SND 10-Q
Smart Sand, Inc. (SND)
10-Q
2025-11-12
For: 2025-09-30
View Original
Added on
April 07, 2026
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, 2025
OR
| 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
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | ||||
( | |||||
| (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 | ||||||||||||
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 ☐ | 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 November 4, 2025: 43,543,792
TABLE OF CONTENTS
| PAGE | ||||||||
1
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. | |||||||
| “FCB ABL Credit Facility”, “FCB Credit Agreement”, “FCB Security Agreement” | The five-year senior secured asset-based credit facility (the “FCB ABL Credit Facility”) pursuant to: (i) a credit agreement, dated as of September 3, 2024, among the Company, the subsidiary borrowers and guarantors party thereto, First-Citizens Bank & Trust Company, as issuing bank, swingline lender and agent, and certain other lenders from time to time party thereto (the “FCB Credit Agreement”); and (ii) a guarantee and collateral agreement, dated as of September 3, 2024, among the Company, the subsidiary borrowers and guarantors party thereto and First-Citizens Bank & Trust Company, as agent (the “FCB Security Agreement”). | |||||||
| “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. | |||||||
2
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SMART SAND, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2025 | December 31, 2024 | ||||||||||
| (unaudited) | |||||||||||
| (in thousands, except share amounts) | |||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable | |||||||||||
| Unbilled receivables | |||||||||||
| Inventory | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other liabilities | |||||||||||
| Deferred revenue | |||||||||||
| Current portion of long-term debt | |||||||||||
| Current portion of operating lease liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Deferred tax liabilities, net | |||||||||||
| Asset retirement obligations | |||||||||||
| Other non-current liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 12) | |||||||||||
| Stockholders’ equity | |||||||||||
Common stock, $ | |||||||||||
Treasury stock, at cost, | ( | ( | |||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
SMART SAND, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Sand revenue | $ | $ | $ | $ | |||||||||||||||||||
| SmartSystems revenue | |||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||
| Cost of goods sold: | |||||||||||||||||||||||
| Sand cost of goods sold | |||||||||||||||||||||||
| SmartSystems cost of goods sold | |||||||||||||||||||||||
| Total cost of goods sold | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| (Gain) loss on disposal of fixed assets, net | ( | ( | |||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Operating income (loss) | ( | ( | ( | ||||||||||||||||||||
| Other income (expenses): | |||||||||||||||||||||||
| Loss on extinguishment of debt | ( | ( | |||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Other income | |||||||||||||||||||||||
| Total other expenses, net | ( | ( | ( | ( | |||||||||||||||||||
| Income (loss) before income tax expense (benefit) | ( | ( | ( | ||||||||||||||||||||
| Income tax expense (benefit) | ( | ( | ( | ||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Net income (loss) per common share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | ( | ||||||||||||||||||
| Diluted | $ | $ | $ | $ | ( | ||||||||||||||||||
| Weighted-average number of common shares: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
SMART SAND, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ||||||||||||||||||||||
| Comprehensive income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
SMART SAND, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
Nine Months Ended September 30, 2025
| 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, 2024 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan issuance | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Restricted stock buy back | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | ( | ( | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Restricted stock buy back | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Forfeited dividends | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan issuance | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Restricted stock buy back | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | ( | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||
6
Nine Months Ended September 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 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan issuance | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Restricted stock buy back | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Restricted stock buy back | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan issuance | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Restricted stock buy back | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
SMART SAND, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Operating activities: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, depletion and accretion of asset retirement obligations | |||||||||||
| Amortization of intangible assets | |||||||||||
| Net (gain) loss on disposal of fixed assets | ( | ||||||||||
| Amortization of deferred financing cost | |||||||||||
| Accretion of debt discount | |||||||||||
| Loss on extinguishment of debt | |||||||||||
| Provision for bad debt | |||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Stock-based compensation, net | |||||||||||
| Employee stock purchase plan compensation | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Unbilled receivables | ( | ||||||||||
| Inventory | ( | ( | |||||||||
| Prepaid expenses and other assets | ( | ( | |||||||||
| Deferred revenue | ( | ||||||||||
| Accounts payable | ( | ( | |||||||||
| Accrued and other expenses | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Investing activities: | |||||||||||
| Purchases of property, plant and equipment | ( | ( | |||||||||
| Proceeds from disposal of assets | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Financing activities: | |||||||||||
| Dividend payments to stockholders | ( | ||||||||||
| Proceeds from the issuance of notes payable | |||||||||||
| Repayments of notes payable | ( | ( | |||||||||
| Proceeds from revolving credit facility | |||||||||||
| Repayment of revolving credit facility | ( | ( | |||||||||
| Payments under finance leases | ( | ( | |||||||||
| Payment of deferred financing and debt issuance costs | ( | ( | |||||||||
| Payment for debt extinguishment costs | ( | ||||||||||
| Employee stock purchase plan issuance | |||||||||||
| Repurchase of treasury stock from restricted stock vesting | ( | ( | |||||||||
| Repurchase of treasury stock from Repurchase Program | ( | ||||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Net increase in cash and cash equivalents | |||||||||||
| Cash and cash equivalents at beginning of year | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental disclosure of cash flow information | |||||||||||
| Purchases of property, plant and equipment in accounts payable and accrued expenses | $ | $ | |||||||||
| Forfeited dividends | $ | $ | |||||||||
| Fixed assets purchased with debt | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
NOTE 1 — Organization and Nature of Business
The Company was incorporated in July 2011 and is headquartered in Yardley, Pennsylvania. The Company operates as a fully integrated frac and industrial sand supply and services company. The Company offers complete mine to wellsite proppant supply and logistics solutions to our frac sand customers. These operations include the excavation, processing and sale of sand as a proppant for hydraulic fracturing operations as well as proppant logistics and wellsite storage solutions through its SmartSystemsTM products and services. The Company also offers sand to customers for industrial uses through its Industrial Product Solutions (“IPS”) business. These industrial uses include glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail, and recreation.
Sand Mines and Processing Facilities
The Company’s integrated Oakdale, Wisconsin facility, with on-site rail infrastructure and wet and dry sand processing facilities, has access to two Class I rail lines, the Canadian Pacific Railway through the Company’s onsite rail terminal and the Union Pacific Railway through the Company’s nearby Byron, Wisconsin facility. The Company commenced operations at this mine and processing facility in July 2012, and subsequently expanded its operations in 2014, 2015 and 2018. Currently, the annual processing capacity at the Oakdale facility is approximately 5.5 million tons.
In September 2020, the Company acquired two frac sand mines and related processing facilities in Ottawa, Illinois and New Auburn, Wisconsin. The Ottawa facility has an annual processing capacity of approximately 1.6 million tons and access to the Burlington Northern Santa Fe (“BNSF”) Class I rail line through the Company’s Peru, Illinois transload facility. The Company began operating the Ottawa, Illinois mine and processing facility and Peru, Illinois transload facility in October 2020. The Company has no plans to operate the New Auburn facility for the foreseeable future.
In March 2022, the Company acquired its Blair, Wisconsin frac sand mine and related processing facility. The Blair facility has an annual processing capacity of approximately 2.9 million tons and contains an onsite, unit train capable rail terminal with access to the Class I Canadian National Railway. The Company began operating the Blair mine and processing facility in May 2023.
Transload & Logistics Solutions
In March 2018, the Company acquired the rights to operate a unit train capable transloading terminal in Van Hook, North Dakota to service the Bakken Formation in the Williston Basin and began providing Northern White sand in-basin in April 2018.
In September 2020, the Company acquired the rights to use a rail terminal located in El Reno, Oklahoma.
In September 2021, the Company acquired the rights to construct and operate a transloading terminal in Waynesburg, Pennsylvania to service the Appalachian Basin, including the Marcellus and Utica Formations. The Company began providing sand to customers through this terminal in January 2022 and expanded the facility’s capacity in late 2023.
In December 2023 and January 2024, the Company acquired the rights to use transloading terminals in Minerva, Ohio and Dennison, Ohio, respectively, and commenced operations at these sites servicing the Appalachian Basin in 2024.
9
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
NOTE 2 — Summary of Significant Accounting Policies
The information presented below supplements the complete description of our significant accounting policies disclosed in our 2024 Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 4, 2025.
Basis of Presentation and Consolidation
The accompanying unaudited quarterly condensed consolidated financial statements (“interim statements”) of the Company are presented in accordance with the rules and regulations of the SEC for quarterly reports on Form 10-Q and therefore do not include all the information and notes required by GAAP. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included. All adjustments are of a normal recurring nature. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. The consolidated balance sheet as of December 31, 2024 was derived from the audited consolidated financial statements as of and for the year ended December 31, 2024. These interim statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2024.
Use of Estimates
The preparation of interim statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates used in the preparation of these financial statements include, but are not limited to: impairment considerations of assets, including intangible assets, fixed assets, and inventory; estimated cost of future asset retirement obligations; fair value of acquired assets and assumed liabilities; recoverability of deferred tax assets; inventory reserve; the collectability of receivables; and certain liabilities. Actual results could differ from management’s best estimates as additional information or actual results become available in the future, and those differences could be material.
Additionally, events such as the ongoing conflicts in Ukraine and the Middle East, rapidly changing trade policies between the United States and other countries, and recent output changes by the Organization of the Petroleum Exporting Countries may affect oil and natural gas prices and create significant volatility in the oilfield service sector.
Employee Retention Credit
The Company qualified for federal government assistance through employee retention credit provisions of the Consolidated Appropriations Act of 2021. As of September 30, 2025 and December 31, 2024, the Company included $522
Performance Obligations
10
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes, which updates various disclosures including enhancing the income tax rate reconciliation and income taxes paid disclosures by requiring greater disaggregation of information. The other amendments in this Update are intended to improve the effectiveness and comparability of disclosures. The Update is effective for the Company for the annual reporting period beginning January 1, 2025 and for interim periods beginning January 1, 2026. While the Company is still in the process of evaluating the effects of ASU 2023-09 and its related updates on the consolidated financial statements, at the time of adoption, it believes the primary effect will be updated note disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, which updates various disclosures including enhancing the disclosure of certain costs and expenses in the notes to the financial statements. The Update is effective for the Company for its annual financial statements for 2027 and interim periods thereafter. Early adoption is permitted. While the Company is still in the process of evaluating the effects of ASU 2024-03, at the time of adoption, it believes the primary effect will be disaggregation of the cost of goods sold and selling, general and administrative line items on the face of the financial statements or within the notes to the financial statements.
NOTE 3 — Inventory
Inventory consisted of the following:
| September 30, 2025 | December 31, 2024 | ||||||||||
| Raw material | $ | $ | |||||||||
| Work in progress | |||||||||||
| Finished goods | |||||||||||
| Spare parts | |||||||||||
| Total inventory | $ | $ | |||||||||
11
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
NOTE 4 — Property, Plant and Equipment, net
Net property, plant and equipment consisted of:
| September 30, 2025 | December 31, 2024 | ||||||||||
| Machinery, equipment and tooling | $ | $ | |||||||||
SmartSystems | |||||||||||
| Vehicles | |||||||||||
| Furniture and fixtures | |||||||||||
| Plant and building | |||||||||||
| Real estate properties | |||||||||||
| Railroad and sidings | |||||||||||
| Land and land improvements | |||||||||||
| Asset retirement obligations | |||||||||||
| Mineral properties | |||||||||||
| Deferred mining costs | |||||||||||
| Construction in progress | |||||||||||
| Less: accumulated depreciation and depletion | |||||||||||
| Total property, plant and equipment, net | $ | $ | |||||||||
NOTE 5 — Accrued and Other Expenses
Accrued and other expenses were comprised of the following:
| September 30, 2025 | December 31, 2024 | ||||||||||
| Employee related expenses | $ | $ | |||||||||
Accrued equipment expense | |||||||||||
| Accrued professional fees | |||||||||||
| Accrued royalties | |||||||||||
| Accrued freight and delivery charges | |||||||||||
| Accrued real estate tax | |||||||||||
| Accrued utilities | |||||||||||
| Sales tax liability | |||||||||||
| Income tax payable | |||||||||||
| Other accrued liabilities | |||||||||||
| Total accrued liabilities | $ | $ | |||||||||
12
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
NOTE 6 — Debt
The current portion of long-term debt consists of the following:
| September 30, 2025 | December 31, 2024 | ||||||||||
| VFI Equipment Financing | $ | $ | |||||||||
| Notes payable | |||||||||||
| Finance leases | |||||||||||
| Current portion of long-term debt | $ | $ | |||||||||
Long-term debt, net of current portion consists of the following:
| September 30, 2025 | December 31, 2024 | ||||||||||
| FCB ABL Credit Facility | $ | $ | |||||||||
| VFI Equipment Financing | |||||||||||
| Notes payable | |||||||||||
| Finance leases | |||||||||||
| Long-term debt | $ | $ | |||||||||
13
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
The following summarizes the maturity of our debt:
| FCB ABL Credit Facility | VFI Equipment Financing | Notes Payable | Finance Leases | Total | |||||||||||||||||||||||||
| Remainder of 2025 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| 2026 | |||||||||||||||||||||||||||||
| 2027 | |||||||||||||||||||||||||||||
| 2028 | |||||||||||||||||||||||||||||
| 2029 | |||||||||||||||||||||||||||||
| 2030 and thereafter | |||||||||||||||||||||||||||||
| Total minimum payments | |||||||||||||||||||||||||||||
| Amount representing interest | ( | ( | ( | ( | |||||||||||||||||||||||||
| Amount representing unamortized lender fees | ( | ( | |||||||||||||||||||||||||||
| Present value of payments | |||||||||||||||||||||||||||||
| Less: current portion | ( | ( | ( | ( | |||||||||||||||||||||||||
| Total long-term debt | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
FCB ABL Credit Facility
On September 3, 2024, the Company entered into the FCB ABL credit facility. The FCB ABL Credit Facility provides for non-amortizing revolving loans in an aggregate principal amount of up to $30,000 , subject to a borrowing base comprised of eligible inventory and accounts receivable. Additionally, obligations under the FCB ABL Credit Facility are guaranteed by certain of our wholly-owned domestic subsidiaries and secured by a first-priority security interest in certain non-real estate assets. Borrowings under the FCB ABL Credit Facility bear interest at a rate equal to the secured overnight financing rate (“SOFR”) plus a margin of 2.75 %. The FCB ABL credit facility matures in September 2029.
The FCB ABL Credit Facility contains a number of covenants that, among other things, restrict our ability to incur liens or other indebtedness, make certain restricted payments, merge or consolidate and dispose of assets. In addition, the FCB ABL Credit Facility requires us in certain limited circumstances to maintain a minimum fixed charge coverage ratio of 1.0 . The FCB ABL Credit Facility also contains certain affirmative covenants and events of default customary for facilities of this type. The Company was compliant with all financial requirements of this facility.
The available borrowing amount under the FCB ABL Credit Facility as of September 30, 2025 was $30,000 and is based on the Company’s eligible accounts receivable and inventory. The Company had no borrowings outstanding and $30,000 available to be drawn under this facility as of September 30, 2025. The weighted average interest rate for this facility for the nine months ended September 30, 2025 was 6.64 %.
VFI Equipment Financing
On June 28, 2024, the Company entered into the VFI Equipment Financing with a principal amount of $10,000 . The VFI Equipment Financing is legally comprised of a Master Lease Agreement and one lease schedule. The VFI Equipment Financing is considered a lease under article 2A of the Uniform Commercial Code but is considered a financing arrangement for accounting and financial reporting purposes, and not a lease. The collateral under the VFI Equipment Financing includes the majority of the Company’s SmartSystems equipment. The VFI Equipment Financing bears interest at a fixed rate of 8.56 %. The Company used the net proceeds to repay in full and terminate the Oakdale Equipment Financing, and the remainder was used for general corporate purposes. The VFI Equipment Financing matures on May 8, 2028. The Company will reacquire the underlying equipment on the lease schedule upon maturity for one dollar.
14
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
Notes Payable
The Company has entered into various financing arrangements, primarily to finance heavy equipment. As of September 30, 2025, these notes payable bear interest at rates between 0.00 % and 8.49 %.
NOTE 7 — Leases
Lessee
The operating and financing components of the Company’s right-of-use assets and lease liabilities on the consolidated balance sheets were as follows:
| Balance Sheet Location | September 30, 2025 | December 31, 2024 | ||||||||||||||||||
| Right-of-use assets | ||||||||||||||||||||
| Operating | Operating right-of-use assets | $ | $ | |||||||||||||||||
| Financing | Property, plant and equipment, net | |||||||||||||||||||
| Total right-of use assets | $ | $ | ||||||||||||||||||
| Lease liabilities | ||||||||||||||||||||
| Operating | Operating lease liabilities, current and long-term portions | $ | $ | |||||||||||||||||
| Financing | Long-term debt, current and long-term portions | |||||||||||||||||||
| Total lease liabilities | $ | $ | ||||||||||||||||||
Operating lease costs are recorded as a single expense on the statement of operations and allocated to the right-of-use assets and the related lease liabilities as depreciation expense and interest expense, respectively. Lease cost recognized in the condensed consolidated statement of operations for the three and nine months ended September 30, 2025 and 2024 was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Finance lease cost | |||||||||||||||||||||||
| Amortization of right-of-use assets | $ | $ | $ | $ | |||||||||||||||||||
| Interest on lease liabilities | |||||||||||||||||||||||
| Operating lease cost | |||||||||||||||||||||||
| Short-term lease cost | |||||||||||||||||||||||
| Total lease cost | $ | $ | $ | $ | |||||||||||||||||||
15
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
Other information related to the Company’s leasing activity for the nine months ended September 30, 2025 and 2024 is as follows:
| Nine Months Ended September 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||
| Operating cash flows used for finance leases | $ | $ | ||||||||||||
| Operating cash flows used for operating leases | $ | $ | ||||||||||||
| Financing cash flows used for finance leases | $ | $ | ||||||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ | ||||||||||||
| Weighted average remaining lease term - finance leases | ||||||||||||||
| Weighted average discount rate - finance leases | % | % | ||||||||||||
| Weighted average remaining lease term - operating leases | ||||||||||||||
| Weighted average discount rate - operating leases | % | % | ||||||||||||
Maturities of the Company’s lease liabilities as of September 30, 2025 are as follows:
| Operating Leases | Finance Leases | Total | ||||||||||||||||||
| Remainder of 2025 | $ | $ | $ | |||||||||||||||||
| 2026 | ||||||||||||||||||||
| 2027 | ||||||||||||||||||||
| 2028 | ||||||||||||||||||||
| 2029 | ||||||||||||||||||||
| Thereafter | ||||||||||||||||||||
| Total cash lease payments | ||||||||||||||||||||
| Less: amounts representing interest | ( | ( | ( | |||||||||||||||||
| Total lease liabilities | $ | $ | $ | |||||||||||||||||
NOTE 8 — Asset Retirement Obligations
The Company had a post-closure reclamation and site restoration obligation of $22,124 as of September 30, 2025. The following is a reconciliation of the total reclamation liability for asset retirement obligations.
| Balance at December 31, 2024 | $ | ||||
| Accretion expense | |||||
| Balance at September 30, 2025 | $ | ||||
NOTE 9 — Segment Reporting
The Company has two reportable segments, Sand and SmartSystems, as of September 30, 2025. The Company evaluates its segment reporting on an ongoing basis. The Company does not currently provide asset information by reportable segment as it does not routinely evaluate the total asset position by segment. The Company’s operations in foreign countries are immaterial.
16
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
The chief operating decision maker (“CODM”) is Charles Young, the Company’s chief executive officer. The CODM regularly reviews the Company’s GAAP financial statements, as well as the non-GAAP reporting measures when considering the profit and loss of the Company and uses this information in deciding how to allocate resources.
The Sand segment includes both frac sand sales and IPS sales. The sand production process begins the same way for each of these revenue streams. Frac Sand consists of four primary sizes of sand, called grades. IPS begins with these same frac sand grades and may contain additional sizes or custom blends of a variety of grades.
The SmartSystems segment revenue is primarily from the rental of our patented SmartSystems equipment and related services provided to customers. This segment offers customers portable wellsite storage and management solutions that enable customers to unload, store, and deliver proppant at the wellsite.
During the three months ended September 30, 2025, two of the Company’s customers had revenues of more than 10%. Of these two customers, all had revenues in the Sand segment. Sand segment revenue during the three months ended September 30, 2025 includes $4.4 million related to contractual charges for tons sold in excess of certain contractual thresholds in a prior period, which was not recognizable under ASC 606 until the current period. The following tables present additional segment information for the three months ended September 30, 2025 and a reconciliation to amounts on the condensed consolidated statement of operations.
| Sand | SmartSystems | Total | |||||||||||||||
| Revenue | $ | $ | $ | ||||||||||||||
| Segment cost of goods sold | |||||||||||||||||
| Logistics costs | $ | $ | $ | ||||||||||||||
| Production costs | |||||||||||||||||
| Depreciation, depletion, and accretion of asset retirement obligations | |||||||||||||||||
| Other costs | |||||||||||||||||
| Total cost of goods sold | $ | $ | $ | ||||||||||||||
| Gross profit | $ | $ | $ | ||||||||||||||
| Total operating expenses | |||||||||||||||||
| Total other (expenses) income, net | ( | ||||||||||||||||
| Income tax expense (benefit) | |||||||||||||||||
| Net income | $ | ||||||||||||||||
| Additions to property, plant and equipment | $ | $ | |||||||||||||||
17
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
During the nine months ended September 30, 2025, two of the Company’s customers had revenues of more than 10%. Of these two customers, all have revenues only in the Sand segment. Sand segment revenue during the nine months ended September 30, 2025 includes $4.4 million related to contractual charges for tons sold in excess of certain contractual thresholds in a prior period, which was not recognizable under ASC 606 until the current period. The following tables present additional segment information for the nine months ended September 30, 2025 and a reconciliation to amounts on the condensed consolidated statement of operations.
| Sand | SmartSystems | Total | |||||||||||||||
| Revenue | $ | $ | $ | ||||||||||||||
| Segment cost of goods sold | |||||||||||||||||
| Logistics costs | $ | $ | $ | ||||||||||||||
| Production costs | |||||||||||||||||
| Depreciation, depletion, and accretion of asset retirement obligations | |||||||||||||||||
| Other costs | |||||||||||||||||
| Total cost of goods sold | $ | $ | $ | ||||||||||||||
| Gross profit | $ | $ | $ | ||||||||||||||
| Total operating expenses | |||||||||||||||||
| Total other (expenses) income, net | ( | ||||||||||||||||
| Income tax expense (benefit) | ( | ||||||||||||||||
| Net income | $ | ||||||||||||||||
| Additions to property, plant and equipment | $ | $ | |||||||||||||||
18
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
During the three months ended September 30, 2024, four of the Company’s customers had revenues of more than 10%. Of these four customers, three had revenues only in the Sand segment and one had revenues in the Sand segment and SmartSystems segment. The following tables present additional segment information for the three months ended September 30, 2024 and a reconciliation to amounts on the condensed consolidated statement of operations.
| Sand | SmartSystems | Total | |||||||||||||||
| Revenue | $ | $ | $ | ||||||||||||||
| Segment cost of goods sold | |||||||||||||||||
| Logistics costs | $ | $ | $ | ||||||||||||||
| Production costs | |||||||||||||||||
| Depreciation, depletion, and accretion of asset retirement obligations | |||||||||||||||||
| Other costs | |||||||||||||||||
| Total cost of goods sold | $ | $ | $ | ||||||||||||||
| Gross profit | $ | $ | ( | $ | |||||||||||||
| Total operating expenses | |||||||||||||||||
| Total other (expenses) income, net | ( | ||||||||||||||||
| Income tax expense (benefit) | ( | ||||||||||||||||
| Net loss | $ | ( | |||||||||||||||
| Additions to property, plant and equipment | $ | $ | |||||||||||||||
During the nine months ended September 30, 2024, three of the Company’s customers had revenues of more than 10%. Of these three customers, two had revenues only in the Sand segment and one had revenues in the Sand segment and SmartSystems segment. The following tables present additional segment information for the nine months ended September 30, 2024 and a reconciliation to amounts on the condensed consolidated statement of operations.
| Sand | SmartSystems | Total | |||||||||||||||
| Revenue | $ | $ | $ | ||||||||||||||
| Segment cost of goods sold | |||||||||||||||||
| Logistics costs | $ | $ | $ | ||||||||||||||
| Production costs | |||||||||||||||||
| Depreciation, depletion, and accretion of asset retirement obligations | |||||||||||||||||
| Other costs | |||||||||||||||||
| Total cost of goods sold | $ | $ | $ | ||||||||||||||
| Gross profit | $ | $ | $ | ||||||||||||||
| Total operating expenses | |||||||||||||||||
| Total other (expenses) income, net | ( | ||||||||||||||||
| Income tax expense (benefit) | ( | ||||||||||||||||
| Net loss | $ | ( | |||||||||||||||
| Additions to property, plant and equipment | $ | $ | |||||||||||||||
19
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
NOTE 10 — Earnings Per Share
Basic net income (loss) per share of common stock is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, excluding the dilutive effects of restricted stock. Diluted net income (loss) per share of common stock is computed by dividing the net income attributable to common stockholders by the sum of the weighted-average number of shares of common stock outstanding during the period plus the potential dilutive effects of shares of restricted stock outstanding during the period calculated in accordance with the treasury stock method, although shares of restricted stock are excluded if their effect is anti-dilutive. The number of shares underlying equity-based awards that were excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive was 2,492 and 1,158 for the three months ended September 30, 2025 and 2024, respectively. The number of shares underlying equity-based awards that were excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive was 2,473 and 1,158 for the nine months ended September 30, 2025 and 2024, respectively. In periods with a net loss, there is no difference between basic and diluted net loss per share of common stock. The following table reconciles the weighted-average common shares outstanding used in the calculation of basic net (loss) income per share to the weighted average common shares outstanding used in the calculation of diluted net income per share.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Assumed conversion of restricted stock | |||||||||||||||||||||||
| Diluted weighted average common stock outstanding | |||||||||||||||||||||||
NOTE 11 — Income Taxes
The Company calculates its interim income tax provision by estimating the annual expected effective tax rate and applying that rate to its ordinary year-to-date earnings or loss. In addition, the effect of changes in enacted tax laws, rates or tax status is recognized in the interim period in which the change occurs. For the three months ended September 30, 2025 and 2024, the effective tax rate was approximately 40.9 % and 98.1 %, respectively. For the nine months ended September 30, 2025 and 2024, the effective tax rate was approximately 106.6 % and 74.7 %, respectively. The computation of the effective tax rate includes modifications from the statutory rate such as income tax credits, tax depletion deduction, carrybacks, and state taxes, among other items. For the three and nine months ended September 30, 2025 and 2024, the statutory tax rate was 21.0
The Company has recorded a liability for uncertain tax positions included in its consolidated balance sheet of $2,240 as of December 31, 2024. There was no material change for the nine months ended September 30, 2025.
The Company believes it will not be able to use all of its tax benefits from some of its tax deductions. Because of this, it has recorded a partial valuation allowance against those benefits, which is included in the long-term deferred tax liabilities, net on its consolidated balance sheets. At December 31, 2024, the Company recorded a partial valuation allowance against the gross deferred tax assets on its consolidated balance sheet in the amount of $2,156 . There was no material change for the three and nine months ended September 30, 2025.
The Company’s federal income tax returns subsequent to 2020 remain open to audit by taxing authorities. The Company has not been informed that its tax returns are the subject of any audit or investigation by taxing authorities.
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (the “OBBBA”) enacting significant changes to the Internal Revenue Code. Many of the changes in the OBBBA make permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. ASC 740 requires entities to evaluate the effects of changes in tax rates and laws on deferred tax balances in the interim and annual reporting periods in which the legislation is enacted. The Company is currently evaluating the impact of the new legislation but does not expect it to have a material impact on the results of operations.
20
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
NOTE 12 — Concentrations
As of September 30, 2025, four customers accounted for 63 % of the Company’s total accounts and unbilled receivables. As of December 31, 2024, four customers accounted for 84 % of the Company’s total accounts receivable.
During the three months ended September 30, 2025, 58 % of the Company’s revenues were earned from three customers. During the three months ended September 30, 2024, 67 % of the Company’s revenues were earned from four customers. During the nine months ended September 30, 2025, 40 % of the Company’s revenues were earned from two customers. During the nine months ended September 30, 2024, 54 % of the Company’s revenues were earned from three customers.
As of September 30, 2025, one vendor accounted for 14 % of the Company’s accounts payable. As of December 31, 2024, one vendor accounted for 17 % of the Company’s accounts payable.
During the three months ended September 30, 2025, two vendors accounted for 27 % of the Company’s cost of goods sold. During the three months ended September 30, 2024, two vendors accounted for 33 % of the Company’s cost of goods sold. During the nine months ended September 30, 2025, two vendors accounted for 31 % of the Company’s cost of goods sold. During the nine months ended September 30, 2024, two vendors accounted for 36 % of the Company’s cost of goods sold.
The Company’s primary product is Northern White sand, and its mining operations are limited to Wisconsin and Illinois. There is a risk of loss if there are significant environmental, legal or economic changes to the geographic areas of the Company’s mines, the oil and natural gas producing basins they serve, or the transportation routes between them.
NOTE 13 — Commitments and Contingencies
Litigation
In addition to the matters described below, the Company may be subject to various legal proceedings, claims and governmental inspections, audits or investigations arising out of our operations in the normal course of business, which cover matters such as general commercial, governmental and trade regulations, product liability, environmental, intellectual property, employment and other actions. Although the outcomes of these routine claims cannot be predicted with certainty, in the opinion of management, the ultimate resolution of these matters will not have a material adverse effect on our financial statements.
Cory Berg, et al. v. Hi-Crush Blair LLC, LLC et al., Case No. 2019-cv-65, Trempealeau County, Wisconsin
Leland Drangstveit, et al. v. Hi-Crush Blair, LLC, et al., Case No. 2019-cv-66, Trempealeau County, Wisconsin
On April 22, 2019 and September 29, 2021, Cory Berg, et al. and Leland Drangstveit, et al., respectively (collectively, the “Plaintiffs”), filed complaints and an amended complaint in separate actions against Blair, certain of its subcontractors and its and their respective insurance companies in the Circuit Court of the State of Wisconsin in and for Trempealeau County (Case Nos. 19-CV-65 and 19-CV-66, respectively). The Plaintiffs allege that Blair and its subcontractors were negligent and created a nuisance by, among other things, generating excessive noise, light and dust. The Plaintiffs are seeking unspecified monetary damages and other relief. The insurance companies included as defendants have asserted counterclaims seeking declarations as to their rights and liabilities under their respective applicable commercial general liability insurance policies. HCR has agreed under the Purchase Agreement to indemnify the Company for any actions or omissions of HCR or its affiliates (including Blair) that occurred prior to the closing of the Company’s acquisition of Blair. In late August, several of the defendants, including Blair, agreed to settlement terms with the Plaintiffs. The parties finalized settlement paperwork in February 2025 and the matter is closed.
Bonds
The Company has performance bonds with various public and private entities regarding reclamation, permitting and maintenance of public roadways. Total aggregate principal amount of performance bonds outstanding as of September 30, 2025 was $19,727 .
21
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of the Company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related information contained herein and our audited financial statements as of December 31, 2024 contained in our Annual Report on Form 10-K. We use contribution margin, EBITDA, adjusted EBITDA and free cash flow herein as non-GAAP measures of our financial performance. For further discussion of contribution margin, EBITDA, adjusted EBITDA and free cash flow, see the section entitled “Non-GAAP Financial Measures.” We define various terms to simplify the presentation of information in this Quarterly Report on Form 10-Q (this “Report”). All share amounts are presented in thousands.
Forward-Looking Statements
This discussion contains forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed herein and in the section entitled “Risk Factors” in our Form 10-K for the year ended December 31, 2024. Our estimates and forward-looking statements are primarily based on our current expectations and estimates of future events and trends, which affect or may affect our business and operations. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to us. Important factors, in addition to the factors described in this Report, may adversely affect our results as indicated in forward-looking statements. You should read this Report and the documents that we have filed as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect. The words “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “might,” “would,” “continue” or the negative of these terms or other comparable terminology and similar words are intended to identify estimates and forward-looking statements. Estimates and forward-looking statements speak only as of the date they were made, and, except to the extent required by law, we undertake no obligation to update, to revise or to review any estimate and/or forward-looking statement because of new information, future events or other factors. Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. As a result of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this Report might not occur and our future results, level of activity, performance or achievements may differ materially from those expressed in these forward-looking statements due to, including, but not limited to, the factors mentioned above, and the differences may be material and adverse. Because of these uncertainties, you should not place undue reliance on these forward-looking statements.
Overview
The Company
We are a fully integrated frac and industrial sand supply and services company. We offer complete mine to wellsite proppant supply and logistics solutions to our frac sand customers. We produce low-cost, high quality Northern White sand, which is a premium sand used as proppant to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells and for a variety of industrial applications. We also offer proppant logistics solutions to our customers through our in-basin transloading terminals and our SmartSystems™ wellsite storage capabilities. In recent years, we have expanded our product line to offer Industrial Products Solutions (“IPS”) in order to diversify our customer base and markets we serve by offering sand for industrial uses. We market our products and services to oil and natural gas exploration and production companies, oilfield service companies, and industrial manufacturers. We sell our sand through long-term contracts, short-term supply agreements or spot sales in the open market. We provide wellsite proppant storage solutions services and equipment under flexible contract terms custom tailored to meet the needs of our customers. We believe that, among other things, the following makes us a highly attractive provider of sand and logistics services: (i) the size and favorable geologic characteristics of our sand reserves; (ii) the strategic location and logistical advantages of our facilities; (iii) our proprietary SmartDepot™
22
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
portable wellsite storage silos, SmartPath® wellsite proppant management system and SmartBelt™ conveyor; (iv) access to all Class I rail lines; and (v) the industry experience of our senior management team.
We incorporated in Delaware in July 2011 and began operations at our Oakdale, Wisconsin facility with 1.1 million tons of annual processing capacity in July 2012. After several expansions, our current annual processing capacity at our Oakdale facility, which has access to both the Canadian Pacific and Union Pacific rail networks, is approximately 5.5 million tons. In 2020, we acquired our Ottawa, Illinois mine and processing facility, which has an annual processing capacity of approximately 1.6 million tons and access to the Burlington Northern Santa Fe rail network. In March 2022, we acquired our Blair, Wisconsin mine and processing facility, which has approximately 2.9 million tons of total annual processing capacity and contains an onsite, unit train capable rail terminal with access to the Class I Canadian National Railway. We commenced operations at the Blair facility in May 2023. In total, we have annual processing capacity of approximately 10.0 million tons across all of our operating facilities.
We directly control five in-basin transloading facilities and have access to third party transloading terminals in all operating basins. We operate a unit train capable transloading terminal in Van Hook, North Dakota to service the Bakken Formation in the Williston Basin. We also serve the Appalachian Basin through three company-controlled terminals. In January 2022, we began operations at a unit train capable transloading terminal in Waynesburg, Pennsylvania, which we expanded in 2023. In December 2023, we acquired the right to operate a terminal in Minerva, Ohio and in January 2024, we acquired the right to operate a terminal in Dennison, Ohio. These two Ohio terminals became operational in 2024. In September 2025, we completed the expansion of our terminal in Dennison, OH. We also have the right to use a rail terminal located in El Reno, Oklahoma. Additionally, we have longstanding relationships with third party terminal operators that provide us with access to substantially all oil and natural gas exploration production basins of North America.
We offer portable wellsite proppant storage and management solutions to our customers through our SmartSystems products and services. Our SmartSystems enable customers to unload, store and deliver proppant at the wellsite, and rapidly set up, takedown and transport the entire system.
In 2021, we expanded our product line to offer Industrial Sand through IPS. In 2023, we completed the installation of blending and cooling assets at our Ottawa, Illinois facility that we believe provides additional opportunities to increase our customer base in the IPS business. While sales of IPS to customers have been a small portion of our overall sand sales, we expect to continue to expand and diversify to serve the major industrial markets throughout North America, including glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail, recreation and more.
Market Trends
Our historical results of operations and cash flows may not be indicative of results of operations and cash flows to be expected in the future. Events such as the ongoing conflicts in Ukraine and the Middle East, rapidly changing trade policies between the United States and other countries, and recent output changes by the Organization of the Petroleum Exporting Countries may affect oil and natural gas prices and create volatility in the oilfield service sector. Our sales into Mexico and Canada are currently exempt from tariffs. Although our sales into Canada were subject to tariffs earlier this year, a recent Surtax Remission Order eliminated such tariffs on our sand. Should the tariff rates change, we anticipate that our customers would be responsible for the increased cost, which may result in customers sourcing their sand needs from other suppliers within their own countries. We are currently unable to estimate the effect of current or future events on our future financial position and results of operations. Therefore, we give no assurances that these events will not have a material adverse effect on our financial position or results of operations.
We experienced an increase in the volume of sand sold in 2024, which was followed by a slowdown in the first quarter of 2025. We have experienced an increase in the volume of sand sold in the second and third quarters of 2025 as customers increased their activity. There have also been modest pricing fluctuations over the periods presented, but we believe the fluctuation is consistent with other commodities in the oilfield services sector. We believe the demand for frac sand will continue to moderately increase, driven by increased lateral well lengths and increased volume of sand per linear foot of lateral well. Additionally, demand may increase over the next five years, due to potential increased export capacity of LNG and increased power demand for data centers leading to increased drilling and completions of natural gas wells to support this growing demand.
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SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Demand in the IPS business is relatively stable as customers are spread over a wide range of industries including glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail, recreation and more. The IPS business is primarily influenced by macroeconomic drivers such as consumer demand and population growth. We believe that as this business grows, it may provide us with the ability to diversify a portion our sales into more stable, consumer-driven products to help mitigate price volatility in the oil and gas industry.
Since taking office on January 20, 2025, President Trump has issued a series of executive orders and memoranda signaling a shift in environmental and energy policy in the United States, including the revocation of approximately 80 Biden-era executive orders related to public health, the environment, climate change and climate-related financial risks. President Trump also declared a national energy emergency, directing agencies to expedite conventional energy projects, and several agencies have undertaken actions of a deregulatory nature in accordance with the executive orders, memoranda and emergency declaration. Though our products are not currently subject to tariffs, throughout 2025, there have been fluctuating tariffs that may directly or indirectly affect our results of operations. We continue to actively monitor current events, but we are unable to estimate the magnitude of their effect on our future financial position, results of operations or cash flows, or give any assurances that these events will not have a material adverse effect on our financial position, results of operations, or cash flows.
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SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
GAAP Results of Operations
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
The following table summarizes our revenue and expenses for the periods indicated.
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Dollars | Percentage | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Sand revenue | $ | 91,643 | $ | 62,232 | $ | 29,411 | 47 | % | |||||||||||||||
| SmartSystems revenue | 1,137 | 926 | 211 | 23 | % | ||||||||||||||||||
| Total revenue | 92,780 | 63,158 | 29,622 | 47 | % | ||||||||||||||||||
| Cost of goods sold: | |||||||||||||||||||||||
| Sand cost of goods sold | 76,766 | 55,601 | 21,165 | 38 | % | ||||||||||||||||||
| SmartSystems cost of goods sold | 1,079 | 1,070 | 9 | 1 | % | ||||||||||||||||||
| Total cost of goods sold | 77,845 | 56,671 | 21,174 | 37 | % | ||||||||||||||||||
| Gross profit | 14,935 | 6,487 | 8,448 | 130 | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative | 9,086 | 9,703 | (617) | (6) | % | ||||||||||||||||||
| Depreciation and amortization | 589 | 633 | (44) | (7) | % | ||||||||||||||||||
| (Gain) loss on disposal of fixed assets, net | (110) | 1,063 | (1,173) | (110) | % | ||||||||||||||||||
| Total operating expenses | 9,565 | 11,399 | (1,834) | (16) | % | ||||||||||||||||||
| Operating income (loss) | 5,370 | (4,912) | 10,282 | 209 | % | ||||||||||||||||||
| Other income (expenses): | |||||||||||||||||||||||
| Loss on extinguishment of debt | — | (31) | 31 | Not meaningful | |||||||||||||||||||
| Interest expense, net | (320) | (344) | 24 | 7 | % | ||||||||||||||||||
| Other income | 28 | 53 | (25) | (47) | % | ||||||||||||||||||
| Total other expenses, net | (292) | (322) | 30 | 9 | % | ||||||||||||||||||
| Income (loss) before income tax expense (benefit) | 5,078 | (5,234) | 10,312 | 197 | % | ||||||||||||||||||
| Income tax expense (benefit) | 2,076 | (5,136) | 7,212 | 140 | % | ||||||||||||||||||
| Net income (loss) | $ | 3,002 | $ | (98) | $ | 3,100 | 3,163 | % | |||||||||||||||
Revenues
Revenues were $92.8 million and tons sold were approximately 1,472,000 for the three months ended September 30, 2025. Revenues for the three months ended September 30, 2024 were $63.2 million, during which time we sold approximately 1,189,000 tons of sand. The key factors contributing to the increase in revenues for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, were as follows:
•Sand revenue was 47% higher at $91.6 million for the three months ended September 30, 2025 versus $62.2 million for the three months ended September 30, 2024. The higher sand revenue was due to higher sand volumes sold along with higher average sand prices. Higher average selling prices in the current period were primarily driven by changes in the delivery location mix rather than frac sand pricing. Sand revenue for the three months ended September 30,
25
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
2025 also included $4.4 million related to contractual charges for tons sold in excess of certain contractual thresholds in a prior period which was not recognizable under ASC 606 until the current period.
•SmartSystems revenue was approximately $1.1 million for the three months ended September 30, 2025 compared to $0.9 million for the three months ended September 30, 2024. The increase in SmartSystems revenue was due to higher utilization of our SmartSystems fleet.
Cost of Goods Sold
Cost of goods sold was $77.8 million and $56.7 million for the three months ended September 30, 2025 and 2024, respectively. The increase in cost of goods sold for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, was primarily due to higher sales volumes. The cost per ton to produce our sand was higher in the current period due to increased mining costs and increased freight and transloading costs. Freight and other delivery costs were higher due primarily to the delivery location of frac sand sales.
Gross Profit
Gross profit was $14.9 million for the three months ended September 30, 2025, compared to $6.5 million for the three months ended September 30, 2024. The increase in profitability for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was primarily due to higher sales volumes and the excess tons payment in the quarter, which were partially offset by higher freight and transloading costs due to delivery location.
Operating Expenses
Selling, general and administrative expenses decreased to $9.1 million for the three months ended September 30, 2025 compared to $9.7 million for the three months ended September 30, 2024. The decrease in selling, general and administrative expenses was primarily due to $1.3 million in banking and legal fees associated with refinancing our ABL facility in September 2024 partially offset by higher royalty expense due to increased sales volumes for the three months ended September 30, 2025.
Interest Expense, net
We incurred $0.3 million and $0.3 million of net interest expense for the three months ended September 30, 2025 and 2024, respectively.
Income Tax (Benefit) Expense
For the three months ended September 30, 2025 and 2024, our effective tax rate was approximately 40.9% and 98.1%, respectively. We are required to record our interim period income tax (benefit) expense in accordance with GAAP, which requires that we estimate our full year effective tax rate and apply that rate to the net income for the period. Our effective tax rate includes modifications from the statutory rate for items such as income tax credits, tax depletion deduction, carrybacks, and state taxes, among other items. The biggest driver of our income tax (benefit) expense is our depletion deduction calculation, which is not directly related to the net income of our Company. This tax deduction has an equally large effect on our income tax rate, which is the basis for the quarterly income tax (benefit) expense calculation. We do not expect to be a payer of federal income tax in 2025 and we expect to pay an immaterial amount of state income taxes in 2025. Because of the difference between income tax recorded on a GAAP basis and the cash taxes we expect to pay, we use additional non-GAAP performance measures of contribution margin, adjusted EBITDA, and free cash flow to evaluate our results of operations.
As of September 30, 2025, we have recorded a liability for uncertain tax positions included in our balance sheet, related to our depletion deduction methodology. As of September 30, 2025, we determined that it is more likely than not that we will not be able to fully realize the benefits of certain existing deductible temporary differences and have recorded a partial valuation allowance against the gross deferred tax assets, which is included in liabilities, long-term, net on our balance sheet, and a corresponding increase to the income tax expense on our condensed consolidated statement of operations.
26
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Net Income (Loss)
Net income was $3.0 million for the three months ended September 30, 2025 as compared to net loss of $0.1 million for the three months ended September 30, 2024. The improvement in net income in the current period relative to the prior year period is primarily due to the increase in total tons sold due to increased demand combined with lower operating expenses.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
The following table summarizes our revenue and expenses for the periods indicated.
Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Dollars | Percentage | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Sand revenue | $ | 240,697 | $ | 212,971 | $ | 27,726 | 13 | % | |||||||||||||||
| SmartSystems revenue | 3,411 | 7,038 | (3,627) | (52) | % | ||||||||||||||||||
| Total revenue | 244,108 | 220,009 | 24,099 | 11 | % | ||||||||||||||||||
| Cost of goods sold: | |||||||||||||||||||||||
| Sand cost of goods sold | 214,097 | 183,470 | 30,627 | 17 | % | ||||||||||||||||||
| SmartSystems cost of goods sold | 3,347 | 5,168 | (1,821) | (35) | % | ||||||||||||||||||
| Total cost of goods sold | 217,444 | 188,638 | 28,806 | 15 | % | ||||||||||||||||||
| Gross profit | 26,664 | 31,371 | (4,707) | (15) | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative | 27,439 | 28,924 | (1,485) | (5) | % | ||||||||||||||||||
| Depreciation and amortization | 1,812 | 1,978 | (166) | (8) | % | ||||||||||||||||||
| (Gain) loss on disposal of fixed assets, net | (830) | 1,069 | (1,899) | (178) | % | ||||||||||||||||||
| Total operating expenses | 28,421 | 31,971 | (3,550) | (11) | % | ||||||||||||||||||
| Operating income (loss) | (1,757) | (600) | (1,157) | 193 | % | ||||||||||||||||||
| Other income (expenses): | |||||||||||||||||||||||
| Loss on extinguishment of debt | — | (1,341) | 1,341 | Not meaningful | |||||||||||||||||||
| Interest expense, net | (978) | (1,226) | 248 | 20 | % | ||||||||||||||||||
| Other income | 223 | 224 | (1) | — | % | ||||||||||||||||||
| Total other expenses, net | (755) | (2,343) | 1,588 | 68 | % | ||||||||||||||||||
| (Loss) income before income tax expense | (2,512) | (2,943) | 431 | 15 | % | ||||||||||||||||||
| Income tax (benefit) expense | (2,679) | (2,199) | (480) | 22 | % | ||||||||||||||||||
| Net income (loss) | $ | 167 | $ | (744) | $ | 911 | 122 | % | |||||||||||||||
Revenues
Revenues were $244.1 million and tons sold were approximately 3,965,000 for the nine months ended September 30, 2025. Revenues for the nine months ended September 30, 2024 were $220.0 million, during which time we sold approximately 3,799,000 tons of sand. The key factors contributing to the change in revenues for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 were as follows:
•Sand revenue increased to $240.7 million for the nine months ended September 30, 2025 versus $213.0 million for the nine months ended September 30, 2024. Total volumes increased by approximately 4% while sand pricing per ton was slightly higher in the current period. Sand revenue for the nine months ended September 30, 2025 also included
27
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
$4.4 million related to contractual charges for tons sold in excess of certain contractual thresholds in a prior period which was not recognizable under ASC 606 until the current period.
•SmartSystems revenue was approximately $3.4 million for the nine months ended September 30, 2025 compared to $7.0 million for the nine months ended September 30, 2024. The decline in SmartSystems revenue was due to lower utilization of our SmartSystems fleet.
Cost of Goods Sold
Cost of goods sold was $217.4 million and $188.6 million for the nine months ended September 30, 2025 and September 30, 2024, respectively. The increase was primarily due to higher volumes sold in the current period and the related increase in production costs, and freight and transloading costs.
Gross Profit
Gross profit was $26.7 million and $31.4 million for the nine months ended September 30, 2025 and September 30, 2024, respectively. The gross profit for the nine months ended September 30, 2025 was lower, compared to the nine months ended September 30, 2024, due primarily to lower utilization of our SmartSystems fleet and increased freight and transload costs associated with higher sales volumes in the current period.
Operating Expenses
Selling, general and administrative expenses were $27.4 million for the nine months ended September 30, 2025 compared to $28.9 million for the nine months ended September 30, 2024. The decline in selling, general and administrative costs was driven by higher banking and legal costs associated with debt refinancing in the prior year. The gain on disposal of assets of $0.8 million for the nine months ended September 30, 2025 was primarily related to the sale of vacant land that was part of a previous acquisition.
Interest Expense, net
We incurred $1.0 million and $1.2 million of net interest expense for the nine months ended September 30, 2025 and September 30, 2024, respectively.
Income Tax (Benefit) Expense
For the nine months ended September 30, 2025 and September 30, 2024, our effective tax rate was approximately 106.6% and 74.7%, respectively. We are required to record our interim period income tax (benefit) expense in accordance with GAAP, which requires that we estimate our full year effective tax rate and apply that rate to the net income for the period. Our effective tax rate includes modifications from the statutory rate for items such as income tax credits, tax depletion deduction, carrybacks, and state taxes, among other items. The biggest driver of our income tax (benefit) expense is our depletion deduction calculation, which is not directly related to the net income of our Company. This tax deduction has an equally large effect on our income tax rate, which is the basis for the quarterly income tax (benefit) expense calculation. We do not expect to be a payer of federal income tax in 2025 and we expect to pay an immaterial amount of state income taxes in 2025. Because of the difference between income tax recorded on a GAAP basis and the cash taxes we expect to pay, we use additional non-GAAP performance measures of contribution margin, adjusted EBITDA, and free cash flow to evaluate our results of operations.
As of September 30, 2025, we have recorded a liability for uncertain tax positions included on our balance sheet, related to our depletion deduction methodology. As of September 30, 2025, we determined that it is more likely than not that we will not be able to fully realize the benefits of certain existing deductible temporary differences and have recorded a partial valuation allowance against the gross deferred tax assets, which is included in liabilities, long-term, net on our balance sheet, and a corresponding increase to the income tax expense on our condensed consolidated statement of operations.
28
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Net Income (Loss)
Net income was $0.2 million for the nine months ended September 30, 2025 as compared to net loss of $0.7 million for the nine months ended September 30, 2024. Net income improved in the current period primarily due to higher sales volumes and lower operating expenses partially offset by the increased cost of goods sold. Our income tax (benefit) expense further contributed to our net income for the current period. Income tax expense (benefit) often distorts our results of operations due to variances between amounts recorded for GAAP and the amount we pay in a reporting period. We calculate our income tax expense as required by GAAP, but we do not expect to be a payer of any material income taxes for the full year 2025. Because of the difference between income tax recorded on a GAAP basis and the cash taxes we expect to pay, we use non-GAAP measures of contribution margin, adjusted EBITDA, and free cash flow as measures of our performance.
Non-GAAP Financial Measures
Contribution margin, EBITDA, adjusted EBITDA and free cash flow are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial condition and results of operations. Gross profit is the GAAP measure most directly comparable to contribution margin, net income is the GAAP measure most directly comparable to EBITDA and adjusted EBITDA and net cash provided by operating activities is the GAAP measure most directly comparable to free cash flow. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measures. Each of these non-GAAP financial measures has important limitations as analytical tools because they exclude some but not all items that affect the most directly comparable GAAP financial measures. You should not consider contribution margin, EBITDA, adjusted EBITDA or free cash flow in isolation or as substitutes for an analysis of our results as reported under GAAP. Because contribution margin, EBITDA, adjusted EBITDA and free cash flow may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
Contribution Margin
We use contribution margin, which we define as total revenues less cost of goods sold excluding depreciation, depletion and accretion of asset retirement obligations, to measure our financial and operating performance. Contribution margin excludes other operating expenses and income, including costs not directly associated with the operations of our business such as accounting, human resources, information technology, legal, sales and other administrative activities.
We believe that reporting contribution margin and contribution margin per ton sold provides useful performance metrics to management and external users of our financial statements, such as investors and commercial banks, because these metrics provide an operating and financial measure of our ability, as a combined business, to generate margin in excess of our operating cost base.
Gross profit is the GAAP measure most directly comparable to contribution margin. Contribution margin should not be considered an alternative to gross profit presented in accordance with GAAP. Since contribution margin may be defined differently by other companies in our industry, our definition of contribution margin may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. The following table presents a reconciliation of gross profit to
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SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
contribution margin.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands, except per ton amounts) | |||||||||||||||||||||||
| Revenue | $ | 92,780 | $ | 63,158 | $ | 244,108 | $ | 220,009 | |||||||||||||||
| Cost of goods sold | 77,845 | 56,671 | 217,444 | 188,638 | |||||||||||||||||||
| Gross profit | 14,935 | 6,487 | 26,664 | 31,371 | |||||||||||||||||||
| Depreciation, depletion, and accretion of asset retirement obligations | 6,786 | 6,700 | 20,419 | 20,111 | |||||||||||||||||||
| Contribution margin | $ | 21,721 | $ | 13,187 | $ | 47,083 | $ | 51,482 | |||||||||||||||
| Contribution margin per ton | $ | 14.76 | $ | 11.09 | $ | 11.87 | $ | 13.55 | |||||||||||||||
| Total tons sold | 1,472 | 1,189 | 3,965 | 3,799 | |||||||||||||||||||
Contribution margin was $21.7 million and $13.2 million, or $14.76 and $11.09 per ton sold, for the three months ended September 30, 2025 and 2024, respectively. Contribution margin was higher compared to the same period in 2024 primarily due to increased sales volumes and the excess ton payment of $4.4 million partially offset by higher logistics costs related to the delivery location of our frac sand sales. Contribution margin was $47.1 million and $51.5 million, or $11.87 and $13.55 per ton sold, for the nine months ended September 30, 2025 and 2024, respectively. The decline in overall contribution margin for the nine month period ended September 30, 2025, when compared to the same period in 2024, was primarily due to the increase in logistics costs due to higher sales volumes, delivery location mix of our sales and increased mining costs.
EBITDA and Adjusted EBITDA
We define EBITDA as net income, plus: (i) depreciation, depletion and amortization expense; (ii) income tax expense (benefit) and other results of operations based taxes; and (iii) interest expense. We define adjusted EBITDA as EBITDA, plus: (i) gain or loss on sale of fixed assets or discontinued operations; (ii) integration and transition costs associated with specified transactions; (iii) equity compensation; (iv) acquisition and development costs; (v) non-recurring cash charges related to restructuring, retention and other similar actions; (vi) earn-out, contingent consideration obligations; and (vii) non-cash charges and unusual or non-recurring charges. Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors and commercial banks, to assess:
•the financial performance of our assets without regard to the impact of financing methods, capital structure or historical cost basis of our assets;
•the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities;
•our ability to incur and service debt and fund capital expenditures;
•our operating performance as compared to those of other companies in our industry without regard to the impact of financing methods or capital structure; and
•our debt covenant compliance, as adjusted EBITDA is a key component of critical covenants to the FCB ABL Credit Facility.
30
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
We believe that our presentation of EBITDA and adjusted EBITDA will provide useful information to investors in assessing our financial condition and results of operations. Net income is the GAAP measure most directly comparable to EBITDA and adjusted EBITDA. EBITDA and adjusted EBITDA should not be considered alternatives to net income presented in accordance with GAAP. Because EBITDA and adjusted EBITDA may be defined differently by other companies in our industry, our definitions of EBITDA and adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. The following table presents a reconciliation of net loss to EBITDA and adjusted EBITDA for each of the periods indicated.
| Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Net income (loss) | $ | 3,002 | $ | (98) | $ | 167 | $ | (744) | |||||||||||||||
| Depreciation, depletion and amortization | 7,179 | 7,161 | 21,619 | 21,574 | |||||||||||||||||||
| Income tax (benefit) expense and other taxes | 2,076 | (5,136) | (2,679) | (2,199) | |||||||||||||||||||
| Interest expense | 364 | 383 | 1,081 | 1,286 | |||||||||||||||||||
| EBITDA | $ | 12,621 | $ | 2,310 | $ | 20,188 | $ | 19,917 | |||||||||||||||
| Net (gain) loss on disposal of fixed assets | (110) | 1,063 | (830) | 1,069 | |||||||||||||||||||
| Equity compensation | 834 | 765 | 2,602 | 2,072 | |||||||||||||||||||
| Acquisition and development costs | — | 8 | — | 316 | |||||||||||||||||||
| Loss on extinguishment of debt | — | 31 | — | 1,341 | |||||||||||||||||||
| Cash charges related to restructuring and retention of employees | — | — | 33 | 148 | |||||||||||||||||||
| Bank and legal costs related to financing not closed | — | 1,294 | — | 1,294 | |||||||||||||||||||
| Accretion of asset retirement obligations | 269 | 249 | 832 | 747 | |||||||||||||||||||
| Adjusted EBITDA | $ | 13,614 | $ | 5,720 | $ | 22,825 | $ | 26,904 | |||||||||||||||
Adjusted EBITDA was $13.6 million for the three months ended September 30, 2025 compared to $5.7 million for the three months ended September 30, 2024. The increase in adjusted EBITDA for the three months ended September 30, 2025, compared to the same period in 2024, was primarily due to higher sales volumes of sand sold and the excess ton payment partially offset by the increase in logistics and production costs associated with those sales. Adjusted EBITDA was $22.8 million for the nine months ended September 30, 2025 compared to $26.9 million for the nine months ended September 30, 2024. The decrease in adjusted EBITDA for the nine months ended September 30, 2025, compared to the same period in 2024, was primarily due to higher logistics costs due to the delivery location of frac sand sales and higher mining costs.
Free Cash Flow
Free cash flow, which we define as net cash provided by operating activities less purchases of property, plant and equipment, is used as a supplemental financial measure by our management and by external users of our financial statements, such as investors and commercial banks, to measure the liquidity of our business.
Net cash provided by operating activities is the GAAP measure most directly comparable to free cash flows. Free cash flows should not be considered an alternative to net cash provided by operating activities presented in accordance with GAAP. Because free cash flows may be defined differently by other companies in our industry, our definition of free cash flows may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. The following table presents
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SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
a reconciliation of net cash provided by operating activities to free cash flows.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Net cash (used in) provided by operating activities | $ | 18,159 | $ | 5,810 | $ | 21,746 | $ | 16,829 | |||||||||||||||
| Purchases of property, plant and equipment | (3,385) | (2,135) | (9,597) | (5,135) | |||||||||||||||||||
| Free cash flow | $ | 14,774 | $ | 3,675 | $ | 12,149 | $ | 11,694 | |||||||||||||||
Free cash flow was $14.8 million for the three months ended September 30, 2025 compared to $3.7 million for the three months ended September 30, 2024. Free cash flow was $12.1 million for the nine months ended September 30, 2025 compared to $11.7 million for the nine months ended September 30, 2024. The increase in free cash flow for the three and nine months ended September 30, 2025 was primarily due to positive cash flows from operating activities due to higher net income and higher conversion of working capital to cash.
Liquidity and Capital Resources
Our primary sources of liquidity are cash flow generated from operations and availability under our FCB ABL Credit Facility and other equipment financing sources. As of September 30, 2025, cash on hand was $5.1 million and we had $30.0 million in undrawn availability on our FCB ABL Credit Facility.
Based on our balance sheet, cash flows, current market conditions, and information available to us at this time, we believe that we have sufficient liquidity and other available capital resources, to meet our cash needs for the next twelve months.
Material Cash Requirements
Dividends and Share Repurchase Program
On July 23, 2025, our Board of Directors declared a special dividend of $0.10 per share of common stock, which was paid on August 14, 2025 to stockholders of record at the close of business on August 4, 2025. The dividend payment returned approximately $4.4 million to our shareholders.
On October 3, 2024, our Board of Directors 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.
Under the Repurchase Program, we have repurchased 1,003,602 shares of our common stock for $2.1 million. The remaining amount that may be repurchased as of September 30, 2025 is $7.9 million.
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SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
10b5-1 Trading Plan
On May 22, 2025, we entered into a written trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. We implemented this written trading plan in connection with our Repurchase Program. The trading plan permitted the purchase of up to a total of $1.5 million of our shares (including commissions). The number of shares of Company common stock to be purchased on any purchase day was up to the maximum daily target volume allowable under Rule 10b-18 of the Exchange Act. We purchased $1.5 million of shares under the 10b5-1 Trading Plan and the plan was terminated in July 2025.
Capital Requirements
We expect full year 2025 capital expenditures to be between $15.0 million and $17.0 million, excluding any acquisitions. Our expected capital expenditures for 2025 are primarily to open new mining areas for development, efficiency projects at Oakdale, Blair and Ottawa facilities, expansion and customization of our newly acquired Ohio terminals and potential investment in one or more new terminals. We expect to fund these capital expenditures with existing cash from operations, equipment financing options available to us or borrowings under the FCB ABL Credit Facility.
Indebtedness
Our debt facilities include the VFI Equipment Financing, various notes payable and our FCB ABL Credit Facility. Our VFI Equipment Financing is secured by a substantial portion of the Company’s SmartSystems equipment. The outstanding balance under the VFI Equipment Financing as of September 30, 2025 was $6.9 million. Minimum cash payments on this facility for the remainder of 2025 are anticipated to be $0.7 million. Our various notes payable are primarily secured by heavy equipment. Total debt under these notes payable as of September 30, 2025 was $5.3 million. Minimum cash payments on these notes payable for the remainder of 2025 are anticipated to be $0.4 million. There were no outstanding borrowings on our FCB ABL Credit Facility as of September 30, 2025.
Operating Leases
We use leases primarily to procure certain office space, railcars and heavy equipment as part of our operations. The majority of our lease payments are fixed and determinable. Our operating lease liabilities as of September 30, 2025 were $26.0 million. Minimum cash payments on operating leases for the remainder of 2025 are anticipated to be $2.5 million.
Mineral Rights Property
The Company is obligated under certain contracts for minimum payments for the right to use land for extractive activities. The annual minimum payments under these contracts are approximately $2.5 million per year in the aggregate for the next 12 years.
Off-Balance Sheet Arrangements
We had outstanding performance bonds of $19.7 million as of September 30, 2025.
Contractual Obligations
As of September 30, 2025, we had contractual obligations for the FCB ABL Credit Facility, VFI Equipment Financing, notes payable, operating and finance leases, delivery of sand, royalties and similar minimum payments for the rights to mine land, capital expenditures, asset retirement obligations, and other commitments to municipalities for maintenance.
Environmental Matters
We are subject to various federal, state and local laws and regulations governing, among other things, hazardous materials, air and water emissions, environmental contamination and reclamation and the protection of the environment and natural resources. We have made, and expect to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures.
33
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Seasonality
Our business is affected to some extent by seasonal fluctuations in weather that impact the production levels for a portion of our wet sand processing capacity. While our dry plants are able to process finished product volumes evenly throughout the year, some of our excavation and our wet sand processing activities have historically been limited during winter months. As a consequence, we typically have experienced lower cash operating costs in the first and fourth quarter of each calendar year, and higher cash operating costs in the second and third quarter of each calendar year when we have overproduced sand to meet demand in the winter months. These higher cash operating costs are capitalized into inventory and expensed when these tons are sold, which can lead to us having higher overall cost of production in the first and fourth quarters of each calendar year as we expense inventory costs that were previously capitalized. We have indoor wet processing facilities at two of our plant locations, which allow us to produce wet sand inventory year-round to support a portion of our dry sand processing capacity, which may reduce some of the effects of this seasonality. We may also sell frac sand for use in oil and natural gas producing basins where severe weather conditions may curtail drilling activities and, as a result, our sales volumes to those areas may be reduced during such severe weather periods.
Customer Concentration
For the nine months ended September 30, 2025, Equitable Gas Corporation and Encino Energy accounted for 27.7% and 12.5% of total revenue, respectively. For the nine months ended September 30, 2024, revenue from Equitable Gas Corporation, Encino Energy and Liberty Oilfield accounted for 29%, 13.8%, and 11% of total revenue, respectively.
Critical Accounting Policies and Estimates
There have been no material changes in our critical accounting policies and procedures during the nine months ended September 30, 2025.
Use of Estimates
The preparation of interim statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates used in the preparation of these financial statements include but are not limited to: impairment considerations of assets, including intangible assets, fixed assets, and inventory; estimated cost of future asset retirement obligations; fair values of acquired assets and assumed liabilities; recoverability of deferred tax assets; inventory reserve; and the collectability of receivables; and certain liabilities.
Actual results could differ from management’s best estimates as additional information or actual results become available in the future, and those differences could be material. Future economic performance is uncertain due to current high inflation and other economic concerns. We continue to actively monitor the global impact of current events, but we are unable to estimate the impact of future events on our financial position and results of operations or give any assurances that these events will not have a material adverse effect on our financial position or results of operations.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have considered changes in our exposure to market risks during the nine months ended September 30, 2025 and have determined that there have been no material changes to our exposure to market risks from those described in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 4, 2025.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There were no changes that occurred during the third quarter of fiscal year 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time we may be involved in litigation relating to claims arising out of our operations in the normal course of business. The disclosure called for by Part II, Item 1 regarding our legal proceedings is incorporated by reference herein from Part I, Item 1. Note 14 - Commitments and Contingencies - Litigation of the notes to the condensed consolidated financial statements in this Form 10-Q for the three and nine months ended September 30, 2025.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended September 30, 2025, no shares were sold by the Company without registration under the Securities Act of 1933, as amended.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On October 3, 2024, our Board of Directors 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. The following table outlines purchases of our common stock under the Repurchase Program during the quarter ended September 30, 2025.
| Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares (or approximate dollar value) that may yet be purchased under the plans or programs | |||||||||||||||||||||||
| July 2025 | 13,627 | $ | 2.07 | 13,627 | $ | 7,904,773 | ||||||||||||||||||||
| August 2025 | — | $ | — | — | $ | 7,904,773 | ||||||||||||||||||||
| September 2025 | — | $ | — | — | $ | 7,904,773 | ||||||||||||||||||||
| 13,627 | 13,627 | |||||||||||||||||||||||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
We are committed to maintaining a culture that prioritizes mine safety. We believe that our commitment to safety, the environment and the communities in which we operate is critical to the success of our business. Our sand mining operations are subject to mining safety regulation. The U.S. Mining Safety and Health Administration (“MSHA”) is the primary regulatory
36
organization governing frac sand mining and processing. Accordingly, MSHA regulates quarries, surface mines, underground mines and the industrial mineral processing facilities associated with and located at quarries and mines. The mission of MSHA is to administer the provisions of the Federal Mine Safety and Health Act of 1977 and to enforce compliance with mandatory miner safety and health standards. As part of MSHA’s oversight, representatives perform at least two unannounced inspections annually for each above-ground facility.
We are also subject to regulations by the U.S. Occupational Safety and Health Administration, which has promulgated rules for workplace exposure to respirable silica for several other industries. Respirable silica is a known health hazard for workers exposed over long periods. MSHA has adopted rules of permissible exposure limits for respirable crystalline silica and an action level for respirable crystalline silica, implemented medical surveillance for metal/non-metal mines and updated the respiratory protection standard. Portions of the rule are subject to legal challenge and have been stayed as of April 2025. Airborne respirable silica is associated with work areas at our site and is monitored closely through routine testing and MSHA inspection.
Our operations are subject to the Federal Mine Safety and Health Act of 1977, as amended by the Mine Improvement and New Emergency Response Act of 2006, which imposes stringent health and safety standards on numerous aspects of mineral extraction and processing operations, including the training of personnel, operating procedures, operating equipment, and other matters. Our failure to comply with such standards, or changes in such standards or the interpretation or enforcement thereof, could have a material adverse effect on our business and financial condition or otherwise impose significant restrictions on our ability to conduct mineral extraction and processing operations. Following passage of The Mine Improvement and New Emergency Response Act of 2006, MSHA significantly increased the numbers of citations and orders charged against mining operations. The dollar penalties assessed for citations issued has also increased in recent years. Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this Report.
ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
| 3.1 | ||||||||
| 3.2 | ||||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
32.1*† | ||||||||
32.2*† | ||||||||
| 95.1* | ||||||||
| 101.INS | Extracted XBRL Instance Document - the instance document does not appear in the Interactive Data File as XBRL tags are embedded in the Inline XBRL document. | |||||||
| 101.SCH* | XBRL Taxonomy Extension Schema | |||||||
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase | |||||||
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase | |||||||
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase | |||||||
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase | |||||||
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
| * | Filed Herewith. | ||||
† | This certification is deemed not filed for purposes of section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act. | ||||
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Smart Sand, Inc. | ||||||||
| November 12, 2025 | By: | /s/ Lee E. Beckelman | ||||||
| Lee E. Beckelman, Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
| Smart Sand, Inc. | ||||||||
| November 12, 2025 | By: | /s/ Christopher M. Green | ||||||
| Christopher M. Green, Vice President of Accounting | ||||||||
| (Principal Accounting Officer) | ||||||||
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