• Sales Volume: Just under 1.3 million tons in Q2 2024, a 5% decrease from Q1 2024.
• Revenue: $73.8 million in Q2 2024, down from $83.1 million in Q1 2024.
• Contribution Margin: $19.8 million or $15.53 per ton in Q2 2024, up from $18.5 million or $13.85 per ton in Q1 2024.
• Adjusted EBITDA: $11.9 million in Q2 2024, compared to $9.3 million in Q1 2024.
• Free Cash Flow: $13.5 million in Q2 2024, compared to negative $5.5 million in Q1 2024.
• Cost of Sales: $60.7 million in Q2 2024, a 15% decrease from Q1 2024.
• Operating Expenses: $9.5 million in Q2 2024, down from $11 million in Q1 2024.
• Cash and Cash Equivalents: $6.3 million at the end of Q2 2024.
• Available Liquidity: In excess of $28 million at the end of Q2 2024.
• Capital Expenditures: $1.4 million in Q2 2024, with full-year expectations of $10 million to $13 million.

• Warning! GuruFocus has detected 6 Warning Signs with TRIB.

Release Date: August 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Smart Sand Inc (NASDAQ:SND) reported strong sales volume of just under 1.3 million tons in Q2 2024, exceeding projections.
• The company generated $13.5 million in free cash flow for the quarter, becoming free cash flow positive for the year through June.
• Contribution margin improved to $19.8 million, and adjusted EBITDA increased to $11.8 million in Q2 2024.
• Smart Sand Inc (NASDAQ:SND) is expanding its market presence by investing in new terminals in Ohio, opening up the Utica shale formation as a market.
• The company is committed to returning value to shareholders, with plans to announce such initiatives later in the year.

Negative Points

• Total revenues for Q2 2024 were $73.8 million, a decrease from $83.1 million in the first quarter, primarily due to lower sand sales volumes.
• Sales volumes decreased by 5% from the first quarter, with 1.27 million tons sold in Q2 2024.
• Smart Sand Inc (NASDAQ:SND) experienced a $1.3 million loss on the extinguishment of debt related to equipment lease payoffs.
• There is potential for a slowdown in the Marcellus Basin in the second half of the year due to low natural gas prices.
• The company faces ongoing fluctuations in oil and gas demand for frac sand, which could impact future sales.

Q & A Highlights

Q: Can you quantify the cost savings achieved and expected in the future? A: Lee Beckelman, CFO, explained that while it's challenging to quantify precisely, initiatives like hydro mining and labor management could reduce production costs by $1 to $2 per ton. William Young, COO, added that moving to electrically driven pumps helps mitigate diesel cost spikes, providing more cost stability.

Q: What are you seeing in terms of sand pricing in the spot market compared to contracted volumes? A: Lee Beckelman, CFO, noted that pricing has been relatively flat over the last few quarters. William Young, COO, added that while pricing varies by market, it has remained stable, with interest in contracting at mid-20s pricing levels. Charles Young, CEO, emphasized their strong rail logistics as a competitive advantage.

Q: How is the Canadian market performing, and what is the potential for growth? A: Lee Beckelman, CFO, stated that about 10% of sales are currently in Canada, with potential growth driven by LNG export capacity. William Young, COO, mentioned that their Blair mine's coarser sand aligns well with Canadian demand, allowing efficient use of their products.

Q: What is the expected impact of the Canadian rail strike on your operations? A: William Young, COO, indicated that the strike, primarily affecting Canada, should not impact their operations significantly in the Lower 48, where most of their volume is directed. They remain hopeful for a quick resolution.

Q: What are your plans for returning value to shareholders? A: Lee Beckelman, CFO, mentioned they are evaluating options such as dividends or share repurchases, considering cash flow consistency. They previously repurchased 11% of shares in 2023 and aim to continue delivering shareholder value.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.