Smart Sand(US:SND)2025-11-12 11:12Revenue and Profitability - Revenue for the three months ended September 30, 2025, was $92.8 million, a 47% increase from $63.2 million in the same period of 2024, driven by higher sand volumes and average prices [130]. - Sand revenue reached $91.6 million for the three months ended September 30, 2025, compared to $62.2 million in 2024, with a significant contribution of $4.4 million from contractual charges recognized in the current period [131]. - Gross profit for the three months ended September 30, 2025, was $14.9 million, up from $6.5 million in the same period of 2024, attributed to higher sales volumes and excess tons payment [134]. - Net income for the three months ended September 30, 2025, was $3.0 million, compared to a net loss of $0.1 million for the same period in 2024, primarily due to increased demand and lower operating expenses [139]. - Total revenue for the nine months ended September 30, 2025, was $244.1 million, an increase of 11% from $220.0 million in the same period of 2024, driven by a 13% increase in sand revenue [141]. - Sand revenue increased to $240.7 million for the nine months ended September 30, 2025, compared to $213.0 million for the same period in 2024, with total volumes sold increasing by approximately 4% [142]. - Gross profit for the nine months ended September 30, 2025, was $26.7 million, a decrease of 15% from $31.4 million in the same period of 2024, attributed to lower utilization of the SmartSystems fleet and increased freight costs [146]. - Contribution margin for the three months ended September 30, 2025, was $21.7 million, or $14.76 per ton sold, compared to $13.2 million, or $11.09 per ton sold in 2024, reflecting a significant increase in sales volumes [159]. - Adjusted EBITDA for the three months ended September 30, 2025, was $13.6 million, up from $5.7 million in the same period in 2024, primarily due to higher sales volumes and excess ton payments [163]. Costs and Expenses - Total cost of goods sold increased to $77.8 million in Q3 2025 from $56.7 million in Q3 2024, primarily due to higher sales volumes and increased mining, freight, and transloading costs [133]. - Cost of goods sold for the nine months ended September 30, 2025, was $217.4 million, up 15% from $188.6 million in 2024, primarily due to higher volumes sold and increased production costs [145]. - Selling, general and administrative expenses decreased to $27.4 million for the nine months ended September 30, 2025, from $28.9 million in 2024, mainly due to reduced banking and legal costs [147]. - Net interest expense for the nine months ended September 30, 2025, was $1.0 million, down from $1.2 million in the same period of 2024, reflecting improved financial management [148]. Operational Capacity and Growth - The company has an annual processing capacity of approximately 10.0 million tons across all operating facilities, following recent acquisitions and expansions [118]. - The demand for frac sand is expected to moderately increase due to longer lateral well lengths and increased sand volume per linear foot, alongside potential growth in LNG export capacity [123]. - The Industrial Products Solutions (IPS) business is anticipated to grow, diversifying sales into stable, consumer-driven products across various industries [125]. - The company operates five in-basin transloading facilities and has expanded its terminal operations in Ohio, enhancing logistical capabilities [119]. Cash Flow and Financial Position - Free cash flow for the three months ended September 30, 2025, was $14.8 million, compared to $3.7 million in 2024, driven by positive cash flows from operating activities [168]. - As of September 30, 2025, cash on hand was $5.1 million, with $30.0 million in undrawn availability on the FCB ABL Credit Facility [169]. - The company declared a special dividend of $0.10 per share, returning approximately $4.4 million to shareholders on August 14, 2025 [171]. - Capital expenditures for 2025 are expected to be between $15.0 million and $17.0 million, primarily for opening new mining areas and efficiency projects [177]. Liabilities and Financial Management - The outstanding balance under the VFI Equipment Financing as of September 30, 2025, was $6.9 million, with minimum cash payments anticipated to be $0.7 million for the remainder of 2025 [178]. - Operating lease liabilities as of September 30, 2025, were $26.0 million, with minimum cash payments expected to be $2.5 million for the remainder of 2025 [179]. - The company had outstanding performance bonds of $19.7 million as of September 30, 2025 [181]. - The company recorded a liability for uncertain tax positions as of September 30, 2025, indicating challenges in realizing certain deductible temporary differences [150]. Market and Economic Conditions - The company is actively monitoring geopolitical events and trade policies that may impact its financial position and operations, particularly regarding tariffs and market volatility [122]. - The company continues to monitor the global impact of current events, with future economic performance being uncertain due to high inflation [190]. - There have been no material changes to market risk exposure as of September 30, 2025 [191]. Compliance and Internal Controls - Management has concluded that disclosure controls and procedures were effective as of the end of the reporting period [192]. - There have been no changes in internal control over financial reporting that materially affected the company during the third quarter of fiscal year 2025 [193]. - The company is committed to maintaining a culture prioritizing mine safety, adhering to regulations set by the U.S. Mining Safety and Health Administration [200]. - There have been no material changes in critical accounting policies during the nine months ended September 30, 2025 [188]. Share Repurchase Program - The company has an eighteen-month share repurchase program approved for up to $10.0 million of ordinary shares [197]. - The total number of shares purchased as part of the repurchase program in July 2025 was 13,627 at an average price of $2.07 per share [198].