U.S. Silica Holdings Inc (NYSE:SLCA) Slides On Back Of Weak Preliminary 4Q Operations


Dallas, Texas 02/05/2014 (FINANCIALSTRENDS) – The $1.4 billion market capped U.S. Silica Holdings Inc (NYSE:SLCA) has seen its stock bleed valuation  at the markets ever since it reported  preliminary fourth quarter 2013 results and provided weaker than expected 2014 guidance.

Making no excuses for the slowdown in the 4Q operations, U.S. Silica Holdings Inc (NYSE:SLCA) president and chief executive officer Bryan Shinn has been quoted to have said that, “Our fourth quarter results were negatively impacted by the severe winter storms in mid- and late December.  The weather reduced well completion activity and drove higher costs across our supply chain.  We also encountered meaningful one-time costs, including a bad debt expense related to a customer bankruptcy.  However, I am pleased to report that volumes appear to have rebounded in January.”

Due to the unforeseen circumstances the firm lowered its guidance for full year 2014 operations; It expects earnings before tax to come in at $180 to $200 million and has limited its cap ex in the new year at $75 to $85 million range. It also expects its tax liability to hover around the 25 percent mark.

The audited results are expected to be announced on 25th February. The downward pegging of the outlook by the firm should not come as a surprise to investors. In the past few weeks, this is the second successive downward revision of the revenue/earnings forecast. This trend warns the market that the management team itself is blindsided to the slowdown in its business and hence are attempting to set expectations before the actual announcement.

The stock has shed close to 14 percent of its market value during trading last week and addend a further 4.7 percent loss during trading on 4th February. At current price points, it is trading 56 percent above its 52 week low price point.