Smart Sand, Inc. (NASDAQ: SND) (the "Company" or "Smart Sand"), a fully integrated frac and industrial sand supply and services company, a low-cost producer of high quality Northern White frac sand, a proppant logistics solutions provider through both its in-basin transloading terminals and SmartSystemsTM products and services and a provider of industrial product solutions, today announced results for the third quarter of 2024.
"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."
Third Quarter 2024 Highlights
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, we had net loss before income tax of $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. 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 SmartSytem 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.
Adjusted EBITDA was $5.7 million for the third quarter of 2024, compared to $11.9 million for the second quarter of 2024 and $13.2 million for the third quarter of 2023. The decrease in adjusted EBITDA in the third quarter of 2024 compared to both of the comparable periods was primarily due to lower contribution margin per ton sold in the current period, which was driven by lower average selling prices.
Net cash provided by operating activities was $5.8 million in the third quarter of 2024, compared to net cash provided by operating activities of $14.9 million in the second quarter of 2024 and net cash provided by operating activities of $12.5 million in the third quarter of 2023. The decline in cash flow from operations in the third quarter of 2024 compared to the second quarter of 2024 was primarily due to reduced sales volumes and lower average selling prices in the current period.
Free cash flow was $3.7 million for the third quarter of 2024. Net cash provided by operating activities was $5.8 million and capital expenditures were $2.1 million in the third quarter of 2024. We currently estimate that full year 2024 capital expenditures will be between $8.0 million and $10.0 million.
Liquidity
On October 3, 2024, the Smart Sand Board of Directors declared a special dividend of $0.10 per share of common stock, which was paid on October 28, 2024 to stockholders of record at the close of business on October 15, 2024.
On October 3, 2024, the Smart Sand Board of Directors also approved an eighteen month share repurchase program under which we may purchase up to $10.0 million of our ordinary shares (the "Repurchase Program"). Pursuant to the Repurchase Program, we may repurchase our ordinary shares from time to time, in amounts, at prices and at such times as management deems appropriate, subject to market conditions and other considerations. Management may make repurchases in the open market, privately negotiated transactions, accelerated repurchase programs or structured share repurchase programs. The Repurchase Program will be conducted in compliance with applicable legal requirements and shall be subject to market conditions and other factors. The Repurchase Program does not obligate management to acquire any particular amount of ordinary shares and the Repurchase Program may be modified or suspended at any time.
Our primary sources of liquidity are cash on hand, cash flow generated from operations and available borrowings under the FCB ABL Credit Facility. As of September 30, 2024, cash on hand was $7.2 million and we had $30.0 million in undrawn availability on the FCB ABL Credit Facility.
