Shares of Smart Sand Inc. (NASDAQ:SND) tumbled on Thursday, falling nearly 15% by 10:45 a.m. EDT after the frack sand producer reported lackluster first-quarter results.
On the one hand, Smart Sand's first-quarter results weren't that bad. Revenue jumped more than 70% year over year to $42.6 million after the company sold 723,000 tons of sand, the highest amount in its history. However, despite the jump, revenue did come in about $3.6 million below analysts' expectations. Earnings likewise missed the mark as the company posted only $1 million, or $0.02 per share, of net income -- even with the year-ago period and $0.06 per share below the consensus estimate -- due mainly to higher operating expenses because of an expansion project coming online in the second quarter.
CEO Charles Young noted that demand for frack sand "continues to be strong." He also stated that the company sold record volumes from its Oakdale, Wisconsin, facility and expects strong demand for the sand produced from an upcoming capacity expansion, which should be fully operational in the second quarter. The company also made progress during the quarter on its efforts to become a more integrated supplier of frack sand to the oil and gas industry by partnering with a major railroad to offer customers competitive and efficient deliveries. In addition to that, Smart Sand agreed to acquire a company that makes portable frack-sand storage solutions, which should close by month end.
While Smart Sand's quarter came in a bit lighter than expected, demand for frack sand remains red-hot due to improving oil prices. Because of that, revenue and earnings should head higher over the course of the year, especially with the Oakdale expansion coming online. Smart Sand might not be one of the top fracking stocks to consider buying amid the oil market recovery, but shares are certainly cheaper after today's sell-off and could bounce back sharply if earnings begin heading higher.