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U.S. Silica (SLCA) Q3 Earnings Preview: What's in Store?
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U.S. Silica Holdings, Inc. (SLCA - Free Report) is set to release third-quarter 2016 results after the closing bell on Nov 3.
U.S. Silica posted better-than-expected results in second-quarter 2016. Its adjusted loss of 17 cents per share for the quarter was lower than the Zacks Consensus Estimate of a loss of 23 cents, translating into a 26.09% positive surprise. Revenues of $117 million also came ahead of the Zacks Consensus Estimate of $116 million.
U.S. Silica surpassed the Zacks Consensus Estimate in two of the trailing four quarters, while missing in the other two, with an average negative surprise of 26.07%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
U.S. Silica, in its last quarter earnings call, said that it will not provide any guidance for adjusted EBITDA until it gets a clear picture of business activity levels and related demand for its products. The company expects its capital expenditures for 2016 to be in the range of $28–$33 million.
U.S. Silica remains focused on cost reduction and operational efficiency improvement. It is executing many cost improvement projects throughout its supply chain. The company is on track to deliver roughly $50 million of cost improvements in 2016.
Moreover, the company remains focused on preserving capital, improving customer satisfaction and boosting its market position in 2016. U.S. Silica also looks to spend capital prudently in 2016, giving priority to critical maintenance projects.
U.S. Silica’s strong balance sheet also provides it with ample opportunities for making strategic investments that will help expand the life of its flagship operation and ensure its long-term competitive position in the market. The company’s decision to raise capital in first-quarter 2016 enhanced its financial flexibility and reinforced its balance sheet.
As part of its investment strategy, the company completed the purchase of logistics solutions provider, Sandbox Enterprises LLC, in Aug 2016. The acquisition, which provides U.S. Silica with unmatched logistics capabilities, allows the company to offer its customers significantly improved transportation and operating efficiencies and meaningful cost savings relative to existing proppant delivery systems. U.S. Silica expects the acquisition to be modestly accretive to its earnings per share in 2016 and deliver earnings accretion of between 20 cents and 30 cents per share in 2017.
However, U.S. Silica is facing sustained challenges in its Oil and Gas segment. Revenues from this unit slid around 29% in the second quarter, partly due to pricing pressure. Lack of visibility in this business prevented the company from giving earnings guidance for 2016.
Our proven model does not conclusively show that U.S. Silica is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for U.S. Silica is -5.26% as the Most Accurate Estimate stands at 20 cents while the Zacks Consensus Estimate is pegged at 19 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: U.S. Silica currently carries a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some stocks in the basic materials space that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
International Flavors & Fragrances Inc. (IFF - Free Report) has Earnings ESP of +1.42% and carries a Zacks Rank #2.
The Chemours Company (CC - Free Report) has an Earnings ESP of +25.71% and a Zacks Rank #3.
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U.S. Silica (SLCA) Q3 Earnings Preview: What's in Store?
U.S. Silica Holdings, Inc. (SLCA - Free Report) is set to release third-quarter 2016 results after the closing bell on Nov 3.
U.S. Silica posted better-than-expected results in second-quarter 2016. Its adjusted loss of 17 cents per share for the quarter was lower than the Zacks Consensus Estimate of a loss of 23 cents, translating into a 26.09% positive surprise. Revenues of $117 million also came ahead of the Zacks Consensus Estimate of $116 million.
U.S. Silica surpassed the Zacks Consensus Estimate in two of the trailing four quarters, while missing in the other two, with an average negative surprise of 26.07%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
U.S. Silica, in its last quarter earnings call, said that it will not provide any guidance for adjusted EBITDA until it gets a clear picture of business activity levels and related demand for its products. The company expects its capital expenditures for 2016 to be in the range of $28–$33 million.
U.S. Silica remains focused on cost reduction and operational efficiency improvement. It is executing many cost improvement projects throughout its supply chain. The company is on track to deliver roughly $50 million of cost improvements in 2016.
Moreover, the company remains focused on preserving capital, improving customer satisfaction and boosting its market position in 2016. U.S. Silica also looks to spend capital prudently in 2016, giving priority to critical maintenance projects.
U.S. Silica’s strong balance sheet also provides it with ample opportunities for making strategic investments that will help expand the life of its flagship operation and ensure its long-term competitive position in the market. The company’s decision to raise capital in first-quarter 2016 enhanced its financial flexibility and reinforced its balance sheet.
As part of its investment strategy, the company completed the purchase of logistics solutions provider, Sandbox Enterprises LLC, in Aug 2016. The acquisition, which provides U.S. Silica with unmatched logistics capabilities, allows the company to offer its customers significantly improved transportation and operating efficiencies and meaningful cost savings relative to existing proppant delivery systems. U.S. Silica expects the acquisition to be modestly accretive to its earnings per share in 2016 and deliver earnings accretion of between 20 cents and 30 cents per share in 2017.
However, U.S. Silica is facing sustained challenges in its Oil and Gas segment. Revenues from this unit slid around 29% in the second quarter, partly due to pricing pressure. Lack of visibility in this business prevented the company from giving earnings guidance for 2016.
US SILICA HOLDI Price and EPS Surprise
US SILICA HOLDI Price and EPS Surprise | US SILICA HOLDI Quote
Earnings Whispers
Our proven model does not conclusively show that U.S. Silica is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for U.S. Silica is -5.26% as the Most Accurate Estimate stands at 20 cents while the Zacks Consensus Estimate is pegged at 19 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: U.S. Silica currently carries a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some stocks in the basic materials space that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Koppers Holdings Inc. (KOP - Free Report) sports a Zacks Rank #1 and has an Earnings ESP of +18.18%. You can see the complete list of today’s Zacks #1 Rank stocks here.
International Flavors & Fragrances Inc. (IFF - Free Report) has Earnings ESP of +1.42% and carries a Zacks Rank #2.
The Chemours Company (CC - Free Report) has an Earnings ESP of +25.71% and a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>