Smart Sand Raises Annual Volume Growth Forecast
Smart Sand reported record quarterly revenue of $115.1 million and raised its forecast for annual sand sales-volume growth.
Smart Sand, Inc. (SND), a supplier of Northern White frac sand, industrial sand and proppant logistics services, raised its annual volume outlook after quarterly sales broke out of a near-flat start to the year. Tons sold rose 25% sequentially in the second quarter, following a 1% increase in the first quarter. The company reported record quarterly sales volumes and revenue.
Second-quarter sales totaled approximately 1,864,000 tons, generating revenue of $115.1 million. The company attributed the revenue increase to higher volumes and higher average selling prices. More sand also meant higher freight and transloading expenses, taking total cost of goods sold to $95.2 million. But Smart Sand said a greater volume moved through its own terminals, allowing more efficient logistics costs per ton than sales through third-party terminals.
That combination translated into more earnings from each ton. Contribution margin per ton reached $14.54, compared with $8.84 in the first quarter. The company said larger volumes spread fixed operating costs across more sales. Total contribution margin was $27.1 million, while adjusted EBITDA was $18.7 million. Smart Sand attributed the EBITDA improvement primarily to higher volumes, partially offset by the associated production and logistics expenses.
Sand remained the dominant business, producing $113.8 million in quarterly revenue. SmartSystems, the company's wellsite storage offering, generated $1.2 million. Chief Executive Charles Young said the redesigned SmartSystems fleet continued to perform well during the quarter. The company had put the new configuration into service in the first quarter, when Young said additional fleet investment would depend on customer commitments.
Industrial Products Solutions sales volumes also grew sequentially, Young said, although the company did not provide a separate revenue figure for that business. He said the company expects continued growth in industrial sales. The operation supplied markets beyond oil and gas, with the company's industrial sand offerings serving applications including glass, foundries, building products and filtration. Those sales sat alongside the core frac sand business and the logistics services that connected its mines with customers.
Net income was $10.2 million, below the $21.4 million reported a year earlier. The earlier quarter included a $21.7 million income tax benefit. Operating income in the latest quarter was $10.1 million. Smart Sand said operating expenses fell sequentially primarily because of lower wages and benefits, while royalties associated with higher sales volumes increased expenses relative to the year-earlier period.
The earnings improvement did not produce positive free cash flow for the quarter. Free cash flow was negative $1.4 million, against positive $0.8 million in the first quarter. Operating activities generated $3.4 million, while purchases of property, plant and equipment totaled $4.8 million. The company attributed the sequential decline in free cash flow primarily to the increase in those purchases.
For the first six months of 2026, capital spending totaled approximately $7.0 million. The company's full-year capital expenditure forecast is $15.0 million to $20.0 million, excluding acquisitions and potential investments in new terminals. Smart Sand expects positive free cash flow for the full year. At June 30, cash on hand was $10.2 million, with $30.0 million of undrawn availability under its credit facility.
Smart Sand also continued returning capital. It repurchased $2.5 million of shares during the quarter and declared a special dividend of $0.10 a share payable August 12. The company said total shareholder returns for 2026, including that pending dividend, would reach approximately $12.1 million.
The company now expects annual sales volumes to grow 10% to 20% over 2025, replacing its previous forecast of 5% to 10%. Young said demand remained strong across the key basins Smart Sand served. The company expects activity to remain strong through the third quarter and potentially into the fourth.
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