Smart Sand (NASDAQ: SND) narrows loss as sand volumes surge in Q1 2026
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
Smart Sand, Inc. reported much stronger results for the quarter ended March 31, 2026. Revenue rose to $93.1 million from $65.6 million, driven by about 40% higher sand volumes sold at slightly better pricing. Tons sold increased to roughly 1.49 million from 1.07 million.
Gross profit improved to $6.1 million, and net loss narrowed sharply to $3.9 million from $24.2 million, helped by a much lower tax charge. Adjusted EBITDA increased to $3.8 million from $1.4 million. Free cash flow was $0.8 million, down from $5.2 million, mainly because prior customer prepayments were recognized as revenue.
Liquidity remained solid with $19.5 million of cash and $30.0 million of undrawn capacity on the FCB ABL Credit Facility. The company declared a special dividend of $0.10 per share, returning about $3.9 million, and authorized a new $20.0 million share repurchase program following completion of a $10.0 million program.
Positive
- Revenue and profitability improved sharply: Q1 2026 revenue rose to $93.1 million (up 42%), net loss narrowed to $3.9 million from $24.2 million, and adjusted EBITDA increased to $3.8 million from $1.4 million, reflecting higher sand volumes and better operating leverage.
Negative
- None.
Insights
Stronger volumes and pricing improved results, while balance sheet and capital returns remain conservative.
Smart Sand grew revenue to $93.1M, up 42%, on about 40% higher sand volumes and slightly better pricing. Contribution margin rose to $13.2M, and adjusted EBITDA more than doubled to $3.8M, indicating better operating leverage despite ongoing net losses.
Liquidity looks comfortable with $19.5M cash and $30.0M available on the FCB ABL Credit Facility, with no borrowings outstanding as of March 31, 2026. Debt is modest, mainly the VFI Equipment Financing and equipment notes, and lease obligations are predictable.
Capital allocation is more shareholder-friendly: a special dividend of $0.10 per share returned about $3.9M, and a new $20M repurchase program follows an earlier $10M plan. However, free cash flow fell to $0.8M, and revenue is still concentrated, with three customers making up 69% of sales in Q1 2026.
Key Figures
Revenue Q1 2026: $93.1 million
Revenue Q1 2025: $65.6 million
Net loss Q1 2026: $3.9 million
+5 more
8 metrics
Revenue Q1 2026
$93.1 million
Three months ended March 31, 2026
Revenue Q1 2025
$65.6 million
Three months ended March 31, 2025
Net loss Q1 2026
$3.9 million
Three months ended March 31, 2026
Adjusted EBITDA Q1 2026
$3.8 million
Non-GAAP metric for three months ended March 31, 2026
Tons of sand sold
1,492,000 tons
Three months ended March 31, 2026
Contribution margin per ton
$8.84 per ton
Three months ended March 31, 2026
Cash and cash equivalents
$19.5 million
Balance sheet as of March 31, 2026
ABL availability
$30.0 million
Undrawn FCB ABL Credit Facility as of March 31, 2026
Key Terms
FCB ABL Credit Facility, VFI Equipment Financing, Contribution margin, Adjusted EBITDA, +2 more
6 terms
FCB ABL Credit Facility financial
"The FCB ABL Credit Facility provides for non-amortizing revolving loans in an aggregate principal amount of up to $30,000..."
VFI Equipment Financing financial
"On June 28, 2024, the Company entered into the VFI Equipment Financing with a principal amount of $10,000."
Contribution margin financial
"We use contribution margin, which we define as total revenues less cost of goods sold excluding depreciation..."
Contribution margin is the amount of money left from a product’s sale after paying the costs that rise with each unit sold (like materials or hourly labor); it can be shown per unit or as a percentage of the sale price. Investors care because it shows how much each sale contributes to covering fixed expenses and generating profit — think of each sale as a slice of pie where the contribution margin is the slice available to pay the rent and add to earnings.
Adjusted EBITDA financial
"We define adjusted EBITDA as EBITDA, plus: (i) gain or loss on sale of fixed assets or discontinued operations..."
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Free cash flow financial
"Free cash flow, which we define as net cash provided by operating activities less purchases of property, plant and equipment..."
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
Asset retirement obligations financial
"The Company had a post-closure reclamation and site restoration obligation of $22,760 as of March 31, 2026."
Asset retirement obligations are a company’s recorded promise to pay for dismantling, cleaning up, or restoring property when a long-lived asset is retired — for example decommissioning a plant or removing equipment. Companies estimate the future cleanup cost today and book it as a liability (and add the cost to the asset), so it affects the balance sheet, reported profits over time, and future cash needs; investors watch it like a planned bill that can reduce cash available for returns.
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 March 31, 2026
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 May 5, 2026: 42,985,681
TABLE OF CONTENTS
| PAGE | ||||||||
PART I | FINANCIAL INFORMATION | |||||||
ITEM 1. | Financial Statements | 3 | ||||||
Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025 | 3 | |||||||
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 (Unaudited) | 4 | |||||||
Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2026 and 2025 (Unaudited) | 5 | |||||||
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2026 and 2025 (Unaudited) | 6 | |||||||
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (Unaudited) | 7 | |||||||
Notes to the Condensed Consolidated Financial Statements (Unaudited) | 8 | |||||||
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 | ||||||
ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk | 28 | ||||||
ITEM 4. | Controls and Procedures | 28 | ||||||
PART II | OTHER INFORMATION | 29 | ||||||
ITEM 1. | Legal Proceedings | 29 | ||||||
ITEM 1A. | Risk Factors | 29 | ||||||
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 29 | ||||||
ITEM 3. | Defaults upon Senior Securities | 29 | ||||||
ITEM 4. | Mine Safety Disclosures | 30 | ||||||
ITEM 5. | Other Information | 30 | ||||||
ITEM 6. | Exhibits | 31 | ||||||
SIGNATURES | 32 | |||||||
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., par 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
| March 31, 2026 | December 31, 2025 | ||||||||||
| (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 March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (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 on disposal of fixed assets, net | ( | ( | |||||||||
| Total operating expenses | |||||||||||
| Operating loss | ( | ( | |||||||||
| Other income (expenses): | |||||||||||
| Interest expense, net | ( | ( | |||||||||
| Other income | |||||||||||
| Total other expenses, net | ( | ( | |||||||||
| Loss before income tax (benefit) expense | ( | ( | |||||||||
| Income tax (benefit) expense | ( | ||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Net 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 LOSS
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Other comprehensive income (loss): | |||||||||||
| Foreign currency translation adjustment | |||||||||||
| Comprehensive 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)
Three Months Ended March 31, 2026
| 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, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| 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, 2026 | $ | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 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 | $ | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
SMART SAND, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Operating activities: | |||||||||||
| Net 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 on disposal of fixed assets | ( | ( | |||||||||
| Amortization of deferred financing cost | |||||||||||
| 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 | ( | ||||||||||
| Repayments of notes payable | ( | ( | |||||||||
| Proceeds from revolving credit facility | |||||||||||
| Repayment of revolving credit facility | ( | ||||||||||
| Payments under finance leases | ( | ( | |||||||||
| 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 (decrease) 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 | $ | $ | |||||||||
| Fixed assets purchased with debt | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
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 the Company’s SmartSystemsTM products and services. The Company also offers sand to customers for industrial uses through its Industrial Products 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 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 its Oakdale mine and processing facility in July 2012, and subsequently expanded its operations in 2014, 2015 and 2018. 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. In September 2025, the Company completed the expansion of its terminal in Dennison, Ohio.
8
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 2025 Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2026.
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, 2025 was derived from the audited consolidated financial statements as of and for the year ended December 31, 2025. These interim statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 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 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 periodic 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, along with potentially impacting the drilling and completion of new oil and natural gas wells. Recent U.S. actions in Iran and Venezuela have added uncertainty to global crude supply, pricing and market dynamics, which may indirectly affect demand for frac sand and related services. Since demand for frac sand is tied to new well completion activity, which is impacted by current oil and natural gas prices, the Company cannot predict if frac sand prices will increase, decrease or stabilize.
Performance Obligations
Recent Accounting Pronouncements
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
9
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
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:
| March 31, 2026 | December 31, 2025 | ||||||||||
| Raw material | $ | $ | |||||||||
| Work in progress | |||||||||||
| Finished goods | |||||||||||
| Spare parts | |||||||||||
| Total inventory | $ | $ | |||||||||
NOTE 4 — Property, Plant and Equipment, net
Net property, plant and equipment consisted of:
| March 31, 2026 | December 31, 2025 | ||||||||||
| Machinery, equipment and tooling | $ | $ | |||||||||
SmartSystems | |||||||||||
| Vehicles | |||||||||||
| Furniture and fixtures | |||||||||||
| Plant and buildings | |||||||||||
| 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 | $ | $ | |||||||||
10
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
NOTE 5 — Accrued and Other Expenses
Accrued and other expenses were comprised of the following:
| March 31, 2026 | December 31, 2025 | ||||||||||
| 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 | |||||||||||
| Other accrued liabilities | |||||||||||
| Total accrued liabilities | $ | $ | |||||||||
NOTE 6 — Debt
The current portion of long-term debt consists of the following:
| March 31, 2026 | December 31, 2025 | ||||||||||
| VFI Equipment Financing | $ | $ | |||||||||
| Notes payable | |||||||||||
| Finance leases | |||||||||||
| Current portion of long-term debt | $ | $ | |||||||||
Long-term debt, net of current portion consists of the following:
| March 31, 2026 | December 31, 2025 | ||||||||||
| FCB ABL Credit Facility | $ | $ | |||||||||
| VFI Equipment Financing | |||||||||||
| Notes payable | |||||||||||
| Finance leases | |||||||||||
| Long-term debt | $ | $ | |||||||||
11
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 2026 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| 2027 | |||||||||||||||||||||||||||||
| 2028 | |||||||||||||||||||||||||||||
| 2029 | |||||||||||||||||||||||||||||
| 2030 | |||||||||||||||||||||||||||||
| 2031 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 requirements of this facility.
The available borrowing amount under the FCB ABL Credit Facility as of March 31, 2026 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 March 31, 2026. There was no interest paid on this facility for the three months ended March 31, 2026.
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 11.56 %. The Company used the net proceeds to refinance a prior fixed rate facility, and the remainder was added to working capital. The VFI Equipment Financing matures on September 30, 2028. The Company will reacquire the underlying equipment on the lease schedule upon maturity for one dollar.
12
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 March 31, 2026, 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 | March 31, 2026 | December 31, 2025 | ||||||||||||||||||
| 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 condensed consolidated statements 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 statements of operations for the three months ended March 31, 2026 and 2025 was as follows:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Finance lease cost | |||||||||||
| Amortization of right-of-use assets | $ | $ | |||||||||
| Interest on lease liabilities | |||||||||||
| Operating lease cost | |||||||||||
| Short-term lease cost | |||||||||||
| Total lease cost | $ | $ | |||||||||
13
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 three months ended March 31, 2026 and 2025 is as follows:
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| 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 March 31, 2026 are as follows:
| Operating Leases | Finance Leases | Total | ||||||||||||||||||
| Remainder of 2026 | $ | $ | $ | |||||||||||||||||
| 2027 | ||||||||||||||||||||
| 2028 | ||||||||||||||||||||
| 2029 | ||||||||||||||||||||
| 2030 | ||||||||||||||||||||
| 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 $22,760 as of March 31, 2026. The following is a reconciliation of the total reclamation liability for asset retirement obligations.
| Balance at December 31, 2025 | $ | ||||
| Accretion expense | |||||
| Balance at March 31, 2026 | $ | ||||
NOTE 9 — Segment Reporting
The Company has two reportable segments, Sand and SmartSystems, as of March 31, 2026. 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 chief operating decision maker (“CODM”) is Charles
14
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
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 primarily consists of four 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 March 31, 2026, three of the Company’s customers each accounted for more than 10% of the Company’s revenues. Of these three customers, two had revenues in the Sand segment and one had revenues in both the Sand and SmartSystems segment. The following tables present additional segment information for the three months ended March 31, 2026 and a reconciliation to amounts on the condensed consolidated statements 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 (1) | |||||||||||||||||
| 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 | $ | $ | |||||||||||||||
| (1) Other costs primarily consist of labor and benefits, consumables, equipment-related costs, maintenance, utilities, and other operational support expenses. | |||||||||||||||||
15
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 March 31, 2025, four of the Company’s customers each accounted for more than 10% of the Company’s revenues. Of these four customers, all had revenues in the Sand segment. The following tables present additional segment information for the three months ended March 31, 2025 and a reconciliation to amounts on the condensed consolidated statements 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 (1) | |||||||||||||||||
| 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 | $ | $ | |||||||||||||||
| (1) Other costs primarily consist of labor and benefits, consumables, equipment-related costs, maintenance, utilities, and other operational support expenses. | |||||||||||||||||
The following table presents revenue by geographic location, based on the country in which delivery to the customer occurred for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| United States | $ | $ | |||||||||
| Canada | |||||||||||
| Total Revenue | $ | $ | |||||||||
NOTE 10 — 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 March 31, 2026 and 2025, the effective tax rate was approximately 23.3 % and (233.6 )%, respectively. The computation of the effective tax rate includes modifications from the statutory rate such as income tax credits, tax depletion deduction, valuation allowance and state taxes, among other items. For the three months ended March 31, 2026 and 2025, the statutory tax rate was 21.0
The Company has recorded a liability for uncertain tax positions included in its consolidated balance sheet of $630 as of December 31, 2025. There was no material change for the three months ended March 31, 2026.
16
SMART SAND, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per share data)
(UNAUDITED)
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 March 31, 2026 and December 31, 2025, the Company recorded a partial valuation allowance against the gross deferred tax assets on its consolidated balance sheet in the amount of $5,486 and $1,866 , respectively.
The Company’s federal income tax returns subsequent to 2021 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.
NOTE 11 — Concentrations
As of March 31, 2026, four customers accounted for 66 % of the Company’s total accounts and unbilled receivables. As of December 31, 2025, four customers accounted for 57 % of the Company’s total accounts receivable.
During the three months ended March 31, 2026, 69 % of the Company’s revenues were earned from three customers. During the three months ended March 31, 2025, 74 % of the Company’s revenues were earned from four customers.
As of March 31, 2026, one vendor accounted for 13 % of the Company’s accounts payable. As of December 31, 2025, two vendors accounted for 24 % of the Company’s accounts payable.
During the three months ended March 31, 2026, three vendors accounted for 42 % of the Company’s cost of goods sold. During the three months ended March 31, 2025, two vendors accounted for 40 % 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 12 — Commitments and Contingencies
Litigation
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.
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 March 31, 2026 was $19,964 .
NOTE 13 — Subsequent Events
On April 9, 2026, the Smart Sand Board of Directors declared a special dividend of $0.10 per share of common stock, which was paid on May 5, 2026 to stockholders of record at the close of business on April 22, 2026. The dividend payment returned approximately $3,937 to the Company’s shareholders.
17
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, 2025 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, 2025. 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 late 2021, we created our Industrial Products Solutions (“IPS”) business 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 diversified industrial and commercial customers. 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: (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™ portable wellsite storage silos, SmartPath® wellsite proppant management system
18
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
and SmartBelt™ conveyor; (iv) access to all Class I rail lines; and (v) the industry experience of our senior management team make us a highly attractive provider of sand and logistics services.
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 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 substantially all operating basins. These terminals allow us to offer more efficient and sustainable delivery options to our customers. 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, Ohio. We also have rights to use a rail terminal located in El Reno, Oklahoma. Additionally, we have long-standing relationships with third party terminal operators that allow us 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.
We expanded our IPS product line in 2023 by completing the installation of blending and cooling equipment at our Ottawa, Illinois facility, which we believe provides new opportunities to increase our customer base in the IPS business. 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 and recreational uses.
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 periodic 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. Recent U.S. actions in Iran and Venezuela have added uncertainty to global crude supply, pricing and market dynamics, which may indirectly affect demand for frac sand and related services.
Our sales into Mexico and Canada are currently exempt from tariffs. Although our sales into Canada were subject to tariffs in the beginning of 2025, a 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.
During 2025 and the first quarter of 2026, we experienced an increase in the volume of sand sold as customers increased their activity. There have also been modest sand pricing fluctuations over the periods presented, but we believe the fluctuation is consistent with other products in the oilfield services sector. We believe the demand for frac sand will continue to moderately increase, driven by long-term demand for natural gas in North America and continued efforts by oil and natural gas producers to increase the efficiency of well completions and the increased production per well completed, which is leading to increased
19
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
volume of sand per linear foot of lateral well. Frac sand demand may also increase over the next five years, due to higher levels of drilling and completion of natural gas wells to supply natural gas for increased export capacity of liquefied natural gas (“LNG”) and increased power demand for data centers. North American LNG export capacity is currently expected to grow by over 50% by 2030. Artificial intelligence (“AI”) facilities are being planned in various locations across North America, including near the Marcellus region. Developers of AI facilities are looking for locations near existing natural gas wells, water, infrastructure and people to be able to directly source some of their power supply needs. We are watching AI and LNG export capacity growth closely as a potential long-term driver of demand for our frac sand products and logistical services.
Demand in the IPS business is 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 of 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 numerous Biden-era executive orders, presidential memoranda and other executive actions 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, recently, 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.
20
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
GAAP Results of Operations
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
The following table summarizes our revenue and expenses for the periods indicated.
Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percentage | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Sand revenue | $ | 92,488 | $ | 64,464 | $ | 28,024 | 43 | % | |||||||||||||||
| SmartSystems revenue | 623 | 1,094 | (471) | (43) | % | ||||||||||||||||||
| Total revenue | 93,111 | 65,558 | 27,553 | 42 | % | ||||||||||||||||||
| Cost of goods sold: | |||||||||||||||||||||||
| Sand cost of goods sold | 85,842 | 61,673 | 24,169 | 39 | % | ||||||||||||||||||
| SmartSystems cost of goods sold | 1,161 | 1,113 | 48 | 4 | % | ||||||||||||||||||
| Total cost of goods sold | 87,003 | 62,786 | 24,217 | 39 | % | ||||||||||||||||||
| Gross profit | 6,108 | 2,772 | 3,336 | 120 | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative | 10,709 | 9,243 | 1,466 | 16 | % | ||||||||||||||||||
| Depreciation and amortization | 569 | 619 | (50) | (8) | % | ||||||||||||||||||
| Gain on disposal of fixed assets, net | (297) | (40) | (257) | 643 | % | ||||||||||||||||||
| Total operating expenses | 10,981 | 9,822 | 1,159 | 12 | % | ||||||||||||||||||
| Operating loss | (4,873) | (7,050) | 2,177 | 31 | % | ||||||||||||||||||
| Other income (expenses): | |||||||||||||||||||||||
| Interest expense, net | (255) | (342) | 87 | 25 | % | ||||||||||||||||||
| Other income | 96 | 129 | (33) | (26) | % | ||||||||||||||||||
| Total other expenses, net | (159) | (213) | 54 | 25 | % | ||||||||||||||||||
| Loss before income tax (benefit) expense | (5,032) | (7,263) | 2,231 | 31 | % | ||||||||||||||||||
| Income tax (benefit) expense | (1,172) | 16,968 | (18,140) | (107) | % | ||||||||||||||||||
| Net loss | $ | (3,860) | $ | (24,231) | $ | 20,371 | 84 | % | |||||||||||||||
Revenues
Revenues were $93.1 million and tons sold were approximately 1,492,000 for the three months ended March 31, 2026. Revenues for the three months ended March 31, 2025 were $65.6 million, during which time we sold approximately 1,069,000 tons of sand. The key factors contributing to the change in revenues for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 were as follows:
•Sand revenue increased to $92.5 million for the three months ended March 31, 2026 versus $64.5 million for the three months ended March 31, 2025. Total volumes increased by approximately 40% and sand pricing per ton was slightly higher in the current period.
•SmartSystems revenue was approximately $0.6 million for the three months ended March 31, 2026 compared to $1.1 million for the three months ended March 31, 2025. The decline in SmartSystems revenue was due to lower utilization of our SmartSystems fleet.
21
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Cost of Goods Sold
Cost of goods sold was $87.0 million and $62.8 million for the three months ended March 31, 2026 and March 31, 2025, respectively. The increase was primarily due to higher volumes sold in the current period and the related increase in production costs, freight and transloading costs.
Gross Profit
Gross profit was $6.1 million and $2.8 million for the three months ended March 31, 2026 and March 31, 2025, respectively. The gross profit for the three months ended March 31, 2026 was higher, compared to the three months ended March 31, 2025, due primarily to higher sales volumes in the current period.
Operating Expenses
Selling, general and administrative expenses were $10.7 million for the three months ended March 31, 2026 compared to $9.2 million for the three months ended March 31, 2025. The increase in selling, general and administrative expenses was driven by increased wages and royalties on higher sales volumes. The gain on disposal of assets of $0.3 million for the three months ended March 31, 2026 was primarily related to disposals of heavy equipment.
We incurred $0.3 million of net interest expense for both the three months ended March 31, 2026 and March 31, 2025.
Income Tax (Benefit) Expense
For the three months ended March 31, 2026 and March 31, 2025, our effective tax rate was approximately 23.3% and (233.6)%, 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, valuation allowance, 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 2026 and we expect to pay an immaterial amount of state income taxes in 2026. 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 March 31, 2026, we have recorded a liability for uncertain tax positions included on our balance sheet, related to our depletion deduction methodology. As of March 31, 2026, 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 statements of operations.
Net Loss
Net loss was $3.9 million for the three months ended March 31, 2026 as compared to net loss of $24.2 million for the three months ended March 31, 2025. Net loss decreased in the current period primarily due to a decrease in our income tax (benefit) expense. Income tax (benefit) expense 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 2026. 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
22
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
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 contribution margin.
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands, except per ton amounts) | |||||||||||
| Revenue | $ | 93,111 | $ | 65,558 | |||||||
| Cost of goods sold | 87,003 | 62,786 | |||||||||
| Gross profit | 6,108 | 2,772 | |||||||||
| Depreciation, depletion, and accretion of asset retirement obligations | 7,081 | 6,805 | |||||||||
| Contribution margin | $ | 13,189 | $ | 9,577 | |||||||
| Contribution margin per ton | $ | 8.84 | $ | 8.96 | |||||||
| Total tons sold | 1,492 | 1,069 | |||||||||
Contribution margin was $13.2 million and $9.6 million, or $8.84 and $8.96 per ton sold, for the three months ended March 31, 2026 and 2025, respectively. Contribution margin was higher compared to the same period in 2025 primarily due to increased sales volumes at a slightly higher average selling price.
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
23
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
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.
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 March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Net loss | $ | (3,860) | $ | (24,231) | |||||||
| Depreciation, depletion and amortization | 7,439 | 7,205 | |||||||||
| Income tax (benefit) expense and other taxes | (1,172) | 16,968 | |||||||||
| Interest expense | 394 | 372 | |||||||||
| EBITDA | $ | 2,801 | $ | 314 | |||||||
| Net gain on disposal of fixed assets | (297) | (40) | |||||||||
| Equity compensation | 913 | 859 | |||||||||
| Acquisition and development costs | 71 | — | |||||||||
| Accretion of asset retirement obligations | 288 | 293 | |||||||||
| Adjusted EBITDA | $ | 3,776 | $ | 1,426 | |||||||
Adjusted EBITDA was $3.8 million for the three months ended March 31, 2026 compared to $1.4 million for the three months ended March 31, 2025. The increase in adjusted EBITDA for the three months ended March 31, 2026, compared to the same period in 2025, was primarily due to higher sales volumes of sand sold.
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 flow. Free cash flow should not be considered an alternative to net cash provided by operating activities presented in accordance with GAAP. Because free cash flow may be defined differently by other companies in our industry, our definition of free cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. The following table presents a
24
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
reconciliation of net cash provided by operating activities to free cash flow.
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Net cash provided by operating activities | $ | 3,043 | $ | 8,724 | |||||||
| Purchases of property, plant and equipment | (2,201) | (3,536) | |||||||||
| Free cash flow | $ | 842 | $ | 5,188 | |||||||
Free cash flow was $0.8 million for the three months ended March 31, 2026 compared to $5.2 million for the three months ended March 31, 2025. The decrease in free cash flow for the three months ended March 31, 2026 was primarily due to lower cash flow from operating activities, driven by the difference between cash received and revenue recognized related to significant customer prepayments received in the prior quarter and recognized as revenue in the current quarter.
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 March 31, 2026, cash on hand was $19.5 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
On April 9, 2026, our Board of Directors declared a special dividend of $0.10 per share of common stock, which was paid on May 5, 2026 to stockholders of record at the close of business on April 22, 2026. The dividend payment returned approximately $3.9 million to our shareholders.
Share Repurchase Program
On February 23, 2026, our Board of Directors approved a two-year share repurchase program under which we may purchase up to $20.0 million of our common stock (the “New Repurchase Program”). The New Repurchase Program went into effect on April 3, 2026 upon the expiration of our previous share repurchase program and will continue through April 2, 2028. Pursuant to the New 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 New Repurchase Program will be conducted in compliance with applicable legal requirements and shall be subject to market conditions and other factors. The New Repurchase Program does not obligate us to acquire any particular amount of ordinary shares, and the New Repurchase Program may be modified or suspended at any time at our discretion. No repurchases have been made under the New Repurchase Program.
On October 3, 2024, our Board of Directors approved an eighteen-month share repurchase program under which we could purchase up to $10.0 million of our ordinary shares (the “Prior Repurchase Program”). Under the Prior Repurchase Program, we have repurchased 1,347,600 shares of our common stock for $3.6 million and the Prior Repurchase Program was completed on April 2, 2026.
25
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
10b5-1 Trading Plan
On March 3, 2026, 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 $2.5 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 repurchased $1.5 million of shares under this 10b5-1 Trading Plan during the three months ended March 31, 2026.
On November 20, 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 $2.5 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. No shares were repurchased under this 10b5-1 Trading Plan. The 10b5-1 Trading Plan was terminated in March 2026.
Capital Requirements
We expect full year 2026 capital expenditures to be between $15.0 million and $20.0 million, consisting primarily of capital to open new mining areas for development and efficiency projects at our Oakdale, Blair and Ottawa facilities. 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 our SmartSystems equipment. The outstanding balance under the VFI Equipment Financing as of March 31, 2026 was $6.1 million. Minimum cash payments on this facility for the remainder of 2026 are anticipated to be $2.2 million. Our various notes payable are primarily secured by heavy equipment. Total debt under these notes payable as of March 31, 2026 was $7.6 million. Minimum cash payments on these notes payable for the remainder of 2026 are anticipated to be $1.9 million. There were no outstanding borrowings on our FCB ABL Credit Facility as of March 31, 2026.
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 March 31, 2026 were $25.0 million. Minimum cash payments on operating leases for the remainder of 2026 are anticipated to be $7.9 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 11 years.
Off-Balance Sheet Arrangements
We had outstanding performance bonds of $20.0 million as of March 31, 2026.
Contractual Obligations
As of March 31, 2026, 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.
26
SMART SAND, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
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.
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 three months ended March 31, 2026, EOG Resources, Inc., EQT Corporation and ARC Resources, Ltd. accounted for 31.1%, 20.2% and 17.6% of total revenue, respectively. For the three months ended March 31, 2025, revenue from EQT Corporation, Encino Energy, Expand Energy Corporation and CNX Resources Corporation accounted for 35.5%, 13.2%, 12.9% and 12.6% of total revenue, respectively.
Critical Accounting Policies and Estimates
There have been no material changes in our critical accounting policies and procedures during the three months ended March 31, 2026.
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; 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.
27
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have considered changes in our exposure to market risks during the three months ended March 31, 2026 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, 2025, filed with the SEC on February 26, 2026.
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 first quarter of fiscal year 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
28
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 12 - Commitments and Contingencies - Litigation of the notes to the condensed consolidated financial statements in this Form 10-Q for the three months ended March 31, 2026.
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, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended March 31, 2026, no shares were sold by the Company without registration under the Securities Act.
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 could 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 deemed appropriate, subject to market conditions and other considerations. The following table outlines purchases of our common stock under the Repurchase Program during the quarter ended March 31, 2026. The Repurchase Program was completed on April 2, 2026.
| 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 | |||||||||||||||||||||||
| January 2026 | — | $ | — | — | $ | 7,904,773 | ||||||||||||||||||||
| February 2026 | — | $ | — | — | $ | 7,904,773 | ||||||||||||||||||||
| March 2026 | 343,998 | $ | 4.28 | 343,998 | $ | 6,432,889 | ||||||||||||||||||||
| 343,998 | 343,998 | |||||||||||||||||||||||||
On February 23, 2026, our Board of Directors approved a share repurchase program authorizing us to repurchase up to $20.0 million of our outstanding shares of common stock (the “New Repurchase Program”). The New Repurchase Program took effect on April 3, 2026 after completion of the Prior Repurchase Program and will continue through April 2, 2028. The timing, manner, price, and amount of any repurchases under the New Repurchase Program will be determined at our discretion. Purchases may be effected through open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, or other means. The New Repurchase Program does not obligate us to acquire any particular amount of ordinary shares and the New Repurchase Program may be modified or suspended at any time at our discretion.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
29
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 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
30
ITEM 6. EXHIBITS
| 3.1 | Second Amended and Restated Certificate of Incorporation of Smart Sand, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 15, 2016) | |||||||
| 3.2 | Second Amended and Restated Bylaws of Smart Sand, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on November 15, 2016) | |||||||
| 31.1* | Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
| 31.2* | Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
32.1*† | Certification Pursuant to 18 U.S.C. adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
32.2*† | Certification Pursuant to 18 U.S.C. adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 95.1* | Mine Safety Disclosure Exhibit | |||||||
| 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 or the Exchange Act. | ||||
31
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. | ||||||||
| May 12, 2026 | By: | /s/ Lee E. Beckelman | ||||||
| Lee E. Beckelman, Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
| Smart Sand, Inc. | ||||||||
| May 12, 2026 | By: | /s/ Christopher M. Green | ||||||
| Christopher M. Green, Vice President of Accounting | ||||||||
| (Principal Accounting Officer) | ||||||||
32
FAQ
How did Smart Sand (SND) perform financially in Q1 2026?
Smart Sand delivered much stronger Q1 2026 results, with revenue rising to $93.1 million from $65.6 million. Net loss narrowed significantly to $3.9 million versus $24.2 million a year earlier, as higher sand volumes and improved margins offset increased operating expenses.
What drove Smart Sand’s revenue growth in the first quarter of 2026?
Revenue growth came mainly from higher sand volumes and slightly better pricing. Sand revenue increased to $92.5 million from $64.5 million, with tons sold rising about 40% to approximately 1.49 million. SmartSystems revenue declined due to lower fleet utilization.
What was Smart Sand’s profitability and EBITDA in Q1 2026?
Profitability improved, though the company remained loss-making. Gross profit increased to $6.1 million from $2.8 million, and net loss narrowed to $3.9 million. Adjusted EBITDA rose to $3.8 million, up from $1.4 million, mainly on higher sand sales volumes.
What is Smart Sand’s liquidity position and debt level as of March 31, 2026?
Smart Sand held $19.5 million in cash and had $30.0 million of undrawn capacity on its FCB ABL Credit Facility with no outstanding borrowings. Long-term debt totaled $9.2 million, primarily from VFI Equipment Financing and notes payable, plus lease liabilities.
What are key risks and customer concentrations for Smart Sand?
Smart Sand is exposed to customer and vendor concentration and commodity-driven demand. In Q1 2026, 69% of revenue came from three customers, and three vendors represented 42% of cost of goods sold. Results also depend on oil and gas activity and frac sand demand.