“The demand for frac sand, and in particular Northern White, continues to be strong. We sold record quarterly volumes from our
First Quarter 2018 Highlights
Revenues were
Overall tons sold were approximately 723,000 in the first quarter of 2018, the highest in Company history, compared to approximately 706,400 tons sold in the fourth quarter of 2017 and 559,000 tons in the first quarter of 2017, increases of 2% and 29%, respectively.
Net income was
Adjusted EBITDA was
Capital Expenditures
Smart Sand’s capital expenditures totaled
Conference Call
Forward-looking Statements
All statements in this news release other than statements of historical facts are forward-looking statements that contain our 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 the Company's 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, changes in economic or political conditions, and such other factors discussed or referenced in the “Risk Factors” section of the Company’s Form 10-K for the year ended
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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
Three Months Ended | ||||||||||||
March 31, 2018 (unaudited) |
December 31, 2017 (unaudited) |
March 31, 2017 (unaudited) |
||||||||||
(in thousands, except per share amounts) | ||||||||||||
Revenues | $ | 42,628 | $ | 43,037 | $ | 25,059 | ||||||
Cost of goods sold | 35,413 | 32,938 | 19,662 | |||||||||
Gross profit | 7,215 | 10,099 | 5,397 | |||||||||
Operating expenses: | ||||||||||||
Salaries, benefits and payroll taxes | 2,573 | 2,517 | 1,697 | |||||||||
Depreciation and amortization | 188 | 148 | 108 | |||||||||
Selling, general and administrative | 3,101 | 2,868 | 2,034 | |||||||||
Total operating expenses | 5,862 | 5,533 | 3,839 | |||||||||
Operating income | 1,353 | 4,566 | 1,558 | |||||||||
Other income (expenses): | ||||||||||||
Other interest expense, net | (180 | ) | (110 | ) | (111 | ) | ||||||
Other income | 34 | 265 | 37 | |||||||||
Total other income (expenses), net | (146 | ) | 155 | (74 | ) | |||||||
Income before income tax (benefit) expense | 1,207 | 4,721 | 1,484 | |||||||||
Income tax (benefit) expense | 232 | (6,165 | ) | 515 | ||||||||
Net income | $ | 975 | $ | 10,886 | $ | 969 | ||||||
Net income per common share: | ||||||||||||
Basic | $ | 0.02 | $ | 0.27 | $ | 0.02 | ||||||
Diluted | $ | 0.02 | $ | 0.27 | $ | 0.02 | ||||||
Weighted-average number of common shares: | ||||||||||||
Basic | 40,412 | 40,393 | 39,697 | |||||||||
Diluted | 40,441 | 40,435 | 39,874 | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
March 31, 2018 (unaudited) |
December 31, 2017 (audited) |
|||||||
(in thousands) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 2,135 | $ | 34,740 | ||||
Restricted cash | 487 | 487 | ||||||
Accounts receivables, net | 27,691 | 23,377 | ||||||
Unbilled receivables | 206 | 1,192 | ||||||
Inventories | 5,272 | 9,092 | ||||||
Prepaid expenses and other current assets | 4,992 | 3,849 | ||||||
Total current assets | 40,783 | 72,737 | ||||||
Property, plant and equipment, net | 210,037 | 172,202 | ||||||
Deferred financing costs, net | 400 | 892 | ||||||
Other assets | 3,414 | 971 | ||||||
Total assets | $ | 254,634 | $ | 246,802 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 12,243 | $ | 26,123 | ||||
Accrued and other expenses | 11,819 | 7,576 | ||||||
Deferred revenue | 872 | — | ||||||
Current portion of equipment financing obligations | 502 | 572 | ||||||
Current portion of notes payable | 288 | 288 | ||||||
Total current liabilities | 25,724 | 34,559 | ||||||
Revolving credit facility, net | 15,624 | — | ||||||
Deferred tax liabilities, long-term, net | 13,546 | 13,239 | ||||||
Asset retirement obligation | 8,117 | 8,982 | ||||||
Total liabilities | 63,011 | 56,780 | ||||||
Stockholders’ equity | ||||||||
Common stock | 40 | 40 | ||||||
Treasury stock, at cost | (720 | ) | (666 | ) | ||||
Additional paid-in capital | 159,739 | 159,059 | ||||||
Retained earnings | 32,564 | 31,589 | ||||||
Total stockholders’ equity | 191,623 | 190,022 | ||||||
Total liabilities and stockholders’ equity | $ | 254,634 | $ | 246,802 | ||||
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
We define EBITDA as our 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, including our initial public offering, (iii) equity compensation; (iv) development costs; (v) non-recurring cash charges related to restructuring, retention and other similar actions, (vi) earn-out and contingent consideration obligations 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 and capital structure; and
- our debt covenant compliance as Adjusted EBITDA is a key component of critical covenants in our credit agreement.
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 definition 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:
Three Months Ended | ||||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||||
(in thousands) | ||||||||||||
Net (loss) income | $ | 975 | $ | 10,886 | $ | 969 | ||||||
Depreciation, depletion and amortization | 3,160 | 2,184 | 1,667 | |||||||||
Income tax expense (benefit) | 232 | (6,165 | ) | 515 | ||||||||
Interest expense | 219 | 174 | 173 | |||||||||
Franchise taxes | 220 | 31 | 228 | |||||||||
EBITDA | $ | 4,806 | $ | 7,110 | $ | 3,552 | ||||||
(Gain) loss on sale of fixed assets (1) | - | 66 | (39 | ) | ||||||||
Integration and transition costs | - | - | - | |||||||||
Equity compensation (2) | 490 | 495 | 176 | |||||||||
Development costs (3) | 328 | 766 | - | |||||||||
Cash charges related to restructuring and retention (4) | 94 | 40 | - | |||||||||
Non-cash charges (5) | 134 | 453 | 20 | |||||||||
Adjusted EBITDA | $ | 5,852 | $ | 8,930 | $ | 3,709 | ||||||
(1) Includes gains and losses related to the sale and disposal of certain assets in property, plant and equipment. | ||||||||||||
(2) Represents the non-cash expenses for stock-based awards issued to our employees and employee stock purchase plan | ||||||||||||
compensation expense. | ||||||||||||
(3) Represents costs related to current development project activities. | ||||||||||||
(4) Represents costs associated with the retention and relocation of employees. | ||||||||||||
(5) Represents accretion of asset retirement obligations. | ||||||||||||
Production Costs
We also use production costs, which we define as costs of goods sold, excluding depreciation, depletion, accretion of asset retirement obligations and freight charges to measure our financial performance. Freight charges consist of shipping costs and railcar rental and storage expenses. Shipping costs consist of railway transportation costs to deliver products to customers. A portion of these freight charges are passed through to our customers and are, therefore, included in revenue. Railcar rental and storage expenses are associated with our long-term railcar operating agreements with certain customers. We believe production costs is a meaningful measure to management and external users of our financial statements, such as investors and commercial banks, because it provides a measure of operating performance that is unaffected by historical cost basis and logistics charges that vary by customer. Cost of goods sold is the GAAP measure most directly comparable to production costs. Production costs should not be considered an alternative to cost of goods sold presented in accordance with GAAP. Because production costs may be defined differently by other companies in our industry, our definition of production costs may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
The following table presents a reconciliation of production costs to cost of goods sold:
Three Months Ended | ||||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||||
(in thousands) | ||||||||||||
Cost of goods sold | $ | 35,413 | $ | 32,938 | $ | 19,662 | ||||||
Depreciation, depletion, and accretion of asset retirement obligations | (3,106 | ) | (2,490 | ) | (1,579 | ) | ||||||
Freight charges | (17,158 | ) | (20,009 | ) | (9,228 | ) | ||||||
Production costs | 15,149 | 10,439 | 8,855 | |||||||||
Production costs per ton | $ | 20.95 | $ | 14.79 | $ | 15.84 | ||||||
Total tons sold | 723 | 706 | 559 | |||||||||
Investor Contacts
CFO
(281) 231-2660
LBeckelman@smartsand.com
Investor Relations and Budgeting Manager
(281) 231-2660
PCerniglia@smartsand.com
Smart Sand, Inc.