Smart Sand Inc. announced results for the third quarter of 2023. Tons sold were approximately 1,219,000 in the third quarter of 2023, compared to approximately 1,084,000 tons in the second quarter of 2023 and 1,110,000 tons in the third quarter of 2022, an increase of 10% sequentially and 12% over the comparable period in 2022.
Revenues were $76.9 million in the third quarter of 2023, compared to $74.8 million in the second quarter of 2023 and $71.6 million in the third quarter of 2022. Revenues increased in the third quarter of 2023, compared to the second quarter of 2023, primarily due to contractual shortfall revenue recognized in the third quarter of 2023. Third quarter 2023 revenues increased, compared to third quarter 2022, due to higher sales volumes.
Gross profit was $14.4 million in the third quarter of 2023, compared to $12.7 million in the second quarter of 2023 and $11.4 million in the third quarter of 2022. Gross profit improved in the third quarter of 2023 compared to the second quarter of 2023 primarily due to contractual shortfall revenue recognized in the third quarter of 2023 and lower freight expenses. Gross profit improved for the third quarter of 2023 compared to the third quarter of 2022 primarily due to an increase in sales volumes leading to higher sand revenues.
For the third quarter of 2023, the company had net income of $6.7 million, or $0.18 per basic and diluted share, compared to a net income of $6.3 million, or $0.17 per basic and diluted share, for the second quarter of 2023 and a net income of $2.7 million, or $0.06 per basic and diluted share, for the third quarter of 2022.
Net income was higher in the second quarter of 2023 compared to the third quarter of 2023 due to the income tax benefit recorded in the second quarter. The improvement in net income in the current year period relative to the comparable period in 2022 was primarily due to higher gross profit due to higher sand sales revenues from increased sales volumes.
Contribution margin of $21.0 million, or $17.20 per ton sold, for the third quarter of 2023 was an increase compared to $19.0 million, or $17.57 per ton sold for the second quarter of 2023, and third quarter 2022 contribution margin of $17.8 million, or $16.01 per ton sold.
- The increase in contribution margin, compared to the second quarter of 2023, was due primarily to contractual shortfall revenue recognized in the quarter.
- The increase in contribution margin and contribution margin per ton in the third quarter of 2023 compared to the third quarter of 2022 was primarily due to higher sales volumes leading to higher sand revenues and lower freight expenses.
“Smart Sand delivered strong operating and financial results in the third quarter of 2023,” stated Charles Young, Smart Sand’s chief executive officer. “Sales volumes increased sequentially as we saw strong demand in both the Bakken and Marcellus basins and had our first full quarter of operations at our Blair facility, leading to increased sales volumes into the Canadian market.
“In the third quarter we increased the number of Smartpath fleets utilizing our new Smartbelt technology and we continue to add new industrial sand sales customers” continued Young. “We continue to look for ways to expand our presence in key markets and broaden our customer base. In the fourth quarter, we expect to complete an expansion of our Waynesburg terminal in Pennsylvania to allow us to handle increased sales volume into the Marcellus Basin. Additionally, we anticipate completing improvements at our Utica, Illinois facility to add cooling and blending capabilities to support our industrial sand business. We continue to invest strategically to drive increased sales volumes from our three operating facilities. Our focus continues to be on increasing our free cash flow and delivering strong returns for our shareholders”