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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Smart Sand Inc | NASDAQ:SND | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.04 | 1.91% | 2.13 | 2.02 | 2.42 | 2.1575 | 2.07 | 2.12 | 176,296 | 23:40:50 |
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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45-2809926
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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1725 Hughes Landing Blvd, Suite 800
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The Woodlands, Texas 77380
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(281) 231-2660
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(Address of principal executive offices)
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(Registrant’s telephone number)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.001 per share
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SND
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Nasdaq Global Select Market
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Large accelerated filer ☐
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Accelerated filer
ý
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Non-accelerated filer ☐
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Smaller reporting company
ý
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Emerging Growth Company
ý
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PAGE
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“We”, “Us”, “Company”, “Smart Sand” or “Our”
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Smart Sand, Inc., a company organized under the laws of Delaware, and its subsidiaries.
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“shares”, “stock”
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The common stock of Smart Sand, Inc., nominal value $0.001 per share.
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“Credit Agreement”, “Credit Facility”
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On December 8, 2016, the Company entered into a $45 million 3-year senior secured revolving credit facility under a revolving credit agreement with Jefferies Finance LLC as administrative and collateral agent (the “Credit Agreement”). This credit facility was amended: (i) on April 8, 2018, to increase our total borrowing capacity to $60 million; (ii) on July 13, 2018, to, among other things, (A) increase the limit on our ability to sell, transfer or dispose of assets, subject to certain considerations from an aggregate amount of $25 million to $55 million, (B) increase the limit on our ability to incur capital lease obligations from an aggregate principal amount of $15 million to $30 million, and (C) exclude certain current and future earn-out obligations from the definition of indebtedness in the Credit Agreement; and (iii) on February 22, 2019, to, among other things (A) extend the maturity date to June 30, 2020, and (B) decrease our total borrowing capacity to $55 million by June 30, 2019, $52.5 million by September 30, 2019 and $50 million by December 31, 2019 (“Credit Facility”).
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“Exchange Act”
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The Securities Exchange Act of 1934, as amended.
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“Securities Act”
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The Securities Act of 1933, as amended.
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“FCA”, “DAT”, “DAP”
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Free Carrier, Delivered at Terminal, Delivered at Place, respectively, Incoterms 2010.
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“FASB”, “ASU”, “ASC”, “GAAP”
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Financial Accounting Standards Board, Accounting Standards Update, Accounting Standards Codification, Accounting Principles Generally Accepted in the United States, respectively.
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June 30,
2019 |
|
December 31,
2018 |
||||
|
(unaudited)
|
|
|||||
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(in thousands, except share amounts)
|
||||||
Assets
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
1,253
|
|
|
$
|
1,466
|
|
Accounts receivable, net
|
45,652
|
|
|
18,989
|
|
||
Unbilled receivables
|
7,311
|
|
|
7,823
|
|
||
Inventories
|
12,381
|
|
|
18,575
|
|
||
Prepaid expenses and other current assets
|
1,902
|
|
|
3,243
|
|
||
Total current assets
|
68,499
|
|
|
50,096
|
|
||
Property, plant and equipment, net
|
250,978
|
|
|
248,396
|
|
||
Operating right-of-use assets
|
32,417
|
|
|
—
|
|
||
Intangible assets, net
|
17,233
|
|
|
18,068
|
|
||
Other assets
|
3,374
|
|
|
3,732
|
|
||
Total assets
|
$
|
372,501
|
|
|
$
|
320,292
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
8,050
|
|
|
$
|
11,336
|
|
Accrued and other expenses
|
10,237
|
|
|
8,392
|
|
||
Deferred revenue
|
3,401
|
|
|
4,095
|
|
||
Current portion of long-term debt
|
40,238
|
|
|
829
|
|
||
Current portion of operating lease liabilities
|
13,339
|
|
|
—
|
|
||
Total current liabilities
|
75,265
|
|
|
24,652
|
|
||
Long-term debt, net of current portion
|
6,396
|
|
|
47,893
|
|
||
Long-term operating lease liabilities, net of current portion
|
19,702
|
|
|
—
|
|
||
Long-term deferred tax liabilities, net
|
22,185
|
|
|
17,898
|
|
||
Asset retirement obligation
|
15,185
|
|
|
13,322
|
|
||
Contingent consideration
|
4,400
|
|
|
7,167
|
|
||
Total liabilities
|
143,133
|
|
|
110,932
|
|
||
Commitments and contingencies (Note 16)
|
|
|
|
|
|
||
Stockholders’ equity
|
|
|
|
||||
Common stock, $0.001 par value, 350,000,000 shares authorized; 40,949,849 issued and 40,209,409 outstanding at June 30, 2019; 40,673,513 issued and 39,974,478 outstanding at December 31, 2018
|
40
|
|
|
40
|
|
||
Treasury stock, at cost, 740,440 and 699,035 shares at June 30, 2019 and December 31, 2018, respectively
|
(2,978
|
)
|
|
(2,839
|
)
|
||
Additional paid-in capital
|
163,797
|
|
|
162,195
|
|
||
Retained earnings
|
68,586
|
|
|
50,277
|
|
||
Accumulated other comprehensive loss
|
(77
|
)
|
|
(313
|
)
|
||
Total stockholders’ equity
|
229,368
|
|
|
209,360
|
|
||
Total liabilities and stockholders’ equity
|
$
|
372,501
|
|
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$
|
320,292
|
|
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Three Months Ended June 30,
|
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Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Revenues
|
$
|
67,941
|
|
|
$
|
54,448
|
|
|
$
|
119,716
|
|
|
$
|
97,076
|
|
Cost of goods sold
|
43,068
|
|
|
34,678
|
|
|
83,673
|
|
|
70,091
|
|
||||
Gross profit
|
24,873
|
|
|
19,770
|
|
|
36,043
|
|
|
26,985
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Salaries, benefits and payroll taxes
|
2,798
|
|
|
2,790
|
|
|
5,508
|
|
|
5,362
|
|
||||
Depreciation and amortization
|
655
|
|
|
476
|
|
|
1,331
|
|
|
664
|
|
||||
Selling, general and administrative
|
2,790
|
|
|
3,595
|
|
|
5,590
|
|
|
6,696
|
|
||||
Change in the estimated fair value of contingent consideration
|
(575
|
)
|
|
—
|
|
|
(1,542
|
)
|
|
—
|
|
||||
Total operating expenses
|
5,668
|
|
|
6,861
|
|
|
10,887
|
|
|
12,722
|
|
||||
Operating income
|
19,205
|
|
|
12,909
|
|
|
25,156
|
|
|
14,263
|
|
||||
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net
|
(994
|
)
|
|
(500
|
)
|
|
(1,975
|
)
|
|
(680
|
)
|
||||
Other income
|
37
|
|
|
25
|
|
|
74
|
|
|
58
|
|
||||
Total other income (expenses), net
|
(957
|
)
|
|
(475
|
)
|
|
(1,901
|
)
|
|
(622
|
)
|
||||
Income before income tax expense
|
18,248
|
|
|
12,434
|
|
|
23,255
|
|
|
13,641
|
|
||||
Income tax expense
|
3,972
|
|
|
2,413
|
|
|
4,946
|
|
|
2,645
|
|
||||
Net income
|
$
|
14,276
|
|
|
$
|
10,021
|
|
|
$
|
18,309
|
|
|
$
|
10,996
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
0.36
|
|
|
$
|
0.25
|
|
|
$
|
0.46
|
|
|
$
|
0.27
|
|
Diluted
|
$
|
0.36
|
|
|
$
|
0.25
|
|
|
$
|
0.46
|
|
|
$
|
0.27
|
|
Weighted-average number of common shares:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
40,074
|
|
|
40,499
|
|
|
40,035
|
|
|
40,455
|
|
||||
Diluted
|
40,173
|
|
|
40,550
|
|
|
40,117
|
|
|
40,550
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Net income
|
$
|
14,276
|
|
|
$
|
10,021
|
|
|
$
|
18,309
|
|
|
$
|
10,996
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
91
|
|
|
76
|
|
|
236
|
|
|
76
|
|
||||
Comprehensive income
|
$
|
14,367
|
|
|
$
|
10,097
|
|
|
$
|
18,545
|
|
|
$
|
11,072
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional Paid-in Capital
|
|
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’ Equity
|
||||||||||||||||||
|
Outstanding
Shares
|
|
Par Value
|
|
Shares
|
|
Amount
|
|
|
Retained
Earnings
|
|
|
|||||||||||||||||
|
(in thousands, except share amounts)
|
||||||||||||||||||||||||||||
Balance at December 31, 2018
|
39,974,478
|
|
|
$
|
40
|
|
|
699,035
|
|
|
$
|
(2,839
|
)
|
|
$
|
162,195
|
|
|
$
|
50,277
|
|
|
$
|
(313
|
)
|
|
$
|
209,360
|
|
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
145
|
|
|
145
|
|
||||||
Vesting of restricted stock
|
30,729
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
790
|
|
|
—
|
|
|
—
|
|
|
790
|
|
||||||
Employee stock purchase plan compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||||
Employee stock purchase plan issuance
|
20,954
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
—
|
|
|
40
|
|
||||||
Restricted stock buy back
|
(5,714
|
)
|
|
—
|
|
|
5,714
|
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,033
|
|
|
—
|
|
|
4,033
|
|
||||||
Balance at March 31, 2019
|
40,020,447
|
|
|
40
|
|
|
704,749
|
|
|
(2,862
|
)
|
|
163,034
|
|
|
54,310
|
|
|
(168
|
)
|
|
214,354
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
91
|
|
|
91
|
|
||||||
Vesting of restricted stock
|
224,653
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
754
|
|
|
—
|
|
|
—
|
|
|
754
|
|
||||||
Employee stock purchase plan compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||||
Employee stock purchase plan issuance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock buy back
|
(35,691
|
)
|
|
—
|
|
|
35,691
|
|
|
(116
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(116
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,276
|
|
|
—
|
|
|
14,276
|
|
||||||
Balance at June 30, 2019
|
40,209,409
|
|
|
$
|
40
|
|
|
740,440
|
|
|
$
|
(2,978
|
)
|
|
$
|
163,797
|
|
|
$
|
68,586
|
|
|
$
|
(77
|
)
|
|
$
|
229,368
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional Paid-in Capital
|
|
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’ Equity
|
||||||||||||||||||
|
Outstanding
Shares
|
|
Par Value
|
|
Shares
|
|
Amount
|
|
|
Retained
Earnings
|
|
|
|||||||||||||||||
|
(in thousands, except share amounts)
|
||||||||||||||||||||||||||||
December 31, 2017
|
40,393,033
|
|
|
$
|
40
|
|
|
81,052
|
|
|
$
|
(666
|
)
|
|
$
|
159,059
|
|
|
$
|
31,589
|
|
|
$
|
—
|
|
|
$
|
190,022
|
|
Vesting of restricted stock
|
96,713
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
610
|
|
|
—
|
|
|
—
|
|
|
610
|
|
||||||
Employee stock purchase plan issuance
|
9,639
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70
|
|
|
—
|
|
|
—
|
|
|
70
|
|
||||||
Restricted stock buy back
|
(8,822
|
)
|
|
—
|
|
|
8,822
|
|
|
(54
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
975
|
|
|
—
|
|
|
975
|
|
||||||
Balance at March 31, 2018
|
40,490,563
|
|
|
40
|
|
|
89,874
|
|
|
(720
|
)
|
|
159,739
|
|
|
32,564
|
|
|
—
|
|
|
191,623
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
76
|
|
|
76
|
|
||||||
Vesting of restricted stock
|
59,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
650
|
|
|
—
|
|
|
—
|
|
|
650
|
|
||||||
Employee stock purchase plan compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
38
|
|
||||||
Employee stock purchase plan issuance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Restricted stock buy back
|
(20,781
|
)
|
|
—
|
|
|
20,781
|
|
|
(119
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(119
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,021
|
|
|
—
|
|
|
10,021
|
|
||||||
Balance at June 30, 2018
|
40,529,182
|
|
|
$
|
40
|
|
|
110,655
|
|
|
$
|
(839
|
)
|
|
$
|
160,428
|
|
|
$
|
42,585
|
|
|
$
|
76
|
|
|
$
|
202,290
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
18,309
|
|
|
$
|
10,996
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, depletion and accretion of asset retirement obligation
|
12,501
|
|
|
7,359
|
|
||
Amortization of intangible assets
|
837
|
|
|
284
|
|
||
Asset retirement obligation settlement
|
(1,883
|
)
|
|
(1,783
|
)
|
||
Amortization of deferred financing cost
|
117
|
|
|
138
|
|
||
Accretion of debt discount
|
331
|
|
|
116
|
|
||
Deferred income taxes
|
4,287
|
|
|
2,647
|
|
||
Stock-based compensation, net
|
1,544
|
|
|
1,298
|
|
||
Employee stock purchase plan compensation
|
18
|
|
|
—
|
|
||
Change in contingent consideration fair value
|
(1,542
|
)
|
|
—
|
|
||
Changes in assets and liabilities, net of effects of acquisitions:
|
|
|
|
||||
Accounts receivable
|
(26,663
|
)
|
|
(597
|
)
|
||
Unbilled receivables
|
512
|
|
|
(3,715
|
)
|
||
Inventories
|
6,194
|
|
|
(315
|
)
|
||
Prepaid expenses and other assets
|
1,587
|
|
|
(2,975
|
)
|
||
Deferred revenue
|
(694
|
)
|
|
4,805
|
|
||
Accounts payable
|
(1,977
|
)
|
|
(3,057
|
)
|
||
Accrued and other expenses
|
3,925
|
|
|
3,712
|
|
||
Net cash provided by operating activities
|
17,403
|
|
|
18,913
|
|
||
Investing activities:
|
|
|
|
||||
Acquisition of businesses, net of cash acquired
|
—
|
|
|
(29,878
|
)
|
||
Purchases of property, plant and equipment
|
(13,869
|
)
|
|
(66,841
|
)
|
||
Net cash used in investing activities
|
(13,869
|
)
|
|
(96,719
|
)
|
||
Financing activities:
|
|
|
|
||||
Proceeds from the issuance of notes payable
|
4,696
|
|
|
—
|
|
||
Repayments of notes payable
|
(734
|
)
|
|
(288
|
)
|
||
Payments under equipment financing obligations
|
(50
|
)
|
|
(140
|
)
|
||
Payment of deferred financing and debt issuance costs
|
(835
|
)
|
|
(146
|
)
|
||
Proceeds from revolving credit facility
|
22,750
|
|
|
59,000
|
|
||
Repayment of revolving credit facility
|
(28,250
|
)
|
|
(14,000
|
)
|
||
Payment of contingent consideration
|
(1,225
|
)
|
|
—
|
|
||
Proceeds from equity issuance
|
40
|
|
|
71
|
|
||
Purchase of treasury stock
|
(139
|
)
|
|
(173
|
)
|
||
Net cash (used in) provided by financing activities
|
(3,747
|
)
|
|
44,324
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
||
Net decrease in cash and cash equivalents
|
(213
|
)
|
|
(33,482
|
)
|
||
Cash and cash equivalents at beginning of year
|
1,466
|
|
|
35,227
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,253
|
|
|
$
|
1,745
|
|
Supplemental disclosure of cash flow information
|
|
|
|
||||
Non-cash investing activities:
|
|
|
|
||||
Contingent consideration
|
$
|
—
|
|
|
$
|
9,200
|
|
Asset retirement obligation
|
$
|
3,301
|
|
|
$
|
2,086
|
|
Non-cash financing activities:
|
|
|
|
||||
Capitalized expenditures in accounts payable and accrued expenses
|
$
|
1,237
|
|
|
$
|
6,585
|
|
Machinery, equipment and tooling
|
$
|
1,478
|
|
Plant and building
|
1,407
|
|
|
Railroad and sidings
|
9,926
|
|
|
Land improvements
|
2,738
|
|
|
Total assets acquired
|
$
|
15,549
|
|
Base price - cash
|
$
|
30,000
|
|
Contingent consideration – earnout
|
9,200
|
|
|
Working capital adjustment
|
(122
|
)
|
|
Total purchase consideration
|
$
|
39,078
|
|
|
|
Fair Value
|
|
Useful Life (in years)
|
||
Assets Acquired
|
|
|
|
|
||
Accounts receivable
|
|
$
|
112
|
|
|
|
Inventory
|
|
1,700
|
|
|
|
|
Prepaid expenses and other current assets
|
|
126
|
|
|
|
|
Total current assets acquired
|
|
$
|
1,938
|
|
|
|
Property, plant and equipment
|
|
740
|
|
|
|
|
Customer relationships
|
|
270
|
|
|
1 year
|
|
Developed technology
|
|
18,800
|
|
|
13 years
|
|
Trade name
|
|
900
|
|
|
Indefinite
|
|
Goodwill
|
|
16,935
|
|
|
|
|
Other assets
|
|
225
|
|
|
|
|
Total non-current assets acquired
|
|
37,870
|
|
|
|
|
Total assets acquired
|
|
$
|
39,808
|
|
|
|
|
|
|
|
|
||
Liabilities Assumed
|
|
|
|
|
||
Accounts payable
|
|
$
|
331
|
|
|
|
Accrued and other expenses
|
|
399
|
|
|
|
|
Total liabilities assumed
|
|
730
|
|
|
|
|
Estimated fair value of net assets acquired
|
|
$
|
39,078
|
|
|
|
|
|
June 30, 2019
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Contingent consideration
|
|
$
|
4,400
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,400
|
|
Total liabilities
|
|
$
|
4,400
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,400
|
|
Balance as of December 31, 2018
|
|
$
|
7,167
|
|
Payment of contingent consideration
|
|
(1,225
|
)
|
|
Fair value adjustment
|
|
(1,542
|
)
|
|
Balance as of June 30, 2019
|
|
$
|
4,400
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Raw material
|
$
|
628
|
|
|
$
|
1,201
|
|
Work in progress
|
6,067
|
|
|
10,070
|
|
||
Finished goods
|
4,769
|
|
|
4,648
|
|
||
Spare parts
|
917
|
|
|
1,356
|
|
||
Total sand inventory
|
$
|
12,381
|
|
|
$
|
17,275
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Work in progress
|
$
|
—
|
|
|
$
|
1,300
|
|
Total SmartSystems inventory
|
$
|
—
|
|
|
$
|
1,300
|
|
|
|
|
|
||||
Total inventory
|
$
|
12,381
|
|
|
$
|
18,575
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Machinery, equipment and tooling
|
$
|
16,080
|
|
|
$
|
14,858
|
|
SmartSystems
|
9,532
|
|
|
5,286
|
|
||
Vehicles
|
2,214
|
|
|
1,955
|
|
||
Furniture and fixtures
|
1,217
|
|
|
1,140
|
|
||
Plant and building
|
160,413
|
|
|
158,882
|
|
||
Real estate properties
|
4,855
|
|
|
4,601
|
|
||
Railroad and sidings
|
27,347
|
|
|
27,347
|
|
||
Land and land improvements
|
27,421
|
|
|
27,167
|
|
||
Asset retirement obligation
|
19,770
|
|
|
16,469
|
|
||
Mineral properties
|
10,075
|
|
|
10,075
|
|
||
Deferred mining costs
|
1,806
|
|
|
1,806
|
|
||
Construction in progress
|
25,132
|
|
|
21,619
|
|
||
|
305,862
|
|
|
291,205
|
|
||
Less: accumulated depreciation and depletion
|
54,884
|
|
|
42,809
|
|
||
Total property, plant and equipment, net
|
$
|
250,978
|
|
|
$
|
248,396
|
|
|
|
Estimated Useful Life (Years)
|
|
Gross Carrying Amount at December 31, 2018
|
|
Accumulated Amortization
|
|
Net Book Value at June 30, 2019
|
||||||
Developed technology
|
|
13
|
|
$
|
18,800
|
|
|
$
|
1,567
|
|
|
$
|
17,233
|
|
Customer relationships
|
|
1
|
|
270
|
|
|
270
|
|
|
—
|
|
|||
|
|
|
|
$
|
19,070
|
|
|
$
|
1,837
|
|
|
$
|
17,233
|
|
|
|
|
||
Remainder of 2019
|
|
$
|
723
|
|
2020
|
|
1,446
|
|
|
2021
|
|
1,446
|
|
|
2022
|
|
1,446
|
|
|
2023
|
|
1,446
|
|
|
Thereafter
|
|
10,726
|
|
|
Total
|
|
$
|
17,233
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Employee related expenses
|
$
|
2,993
|
|
|
$
|
1,894
|
|
Accrued construction related expenses
|
259
|
|
|
948
|
|
||
Accrued professional fees
|
428
|
|
|
465
|
|
||
Accrued royalties
|
1,678
|
|
|
1,780
|
|
||
Accrued freight and delivery charges
|
1,976
|
|
|
2,556
|
|
||
Accrued real estate tax
|
403
|
|
|
—
|
|
||
Accrued utilities
|
537
|
|
|
—
|
|
||
Accrued income taxes
|
634
|
|
|
—
|
|
||
Deferred rent
|
—
|
|
|
712
|
|
||
Other accrued liabilities
|
1,329
|
|
|
37
|
|
||
Total accrued liabilities
|
$
|
10,237
|
|
|
$
|
8,392
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Credit Facility
|
$
|
38,255
|
|
|
$
|
—
|
|
Finance leases
|
137
|
|
|
90
|
|
||
Notes payable
|
1,846
|
|
|
739
|
|
||
Total current portion of long-term debt
|
$
|
40,238
|
|
|
$
|
829
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Credit Facility
|
$
|
—
|
|
|
$
|
44,255
|
|
Finance leases
|
498
|
|
|
547
|
|
||
Notes payable
|
5,898
|
|
|
3,091
|
|
||
Total long-term debt, net of current portion
|
$
|
6,396
|
|
|
$
|
47,893
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Revolving credit facility
|
$
|
39,000
|
|
|
$
|
44,500
|
|
Less: Debt discount, net
|
(745
|
)
|
|
(245
|
)
|
||
Revolving credit facility, net
|
$
|
38,255
|
|
|
$
|
44,255
|
|
|
|
Balance Sheet Location
|
|
June 30, 2019
|
||
Right-of-use assets
|
|
|
|
|
||
Operating
|
|
Operating right-of-use assets
|
|
$
|
32,417
|
|
Financing
|
|
Property, plant and equipment, net
|
|
659
|
|
|
Total right-of use assets
|
|
|
|
$
|
33,076
|
|
|
|
|
|
|
||
Lease liabilities
|
|
|
|
|
||
Operating
|
|
Operating lease liabilities, current and long-term portions
|
|
$
|
33,041
|
|
Financing
|
|
Long-term debt, current and long-term portions
|
|
615
|
|
|
Total lease liabilities
|
|
|
|
$
|
33,656
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 30, 2019
|
|
June 30, 2019
|
||||
Finance lease cost
|
|
|
|
||||
Amortization of right-of-use assets
|
$
|
34
|
|
|
$
|
64
|
|
Interest on lease liabilities
|
11
|
|
|
22
|
|
||
Operating lease cost
|
4,257
|
|
|
7,364
|
|
||
Short-term lease cost
|
120
|
|
|
134
|
|
||
Total lease cost
|
$
|
4,422
|
|
|
$
|
7,584
|
|
|
|
Six Months Ended
|
||
|
|
June 30, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
||
Operating cash flows used for finance leases
|
|
$
|
20
|
|
Operating cash flows used for operating leases
|
|
$
|
7,288
|
|
Financing cash flows used for finance leases
|
|
$
|
58
|
|
|
|
|
||
Right-of-use assets obtained in exchange for new finance lease liabilities
|
|
$
|
55
|
|
Right-of-use assets recorded upon adoption
|
|
$
|
35,939
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
|
$
|
4,100
|
|
|
|
|
||
|
|
|
||
Weighted average remaining lease term - finance leases
|
|
4.0 years
|
|
|
Weighted average discount rate - finance leases
|
|
6.69
|
%
|
|
Weighted average remaining lease term - operating leases
|
|
2.9 years
|
|
|
Weighted average discount rate - operating leases
|
|
5.50
|
%
|
Year
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
||||||
Remainder of 2019
|
|
$
|
7,864
|
|
|
$
|
116
|
|
|
$
|
7,980
|
|
2020
|
|
12,762
|
|
|
165
|
|
|
12,927
|
|
|||
2021
|
|
8,847
|
|
|
165
|
|
|
9,012
|
|
|||
2022
|
|
3,979
|
|
|
151
|
|
|
4,130
|
|
|||
2023
|
|
1,394
|
|
|
103
|
|
|
1,497
|
|
|||
Thereafter
|
|
888
|
|
|
—
|
|
|
888
|
|
|||
Total cash lease payments
|
|
35,734
|
|
|
700
|
|
|
36,434
|
|
|||
Less: amounts representing interest
|
|
(2,693
|
)
|
|
(85
|
)
|
|
(2,778
|
)
|
|||
Total lease liabilities
|
|
$
|
33,041
|
|
|
$
|
615
|
|
|
$
|
33,656
|
|
Balance at December 31, 2018
|
$
|
13,322
|
|
Additions and revisions of prior estimates
|
3,301
|
|
|
Accretion expense
|
445
|
|
|
Settlement of liability
|
(1,883
|
)
|
|
Balance at June 30, 2019
|
$
|
15,185
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
Revenue
|
|
Percentage of Total Revenue
|
|
Revenue
|
|
Percentage of Total Revenue
|
|
Revenue
|
|
Percentage of Total Revenue
|
|
Revenue
|
|
Percentage of Total Revenue
|
||||||||||||
Sand sales revenue
|
$
|
26,862
|
|
|
39
|
%
|
|
$
|
34,626
|
|
|
64
|
%
|
|
$
|
48,008
|
|
|
40
|
%
|
|
$
|
56,913
|
|
|
58
|
%
|
Reservation revenue
|
4,500
|
|
|
7
|
%
|
|
5,838
|
|
|
11
|
%
|
|
9,000
|
|
|
8
|
%
|
|
12,466
|
|
|
13
|
%
|
||||
Shortfall revenue
|
16,283
|
|
|
24
|
%
|
|
668
|
|
|
1
|
%
|
|
22,039
|
|
|
18
|
%
|
|
668
|
|
|
1
|
%
|
||||
Logistics revenue
|
20,296
|
|
|
30
|
%
|
|
13,316
|
|
|
24
|
%
|
|
40,669
|
|
|
34
|
%
|
|
27,029
|
|
|
28
|
%
|
||||
Total revenues
|
$
|
67,941
|
|
|
100
|
%
|
|
$
|
54,448
|
|
|
100
|
%
|
|
$
|
119,716
|
|
|
100
|
%
|
|
$
|
97,076
|
|
|
100
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Weighted average common shares outstanding
|
40,074
|
|
|
40,499
|
|
|
40,035
|
|
|
40,455
|
|
Assumed conversion of restricted stock
|
99
|
|
|
51
|
|
|
82
|
|
|
95
|
|
Diluted weighted average common stock outstanding
|
40,173
|
|
|
40,550
|
|
|
40,117
|
|
|
40,550
|
|
Remainder of 2019
|
|
$
|
1,304
|
|
2020
|
|
2,075
|
|
|
2021
|
|
1,040
|
|
|
2022
|
|
461
|
|
|
2023
|
|
101
|
|
|
Total
|
|
$
|
4,981
|
|
|
Number of
Shares
|
|
Weighted
Average
|
|||
Unvested, December 31, 2018
|
1,027
|
|
|
$
|
9.83
|
|
Granted
|
335
|
|
|
$
|
2.54
|
|
Vested
|
(256
|
)
|
|
$
|
7.30
|
|
Forfeited
|
(18
|
)
|
|
$
|
6.38
|
|
Unvested, June 30, 2019
|
1,088
|
|
|
$
|
9.31
|
|
|
|
||
Remainder of 2019
|
$
|
208
|
|
2020
|
2,275
|
|
|
2021
|
2,275
|
|
|
2022
|
2,275
|
|
|
2023
|
2,275
|
|
|
Thereafter
|
31,850
|
|
|
Total
|
$
|
41,158
|
|
|
Three Months Ended June 30,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
Dollars
|
|
Percentage
|
|||||||
|
(in thousands)
|
|
|
|
|
|||||||||
Revenues
|
$
|
67,941
|
|
|
$
|
54,448
|
|
|
$
|
13,493
|
|
|
25
|
%
|
Cost of goods sold
|
43,068
|
|
|
34,678
|
|
|
8,390
|
|
|
24
|
%
|
|||
Gross profit
|
24,873
|
|
|
19,770
|
|
|
5,103
|
|
|
26
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Salaries, benefits and payroll taxes
|
2,798
|
|
|
2,790
|
|
|
8
|
|
|
—
|
%
|
|||
Depreciation and amortization
|
655
|
|
|
476
|
|
|
179
|
|
|
38
|
%
|
|||
Selling, general and administrative
|
2,790
|
|
|
3,595
|
|
|
(805
|
)
|
|
(22
|
)%
|
|||
Change in the estimated fair value of contingent consideration
|
(575
|
)
|
|
—
|
|
|
(575
|
)
|
|
Not meaningful
|
|
|||
Total operating expenses
|
5,668
|
|
|
6,861
|
|
|
(1,193
|
)
|
|
(17
|
)%
|
|||
Operating income
|
19,205
|
|
|
12,909
|
|
|
6,296
|
|
|
49
|
%
|
|||
Other income (expenses):
|
|
|
|
|
|
|
|
|||||||
Interest expense, net
|
(994
|
)
|
|
(500
|
)
|
|
(494
|
)
|
|
99
|
%
|
|||
Other income
|
37
|
|
|
25
|
|
|
12
|
|
|
48
|
%
|
|||
Total other expenses, net
|
(957
|
)
|
|
(475
|
)
|
|
(482
|
)
|
|
101
|
%
|
|||
Income before income tax expense
|
18,248
|
|
|
12,434
|
|
|
5,814
|
|
|
47
|
%
|
|||
Income tax expense
|
3,972
|
|
|
2,413
|
|
|
1,559
|
|
|
65
|
%
|
|||
Net income
|
$
|
14,276
|
|
|
$
|
10,021
|
|
|
$
|
4,255
|
|
|
42
|
%
|
•
|
We had
$16.3 million
of shortfall revenue for the three months ended
June 30, 2019
compared to
$0.7 million
shortfall revenue for the three months ended
June 30, 2018
. Our customer contracts dictate whether customers are invoiced quarterly or at the end of their respective contract year for shortfall payments. We recognize revenue to the extent of the unfulfilled minimum contracted quantity at the shortfall price per ton as stated in the contract.
|
•
|
Sand sales revenue decreased from
$34.6 million
for the three months ended
June 30, 2018
to
$26.9 million
for the three months ended
June 30, 2019
as a result of lower total volumes sold.
|
•
|
Logistics revenue, which includes freight for certain mine gate sand sales, railcar usage and logistics services, was approximately
$20.3 million
for the three months ended
June 30, 2019
compared to
$13.3 million
for the three months ended
June 30, 2018
. The increase in transportation revenue was due to increased in-basin sales volumes in the
second
quarter of
2019
and wellsite proppant storage solutions sold under contracts existing prior to our acquisition of Quickthree Solutions, Inc. (“Quickthree”).
|
|
Six Months Ended June 30,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
Dollars
|
|
Percentage
|
|||||||
|
(in thousands)
|
|
|
|
|
|||||||||
Revenues
|
$
|
119,716
|
|
|
$
|
97,076
|
|
|
$
|
22,640
|
|
|
23
|
%
|
Cost of goods sold
|
83,673
|
|
|
70,091
|
|
|
13,582
|
|
|
19
|
%
|
|||
Gross profit
|
36,043
|
|
|
26,985
|
|
|
9,058
|
|
|
34
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Salaries, benefits and payroll taxes
|
5,508
|
|
|
5,362
|
|
|
146
|
|
|
3
|
%
|
|||
Depreciation and amortization
|
1,331
|
|
|
664
|
|
|
667
|
|
|
100
|
%
|
|||
Selling, general and administrative
|
5,590
|
|
|
6,696
|
|
|
(1,106
|
)
|
|
(17
|
)%
|
|||
Change in the estimated fair value of contingent consideration
|
(1,542
|
)
|
|
—
|
|
|
(1,542
|
)
|
|
Not meaningful
|
|
|||
Total operating expenses
|
10,887
|
|
|
12,722
|
|
|
(1,835
|
)
|
|
(14
|
)%
|
|||
Operating income
|
25,156
|
|
|
14,263
|
|
|
10,893
|
|
|
76
|
%
|
|||
Other income (expenses):
|
|
|
|
|
|
|
|
|||||||
Interest expense, net
|
(1,975
|
)
|
|
(680
|
)
|
|
(1,295
|
)
|
|
190
|
%
|
|||
Other income
|
74
|
|
|
58
|
|
|
16
|
|
|
28
|
%
|
|||
Total other expenses, net
|
(1,901
|
)
|
|
(622
|
)
|
|
(1,279
|
)
|
|
206
|
%
|
|||
Income before income tax expense
|
23,255
|
|
|
13,641
|
|
|
9,614
|
|
|
70
|
%
|
|||
Income tax expense
|
4,946
|
|
|
2,645
|
|
|
2,301
|
|
|
87
|
%
|
|||
Net income
|
$
|
18,309
|
|
|
$
|
10,996
|
|
|
$
|
7,313
|
|
|
67
|
%
|
•
|
We had
$22.0 million
of shortfall revenue for the
six
months ended
June 30, 2019
compared to
$0.7 million
shortfall revenue for the
six
months ended
June 30, 2018
. Our customer contracts dictate whether customers are invoiced quarterly or at the end of their respective contract year for shortfall payments. We recognize revenue to the extent of the unfulfilled minimum contracted quantity at the shortfall price per ton as stated in the contract.
|
•
|
Sand sales revenue decreased from
$56.9 million
for the six months ended
June 30, 2018
to
$48.0 million
for the six months ended
June 30, 2019
as a result of lower total volumes of sand sold.
|
•
|
Logistics revenue, which includes freight for certain mine gate sand sales, railcar usage and logistics services, was approximately
$40.7 million
for the
six
months ended
June 30, 2019
compared to
$27.0 million
for the
six
months ended
June 30, 2018
. The increase in transportation revenue was due to increased in-basin sales volumes in the
second
quarter of
2019
and wellsite proppant storage solutions sold under contracts existing prior to our acquisition of Quickthree.
|
•
|
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 Credit Facility.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Net income
|
$
|
14,276
|
|
|
$
|
10,021
|
|
|
$
|
18,309
|
|
|
$
|
10,996
|
|
Depreciation, depletion and amortization
|
6,590
|
|
|
4,296
|
|
|
12,893
|
|
|
7,456
|
|
||||
Income tax expense
|
3,973
|
|
|
2,413
|
|
|
4,946
|
|
|
2,645
|
|
||||
Interest expense
|
997
|
|
|
509
|
|
|
1,978
|
|
|
728
|
|
||||
Franchise taxes
|
93
|
|
|
109
|
|
|
178
|
|
|
329
|
|
||||
EBITDA
|
$
|
25,929
|
|
|
$
|
17,348
|
|
|
$
|
38,304
|
|
|
$
|
22,154
|
|
(Gain) on sale of fixed assets
|
(1
|
)
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
||||
Equity compensation
(1)
|
685
|
|
|
668
|
|
|
1,384
|
|
|
1,159
|
|
||||
Acquisition and development costs
(2)
|
(577
|
)
|
|
914
|
|
|
(1,524
|
)
|
|
1,243
|
|
||||
Cash charges related to restructuring and retention
(3)
|
41
|
|
|
270
|
|
|
82
|
|
|
363
|
|
||||
Accretion of asset retirement obligations
|
166
|
|
|
57
|
|
|
445
|
|
|
191
|
|
||||
Adjusted EBITDA
|
$
|
26,243
|
|
|
$
|
19,257
|
|
|
$
|
38,665
|
|
|
$
|
25,110
|
|
(1)
|
Represents the non-cash expenses for stock-based awards issued to our employees and employee stock purchase plan compensation expense.
|
(2)
|
Includes
$575
and
$1,542
fair value adjustment of contingent consideration for the three and six months ended June 30, 2019, respectively, and
$843
and
$1,159
acquisition costs related to our acquisition of Quickthree for the three and six months ended June 30, 2018, respectively.
|
(3)
|
Represents costs associated with the retention and relocation of employees.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Revenue
|
$
|
67,941
|
|
|
$
|
54,448
|
|
|
$
|
119,716
|
|
|
$
|
97,076
|
|
Cost of goods sold
|
43,068
|
|
|
34,678
|
|
|
83,673
|
|
|
70,091
|
|
||||
Gross profit
|
24,873
|
|
|
19,770
|
|
|
36,043
|
|
|
26,985
|
|
||||
Depreciation, depletion, and accretion of asset retirement obligations
|
6,101
|
|
|
3,878
|
|
|
12,007
|
|
|
6,982
|
|
||||
Contribution margin
|
$
|
30,974
|
|
|
$
|
23,648
|
|
|
$
|
48,050
|
|
|
$
|
33,967
|
|
Contribution margin per ton
|
$
|
41.80
|
|
|
$
|
28.19
|
|
|
$
|
34.59
|
|
|
$
|
21.75
|
|
Total tons sold
|
741
|
|
|
839
|
|
|
1,389
|
|
|
1,562
|
|
|
June 30,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Total current assets
|
$
|
68,499
|
|
|
$
|
50,096
|
|
Total current liabilities
|
75,265
|
|
|
24,652
|
|
||
Working capital
|
$
|
(6,766
|
)
|
|
$
|
25,444
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Net cash provided by operating activities
|
$
|
17,403
|
|
|
$
|
18,913
|
|
Net cash used in investing activities
|
$
|
(13,869
|
)
|
|
$
|
(96,719
|
)
|
Net cash (used in) provided by financing activities
|
$
|
(3,747
|
)
|
|
$
|
44,324
|
|
*
|
Filed Herewith.
|
†
|
This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
|
‡
|
Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10).
|
|
Smart Sand, Inc.
|
|
|
|
|
August 7, 2019
|
By:
|
/s/ Charles E. Young
|
|
|
Charles E. Young, Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
Smart Sand, Inc.
|
|
|
|
|
August 7, 2019
|
By:
|
/s/ Lee E. Beckelman
|
|
|
Lee E. Beckelman, Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
1 Year Smart Sand Chart |
1 Month Smart Sand Chart |
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