Smart Sand, Inc. announced results for the second quarter 2021. Revenues were $29.6 million in the second quarter compared to $27.5 million in the first quarter of 2021 and $26.1 million in the second quarter of 2020.
Revenues were up due to higher sand sales revenues resulting from higher in-basin sales volumes, partially offset by a decrease in logistics and shortfall revenues.
Logistics revenue decreased in the second quarter of 2021, as compared to the first quarter of 2021, due to increased in-basin shipments, which include transportation and other handling services, rather than mine gate shipments. The increase in revenue in the second quarter of 2021, as compared to the second quarter of 2020, was primarily due to the negative impact of COVID-19 on sales during 2020, which was partially offset by shortfall revenue.
Tons sold were approximately 767,000 in the second quarter of 2021, compared with approximately 760,000 tons in the first quarter of 2021 and 208,000 tons in the second quarter of 2020, increases of 1% and 269%, respectively. Sales volumes were relatively consistent in the second quarter of 2021, compared to the first quarter of 2021, and significantly higher than the same period in the prior year. Demand has increased from last year as the overall economy has improved from the depressed levels caused by COVID-19 in 2020.
For the second quarter of 2021, the company had a net loss of $(27.3) million, or $(0.65) per basic and diluted share, compared to net loss of $(3.9) million, or $(0.09) per basic and diluted share, for the first quarter of 2021 and net income of $4.6 million, or $0.12 per basic and diluted share, for the second quarter of 2020.
The higher net loss in the second quarter of 2021, as compared to the first quarter of 2021 is primarily due to $19.6 million recorded as non-cash bad debt expense in the current period, which is the difference between the $54.6 million accounts receivable balance that was subject to the company’s litigation with U.S. Well Services LLC and the $35.0 million cash received in the settlement of such litigation, partially offset by higher average sand prices over the previous quarter. While the company wrote down a portion of the receivables that it had previously recorded related to the disputed contract with U.S. Well, it increased its cash position by $35.0 million as a result of the proceeds received in the settlement.
Charles Young, Smart Sand’s chief executive officer, stated, “We are pleased to have put the U.S. Well Service lawsuit behind us with the favorable judgement and our negotiated settlement of $35 million in cash. This brings this issue to a positive conclusion, provides us with additional liquidity to support the business and allows us the ability to fully focus on the path ahead for Smart Sand. Although second quarter sales volumes were basically flat with first quarter sales, our activity levels for the first half of 2021 were higher than we achieved in the first half of 2019, before the pandemic severely impacted market activity. Should commodity prices continue to stay in their current pricing ranges, we believe activity will start to improve over the next twelve months. With our high-quality asset base, ample liquidity and strong balance sheet, we are well positioned to compete in the market going forward.”
Smart Sand also revealed that it has entered into a new multi-year Master Product Purchase Agreement with EQT Production Co., a subsidiary of EQT Corporation.
Under the new agreement, the company will continue to supply EQT with frac sand in the Appalachian Basin, including at a new transloading terminal in southwestern Pennsylvania that the company intends to have in service by the end of the year. The agreement has a three-year term, subject to earlier termination if the new transloading terminal is not in service by the end of 2021.
“We are extremely excited to be continuing our long-term relationship with EQT, one of our oldest and most reliable business partners. This new contract demonstrates our continued commitment to provide long-term, sustainable sand supply and logistics solutions to our customers. The Appalachian Basin is a key market for Smart Sand. We continue to work to build out our logistics capabilities, including this new terminal, to offer even greater efficiency to our customers while also providing ESG benefits by reducing trucking mileage and associated carbon emissions related to sand delivery,” Young said.