It has been about a month since the last earnings report for Silica Holdings (SLCA - Free Report) . Shares have added about 15.7% 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 its most recent earnings report in order to get a better handle on the important catalysts.
U.S. Silica Earnings & Sales Trail Estimates in Q3
U.S. Silica saw its profits drop in the third quarter of 2018. The company logged a profit of $6.3 million or 8 cents per share in the quarter, down roughly 85% from $41.3 million or 50 cents in the year-ago quarter. The bottom line in the reported quarter was hurt by costs associated with plant capacity expansion and merger and acquisition-related expenses.
Barring one-time items, adjusted earnings came in at 44 cents per share, which trailed the Zacks Consensus Estimate of 59 cents.
U.S. Silica reported revenues of $423.2 million for the quarter, up around 23% year over year. However, it missed the Zacks Consensus Estimate of $472.2 million.
Revenues in the Oil & Gas division were $302.5 million in the quarter, up roughly 6% year over year. Overall sales volume rose 21% year over year to 3.821 million tons.
Oil & Gas contribution margin was $89.6 million in the quarter, down 22% sequentially and 7% year over year. The company witnessed significantly lower pricing in the back half of the quarter.
Revenues in the ISP division came in at $120.7 million, up 106% year over year. Overall sales volume rose 6% year over year to 0.983 million tons. ISP contribution margin went up 18% sequentially and 103% year over year to $48.7 million, driven by strong legacy business and the EP Minerals acquisition.
U.S. Silica had $345.6 million in cash and cash equivalents at the end of the quarter, down roughly 25% year over year.
Long-term debt rose to roughly $1,251.1 million from $506.6 million in the prior-year quarter. Total debt was $1,264.5 million. Capital spending in the quarter was $61.6 million. U.S. Silica also generated operating cash flow of $94.7 million during the quarter.
U.S. Silica expects capital expenditures for 2018 to be roughly $350 million. It also sees annual effective tax rate to be 11% for the year.
The company envisions a seasonal slowdown in ISP volumes and a seasonal decline in higher margin ground product sales in the fourth quarter as customers idle production facility for major maintenance and holidays.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -109.37% due to these changes.
Currently, Silica Holdings has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Silica Holdings has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.