Hi-Crush Inc. (HCR) Down 76.1% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Hi-Crush Inc. (HCR). Shares have lost about 76.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Hi-Crush Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Hi-Crush's Q4 Earnings Beat Estimates, Sales Down Y/Y

Hi-Crush reported net loss of $21.4 million or 21 cents per share in fourth-quarter 2019, which was wider than net loss of $9.9 million or 8 cents in the year-ago quarter.

Barring one-time items, adjusted loss per share was 13 cents, which was narrower than the Zacks Consensus Estimate of a loss of 17 cents.

Revenues declined 22.7% year over year to $125.5 million.

Total frac sand sold during the quarter was 2,106,622 tons, up 6.6% year over year. Contribution margin per ton sold declined 37.1% year over year to $9.02 in the quarter. Average sales price was $37 per ton in the fourth quarter, down 14% sequentially. The company’s results were hurt by seasonally weaker activity levels across the industry.

2019 Highlights

The company registered a net loss of $413.6 million or $4.10 per share in 2019 against a net income of $137.6 million or $1.42 in 2018.

Total revenues fell 24.5% year over year to $636.4 million in 2019.

Operational Update

In the fourth quarter, truckloads of frac sand delivered totaled 63,076, which was driven by activity across all major basins, sales of frac sand from operating production facilities and deployment of next generation NexStage silo sets.

Truckloads delivered by Pronghorn Energy Services declined 19% sequentially in the fourth quarter. As of Dec 31, 2019, the company operated last mile crews in the Permian, Marcellus/Utica, Eagle Ford, Mid-Con, Powder River and Bakken regions.

During the reported quarter, Hi-Crush also deployed next generation NexStage silos to a major E&P in the Permian basin.

Financial Position

At the end of 2019, the company had total liquidity of $101.5 million. This includes $57.6 million of cash along with $43.9 million in available borrowing capacity under its senior secured revolving credit facility (also known as the ABL Facility).

Long-term debt was $445.3 million at the end of 2019 compared with $443.3 million at the end of 2018.

Net cash provided by operating activities in 2019 were $29.9 million, down from $237.3 million in the prior year.

Stock Repurchase

The company repurchased 348,653 common shares worth $0.2 million in the fourth quarter. As of Dec 31, 2019, Hi-Crush has repurchased a total of 1,526,384 common shares for total consideration of $3.4 million. The stock repurchase program had $21.6 million of remaining authorized capacity at the end of 2019.

Outlook

For first-quarter 2020, the company expects a sequential increase in the delivery of truckloads, sand sales, equipment lease revenues, contribution margin per ton and adjusted EBITDA. Higher logistics activity with new customer work, deployment of more silo sets and overall increase in customer activity are likely to support the upside.

Notably, Hi-Crush expects truckloads delivery to rise by more than 25% during the first quarter. Frac sand volumes sold is projected to increase 15-25% to 2.4-2.6 million tons.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted 23.81% due to these changes.

VGM Scores

At this time, Hi-Crush Inc. has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, 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.

Outlook

Hi-Crush Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.