1. SND reported Q1 2025 revenue of $65.6 million, down from $91.4 million. 2. Sales volumes decreased by 27% sequentially due to seasonal trends. 3. Free cash flow of $5.2 million was generated amidst operational adjustments. 4. Expected increase in sales volumes of 10-20% for Q2 driven by market demand. 5. Share buyback and dividends indicate management's commitment to shareholder value.
The significant revenue and net loss drop may negatively impact investor sentiment, resembling past downturns in performance.
Key financial metrics declining can sway investor confidence, impacting stock performance.
Immediate market reaction likely, however, potential sales volume recovery could reverse impact in ensuing quarters.
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 sand, a proppant logistics solutions provider through both its in-basin transloading terminals and SmartSystemsTM products and services, and a provider of industrial product solutions, today announced results for the first quarter of 2025.
"During the first quarter of 2025, Smart Sand continued to demonstrate its commitment to delivering positive free cash flow through the operating cycles of our business and returning value to our shareholders," stated Charles Young, Smart Sand's Chief Executive Officer. "In the quarter, the Company generated $5.2 million in free cash flow and repurchased 135 thousand shares. This follows a $0.10/share dividend we paid to shareholders in the fourth quarter of 2024."
"As expected, sales volumes moderated in the first quarter, following a record breaking fourth quarter in 2024, driven by our customers' strong year-end push. With a robust start to the second quarter, we anticipate sales volumes to rise significantly, increasing between 10% and 20% compared to first quarter results. We expect activity to strengthen in the Marcellus and Utica basins, driven by the timing of customer well completions, and in the Bakken and Western Canadian Sedimentary Basin, boosted by seasonal spring and summer demand in those markets. While we remain proactive in monitoring tariffs, political developments and their potential impact on oil and gas activity, the current economic uncertainty has led us to defer full year guidance at this time. We look forward to providing an update, including possible full year guidance, in a future earnings release."
"Industrial sales marked a record-breaking quarter, with sales volumes increasing 9% sequentially, even as frac sand volumes experienced a temporary dip during the same period" continued Mr. Young. "Although industrial sales currently represent a smaller portion of our business, we expect this growing business line to account for about 5% of our total sales volumes this year. Additionally, our SmartSystems business demonstrated notable progress, with increased fleet utilization and positive contribution margin in the first quarter."
In the first quarter of 2025, tons sold totaled approximately 1,069,000, compared to 1,464,000 tons in the fourth quarter of 2024 and 1,336,000 tons in the first quarter of 2024, reflecting a 27% sequential decrease and a 20% year-over-year decline. This shift in sales volumes was driven by the exceptionally strong demand in the fourth quarter of 2024, which also deferred the typical winter slowdown from the fourth quarter into the first quarter of 2025.
Revenues in the first quarter of 2025 were $65.6 million, compared to $91.4 million in the fourth quarter of 2024 and $83.1 million in the first quarter of 2024. This decline was primarily driven by lower sales volumes and a moderation in average selling prices, reflecting a more balanced supply and demand for Northern White sand over the past twelve months.
Cost of goods sold declined to $62.8 million for the first quarter of 2025, down from $77.9 million for the fourth quarter 2024 and $71.2 million for the first quarter of 2024, primarily reflecting lower sales volumes and reduced logistics costs caused by fewer rail shipments in the quarter.
Gross profit for the first quarter 2025 was $2.8 million compared to $13.5 million in the fourth quarter of 2024 and $11.8 million in the first quarter of 2024. Gross profit declined sequentially and year over year due to the lower sales volumes and moderating average sales prices, partially mitigated by the reduced cost of goods sold.
Operating expenses in the first quarter of 2025 were $9.8 million, consistent with fourth quarter of 2024 and down from $11.0 million in the first quarter of 2024, primarily due to reduced wages and royalties.
Total other expenses for first quarter of 2025 were $0.2 million, down from $0.4 million in both the fourth quarter of 2024 and the first quarter of 2024, primarily reflecting lower interest expenses due to reduced borrowings under our FCB ABL Credit Facility.
In the first quarter of 2025, the Company recorded a net loss of $(24.2) million, or $(0.62) per basic and diluted share. The Company had net income of $3.7 million, or $0.10 per basic and diluted share, for the fourth quarter of 2024 and a net loss of $(0.2) million, or $(0.01) per basic and diluted share, for the first quarter of 2024. The net loss for the current quarter was primarily driven by non-cash deferred income tax expense. Income tax expense / benefit often distorts our results of operations due primarily to deferred tax variances. We are required to record our interim period income tax expense (benefit) in accordance with GAAP, which requires that we estimate our full year effective tax rate and apply that rate to the net income for the period.
Contribution margin in the first quarter of 2025 was $9.6 million, or $8.96 per ton sold, compared to $20.2 million, or $13.80 per ton sold, in the fourth quarter of 2024 and $18.5 million, or $13.85 per ton sold, in the first quarter of 2024. Adjusted EBITDA was $1.4 million in the first quarter of 2025 down from $11.9 million in the fourth quarter of 2024 and $9.3 million in the first quarter of 2024.
The sequential and year-over-year declines in contribution margin, and adjusted EBITDA were primarily driven by lower sales volumes and moderated average selling prices, which reduced revenues, though partially offset by a decrease in cost of goods sold.
In the first quarter of 2025, the Company repurchased 135,196 shares of its common stock for $0.3 million under its current share repurchase program. On October 3, 2024, the Smart Sand Board of Directors approved an eighteen month share repurchase program under which the Company may purchase up to $10.0 million of its ordinary shares (the "Repurchase Program").
The Company's primary sources of liquidity include cash on hand, cash flow from operations, and available borrowings under the Company's FCB ABL Credit Facility. As of March 31, 2025, cash on hand was $5.1 million and the Company had $30.0 million in undrawn availability on the FCB ABL Credit Facility.
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.
For more information, please visit www.smartsand.com.