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Smart Sand, Inc. (SND)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 47% year over year to $91.4M and 45% sequentially; Smart Sand returned to profitability with $0.10 basic EPS and delivered its highest quarterly volumes ever at 1.464M tons .
  • Contribution margin per ton improved to $13.80 (vs. $11.09 in Q3 and $9.07 in Q4 2023), and Adjusted EBITDA jumped to $11.9M (vs. $5.7M in Q3 and $0.7M in Q4 2023), driven by higher volumes and lower operating expenses .
  • Management guided 2025 sales volumes to flat to up ~5% versus 2024 and expects contribution margin per ton consistent with 2024; 2025 capex planned at $13–$17M, focused on mining expansion and terminals .
  • The company discontinued earnings calls starting with Q4 2024; catalysts include volume recovery in Marcellus/Utica/Canada, LNG expansion, and AI data center power demand that could tighten Northern White fine-mesh sand supply and support pricing in 2025 .

What Went Well and What Went Wrong

What Went Well

  • Record quarterly and annual volumes; sequential revenue +45% and net income of $3.7M with $0.10 basic EPS in Q4 2024, aided by $4.8M contractual charges for volumes above thresholds and improved pricing .
  • Contribution margin per ton expanded to $13.80 and Adjusted EBITDA to $11.9M in Q4; management attributed the outperformance to higher sales volumes and lower operating expenses from cost initiatives .
  • Strategic footprint expansion: strong activity in Bakken/Marcellus plus new markets (Utica and Canada) representing ~11% of 2024 volume; CEO: “We currently expect to generate positive free cash flow in 2025 and will continue to look for opportunities to return capital back to our shareholders.” .

What Went Wrong

  • Q4 operating cash flow was $1.0M and free cash flow was negative $(0.8)M on higher working capital needs and capex; cash fell to $1.6M at year-end (with $30M undrawn availability) .
  • Sand prices declined in H2 2024, compressing contribution margin per ton versus prior year (FY 2024 $13.62 vs. $14.85 in FY 2023) despite higher volumes; management noted pricing pressure as supply/demand balanced .
  • SmartSystems revenue and utilization declined versus 2023; non-cash losses related to relocating last-mile equipment facilities also impacted results, and Q1 2025 volumes are expected to moderate from the unusually strong Q4 .

Financial Results

Headline comparison vs prior quarter and prior year

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$61.9 $63.2 $91.4
Net Income ($USD Millions)$(4.8) $(0.1) $3.7
Diluted EPS ($USD)$(0.12) $0.00 $0.09
Gross Profit ($USD Millions)$2.8 $6.5 $13.5
Contribution Margin per Ton ($USD)$9.07 $11.09 $13.80
Adjusted EBITDA ($USD Millions)$0.7 $5.7 $11.9
Tons Sold (Millions)1.016 1.189 1.464

Notes: Q4 revenue included $4.8M in contractual charges for tons sold above thresholds; pricing improved versus Q3 but remained below early-2024 levels .

Segment breakdown

Segment Revenue ($USD Millions)Q4 2023Q3 2024Q4 2024
Sand Revenue$60.1 $62.2 $90.6
SmartSystems Revenue$1.8 $0.9 $0.7
Total Revenue$61.9 $63.2 $91.4

KPIs and cash metrics

KPIQ4 2023Q3 2024Q4 2024
Tons Sold (000s)1,016 1,189 1,464
Contribution Margin ($USD Millions)$9.2 $13.2 $20.2
Net Cash from Operations ($USD Millions)$(2.7) $5.8 $1.0
Free Cash Flow ($USD Millions)$(9.6) $3.7 $(0.8)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Q1 Sales VolumesQ1 2025“Consistent to potentially higher than Q1 2024” (Q3 call) “Moderate due to unusually robust Q4; activity picking up into Q2” Lower near-term, recovery into Q2
Full-Year Sales VolumesFY 2025N/AFlat to up ~5% vs. FY 2024 Introduced; constructive
Contribution Margin per TonFY 2025N/A“At levels consistent with 2024” Introduced; stable
Capital ExpendituresFY 2025N/A$13–$17M; ~$8M for mining/terminals Introduced; step-up vs. 2024
Q4 Volumes (point-in-time)Q4 20241.1–1.4M tons (Q3 call) Actual 1.464M tons Beat Q3 outlook
Shareholder ReturnsOct 2024–Apr 2026N/A$0.10 special dividend (paid Oct 28, 2024); $10M buyback authorization New programs

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q3 2024)Current Period (Q4 2024)Trend
AI/data center power demandQ3: Positive demand tailwind expectation tied to AI data centers and natural-gas power Press release: AI data centers expected to increase electricity/natural gas demand supporting frac sand in Appalachian/Canada Reinforced tailwind
Pricing and fine-mesh Northern WhiteQ3: Pricing moderated; expectation for improvement in 2025; reserves ~75% fine mesh; supply constraints Q4: Improved pricing contributed to Q4 revenue growth (alongside volumes) Stabilizing → Improvement
Regional activity (Bakken, Marcellus, Utica, Canada)Q3: Volumes in Utica via new Ohio terminals; Canada ~11% sales; Marcellus activity improving Q4: Strong activity in Bakken/Marcellus; Utica and Canada increased volumes; delayed projects completed Broader, stronger
SmartSystems utilizationQ2/Q3: Utilization reduced; revamp to improve efficiency; SmartSystems revenue down Q4: SmartSystems revenue fell to $0.7M; operations refocused on cost efficiency Mixed; utilization still low
Shareholder returns & liquidityQ3: $30M ABL facility; dividend and buyback announced Q4: $30M undrawn availability; special dividend paid; buyback in place Strengthening capital returns

Management Commentary

  • CEO: “Smart Sand delivered strong operating and financial results… [achieved] highest quarterly volumes and annual volumes in its history… we currently expect to generate positive free cash flow in 2025 and will continue to look for opportunities to return capital back to our shareholders.” .
  • CEO on demand drivers: “We expect domestic LNG export capacity expansion and AI data center development to increase domestic demand for electricity and natural gas… directly support… frac sand demand in… Appalachian and Canadian basins.” .
  • CFO: Company ended 2024 with cash $1.6M and $30.0M undrawn on the credit facility; 2025 capex $13–$17M including ~$8M for mining/terminal investments .
  • Strategic positioning: “Our mines and logistics operations are uniquely positioned to support potential growth in all the primary Northern White Sand markets.” .
  • Operating focus: “We are focused on improving the utilization of our existing asset base… and increasing our market share… invest in incremental mining… and strategic investments in terminals” .

Q&A Highlights

  • Proppant per well/pad dynamics and longer laterals: Management expects moderation in proppant per foot but increased sand per pad; longer laterals continue to increase sand per well .
  • Pricing outlook: Pricing moderated in recent quarters but expected to improve in 2025 as demand rises and fine-mesh supply remains tight .
  • Industrial Product Solutions (IPS) growth: IPS volumes could rise from ~5% to ~10% of total in 2025, driven by glass and foundry markets .
  • Shareholder returns framework: Opportunistic mix of dividends and buybacks contingent on consistent free cash flow and return analysis .
  • Canada outlook: Blair facility logistics and LNG projects underpin cautious optimism; Canada ~11% of sales in Q3 .

Estimates Context

  • Wall Street consensus from S&P Global for Q4 2024 was unavailable due to data-access limits in this session; we attempted to pull Primary EPS Consensus Mean and Revenue Consensus Mean for Q4 2024 but received a rate-limit error from SPGI (“Daily Request Limit of 250000 Exceeded”). As a result, an estimates-based beat/miss analysis versus S&P Global consensus cannot be provided at this time [GetEstimates error].
  • In absence of consensus, results indicate sequential and year-over-year strength in revenue, volumes, contribution margin per ton, and Adjusted EBITDA, and a return to profitability in Q4 2024 .

Key Takeaways for Investors

  • Volume-led inflection: Q4 2024 volumes and revenue sharply rebounded; early-2025 moderation expected but trajectory supports 2025 volumes flat to up ~5%, with margin per ton consistent with 2024 .
  • Pricing setup improving: Fine-mesh Northern White supply constraints and demand tailwinds (LNG, AI data centers) point to potential pricing improvement in 2025 from moderated levels in H2 2024 .
  • Capital returns and liquidity: Special dividend paid, $10M buyback authorized, and $30M undrawn revolver provide flexibility for shareholder returns alongside 2025 growth capex .
  • Operational efficiency: Lower operating expenses and logistics advantages (Ohio terminals, Blair facility) support contribution margin resilience even amid pricing pressure .
  • SmartSystems remains a lever: Utilization and revenue down; revamp could add margin leverage if adoption improves in 2025 .
  • Watch near-term working capital: Q4 FCF was negative on working capital/capex; 2025 capex up ($13–$17M). Monitor execution on mining/terminal investments and receivables conversion .
  • Stock narrative: Volume recovery, structurally tight fine-mesh supply, and clear capital return policy are supportive; estimate comparison pending S&P consensus retrieval to confirm beat/miss positioning.

Appendix: Additional Data Points

  • Q4 2024 revenue included $4.8M contractual charges for excess tons sold, boosting the quarter’s topline .
  • Company discontinued earnings calls starting with Q4 2024; investors are directed to releases and IR materials, and may contact the CFO with questions .
  • FY 2024: Revenue $311.4M; Adjusted EBITDA $38.8M; free cash flow $10.9M .
  • Special dividend: $0.10 per share declared Oct 3, 2024 and paid Oct 28, 2024; $10M repurchase program authorized through April 3, 2026 .