A declining number of active oil rigs across the oil and gas plays resulted in lower frac sand sales and revenue in the second quarter for Smart Sands Inc., the Texas firm with an operation in El Reno, Oklahoma.
The company reported 1.1 million tons of sand sold during the quarter, down from the first quarter, and $74.8 million in revenue along with net income of $6.3 million. The numbers compared to $82.4 million in the first quarter of 2023 and $68.7 million in the second quarter of 2022.
The company’s adjusted EBITDA for the quarter totaled $11.4 million based on $10.8 million free cash flow and $16.1 million in net cash provided by operating activities.
Smart Sand had net income of $6.3 million, or $0.17 per basic and diluted share, compared to a net loss of $3.6 million, or $(0.09) per basic and diluted share, for the first quarter of 2023 and a net loss of $0.1 million, or $0.00 per basic and diluted share, for the second quarter of 2022.
Revenues decreased in the second quarter of 2023, compared to the first quarter of 2023, due to lower tons sold in the second quarter of 2023 and contractual shortfall revenue recognized in the first quarter of 2023. While tons sold were marginally lower in the second quarter of 2023 compared to the second quarter of 2022, revenues increased as a result of higher average sales prices for the sand.
“Smart Sand continued to deliver solid financial and operating results in the second quarter of 2023,” stated Charles Young, Smart Sand’s Chief Executive Officer who credited some of the gains to increased frac sales volumes into the Bakken.
“We continue to take advantage of our high quality Northern White asset base and superior logistics service offerings to deliver strong financial returns for our shareholders. We started up operations at our Blair, Wisconsin facility and delivered our first sand shipments into the Canadian market,” he added.
Young anticipates a positive third quarter and the company intends to build on the momentum.
“Supply and demand fundamentals for Northern White sand have improved due to consistent demand for oil and natural gas leading to increased well completion activity, which has helped to support higher pricing for our sand.”
Tons sold were approximately 1,084,000 in the second quarter of 2023, compared to approximately 1,195,000 tons in the first quarter of 2023 and 1,196,000 tons in the second quarter of 2022, a decrease of 9% both sequentially and over the comparable period in 2022.
Gross profit was $12.7 million in the second quarter of 2023, compared to $11.6 million in the first quarter of 2023 and $9.0 million in the second quarter of 2022. Gross profit improved in the second quarter of 2023 compared to the first quarter of 2023 primarily due to lower seasonal production costs in spring and summer months and lower freight expenses due to a shift in the sales mix of the basins in which sand was delivered.. Gross profit improved for the second quarter of 2023 compared to the second quarter of 2022 primarily due to higher average sales prices for the sand.