snd-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________

FORM 10-Q

_____________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ___ to ___

Commission file number 001-37936

SMART SAND, INC.

(Exact name of registrant as specified in its charter)


Delaware			45-2809926
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

1000 Floral Vale Boulevard, Suite 225
Yardley, Pennsylvania 19067			(281) 231-2660
(Address of principal executive offices)			(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

SND

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated Filer ☒

Smaller reporting company

☒

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Number of shares of common stock outstanding, par value $0.001 per share, as of August 5, 2024: 42,926,544

TABLE OF CONTENTS


		PAGE
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2024 and 2023 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (Unaudited)	8
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	9
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	30
ITEM 4.	Controls and Procedures	30

PART II	OTHER INFORMATION	31

ITEM 1.	Legal Proceedings	31
ITEM 1A.	Risk Factors	31
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
ITEM 3.	Defaults upon Senior Securities	31
ITEM 4.	Mine Safety Disclosures	31
ITEM 5.	Other Information	32
ITEM 6.	Exhibits	33

SIGNATURES		34

Certain Definitions

The following definitions apply throughout this quarterly report unless the context requires otherwise:


“We”, “Us”, “Company”, “Smart Sand” or “Our”						Smart Sand, Inc., a company organized under the laws of Delaware, and its subsidiaries.

“shares”, “stock”						The common stock of Smart Sand, Inc., nominal value $0.001 per share.

“ABL Credit Facility”, “ABL Credit Agreement”, “ABL Security Agreement”						The five-year senior secured asset-based lending credit facility (the “ABL Credit Facility”) pursuant to: (i) an ABL Credit Agreement, dated December 13, 2019, between the Company and Jefferies Finance LLC, as amended from time to time (as amended, the “ABL Credit Agreement”); and (ii) a Guarantee and Collateral Agreement, dated December 13, 2019, between the Company and Jefferies Finance LLC, as agent, as amended from time to time (as amended, the “Security Agreement”).

“Oakdale Equipment Financing”, “MLA”						The five-year Master Lease Agreement, dated December 13, 2019, between Nexseer Capital (“Nexseer”) and related lease schedules in connection therewith (collectively, the “MLA”). The MLA was structured as a sale-leaseback of substantially all of the equipment at the Company’s mining and processing facility located near Oakdale, Wisconsin. The Oakdale Equipment Financing was considered a lease under article 2A of the Uniform Commercial Code but was considered a financing arrangement (and not a lease) for accounting or financial reporting purposes. The MLA and all schedules were paid and full and terminated on June 28, 2024.

“VFI Equipment Financing”						The four-year Master Lease Agreement, dated May 9, 2024, between Varilease Finance, Inc. (“VFI”) and related lease schedule entered into on June 26, 2024 in connection therewith (collectively, the “VFI Equipment Financing”). The VFI Equipment Financing was structured as a sale-leaseback of specific SmartSystemsTM wellsite proppant storage equipment owned by the Company. The VFI Equipment Financing is considered a lease under article 2A of the Uniform Commercial Code but is considered a financing arrangement (and not a lease) for accounting and financial reporting purposes.


“Exchange Act”						The Securities Exchange Act of 1934, as amended.

“Securities Act”						The Securities Act of 1933, as amended.



“FASB”, “ASU”, “ASC”, “GAAP”						Financial Accounting Standards Board, Accounting Standards Update, Accounting Standards Codification, Accounting Principles Generally Accepted in the United States, respectively.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SMART SAND, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2024		December 31, 2023
	(unaudited)
	(in thousands, except share amounts)
Assets
Current assets:
Cash and cash equivalents	$	6,257	$	6,072
Accounts receivable	26,232		23,231
Unbilled receivables	4,332		2,561
Inventory	25,031		26,823
Prepaid expenses and other current assets	2,929		3,217
Total current assets	64,781		61,904
Property, plant and equipment, net	246,530		255,092
Operating lease right-of-use assets	24,431		23,265
Intangible assets, net	5,480		5,876
Other assets	593		163
Total assets	$	341,815	$	346,300
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	9,548	$	16,041
Accrued expenses and other liabilities	12,808		11,024
Deferred revenue	636		1,154

Current portion of long-term debt	5,485		15,711
Current portion of operating lease liabilities	10,593		10,536
Total current liabilities	39,070		54,466

Long-term debt	9,330		3,449
Long-term operating lease liabilities	15,062		14,056
Deferred tax liabilities, net	15,029		12,101
Asset retirement obligations	20,421		19,923
Other non-current liabilities	38		38
Total liabilities	98,950		104,033
Commitments and contingencies (Note 12)
Stockholders’ equity
Common stock, $0.001 par value, 350,000,000 shares authorized; 46,254,641 issued and 38,771,217 outstanding at June 30, 2024; 45,858,022 issued and 38,486,762 outstanding at December 31, 2023	39		39
Treasury stock, at cost, 7,483,424 and 7,371,260 shares at June 30, 2024 and December 31, 2023, respectively	(14,471)		(14,249)
Additional paid-in capital	183,492		181,973
Retained earnings	73,893		74,539
Accumulated other comprehensive loss	(88)		(35)
Total stockholders’ equity	242,865		242,267
Total liabilities and stockholders’ equity	$	341,815	$	346,300

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SMART SAND, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands, except per share amounts)
Revenues:
Sand revenue	$	71,020	$	72,445	$	150,739	$	152,464
SmartSystems revenue	2,780		2,331		6,113		4,662
Total revenue	73,800		74,776		156,852		157,126
Cost of goods sold:
Sand cost of goods sold	58,903		60,193		127,870		128,932
SmartSystems cost of goods sold	1,824		1,894		4,098		3,868
Total cost of goods sold	60,727		62,087		131,968		132,800
Gross profit	13,073		12,689		24,884		24,326
Operating expenses:
Selling, general and administrative	8,871		8,953		19,221		19,717
Depreciation and amortization	671		629		1,345		1,221
Loss (gain) on disposal of fixed assets, net	3		24		6		1,913


Total operating expenses	9,545		9,606		20,572		22,851
Operating income	3,528		3,083		4,312		1,475
Other income (expenses):

Loss on extinguishment of debt	(1,310)		—		(1,310)		—
Interest expense, net	(393)		(223)		(882)		(664)
Other income	75		159		171		207
Total other expenses, net	(1,628)		(64)		(2,021)		(457)
Income (loss) before income tax expense (benefit)	1,900		3,019		2,291		1,018
Income tax expense (benefit)	2,330		(3,288)		2,937		(1,690)
Net (loss) income	$	(430)	$	6,307	$	(646)	$	2,708
Net (loss) income per common share:
Basic	$	(0.01)	$	0.17	$	(0.02)	$	0.07
Diluted	$	(0.01)	$	0.17	$	(0.02)	$	0.07
Weighted-average number of common shares:
Basic	38,724		37,968		38,639		39,611
Diluted	38,724		37,968		38,639		39,659

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SMART SAND, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
Net (loss) income	$	(430)	$	6,307	$	(646)	$	2,708
Other comprehensive (loss) income:
Foreign currency translation adjustment	(27)		(41)		(53)		(107)
Comprehensive (loss) income	$	(457)	$	6,266	$	(699)	$	2,601

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SMART SAND, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

Six Months Ended June 30, 2024


	Common Stock			Treasury Stock			Additional Paid-in Capital				Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity
	Outstanding Shares	Par Value		Shares	Amount				Retained Earnings
	(in thousands, except share amounts)
Balance at December 31, 2023	38,486,762	$	39	7,371,260	$	(14,249)	$	181,973	$	74,539	$	(35)	$	242,267
Foreign currency translation adjustment	—	—		—	—		—		—		(26)		(26)

Vesting of restricted stock	288,817	—		—	—		—		—		—		—
Stock-based compensation	—	—		—	—		642		—		—		642
Employee stock purchase plan compensation	—	—		—	—		6		—		—		6
Employee stock purchase plan issuance	17,891	—		—	—		25		—		—		25

Restricted stock buy back	(87,462)	—		87,462	(170)		—		—		—		(170)
Net loss	—	—		—	—		—		(216)		—		(216)
Balance at March 31, 2024	38,706,008	$	39	7,458,722	$	(14,419)	$	182,646	$	74,323	$	(61)	242,528
Foreign currency translation adjustment	—	—		—	—		—		—		(27)		(27)

Vesting of restricted stock	89,911	—		—	—		—		—		—		—
Stock-based compensation	—	—		—	—		840		—		—		840
Employee stock purchase plan compensation	—	—		—	—		6		—		—		6


Restricted stock buy back	(24,702)	—		24,702	(52)		—		—		—		(52)
Net loss	—	—		—	—		—		(430)		—		(430)
Balance at June 30, 2024	38,771,217	$	39	7,483,424	$	(14,471)	$	183,492	$	73,893	$	(88)	$	242,865

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Six Months Ended June 30, 2023


	Common Stock			Treasury Stock			Additional Paid-in Capital				Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity
	Outstanding Shares	Par Value		Shares	Amount				Retained Earnings
	(in thousands, except share amounts)
Balance at December 31, 2022	43,088,106	$	43	2,010,961	$	(5,075)	$	178,386	$	69,890	$	227	$	243,471
Foreign currency translation adjustment	—	—		—	—		—		—		(66)		(66)
Vesting of restricted stock	4,750	—		—	—		—		—		—		—
Stock-based compensation	—	—		—	—		779		—		—		779
Employee stock purchase plan compensation	—	—		—	—		7		—		—		7
Employee stock purchase plan issuance	21,810	—		—	—		33		—		—		33
Purchase of treasury stock	(5,175,688)	(5)		5,175,688	(8,845)		—		—		—		(8,850)
Restricted stock buy back	(1,618)	—		1,618	(3)		—		—		—		(3)
Net loss	—	—		—	—		—		(3,599)		—		(3,599)
Balance at March 31, 2023	37,937,360	$	38	7,188,267	$	(13,923)	$	179,205	$	66,291	$	161	231,772
Foreign currency translation adjustment	—	—		—	—		—		—		(41)		(41)
Vesting of restricted stock	228,036	—		—	—		—		—		—		—
Stock-based compensation	—	—		—	—		833		—		—		833
Employee stock purchase plan compensation	—	—		—	—		8		—		—		8
Restricted stock buyback	(48,131)	—		48,131	(77)		—		—		—		(77)
Net income	—	—		—	—		—		6,307		—		6,307
Balance at June 30, 2023	38,117,265	$	38	7,236,398	$	(14,000)	$	180,046	$	72,598	$	120	$	238,802

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SMART SAND, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended June 30,
	2024		2023
	(in thousands)
Operating activities:
Net (loss) income	$	(646)	$	2,708
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and accretion of asset retirement obligations	14,496		13,338
Amortization of intangible assets	398		398
Net loss on disposal of fixed assets	6		1,913
Amortization of deferred financing cost	53		53
Accretion of debt discount	92		93
Loss on extinguishment of debt	1,310		—
Deferred income taxes	2,927		(1,748)
Stock-based compensation, net	1,482		1,612
Employee stock purchase plan compensation	12		15
Changes in assets and liabilities:
Accounts receivable	(3,001)		5,908
Unbilled receivables	(

SEC Form 10-Q filed by Smart Sand Inc.