Smart Sand Inc. second-quarter revenues were $67.9, an increase of 31% compared to first-quarter revenues of $51.8 million, and an increase of 25% compared to second-quarter 2018 revenues of $54.4 million.
Included in revenues were $16.3 million, $5.8 million and $0.7 million of shortfall revenues for the second quarter of 2019, the first quarter of 2019 and the second quarter of 2018, respectively. Of these shortfall revenue amounts, $14.5 million, $3.8 million and $0 related to customers currently subject to litigation.
The increase in revenue over the first quarter of 2019 was primarily attributable to higher shortfall revenue and higher sand sales. The increase over the second quarter 2018 was primarily attributable to higher shortfall revenue and increased in-basin sales.
Overall tons sold were approximately 741,000 in the second quarter of 2019, compared with approximately 648,000 tons in the first quarter of 2019 and 839,000 tons for the second quarter of 2018.
Net income was $14.3 million, or $0.36 per basic and diluted share, for the second quarter of 2019, compared with net income of $4.0 million, or $0.10 per basic and diluted share, for the first quarter of 2019 and net income of $10.0 million, or $0.25 per basic and diluted share, for the second quarter of 2018. The increased net income in the second quarter of 2019 is primarily attributable to higher shortfall revenues and strong in-basin sales along with lower operating costs in connection with “right sizing” the operations to match current sales volumes as compared to the prior quarters, respectively.
Charles Young, Smart Sand’s chief executive officer, stated, “Smart Sand had another solid quarter with sales volumes increasing sequentially as the market continued its recovery. We did this by executing our long-term strategy of supporting our existing long-term contracted customers; extending our spot market business; being one of the lowest-cost producers of high-quality Northern White Sand; maintaining low debt levels; delivering efficient and sustainable supply chain logistics from the mine to the wellsite; and ramping up the utilization of our last-mile SmartSystems.”
Smart Sand’s capital expenditures totaled $5.4 million for the second quarter ended June 30, 2019 and $13.9 million for the six months ended June 30, 2019, primarily for the manufacturing of its SmartSystems wellsite storage solutions and maintenance and efficiency upgrades at its Oakdale facility.
The company estimates full-year 2019 capital expenditures will be approximately $25 million to $35 million, excluding any additional acquisitions. This range of investment gives consideration to investment in the buildup of additional SmartSystems equipment.