Smart Sand Reports 21% Revenue Decline and $24.2 Million Net Loss in Q1 2025

Smart Sand, Inc. reported a significant decline in financial performance for the first quarter of 2025, with total revenues of $65.6 million, down 21% from $83.1 million in the same period last year. The decrease was primarily driven by a 19% drop in sand revenue, which fell to $64.5 million from $79.7 million, attributed to a 20% reduction in sales volume. The company sold approximately 1.069 million tons of sand during the quarter, compared to 1.336 million tons in the first quarter of 2024. Additionally, SmartSystems revenue decreased by 67%, from $3.3 million to $1.1 million, due to lower utilization of the SmartSystems fleet.

The company's cost of goods sold also decreased, totaling $62.8 million, down 12% from $71.2 million in the prior year. This reduction was a result of lower sales volumes, although logistics and production costs increased on a per-ton basis. Gross profit for the quarter was reported at $2.8 million, a sharp decline from $11.8 million in the previous year, reflecting the impact of reduced sales volumes and higher variable production costs. Operating expenses were lower at $9.8 million compared to $11.0 million, primarily due to decreased selling, general, and administrative expenses.

Smart Sand's net loss for the first quarter of 2025 was $24.2 million, a significant increase from a net income of $0.2 million in the same quarter of 2024. This loss was largely influenced by non-cash deferred income taxes and lower gross profit. The effective tax rate for the quarter was approximately (233.6)%, reflecting the complexities of the company's tax position. The company reported a positive free cash flow of $5.2 million, a notable improvement from a negative free cash flow of $5.5 million in the prior year, attributed to better management of operating expenses and capital expenditures.

In terms of operational developments, Smart Sand continues to focus on expanding its market presence and product offerings. The company has been actively involved in diversifying its customer base through its Industrial Products Solutions (IPS) business, which targets various industrial markets. As of March 31, 2025, Smart Sand had 44,083,342 shares of common stock outstanding and reported a cash balance of $5.1 million, with $30 million available under its FCB ABL Credit Facility. The company anticipates capital expenditures between $13 million and $17 million for 2025, aimed at enhancing operational efficiency and expanding its facilities.

Looking ahead, Smart Sand acknowledges the cyclical nature of the frac sand market and the potential for increased demand driven by longer lateral well lengths and higher sand volumes per well. However, the company remains cautious about external factors such as geopolitical events and trade policies that could impact its operations. The management believes that maintaining liquidity and managing capital resources effectively will be crucial in navigating the challenges ahead.