Smart Sand, Inc. Announces Third Quarter 2022 Results
Smart Sand, Inc. reported strong financial results for Q3 2022, with revenues of $71.6 million and a net income of $2.7 million. Despite a 7% sequential decrease in tons sold, volumes increased by 41% year-over-year. The company's gross profit rose to $11.4 million, driven by higher sales prices and shortfall revenues. Adjusted EBITDA was $11.3 million, reflecting improved operational efficiency. Smart Sand maintained a positive outlook for demand in the North American market, forecasting continued strong performance.
- Q3 2022 revenue of $71.6 million, up from $68.7 million in Q2 2022 and $34.5 million in Q3 2021.
- Net income of $2.7 million in Q3 2022 compared to a net loss of $7.3 million in Q3 2021.
- Adjusted EBITDA of $11.3 million, an increase from $9.2 million in Q2 2022.
- 41% year-over-year increase in tons sold, indicating strong demand and operational growth.
- Sequential decrease of 7% in tons sold compared to Q2 2022.
- Net cash provided by operating activities decreased to $10.8 million in Q3 2022 from $37.5 million in Q3 2021.
- 3Q 2022 revenue of
$71.6 million - 3Q 2022 total tons sold of approximately 1.1 million
- 3Q 2022 net income of
$2.7 million - 3Q 2022 Adjusted EBITDA of
$11.3 million
THE WOODLANDS, Texas, Nov. 08, 2022 (GLOBE NEWSWIRE) -- 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 and a provider of industrial product solutions and proppant logistics solutions through both its in-basin transloading terminals and SmartSystems™ products and services, today announced results for the third quarter 2022.
“Smart Sand delivered solid operating and financial results in the third quarter,” stated Charles Young, Smart Sand’s Chief Executive Officer. “Activity levels continued to be strong at our Oakdale and Utica facilities and we increased the utilization of our SmartSystems last mile fleets during the quarter. Additionally, Smart Sand generated positive Free Cash Flow in the quarter as we continue to execute our plan to increase margins while efficiently managing our costs and capital expenditures. The outlook for completions activity in North America continues to be positive and we expect demand for our products and services to continue to be strong.”
Third Quarter 2022 Results
Tons sold were approximately 1,110,000 in the third quarter of 2022, compared to approximately 1,196,000 tons in the second quarter of 2022 and 790,000 tons in the third quarter of 2021, a decrease of
Revenues were
Gross profit was
For the third quarter of 2022, the Company had net income of
Contribution margin was
Adjusted EBITDA was
Net cash provided by operating activities was
Free cash flow was
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 September 30, 2022, cash on hand was
Conference Call
Smart Sand will host a conference call and live webcast for analysts and investors on November 9, 2022 at 10:00 a.m. Eastern Time to discuss its third quarter 2022 financial results. Investors are invited to listen to a live audio webcast of the conference call, which will be accessible by visiting the “Investors” section of the Company’s website at www.smartsand.com. To access the live webcast, please log in 10 minutes prior to the start of the call to register. Once registration is completed, participants will receive a dial-in number along with a personalized PIN. An archived replay of the call will also be available on our website following the call.
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 our 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, regulatory changes, adverse weather conditions, increased fuel prices, higher transportation costs, access to capital, increased competition, continued effects of the global pandemic, 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, 2021, filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on March 8, 2022, and in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed by the Company with the SEC on November 8, 2022.
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
We are 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. We produce 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. Our 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. We also offer logistics solutions to our customers through our in-basin transloading terminals and our SmartSystems wellsite storage capabilities. We own and operate premium sand mines and related processing facilities in Wisconsin and Illinois, which have access to four Class I rail lines, allowing us 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 | |||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | |||||||||
| (unaudited) | (unaudited) | (unaudited) | |||||||||
| Revenues: | |||||||||||
| Sand sales revenue | $ | 66,663 | $ | 67,111 | $ | 31,343 | |||||
| Shortfall revenue | 2,681 | — | 2,680 | ||||||||
| Logistics revenue | 2,248 | 1,603 | 456 | ||||||||
| Total revenue | 71,592 | 68,714 | 34,479 | ||||||||
| Cost of goods sold | 60,163 | 59,743 | 36,526 | ||||||||
| Gross profit | 11,429 | 8,971 | (2,047 | ) | |||||||
| Operating expenses: | |||||||||||
| Salaries, benefits and payroll taxes | 3,554 | 3,225 | 2,490 | ||||||||
| Depreciation and amortization | 556 | 563 | 352 | ||||||||
| Selling, general and administrative | 3,542 | 3,795 | 3,867 | ||||||||
| Bad debt expense | — | 1 | — | ||||||||
| Total operating expenses | 7,652 | 7,584 | 6,709 | ||||||||
| Operating Income (loss) | 3,777 | 1,387 | (8,756 | ) | |||||||
| Other income (expenses): | |||||||||||
| Interest expense, net | (411 | ) | (406 | ) | (467 | ) | |||||
| Other income | 148 | 56 | 1,792 | ||||||||
| Total other expenses, net | (263 | ) | (350 | ) | 1,325 | ||||||
| Income (loss) before income tax expense (benefit) | 3,514 | 1,037 | (7,431 | ) | |||||||
| Income tax expense (benefit) | 831 | 1,127 | (169 | ) | |||||||
| Net income (loss) | $ | 2,683 | $ | (90 | ) | $ | (7,262 | ) | |||
| Net loss per common share: | |||||||||||
| Basic | $ | 0.06 | $ | — | $ | (0.17 | ) | ||||
| Diluted | $ | 0.06 | $ | — | $ | (0.17 | ) | ||||
| Weighted-average number of common shares: | |||||||||||
| Basic | 42,522 | 42,181 | 41,850 | ||||||||
| Diluted | 42,524 | 42,181 | 41,850 | ||||||||
| SMART SAND, INC. CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| September 30, 2022 | |||||||
| (unaudited) | December 31, 2021 | ||||||
| (in thousands) | |||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 10,371 | $ | 25,588 | |||
| Accounts receivable | 32,902 | 17,481 | |||||
| Unbilled receivables | 1,292 | 1,884 | |||||
| Inventory | 20,618 | 15,024 | |||||
| Prepaid expenses and other current assets | 7,405 | 13,886 | |||||
| Total current assets | 72,588 | 73,863 | |||||
| Property, plant and equipment, net | 267,210 | 262,465 | |||||
| Operating lease right-of-use assets | 28,418 | 29,828 | |||||
| Intangible assets, net | 6,867 | 7,461 | |||||
| Other assets | 315 | 402 | |||||
| Total assets | $ | 375,398 | $ | 374,019 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 11,634 | $ | 8,479 | |||
| Accrued expenses and other liabilities | 16,267 | 14,073 | |||||
| Current portion of deferred revenue | 9,905 | 9,842 | |||||
| Current portion of long-term debt | 6,495 | 7,127 | |||||
| Current portion of operating lease liabilities | 10,560 | 9,029 | |||||
| Total current liabilities | 54,861 | 48,550 | |||||
| Long-term deferred revenue | — | 6,428 | |||||
| Long-term debt | 16,289 | 15,353 | |||||
| Long-term operating lease liabilities | 19,989 | 23,690 | |||||
| Deferred tax liabilities, long-term, net | 19,650 | 22,434 | |||||
| Asset retirement obligation | 25,006 | 16,155 | |||||
| Other non-current liabilities | 42 | 249 | |||||
| Total liabilities | 135,837 | 132,859 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity | |||||||
| Common stock | 42 | 42 | |||||
| Treasury stock | (4,986 | ) | (4,535 | ) | |||
| Additional paid-in capital | 176,992 | 174,486 | |||||
| Retained earnings | 67,263 | 70,593 | |||||
| Accumulated other comprehensive income | 250 | 574 | |||||
| Total stockholders’ equity | 239,561 | 241,160 | |||||
| Total liabilities and stockholders’ equity | $ | 375,398 | $ | 374,019 | |||
| SMART SAND, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| Three Months Ended | |||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | |||||||||
| (unaudited) | (unaudited) | (unaudited) | |||||||||
| (in thousands) | |||||||||||
| Operating activities: | |||||||||||
| Net income (loss) | $ | 2,683 | $ | (90 | ) | $ | (7,262 | ) | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, depletion and accretion of asset retirement obligation | 6,698 | 6,638 | 6,333 | ||||||||
| Amortization of intangible assets | 198 | 199 | 198 | ||||||||
| (Gain) loss on disposal of assets | (466 | ) | (16 | ) | 283 | ||||||
| Provision for bad debt | — | 1 | — | ||||||||
| Amortization of deferred financing cost | 26 | 27 | 26 | ||||||||
| Accretion of debt discount | 47 | 46 | 47 | ||||||||
| Deferred income taxes | 480 | 911 | (1,704 | ) | |||||||
| Stock-based compensation | 808 | 802 | 879 | ||||||||
| Employee stock purchase plan compensation | 7 | 6 | 10 | ||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | (3,264 | ) | (5,563 | ) | (4,965 | ) | |||||
| Unbilled receivables | 6,042 | (3,236 | ) | (19 | ) | ||||||
| Inventories | (3,744 | ) | (3,291 | ) | 556 | ||||||
| Prepaid expenses and other assets | 1,218 | (1,981 | ) | 505 | |||||||
| Deferred revenue | (1,823 | ) | (3,369 | ) | 4,877 | ||||||
| Accounts payable | (445 | ) | 3,422 | (134 | ) | ||||||
| Accrued and other expenses | 2,315 | 3,207 | 1,434 | ||||||||
| Net cash (used in) provided by operating activities | 10,780 | (2,287 | ) | 1,064 | |||||||
| Investing activities: | |||||||||||
| Purchases of property, plant and equipment | (4,398 | ) | (1,369 | ) | (1,933 | ) | |||||
| Proceeds from disposal of assets | 995 | — | 76 | ||||||||
| Net cash used in investing activities | (3,403 | ) | (1,369 | ) | (1,857 | ) | |||||
| Financing activities: | |||||||||||
| Repayments of notes payable | (1,893 | ) | (1,805 | ) | (1,798 | ) | |||||
| Payments under equipment financing obligations | (28 | ) | (25 | ) | (27 | ) | |||||
| Proceeds from revolving credit facility | 3,000 | 3,000 | — | ||||||||
| Proceeds from equity issuance | 27 | — | 25 | ||||||||
| Purchase of treasury stock | (210 | ) | (114 | ) | (6 | ) | |||||
| Net cash provided by (used in) financing activities | 896 | 1,056 | (1,806 | ) | |||||||
| Net increase in cash and cash equivalents | 8,273 | (2,600 | ) | (2,599 | ) | ||||||
| Cash and cash equivalents at beginning of period | 2,098 | 4,698 | 39,278 | ||||||||
| Cash and cash equivalents at end of period | $ | 10,371 | $ | 2,098 | $ | 36,679 | |||||
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.
Historically, we have reported production costs and production cost per ton as non-GAAP financial measures. As we expand our logistics activities and continue to sell sand closer to the wellhead, our sand production costs will only be a portion of our overall cost structure.
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 contribution margin to gross profit.
| Three Months Ended | |||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | |||||||
| (in thousands, except per ton amounts) | |||||||||
| Revenue | $ | 71,592 | $ | 68,714 | $ | 34,479 | |||
| Cost of goods sold | 60,163 | 59,743 | 36,526 | ||||||
| Gross profit | 11,429 | 8,971 | (2,047 | ) | |||||
| Depreciation, depletion, and accretion of asset retirement obligations included in cost of goods sold | 6,340 | 6,283 | 6,145 | ||||||
| Contribution margin | $ | 17,769 | $ | 15,254 | $ | 4,098 | |||
| Contribution margin per ton | $ | 16.01 | $ | 12.75 | $ | 5.19 | |||
| Total tons sold | 1,110 | 1,196 | 790 | ||||||
EBITDA and Adjusted EBITDA
We define EBITDA as net income, plus: (i) depreciation, depletion and amortization expense; (ii) income tax expense (benefit); (iii) interest expense; and (iv) franchise taxes. 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 other acquisition and development costs; 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 EBITDA and Adjusted EBITDA to net income for each of the periods indicated.
The following table presents a reconciliation of EBITDA and Adjusted EBITDA to net income for each of the periods indicated:
| Three Months Ended | |||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | |||||||||
| (in thousands) | |||||||||||
| Net income (loss) | $ | 2,683 | $ | (90 | ) | $ | (7,262 | ) | |||
| Depreciation, depletion and amortization | 6,705 | 6,658 | 6,165 | ||||||||
| Income tax expense/(benefit) | 831 | 1,127 | (169 | ) | |||||||
| Interest expense | 431 | 417 | 484 | ||||||||
| Franchise taxes | 77 | 131 | 42 | ||||||||
| EBITDA | $ | 10,727 | $ | 8,243 | $ | (740 | ) | ||||
| (Gain) loss on sale of fixed assets | (466 | ) | (16 | ) | 281 | ||||||
| Equity compensation | 713 | 636 | 784 | ||||||||
| Employee retention credit | — | — | (1,674 | ) | |||||||
| Acquisition and development costs | 97 | — | — | ||||||||
| Cash charges related to restructuring and retention | 31 | 106 | 8 | ||||||||
| Accretion of asset retirement obligations | 189 | 190 | 332 | ||||||||
| Adjusted EBITDA | $ | 11,291 | $ | 9,159 | $ | (1,009 | ) | ||||
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 free cash flow to net cash provided by operating activities.
| Three Months Ended | |||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | |||||||||
| (in thousands) | |||||||||||
| Net cash provided by (used in) operating activities | $ | 10,780 | $ | (2,287 | ) | $ | 37,544 | ||||
| Purchases of property, plant and equipment | (4,398 | ) | (1,369 | ) | (6,976 | ) | |||||
| Free cash flow | $ | 6,382 | $ | (3,656 | ) | $ | 30,568 | ||||
FAQ
What were Smart Sand's Q3 2022 revenues?
Did Smart Sand report a profit or loss in Q3 2022?
What was the adjusted EBITDA for Smart Sand in Q3 2022?
How did tons sold in Q3 2022 compare to previous quarters?
What is the outlook for Smart Sand in North America?
