snd-20230930

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 September 30, 2023


☐			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)

28420 Hardy Toll Road, Suite 130
Spring, Texas 77373			(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 October 31, 2023: 41,295,604

TABLE OF CONTENTS


		PAGE
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended Septemb e r 30, 2023 and 2022 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (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	19
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	31
ITEM 4.	Controls and Procedures	31

PART II	OTHER INFORMATION	32

ITEM 1.	Legal Proceedings	32
ITEM 1A.	Risk Factors	32
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
ITEM 3.	Defaults upon Senior Securities	32
ITEM 4.	Mine Safety Disclosures	32
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 is 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 is considered a lease under article 2A of the Uniform Commercial Code but is considered a financing arrangement (and not a lease) for accounting or 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


	September 30, 2023		December 31, 2022
	(unaudited)
	(in thousands, except share amounts)
Assets
Current assets:
Cash and cash equivalents	$	9,309	$	5,510
Accounts receivable	24,015		35,746
Unbilled receivables	165		79
Inventory	25,955		20,185
Prepaid expenses and other current assets	712		6,593
Total current assets	60,156		68,113
Property, plant and equipment, net	255,644		258,843
Operating lease right-of-use assets	24,448		26,075
Intangible assets, net	6,074		6,669
Other assets	185		303
Total assets	$	346,507	$	360,003
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	10,439	$	14,435
Accrued expenses and other liabilities	15,461		13,430
Deferred revenue	2,018		6,959

Current portion of long-term debt	5,691		6,183
Current portion of operating lease liabilities	11,139		10,910
Total current liabilities	44,748		51,917

Long-term debt	6,895		9,807
Long-term operating lease liabilities	14,978		17,642
Long-term deferred tax liabilities, net	14,142		18,238
Asset retirement obligations	19,558		18,888

Other non-current liabilities	40		40
Total liabilities	100,361		116,532
Commitments and contingencies (Note 14)
Stockholders’ equity
Common stock, $0.001 par value, 350,000,000 shares authorized; 45,617,642 issued and 38,311,714 outstanding at September 30, 2023; 45,099,067 issued and 43,088,106 outstanding at December 31, 2022	38		43
Treasury stock, at cost, 7,305,928 and 2,010,961 shares at September 30, 2023 and December 31, 2022, respectively	(14,124)		(5,075)
Additional paid-in capital	180,934		178,386
Retained earnings	79,325		69,890
Accumulated other comprehensive income	(27)		227
Total stockholders’ equity	246,146		243,471
Total liabilities and stockholders’ equity	$	346,507	$	360,003

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands, except per share amounts)
Revenues:
Sand sales revenue	$	72,480	$	66,663	$	223,013	$	172,063
Shortfall revenue	2,389		2,681		4,304		4,596
Logistics revenue	2,031		2,248		6,709		5,252
Total revenue	76,900		71,592		234,026		181,911
Cost of goods sold	62,502		60,163		195,302		163,492
Gross profit	14,398		11,429		38,724		18,419
Operating expenses:
Salaries, benefits and payroll taxes	4,292		3,554		13,800		10,171
Depreciation and amortization	647		556		1,868		1,646
Selling, general and administrative	4,625		4,008		14,834		11,867
Loss (gain) on disposal of fixed assets, net	(92)		(466)		1,821		(482)


Total operating expenses	9,472		7,652		32,323		23,202
Operating income (loss)	4,926		3,777		6,401		(4,783)
Other income (expenses):

Interest expense, net	(276)		(411)		(940)		(1,244)

Other income	198		148		405		416
Total other income (expenses), net	(78)		(263)		(535)		(828)
Income (loss) before income tax expense (benefit)	4,848		3,514		5,866		(5,611)
Income tax expense (benefit)	(1,879)		831		(3,569)		(2,282)
Net income (loss)	$	6,727	$	2,683	$	9,435	$	(3,329)
Net income (loss) per common share:
Basic	$	0.18	$	0.06	$	0.24	$	(0.08)
Diluted	$	0.18	$	0.06	$	0.24	$	(0.08)
Weighted-average number of common shares:
Basic	38,253		42,522		39,153		42,265
Diluted	38,412		42,524		39,239		42,265

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)
Net income (loss)	$	6,727	$	2,683	$	9,435	$	(3,329)
Other comprehensive (loss) income:
Foreign currency translation adjustment	(147)		(266)		(254)		(324)
Comprehensive income (loss)	$	6,580	$	2,417	$	9,181	$	(3,653)

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)

Nine Months Ended September 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	(5,177,306)	(5)		5,177,306	(8,848)		—		—		—		(8,853)

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)

SEC Form 10-Q filed by Smart Sand Inc.