Smart Sand Inc. announced results for the third quarter of 2024. Tons sold were approximately 1,189,000 in the third quarter of 2024, compared to approximately 1,274,000 tons in the second quarter of 2024 and 1,219,000 tons in the third quarter of 2023, a 7% decrease sequentially and a 2% decrease over the comparable period in 2023.
Revenues were $63.2 million in the third quarter of 2024, compared to $73.8 million in the second quarter of 2024 and $76.9 million in the third quarter of 2023. Revenues declined in the third quarter of 2024, compared to both the second quarter of 2024 and third quarter 2023, due primarily to lower sales volumes and lower average selling prices. The supply and demand for Northern White sand have become more in balance over the course of 2024 which has led to pricing pressure.
For the third quarter of 2024, net loss before income tax was $5.2 million, compared to a net income before income tax of $1.9 million, for the second quarter of 2024 and net income before income tax of $4.8 million, for the third quarter of 2023.
“Income tax expense and benefits distorts our results of operations,” the company stated. “We do not expect to make payments for federal income tax in 2024. For the third quarter of 2024, we had lower net income before income tax expense as compared to the second quarter of 2024 and the third quarter 2023 due primarily to lower revenues from lower sales volumes and lower average sand prices coupled with lower SmartSystem rental revenue due to reduced fleet utilization in the quarter. Additionally, we had a $1.1 million non-cash charge related to the closing and relocation of our fabrication operations in Canada and $1.3 million in bank fees and legal expenses related to refinancing our expiring ABL credit facility.
“We reduced our SmartSystem fleet utilization in the quarter as we are currently in the process of revamping our SmartSystem fleet configuration to improve the efficiency of our fleet operations and to better meet the long term needs of the market. We are currently in testing mode for the revamped SmartSystems and expect to roll out the new fleet configuration early in 2025.”
Third quarter 2024 contribution margin of $13.2 million, or $11.09 per ton sold, was a decrease compared to $19.8 million or $15.53 per ton sold, for the second quarter of 2024, and $21.0 million or $17.20 per ton sold for the third quarter of 2023.
The decline in contribution margin and contribution margin per ton for both comparable periods was due primarily to lower average selling prices of our frac sand, partially offset by reduced production costs on both lower volumes and due to cost-cutting measures implemented by management.
“We are pleased to report that our continued focus on pro-actively managing our cost structure and capital expenditures led to positive free cash flow for the quarter,” stated Chuck Young, CEO of Smart Sand. “We remain cash flow positive for 2024, and in keeping with our stated goal of returning capital to our shareholders this year, we recently paid a special dividend of $0.10 per common share outstanding, and we additionally announced a share buyback plan of up to $10 million.
“Importantly, during the quarter, we put in place a new five-year $30 million ABL credit facility with our new lender First Citizens Bank. This facility provides us with an efficient and flexible source of funding that allows us manage our business going forward as well as the ability to act quickly on emerging opportunities.
“We continue to believe in the long-term fundamentals of the oil and gas business, and although volumes decreased modestly quarter over quarter, demand remains strong through the fourth quarter. As for 2025, we are particularly excited about anticipated growing demand for natural gas in both the US and Canadian markets coupled with oil activity that is expected to increase in the Utica basin. As a result, we expect a pickup in activity and volumes through the end of the year and in the first half of 2025.”