Smart Sand Inc.—weak in the 4Q but stronger for the year

Smart Sand, Inc., the frac sand supply company with an operation in El Reno, Oklahoma as well as in Texas, Wisconsin, Illinois, Ohio and Pennsylvania reported fourth quarter revenue of nearly $62 million and $296 million for the year.

“Smart Sand delivered strong operating and financial results for the full year 2023” stated Charles Young, Smart Sand’s Chief Executive Officer. Stronger and improved over 2022.

In the fourth quarter, the company had sales of 1,016,000 tons of sand for oil and gas drilling operations throughout the country. For the year, Smart Sand sold and delivered 4,514,000 tons. But a loss of revenue was recorded for the fourth quarter.

For the fourth quarter of 2023, the Company had a net loss of $(4.8) million, or $(0.12) per basic and diluted share, compared to net income of $6.7 million, or $0.18 per basic and diluted share, for the third quarter of 2023, and net income of $2.6 million, or $0.06 per basic share and diluted share for the fourth quarter 2022.

For the fourth quarter of 2023, the company had negative $9.6 million in free cash flow, spending $2.7 million in cash flow on operations and $6.9 million on capital expenditures.  As of December 31, 2023, cash on hand totatled $6.1 million and $12.0 million in undrawn availability on the existing credit facility.

“Sales volumes for the year were a record for the Company,” said Young.

“During the year we gained access to the Canadian frac sand market through the commencement of operations at our Blair, Wisconsin facility. We improved our logistics capabilities in the Marcellus and Utica formations of the Appalachian Basin by expanding our Waynesburg, Pennsylvania terminal.”

He also confirmed sales were lower in the fourth quarter because of what he called “seasonal weather-related issues” as well as a “general slowdown in overall market activity from lower customer spending.” Young said however, the market activity picked up in early 2024.

Total revenue was $296.0 million for the full year 2023, compared to $255.7 million for the full year of 2022. Sand sales revenue in 2023 was $283.2 million compared to $243.2 million in 2022. Total revenue and sand sales both increased by 16% year-over-year, as a result of increased sand sales volumes and higher prices primarily driven by increased market activity in the operating basins that the Company serves.

Total tons sold were 4,514,000 for the full year 2023, compared to full year 2022 total tons sold of 4,333,000, an increase of 4% year-over-year.

Net income was $4.6 million, or $0.12 per basic and diluted share, for the full year 2023, compared with net loss of $(0.7) million, or $(0.02) per basic and diluted share, for the full year 2022. The increase in net income was primarily from increased total volumes sold and higher average sales prices for our sand.

Net cash provided by operating activities was $31.0 million for the year ended December 31, 2023, derived from net income of $4.6 million, which includes net non-cash items of $27.8 million and $(1.4) million in changes in operating assets and liabilities. The net cash provided by operating activities in 2022 was $5.4 million. The increase in net cash provided by operating activities in 2023, compared to 2022, was primarily due to higher net income and reduced use of cash from changes in assets and

Total revenue was $61.9 million in the fourth quarter of 2023, compared to third quarter of 2023 revenue of $76.9 million. Total revenue decreased 19% sequentially due to lower sand sales volumes and lower shortfall revenue. Fourth quarter 2023 total revenue decreased by 16% compared to fourth quarter 2022 revenues of $73.8 million. Lower revenue year-over-year was due primarily to lower tons sold.

Tons sold in the fourth quarter of 2023 were 1,016,000, a 17% decrease compared to third quarter 2023 tons sold of 1,219,000. Tons sold in the fourth quarter of 2023 decreased by 14% compared to 1,175,000 tons sold in the fourth quarter of 2022. Sales volumes were lower in the current period due primarily to lower market activity from weather-related slowdowns and reduced customer spending as accelerated spending earlier in the year led to reduced activity in the fourth quarter.

Contribution margin was $9.2 million, or $9.07 per ton sold, for the fourth quarter of 2023 compared to $21.0 million, or $17.20 per ton sold, for the third quarter of 2023 and $17.4 million, or $14.77 per ton sold, for the fourth quarter of 2022. Adjusted EBITDA was $1.0 million for the fourth quarter of 2023, compared to $13.3 million for the third quarter of 2023 and $10.7 million for the fourth quarter of 2022.

For the full year 2023, we had positive free cash flow of $8.0 million, generating $31.0 million in cash flow from operations while spending $23.0 million on capital expenditures.

The post Smart Sand Inc.—weak in the 4Q but stronger for the year first appeared on Oklahoma Energy Today.