Service & Supply | Quarterly / Earnings Reports | Oilfield Services | Fourth Quarter (4Q) Update

Smart Sand Inc. Fourth Quarter 2019 Results

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   |    Wednesday,February 26,2020

Smart Sand, Inc. announced results for the fourth quarter and full year ended December 31, 2019.

Highlights:

• 4Q and full year 2019 revenue of $47.7 million and $233.1 million, respectively.
• 4Q and full year 2019 total tons sold of approximately 462,000 and 2,462,000, respectively.
• 4Q and full year 2019 net income of $2.4 million and $31.6 million, respectively.
• 4Q and full year 2019 Adjusted EBITDA of $19.6 million and $87.1 million, respectively.

Charles Young, Smart Sand’s Chief Executive Officer, stated “In spite of challenging market conditions, Smart Sand delivered another solid quarter to finish out an impressive year. During 2019, we demonstrated the value of our mine to wellsite solutions strategy by increasing activity through our Van Hook terminal and beginning the buildup of our SmartSystems™ equipment. As of today, we have nine SmartSystems fleets leased to customers. Additionally, we refinanced our former credit facility with a five-year bank financing and a five-year equipment lease arrangement that provide Smart Sand with long-term capital to support our ongoing operations.  We believe that we have established the foundation to support our long-term strategy to provide sustainable sand supply and logistics solutions to our customers for 2020 and beyond."

Full Year 2019 Highlights

Revenues of $233.1 million for the full year 2019 were the highest in the history of the Company, representing a 10% increase over full year 2018 revenues of $212.5 million.  The increase in revenues was primarily due to higher shortfall revenue from customers that did not take their contractual minimum volumes of sand and higher logistics revenue due to higher in-basin sales and rentals of our SmartSystems equipment.

Overall tons sold were approximately 2,462,000 in the full year 2019, compared to full year 2018 volume of 2,995,000 tons. Tons sold decreased by 18% due to decreased exploration and production activity among some of our customers and in the oil and natural gas industry in general.

Net income was $31.6 million, or $0.79 per basic share and $0.78 per diluted share for the full year 2019, compared with net income of $18.7 million, or $0.46 per basic and diluted share, for the full year 2018, an increase of 69% year over year.  The increase in net income was primarily due to higher shortfall revenue from customers that did not take their contractual minimum volumes of sand, increased volumes shipped through our Van Hook terminal and leased SmartSystems equipment. Impairment losses negatively impacted net income in 2019 and 2018 by $15.5 million and $17.8 million, respectively. 

Adjusted EBITDA was $87.1 million for the full year 2019 compared to Adjusted EBITDA of $66.0 million for the full year 2018, an increase of 32% year over year.  The increase in Adjusted EBITDA for the year ended December 31, 2019, as compared to the prior year, was primarily due to higher shortfall and logistics revenue, partially offset by increased transportation charges and lower overall volumes of sand sold.

Fourth Quarter 2019 Highlights

Revenues were $47.7 million in the fourth quarter of 2019, a 27% decrease compared to third quarter 2019 revenues of $65.7 million. Fourth quarter 2019 revenues decreased by 9% compared to fourth quarter 2018 revenues of $52.2 million. The decrease in revenues over the previous quarter was primarily attributable to a decline in total sales volumes. The decrease in revenue over the fourth quarter of 2018 was primarily due to a decline in total sales volumes, partially offset by high shortfall revenue in 2019.

Overall tons sold were approximately 462,000 in the fourth quarter of 2019, compared to approximately 611,000 tons for the third quarter of 2019 and approximately 610,000 tons in the fourth quarter 2018, decreases of 24% for each comparable period. The decline in volumes aligns with the overall decline in completion activity and frac sand use in the industry for the fourth quarter 2019.

Net income was $2.4 million, or $0.06 per basic share and $0.05 per diluted share, for the fourth quarter of 2019, compared with net income of $10.9 million, or $0.27 per basic and diluted share for the third quarter of 2019, and net loss of $4.4 million, or $(0.11) per basic and diluted share, for the fourth quarter 2018. Net income in the fourth quarter of 2019 was negatively impacted by an impairment charge of $7.9 million on our Hixton site, partially offset by gross profit on sand sales, logistics and shortfall revenue. Net income was also impacted by lower total volumes sold in the fourth quarter 2019 compared to the previous quarter and the same period in the prior year.  Net income in the third quarter of 2019 and net loss in the fourth quarter of 2018 were primarily attributable to non-cash impairment charges of $7.6 million and $17.8 million, respectively. The impairment charges were partially offset by strong in-basin sales generated from our Van Hook terminal in each of the periods, respectively.

Adjusted EBITDA was $19.6 million for the fourth quarter of 2019, a decrease of 32% compared to third quarter 2019 Adjusted EBITDA of $28.8 million and an increase of 5% from $18.7 million during the same period last year. The decrease in Adjusted EBITDA compared to the third quarter of 2019 was primarily due to lower sales volumes which was partially offset by lower costs of sales and continued high shortfall revenue recognized in the quarter. The increase in Adjusted EBITDA compared to the fourth quarter 2018 was primarily due to higher shortfall revenue.