STOCK TITAN

Smart Sand, Inc. Announces First Quarter 2024 Results

Rhea-AI Impact
(Neutral)
Rhea-AI Sentiment
(Neutral)
Tags
Rhea-AI Summary

Smart Sand, Inc. (NASDAQ: SND) reported its first quarter 2024 financial results, highlighting a significant increase in sales volumes and revenues. The company sold 1.3 million tons of sand, generating $83.1 million in revenue, a 31% increase from the previous quarter. However, the company reported a net loss of $0.2 million, an improvement from the $4.8 million loss in Q4 2023. Adjusted EBITDA rose to $9.3 million, driven by higher sand sales and better utilization of the SmartSystems fleet. Despite the improved operational metrics, free cash flow was negative at $(5.5) million due to increased working capital needs. Smart Sand expects positive free cash flow for the full year 2024 and has earmarked $15-$20 million for capital expenditures.

Positive
  • Sales volumes increased by 31% sequentially to 1.3 million tons.
  • Revenue rose to $83.1 million, up from $61.9 million in Q4 2023.
  • Net loss improved to $0.2 million from a $4.8 million loss in Q4 2023.
  • Adjusted EBITDA increased to $9.3 million, compared to $0.7 million in Q4 2023.
  • Contribution margin doubled from the previous quarter to $18.5 million.
  • Company expects positive free cash flow for the full year 2024.
Negative
  • Free cash flow was negative at $(5.5) million for Q1 2024.
  • Net cash used in operating activities was $(3.9) million, compared to $(2.7) million in Q4 2023.
  • Lower average selling prices offset revenue gains from higher sales volumes.
  • Capital expenditures are estimated to be between $15-$20 million for 2024.

Insights

Smart Sand, Inc. has delivered mixed results in its first quarter of 2024. Although the company reported a slight net loss of $(0.2) million, this showcases a significant improvement from the previous quarters. The notable increase in revenue to $83.1 million, up from $61.9 million in the fourth quarter of 2023, primarily driven by a 31% rise in sand sales volumes, provides a positive outlook for the company's operational efficiency.

The company's adjusted EBITDA rose sharply to $9.3 million, compared to just $0.7 million in the previous quarter, which demonstrates better cost management and higher utilization of their SmartSystems fleet. This is a positive indicator of the company's ability to handle operational costs more effectively.

However, the dip in free cash flow to $(5.5) million and the increase in working capital indicate potential liquidity constraints. The company’s decision to invest in new terminals in Ohio to serve the Utica shale formation might impact free cash flow in the short term, but it positions Smart Sand to capitalize on new market opportunities.

For retail investors, while the company’s performance shows promising signs of recovery, the increased operating costs and the slight net loss might seem concerning. The company’s strategy to improve efficiency and cost structure is important for sustained financial health.

From a market perspective, Smart Sand’s improvement in sales volumes across major basins indicates a strong market demand for frac sand. The 31% sequential rise in tons sold, reaching approximately 1.3 million tons, underscores robust activity in the oil and gas sectors, particularly in shale formations. This demand is pivotal as it reflects the broader industry trends and could be a precursor to sustained growth.

The company's strategy of increasing the utilization of its SmartSystems™ products and services is a key highlight. These advanced logistics solutions not only enhance operational efficiency but also offer a competitive edge in a highly commoditized market. The reported contribution margin increase to $18.5 million from $9.2 million in the previous quarter further solidifies this strategy.

However, the decline in average selling prices poses a challenge as it might squeeze margins in the future. Investors should keep an eye on how Smart Sand manages this aspect amidst fluctuating market conditions.

Overall, the company's market positioning remains strong and the increased volumes and improved margins provide a solid foundation for potential future growth.

  • 1Q 2024 total tons sold of approximately 1.3 million
  • 1Q 2024 revenue of $83.1 million
  • 1Q 2024 net loss of $(0.2) million
  • 1Q 2024 adjusted EBITDA of $9.3 million

YARDLEY, Pa., May 13, 2024 /PRNewswire/ -- Smart Sand, Inc. (NASDAQ: SND) (the "Company" or "Smart Sand"), a fully integrated frac and industrial sand supply and services company, a low-cost producer of high quality Northern White frac sand, a proppant logistics solutions provider through both its in-basin transloading terminals and SmartSystems™ products and services and a provider of industrial product solutions, today announced results for the first quarter of 2024.

"Smart Sand had a strong first quarter," stated Charles Young, Smart Sand's Chief Executive Officer.  "Compared to the fourth quarter of 2023, sales volumes increased by over 30%, contribution margin doubled and Adjusted EBITDA increased by almost $9 million.  We saw an increase in demand for our sand in all the major basins we serve and we increased our utilization of our SmartSytems fleet.  We invested in our new terminals in northeast Ohio and these terminals are now available to allow us to begin serving the Utica shale formation."

"Free cash flow was negatively impacted by the increase in working capital needed in the quarter to support the higher sales levels.  We expect working capital growth to moderate beginning in the second quarter and currently we expect free cash flow to be positive for 2024.  We are focused on being more efficient in our operations and in the utilization of our combined assets to improve our cost structure which should allow us to generate positive cash flow through the operating cycles in our industry."

First Quarter 2024 Highlights

Tons sold were approximately 1,336,000 in the first quarter of 2024, compared to approximately 1,016,000 tons in the fourth quarter of 2023 and 1,195,000 tons in the first quarter of 2023, an increase of 31% sequentially and 12% over the comparable period in 2023.

Revenues were $83.1 million in the first quarter of 2024, compared to $61.9 million in the fourth quarter of 2023 and $82.4 million in the first quarter of 2023. Revenues increased in the first quarter of 2024, compared to the fourth quarter of 2023, primarily due to higher total sand sales and increased utilization of our SmartSystems fleet. First quarter 2024 revenues increased sightly compared to first quarter 2023, due to higher utilization of our SmartSystems fleet and higher sales volumes, which were offset by lower average selling prices.

For the first quarter of 2024, we had net loss of $0.2 million, or $(0.01) per basic and diluted share, compared to a net loss of $4.8 million, or $(0.12) per basic and diluted share, for the fourth quarter of 2023 and a net loss of $3.6 million, or $(0.09) per basic and diluted share, for the first quarter of 2023. For the first quarter of 2024, we had net income before income tax expense due to higher volumes sold and realized savings on cost-saving measures to reduce our overall operating costs. The net loss recorded in the fourth quarter of 2023 was primarily attributable to lower sales volumes. The net loss recorded in the first quarter of 2023 was primarily attributable to a $1.9 million of net loss on disposal of fixed assets as we reconfigured one of our wet plants to increase the efficiency of its operations and upgraded some of our mining equipment in that period.

First quarter 2024 contribution margin of $18.5 million, or $13.85 per ton sold, was an increase compared to $9.2 million, or $9.07 per ton sold, for the fourth quarter of 2023, and first quarter 2023 contribution margin of $17.8 million, or $14.89 per ton sold. The increase in contribution margin, compared to the fourth quarter of 2023, was due primarily higher tons sold in the current period and higher utilization of our SmartSystems fleet. The increase in total contribution margin, compared to the first quarter of 2023, was primarily due to higher utilization of our SmartSystems fleet and an increase in total volumes sold and production cost savings in the current period, partially mitigated by lower average selling prices. 

Adjusted EBITDA was $9.3 million for the first quarter of 2024, compared to $0.7 million for the fourth quarter of 2023 and $8.3 million for the first quarter of 2023. The increase in Adjusted EBITDA in the first quarter of 2024 compared to the prior quarter and the first quarter of 2023 was primarily due to higher volumes of sand sold and increased utilization of our SmartSystems fleet.

Net cash used in operating activities was $(3.9) million in the first quarter of 2024, compared to net cash used in  operating activities of $(2.7) million in the fourth quarter of 2023 and net cash provided by operating activities of $5.1 million in the first quarter of 2023. The decrease in cash flow from operations in the first quarter of 2024 compared to the fourth quarter of 2023 and the first quarter of 2023 was primarily due to the increase in working capital to support sales increases of 31% sequentially and 12% over the comparable period in 2023.

Free cash flow was $(5.5) million for the first quarter of 2024. Net cash used in operating activities was $(3.9) million and capital expenditures were $1.6 million in the first quarter of 2024. We currently estimate that full year 2024 capital expenditures will be between $15.0 million and $20.0 million.

Liquidity

Our primary sources of liquidity are cash on hand, cash flow generated from operations and available borrowings under our ABL Credit Facility. As of March 31, 2024, cash on hand was $4.6 million and we had $6.0 million in undrawn availability on our ABL Credit Facility.

Conference Call

Smart Sand will host a conference call and live webcast for analysts and investors on May 14, 2024 at 10:00 a.m. Eastern Time to discuss its first quarter 2024 financial results. Investors are invited to join the conference by dialing (646)-357-8785 or 1-800-836-8184 and referencing "Smart Sand" when connected to the operator. Additionally, the call may also be streamed via webcast at  https://app.webinar.net/r5vOQAPdGzN or within the "Investors" section of the Company's website at www.smartsand.com. A replay will be available shortly after the call and can be accessed on the "Investors" section of the Company's website.

Forward-looking Statements

All statements in this news release other than statements of historical facts are forward-looking statements that contain our Company's current expectations about our future results, including the Company's expectations regarding future sales. We have attempted to identify any forward-looking statements by using words such as "expect," "will," "estimate," "believe" and other similar expressions. Although we believe that the expectations reflected and the assumptions or bases underlying our forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Such statements are not guarantees of future performance or events and are subject to known and unknown risks and uncertainties that could cause our actual results, events or financial positions to differ materially from those included within or implied by such forward-looking statements.

Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include, but are not limited to, fluctuations in product demand, delays in the completion of certain expansion and improvement projects at our existing facilities or failure to recognize the anticipated benefits of such projects, regulatory changes, adverse weather conditions, increased fuel prices, higher transportation costs, access to capital, increased competition, changes in economic or political conditions, and such other factors discussed or referenced in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed by the Company with the U.S. Securities and Exchange Commission ("SEC") on March 11, 2024, and in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed by the Company with the SEC on May 13, 2024.

You should not place undue reliance on our forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.

About Smart Sand

Smart Sand is a fully integrated frac and industrial sand supply and services company, offering complete mine to wellsite proppant and logistic solutions to our frac sand customers, and a broad offering of products for industrial sand customers. The Company produces low-cost, high quality Northern White sand, which is a premium sand used as a proppant to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells. The Company's sand is also a high-quality product used in a variety of industrial applications, including glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscaping, retail, recreation and more. The Company also offers logistics solutions to our customers through its in-basin transloading terminals and our SmartSystems wellsite storage capabilities. Smart Sand owns and operates premium sand mines and related processing facilities in Wisconsin and Illinois, which have access to four Class I rail lines, allowing the Company to deliver products substantially anywhere in the United States and Canada. For more information, please visit www.smartsand.com.

 

SMART SAND, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



Three Months Ended


March 31, 2024


December 31, 2023


March 31, 2023


(unaudited)


(unaudited)


(unaudited)



Revenues:






Sand revenue

$                79,719


$                60,148


$                80,019

SmartSystems revenue

3,333


1,799


2,331

Total revenue

83,052


61,947


82,350

Cost of goods sold:






Sand cost of goods sold

68,967


57,865


68,738

SmartSystems cost of goods sold

2,274


1,251


1,975

Total cost of goods sold

71,241


59,116


70,713

Gross profit

11,811


2,831


11,637

Operating expenses:






Selling, general and administrative

10,350


10,088


10,764

Depreciation and amortization

674


667


592

Loss (gain) on disposal of fixed asset, net

3


(19)


1,889

Total operating expenses

11,027


10,736


13,245

Operating income

784


(7,905)


(1,608)

Other income (expenses):






Interest expense, net

(489)


(332)


(441)

Other income

96


119


48

Total other expenses, net

(393)


(213)


(393)

Income (loss) before income tax expense (benefit)

391


(8,118)


(2,001)

Income tax expense (benefit)

607


(3,332)


1,598

Net loss

$                   (216)


$                (4,786)


$                (3,599)

Net loss per common share:






Basic

$                  (0.01)


$                  (0.12)


$                  (0.09)

Diluted

$                  (0.01)


$                  (0.12)


$                  (0.09)

Weighted-average number of common shares:






Basic

38,555


38,339


41,272

Diluted

38,555


38,499


41,272

 

SMART SAND, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS



March 31, 2024


December 31, 2023


(unaudited)



(in thousands)

Assets




Current assets:




Cash and cash equivalents

$                  4,598


$                  6,072

Accounts receivable

37,698


23,231

Unbilled receivables

79


2,561

Inventory

25,584


26,823

Prepaid expenses and other current assets

3,210


3,217

Total current assets

71,169


61,904

Property, plant and equipment, net

251,384


255,092

Operating lease right-of-use assets

20,472


23,265

Intangible assets, net

5,678


5,876

Other assets

558


163

Total assets

$              349,261


$              346,300

Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable

$                  9,935


$                16,041

Accrued expenses and other liabilities

15,402


11,024

Deferred revenue

2,375


1,154

Current portion of long-term debt

22,045


15,711

Current portion of operating lease liabilities

9,554


10,536

Total current liabilities

59,311


54,466

Long-term debt

2,445


3,449

Long-term operating lease liabilities

12,070


14,056

Deferred tax liabilities, net

12,697


12,101

Asset retirement obligations

20,172


19,923

Other non-current liabilities

38


38

Total liabilities

106,733


104,033

Commitments and contingencies




Stockholders' equity




Common stock

39


39

Treasury stock

(14,419)


(14,249)

Additional paid-in capital

182,646


181,973

Retained earnings

74,323


74,539

Accumulated other comprehensive loss

(61)


(35)

Total stockholders' equity

242,528


242,267

Total liabilities and stockholders' equity

$              349,261


$              346,300

 

SMART SAND, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS



Three Months Ended


March 31, 2024


December 31, 2023


March 31, 2023


(unaudited)


(unaudited)


(unaudited)


(in thousands)

Operating activities:






Net loss

(216)


(4,786)


(3,599)

Adjustments to reconcile net income to net cash provided by
operating activities:






Depreciation, depletion and accretion of asset retirement
obligations

7,241


7,113


6,553

Amortization of intangible assets

199


197


199

Loss (gain) on disposal of fixed assets

3


(19)


1,889

Amortization of deferred financing cost

26


26


26

Accretion of debt discount

47


46


47

Deferred income taxes

596


(2,041)


1,669

Stock-based compensation

642


1,035


779

Employee stock purchase plan compensation

6


4


7

Changes in assets and liabilities:






Accounts receivable

(9,344)


784


(74)

Unbilled receivables

(2,640)


(2,396)


(1,363)

Inventory

1,240


(868)


101

Prepaid expenses and other assets

(240)


(2,860)


(676)

Deferred revenue

1,220


(863)


(1,058)

Asset retirement obligation settlement


(197)


Accounts payable

(6,730)


5,845


1,165

Accrued and other expenses

4,087


(3,679)


(560)

Net cash (used in) provided by operating activities

(3,863)


(2,659)


5,105

Investing activities:






Purchases of property, plant and equipment

(1,646)


(6,905)


(4,018)

Proceeds from disposal of assets

1


6


1

Net cash used in investing activities

(1,645)


(6,899)


(4,017)

Financing activities:






Repayments of notes payable

(1,340)


(1,483)


(1,513)

Payments under equipment financing obligations

(56)


(71)


(86)

Payment of deferred financing and debt issuance costs

(425)



Proceeds from revolving credit facility

6,000


8,000


14,000

Repayment of revolving credit facility



(7,000)

Proceeds from equity issuance

25



33

Purchase of treasury stock

(170)


(125)


(4,428)

Net cash provided by financing activities

4,034


6,321


1,006

Effect of exchange rate changes on cash and cash equivalents






Net increase in cash and cash equivalents

(1,474)


(3,237)


2,094

Cash and cash equivalents at beginning of period

6,072


9,309


5,510

Cash and cash equivalents at end of period

$                    4,598


$                    6,072


$                  7,604

Non-GAAP Financial Measures

Contribution Margin

We also use contribution margin, which we define as total revenues less costs of goods sold excluding depreciation, depletion and accretion of asset retirement obligations, to measure its financial and operating performance. Contribution margin excludes other operating expenses and income, including costs not directly associated with the operations of the Company's business such as accounting, human resources, information technology, legal, sales and other administrative activities. 

We believe that reporting contribution margin and contribution margin per ton sold provides useful performance metrics to management and external users of our financial statements, such as investors and commercial banks, because these metrics provide an operating and financial measure of our ability, as a combined business, to generate margin in excess of our operating cost base.

Gross profit is the GAAP measure most directly comparable to contribution margin. Contribution margin should not be considered an alternative to gross profit presented in accordance with GAAP. Because contribution margin may be defined differently by other companies in the industry, our definition of contribution margin may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. The following table presents a reconciliation of gross profit to contribution margin.


Three Months Ended


March 31, 2024


December 31, 2023


March 31, 2023


(in thousands, except per ton amounts)

Revenue

$                83,052


$                61,947


$                82,350

Cost of goods sold

71,241


59,116


70,713

Gross profit

11,811


2,831


11,637

Depreciation, depletion, and accretion of asset retirement
obligations included in cost of goods sold

6,697


6,381


6,159

Contribution margin

$                18,508


$                  9,212


$                17,796

Contribution margin per ton

$                  13.85


$                    9.07


$                  14.89

Total tons sold

1,336


1,016


1,195

EBITDA and Adjusted EBITDA

We define EBITDA as net income, plus: (i) depreciation, depletion and amortization expense; (ii) income tax expense (benefit) and other results of operations based taxes; and (iii) interest expense. We define Adjusted EBITDA as EBITDA, plus: (i) gain or loss on sale of fixed assets or discontinued operations; (ii) integration and transition costs associated with specified transactions; (iii) equity compensation; (iv) acquisition and development costs; (v) non-recurring cash charges related to restructuring, retention and other similar actions; (vi) earn-out, contingent consideration obligations; and (vii) non-cash charges and unusual or non-recurring charges. Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors and commercial banks, to assess:

  • the financial performance of our assets without regard to the impact of financing methods, capital structure or historical cost basis of our assets;
  • the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities;
  • our ability to incur and service debt and fund capital expenditures;
  • our operating performance as compared to those of other companies in our industry without regard to the impact of financing methods or capital structure; and
  • our debt covenant compliance, as Adjusted EBITDA is a key component of critical covenants to the ABL Credit Facility.

We believe that our presentation of EBITDA and Adjusted EBITDA will provide useful information to investors in assessing our financial condition and results of operations. Net income is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA should not be considered alternatives to net income presented in accordance with GAAP. Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. The following table presents a reconciliation of net (loss) income to EBITDA and Adjusted EBITDA for each of the periods indicated.


Three Months Ended


March 31, 2024


December 31, 2023


March 31, 2023


(in thousands)

Net loss

$                   (216)


$                (4,786)


$                (3,599)

Depreciation, depletion and amortization

7,200


7,078


6,551

Income tax expense (benefit) and other taxes

607


(3,332)


1,845

Interest expense

496


329


442

EBITDA

$                  8,087


$                   (711)


$                  5,239

Net loss (gain) on disposal of fixed assets

3


(19)


1,889

Equity compensation

582


1,003


736

Acquisition and development costs

308


204


271

Cash charges related to restructuring and retention

107


14


Accretion of asset retirement obligations

249


234


200

Adjusted EBITDA

$                  9,336


$                     725


$                  8,335

Free Cash Flow

Free cash flow, which we define as net cash provided by operating activities less purchases of property, plant and equipment, is used as a supplemental financial measure by our management and by external users of our financial statements, such as investors and commercial banks, to measure the liquidity of our business.

Net cash provided by operating activities is the GAAP measure most directly comparable to free cash flow. Free cash flow should not be considered an alternative to net cash provided by operating activities presented in accordance with GAAP. Because free cash flows may be defined differently by other companies in our industry, our definition of free cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. The following table presents a reconciliation of net cash provided by (used in) operating activities to free cash flow.


Three Months Ended


March 31, 2024


December 31, 2023


March 31, 2023


(in thousands)

Net cash (used in) provided by operating activities

$                (3,863)


$                (2,659)


$                  5,105

Purchases of property, plant and equipment

(1,646)


(6,905)


(4,018)

Free cash flow

$                (5,509)


$                (9,564)


$                  1,087

Investor Contacts:

Lee Beckelman
Chief Financial Officer
(281) 231-2660
lbeckelman@smartsand.com

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/smart-sand-inc-announces-first-quarter-2024-results-302143914.html

SOURCE Smart Sand, Inc.

FAQ

What were Smart Sand's sales volumes in Q1 2024?

Smart Sand sold approximately 1.3 million tons of sand in Q1 2024.

How much revenue did Smart Sand generate in Q1 2024?

Smart Sand generated $83.1 million in revenue in Q1 2024.

What was Smart Sand's net loss in Q1 2024?

Smart Sand reported a net loss of $0.2 million in Q1 2024.

What was Smart Sand's adjusted EBITDA in Q1 2024?

Smart Sand's adjusted EBITDA was $9.3 million in Q1 2024.

Why was Smart Sand's free cash flow negative in Q1 2024?

Free cash flow was negative at $(5.5) million due to an increase in working capital needed to support higher sales levels.

What is Smart Sand's capital expenditure estimate for 2024?

Smart Sand estimates its full-year 2024 capital expenditures to be between $15 million and $20 million.

Smart Sand, Inc.

NASDAQ:SND

SND Rankings

SND Latest News

SND Stock Data

92.72M
42.93M
28.57%
22.53%
0.6%
Oil & Gas Equipment & Services
Mining & Quarrying of Nonmetallic Minerals (no Fuels)
Link
United States of America
YARDLEY