Producer and supplier of sand, U.S. Silica Holdings, Inc. (SLCA, Financial) declined -34.97% in the quarter. Weakened demand across the energy patch, including markets in West Texas have driven an oversupply of sand resulting in pricing pressure and margin degradation. While a key component of our investment thesis in SLCA continues to be driven by its Industrial segment, we underestimated the impact that weakness in oil and gas could have on the cost structure of the Industrial business. Looking ahead, SLCA remains in a solid position from a liquidity perspective. They do not have any maturities due until 2025, and the balance sheet and cash on hand remain sound. At current trading levels, we believe SLCA is well positioned from a risk/reward standpoint.
From John Rogers (Trades, Portfolio)' Ariel Fund fourth-quarter 2019 commentary.
