Texas-based Smart Sand, Inc., the frac sand supplier with an operation in El Reno, Oklahoma reported increased sales of sand and revenue in the first quarter of the year.
While its revenues totaled $82.4 million compared to $73.8 million in the fourth quarter of 2022 and $41.6 million from a year earlier, the company still reported a first quarter net loss of $3.6 million.
The company explained the decrease in net income in the first quarter of 2023 compared to the fourth quarter of 2022 was primarily due to a $1.9 million of net loss on the disposal of fixed assets as it reconfigured one of its wet plants to increase the efficiency of its operations and upgraded some of the mining equipment. The net loss in the first quarter of 2023 was also due to increased salary and wages from increased staffing as it brings the Blair facility online and year end 2022 bonuses that were paid in the first quarter of 2023.
The company said it saw the gain in revenues because of a higher average sales price for its sand. Sand volumes and sales prices have increased in the past year because of what the company called “improvement in the supply and demand fundamentals for frac sand.”
Headquartered in Spring, Texas, the firm said it sold 1.2 million tons of sand in the first quarter from its various operations across the U.S., helping to create an adjusted EBITDA of $8.4 million. It also recorded net cash from operating activities of $5.1 million along with a free cash flow of $1.1 million.
Tons sold were approximately 1,195,000 in the first quarter of 2023, compared to approximately 1,175,000 tons in the fourth quarter of 2022 and 852,000 tons in the first quarter of 2022, an increase of 2% sequentially and an increase of 40% over the comparable period in 2022.
“For the fourth consecutive quarter we had sand sales volumes in excess of 1 million tons and in the first quarter we generated positive free cash flow,” stated Charles Young, Smart Sand’s Chief Executive Officer.
” We are excited to bring our Blair facility online in the second quarter and to start competing in the Canadian market. With the opening of Blair, we will be increasing the logistics options we can provide to our customers by having direct access to the Canadian National rail line.”
Gross profit was $11.6 million in the first quarter of 2023, compared to $11.2 million in the fourth quarter of 2022 and $(2.0) million in the first quarter of 2022. Gross profit improved in the first quarter of 2023 compared to the fourth quarter of 2022 primarily due to higher shortfall revenue and higher average sales prices.
Net cash provided by operating activities was $5.1 million in the first quarter of 2023, compared to net cash provided by operating activities of $5.6 million in the fourth quarter of 2022 and net cash used in operating activities of $(8.7) million in the first quarter of 2022. The slight decrease in net cash provided by operating activities in the first quarter of 2023 compared to the fourth quarter of 2022 was primarily due to the timing of collections from customers and payments to vendors.
Free cash flow was $1.1 million for the first quarter of 2023. Net cash provided by operating activities during this period was $5.1 million, and capital expenditures were $4.0 million in the first quarter of 2023. The company said it currently estimates that full year 2023 capital expenditures, including amounts relating to the start-up of the Blair facility, will be between $20.0 million and $25.0 million.