Smart Sand Inc. announced results for the third quarter 2021. Revenues were $34.5 million in the third quarter of 2021, compared to $29.6 million in the second quarter of 2021 and $23.4 million in the third quarter of 2020. Revenues were up in the third quarter, compared to the second quarter of 2021, due to higher sand sales revenues resulting from higher in-basin sales volumes and higher shortfall revenue.
The increase in revenue in the third quarter of 2021, as compared to the third 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 790,000 in the third quarter of 2021, compared with approximately 767,000 tons in the second quarter of 2021 and 309,000 tons in the third quarter of 2020, increases of 3% and 156%, respectively. Demand has increased from last year as the overall economy has improved from the depressed levels caused by COVID-19 in 2020.
For the third quarter of 2021, the company had a net loss of $7.3 million. The net loss in the third quarter is primarily attributable to continued low average selling prices relative to the cost to produce and deliver sand to its customers.
The difference in net loss in third quarter of 2021 compared to the net income third quarter of 2020 was primarily due to $39.9 million gain on bargain purchase related to its acquisition of Eagle Proppants Holdings in September 2020.
Contribution margin was $4.1 million, or $5.19 per ton sold, for the third quarter of 2021 compared to $3.5 million, or $4.55 per ton sold, for the second quarter of 2021 and $10.4 million, or $33.52 per ton sold, for the third quarter of 2020. Additional shortfall revenue in the third quarter was offset by higher shipping costs due to additional volumes sold in basin.
The decrease in contribution margin and contribution margin per ton in the third quarter of 2021 compared to the same period in the prior year was due primarily to higher shortfall revenue in the prior-year period offsetting historically low sales volumes as the COVID-19 pandemic negatively affected the global economy.
Charles Young, Smart Sand’s chief executive officer, stated, “During the third quarter, we increased sales volumes sequentially and generated positive cash flow from operations. We continue to manage our capital expenditures prudently and reduce our leverage as we pay down our equipment financing debt. We are starting to see signs of increased activity going into 2022 and we believe that our investment in our new Waynesburg, Pennsylvania terminal to service the Appalachian Basin, including the Marcellus and Utica Formations, is going to provide us with the ability to expand our market share in this key Northern White Sand market.”