0001193125-26-206587
SEC filingA challenging quarter with sharp revenue decline and swing to net loss, driven by lower proppant pricing and reduced shortfall revenue, partially offset by growth in power segment.
Gross profit fell sharply to $6.3 million from $54.5 million, resulting in a gross margin of 2.4%. The compression was due to utilization of the Dune Express with shortened average drive distances for deliveries to last-mile logistics customers, along with a decrease in maintenance expense between periods. Cost of sales remained elevated as overhead allocation, depreciation, and depletion are capitalized as a component of inventory and reflected in cost of sales when inventory is sold.
Operating income swung to a loss of $32.5 million from income of $15.3 million, reflecting the gross margin decline and higher operating expenses. Net loss was $47.3 million compared to net income of $1.2 million in the prior year, driven by the operating loss and higher interest expense. Diluted EPS was $(0.38) versus $0.01.
Net cash provided by operating activities improved to $19.0 million from a use of $7.5 million in the prior year, primarily due to a decrease in accounts receivable and an increase in accounts payable and accrued liabilities and other liabilities. Capital expenditures decreased to $29.3 million from $52.4 million, reflecting disciplined spending. Free cash flow was negative $10.3 million.
The power segment continued to benefit from the Moser acquisition, with rental revenue contributing to service revenue growth. The company sells proppant under supply agreements or spot sales at prevailing market rates, dependent on production costs, volumes sold, and market conditions.