Smart Sand Inc.

11/10/2026 | Press release | Distributed by Public on 11/10/2026 15:02

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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
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. In total, we have annual processing capacity of approximately 10.0 million tons across all of our active operating facilities.
We directly control six 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 July and August 2024, we began operations at terminals in Minerva, Ohio and Dennison, Ohio, respectively. In September 2025, we completed the expansion of our terminal in Dennison, Ohio. In July 2026, we acquired the right to operate a terminal in Williamsport, Pennsylvania and expect to begin operations at this terminal in 2027. In August 2026, we acquired the rights to a site in Fort St. John, British Columbia for potential future terminal development. 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 have steadily grown our IPS business since its inception in late 2021. 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, the management of strategic petroleum reserves in various 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. 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. Anticipated increasing demand for natural gas in North America to support increased liquefied natural gas ("LNG") export capacity and power generation needs for new data center development may also impact the demand for frac sand.
Our sales into Mexico and Canada are currently exempt from tariffs. Although our sales into Canada were subject to tariffs in early 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 2026, we experienced an increase in the volume of sand sold as customers increased their activity. There have also been modest sand pricing improvements over the periods presented as the supply relative to the increasing demand for Northern White sand continues to tighten. We believe the demand for frac sand will continue to 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
SMART SAND, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
well completions and the increased production per well completed, which is leading to increased 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 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 labor to be able to directly source some of their power supply needs.
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.
SMART SAND, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
GAAP Results of Operations
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
The following table summarizes our revenue and expenses for the periods indicated.
Three Months Ended September 30, Change
2026 2025 Dollars Percentage
(in thousands)
Revenues:
Sand revenue $ 111,062 $ 91,643 $ 19,419 21 %
SmartSystems revenue 1,235 1,137 98 9 %
Total revenue 112,297 92,780 19,517 21 %
Cost of goods sold:
Sand cost of goods sold 91,697 76,766 14,931 19 %
SmartSystems cost of goods sold 1,417 1,101 316 29 %
Total cost of goods sold 93,114 77,867 15,247 20 %
Gross profit 19,183 14,913 4,270 29 %
Operating expenses:
Selling, general and administrative 9,448 9,064 384 4 %
Depreciation and amortization 545 589 (44) (7) %
Gain on disposal of fixed assets, net (11) (110) 99 90 %
Total operating expenses 9,982 9,543 439 5 %
Operating income (loss) 9,201 5,370 3,831 71 %
Other income (expenses):
Interest expense, net (298) (320) 22 7 %
Other income 15 28 (13) (46) %
Total other expenses, net (283) (292) 9 3 %
Income before income tax expense (benefit) 8,918 5,078 3,840 76 %
Income tax expense 566 2,076 (1,510) (73) %
Net income $ 8,352 $ 3,002 $ 5,350 178 %
Revenues
Revenues were $112.3 million and tons sold were approximately 1,783,000 for the three months ended September 30, 2026. Revenues for the three months ended September 30, 2025 were $92.8 million, during which time we sold approximately 1,472,000 tons of sand. Revenues for the three months ended September 30, 2025 also included $4.4 million of contractual charges for tons sold in excess of certain contractual thresholds in a prior period that were not recognizable under ASC 606 until that period, which did not recur during the three months ended September 30, 2026. The key factors contributing to the increase of $19.5 million in revenues for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, were an approximate 21% increase in total sales volumes and slightly higher sand pricing. Higher sales volumes were driven by increased frac sand demand associated with growing natural gas demand to support increased LNG export capacity.
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 $93.1 million and $77.9 million for the three months ended September 30, 2026 and 2025, respectively. The increase in cost of goods sold for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, was primarily due to higher volumes sold in the current period and the related increase in mining, production and freight costs.
Gross Profit
Gross profit was $19.2 million for the three months ended September 30, 2026, compared to $14.9 million for the three months ended September 30, 2025. The increase in profitability for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 was primarily due to higher sales volumes.
Operating Expenses
Selling, general and administrative expenses increased to $9.4 million for the three months ended September 30, 2026 compared to $9.1 million for the three months ended September 30, 2025. The increase in selling, general and administrative expenses was primarily due to higher royalty expense associated with higher sales volumes and increased legal and accounting fees for the three months ended September 30, 2026.
Interest Expense, net
We incurred $0.3 million and $0.3 million of net interest expense for the three months ended September 30, 2026 and 2025, respectively.
Income Tax Expense
For the three months ended September 30, 2026 and 2025, our effective tax rate was approximately 6.3% and 40.9%, respectively. We are required to record our interim period income tax 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 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 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 September 30, 2026, we have recorded a liability for uncertain tax positions included in our balance sheet, related to our depletion deduction methodology. As of September 30, 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 deferred tax liabilities, net on our balance sheet, and a corresponding increase to the income tax expense on our condensed consolidated statement of operations.
Net Income
Net income was $8.4 million for the three months ended September 30, 2026 as compared to net income of $3.0 million for the three months ended September 30, 2025. Gross profit increased in the current period primarily due to higher sales volumes and modest pricing improvements, which was offset by the increase in cost of goods sold associated with those volumes. Our lower income tax expense for the three months ended September 30, 2026 compared with the same period in 2025 further contributed to the increase in net income between the periods.
SMART SAND, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
The following table summarizes our revenue and expenses for the periods indicated.
Nine Months Ended September 30,
Change
2026 2025 Dollars Percentage
(in thousands)
Revenues:
Sand revenue $ 317,399 $ 240,697 $ 76,702 32 %
SmartSystems revenue 3,059 3,411 (352) (10) %
Total revenue 320,458 244,108 76,350 31 %
Cost of goods sold:
Sand cost of goods sold 271,399 214,097 57,302 27 %
SmartSystems cost of goods sold 4,085 3,389 696 21 %
Total cost of goods sold 275,484 217,486 57,998 27 %
Gross profit 44,974 26,622 18,352 69 %
Operating expenses:
Selling, general and administrative 29,397 27,397 2,000 7 %
Depreciation and amortization 1,666 1,812 (146) (8) %
Gain on disposal of fixed assets, net (468) (830) 362 44 %
Total operating expenses 30,595 28,379 2,216 8 %
Operating income (loss) 14,379 (1,757) 16,136 918 %
Other income (expenses):
Interest expense, net (856) (978) 122 12 %
Other income 583 223 360 161 %
Total other expenses, net (273) (755) 482 64 %
Income (loss) before income tax (benefit) expense 14,106 (2,512) 16,618 662 %
Income tax benefit (554) (2,679) 2,125 79 %
Net income $ 14,660 $ 167 $ 14,493 8,678 %
Revenues
Revenues were $320.5 million and tons sold were approximately 5,139,000 for the nine months ended September 30, 2026. Revenues for the nine months ended September 30, 2025 were $244.1 million, during which time we sold approximately 3,965,000 tons of sand. Revenues for the nine months ended September 30, 2025 also included $4.4 million of contractual charges for tons sold in excess of certain contractual thresholds in a prior period that were not recognizable under ASC 606 until that period, which did not recur during the nine months ended September 30, 2026. Revenues for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 were higher primarily due to a 30% increase in sales volumes and sand pricing that was slightly higher in the current period. The increase in sales volumes was driven by higher frac sand demand associated with increased natural gas demand to support increased LNG export capacity.
Cost of Goods Sold
Cost of goods sold was $275.5 million and $217.5 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. The increase was primarily due to higher volumes sold in the current period and the related increase in mining, production and freight costs.
SMART SAND, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Gross Profit
Gross profit was $45.0 million and $26.6 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. The gross profit for the nine months ended September 30, 2026 was higher, compared to the nine months ended September 30, 2025, due primarily to higher sales volumes at slightly higher selling prices.
Operating Expenses
Selling, general and administrative expenses were $29.4 million for the nine months ended September 30, 2026 compared to $27.4 million for the nine months ended September 30, 2025. The increase in selling, general and administrative expenses was driven primarily by increased royalty expense associated with higher sales volumes and increased legal and accounting fees. The gain on disposal of assets of $0.5 million for the nine months ended September 30, 2026 was related to disposals of heavy equipment.
Interest Expense, net
We incurred $0.9 million and $1.0 million of net interest expense for the nine months ended September 30, 2026 and September 30, 2025, respectively.
Other Income
Other income was $0.6 million and $0.2 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. The increase in other income was primarily attributable to a $0.4 million equipment cost recovery related to previously incurred costs.
Income Tax Benefit
For the nine months ended September 30, 2026 and September 30, 2025, our effective tax rate was approximately (3.9)% and 106.6%, respectively. We are required to record our interim period income tax benefit 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 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 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 September 30, 2026, we have recorded a liability for uncertain tax positions included on our balance sheet, related to our depletion deduction methodology. As of September 30, 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 deferred tax liabilities, net on our balance sheet, and a corresponding increase to the income tax expense on our condensed consolidated statements of operations.
Net Income
Net income was $14.7 million for the nine months ended September 30, 2026 as compared to net income of $0.2 million for the nine months ended September 30, 2025. Net income improved in the current period primarily due to higher sales volumes partially offset by an increase in cost of goods sold and operating expenses. Our income tax benefit further contributed to the difference in net income between the current and prior year periods.
SMART SAND, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Non-GAAP Financial Measures
Contribution margin, EBITDA, adjusted EBITDA and free cash flow are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial condition and results of operations. Gross profit is the GAAP measure most directly comparable to contribution margin, net income is the GAAP measure most directly comparable to EBITDA and adjusted EBITDA and net cash provided by operating activities is the GAAP measure most directly comparable to free cash flow. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measures. Each of these non-GAAP financial measures has important limitations as analytical tools because they exclude some but not all items that affect the most directly comparable GAAP financial measures. You should not consider contribution margin, EBITDA, adjusted EBITDA or free cash flow in isolation or as substitutes for an analysis of our results as reported under GAAP. Because contribution margin, EBITDA, adjusted EBITDA and free cash flow may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
Contribution Margin
We use contribution margin, which we define as total revenues less cost of goods sold excluding depreciation, depletion and accretion of asset retirement obligations, to measure our financial and operating performance. Contribution margin excludes other operating expenses and income, including costs not directly associated with the operations of our business such as accounting, human resources, information technology, legal, sales and other administrative activities.
We believe that reporting contribution margin and contribution margin per ton sold provides useful performance metrics to management and external users of our financial statements, such as investors and commercial banks, because these metrics provide an operating and financial measure of our ability, as a combined business, to generate margin in excess of our operating cost base.
Gross profit is the GAAP measure most directly comparable to contribution margin. Contribution margin should not be considered an alternative to gross profit presented in accordance with GAAP. Since contribution margin may be defined differently by other companies in our industry, our definition of contribution margin may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. The following table presents a reconciliation of gross profit to contribution margin.
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(in thousands, except per ton amounts)
Revenue $ 112,297 $ 92,780 $ 320,458 $ 244,108
Cost of goods sold 93,114 77,867 275,484 217,486
Gross profit 19,183 14,913 44,974 26,622
Depreciation, depletion, and accretion of asset retirement obligations 7,247 6,786 21,608 20,419
Contribution margin $ 26,430 $ 21,699 $ 66,582 $ 47,041
Contribution margin per ton $ 14.82 $ 14.74 $ 12.96 $ 11.86
Total tons sold 1,783 1,472 5,139 3,965
Contribution margin was $26.4 million and $21.7 million, or $14.82 and $14.74 per ton sold, for the three months ended September 30, 2026 and 2025, respectively. Contribution margin was $66.6 million and $47.0 million, or $12.96 and $11.86 per ton sold, for the nine months ended September 30, 2026 and 2025, respectively. The increase for the three and nine months ended September 30, 2026, compared to September 30, 2025 was primarily due to increased sales volumes at slightly higher average selling prices. Incremental tons sold generated higher contribution margin and improved contribution margin per ton as fixed costs were spread over the higher tons sold.
SMART SAND, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
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 items and unusual or non-recurring items. 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 income to EBITDA and Adjusted EBITDA for each of the periods indicated.
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(in thousands)
Net income $ 8,352 $ 3,002 $ 14,660 $ 167
Depreciation, depletion and amortization 7,579 7,179 22,639 21,619
Income tax expense (benefit) and other taxes 566 2,076 (554) (2,679)
Interest expense 387 364 1,160 1,081
EBITDA $ 16,884 $ 12,621 $ 37,905 $ 20,188
Net gain on disposal of fixed assets (11) (110) (468) (830)
Equity compensation 796 834 2,431 2,602
Acquisition and development costs - - 71 -
Cash charges related to restructuring and retention of employees - - - 33
Accretion of asset retirement obligations 289 269 865 832
Equipment cost recovery - - (419) -
Adjusted EBITDA $ 17,958 $ 13,614 $ 40,385 $ 22,825
SMART SAND, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Adjusted EBITDA was $18.0 million for the three months ended September 30, 2026 compared to $13.6 million for the three months ended September 30, 2025. Adjusted EBITDA was $40.4 million for the nine months ended September 30, 2026 compared to $22.8 million for the nine months ended September 30, 2025. The increase in Adjusted EBITDA for the three and nine months ended September 30, 2026, compared to the same period in 2025 was primarily driven by higher sales volumes of sand sold at slightly improved sand pricing, while keeping operating expenses at relatively consistent levels.
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 reconciliation of net cash provided by operating activities to free cash flow.
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(in thousands)
Net cash provided by operating activities $ 21,124 $ 18,159 $ 27,580 $ 21,746
Purchases of property, plant and equipment (3,843) (3,385) (10,812) (9,597)
Free cash flow $ 17,281 $ 14,774 $ 16,768 $ 12,149
Free cash flow was $17.3 million for the three months ended September 30, 2026 compared to $14.8 million for the three months ended September 30, 2025. Free cash flow was $16.8 million for the nine months ended September 30, 2026 compared to $12.1 million for the nine months ended September 30, 2025. The increase in free cash flow for the three and nine months ended September 30, 2026 was primarily due to positive cash flows from operating activities due to the increased sales volume activity and higher conversion of working capital to cash offset by increased capital expenditures in the period.
Liquidity and Capital Resources
Our primary sources of liquidity are cash flow generated from operations and availability under our FCB ABL Credit Facility and other equipment financing sources. As of September 30, 2026, cash on hand was $21.7 million and we had $50.0 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 November 5, 2026, our Board of Directors declared a special dividend of $0.05 per share of common stock, which will be paid on November 30, 2026 to shareholders of record at the close of business on November 18, 2026. The dividend payment will return approximately $2.2 million to shareholders.
On July 16, 2026, our Board of Directors declared a special dividend of $0.10 per share of common stock, which was paid on August 12, 2026 to shareholders of record at the close of business on July 28, 2026. The dividend payment returned approximately $4.2 million to shareholders.
SMART SAND, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
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 shareholders of record at the close of business on April 22, 2026. The dividend payment returned approximately $3.9 million to shareholders.
Share Repurchase Programs
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 shares of common stock 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 shares of common stock, and the New Repurchase Program may be modified or suspended at any time at our discretion. Under the New Repurchase Program, we have repurchased 470,088 shares of our common stock for $2.5 million.
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 shares of common stock (the "Prior Repurchase Program"). Under the Prior Repurchase Program, we repurchased 1,347,600 shares of our common stock for $3.6 million and the Prior Repurchase Program was completed on April 2, 2026.
Capital Requirements
We expect full year 2026 capital expenditures to be between $15.0 million and $20.0 million, excluding acquisitions, 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 September 30, 2026 was $5.0 million. Minimum cash payments on this facility for the remainder of 2026 are anticipated to be $0.7 million. Our various notes payable are primarily secured by heavy equipment. Total debt under these notes payable as of September 30, 2026 was $8.1 million. Minimum cash payments on these notes payable for the remainder of 2026 are anticipated to be $1.1 million. On September 1, 2026, we entered into Amendment No. 2 to the FCB ABL Credit Facility, which increased the aggregate revolving commitments under the facility from $30,000 to $50,000 and extended the maturity date to September 1, 2031. There were no outstanding borrowings on our FCB ABL Credit Facility as of September 30, 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 September 30, 2026 were $30.3 million. Minimum cash payments on operating leases for the remainder of 2026 are anticipated to be $2.5 million.
Mineral Rights Property
The Company is obligated under certain contracts for minimum payments for the right to use land for extractive activities. The annual minimum payments under these contracts are approximately $2.5 million per year in the aggregate for the next 11 years.
SMART SAND, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Off-Balance Sheet Arrangements
We had outstanding performance bonds of $20.0 million as of September 30, 2026.
Contractual Obligations
As of September 30, 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.
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
During the three months ended September 30, 2026, 85% of our revenues were earned from five customers. During the three months ended September 30, 2025, 58% of our revenues were earned from three customers. During the nine months ended September 30, 2026, 72% of our revenues were earned from four customers. During the nine months ended September 30, 2025, 40% of our revenues were earned from two customers.
Critical Accounting Policies and Estimates
There have been no material changes in our critical accounting policies and procedures during the nine months ended September 30, 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
SMART SAND, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
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.
Smart Sand Inc. published this content on November 10, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 10, 2026 at 21:06 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]