4Q 2023 and full year 2023 revenue of $61.9 million and $296.0 million, respectively.
4Q 2023 and full year 2023 total tons sold of approximately 1,016,000 and 4,514,000, respectively.
4Q 2023 and full year 2023 net cash (used) provided by operating activities of $(2.7) million and $31.0 million, respectively.
4Q 2023 and full year 2023 free cash flow of $(9.6) million and $8.0 million, respectively.
SPRING, Texas, March 11, 2024 /PRNewswire/ — 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, and a proppant logistics solutions provider through both its in-basin transloading terminals and SmartSystems™ products and services, today announced results for the fourth quarter and full year ended December 31, 2023.
“Smart Sand delivered strong operating and financial results for the full year 2023” stated Charles Young, Smart Sand’s Chief Executive Officer. “Sales volumes for the year were a record for the Company. During the year we gained access to the Canadian frac sand market through the commencement of operations at our Blair, Wisconsin facility. We improved our logistics capabilities in the Marcellus and Utica formations of the Appalachian Basin by expanding our Waynesburg, Pennsylvania terminal . We invested in cooling and blending capabilities at our Utica, Illinois facility to support increased industrial sand opportunities and expanded our last mile service presence in the Bakken and Appalachian Basins. Additionally, we recently obtained the rights to operate two additional terminals in Northeast Ohio, which we believe will support growing activity in the Appalachian Basin.”
“Lower sales volumes, due primarily to seasonal weather-related issues and a general slowdown in overall market activity from lower customer spending due to year-end budget exhaustion, negatively impacted our operating and financial results in the fourth quarter. However, market activity has picked up considerably since the start of 2024 with current monthly sales volumes trending back to third quarter 2023 levels or better and we expect to see improved operating and financial results in the first quarter 2024.”
Full Year 2023 Highlights
Total revenue was $296.0 million for the full year 2023, compared to $255.7 million for the full year of 2022. Sand sales revenue in 2023 was $283.2 million compared to $243.2 million in 2022. Total revenue and sand sales both increased by 16% year-over-year, as a result of increased sand sales volumes and higher prices primarily driven by increased market activity in the operating basins that the Company serves.
Total tons sold were 4,514,000 for the full year 2023, compared to full year 2022 total tons sold of 4,333,000, an increase of 4% year-over-year.
Net income was $4.6 million, or $0.12 per basic and diluted share, for the full year 2023, compared with net loss of $(0.7) million, or $(0.02) per basic and diluted share, for the full year 2022. The increase in net income was primarily from increased total volumes sold and higher average sales prices for our sand.
Net cash provided by operating activities was $31.0 million for the year ended December 31, 2023, derived from net income of $4.6 million, which includes net non-cash items of $27.8 million and $(1.4) million in changes in operating assets and liabilities. The net cash provided by operating activities in 2022 was $5.4 million. The increase in net cash provided by operating activities in 2023, compared to 2022, was primarily due to higher net income and reduced use of cash from changes in assets and liabilities.
Contribution margin was $67.0 million, or $14.85 per ton sold, for the full year 2023 compared to $54.6 million, or $12.61 per ton sold, for the full year 2022. Adjusted EBITDA was $34.1 million for the full year 2023 compared to Adjusted EBITDA of $29.3 million for the full year 2022. The increase in contribution margin and Adjusted EBITDA for the year ended December 31, 2023, as compared to the prior year, was primarily due to an increase in pricing and higher overall tons sold in the current period.
Fourth Quarter 2023 Highlights
Total revenue was $61.9 million in the fourth quarter of 2023, compared to third quarter of 2023 revenue of $76.9 million. Total revenue decreased 19% sequentially due to lower sand sales volumes and lower shortfall revenue. Fourth quarter 2023 total revenue decreased by 16% compared to fourth quarter 2022 revenues of $73.8 million. Lower revenue year-over-year was due primarily to lower tons sold.
Tons sold in the fourth quarter of 2023 were 1,016,000, a 17% decrease compared to third quarter 2023 tons sold of 1,219,000. Tons sold in the fourth quarter of 2023 decreased by 14% compared to 1,175,000 tons sold in the fourth quarter of 2022. Sales volumes were lower in the current period due primarily to lower market activity from weather-related slowdowns and reduced customer spending as accelerated spending earlier in the year led to reduced activity in the fourth quarter.
For the fourth quarter of 2023, the Company had a net loss of $(4.8) million, or $(0.12) per basic and diluted share, compared to net income of $6.7 million, or $0.18 per basic and diluted share, for the third quarter of 2023, and net income of $2.6 million, or $0.06 per basic share and diluted share for the fourth quarter 2022.
Contribution margin was $9.2 million, or $9.07 per ton sold, for the fourth quarter of 2023 compared to $21.0 million, or $17.20 per ton sold, for the third quarter of 2023 and $17.4 million, or $14.77 per ton sold, for the fourth quarter of 2022. Adjusted EBITDA was $1.0 million for the fourth quarter of 2023, compared to $13.3 million for the third quarter of 2023 and $10.7 million for the fourth quarter of 2022.
Lower net income, contribution margin and adjusted EBITDA sequentially and year-over-year were primarily due to lower revenue from decreased tons sold, partially offset by lower cost of goods sold.
Capital and Liquidity
For the full year 2023, we had positive free cash flow of $8.0 million, generating $31.0 million in cash flow from operations while spending $23.0 million on capital expenditures. For the fourth quarter of 2023, we had negative $9.6 million in free cash flow, spending $2.7 million in cash flow on operations and $6.9 million on capital expenditures. As of December 31, 2023, we had cash on hand of $6.1 million and $12.0 million in undrawn availability on our existing credit facility.
Conference Call
Smart Sand will host a conference call and live webcast for analysts and investors on March 12, 2024 at 10:00 a.m. Eastern Time to discuss the Company’s fourth quarter and full year 2023 financial results. Investors are invited to join the conference by dialing (646) 357-8785 or 1-800-836-8184 and referencing “Smart Sand” when connected to the operator. Additionally, the call may also be streamed via webcast at https://app.webinar.net/2LBqwEV8z34 or within the “Investors” section of the Company’s website at www.smartsand.com. A replay will be available shortly after the call and can be accessed on the “Investors” section of the Company’s website.
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. 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 our Company’s Form 10-K for the year ended December 31, 2023, to be filed by us with the U.S. Securities and Exchange Commission on March 11, 2024.
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
Smart Sand is a fully integrated frac and industrial sand supply and services company, offering complete mine to wellsite proppant and logistics 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. The Company’s 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. The Company offers logistics solutions to our customers through its in-basin transloading terminals and SmartSystems™ wellsite storage and sand management capabilities. Smart Sand owns and operates premium sand mines and related processing facilities in Wisconsin and Illinois, which have access to four Class I rail lines, allowing the Company to deliver products substantially anywhere in the United States and Canada. For more information, please visit www.smartsand.com.
Availability of Information on Smart Sand’s Website
We routinely announce material information using U.S. Securities and Exchange Commission filings, press releases, public conference calls and webcasts and the Smart Sand investor relations website. While not all of the information that we post to the Smart Sand investor relations website is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others interested in Smart Sand to review the information that we share at the “Investors” link located at the top of the page on www.smartsand.com.
|
SMART SAND, INC. CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||
|
Three Months Ended |
|||||
|
December 31, 2023 |
September 30, 2023 |
December 31, 2022 |
|||
|
(unaudited) |
(unaudited) |
(unaudited) |
|||
|
(in thousands, except per share amounts) |
|||||
|
Revenues: |
|||||
|
Sand sales revenue |
$ 60,147 |
$ 72,480 |
$ 71,099 |
||
|
Shortfall revenue |
— |
2,389 |
414 |
||
|
Logistics revenue |
1,800 |
2,031 |
2,316 |
||
|
Total revenue |
61,947 |
76,900 |
73,829 |
||
|
Cost of goods sold |
59,116 |
62,502 |
62,657 |
||
|
Gross profit |
2,831 |
14,398 |
11,172 |
||
|
Operating expenses: |
|||||
|
Salaries, benefits and payroll taxes |
4,509 |
4,292 |
3,309 |
||
|
Depreciation and amortization |
667 |
647 |
598 |
||
|
Selling, general and administrative |
5,579 |
4,625 |
5,421 |
||
|
Loss (gain) on disposal of fixed assets, net |
(19) |
(92) |
188 |
||
|
Total operating expenses |
10,736 |
9,472 |
9,516 |
||
|
Operating (loss) income |
(7,905) |
4,926 |
1,656 |
||
|
Other income (expenses): |
|||||
|
Interest expense, net |
(332) |
(276) |
(364) |
||
|
Other income |
119 |
198 |
412 |
||
|
Total other income (expenses), net |
(213) |
(78) |
48 |
||
|
(Loss) income before income tax benefit |
(8,118) |
4,848 |
1,704 |
||
|
Income tax benefit |
(3,332) |
(1,879) |
(923) |
||
|
Net (loss) income |
$ (4,786) |
$ 6,727 |
$ 2,627 |
||
|
Net (loss) income per common share: |
|||||
|
Basic |
$ (0.12) |
$ 0.18 |
$ 0.06 |
||
|
Diluted |
$ (0.12) |
$ 0.18 |
$ 0.06 |
||
|
Weighted-average number of common shares: |
|||||
|
Basic |
38,339 |
38,253 |
42,833 |
||
|
Diluted |
38,499 |
38,412 |
42,862 |
||
|
SMART SAND, INC. CONSOLIDATED STATEMENTS OF OPERATIONS |
|||
|
Year Ended December 31, |
|||
|
2023 |
2022 |
||
|
(in thousands, except per share amount) |
|||
|
Revenues: |
|||
|
Sand sales revenue |
$ 283,160 |
$ 243,162 |
|
|
Shortfall revenue |
4,304 |
5,010 |
|
|
Logistics revenue |
8,509 |
7,568 |
|
|
Total revenue |
295,973 |
255,740 |
|
|
Cost of goods sold |
254,418 |
226,149 |
|
|
Gross profit |
41,555 |
29,591 |
|
|
Operating expenses: |
|||
|
Salaries, benefits and payroll taxes |
18,309 |
13,480 |
|
|
Depreciation and amortization |
2,535 |
2,244 |
|
|
Selling, general and administrative |
20,413 |
17,288 |
|
|
Loss (gain) on disposal of fixed assets, net |
1,802 |
(294) |
|
|
Bad debt expense |
— |
1 |
|
|
Total operating expenses |
43,059 |
32,719 |
|
|
Operating loss |
(1,504) |
(3,128) |
|
|
Other (expenses) income: |
|||
|
Interest expense, net |
(1,272) |
(1,608) |
|
|
Other income |
524 |
828 |
|
|
Total other (expenses) income, net |
(748) |
(780) |
|
|
Loss before income tax benefit |
(2,252) |
(3,908) |
|
|
Income tax benefit |
(6,901) |
(3,205) |
|
|
Net income (loss) |
$ 4,649 |
$ (703) |
|
|
Net income (loss) per common share: |
|||
|
Basic |
$ 0.12 |
$ (0.02) |
|
|
Diluted |
$ 0.12 |
$ (0.02) |
|
|
Weighted-average number of common shares: |
|||
|
Basic |
38,948 |
42,408 |
|
|
Diluted |
39,046 |
42,408 |
|
|
SMART SAND, INC. CONSOLIDATED BALANCE SHEETS |
|||
|
December 31, |
|||
|
2023 |
2022 |
||
|
(in thousands of U.S. dollars) |
|||
|
Assets |
|||
|
Current assets: |
|||
|
Cash and cash equivalents |
$ 6,072 |
$ 5,510 |
|
|
Accounts receivable |
23,231 |
35,746 |
|
|
Unbilled receivables |
2,561 |
79 |
|
|
Inventory |
26,823 |
20,185 |
|
|
Prepaid expenses and other current assets |
3,217 |
6,593 |
|
|
Total current assets |
61,904 |
68,113 |
|
|
Property, plant and equipment, net |
255,092 |
258,843 |
|
|
Operating lease right-of-use assets |
23,265 |
26,075 |
|
|
Intangible assets, net |
5,876 |
6,669 |
|
|
Other assets |
163 |
303 |
|
|
Total assets |
$ 346,300 |
$ 360,003 |
|
|
Liabilities and Stockholders’ Equity |
|||
|
Current liabilities: |
|||
|
Accounts payable |
$ 16,041 |
$ 14,435 |
|
|
Accrued expenses and other liabilities |
11,024 |
13,430 |
|
|
Deferred revenue |
1,154 |
6,959 |
|
|
Current portion of long-term debt |
15,711 |
6,183 |
|
|
Current portion of operating lease liabilities |
10,536 |
10,910 |
|
|
Total current liabilities |
54,466 |
51,917 |
|
|
Long-term debt |
3,449 |
9,807 |
|
|
Long-term operating lease liabilities |
14,056 |
17,642 |
|
|
Deferred tax liabilities, long-term, net |
12,101 |
18,238 |
|
|
Asset retirement obligation |
19,923 |
18,888 |
|
|
Other non-current liabilities |
38 |
40 |
|
|
Total liabilities |
104,033 |
116,532 |
|
|
Commitments and contingencies |
|||
|
Stockholders’ equity |
|||
|
Common stock |
39 |
43 |
|
|
Treasury stock, at cost |
(14,249) |
(5,075) |
|
|
Additional paid-in capital |
181,973 |
178,386 |
|
|
Retained earnings |
74,539 |
69,890 |
|
|
Accumulated other comprehensive (loss) income |
(35) |
227 |
|
|
Total stockholders’ equity |
242,267 |
243,471 |
|
|
Total liabilities and stockholders’ equity |
$ 346,300 |
$ 360,003 |
|
|
SMART SAND, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||
|
Three Months Ended |
|||||
|
December 31, 2023 |
September 30, 2023 |
December 31, 2022 |
|||
|
(unaudited) |
(unaudited) |
(unaudited) |
|||
|
(in thousands) |
|||||
|
Operating activities: |
|||||
|
Net (loss) income |
$ (4,786) |
$ 6,727 |
$ 2,627 |
||
|
Adjustments to reconcile net income to net cash provided by |
|||||
|
Depreciation, depletion and accretion of asset retirement |
7,113 |
7,021 |
6,584 |
||
|
Amortization of intangible assets |
197 |
198 |
196 |
||
|
Loss (gain) on disposal of assets |
(19) |
(92) |
188 |
||
|
Amortization of deferred financing cost |
26 |
26 |
26 |
||
|
Accretion of debt discount |
46 |
47 |
46 |
||
|
Deferred income taxes |
(2,041) |
(2,348) |
(1,412) |
||
|
Stock-based compensation |
1,035 |
860 |
748 |
||
|
Employee stock purchase plan compensation |
4 |
5 |
7 |
||
|
Changes in assets and liabilities: |
|||||
|
Accounts receivable |
784 |
5,980 |
(4,027) |
||
|
Unbilled receivables |
(2,396) |
92 |
2,398 |
||
|
Inventories |
(868) |
(2,950) |
433 |
||
|
Prepaid expenses and other assets |
(2,860) |
661 |
3,452 |
||
|
Deferred revenue |
(863) |
(4,328) |
(2,946) |
||
|
Asset retirement obligation settlement |
(197) |
— |
— |
||
|
Accounts payable |
5,845 |
(1,822) |
2,460 |
||
|
Accrued expenses and other liabilities |
(3,679) |
2,400 |
(5,191) |
||
|
Net cash provided (used) by operating activities |
(2,659) |
12,477 |
5,589 |
||
|
Investing activities: |
|||||
|
Purchases of property, plant and equipment |
(6,905) |
(6,881) |
(3,196) |
||
|
Proceeds from disposal of assets |
6 |
50 |
75 |
||
|
Net cash used in investing activities |
(6,899) |
(6,831) |
(3,121) |
||
|
Financing activities: |
|||||
|
Repayments of notes payable |
(1,483) |
(1,502) |
(1,851) |
||
|
Payments under equipment financing obligations |
(71) |
(200) |
(28) |
||
|
Proceeds from revolving credit facility |
8,000 |
— |
4,000 |
||
|
Repayment of revolving credit facility |
— |
— |
(10,000) |
||
|
Proceeds from equity issuance |
— |
23 |
— |
||
|
Royalty stock issuance |
— |
— |
639 |
||
|
Purchase of treasury stock |
(125) |
(150) |
(89) |
||
|
Net cash provided by (used in) financing activities |
6,321 |
(1,829) |
(7,329) |
||
|
Net increase in cash and cash equivalents |
(3,237) |
3,817 |
(4,861) |
||
|
Cash and cash equivalents at beginning of period |
9,309 |
5,492 |
10,371 |
||
|
Cash and cash equivalents at end of period |
$ 6,072 |
$ 9,309 |
$ 5,510 |
||
|
SMART SAND, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||
|
Year Ended December 31, |
|||
|
2023 |
2022 |
||
|
(audited) |
(audited) |
||
|
(in thousands) |
|||
|
Operating activities: |
|||
|
Net income (loss) |
$ 4,649 |
$ (703) |
|
|
Adjustments to reconcile net income to net cash provided by operating |
|||
|
Depreciation, depletion and accretion of asset retirement obligation |
27,472 |
26,488 |
|
|
Amortization of intangible assets |
793 |
792 |
|
|
(Gain) loss on disposal of assets |
1,802 |
(294) |
|
|
Provision for bad debt |
— |
1 |
|
|
Amortization of deferred financing cost |
105 |
105 |
|
|
Accretion of debt discount |
186 |
186 |
|
|
Deferred income taxes |
(6,137) |
(4,196) |
|
|
Stock-based compensation, net |
3,507 |
3,184 |
|
|
Employee stock purchase plan compensation |
24 |
25 |
|
|
Changes in assets and liabilities: |
|||
|
Accounts receivable |
12,672 |
(18,265) |
|
|
Unbilled receivables |
(2,640) |
1,805 |
|
|
Inventories |
(6,638) |
(5,161) |
|
|
Prepaid expenses and other assets |
1,996 |
6,524 |
|
|
Settlement of asset retirement obligation |
(197) |
— |
|
|
Deferred revenue |
(5,805) |
(9,311) |
|
|
Accounts payable |
1,974 |
5,244 |
|
|
Accrued and other expenses |
(2,772) |
(1,004) |
|
|
Net cash provided by operating activities |
30,991 |
5,420 |
|
|
Investing activities: |
|||
|
Acquisition of businesses, net of cash acquired |
— |
(6,547) |
|
|
Purchases of property, plant and equipment |
(23,031) |
(12,731) |
|
|
Proceeds from disposal of assets |
129 |
1,070 |
|
|
Net cash used in investing activities |
(22,902) |
(18,208) |
|
|
Financing activities: |
|||
|
Repayments of notes payable |
(10,435) |
(7,325) |
|
|
Payments under equipment financing obligations |
(394) |
(116) |
|
|
Proceeds from revolving credit facility |
23,000 |
10,000 |
|
|
Repayment of revolving credit facility |
(15,000) |
(10,000) |
|
|
Proceeds from equity issuance |
56 |
52 |
|
|
Royalty stock issuance |
— |
639 |
|
|
Purchase of treasury stock |
(4,754) |
(540) |
|
|
Net cash used in financing activities |
(7,527) |
(7,290) |
|
|
Net increase in cash and cash equivalents |
562 |
(20,078) |
|
|
Cash and cash equivalents at beginning of period |
5,510 |
25,588 |
|
|
Cash and cash equivalents at end of period |
$ 6,072 |
$ 5,510 |
|
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 |
|||||
|
December 31, 2023 |
September 30, 2023 |
December 31, 2022 |
|||
|
(in thousands) |
|||||
|
Revenue |
$ 61,947 |
$ 76,900 |
$ 73,829 |
||
|
Cost of goods sold |
59,116 |
62,502 |
62,657 |
||
|
Gross profit |
2,831 |
14,398 |
11,172 |
||
|
Depreciation, depletion, and accretion of asset retirement obligations |
6,381 |
6,573 |
6,184 |
||
|
Contribution margin |
$ 9,212 |
$ 20,971 |
$ 17,356 |
||
|
Contribution margin per ton |
$ 9.07 |
$ 17.20 |
$ 14.77 |
||
|
Total tons sold |
1,016 |
1,219 |
1,175 |
||
|
Year Ended December 31, |
|||
|
2023 |
2022 |
||
|
(in thousands) |
|||
|
Revenue |
$ 295,973 |
$ 255,740 |
|
|
Cost of goods sold |
254,418 |
226,149 |
|
|
Gross profit |
41,555 |
29,591 |
|
|
Depreciation, depletion, and accretion of asset retirement obligations included in cost of |
25,469 |
25,038 |
|
|
Contribution margin |
$ 67,024 |
$ 54,629 |
|
|
Contribution margin per ton |
$ 14.85 |
$ 12.61 |
|
|
Total tons sold |
4,514 |
4,333 |
|
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 tables present a reconciliation of EBITDA and Adjusted EBITDA to net income for each of the periods indicated:
|
Three Months Ended |
|||||
|
December 31, 2023 |
September 30, 2023 |
December 31, 2022 |
|||
|
(in thousands) |
|||||
|
Net (loss) income |
$ (4,786) |
$ 6,727 |
$ 2,627 |
||
|
Depreciation, depletion and amortization |
7,078 |
6,985 |
6,590 |
||
|
Income tax benefit |
(3,332) |
(1,879) |
(923) |
||
|
Interest expense |
329 |
304 |
379 |
||
|
Franchise taxes |
300 |
66 |
85 |
||
|
EBITDA |
$ (411) |
$ 12,203 |
$ 8,758 |
||
|
Loss (gain) on sale of fixed assets |
(19) |
(92) |
188 |
||
|
Equity compensation |
1,003 |
850 |
706 |
||
|
Royalty stock issuance |
— |
— |
639 |
||
|
Acquisition and development costs (1) |
204 |
70 |
241 |
||
|
Cash charges related to restructuring and retention |
14 |
— |
— |
||
|
Accretion of asset retirement obligations |
234 |
235 |
189 |
||
|
Adjusted EBITDA |
$ 1,025 |
$ 13,266 |
$ 10,721 |
||
|
(1) |
Represents costs incurred related to the business combinations and current development project activities. |
|
Year Ended December 31, |
|||
|
2023 |
2022 |
||
|
(in thousands) |
|||
|
Net (loss) income |
$ 4,649 |
$ (703) |
|
|
Depreciation, depletion and amortization |
27,363 |
26,521 |
|
|
Income tax benefit |
(6,901) |
(3,205) |
|
|
Interest expense |
1,532 |
1,661 |
|
|
Franchise taxes |
804 |
353 |
|
|
EBITDA |
$ 27,447 |
$ 24,627 |
|
|
(Gain) loss on sale of fixed assets |
1,802 |
(294) |
|
|
Equity compensation |
3,391 |
2,729 |
|
|
Royalty stock issuance |
— |
639 |
|
|
Acquisition and development costs (1) |
545 |
675 |
|
|
Cash charges related to restructuring and retention of employees |
32 |
137 |
|
|
Accretion of asset retirement obligations |
904 |
758 |
|
|
Adjusted EBITDA |
$ 34,121 |
$ 29,271 |
|
|
(1) |
Represents costs incurred related to the business combinations and current development project activities. |
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 |
|||||
|
December 31, 2023 |
September 30, 2023 |
December 31, 2022 |
|||
|
(in thousands) |
|||||
|
Net cash provided by (used in) operating activities |
$ (2,659) |
$ 12,477 |
$ 5,589 |
||
|
Purchases of property, plant and equipment |
(6,905) |
(6,881) |
(3,196) |
||
|
Free cash flow |
$ (9,564) |
$ 5,596 |
$ 2,393 |
||
|
Year Ended December 31, |
|||
|
2023 |
2022 |
||
|
(in thousands) |
|||
|
Net cash provided by (used in) operating activities |
$ 30,991 |
$ 5,420 |
|
|
Acquisition of Blair facility |
— |
(6,547) |
|
|
Purchases of property, plant and equipment |
(23,031) |
(12,731) |
|
|
Free cash flow |
$ 7,960 |
$ (13,858) |
|
Investor Contacts:Lee Beckelman
Chief Financial Officer
(281) 231-2660
[email protected]
SOURCE Smart Sand, Inc.