SMART SAND, INC. (Exact name of registrant as specified in its charter)" This is the title of the annual report filed by Smart Sand, Inc. with the Securities and Exchange Commission (SEC) on Form 10-K for the fiscal year ended December 31, 2024.
Smart Sand, Inc. filed its annual report for the period ended December 31, 2024. The company reported total revenues of $123.6 million, a 15% increase from the previous year. Net income was $14.1 million, compared to a net loss of $2.3 million in the prior year. The company’s gross profit margin increased to 34.6% from 29.4% in the prior year. As of December 31, 2024, the company had cash and cash equivalents of $43.1 million and total debt of $25.6 million. The company’s market value of common stock held by non-affiliates was $59.9 million as of June 30, 2024. The company’s number of outstanding shares was 42,876,756 as of February 21, 2025.
Overview of the Company’s Financial Performance
Smart Sand, Inc. is a leading provider of high-quality sand and logistics services to the oil and gas industry. In 2024, the company reported total revenue of $311.4 million, a 5% increase from the prior year. This was driven by a 6% increase in sand revenue to $303.6 million, as the company sold 5.3 million tons of sand, up 17% from 2023. However, sand prices declined in the second half of 2024, partially offsetting the volume increase. SmartSystems revenue, which includes the company’s wellsite proppant storage and management solutions, declined 8% to $7.8 million due to lower overall utilization of the equipment fleet.
Gross profit increased 8% to $44.8 million, as the higher sand sales volumes were partially offset by the lower average selling prices. Operating expenses declined 3% to $41.8 million as the company continued to focus on cost-cutting measures. This resulted in operating income of $3.0 million, a significant improvement from the $1.5 million operating loss in 2023.
Net income was $3.0 million in 2024, down from $4.6 million the prior year. This was due to a smaller income tax benefit recorded in 2024 compared to 2023. The company’s effective tax rate was approximately -1,087% in 2024 versus 306% in 2023, reflecting the impact of tax credits, depletion deductions, and net operating loss carryforwards.
Revenue and Profit Trends
Smart Sand has seen a steady recovery in demand for its frac sand products since the industry downturn in 2020. Sand sales volumes increased 17% in 2024 compared to 2023, as exploration and production activity continued to rebound. However, sand prices declined in the second half of 2024, partially offsetting the volume gains.
The company’s SmartSystems business, which provides wellsite proppant storage and management solutions, saw a decline in revenue in 2024 due to lower overall utilization of the equipment fleet. This segment has been an important growth area for Smart Sand, allowing it to expand its offerings beyond just sand production.
Gross profit margins improved in 2024, rising to 14.4% compared to 14.0% in 2023. This was driven by the higher sales volumes, which helped leverage the company’s fixed production costs. However, the decline in average sand prices put some pressure on margins.
Operating expenses declined in 2024, as the company continued to focus on cost control measures. Selling, general and administrative costs were down 1%, while the company recorded a smaller loss on disposal of fixed assets compared to 2023.
Overall, Smart Sand’s profitability has stabilized after the industry downturn, with the company generating positive net income in both 2024 and 2023. However, the decline in sand prices in the second half of 2024 is a concern and bears watching going forward.
Strengths and Weaknesses
One of Smart Sand’s key strengths is its diversified asset base, with three operating processing facilities located in strategic locations. This provides the company with access to multiple Class I rail lines, allowing it to efficiently serve customers across North America. The company’s logistics capabilities, including its owned and operated transloading terminals, are also a competitive advantage.
Smart Sand has also successfully expanded its product offerings beyond just frac sand, with the launch of its industrial sand business in 2021. This diversification helps reduce the company’s reliance on the volatile oil and gas market.
The company’s SmartSystems business, which provides wellsite proppant storage and management solutions, is another strength. This value-added service helps customers improve efficiency and reduce their carbon footprint, positioning Smart Sand as a strategic partner.
A potential weakness for the company is its customer concentration, with its top three customers accounting for over 55% of 2024 revenue. This exposes Smart Sand to risks if any of these major customers were to significantly reduce their purchases.
Additionally, the company’s profitability remains sensitive to fluctuations in sand prices, as evidenced by the margin pressure seen in the second half of 2024. Smart Sand will need to continue focusing on cost control and operational efficiency to maintain margins in a competitive pricing environment.
Outlook and Future Prospects
Looking ahead, Smart Sand is cautiously optimistic about the outlook for 2025 and beyond. The company expects frac sand demand to remain at healthy levels, driven by increased lateral well lengths and higher sand volumes per well. However, the pace of the recovery will likely be moderate.
To position itself for future growth, Smart Sand has been executing on several strategic initiatives. This includes expanding its terminal network, with the addition of two new transloading facilities in Ohio in 2024 to better serve the Appalachian Basin. The company also increased its production capacity with the acquisition of the Blair, Wisconsin facility in 2022.
Additionally, Smart Sand continues to invest in its SmartSystems business, enhancing the capabilities of its wellsite proppant storage and management solutions. The company believes these value-added services will be increasingly important as customers look to improve efficiency and reduce their environmental impact.
In the industrial sand market, Smart Sand sees opportunities to further diversify its customer base and expand into new end-markets, such as glass, foundry, and building products. The company completed upgrades at its Ottawa, Illinois facility in 2023 to support this growth initiative.
Overall, Smart Sand appears well-positioned to navigate the evolving market dynamics in both the oil and gas and industrial sand sectors. Its diversified asset base, logistics capabilities, and innovative product offerings provide a solid foundation for the company to continue delivering value to its customers and shareholders.
Conclusion
Smart Sand delivered a solid financial performance in 2024, with increased sand sales volumes and improved profitability. The company’s diversified asset base, logistics capabilities, and expanding product offerings position it well to capitalize on future growth opportunities in both the oil and gas and industrial sand markets.
However, the company remains exposed to the volatility of sand prices, and its customer concentration presents a risk that will need to be carefully managed. Continued focus on cost control, operational efficiency, and strategic initiatives will be crucial for Smart Sand to navigate the evolving market landscape and drive sustainable long-term growth.
