forecast

Earnings 

U.S. Silica (NYSE: SLCA) reported Q3 EPS of $0.08, $0.54 worse than the analyst estimate of $0.62. Revenue for the quarter came in at $423.2 million versus the consensus estimate of $472.43 million.  

Market Reaction > U.S. Silica Holdings Inc NYSE: SLCA

Closed Week at $14.21 off 52 Wk Low of $12.89

Highlights

“In Oil and Gas sand, we grew volumes 10% sequentially and continued to ramp our new Permian basin mining facilities. This achievement was impressive given the slowdown in well completions driven by Permian well offtake capacity issues and E&P 2018 budget exhaustion. While we did experience pricing pressure during the quarter on Northern White sand and spot sales, our contracts held up well.” – CEO and President Brian Shinn

  • Revenue of $423.2 million for the third quarter of 2018 compared with $427.4 million in the second quarter of 2018, down 1% sequentially and up 23% over the third quarter of 2017.
  • Overall tons sold of 4.804 million for the third quarter of 2018 compared with 4.489 million tons sold in the second quarter of 2018, up 7% sequentially and 18% over the third quarter of 2017.
  • Contribution margin of $138.2 million for the third quarter of 2018 compared with $155.9 million in the second quarter of 2018, down 11% sequentially and up 15% over the third quarter of 2017.
  • Adjusted EBITDA of $105.5 million for the third quarter of 2018 compared with Adjusted EBITDA of $123.6 million in the second quarter of 2018 and $96.7 million in the third quarter of 2017.

Outlook

“I am positive on the outlook for our Oil and Gas businesses in 2019. While we will likely see more white space on our customer\’s calendars for the rest of this year, we believe these near-term challenges are transitory. Budgets will reset in 2019, takeaway capacity will be expanded and the record inventory of DUCs will begin to be completed. All of which should provide positive catalysts for sand and logistics demand. Further, we expect to see more higher cost Northern White sand capacity idled in the next few quarters, which will help balance supply and demand and support stable pricing,” concluded Shinn.

OPEC Oct US Rig Counts

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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