A month has gone by since the last earnings report for Silica Holdings (SLCA). Shares have added about 29.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Silica Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
U.S. Silica's Q2 Earnings & Revenues Surpass Estimates
U.S. Silica reported a net loss of $32.4 million or 44 cents per share in second-quarter 2020 as against a net income of $6.2 million or 8 cents per share in the year-ago quarter.
Barring one-time items, adjusted loss per share was 9 cents, which was narrower than the Zacks Consensus Estimate of a loss of 55 cents.
U.S. Silica generated revenues of $172.5 million, down 56% year over year. However, the figure surpassed the Zacks Consensus Estimate of $144.9 million.
Segment Highlights
Revenues in the Oil & Gas division amounted to $72.5 million, down 73% year over year. Overall sales volume fell 72% year over year to 1.112 million tons. Oil & Gas contribution margin declined 20% sequentially and 63% year over year to $26.2 million or $23.53 per ton.
Revenues in the Industrial and Specialty Products division amounted to $100 million in the quarter, down 18% year over year. Overall sales volume fell 19% year over year to 0.792 million tons. The segment’s contribution margin was $35.1 million or $44.34 per ton in the quarter, down 19% sequentially and down 30% year over year.
Financials
At the end of the second quarter, the company’s cash and cash equivalents were $158.7 million, down 16.2% year over year. Long-term debt was $1,210.5 million, down 1.6% year over year.
Outlook
In the Oil & Gas segment, U.S. Silica predicts a mid-single-digit percentage rise in third-quarter proppant volumes and a meaningful increase in SandBox loads. Moreover, the company expects contribution margin from the unit to be down sequentially.
In the Industrial & Specialty Products segment, it sees a recovery in third-quarter whole grain and higher-margin ground silica volumes. Further, the company expects sustained strength in its diatomaceous earth and specialty clay business. As a result, it expects the contribution margin from the segment to be up 5-10% sequentially in the third quarter. Further, the company stated that it expects volumes and profitability for the fourth quarter to be similar to the levels of the third quarter.