Smart Sand (SND) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $73.8 million, nearly flat year-over-year, with 1.3 million tons sold and higher volumes offset by lower prices and a shift in sales mix.

• Adjusted EBITDA rose to $11.9 million, with contribution margin at $19.8 million ($15.53/ton), and free cash flow turned positive at $13.5 million.

• Net loss for Q2 2024 was $0.4 million, compared to net income of $6.3 million in Q2 2023, mainly due to higher tax expense and a loss on extinguishment of debt.

• Cost structure improvements and efficiency initiatives drove margin and EBITDA gains.

• Expansion into new markets, including operational terminals in Ohio and growth in Canada and Utica, supports long-term goals.

Financial highlights

• Q2 2024 gross profit was $13.1 million, up 3% year-over-year, with gross margin at 17.7%.

• Operating expenses were $9.5 million, down from $11 million in Q1.

• Cash provided by operating activities was $14.9 million, with $13.5 million in free cash flow after $1.4 million in capex.

• Ended Q2 with $6.3 million in cash and $18 million undrawn on the ABL Credit Facility.

• Contribution margin per ton improved to $15.53 in Q2 from $13.85 in Q1.

Outlook and guidance

• Expect to remain free cash flow positive for the full year 2024.

• Q3 sand sales volumes projected at 1.0–1.2 million tons, with contribution margin expected in the $14–$16 per ton range.

• Full-year capital expenditures anticipated at $10–$13 million, focused on process improvements and terminal buildouts.

• Anticipate some slowdown in natural gas basins in 2H 2024, but long-term fundamentals remain strong.

• Plans to announce shareholder return initiatives later in the year.