Smart Sand(SND) - 2022 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Smart Sand, Inc ITEM 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Smart Sand, Inc., including balance sheets, statements of operations, comprehensive (loss) income, changes in stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, acquisitions, debt, leases, and other financial commitments for the three months ended March 31, 2022, and comparative periods Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $4,698 | $25,588 | | Total current assets | $56,125 | $73,863 | | Total assets | $366,570 | $374,019 | | Total current liabilities | $48,200 | $48,550 | | Total liabilities | $130,588 | $132,859 | | Total stockholders' equity | $235,982 | $241,160 | - Total assets decreased by $7.4 million, primarily driven by a significant reduction in cash and cash equivalents[11] Condensed Consolidated Statements of Operations This section details the company's revenues, costs, and net loss over a specific period, reflecting operational performance | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Sand sales revenue | $38,289 | $23,147 | 65% | | Shortfall revenue | $1,915 | $1,741 | 10% | | Logistics revenue | $1,401 | $2,562 | (45)% | | Total revenue | $41,605 | $27,450 | 52% | | Cost of goods sold | $43,586 | $32,427 | 34% | | Gross profit | $(1,981) | $(4,977) | (60)% | | Operating loss | $(9,948) | $(11,067) | (10)% | | Net loss | $(5,923) | $(3,912) | 51% | | Basic EPS | $(0.14) | $(0.09) | 56% | - Total revenue increased by 52% year-over-year, primarily driven by a 65% increase in sand sales revenue[14] - Despite improved gross profit (loss decreased by 60%), net loss increased by 51% to $(5.9) million[14] Condensed Consolidated Statements of Comprehensive (Loss) Income This section presents the total comprehensive loss, including net loss and other comprehensive income or loss components | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(5,923) | $(3,912) | | Comprehensive loss | $(5,907) | $(3,787) | - The comprehensive loss for Q1 2022 was $(5.9) million, an increase from $(3.8) million in Q1 2021, reflecting the higher net loss[17] Condensed Consolidated Statements of Changes in Stockholders' Equity This section outlines the changes in the company's equity accounts, including net loss and stock-based compensation | Metric (in thousands) | December 31, 2021 | March 31, 2022 | | :-------------------- | :---------------- | :------------- | | Total Stockholders' Equity | $241,160 | $235,982 | | Net loss | | $(5,923) | | Stock-based compensation | | $826 | - Total stockholders' equity decreased by $5.2 million from December 31, 2021, to March 31, 2022, primarily due to the net loss incurred during the period, partially offset by stock-based compensation[20] Condensed Consolidated Statements of Cash Flows This section categorizes cash inflows and outflows from operating, investing, and financing activities, showing liquidity changes | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash (used in) provided by operating activities | $(8,662) | $3,914 | | Net cash used in investing activities | $(10,315) | $(2,215) | | Net cash used in financing activities | $(1,913) | $(2,007) | | Net decrease in cash and cash equivalents | $(20,890) | $(308) | | Cash and cash equivalents at end of period | $4,698 | $11,417 | - The company experienced a significant net decrease in cash and cash equivalents of $(20.9) million in Q1 2022, primarily due to cash used in operating activities and a substantial increase in investing activities, including the $6.5 million acquisition of the Blair facility[29] Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the financial statements, covering accounting policies, acquisitions, and other financial commitments NOTE 1 — Organization and Nature of Business & Market Update This note describes Smart Sand's business operations, market position, and recent strategic developments, including diversification and capacity expansion - Smart Sand, Inc. operates as a fully integrated frac sand supply and services company, offering mine-to-wellsite proppant, logistics, and storage solutions for the oil and natural gas industry[32] - The company diversified its customer base by creating the Industrial Products Solutions (IPS) business in late 2021, offering sand for industrial uses such as glass, foundry, and building products[32] - Current annual processing capacity is approximately 10.0 million tons, following expansions and acquisitions, including the Blair, Wisconsin mine and processing facility in March 2022[32] NOTE 2 — Summary of Significant Accounting Policies This note outlines the key accounting principles and estimates used in preparing the interim financial statements - The unaudited interim financial statements are prepared in accordance with SEC rules for Form 10-Q and GAAP, relying on management's estimates for items like asset impairment, asset retirement obligations, and deferred tax assets[37][40] - The company qualified for federal government assistance through employee retention credit provisions, with $1.18 million included in prepaid expenses and other current assets as of March 31, 2022[42] NOTE 3 — Acquisition This note details the acquisition of the Blair facility, including the purchase price and accounting treatment - On March 4, 2022, Smart Sand acquired Hi-Crush Blair LLC (Blair facility) for $6.45 million in cash[44] - The Blair facility is an idle frac sand mine and processing facility in Blair, Wisconsin, with approximately 2.9 million tons of total annual processing capacity and unit train rail access[45] - The transaction was accounted for as an asset acquisition, with acquired assets allocated to property, plant and equipment, net, and an $8.281 million increase to asset retirement obligations[46] NOTE 4 — Inventory This note provides a breakdown of the company's inventory by type and its valuation | Inventory Type (in thousands) | March 31, 2022 | December 31, 2021 | | :---------------------------- | :------------- | :---------------- | | Raw material