U.S. Silica (SLCA) Misses Q1 EPS by 55c, Revenues Miss

U.S. Silica (NYSE: SLCA) reported Q1 EPS of ($0.98), $0.55 worse than the analyst estimate of ($0.43). Revenue for the quarter came in at $269.6 million versus the consensus estimate of $320.02 million.

First Quarter 2020 Highlights

Total Company

• Revenue of $269.6 million for the first quarter of 2020 compared with $339.1 million in the fourth quarter of 2019, down 20% sequentially and down 29% from the first quarter of 2019.
• Overall tons sold of 4.161 million for the first quarter of 2020 compared with 4.204 million tons sold in the fourth quarter of 2019, down 1% sequentially and down 14% from the first quarter of 2019.
• Contribution margin of $76.2 million for the first quarter of 2020 compared with $107.1 million in the fourth quarter of 2019, down 29% sequentially and down 26% from the first quarter of 2019.
• Net loss of $72.3 million, or $0.98 loss per basic and diluted share, for the first quarter of 2020, compared with net loss of $19.3 million, or $0.26 loss per basic and diluted share, for the first quarter of 2019.
• Adjusted EBITDA of $48.2 million for the first quarter of 2020 compared with $73.6 million in the fourth quarter of 2019, down 34% sequentially and down 30% from the first quarter of 2019.

"I'd like to congratulate my colleagues on delivering a solid first quarter in 2020 while appropriately prioritizing personal health and safety," said Bryan Shinn, chief executive officer. "Despite the COVID-19 pandemic and energy market headwinds, we experienced minimal operational disruptions during the quarter thanks to the efforts of our team. While we recognize the challenges that lie ahead in our Oil & Gas segment, we are encouraged by the resilience of our Industrial & Specialty Products segment, which delivered double-digit profitability growth in the quarter."

"Looking ahead, we expect that our diatomaceous earth and specialty clay product lines in particular will continue to perform relatively well, spurred by strong demand for food and beverage filtration media. In our Oil & Gas segment, we expect that volumes and loads will directionally track completions activity, but, as with the 2015-2016 oilfield downturn, we expect to gain market share this year due to our attractive, low cost offerings," he added.

"We also remain laser focused on liquidity management and have rapidly aligned our cost structure and capacity with changing customer demand, which we believe will allow us to emerge from this downturn leaner, stronger and well-positioned to capitalize when the inevitable rebound occurs," he concluded.

Outlook and Guidance

Due to the sharp decline in crude oil prices and the expected reduction in well completions, the Company expects its Oil & Gas segment sales next quarter to decline sharply. However, the Company's costs in this segment are highly variable and the Company will continue to right-size its operations accordingly. In response to these challenging conditions, the Company has idled or curtailed production at several facilities, reducing its staffed annual Oil & Gas production capacity from 24 million tons to 6 million tons.

The Company expects a limited impact to its Industrial & Specialty Products segment, with sales volumes generally tracking GDP trends. The Company expects a decline in the segment's second-quarter sales as a result of temporary shutdowns by some customers in April and May related to COVID-19 and a slowing demand environment for some end markets like building products and automotive. However, the Company expects demand for other products, including diatomaceous earth and specialty clays used for the filtration of food and beverages, to remain relatively strong.

For earnings history and earnings-related data on U.S. Silica (SLCA) click here.

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