Smart Sand, Inc.

Previous wording

We incorporated in Delaware in July 2011 and began operations at our Oakdale, Wisconsin facility with 1.1 million tons of annual processing capacity in July 2012. After several expansions, our current annual processing capacity at our Oakdale facility, which has access to both the Canadian Pacific and Union Pacific rail networks, is approximately 5.5 million tons. In 2020, we acquired our Ottawa, Illinois mine and processing facility, which has an annual processing capacity of approximately 1.6 million tons and access to the Burlington Northern Santa Fe rail network. In March 2022, we acquired our Blair, Wisconsin mine and processing facility, which has approximately 2.9 million tons of annual processing capacity and contains an onsite, unit train capable rail terminal with access to the Class I Canadian National Railway. We commenced operations at the Blair facility in May 2023. In total, we have annual processing capacity of approximately 10.0 million tons across all of our operating facilities.

Current wording

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 operating facilities.

Previous wording

We expanded our IPS product line in 2023 by completing the installation of blending and cooling equipment at our Ottawa, Illinois facility, which we believe provides new opportunities to increase our customer base in the IPS business. We expect to continue to expand and diversify to serve the major industrial markets throughout North America, including glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail and recreational uses.

Current wording

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.

Previous wording

Our historical results of operations and cash flows may not be indicative of results of operations and cash flows to be expected in the future. Events such as the ongoing conflicts in Ukraine and the Middle East, rapidly changing trade policies between the United States and other countries, and periodic output changes by the Organization of the Petroleum Exporting Countries may affect oil and natural gas prices and create volatility in the oilfield service sector. Recent U.S. actions in Iran and Venezuela have added uncertainty to global crude supply, pricing and market dynamics, which may indirectly affect demand for frac sand and related services.

Current wording

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. Recent U.S. actions in Iran and Venezuela have added uncertainty to global crude supply, pricing and market dynamics, which may indirectly affect demand for frac sand and related services. Anticipated increasing demand for natural gas in North America to support increased LNG export capacity and power generation needs for new data center development may impact the demand for frac sand.

Previous wording

Our sales into Mexico and Canada are currently exempt from tariffs. Although our sales into Canada were subject to tariffs in the beginning of 2025, a Surtax Remission Order eliminated such tariffs on our sand. Should the tariff rates change, we anticipate that our customers would be responsible for the increased cost, which may result in customers sourcing their sand needs from other suppliers within their own countries. We are currently unable to estimate the effect of current or future events on our future financial position and results of operations. Therefore, we give no assurances that these events will not have a material adverse effect on our financial position or results of operations.

Current wording

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.

Previous wording

During 2025 and the first quarter of 2026, we experienced an increase in the volume of sand sold as customers increased their activity. There have also been modest sand pricing fluctuations over the periods presented, but we believe the fluctuation is consistent with other products in the oilfield services sector. We believe the demand for frac sand will continue to moderately increase, driven by long-term demand for natural gas in North America and continued efforts by oil and natural gas producers to increase the efficiency of well completions and the increased production per well completed, which is leading to increased volume of sand per linear foot of lateral well. Frac sand demand may also increase over the next five years, due to higher levels of drilling and completion of natural gas wells to supply natural gas for increased export capacity of liquefied natural gas (“LNG”) and increased power demand for data centers. North American LNG export capacity is currently expected to grow by over 50% by 2030. Artificial intelligence (“AI”) facilities are being planned in various locations across North America, including near the Marcellus region. Developers of AI facilities are looking for locations near existing natural gas wells, water, infrastructure and people to be able to directly source some of their power supply needs. We are watching AI and LNG export capacity growth closely as a potential long-term driver of demand for our frac sand products and logistical services.

Current wording

During the first half of 2026, we experienced an increase in the volume of sand sold as customers increased their activity. There have also been modest sand pricing fluctuations over the periods presented, but we believe the fluctuation is consistent with other products in the oilfield services sector. We believe the demand for frac sand will continue to increase, driven by long-term demand for natural gas in North America and continued efforts by oil and natural gas producers to increase the efficiency of well completions and the increased production per well completed, which is leading to increased volume of sand per linear foot of lateral well. Frac sand demand may also increase over the next five years due to higher levels of drilling and completion of natural gas wells to supply natural gas for increased export capacity of liquefied natural gas (“LNG”) and increased power demand for data centers. North American LNG export capacity is currently expected to grow by over 50% by 2030. Artificial intelligence (“AI”) facilities are being planned in various locations across North America, including near the Marcellus region. Developers of AI facilities are looking for locations near existing natural gas wells, water, infrastructure and labor to be able to directly source some of their power supply needs. We are watching AI and LNG export capacity growth closely as a potential long-term driver of demand for our frac sand products and logistical services.

Previous wording

We incurred $0.3 million of net interest expense for both the three months ended March 31, 2026 and March 31, 2025.

Current wording

We incurred $0.3 million and $0.3 million of net interest expense for the three months ended June 30, 2026 and 2025, respectively.

Previous wording

For the three months ended March 31, 2026 and March 31, 2025, our effective tax rate was approximately 23.3% and (233.6)%, respectively. We are required to record our interim period income tax (benefit) expense in accordance with GAAP, which requires that we estimate our full year effective tax rate and apply that rate to the net income for the period. Our effective tax rate includes modifications from the statutory rate for items such as income tax credits, tax depletion deduction, valuation allowance, and state taxes, among other items. The biggest driver of our income tax (benefit) expense is our depletion deduction calculation, which is not directly related to the net income of our Company. This tax deduction has an equally large effect on our income tax rate, which is the basis for the quarterly income tax (benefit) expense calculation. We do not expect to be a payer of federal income tax in 2026 and we expect to pay an immaterial amount of state income taxes in 2026. Because of the difference between income tax recorded on a GAAP basis and the cash taxes we expect to pay, we use additional non-GAAP performance measures of contribution margin, adjusted EBITDA, and free cash flow to evaluate our results of operations.

Current wording

For the three months ended June 30, 2026 and 2025, our effective tax rate was approximately 0.5% and 6643.1%, respectively. We are required to record our interim period income tax expense (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 expense (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 expense (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.

Previous wording

Revenues were $93.1 million and tons sold were approximately 1,492,000 for the three months ended March 31, 2026. Revenues for the three months ended March 31, 2025 were $65.6 million, during which time we sold approximately 1,069,000 tons of sand. The key factors contributing to the change in revenues for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 were as follows:

Current wording

Revenues were $208.2 million and tons sold were approximately 3,356,000 for the six months ended June 30, 2026. Revenues for the six months ended June 30, 2025 were $151.3 million, during which time we sold approximately 2,493,000 tons of sand. The key factors contributing to the change in revenues for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 were as follows:

Previous wording

•Sand revenue increased to $92.5 million for the three months ended March 31, 2026 versus $64.5 million for the three months ended March 31, 2025. Total volumes increased by approximately 40% and sand pricing per ton was slightly higher in the current period.

Current wording

•Sand revenue increased to $206.3 million for the six months ended June 30, 2026 versus $149.1 million for the six months ended June 30, 2025. Total volumes increased by approximately 35% and sand pricing per ton was slightly higher in the current period.

Previous wording

•SmartSystems revenue was approximately $0.6 million for the three months ended March 31, 2026 compared to $1.1 million for the three months ended March 31, 2025. The decline in SmartSystems revenue was due to lower utilization of our SmartSystems fleet.

Current wording

•SmartSystems revenue was approximately $1.8 million for the six months ended June 30, 2026 compared to $2.3 million for the six months ended June 30, 2025. The decline in SmartSystems revenue was due to lower utilization of our SmartSystems fleet.

Previous wording

Cost of goods sold was $87.0 million and $62.8 million for the three months ended March 31, 2026 and March 31, 2025, respectively. The increase was primarily due to higher volumes sold in the current period and the related increase in production costs, freight and transloading costs.

Current wording

Cost of goods sold was $182.2 million and $139.6 million for the six months ended June 30, 2026 and June 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.

Previous wording

Gross profit was $6.1 million and $2.8 million for the three months ended March 31, 2026 and March 31, 2025, respectively. The gross profit for the three months ended March 31, 2026 was higher, compared to the three months ended March 31, 2025, due primarily to higher sales volumes in the current period.

Current wording

Gross profit was $25.9 million and $11.7 million for the six months ended June 30, 2026 and June 30, 2025, respectively. The gross profit for the six months ended June 30, 2026 was higher, compared to the six months ended June 30, 2025, due primarily to higher sales volumes at slightly higher selling prices in the current period.

Previous wording

Selling, general and administrative expenses were $10.7 million for the three months ended March 31, 2026 compared to $9.2 million for the three months ended March 31, 2025. The increase in selling, general and administrative expenses was driven by increased wages and royalties on higher sales volumes. The gain on disposal of assets of $0.3 million for the three months ended March 31, 2026 was primarily related to disposals of heavy equipment.

Current wording

Selling, general and administrative expenses were $20.1 million for the six months ended June 30, 2026 compared to $18.4 million for the six months ended June 30, 2025. The increase in selling, general and administrative expenses was driven primarily by increased royalty expense associated with higher sales volumes. The gain on disposal of assets of $0.5 million for the six months ended June 30, 2026 was related to disposals of heavy equipment.

Previous wording

Contribution margin was $13.2 million and $9.6 million, or $8.84 and $8.96 per ton sold, for the three months ended March 31, 2026 and 2025, respectively. Contribution margin was higher compared to the same period in 2025 primarily due to increased sales volumes at a slightly higher average selling price.

Current wording

2026, compared to June 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.

Previous wording

We define EBITDA as net income, plus: (i) depreciation, depletion and amortization expense; (ii) income tax expense (benefit) and other results of operations based taxes; and (iii) interest expense. We define adjusted EBITDA as EBITDA, plus: (i) gain or loss on sale of fixed assets or discontinued operations; (ii) integration and transition costs associated with specified transactions; (iii) equity compensation; (iv) acquisition and development costs; (v) non-recurring cash charges related to restructuring, retention and other similar actions; (vi) earn-out, contingent consideration obligations; and (vii) non-cash charges 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:

Current wording

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:

Previous wording

We believe that our presentation of EBITDA and Adjusted EBITDA will provide useful information to investors in assessing our financial condition and results of operations. Net income is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA should not be considered alternatives to net income presented in accordance with GAAP. Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA for each of the periods indicated.

Current wording

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 (loss) to EBITDA and Adjusted EBITDA for each of the periods indicated.

Previous wording

Adjusted EBITDA was $3.8 million for the three months ended March 31, 2026 compared to $1.4 million for the three months ended March 31, 2025. The increase in adjusted EBITDA for the three months ended March 31, 2026, compared to the same period in 2025, was primarily due to higher sales volumes of sand sold.

Current wording

Adjusted EBITDA was $18.7 million for the three months ended June 30, 2026 compared to $7.8 million for the three months ended June 30, 2025. Adjusted EBITDA was $22.4 million for the six months ended June 30, 2026 compared to $9.2 million for the six months ended June 30, 2025. The increase in adjusted EBITDA for the three and six months ended June 30, 2026, compared to the same period in 2025 was primarily driven by higher sales volumes of sand sold, while keeping operating expenses at relatively consistent levels.

Previous wording

Our primary sources of liquidity are cash flow generated from operations and availability under our FCB ABL Credit Facility and other equipment financing sources. As of March 31, 2026, cash on hand was $19.5 million and we had $30.0 million in undrawn availability on our FCB ABL Credit Facility.

Current wording

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 June 30, 2026, cash on hand was $10.2 million and we had $30.0 million in undrawn availability on our FCB ABL Credit Facility.

Previous wording

On February 23, 2026, our Board of Directors approved a two-year share repurchase program under which we may purchase up to $20.0 million of our common stock (the “New Repurchase Program”). The New Repurchase Program went into effect on April 3, 2026 upon the expiration of our previous share repurchase program and will continue through April 2, 2028. Pursuant to the New Repurchase Program, we may repurchase our ordinary shares from time to time, in amounts, at prices and at such times as management deems appropriate, subject to market conditions and other considerations. Management may make repurchases in the open market, privately negotiated transactions, accelerated repurchase programs or structured share repurchase programs. The New Repurchase Program will be conducted in compliance with applicable legal requirements and shall be subject to market conditions and other factors. The New Repurchase Program does not obligate us to acquire any particular amount of ordinary shares, and the New Repurchase Program may be modified or suspended at any time at our discretion. No repurchases have been made under the New Repurchase Program.

Current wording

On February 23, 2026, our Board of Directors approved a two-year share repurchase program under which we may purchase up to $20.0 million of our common stock (the “New Repurchase Program”). The New Repurchase Program went into effect on April 3, 2026 upon the expiration of our previous share repurchase program and will continue through April 2, 2028. Pursuant to the New Repurchase Program, we may repurchase our ordinary shares from time to time, in amounts, at prices and at such times as management deems appropriate, subject to market conditions and other considerations. Management may make repurchases in the open market, privately negotiated transactions, accelerated repurchase programs or structured share repurchase programs. The New Repurchase Program will be conducted in compliance with applicable legal requirements and shall be subject to market conditions and other factors. The New Repurchase Program does not obligate us to acquire any particular amount of ordinary shares, and the New Repurchase Program may be modified or suspended at any time at our discretion.

Previous wording

On March 3, 2026, we entered into a written trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. We implemented this written trading plan in connection with our Repurchase Program. The trading plan permitted the purchase of up to a total of $2.5 million of our shares (including commissions). The number of shares of Company common stock to be purchased on any purchase day was up to the maximum daily target volume allowable under Rule 10b-18 of the Exchange Act. We repurchased $1.5 million of shares under this 10b5-1 Trading Plan during the three months ended March 31, 2026.

Current wording

On May 15, 2026, we entered into a written trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. We implemented this written trading plan in connection with our New Repurchase Program. The trading plan permitted the purchase of up to a total of $2.5 million of our shares (including commissions). The number of shares of Company common stock to be purchased on any purchase day was up to the maximum daily target volume allowable under Rule 10b-18 of the Exchange Act. We repurchased $2.5 million of shares under this 10b5-1 Trading Plan during the three months ended June 30, 2026.

Previous wording

We expect full year 2026 capital expenditures to be between $15.0 million and $20.0 million, consisting primarily of capital to open new mining areas for development and efficiency projects at our Oakdale, Blair and Ottawa facilities. We expect to fund these capital expenditures with existing cash from operations, equipment financing options available to us or borrowings under the FCB ABL Credit Facility.

Current wording

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.

Previous wording

Our debt facilities include the VFI Equipment Financing, various notes payable and our FCB ABL Credit Facility. Our VFI Equipment Financing is secured by a substantial portion of our SmartSystems equipment. The outstanding balance under the VFI Equipment Financing as of March 31, 2026 was $6.1 million. Minimum cash payments on this facility for the remainder of 2026 are anticipated to be $2.2 million. Our various notes payable are primarily secured by heavy equipment. Total debt under these notes payable as of March 31, 2026 was $7.6 million. Minimum cash payments on these notes payable for the remainder of 2026 are anticipated to be $1.9 million. There were no outstanding borrowings on our FCB ABL Credit Facility as of March 31, 2026.

Current wording

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 June 30, 2026 was $5.5 million. Minimum cash payments on this facility for the remainder of 2026 are anticipated to be $1.5 million. Our various notes payable are primarily secured by heavy equipment. Total debt under these notes payable as of June 30, 2026 was $9.0 million. Minimum cash payments on these notes payable for the remainder of 2026 are anticipated to be $2.1 million. There were no outstanding borrowings on our FCB ABL Credit Facility as of June 30, 2026.

Previous wording

We use leases primarily to procure certain office space, railcars and heavy equipment as part of our operations. The majority of our lease payments are fixed and determinable. Our operating lease liabilities as of March 31, 2026 were $25.0 million. Minimum cash payments on operating leases for the remainder of 2026 are anticipated to be $7.9 million.

Current wording

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 June 30, 2026 were $28.7 million. Minimum cash payments on operating leases for the remainder of 2026 are anticipated to be $5.6 million.

Previous wording

There have been no material changes in our critical accounting policies and procedures during the three months ended March 31, 2026.

Current wording

There have been no material changes in our critical accounting policies and procedures during the six months ended June 30, 2026.