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U.S. Silica's (SLCA) Q3 Earnings Beat, Revenues Lag Estimates

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U.S. Silica Holdings, Inc. (SLCA - Free Report) reported a net loss of $20 million or 27 cents per share in third-quarter 2021, widening from a loss of $14 million or 19 cents in the year-ago quarter.

The third-quarter results were negatively impacted by merger and acquisition-related expenses, plant startup and expansion costs, and other adjustments.

Barring one-time items, adjusted loss per share was 22 cents, narrower than the Zacks Consensus Estimate of a loss of 30 cents.

U.S. Silica generated revenues of $267.3 million, increasing 51% year over year but decreasing 16% sequentially. The top line missed the Zacks Consensus Estimate of $277.5 million.

Segment Highlights

Revenues in the Oil & Gas division were $141.8 million in the third quarter, shooting up 114% year over year but decreasing 27% sequentially. Overall sales volume shot up 127% year over year to 2.91 million tons. Oil & Gas contribution margin fell 18% year over year to $25.7 million or $8.83 per ton and also fell 69% sequentially. The segment experienced a moderation in demand in sand and logistics demand and higher costs, including higher natural gas prices and accelerated plant maintenance.

Revenues in the Industrial & Specialty Products division amounted to $125.5 million in the third quarter, up 14% year over year. Overall sales volume increased 13% year over year to 1.08 million tons and was flat sequentially. The segment’s contribution margin was $41 million or $38.07 per ton in the quarter, down 11% sequentially and 3% year over year. The segment had robust customer demand and continued success with new offerings. It seeks to better combat macro headwinds associated with logistical and supply chain constraints, overall cost inflation, and higher natural gas prices through the implementation of additional price increases and surcharges.

Financials

At the end of the quarter, the company’s cash and cash equivalents were $250.6 million, up 86% year over year. Long-term debt was $1,195.1 million, down 1.1% year over year.

Outlook

Looking forward to the fourth quarter and 2022, U.S. Silica predicts sustainable long-term growth in its segments. It has a strong portfolio of industrial and specialty products and a solid pipeline of new products. It is focused on generating positive free cash flow and bolstering its balance sheet in 2022.

The Oil & Gas unit is progressing through a transitional year and strong commodity prices along with an expected rise in consumer spending are anticipated to lead to a favorable well-completion environment next year, U.S. Silica noted.

Price Performance

Shares of U.S. Silica have skyrocketed 238.5% in the past year, outperforming the industry’s growth of 14%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank & Stocks to Consider

Currently, U.S. Silica carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Methanex Corporation (MEOH - Free Report) , Olin Corporation (OLN - Free Report) , and Arkema S.A. (ARKAY - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has a projected earnings growth rate of 429% for the current year. The company’s shares have jumped 51.7% over a year.

Olin has a projected earnings growth rate of 740% for the current year. The company’s shares have grown 229.3% over a year.

Arkema has a projected earnings growth rate of 88.7% for the current year. The company’s shares have surged 110.3% over a year.