FALSE000152962800015296282023-11-072023-11-07

3UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
FORM 8-K
________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 7, 2023
SMART SAND, INC.
(Exact name of registrant as specified in its charter)
Delaware001-3793645-2809926
(State or other jurisdiction
of incorporation)		(Commission
File Number)		(I.R.S. Employer
Identification No.)
28420 Hardy Toll Road, Suite 130
Spring, Texas 77373
(Address of principal executive offices and zip code)
 
Registrant’s telephone number, including area code: (281) 231-2660
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 Securities registered pursuant to Section 12(b) of the Act:

Title of Each ClassTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par valueSNDNASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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.  ☐ 



Item 2.02 Results of Operations and Financial Condition.
On November 7, 2023, Smart Sand, Inc. issued a press release providing information regarding earnings for the third quarter ended September 30, 2023. A copy of the press release is attached hereto as Exhibit 99.1.
The information, including Exhibit 99.1, in this Form 8-K is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall otherwise be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d)    Exhibits. The following exhibit is furnished herewith:









SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
SMART SAND, INC.
Dated:
November 7, 2023
By:/s/ Lee E. Beckelman
Lee E. Beckelman
Chief Financial Officer
 




Smart Sand, Inc. Announces Third Quarter 2023 Results
•3Q 2023 total tons sold of approximately 1.2 million
•3Q 2023 revenue of $76.9 million
•3Q 2023 net income of $6.7 million
•3Q 2023 adjusted EBITDA of $13.3 million
•3Q 2023 net cash provided by operating activities of $12.5 million
•3Q 2023 free cash flow of $5.6 million

SPRING, Texas, November 7, 2023 – Smart Sand, Inc. (NASDAQ: SND) (the “Company” or “Smart Sand”), a fully integrated frac and industrial sand supply and services company, a low-cost producer of high quality Northern White frac sand, a proppant logistics solutions provider through both its in-basin transloading terminals and SmartSystemsTM products and services and a provider of industrial product solutions, today announced results for the third quarter of 2023.
“Smart Sand delivered strong operating and financial results in the third quarter of 2023,” stated Charles Young, Smart Sand’s Chief Executive Officer. “Sales volumes increased sequentially as we saw strong demand in both the Bakken and Marcellus basins and had our first full quarter of operations at our Blair facility, leading to increased sales volumes into the Canadian market.”
“In the third quarter we increased the number of Smartpath fleets utilizing our new Smartbelt technology and we continue to add new industrial sand sales customers” continued Charles Young. “We continue to look for ways to expand our presence in key markets and broaden our customer base. In the fourth quarter, we expect to complete an expansion of our Waynesburg terminal in Pennsylvania to allow us to handle increased sales volume into the Marcellus Basin. Additionally, we anticipate completing improvements at our Utica, Illinois facility to add cooling and blending capabilities to support our industrial sand business. We continue to invest strategically to drive increased sales volumes from our three operating facilities. Our focus continues to be on increasing our free cash flow and delivering strong returns for our shareholders”
Third Quarter 2023 Results
Tons sold were approximately 1,219,000 in the third quarter of 2023, compared to approximately 1,084,000 tons in the second quarter of 2023 and 1,110,000 tons in the third quarter of 2022, an increase of 10% sequentially and 12% over the comparable period in 2022.
Revenues were $76.9 million in the third quarter of 2023, compared to $74.8 million in the second quarter of 2023 and $71.6 million in the third quarter of 2022. Revenues increased in the third quarter of 2023, compared to the second quarter of 2023, primarily due to contractual shortfall revenue recognized in the third quarter of 2023. Third quarter 2023 revenues increased, compared to third quarter 2022, due to higher sales volumes.
Gross profit was $14.4 million in the third quarter of 2023, compared to $12.7 million in the second quarter of 2023 and $11.4 million in the third quarter of 2022. Gross profit improved in the third quarter of 2023 compared to the second quarter of 2023 primarily due to contractual shortfall revenue recognized in the third quarter of 2023 and lower freight expenses. Gross profit improved for the third quarter of 2023 compared to the third quarter of 2022 primarily due to an increase in sales volumes leading to higher sand revenues.
For the third quarter of 2023, we had net income of $6.7 million, or $0.18 per basic and diluted share, compared to a net income of $6.3 million, or $0.17 per basic and diluted share, for the second quarter of 2023 and a net income of $2.7 million, or $0.06 per basic and diluted share, for the third quarter of 2022. Net income was higher in the second quarter of 2023 compared to the third quarter of 2023 due to the income tax benefit recorded in the









second quarter. The improvement in net income in the current year period relative to the comparable period in 2022 was primarily due to higher gross profit due to higher sand sales revenues from increased sales volumes.
Contribution margin of $21.0 million, or $17.20 per ton sold, for the third quarter of 2023 was an increase compared to $19.0 million, or $17.57 per ton sold for the second quarter of 2023, and third quarter 2022 contribution margin of $17.8 million, or $16.01 per ton sold. The increase in contribution margin, compared to the second quarter of 2023, was due primarily contractual shortfall revenue recognized in the quarter. The increase in contribution margin and contribution margin per ton in the third quarter of 2023 compared to the third quarter of 2022 was primarily due to higher sales volumes leading to higher sand revenues and lower freight expenses.
Adjusted EBITDA was $13.3 million for the third quarter of 2023, compared to $11.4 million for the second quarter of 2023 and $11.3 million for the third quarter of 2022. The increase in Adjusted EBITDA in the third quarter of 2023 compared to the prior quarter was primarily due to contractual shortfall revenue recognized in the third quarter of 2023. The improvement in Adjusted EBITDA in the third quarter of 2023 compared to the same period in 2022 was primarily due to higher contribution margin.
Net cash provided by operating activities was $12.5 million in the third quarter of 2023, compared to net cash provided by operating activities of $16.1 million in the second quarter of 2023 and net cash provided by operating activities of $10.8 million in the third quarter of 2022. The decrease in cash flow from operations in the third quarter of 2023 compared to the second quarter of 2023 was primarily due to accelerated payments to vendors and seasonal costs incurred as we built our winter inventory stockpiles at Oakdale and Blair in the third quarter of 2023. The increase in net cash provided by operating activities in the third quarter of 2023 compared to the third quarter of 2022 was primarily due to higher net income in the third quarter of 2023.
Free cash flow was $5.6 million for the third quarter of 2023. Net cash provided by operating activities was $12.5 million and capital expenditures were $6.9 million in the third quarter of 2023. We currently estimate that full year 2023 capital expenditures will be between $20.0 million and $23.0 million.
Liquidity
Our primary sources of liquidity are cash on hand, cash flow generated from operations and available borrowings under our ABL Credit Facility. As of September 30, 2023, cash on hand was $9.3 million and we had $19.0 million in undrawn availability on our ABL Credit Facility.
Conference Call
Smart Sand will host a conference call and live webcast for analysts and investors on November 8, 2023 at 10:00 a.m. Eastern Time to discuss its third quarter 2023 financial results. Investors are invited to join the conference by dialing (412)-317-0790 or 1-877-870-4263 and referencing “Smart Sand” when connected to the operator. Additionally, the call may also be streamed via webcast at https://app.webinar.net/1ZrWVRQqaAD or within the “Investors” section of the Company’s website at www.smartsand.com. A replay will be available shortly after the call and can be accessed on the “Investors” section of the Company’s website.
Forward-looking Statements
All statements in this news release other than statements of historical facts are forward-looking statements that contain our Company’s current expectations about our future results, including the Company’s expectations regarding future sales. We have attempted to identify any forward-looking statements by using words such as “expect,” “will,” “estimate,” “believe” and other similar expressions. Although we believe that the expectations reflected and the assumptions or bases underlying our forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Such statements are not guarantees of future performance or events and are subject to known and unknown risks and uncertainties that could cause our actual results, events or financial positions to differ materially from those included within or implied by such forward-looking statements.









Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include, but are not limited to, fluctuations in product demand, delays in the completion of certain expansion and improvement projects at our existing facilities or failure to recognize the anticipated benefits of such projects, regulatory changes, adverse weather conditions, increased fuel prices, higher transportation costs, access to capital, increased competition, changes in economic or political conditions, and such other factors discussed or referenced in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on February 28, 2023, and in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed by the Company with the SEC on November 7, 2023.
You should not place undue reliance on our forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
About Smart Sand
Smart Sand is a fully integrated frac and industrial sand supply and services company, offering complete mine to wellsite proppant and logistic solutions to our frac sand customers, and a broad offering of products for industrial sand customers. The Company produces low-cost, high quality Northern White sand, which is a premium sand used as a proppant to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells. The Company’s sand is also a high-quality product used in a variety of industrial applications, including glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscaping, retail, recreation and more. The Company also offers logistics solutions to our customers through its in-basin transloading terminals and our SmartSystems wellsite storage capabilities. Smart Sand owns and operates premium sand mines and related processing facilities in Wisconsin and Illinois, which have access to four Class I rail lines, allowing the Company to deliver products substantially anywhere in the United States and Canada. For more information, please visit www.smartsand.com.











SMART SAND, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended
September 30, 2023June 30, 2023September 30, 2022
(unaudited)(unaudited)(unaudited)
Revenues:
Sand sales revenue$72,480 $72,435 $66,663 
Shortfall revenue2,389 — 2,681 
Logistics revenue2,031 2,341 2,248 
Total revenue76,900 74,776 71,592 
Cost of goods sold62,502 62,087 60,163 
Gross profit14,398 12,689 11,429 
Operating expenses:
Salaries, benefits and payroll taxes4,292 4,363 3,554 
Depreciation and amortization647 629 556 
Selling, general and administrative4,625 4,590 4,008 
(Gain) loss on disposal of fixed asset, net(92)24 (466)
Total operating expenses9,472 9,606 7,652 
Operating income4,926 3,083 3,777 
Other income (expenses):
Interest expense, net(276)(223)(411)
Other income198 159 148 
Total other expenses, net(78)(64)(263)
Income (loss) before income tax (benefit) expense4,848 3,019 3,514 
Income tax (benefit) expense (1,879)(3,288)831 
Net income$6,727 $6,307 $2,683 
Net income per common share:
Basic$0.18 $0.17 $0.06 
Diluted$0.18 $0.17 $0.06 
Weighted-average number of common shares:
Basic38,253 37,968 42,522 
Diluted38,412 37,968 42,524 










SMART SAND, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2023December 31, 2022
(unaudited)
 (in thousands)
Assets  
Current assets:  
Cash and cash equivalents$9,309 $5,510 
Accounts receivable24,015 35,746 
Unbilled receivables165 79 
Inventory25,955 20,185 
Prepaid expenses and other current assets712 6,593 
Total current assets60,156 68,113 
Property, plant and equipment, net255,644 258,843 
Operating lease right-of-use assets24,448 26,075 
Intangible assets, net6,074 6,669 
Other assets185 303 
Total assets$346,507 $360,003 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$10,439 $14,435 
Accrued expenses and other liabilities15,461 13,430 
Deferred revenue2,018 6,959 
Current portion of long-term debt5,691 6,183 
Current portion of operating lease liabilities11,139 10,910 
Total current liabilities44,748 51,917 
Long-term debt6,895 9,807 
Long-term operating lease liabilities14,978 17,642 
Long-term deferred tax liabilities, net14,142 18,238 
Asset retirement obligations19,558 18,888 
Other non-current liabilities40 40 
Total liabilities100,361 116,532 
Commitments and contingencies
Stockholders’ equity
Common stock
38 43 
Treasury stock
(14,124)(5,075)
Additional paid-in capital180,934 178,386 
Retained earnings79,325 69,890 
Accumulated other comprehensive income(27)227 
Total stockholders’ equity246,146 243,471 
Total liabilities and stockholders’ equity$346,507 $360,003 













SMART SAND, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
September 30, 2023June 30, 2023September 30, 2022
(unaudited)(unaudited)(unaudited)
(in thousands)
Operating activities:
Net income6,727 6,307 2,683 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and accretion of asset retirement obligations7,021 6,785 6,698 
Amortization of intangible assets198 199 198 
(Gain) loss on disposal of fixed assets(92)24 (466)
Provision for bad debt— — — 
Amortization of deferred financing cost26 27 26 
Accretion of debt discount47 46 47 
Deferred income taxes(2,348)(3,417)480 
Stock-based compensation860 833 808 
Employee stock purchase plan compensation5 8 7 
Changes in assets and liabilities:
Accounts receivable5,980 5,982 (3,264)
Unbilled receivables92 1,027 6,042 
Inventories(2,950)(2,921)(3,744)
Prepaid expenses and other assets661 4,871 1,218 
Deferred revenue(4,328)444 (1,823)
Accounts payable(1,822)(3,214)(445)
Accrued and other expenses2,400 (933)2,315 
Net cash provided by operating activities12,477 16,068 10,780 
Investing activities:
Purchases of property, plant and equipment(6,881)(5,227)(4,398)
Proceeds from disposal of assets50 72 995 
Net cash used in investing activities(6,831)(5,155)(3,403)
Financing activities:
Repayments of notes payable(1,502)(5,937)(1,893)
Payments under equipment financing obligations(200)(37)(28)
Proceeds from revolving credit facility— 1,000 3,000 
Repayment of revolving credit facility— (8,000)— 
Proceeds from equity issuance23 — 27 
Purchase of treasury stock(150)(51)(210)
Net cash (used in) provided by financing activities(1,829)(13,025)896 
Net increase in cash and cash equivalents3,817 (2,112)8,273 
Cash and cash equivalents at beginning of period5,492 7,604 2,098 
Cash and cash equivalents at end of period$9,309 $5,492 $10,371 









Non-GAAP Financial Measures
Contribution Margin

We also use contribution margin, which we define as total revenues less costs of goods sold excluding depreciation, depletion and accretion of asset retirement obligations, to measure its financial and operating performance. Contribution margin excludes other operating expenses and income, including costs not directly associated with the operations of the Company’s 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. Because contribution margin may be defined differently by other companies in the 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
September 30, 2023June 30, 2023September 30, 2022
(in thousands, except per ton amounts)
Revenue$76,900 $74,776 $71,592 
Cost of goods sold62,502 62,087 60,163 
Gross profit14,398 12,689 11,429 
Depreciation, depletion, and accretion of asset retirement obligations included in cost of goods sold6,573 6,356 6,340 
Contribution margin$20,971 $19,045 $17,769 
Contribution margin per ton$17.20 $17.57 $16.01 
Total tons sold1,219 1,084 1,110 
EBITDA and Adjusted EBITDA
We define EBITDA as net income, plus: (i) depreciation, depletion and amortization expense; (ii) income tax expense (benefit); (iii) interest expense; and (iv) franchise taxes. 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 other acquisition and development costs; and (vii) non-cash charges and unusual or non-recurring charges. Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors and commercial banks, to assess:
•the financial performance of our assets without regard to the impact of financing methods, capital structure or historical cost basis of our assets;
•the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities;
•our ability to incur and service debt and fund capital expenditures;
•our operating performance as compared to those of other companies in our industry without regard to the impact of financing methods or capital structure; and









•our debt covenant compliance, as Adjusted EBITDA is a key component of critical covenants to the 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) income to EBITDA and Adjusted EBITDA for each of the periods indicated.
Three Months Ended
September 30, 2023June 30, 2023September 30, 2022
(in thousands)
Net income$6,727 $6,307 $2,683 
Depreciation, depletion and amortization6,985 6,750 6,705 
Income tax expense (benefit)(1,879)(3,288)831 
Interest expense304 457 431 
Franchise taxes66 102 77 
EBITDA$12,203 $10,328 $10,727 
Net loss (gain) on disposal of fixed assets(92)25 (466)
Equity compensation850 802 713 
Acquisition and development costs70 — 97 
Cash charges related to restructuring and retention— 18 31 
Accretion of asset retirement obligations235 235 189 
Adjusted EBITDA$13,266 $11,408 $11,291 
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 flows 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 reconciliation of net cash provided by (used in) operating activities to free cash flow.
Three Months Ended
September 30, 2023June 30, 2023September 30, 2022
(in thousands)
Net cash provided by (used in) operating activities$12,477 $16,068 $10,780 
Purchases of property, plant and equipment, net(6,881)(5,227)(4,398)
Free cash flow$5,596 $10,841 $6,382 










Investor Contacts:
Lee Beckelman
Chief Financial Officer
(281) 231-2660
lbeckelman@smartsand.com









v3.23.3
Document
Nov. 07, 2023
Cover [Abstract]  
Document Type 8-K
Document Period End Date Nov. 07, 2023
Entity Registrant Name SMART SAND, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-37936
Entity Tax Identification Number 45-2809926
Entity Address, Address Line One 28420 Hardy Toll Road
Entity Address, Address Line Two Suite 130
Entity Address, City or Town Spring
Entity Address, State or Province TX
Entity Address, Postal Zip Code 77373
City Area Code 281
Local Phone Number 231-2660
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001529628
Security Exchange Name NASDAQ
Trading Symbol SND
Title of 12(b) Security Common Stock, $0.001 par value
Smart Sand (NASDAQ:SND)
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