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What changed in Smart Sand, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Smart Sand, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+423 added−447 removedSource: 10-K (2025-03-04) vs 10-K (2024-03-11)

Top changes in Smart Sand, Inc.'s 2024 10-K

423 paragraphs added · 447 removed · 339 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

95 edited+20 added−24 removed121 unchanged
Biggest changeThe ABL Credit Facility matures on December 13, 2024. Our total available liquidity among cash and available borrowings was $18.1 million as of December 31, 2023. • Experienced management team. The members of our senior management team bring significant experience to the market environment in which we operate.
Biggest changeAs of December 31, 2024, we had cash on hand of $1.6 million and undrawn availability under the FCB ABL Credit Facility of $30.0 million and no outstanding borrowings. The FCB ABL Credit Facility matures in September 2029. Our total available liquidity among cash and available borrowings was $31.6 million as of December 31, 2024. • Experienced management team.
To address the hazards inherent in our business, we maintain insurance coverage that includes physical damage coverage, third-party general liability 15 insurance, employer’s liability, business interruption, environmental and pollution and other coverage, although coverage for environmental and pollution-related losses is subject to significant limitations.
To address the hazards inherent in our business, we maintain insurance coverage that includes physical damage coverage, third-party general liability insurance, employer’s liability, business interruption, environmental and pollution and other coverage, although coverage for 15 environmental and pollution-related losses is subject to significant limitations.
The dunes sagebrush lizard is one example of a species that, if listed as endangered or threatened under the ESA, could impact our operations or the operations of our customers.
The dunes sagebrush lizard is one example of a species that, if listed as endangered or threatened under the ESA, could impact the operations of our customers.
Mr. Whelan has over 20 years of entrepreneurial experience in mining, technology and renewable energy industries. Mr. Whelan received a B.A. in Marketing from Bloomsburg University and M.S. in Instructional Technology from Bloomsburg University. James D. Young James D. Young was named Executive Vice President, General Counsel and Secretary in June 2017. Prior to joining us, Mr.
Mr. Whelan has over 20 years of entrepreneurial experience in mining, technology and renewable energy industries. Mr. Whelan received a B.A. in Marketing from Bloomsburg University and M.S. in Instructional Technology from Bloomsburg University. 20 James D. Young James D. Young was named Executive Vice President, General Counsel and Secretary in June 2017. Prior to joining us, Mr.
We believe that, among other things, the size and favorable geologic characteristics of our sand reserves, the strategic location and logistical advantages of our facilities, our proprietary SmartDepot TM portable wellsite proppant storage silos, our proprietary SmartPath ® transloader, our proprietary SmartBelt TM conveyor system, access to all Class I rail lines, and the industry experience of our senior management team make us as a highly attractive provider of sand and logistics services.
We believe that, among other things, the size and favorable geologic characteristics of our sand reserves, the strategic location and logistical advantages of our facilities, our proprietary SmartDepot TM portable wellsite proppant storage silos, our proprietary SmartPath ® wellsite proppant management system, SmartBelt TM conveyor system, access to all Class I rail lines, and the industry experience of our senior management team make us as a highly attractive provider of sand and logistics services.
Wisconsin has specific permitting and review processes for commercial silica mining operations, and state agencies may impose different or additional monitoring or mitigation requirements than 19 federal agencies. The development of new sites and our existing operations also are subject to a variety of local environmental and regulatory requirements, including land use, zoning, building, and transportation requirements.
Wisconsin has specific permitting and review processes for commercial silica mining operations, and state agencies may impose different or additional monitoring or mitigation requirements than federal agencies. The development of new sites and our existing operations also are subject to a variety of local environmental and regulatory requirements, including land use, zoning, building, and transportation requirements.
We have the ability to simultaneously accommodate multiple unit trains on-site with the Canadian Pacific rail network while also having the ability to ship our frac sand directly to our customers on a second Class I rail carrier through our transloading facility located on the Union Pacific rail network approximately three miles from our Oakdale operations.
We have the ability to simultaneously accommodate multiple unit trains on-site with the Canadian Pacific rail network while also having the ability to ship our frac sand to our customers on a second Class I rail carrier through our transloading facility located on the Union Pacific rail network approximately three miles from our Oakdale operations.
Our low-cost structure results from a number of key attributes, including, among others, our (i) relatively low royalty rates, (ii) majority of fine mineral reserve deposits, (iii) our facilities access to all Class I rail lines within the United States and Canada, and (iv) our low levels of debt.
Our low-cost structure results from a number of key attributes, including, among others, (i) our relatively low royalty rates, (ii) our majority of fine mineral reserve deposits, (iii) our access to all Class I rail lines within the United States and Canada, and (iv) our low levels of debt.
Harm under the ESA includes acts that actually kill or injure wildlife as well as significant habitat modification or degradation that significantly impairs essential behavioral patterns, including breeding, feeding or sheltering . Take prohibitions also protect migratory birds under the Migratory Bird Treaty Act (“MBTA”).
Harm under the ESA includes acts that actually kill or injure wildlife as well as significant habitat modification or degradation that significantly 17 impairs essential behavioral patterns, including breeding, feeding or sheltering . Take prohibitions also protect migratory birds under the Migratory Bird Treaty Act (“MBTA”).
This terminal has allowed us to expand our customer base and to offer more efficient delivery options to customers operating in the Bakken Formation in the Williston Basin. In January 2022 we began operating the terminal in Waynesburg, Pennsylvania to service the Appalachian Basin, including the Marcellus and Utica Formations.
This terminal has allowed us to expand our customer base and to offer more efficient delivery options to customers operating in the Bakken Formation in the Williston Basin. In January 2022 we began operating a terminal in Waynesburg, Pennsylvania to service the Appalachian Basin, including the Marcellus and Utica Formations.
NEPA requires federal agencies to evaluate the environmental impact of all “major federal actions” significantly affecting the quality of the human environment. The granting of a federal permit for a major development project, such as a mining operation, may be considered a “major federal action” that requires review under NEPA.
NEPA requires federal agencies to evaluate the environmental impact of all “major federal actions” significantly 18 affecting the quality of the human environment. The granting of a federal permit for a major development project, such as a mining operation, may be considered a “major federal action” that requires review under NEPA.
Young was a Director of Sales for Comcast Corporation from 2002 to 2011. Mr. Young brings over 25 years of experience in the mining, commercial telecommunications and broadband industries. Mr. Young received a BSc in Biology from Dalhousie 20 University. Mr. Young is the brother of Charles E.
Young was a Director of Sales for Comcast Corporation from 2002 to 2011. Mr. Young brings over 25 years of experience in the mining, commercial telecommunications and broadband industries. Mr. Young received a BSc in Biology from Dalhousie University. Mr. Young is the brother of Charles E.
We expect to fund these capital expenditures with existing cash, cash generated from operations, or borrowings under the ABL Credit Facility or other financing sources, such as equipment finance providers.
We expect to fund these capital expenditures with existing cash, cash generated from operations, or borrowings under the FCB ABL Credit Facility or other financing sources, such as equipment finance providers.
We own patents and have patent applications pending related to our SmartSystems wellsite proppant storage solutions. All of the issued patents have an expiration date after July 2030. With respect to our other products, we principally rely on trade secrets, rather than patents, to protect our proprietary processes, methods, documentation and other technologies, as well as certain other business information.
We own patents and have patent applications pending related to our SmartSystems wellsite proppant storage solutions. All of the issued patents have an expiration date after August 2030. With respect to our other products, we principally rely on trade secrets, rather than patents, to protect our proprietary processes, methods, documentation and other technologies, as well as certain other business information.
We believe that demand for our products will remain strong in basins where regional sand is not an attractive alternative due to the logistics and performance advantages of Northern White Sand, such as the Bakken in North Dakota, the Marcellus and Utica formations in the Appalachian Basin of the Northeast region of the United States, and shale basins in Canada.
We believe that demand for our products will remain strong in basins where regional sand is not an attractive alternative due to the logistics and performance advantages of Northern White Sand, such as the Bakken in North Dakota, the Marcellus and Utica formations in the Appalachian Basin of the Northeast region of the United States, and the Montney and Duvernay shale basins in Canada.
In September 2020, we acquired our Utica, Illinois mine and processing facility, which has annual processing capacity of approximately 1.6 million tons and access to the Burlington Northern Santa Fe Class I rail line through the Peru, Illinois transload facility, as well as rights to use a rail terminal located in El Reno, Oklahoma.
In September 2020, we acquired our Ottawa, Illinois mine and processing facility, which has annual processing capacity of approximately 1.6 million tons and access to the Burlington Northern Santa Fe Class I rail line through the Peru, Illinois transload facility, as well as rights to use a rail terminal located in El Reno, Oklahoma.
We began operating the Utica facility in October 2020. In March 2022, we acquired our Blair, Wisconsin mine and processing facility, which has approximately 2.9 million tons of total annual processing capacity and contains an onsite, unit train capable rail terminal with access to the Class 1 Canadian National Railway.
We began operating the Ottawa facility in October 2020. In March 2022, we acquired our Blair, Wisconsin mine and processing facility, which has approximately 2.9 million tons of total annual processing capacity and contains an onsite, unit train capable rail terminal with access to the Class 1 Canadian National Railway.
We do this through supporting our existing customers, expanding our market share, being a low-cost producer of high-quality Northern White Sand, maintaining low debt leverage and managing efficient and sustainable supply chain logistics from the mine to the wellsite. In late 2021, we began expanding our product line to offer IPS.
We do this through supporting our existing customers, expanding our market share, being a low-cost producer of high-quality Northern White Sand, maintaining low debt leverage and managing efficient and sustainable supply chain logistics from the mine to the wellsite. In late 2021, we expanded our product line to offer IPS.
We believe our three sand mines in Oakdale, Wisconsin, Utica, Illinois and Blair, Wisconsin have a uniquely desirable combination of large high-quality reserves of fine mesh sand that is contiguous to their production and have primary rail loading facilities that are either on site or are in close proximity to the mines.
We believe our three sand mines in Oakdale, Wisconsin, Ottawa, Illinois and Blair, Wisconsin have a uniquely desirable combination of large high-quality reserves of fine mesh sand that is contiguous to their production and primary rail loading facilities that are either on site or are in close proximity to the mines.
We operate a unit train capable transloading terminal in Van Hook, North Dakota to service the Bakken Formation in the Williston Basin. The Van Hook terminal became operational in April 2018. In 2020, as part of our acquisition of the Utica, Illinois mining facility, we obtained rights to use a rail terminal located in El Reno, Oklahoma.
We operate a unit train capable transloading terminal in Van Hook, North Dakota to service the Bakken Formation in the Williston Basin. The Van Hook terminal became operational in April 2018. In 2020, as part of our acquisition of the Ottawa, Illinois mining facility, we obtained rights to use a rail terminal located in El Reno, Oklahoma.
We continue to have discussions with operators in these regions regarding new relationship and growth opportunities. We also believe that the long-term benefits of high quality Northern White sand outweighs the short-term cost savings provided by regional sand in the Permian, Eagle Ford and SCOOP/STACK basins.
We continue to have discussions with operators in these regions regarding new relationships and growth opportunities. We also believe that the long-term benefits of high quality Northern White sand outweighs the short-term cost savings provided by regional sand in the Permian, Eagle Ford and SCOOP/STACK basins.
In addition to documenting 11 years of compliant operations, we have worked on, among other things, protecting wetlands, reducing usage and impact of heavy equipment, reducing fuel usage of equipment and vehicles and defining best practices for onsite water management. We are also a member of Wisconsin’s sustainability initiative, Green Masters.
In addition to documenting 12 years of compliant operations, we have worked on, among other things, protecting wetlands, reducing usage and impact of heavy equipment, reducing fuel usage of equipment and vehicles and defining best practices for onsite water management. We are also a member of Wisconsin’s sustainability initiative, Green Masters.
In turn, if the dunes sagebrush lizard is listed, our operations and the operations of our customers in any area that is designated as the dunes sagebrush lizard’s habitat may be limited, delayed or, in some circumstances, prohibited, and our customers could be required to comply with expensive conservation measures intended to protect the dunes sagebrush lizard and its habitat.
In turn the operations of our customers in any area that is designated as the dunes sagebrush lizard’s habitat may be limited, delayed or, in some circumstances, prohibited, and our customers could be required to comply with expensive conservation measures intended to protect the dunes sagebrush lizard and its habitat.
However, we have enclosed, indoor wet plants at our Oakdale and Utica processing facilities, which allow us to produce wet sand inventory year-round to support a large portion of our dry sand processing capacity, which may reduce certain effects of this seasonality.
However, we have enclosed, indoor wet plants at our Oakdale and Ottawa processing facilities, which allow us to produce wet sand inventory year-round to support a large portion of our dry sand processing capacity, which may reduce certain effects of this seasonality.
While we anticipate that regional sand will continue to affect the demand for Northern White sand in some of the oil and natural gas producing basins in which we market our products. However, we believe there will continue to be demand for our high-quality Northern White frac sand.
We believe that regional sand will continue to affect the demand for Northern White sand in some of the oil and natural gas producing basins in which we market our products. However, we believe there will continue to be demand for our high-quality Northern White frac sand.
Supply and demand for Northern white frac sand was relatively in balance in 2023 and this is expected to continue in 2024. 13 Supplies of high-quality Northern White frac sand are limited to select areas, predominantly in western Wisconsin and limited areas of Minnesota and Illinois.
Supply and demand for Northern white frac sand was relatively in balance in 2023 and 2024 and this is expected to continue in 2025. Supplies of high-quality Northern White frac sand are limited to select areas, predominantly in western Wisconsin and limited areas of Minnesota and Illinois.
Through the expansion of our SmartSystems fleet and addition of new origination and destination options, we continue evaluating ways to reduce the landed cost of our products in-basin and to the wellsite for our customers while increasing our customized service offerings to provide our customers with additional delivery and pricing alternatives. • Focusing on organic growth by increasing the utilization of our mine and frac sand processing facilities.
Through the addition of new origination and destination options, we continue evaluating ways to reduce the landed cost of our products in-basin and to the wellsite for our customers while increasing our customized service offerings to provide our customers with additional delivery and pricing alternatives. • Focusing on organic growth by increasing the utilization of our mine and frac sand processing facilities.
We have strategically designed our operations to provide for low-cost production, including having dryers and wet plants enclosed in our Oakdale and Utica processing facilities that allow for year-round operation at both facilities.
We have strategically designed our operations to provide for low-cost production, including having dryers and wet plants enclosed in our Oakdale and Ottawa processing facilities that allow for year-round operation at both facilities.
Competition The proppant industry is highly competitive. Please read “Risk Factors—Risks Inherent in Our Business—We face significant competition that may cause us to lose market share.” There are numerous large and small producers in all sand producing regions of North America with whom we compete, many of which also offer solutions for unloading, storing and delivering proppant to the wellsite.
Please read “Risk Factors—Risks Inherent in Our Business—We face significant competition that may cause us to lose market share.” There are numerous large and small producers in all sand producing regions of North America with whom we compete, many of which also offer solutions for unloading, storing and delivering proppant to the wellsite.
Please read “Risk Factors—Risks Inherent in Our Business—A substantial majority of our revenues have been generated under contracts with a limited number of customers, and the loss of, material nonpayment or nonperformance by or significant reduction in purchases by any of them could adversely affect our business, results of operations and financial condition.” Capital Plans We expect 2024 capital expenditures to be between $19.0 million and $23.0 million, consisting primarily of capital for efficiency projects at our mine and processing facilities and our in-basin terminals, along with investments in our facilities to support incremental IPS activity.
Please read “Risk Factors—Risks Inherent in Our Business—A substantial majority of our revenues have been generated under contracts with a limited number of customers, and the loss of, material nonpayment or nonperformance by or significant reduction in purchases by any of them could adversely affect our business, results of operations and financial condition.” Capital Plans We expect 2025 capital expenditures to be between $13.0 million and $17.0 million, consisting primarily of capital for efficiency projects at our mine and processing facilities and our in-basin terminals, along with investments in our facilities to support incremental IPS activity.
We intend to continue pursuing opportunities to maximize the value and the utilization of our Oakdale, Utica, and Blair facilities through the addition of new customers and increased sales volumes.
We intend to continue pursuing opportunities to maximize the value and the utilization of our Oakdale, Ottawa, and Blair facilities through the addition of new customers and increased sales volumes.
We believe this business will provide us with the ability to diversify some of our sales into more stable, consumer-driven products to help mitigate some of the price volatility we are exposed to in the oil and gas markets that we serve.
We believe this business provides us with the ability to diversify some of our sales into more stable, consumer-driven products to help mitigate some of the price volatility we are exposed to in the oil and gas markets that we serve.
Since 2016, Smart Sand has maintained International Organization for Standardization (“ISO”) ISO 9001 and ISO 14001 registrations for our quality management system and environmental management system programs, respectively, for our Oakdale facility. We earned initial ISO 9001 registration for our Utica, IL facility in 12 2022. We also have attained Green Professional status in Wisconsin’s Green Master sustainability recognition program.
Since 2016, Smart Sand has maintained International Organization for Standardization (“ISO”) ISO 9001 and ISO 14001 registrations for our quality management system and environmental management system programs, respectively, for our Oakdale facility. We earned initial ISO 9001 registration for our Ottawa, Illinois 12 facility in 2022. We also have attained Green Professional status in Wisconsin’s Green Master sustainability recognition program.
We have direct access to four Class I rail lines in North America and indirect access to all Class I rail lines, which gives us an advantage over many of our competitors by allowing us to offer more competitive pricing and delivery options to our customers. • Sufficient liquidity and financial flexibility.
We have direct access to four Class I rail lines in North America and indirect access to all Class I rail lines, which gives us an advantage over many of our competitors by allowing us to offer more competitive pricing and delivery options to our customers.
Industry Trends Impacting Our Business Unless otherwise indicated, the information set forth under this section, including all statistical data and related forecasts, is derived from Spears’ “Hydraulic Fracturing Market - Q4 2023” published in the first quarter of 2024.
Industry Trends Impacting Our Business Unless otherwise indicated, the information set forth under this section, including all statistical data and related forecasts, is derived from Spears’ “Hydraulic Fracturing Market - Q4 2024” published in the first quarter of 2025.
As part of this program, we have completed a detailed survey of our sustainability and social responsibility activities and started the process of completing carbon inventory. As a mining company, we invest and plan for reclamation, ensuring that the land is returned to beneficial use.
As part of this program, we have completed a detailed survey of our sustainability and social responsibility activities and started the process of completing carbon inventory. As a mining company, we invest and plan for reclamation, so that the land can be returned to beneficial use.
We believe that by 9 executing these business strategies, we will be able to increase long-term stockholder value. We expect to achieve this objective through the following business strategies: • Diversifying our customer base to include Industrial Product Solutions. In late 2021, we expanded our product offering to provide IPS for industrial customers.
We believe that by executing these business strategies, we will be able to increase long-term stockholder value. We expect to achieve this objective through the following business strategies: • Diversifying our customer base to include Industrial Product Solutions. In late 2021, we expanded our product offering to provide IPS for industrial customers. IPS is currently approximately 5% of our business.
We are one of a select group of companies who are members of the Wisconsin Industrial Sand Association, which promotes safe and environmentally responsible sand mining standards. Our Customers Our core customers are oil and natural gas exploration and production and oilfield service companies. In late 2021, we began diversifying our sand sales to include IPS to customers.
We are also members of the Wisconsin Industrial Sand Association, which promotes safe and environmentally responsible sand mining standards. Our Customers Our core customers are oil and natural gas exploration and production companies and oilfield service companies. In late 2021, we began diversifying our sand sales to include IPS to customers.
In June 2023, the Fiscal Responsibility Act, which reforms NEPA, was signed into law by President Biden, and in July of 2023, CEQ proposed the Phase 2 Rule, which is intended to accelerate the permitting process and would, among other changes, clarify which projects require environmental impact statements and that agencies must consider climate change as part of the review process.
In June 2023, the Fiscal Responsibility Act, which reforms NEPA, was signed into law by President Biden, and in May of 2024, CEQ finalized the Phase 2 Rule, which is intended to accelerate the permitting process and, among other changes, clarifies which projects require environmental impact statements and that agencies must consider climate change as part of the review process.
Recently, we obtained access, through long term leases, to rail terminals in Minerva, Ohio and Dennison, Ohio, which we believe will broaden our ability to offer sand to our customers in the Utica Formation of the Appalachian Basin in an efficient and cost-effective manner. We expect each of these terminals to be operational in the second quarter of 2024.
We obtained access, through long term leases, to rail terminals in Minerva, Ohio and Dennison, Ohio, which we believe will broaden our ability to offer sand to our customers in the Utica Formation of the Appalachian Basin in an efficient and cost-effective manner. These terminals became operational in 2024.
Recently, we obtained access, through a long term lease, to rail terminals in Minerva, Ohio and Dennison, Ohio, which we believe will broaden our ability to offer sand to our customers in the Utica Formation in an efficient and cost-effective manner. We expect both of the Ohio terminals to be operational in the second quarter of 2024.
Additionally, we obtained access, through a long term lease, to rail terminals in Minerva, Ohio and Dennison, Ohio, which we believe will broaden our ability to offer sand to our customers in the Utica Formation in an efficient and cost-effective manner. Both of the Ohio terminals became operational in 2024.
These consumption patterns are influenced by numerous factors, including, among other things, the price for oil and natural gas and hydraulic fracturing activity, including the number of stages completed and the amount of proppant used per stage.
These consumption patterns are influenced by numerous factors, including, among other things, the price for oil and natural gas and hydraulic fracturing activity, including the number of stages completed per well, the lateral length of horizontal wells being completed, and the amount of proppant used per stage.
In January 2022, we began operations at an additional unit train capable transloading terminal in Waynesburg, Pennsylvania to service the Appalachian Basin, including the Marcellus and Utica Formations. We completed an expansion of this terminal in the fourth quarter of 2023. In December 2023, we acquired the rights to operate a unit train capable transloading terminal in Minerva, Ohio.
In January 2022, we began operations at a unit train capable transloading terminal in Waynesburg, Pennsylvania to service the Appalachian Basin, including the Marcellus and Utica Formations. We completed an expansion of this terminal in the fourth quarter of 2023.
Whelan was named Executive Vice President of Sales in June 2018. Prior to that time, he served as Executive Vice President of Business Development from April 2017 to June 2018, Vice President of Business Development from September 2016 to March 2017 and as Director of Business Development from April 2014 to August 2016.
Prior to that time, he served as Executive Vice President of Sales from June 2018 to December 2024, Executive Vice President of Business Development from April 2017 to June 2018, Vice President of Business Development from September 2016 to March 2017 and as Director of Business Development from April 2014 to August 2016.
In particular, we currently believe that Northern White frac sand has logistical advantages in the Marcellus, Utica, Bakken, and shale basins in Canada.
In particular, we currently believe that Northern White frac sand has logistical advantages in the Marcellus, Utica and Bakken Formations in the shale basins of the United States, and the Montney and Douvernay shale basins in Canada.
Smart Sand has held ISO 9001/14001-2015 environmental and quality management systems for the past nine years. Smart Sand is also a member of the Wisconsin Industrial Sand Association, a select group of mining companies focused on safety, environmental and public policy.
Smart Sand has held ISO 9001/14001-2015 environmental and quality management systems for the past nine years. Smart Sand is also a member of the Wisconsin Industrial Sand Association, a select group of mining companies focused on safety, environmental and public policy. We believe we provide social value through our excellent employment opportunities.
Smart Sand also adheres to the NISA’s respiratory protection program, and ensures that workers are provided with fitted respirators and ongoing radiological monitoring. Environmental Reviews Our operations may be subject to broad environmental review under the National Environmental Policy Act, as amended, (“NEPA”).
We were already compliant with the inspections and monitoring of health and safety conditions at our plants. Smart Sand also adheres to the NISA’s respiratory protection program, and ensures that workers are provided with fitted respirators and ongoing radiological monitoring. Environmental Reviews Our operations may be subject to broad environmental review under the National Environmental Policy Act, as amended, (“NEPA”).
We recognize revenue in our results of operations in the period in which the obligation becomes due. While we have increased our long term take-or-pay contracts over the past year, currently many customers prefer to source their frac sand supply in the spot market or under short-term contractual arrangements at market prices.
We recognize revenue in our results of operations in the period in which the obligation becomes due. Currently many customers prefer to source their frac sand supply in the spot market or under short-term contractual arrangements at market prices.
Our most recent annual report required under the Tier 1 protocol was submitted to the Green Tier Program contact on March 2023. Employees As of December 31, 2023, we employed 378 people, of which 42 were employed under collective bargaining agreements. The current collective bargaining agreements expire April 30, 2024.
Our most recent annual report required under the Tier 1 protocol was submitted to the Green Tier Program contact on May 31, 2024. 19 Employees As of December 31, 2024, we employed 285 people, of which 25 were employed under a collective bargaining agreement. The current collective bargaining agreements expire April 30, 2027.
Northern White frac sand, which is found predominantly in Wisconsin and limited portions of Minnesota, Illinois, and Missouri, is considered a premium proppant due to its favorable physical characteristics.
We cannot predict if frac sand prices will increase, decrease or stabilize. Northern White frac sand, which is found predominantly in Wisconsin and limited portions of Minnesota, Illinois, and Missouri, is considered a premium proppant due to its favorable physical characteristics.
With the acquisition of the Blair, Wisconsin mine and processing facility, which began operating in the second quarter of 2023, we have the ability to annually process up to approximately 10.0 million tons. We believe our reserve base positions us well to take advantage of current market trends of increasing demand for finer mesh frac sand.
We have the ability to annually process up to approximately 10.0 million tons of sand and we believe our reserve base positions us well to take advantage of current market trends of increasing demand for finer mesh frac sand.
Our main competitors include Badger Mining Corporation, Hi-Crush, Inc., Covia Holdings Corporation, U.S. Silica Holdings, Inc., Capital Sand Company and Solaris Oilfield Infrastructure, Inc.
Our main competitors include Badger Mining Corporation, HC Minerals, Inc., Covia Holdings Corporation, U.S. Silica Holdings, Inc., Capital Sand Company, Source Energy Services and Solaris Energy Infrastructure, Inc.
We are still in the early stages of the industrial sand business, but this business has incrementally grown since its inception and we and expect to continue to expand and diversify to serve the vital industrial markets throughout North America, including glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail, recreation and more. • Expanding and optimizing our existing logistics infrastructure and developing additional origination and destination points.
We expect to continue to expand and diversify to serve the vital industrial markets throughout North America, including glass, 9 foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail, recreation and more. • Expanding and optimizing our existing logistics infrastructure and developing additional origination and destination points.
We expect this terminal to become operational in the second quarter of 2024. In January 2024, we acquired the rights to operate a unit train capable transloading terminal in Dennison, Ohio. We expect this terminal to become operational in the second quarter of 2024.
In December 2023, we acquired the rights to operate a unit train capable transloading terminal in Minerva, Ohio, which became operational in the second quarter of 2024. In January 2024, we acquired the rights to operate a unit train capable transloading terminal in Dennison, Ohio, which became operational in the third quarter of 2024.
In addition, where contamination may be present, it is not uncommon for the neighboring landowners and other third parties to file claims for personal injury, property damage and recovery of response costs.
In addition, where contamination may be present, it is not uncommon for the neighboring landowners and other third parties to file claims for personal injury, property damage and recovery of response costs. We have not received notification that we may be potentially responsible for cleanup costs under CERCLA at any site.
As of December 31, 2023, we have an estimated life of mine of approximately 61 years at Oakdale, 106 years at Utica, and 45 years at Blair, based on our current expected sales volumes.
As of December 31, 2024, we have an estimated life of mine of approximately 60 years at Oakdale, 105 years at Ottawa, and 56 years at Blair, based on our current expected sales volumes.
The dunes sagebrush lizard is found in the active and semi-stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas, including areas where our customers operate and our frac sand facilities may be located.
The dunes sagebrush lizard is found in the active and semi-stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas, including areas where our customers operate and our frac sand facilities may be located. On May 20, 2024, the United States Fish and Wildlife Service (“USFWS”) listed the dunes sagebrush lizard as an endangered species.
Our mine at Utica, Illinois and related transloading terminal in Peru, Illinois added new origination and destination points to our existing capabilities and offers additional capability to ship products on a third Class I rail carrier, the BNSF. Our Blair, Wisconsin mine with onsite rail infrastructure provides us with direct access to the Class 1 Canadian National Railway.
Our mine at Ottawa, Illinois and related transloading terminal in Peru, Illinois added new origination and destination points to our existing capabilities and offers additional capability to ship products on a third Class I rail carrier, the BNSF.
We believe that our SmartSystems reduce trucking and related fuel consumption for our customers, helping them reduce their carbon footprint in their daily operations. In late 2021, we started our IPS business to provide sand to customers for various industrial applications, such as glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail, and recreation.
In late 2021, we started our IPS business to provide sand to customers for various industrial applications, such as glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail, and recreation.
Our El Reno, Oklahoma terminal provides us with the flexibility to send sand to the Woodford and SCOOP/STACK Basins as it is needed by our customers.
Our El Reno, Oklahoma terminal provides us with the flexibility to send sand to the Woodford and SCOOP/STACK Basins as it is needed by our customers. Additionally, our SmartSystems wellsite storage and proppant management systems allow us to offer expanded logistics services to our customers.
Additionally, our SmartSystems wellsite storage and proppant management systems allow us to offer expanded logistics services to our customers. We believe that our SmartSystems reduce trucking and related fuel consumption for our customers, helping them to reduce their carbon footprint in their daily operations.
We believe that our SmartSystems reduce trucking and related fuel consumption for our customers, helping them to reduce their carbon footprint in their daily operations.
Their expertise covers a range of disciplines, including industry-specific operating and technical knowledge and experience managing businesses in a variety of operating conditions. • Focus on safety and environmental stewardship.
The members of our senior management team bring significant experience to the market environment in which we operate. Their expertise covers a range of disciplines, including industry-specific operating and technical knowledge and experience managing businesses in a variety of operating conditions. • Focus on safety and environmental stewardship.
We have not received notification that we may be potentially responsible for cleanup costs under CERCLA at any site. 17 Endangered Species The Endangered Species Act (“ESA”) restricts activities that may result in a “take” of the habitat of endangered or threatened species and provides for substantial penalties in cases where listed species are being harmed.
Endangered Species The Endangered Species Act (“ESA”) restricts activities that may result in a “take” of the habitat of endangered or threatened species and provides for substantial penalties in cases where listed species are being harmed.
Water Discharges The Clean Water Act (“CWA”) and analogous state laws impose restrictions and strict controls with respect to the discharge of pollutants, including spills and leaks of oil and other substances, into state waters or waters of the United States.
It is possible that other climate-related reporting regulations applicable to many U.S. companies will continue to take effect. 16 Water Discharges The Clean Water Act (“CWA”) and analogous state laws impose restrictions and strict controls with respect to the discharge of pollutants, including spills and leaks of oil and other substances, into state waters or waters of the United States.
For the year ended December 31, 2021, Equitable Gas Corporation, Halliburton Energy Services, and Liberty Oilfield Services accounted for 24.3%, 18.3% and, 14.8%, respectively, of our total revenues, and the remainder of our revenues were from 20 customers.
For the year ended December 31, 2024, Equitable Gas Corporation, Encino Energy and Liberty Oilfield Services, accounted for 31.9%, 13.8% and 10.2%, respectively, of total revenue, and the remainder of our revenues were from 82 customers.
We also offer to our customers portable wellsite storage and management solutions through our SmartSystems products and services. Our SmartSystems provide our customers with the capability to unload, store and deliver proppant at the wellsite, as well as the ability to rapidly set up, takedown and transport the entire system.
We also offer our customers portable wellsite storage and management solutions through our 8 SmartSystems products and services. Our Smart Systems enable customers to unload, store, and deliver proppant at the wellsite and rapidly set up, take down, and transport the entire system. This capability enhances our customers’ efficiency, safety, and reliability.
This facility has access to both the Canadian Pacific Class I rail network (through an onsite, unit train capable rail facility) and the Union Pacific Class I rail network (through the Byron, Wisconsin transload facility).
After several expansions our current annual processing capacity at our Oakdale facility is approximately 5.5 million tons. This facility has access to both the Canadian Pacific Class I rail network (through an onsite, unit train capable rail facility) and the Union Pacific Class I rail network (through the Byron, Wisconsin transload facility).
We recognize rental revenue when the equipment is made available for the customer to use or other obligations in the contract are met. For the year ended December 31, 2023, Equitable Gas Corporation, and Liberty Oilfield Services, accounted for 30.2%, and 11.4%, respectively, of total revenue, and the remainder of our revenues were from 72 customers.
For the year ended December 31, 2023, Equitable Gas Corporation and Liberty Oilfield Services accounted for 30.2% and 11.4%, respectively, of our total revenues, and the remainder of our revenues were from 72 customers.
This capability creates efficiencies, flexibility, enhanced safety and reliability for customers. Through our SmartSystems wellsite proppant storage solutions, we offer the SmartDepot and SmartDepotXL™ silo systems, the SmartBelt conveyor, SmartPath transloader, and our rapid deployment trailers. Our SmartDepot silos include passive and active dust suppression technology, along with the capability of a gravity-fed operation.
Through our SmartSystems wellsite proppant storage solutions, we offer the SmartDepot and SmartDepotXL™ silo systems, the SmartBelt conveyor, the SmartPath wellsite proppant management system, and our rapid deployment trailers. The SmartDepot silos feature passive and active dust suppression technology and support gravity-fed operation.
Through our SmartSystems wellsite proppant storage solutions we offer the SmartDepot and SmartDepotXL silo systems, the SmartBelt conveyor, SmartPath transloader, and our rapid deployment trailers.
Through our SmartSystems wellsite proppant storage solutions, we offer the SmartDepot and SmartDepotXL silo systems, the SmartBelt conveyor, the SmartPath wellsite proppant management system, and our rapid deployment trailers. The SmartDepot silos feature passive and active dust suppression technology and support gravity-fed operation.
While we are not aware of any misstatements regarding the proppant industry data presented herein, estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors.” Demand Trends According to Spears, the North American proppant market, including frac sand, ceramic and resin-coated proppant, was approximately 132 million tons in 2023, which is approximately a 5% increase from the 127 million tons Spears reported for 2022.
While we are not aware of any misstatements regarding the proppant industry data presented herein, estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors.” Demand Trends Demand for frac sand continued to moderately increase during 2024.
The addition of the Blair frac sand mine and related processing facility located in Blair, Wisconsin, which contains an onsite, unit train capable rail terminal with access to the Class 1 Canadian National Railway, has secured our access to provide sand on all Class I rail lines in the United States and Canada. • Expanded logistics solutions.
Additionally, we believe the location of our Ottawa, Illinois facility in close proximity to Greater Chicago and other major Midwestern metropolitan markets and our ability to truck or rail our products from this location allows us to be able to offer competitive pricing for industrial sand application. 11 The addition of the Blair frac sand mine and related processing facility located in Blair, Wisconsin, which contains an onsite, unit train capable rail terminal with access to the Class 1 Canadian National Railway, has secured our access to provide sand on all Class I rail lines in the United States and Canada. • Expanded logistics solutions.
The ongoing conflict in Ukraine and recent developments in the Middle East, as well as economic actions taken by the United States and other countries in connection with such conflicts, have contributed to dramatic swings in oil and natural gas prices and significant volatility in the oilfield service sector.
The ongoing conflicts in Ukraine and the Middle East, as well as economic actions taken by the United States and other countries in connection with such conflicts, and other economic factors could have a negative impact on global oil and natural gas demand, which may lead to volatility in the oil field service sector.
We now have access to all Class 1 rail lines within the United States and Canada. The Blair facility began operations in the second quarter of 2023.
Our Blair, Wisconsin mine with onsite rail infrastructure provides us with direct access to the Class 1 Canadian National Railway, allowing us access to all Class 1 rail lines within the United States and Canada. The Blair facility began operations in the second quarter of 2023.
Our on-site transportation assets at Oakdale have access to two Class I rail lines owned by Canadian Pacific and Union Pacific.
Our transportation assets at Oakdale have access to two Class I rail lines owned by Canadian Pacific and Union Pacific. We believe our customized on-site logistical configuration yields lower operating and transportation costs of product to our customers between the mine and in basin destinations.
We believe the Waynesburg terminal will allow us to be one of the most efficient and low-cost sources of frac sand in the Appalachian Basin. We also operate a terminal located in El Reno, Oklahoma, to serve the Woodford and SCOOP/STACK Basins, which we acquired in 2020.
We believe the Waynesburg terminal allows us to be one of the most efficient and low-cost sources of frac sand in the Appalachian Basin.
We cannot ensure that existing environmental, health and safety (“EHS”) laws and regulations will not be reinterpreted or revised or that new EHS laws and regulations will not be adopted or become applicable 14 to us. Revised or additional EHS requirements that result in increased compliance costs or additional operating restrictions could have a material adverse effect on our business.
While resources invested in securing permits are significant, this cost has not had a material adverse effect on our results of operations or financial condition. We cannot ensure that existing environmental, health and safety (“EHS”) laws and regulations will not be reinterpreted or revised or that new EHS laws and regulations will not be adopted or become applicable to us.
In 2023, MSHA proposed similar rules, which would, among other updates, reduce the exposure limits, require immediate corrective actions if exposure limits are exceeded, require exposure sampling and no-cost medical surveillance, and update respiratory protection requirements.
In April 2024, MSHA issued final rules regarding Lowering Miners’ Exposure to Respirable Crystalline Silica and Improving Respiratory Protection , which, among other updates, reduced the exposure limits, required immediate corrective actions if exposure limits are exceeded, required exposure sampling and no-cost medical surveillance, and updated respiratory protection requirements.
While sales of IPS to customers were a small portion of our overall sand sales in 2023, we intend to continue increasing our focus on IPS in 2024 and going forward.
While sales of IPS to customers have been a small portion of our overall sand sales since beginning this business, we intend to continue increasing our expansion of IPS in 2025 and beyond.
We believe our customized on-site logistical configuration yields lower operating and transportation costs of product to our customers between the mine and in basin destinations. 11 Our Utica mine and related Peru transloading terminal in Illinois provides us direct access to another Class I rail line with direct access to the Burlington Northern Santa Fe Class I rail line.
Our Ottawa mine and nearby Peru transloading terminal in Illinois provides us direct access to another Class I rail line with direct access to the Burlington Northern Santa Fe Class I rail line.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIncreasing attention to climate change and natural capital, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary ESG initiatives and disclosures, and consumer demand for alternative sources of energy may result in increased costs (including but not limited to increased costs associated with compliance, stakeholder engagement, contracting, and insurance), reduced demand for our customers’ hydrocarbon products and our product and services, reduced profits, increased legislative and judicial scrutiny, investigations and litigation, and negative impacts on our stock price and access to capital markets.
Biggest changeIncreasing attention to climate change, natural capital, human capital, and other ESG matters by various stakeholders, including consumer demand for alternative sources of energy, may result in increased costs, changes in demand for certain products or services, reputational harm, or other adverse impacts to our business.
Disruptions in transportation services, including shortages of railcars, lack of developed infrastructure, weather-related problems, flooding, drought, accidents, mechanical difficulties, strikes, lockouts, bottlenecks, environmental restrictions or other events could affect our ability to timely and cost effectively deliver to our customers and could temporarily impair the ability of our customers to take delivery and, in certain circumstances, constitute a force majeure event under our customer contracts, permitting our customers to suspend taking delivery of and paying for our frac sand (and in some cases terminating the agreement after a period of time).
Disruptions in transportation services, including shortages of railcars, lack of developed infrastructure, weather-related problems, flooding, drought, accidents, mechanical difficulties, strikes, lockouts, bottlenecks, environmental restrictions or other events could affect our ability to timely and cost effectively deliver to our customers and could temporarily impair the ability of our customers to take delivery and, in certain 24 circumstances, constitute a force majeure event under our customer contracts, permitting our customers to suspend taking delivery of and paying for our frac sand (and in some cases terminating the agreement after a period of time).
The price and supply of natural gas is unpredictable and can fluctuate significantly based on domestic, international, political and economic circumstances, as well as other events outside our control, such as changes in supply and demand due to weather conditions, actions by OPEC, governmental regulations and sanctions, regional production patterns, security threats and environmental concerns.
The price and supply of natural gas is unpredictable and can fluctuate significantly based on domestic, international, political and economic circumstances, as well as other events outside our control, 25 such as changes in supply and demand due to weather conditions, actions by OPEC, governmental regulations and sanctions, regional production patterns, security threats and environmental concerns.
While we intend to renew the collective bargaining agreement, if we 27 are unable to renegotiate acceptable terms with these employees in the future, we could experience, among other things, strikes, work stoppages or other slowdowns by our workers and increased operating costs as a result of higher wages, health care costs or benefits paid to our employees.
While we intend to renew the collective bargaining agreement, if we are unable to renegotiate acceptable terms with these employees in the future, we could experience, among other things, strikes, work stoppages or other slowdowns by our workers and increased operating costs as a result of higher wages, health care costs or benefits paid to our employees.
These events could impact our ability to finance operations by worsening the actual or anticipated future drop in worldwide oil demand, negatively impacting the price we receive for our products and services, compressing the level of available funding under our ABL Credit Facility, inhibiting our lenders from funding borrowings under our ABL Credit Facility or resulting in our lenders reducing the borrowing base under our ABL Credit Facility.
These events could impact our ability to finance operations by worsening the actual or anticipated future drop in worldwide oil demand, negatively impacting the price we receive for our products and services, compressing the level of available funding under our FCB ABL Credit Facility, inhibiting our lenders from funding borrowings under our FCB ABL Credit Facility or resulting in our lenders reducing the borrowing base under our FCB ABL Credit Facility.
Any inability to find alternative components at prices or with quality specifications similar to those deployed today could result in delays or a loss of customers. Unsatisfactory safety performance may negatively affect our customer relationships and, to the extent we fail to retain existing customers or attract new customers, adversely impact our revenues.
Any inability to find alternative components at prices or with quality specifications similar to those deployed today could result in delays or a loss of customers. 29 Unsatisfactory safety performance may negatively affect our customer relationships and, to the extent we fail to retain existing customers or attract new customers, adversely impact our revenues.
A successful claim that we do not have title to our property or lack appropriate water rights could cause us to lose any rights to explore, develop and extract minerals, without compensation for our prior expenditures relating to such property. Our business may suffer a material adverse effect in the event we have title deficiencies.
A successful claim that we do not have title to our property or lack appropriate water rights could cause us to lose any rights to explore, develop and extract minerals, without compensation for 26 our prior expenditures relating to such property. Our business may suffer a material adverse effect in the event we have title deficiencies.
These new supplies have had a negative impact on our ability to sell our Northern White Sand in the Permian Basin or other markets in close proximity to these regional mines. 25 Our operations are subject to operational hazards and unforeseen interruptions for which we may not be adequately insured.
These new supplies have had a negative impact on our ability to sell our Northern White Sand in the Permian Basin or other markets in close proximity to these regional mines. Our operations are subject to operational hazards and unforeseen interruptions for which we may not be adequately insured.
Aside from state laws, local land use restrictions may restrict drilling in general or hydraulic fracturing in particular. Municipalities may adopt local ordinances attempting to prohibit hydraulic fracturing altogether or, at a minimum, to allow such fracturing processes within their jurisdictions to proceed but regulating the time, place and manner of those processes.
Aside from state laws, local land use restrictions may restrict drilling in general or hydraulic fracturing in particular. Municipalities may adopt local 30 ordinances attempting to prohibit hydraulic fracturing altogether or, at a minimum, to allow such fracturing processes within their jurisdictions to proceed but regulating the time, place and manner of those processes.
Subject to the satisfaction of vesting conditions and the requirements of Rule 144, shares registered under the registration statement on Form S-8 will be available for resale immediately in the public market without restriction. We have provided certain registration rights for the sale of common stock by certain existing stockholders in the future.
Subject to the satisfaction of vesting conditions and the requirements of Rule 144, shares registered under the registration statement on Form S-8 will be available for resale immediately in the public market without restriction. 37 We have provided certain registration rights for the sale of common stock by certain existing stockholders in the future.
Any adverse development at these facilities, 23 our rail terminals, or on any of the rail lines we use to deliver our sand due to catastrophic events, weather, or any other event that would cause us to curtail, suspend or terminate operations at such facilities or terminals, could result in us being unable to meet our contracted sand deliveries.
Any adverse development at these facilities, our rail terminals, or on any of the rail lines we use to deliver our sand due to catastrophic events, weather, or any other event that would cause us to curtail, suspend or terminate operations at such facilities or terminals, could result in us being unable to meet our contracted sand deliveries.
This could result in significant losses, loss of customers and business opportunities, reputational damage, litigation, regulatory fines, penalties or intervention, reimbursement or other compensatory costs, or otherwise adversely affect our business, financial condition or results of operations. The reliability and capacity of our information technology systems is critical to our operations.
This could result in significant losses, loss of customers and business opportunities, reputational damage, litigation, regulatory fines, penalties or 28 intervention, reimbursement or other compensatory costs, or otherwise adversely affect our business, financial condition or results of operations. The reliability and capacity of our information technology systems is critical to our operations.
We maintain 30 what we believe is customary and reasonable insurance to protect our business against these potential losses, but such insurance may not be adequate to cover our liabilities, and we are not fully insured against all risks. A financial downturn could negatively affect our business, results of operations, financial condition and liquidity.
We maintain what we believe is customary and reasonable insurance to protect our business against these potential losses, but such insurance may not be adequate to cover our liabilities, and we are not fully insured against all risks. A financial downturn could negatively affect our business, results of operations, financial condition and liquidity.
Global and domestic terrorist activities and the threat of potential terrorist activities and any resulting physical damage and economic downturn could adversely affect our results of operations, impair our ability to raise capital or otherwise adversely impact our ability to realize certain business strategies. 28 Diminished access to water may adversely affect our operations or the operations of our customers.
Global and domestic terrorist activities and the threat of potential terrorist activities and any resulting physical damage and economic downturn could adversely affect our results of operations, impair our ability to raise capital or otherwise adversely impact our ability to realize certain business strategies. Diminished access to water may adversely affect our operations or the operations of our customers.
You may not be able to resell your common stock at or above the 37 public offering price. Additionally, the lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations in the market price of the common stock and limit the number of investors who are able to buy the common stock.
You may not be able to resell your common stock at or above the public offering price. Additionally, the lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations in the market price of the common stock and limit the number of investors who are able to buy the common stock.
If we are unable to make acquisitions from third parties because we are unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts, we are unable to obtain financing for these acquisitions on economically acceptable terms or we are outbid by competitors, our future growth may be limited.
If we are unable to make acquisitions from third parties because we are unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts, we are unable to obtain financing for these acquisitions on economically acceptable terms or we are outbid 23 by competitors, our future growth may be limited.
In order to obtain permits and renewals of permits in the future, we may be required to prepare and present data to governmental authorities pertaining to the potential adverse impact that any proposed excavation or production activities, individually or in the aggregate, may have on the environment.
In order to obtain permits and renewals of permits in the future, we may be required to prepare and present data to governmental authorities pertaining to the potential adverse impact that any proposed excavation or production activities, 32 individually or in the aggregate, may have on the environment.
For example, supplies of regional frac sand from our competitors became 22 available in 2018, starting in the Permian Basin of West Texas, and have continued to expand to certain other basins in or near where we sell sand.
For example, supplies of regional frac sand from our competitors became available in 2018, starting in the Permian Basin of West Texas, and have continued to expand to certain other basins in or near where we sell sand.
Restrictions in our ABL Credit Facility may limit our ability to capitalize on potential acquisition and other business opportunities. The operating and financial restrictions and covenants in our ABL Credit Facility could restrict our ability to finance future operations or capital needs or to expand or pursue our business activities.
Restrictions in our FCB ABL Credit Facility may limit our ability to capitalize on potential acquisition and other business opportunities. The operating and financial restrictions and covenants in our FCB ABL Credit Facility could restrict our ability to finance future operations or capital needs or to expand or pursue our business activities.
It is not possible at this time to predict the timing and effects of climate change or whether additional climate-related legislation, regulations or other measures will be adopted at the local, state, regional, national and international levels.
It is not possible at this time to predict the precise timing and effects of climate change or whether additional climate-related legislation, regulations or other measures will be adopted at the local, state, regional, national and international levels.
We supply frac sand to hydraulic fracturing operators in the oil and natural gas industry. Hydraulic fracturing is an important practice that is used to stimulate production of oil and natural gas from low permeability hydrocarbon bearing 31 subsurface rock formations.
We supply frac sand to hydraulic fracturing operators in the oil and natural gas industry. Hydraulic fracturing is an important practice that is used to stimulate production of oil and natural gas from low permeability hydrocarbon bearing subsurface rock formations.
Significant opposition to a permit by neighboring property owners, members of the public, or other third parties, or delay in the 33 environmental review and permitting process, also could delay or impair our ability to develop or expand a site.
Significant opposition to a permit by neighboring property owners, members of the public, or other third parties, or delay in the environmental review and permitting process, also could delay or impair our ability to develop or expand a site.
In addition, our ability to maintain existing debt financing or to access the capital markets for future equity or debt offerings may be limited by our financial condition at the time of any such financing or offering, the covenants or borrowing base restrictions contained in our ABL Credit Facility or other current or future debt agreements, adverse market conditions or other contingencies and uncertainties that are beyond our control.
In addition, our ability to maintain existing debt financing or to access the capital markets for future equity or debt offerings may be limited by our financial condition at the time of any such financing or offering, the covenants or borrowing base restrictions contained in our FCB ABL Credit Facility or other current or future debt agreements, adverse market 22 conditions or other contingencies and uncertainties that are beyond our control.
To the extent that the United States and other countries implement the Paris Agreement or local, state, regional, national or international governments impose other climate change regulations on the oil and natural gas industry, it could have an adverse effect on our business because substantial limitations on GHG emissions could adversely affect demand for the oil and natural gas that is produced by our customers.
To the extent that other countries implement the Paris Agreement or local, state, regional, national or international governments impose other climate change regulations on the oil and natural gas industry, it could have an adverse effect on our business because substantial limitations on GHG emissions could adversely affect demand for the oil and natural gas that is produced by our customers.
In addition, certain U.S. federal income tax deductions currently available with respect to oil and natural gas exploration and development 21 may be eliminated.
In addition, certain U.S. federal income tax deductions currently available with respect to oil and natural gas exploration and development may be eliminated.
For example, certain of our existing contracts were adjusted in 2020 due to effects of the COVID-19 pandemic, resulting in a combination of reduced average selling prices per ton, adjustments to take-or-pay volumes and length of contract.
For example, certain of our contracts were adjusted in 2020 due to effects of the COVID-19 pandemic, resulting in a combination of 21 reduced average selling prices per ton, adjustments to take-or-pay volumes and length of contract.
Several federal and state regulatory authorities, including MSHA, may continue to propose changes in their regulations regarding workplace exposure to crystalline silica, such as permissible exposure limits and required controls and personal protective equipment.
Several federal and state regulatory authorities, including MSHA, have changed and may continue to propose changes in their regulations regarding workplace exposure to crystalline silica, such as permissible exposure limits and required controls and personal protective equipment.
All of our sand sales are currently produced at our facilities near Oakdale, Wisconsin, Utica, Illinois and Blair, Wisconsin. We ship a substantial portion of our sand through our rail terminals.
All of our sand sales are currently produced at our facilities near Oakdale, Wisconsin, Ottawa, Illinois and Blair, Wisconsin. We ship a substantial portion of our sand through our rail terminals.
In addition to the risks described in this section, the market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including: • our operating and financial performance; • quarterly variations in the rate of growth of our financial indicators, such as revenues, EBITDA, Adjusted EBITDA, contribution margin, free cash flow, net income, and net income per share; • the public reaction to our press releases, our other public announcements, and our filings with the SEC; • strategic actions by our competitors; • our failure to meet revenue or earnings estimates by research analysts or other investors; • changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts; • speculation in the press or investment community; • the failure of research analysts to cover our common stock; 36 • sales of our common stock by us or our stockholders, or the perception that such sales may occur; • changes in accounting principles, policies, guidance, interpretations, or standards; • additions or departures of key management personnel; • actions by our stockholders; • general market conditions, including fluctuations in commodity prices, sand-based proppants, or industrial and recreational sand-based products; • domestic and international economic, legal and regulatory factors unrelated to our performance; and • the realization of any risks described under this “Risk Factors” section.
In addition to the risks described in this section, the market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including: • our operating and financial performance; • quarterly variations in the rate of growth of our financial indicators, such as revenues, EBITDA, Adjusted EBITDA, contribution margin, free cash flow, net income, and net income per share; • the public reaction to our press releases, our other public announcements, and our filings with the SEC; • strategic actions by our competitors; • our failure to meet revenue or earnings estimates by research analysts or other investors; • changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts; • speculation in the press or investment community; • the failure of research analysts to cover our common stock; • sales of our common stock by us or our stockholders, or the perception that such sales may occur; • changes in accounting principles, policies, guidance, interpretations, or standards; • additions or departures of key management personnel; • actions by our stockholders; • general market conditions, including fluctuations in commodity prices, sand-based proppants, or industrial and recreational sand-based products; • domestic and international economic, legal and regulatory factors unrelated to our performance; and • the realization of any risks described under this “Risk Factors” section. 35 We are subject to certain requirements of Section 404 of the Sarbanes-Oxley Act.
Also, institutional lenders may, of their own accord, decide not to provide funding for fossil fuel industry companies based on climate change, natural capital, or other ESG related concerns, which could affect our or our customers’ access to capital for potential growth projects.
Also, institutional lenders may, of their own accord, decide not to provide funding for companies based on climate change, natural capital, or other ESG related concerns, which could affect our or our customers’ access to capital for potential growth projects.
Our success is dependent on our ability to continue to attract, employ and retain highly skilled personnel. Our profitability could be negatively affected if we fail to maintain satisfactory labor relations. As of December 31, 2023, 42 employees in our Illinois facility operated under a collective bargaining agreement. Our collective bargaining agreement expires April 30, 2024.
Our success is dependent on our ability to continue to attract, employ and retain highly skilled personnel. Our profitability could be negatively affected if we fail to maintain satisfactory labor relations. As of December 31, 2024, 25 employees in our Illinois facility operated under a collective bargaining agreement. Our collective bargaining agreement expires on April 30, 2027.
Litigation risks are also increasing, as a number of entities have sought to bring suit against oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to climate change.
Litigation risks are also increasing, as a number of entities, including government entities and private groups, have sought to bring suit against oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to climate change.
As of December 31, 2023, we had several patents related to our SmartSystems, including patents related to our silo storage system and patents related to lifting and lowering our storage silos.
As of December 31, 2024, we had several patents related to our SmartSystems, including patents related to our silo storage system and patents related to lifting and lowering our storage silos.
We are subject to certain requirements of Section 404 of the Sarbanes-Oxley Act. If we are unable to timely comply with Section 404 or if the costs related to compliance are significant, our profitability, stock price, results of operations and financial condition could be materially adversely affected.
If we are unable to timely comply with Section 404 or if the costs related to compliance are significant, our profitability, stock price, results of operations and financial condition could be materially adversely affected. We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act.
The concentration of our capital stock ownership by our largest stockholders and its affiliates will limit your ability to influence corporate matters. As of December 31, 2023, our Chief Executive Officer beneficially owns approximately 17.2% of our outstanding common stock.
The concentration of our capital stock ownership by our largest stockholders and its affiliates will limit your ability to influence corporate matters. As of December 31, 2024, our Chief Executive Officer beneficially owns approximately 17.4% of our outstanding common stock.
An increase in the price or a significant interruption in the supply of these or any other energy sources could have a material adverse effect on our business, results of operations and financial condition. Energy costs, primarily natural gas and electricity, represented approximately 6.4% of our total cost of goods sold for the year ended December 31, 2023.
An increase in the price or a significant interruption in the supply of these or any other energy sources could have a material adverse effect on our business, results of operations and financial condition. Energy costs, primarily natural gas and electricity, represented approximately 7.1% of our total cost of goods sold for the year ended December 31, 2024.
As of December 31, 2023, there were 28,390,059 publicly traded shares of common stock held by our public common stockholders. Although our common stock is listed on the NASDAQ, we do not know whether an active trading market will continue to develop or how liquid that market might be.
As of December 31, 2024, there were 28,570,038 publicly traded shares of common stock held by our public common stockholders. Although our common stock is listed on the NASDAQ, we do not know whether an active trading market will continue to develop or how liquid that market might be.
The emissions fee and funding provisions of the law could increase the operating costs of our customers and accelerate the transition away from fossil fuels, which could in turn adversely affect our business and results of operations.
To the extent the fee is retained and implemented, the emissions fee and funding provisions of the law could increase the operating costs of our customers and accelerate the transition away from fossil fuels, which could in turn adversely affect our business and results of operations.
Our inability to acquire, maintain, or renew necessary financial assurances related to the reclamation and restoration of mining property could have a material adverse effect on our business, financial condition, and results of operations. Climate change legislation and regulatory initiatives could result in increased compliance costs for us and our customers. In recent years, the U.S.
Our inability to acquire, maintain, or renew necessary financial assurances related to the reclamation and restoration of mining property could have a material adverse effect on our business, financial condition, and results of operations. Climate change could result in various risks for us and our customers. In recent years, the U.S.
At the same time, certain environmental groups have suggested that additional laws may be needed and, in some instances, have pursued voter ballot initiatives to more closely and uniformly limit or otherwise regulate the hydraulic fracturing process, and legislation has been proposed by some members of Congress to provide for such regulation.
While President Trump has expressed a policy agenda supportive of our industry, at the same time, certain environmental groups have suggested that additional laws may be needed and, in some instances, have pursued voter ballot initiatives to more closely and uniformly limit or otherwise regulate the hydraulic fracturing process, and legislation has been proposed by some members of Congress to provide for such regulation.
For example, our ABL Credit Facility restricts or limits our ability to: • grant liens; • incur additional indebtedness; • engage in a merger, consolidation or dissolution; • enter into transactions with affiliates; • sell or otherwise dispose of assets, businesses and operations; • materially alter the character of our business as conducted at the time of filing of this annual report; and • make acquisitions, investments and capital expenditures. 24 Furthermore, the borrowing base under our ABL Credit Facility is recalculated from time to time based on our eligible accounts receivable and inventory.
For example, our FCB ABL Credit Facility restricts or limits our ability to: • grant liens; • incur additional indebtedness; • engage in a merger, consolidation or dissolution; • enter into transactions with affiliates; • sell or otherwise dispose of assets, businesses and operations; • materially alter the character of our business as conducted at the time of filing of this annual report; and • make acquisitions, investments and capital expenditures.
The loss of any of these individuals or the failure to attract additional personnel, as needed, could have a material adverse effect on our operations and could lead to higher labor costs or the use of less-qualified personnel.
Competition for management and key personnel is intense, and the pool of qualified candidates is limited. The loss of any of these individuals or the failure to attract additional personnel, as needed, could have a material adverse effect on our operations and could lead to higher labor costs or the use of less-qualified personnel.
While our sales and finished product production levels are contracted evenly throughout the year, our mining and wet sand processing activities are reduced during winter months.
Seasonal fluctuations in weather impact the production levels at our wet processing plant. While our sales and finished product 27 production levels are contracted evenly throughout the year, our mining and wet sand processing activities are reduced during winter months.
During the course of our ongoing evaluation and integration of the internal control over financial reporting, we may identify areas requiring improvement, and we may have to design enhanced processes and controls to address issues identified through this review.
We are evaluating our existing controls against the standards adopted by the Committee of Sponsoring Organizations of the Treadway Commission. During the course of our ongoing evaluation and integration of the internal control over financial reporting, we may identify areas requiring improvement, and we may have to design enhanced processes and controls to address issues identified through this review.
If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us.
Our amended and restated certificate of incorporation authorizes our board of directors to issue preferred stock without stockholder approval. If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us.
The establishment of the final mine closure reclamation liability is based on estimated costs and requires various estimates and assumptions. If our accruals for expected reclamation and other costs associated with facility closures for which we will be responsible were later determined to be insufficient, our business, results of operations and financial condition may be adversely affected.
If our accruals for expected reclamation and other costs associated with facility closures for which we will be responsible were later determined to be insufficient, our business, results of operations and financial condition may be adversely affected.
Any failure by us to comply with applicable environmental laws and regulations may cause governmental authorities to take actions that could adversely impact our operations and financial condition, including: • issuance of administrative, civil, or criminal penalties; • denial, modification, or revocation of permits or other authorizations; • occurrence of delays in permitting or performance of projects; • imposition of injunctive obligations or other limitations on our operations, including cessation of operations; and • requirements to perform site investigatory, remedial, or other corrective actions. 32 Any such regulations could require us to modify existing permits or obtain new permits, implement additional pollution control technology, curtail operations, significantly increase our operating costs, or impose additional operating restrictions among our customers that reduce demand for our services.
Any failure by us to comply with applicable environmental laws and regulations may cause governmental authorities to take actions that could adversely impact our operations and financial condition, including: • issuance of administrative, civil, or criminal penalties; • denial, modification, or revocation of permits or other authorizations; • occurrence of delays in permitting or performance of projects; • imposition of injunctive obligations or other limitations on our operations, including cessation of operations; and 31 • requirements to perform site investigatory, remedial, or other corrective actions.
We rely on sophisticated information technology systems and infrastructure to support our business, including process control technology. Any of these systems may be susceptible to outages due to fire, floods, power loss, telecommunication failures, usage errors by employees, computer viruses, cyber-attacks or other security breaches, or similar events.
Any of these systems may be susceptible to outages due to fire, floods, power loss, telecommunication failures, usage errors by employees, computer viruses, cyber-attacks or other security breaches, or similar events.
Concerns over silicosis and other potential adverse health effects, as well as concerns regarding potential liability from the use of frac sand, may have the effect of discouraging our customers’ use of our frac sand.
These health risks have been, and may continue to be, a significant issue confronting the proppant industry. Concerns over silicosis and other potential adverse health effects, as well as concerns regarding potential liability from the use of frac sand, may have the effect of discouraging our customers’ use of our frac sand.
If we were to reduce the estimated life of our operating facilities, the fixed facility closure costs would be applied to a shorter period of production, which would increase the cost of production per ton produced and could materially and adversely affect our business, results of operations and financial condition. 26 Applicable statutes and regulations require that mining property be reclaimed following a mine closure in accordance with specified standards and an approved reclamation plan.
If we were to reduce the estimated life of our operating facilities, the fixed facility closure costs would be applied to a shorter period of production, which would increase the cost of production per ton produced and could materially and adversely affect our business, results of operations and financial condition.
We may not be able to comply with any new or amended laws and regulations that are adopted, and any new or amended laws and regulations could have a material adverse effect on our operating results by requiring us to modify or cease our operations. In addition, the inhalation of respirable crystalline silica is associated with the lung disease silicosis.
We may not be able to comply fully with the amended regulations that were adopted at the federal level, and any new or amended laws and regulations could have a material adverse effect on our operating results by requiring us to modify or cease our operations.
Such changes in laws, regulations or government policy and related interpretations pertaining to water rights may alter the environment in which we and our customers do business, which may negatively affect our financial condition and results of operations. We may be subject to interruptions or failures in our information technology systems, including cyber-attacks.
Such changes in laws, regulations or government policy and related interpretations pertaining to water rights may alter the environment in which we and our customers do business, which may negatively affect our financial condition and results of operations. The availability of water may also change due to various environmental, demographic, or other pressures, including climate change.
If one or more of the analysts who covers us downgrades our securities, the price of our securities would likely decline.
If analysts who cover us downgrade our securities, the price of our securities would likely decline.
A negative shift in investor sentiment towards the oil and natural gas industry and increased attention to environmental, social and governance (“ESG”) and conservation matters may adversely impact our business.
The long-term impact of such actions on our customers’ operations, if any, is difficult to predict at this time. A negative shift in investor sentiment towards the oil and natural gas industry and increased attention to environmental, social and governance (“ESG”) and conservation matters may adversely impact our business.
Third parties from time to time may initiate litigation against us by asserting that the conduct of our business infringes, misappropriates or otherwise violates intellectual property rights.
Policing unauthorized use of intellectual property rights can be difficult and expensive, and adequate remedies may not be available. We may be adversely affected by disputes regarding intellectual property rights of third parties. Third parties from time to time may initiate litigation against us by asserting that the conduct of our business infringes, misappropriates or otherwise violates intellectual property rights.
COP28 also resulted in an agreement among 200 nations to take more decisive climate action, including commitments to reduce reliance on fossil fuels. Several states and geographic regions in the United States have also adopted legislation and regulations to reduce emissions of GHGs, including cap and trade regimes and commitments to contribute to meeting the goals of the Paris Agreement.
Additionally, several states and geographic regions in the United States have adopted legislation and regulations to reduce emissions of GHGs, including cap and trade regimes and 33 commitments to contribute to meeting the goals of the Paris Agreement.
There is evidence of an association between crystalline silica exposure or silicosis and lung cancer and a possible association with other diseases, including immune system disorders such as scleroderma. These health risks have been, and may continue to be, a significant issue confronting the proppant industry.
In addition, the inhalation of respirable crystalline silica is associated with the lung disease silicosis. There is evidence of an association between crystalline silica exposure or silicosis and lung cancer and a possible association with other diseases, including immune system disorders such as scleroderma.
This section also requires that our independent registered public accounting firm opine on those internal controls upon our public float exceeding a certain threshold as set forth in the SEC rules. We are evaluating our existing controls against the standards adopted by the Committee of Sponsoring Organizations of the Treadway Commission.
Section 404 requires that we document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting. This section also requires that our independent registered public accounting firm opine on those internal controls upon our public float exceeding a certain threshold as set forth in the SEC rules.
If one or more of these analysts ceases to cover us or fails to publish regular reports on us, interest in the purchase of our securities could decrease, which could cause the price of our common stock and other securities and their trading volume to decline.
If analysts ceases to cover us or fails to publish regular reports on us, interest in the purchase of our securities could decrease, which could cause the price of our common stock and other securities and their trading volume to decline. 36 Our amended and restated certificate of incorporation and amended and restated bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock.
There is no guarantee that the price of our common stock that will prevail in the market will ever exceed the price that you previously paid. 38 Future sales of our common stock in the public market could reduce our stock price, and the sale or issuance of equity or convertible securities may dilute your ownership in us.
Future sales of our common stock in the public market could reduce our stock price, and the sale or issuance of equity or convertible securities may dilute your ownership in us. We may sell additional shares of common stock in subsequent public offerings. We may also issue additional shares of common stock or convertible securities.
If either of these events were to occur, there could be an adverse impact on our business, results of operations and financial condition. Our business may suffer if we lose, or are unable to attract and retain, key personnel. We depend to a large extent on the services of our senior management team and other key personnel.
Our business may suffer if we lose, or are unable to attract and retain, key personnel. We depend to a large extent on the services of our senior management team and other key personnel. Members of our senior management and other key employees bring significant experience to the market environment in which we operate.
The plan addresses matters such as removal of facilities and equipment, regrading, prevention of erosion and other forms of water pollution, re-vegetation and post-mining land use. We may be required to post a surety bond or other form of financial assurance equal to the cost of reclamation as set forth in the approved reclamation plan.
Applicable statutes and regulations require that mining property be reclaimed following a mine closure in accordance with specified standards and an approved reclamation plan. The plan addresses matters such as removal of facilities and equipment, regrading, prevention of erosion and other forms of water pollution, re-vegetation and post-mining land use.
In January of 2024, the EPA released its proposed rule to implement the methane emissions fee with a proposed effective date in 2025 for reporting year 2024 emissions.
In November of 2024, the EPA released its final rule to implement the methane emissions fee with an effective date of January 17, 2025, for reporting year 2024 emissions. Twenty-three states have filed a lawsuit challenging the rule, and the change in U.S. presidential administration provides additional uncertainty as to the rule’s future.
Negative economic conditions could also adversely affect the collectability of our trade receivables or performance by our vendors and suppliers. Risks Related to our Recent Expansion Activity Our acquisition of the Blair facility may not achieve its intended results, and we may be unable to successfully integrate the operations of the Blair facility.
Negative economic conditions could also adversely affect the collectability of our trade receivables or performance by our vendors and suppliers.
Decreases in our eligible accounts receivable and inventory may limit our available borrowing levels and may require us to comply with certain financial ratios. We may not be able to renew the ABL Credit Facility or secure a new credit facility on favorable terms, or at all, which would adversely affect our business, financial condition and/or cash flows.
Furthermore, the borrowing base under our FCB ABL Credit Facility is recalculated from time to time based on our eligible accounts receivable and inventory. Decreases in our eligible accounts receivable and inventory may limit our available borrowing levels and may require us to comply with certain financial ratios. We face distribution and logistical challenges in our business.
We may sell additional shares of common stock in subsequent public offerings. We may also issue additional shares of common stock or convertible securities. As of December 31, 2023, we have outstanding 41,117,111 shares of common stock. Our Chief Executive Officer beneficially owns 7,076,340 shares of our common stock, or approximately 17.2% of our total outstanding shares.
As of December 31, 2024, we have outstanding 42,899,193 shares of common stock. Our Chief Executive Officer beneficially owns 7,454,581 shares of our common stock, or approximately 17.4% of our total outstanding shares.
The Paris Agreement entered into force in November 2016 after more than 170 nations, including the United States, ratified or otherwise indicated their intent to be bound by the agreement. In April 2021, President Biden announced a goal of reducing the United States’ emissions by 50-52% below 2005 levels by 2030.
The Paris Agreement entered into force in November 2016 after more than 170 nations, including the United States, ratified or otherwise indicated their intent to be bound by the agreement. While President Trump has initiated action to withdraw the United States from the Paris agreement, this withdrawal is not immediate and may animate stronger actions by various other policymakers.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions.
Such ratings are used by some investors to inform their investment and voting decisions.
Our cash flow fluctuates on a seasonal basis. Our cash flow is affected by a variety of factors, including weather conditions and seasonal periods. Seasonal fluctuations in weather impact the production levels at our wet processing plant.
Certain of these events or conditions may also be exacerbated by climate change. For more information, see our risk factor “Climate change could result in various risks for us and our customers.” Our cash flow fluctuates on a seasonal basis. Our cash flow is affected by a variety of factors, including weather conditions and seasonal periods.
Additionally, in March 2022, the SEC proposed new rules relating to the disclosure of a range of climate-related data risks and opportunities, including financial impacts, physical and transition risks, related governance and strategy and GHG emissions, for certain public companies.
Securities and Exchange Commission (“SEC”) issued a proposed rule in March 2022 that will mandate extensive disclosure of climate-related data, risks, GHG emissions, for certain public companies. The SEC issued a final in March 2024. Multiple lawsuits have been filed and in April 2024, the SEC voluntarily stayed the rules pending the outcome of the litigation.
Removed
We have historically relied on third-party financing to meet our seasonal cash flow requirements. Our ABL Credit Facility is set to expire on December 13, 2024.
Added
In addition, prices can be affected by a number of factors beyond our control, including weather conditions, seasonal trends, domestic and foreign supply of and demand for natural gas, domestic, local and foreign governmental regulations, tariffs and taxes, including environmental and climate change regulation, among others.
Removed
If we are unable to renew our ABL Credit Facility or secure a new credit facility on favorable terms, or at all, our ability to fund our operations would be impaired, which would have a material adverse effect on our business, financial condition and/or cash flows. We face distribution and logistical challenges in our business.
Added
We may be required to post a surety bond or other form of financial assurance equal to the cost of reclamation as set forth in the approved reclamation plan. The establishment of the final mine closure reclamation liability is based on estimated costs and requires various estimates and assumptions.
Removed
The manufacturing and maintenance of our SmartSystems equipment requires skilled and experienced personnel who can perform physically demanding work. Our ability to operate the manufacturing facility in Saskatoon depends upon our ability to have access to the services of skilled workers. The demand for skilled workers is high, and the supply is limited.
Added
For more information, see our risk factor “Climate change could result in various risks for us and our customers.” We may be subject to interruptions or failures in our information technology systems, including cyber-attacks. We rely on sophisticated information technology systems and infrastructure to support our business, including process control technology.
Removed
As a result, competition for experienced personnel is intense, and a significant increase in the wages paid by competing employers could result in a reduction of our skilled labor force, increases in the rates that we must pay or both.
Added
Tariffs on goods and services between the United States, Canada and Mexico may be detrimental to our business. Our sales into Canada and Mexico may become subject to retaliatory tariffs if the United States imposes tariffs on imports from Canada and Mexico into the United States.
Removed
Members of our senior management and other key employees bring significant experience to the market environment in which we operate. Competition for management and key personnel is intense, and the pool of qualified candidates is limited.
Added
In recent years, the Company has expanded its sales to customers located in Canada and Mexico. If enacted, currently contemplated tariffs, set at 25%, may significantly affect transactions with our customers and vendors located in Canada and Mexico.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn the event there is a cyber security incident, the VP of Technology and the Incident Response Team will assess the cybersecurity incident’s impact as the basis for assigning a preliminary severity level. The VP of Technology is also responsible for communicating incidents to other members of management as appropriate.
Biggest changeIn the event there is a cyber security incident, the designated IT personnel and the Incident Response Team will assess the cybersecurity incident’s impact as the basis for assigning a preliminary severity level. Designated IT personnel are also responsible for communicating incidents to other members of management as appropriate.
These include, but are not limited to, internal reporting, monitoring, and detection tools to assist us in identifying vulnerabilities in our products before they are exploited by malicious threat actors. We have an Incident Response Plan that defines and documents procedures for assessing, identifying, and managing a cybersecurity incident.
These include, but are not limited to, internal reporting, monitoring, and detection tools to assist us in identifying vulnerabilities in our products before they are exploited by malicious threat actors. 38 We have an Incident Response Plan that defines and documents procedures for assessing, identifying, and managing a cybersecurity incident.
If our systems, or our customers' or suppliers’ systems, for protecting against cybersecurity incidents prove to be insufficient, a cybersecurity incident could have a material adverse effect on our business, operations, or consolidated financial condition. See additional information about our cybersecurity risks under General Risk factors in Item1(a) Risk Factors. 40
If our systems, or our customers' or suppliers’ systems, for protecting against cybersecurity incidents prove to be insufficient, a cybersecurity incident could have a material adverse effect on our business, operations, or consolidated financial condition. See additional information about our cybersecurity risks under General Risk factors in Item1(a) Risk Factors.
Aside from more immediate reporting of material incidents to our Board of Directors as described above, our VP of Technology provides our Board of Directors an update on cybersecurity during each of its quarterly meetings regarding the effectiveness of technical and human security controls, cybersecurity training program compliance, internal and third-party cybersecurity incidents, and cybersecurity risks.
Aside from more immediate reporting of material incidents to our Board of Directors as described above, our IT personnel regularly provide our Board of Directors an update on cybersecurity during each of its quarterly meetings regarding the effectiveness of technical and human security controls, cybersecurity training program compliance, internal and third-party cybersecurity incidents, and cybersecurity risks.
Removed
Our VP of Technology leads all components of our IT functions. Our VP of Technology has over 29 years of experience in the IT profession, including 7 years with Smart Sand.
Added
Our CFO leads the IT department and together with IT management they have more than 30 years of combined experience in the IT profession.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Blair mine includes a total of 1,285 acres that are owned outright by Smart Sand Blair, a wholly-owned subsidiary of Smart Sand, Inc. This ownership includes subsurface mineral and water rights. The site has no leased property. Royalties are estimated to be paid on certain grades of silica sand in the amount of $1.75/ton with certain minimum annual payments.
Biggest changeAll required permits are secured, and the site is operating in full compliance. Blair Wisconsin We began operating the Blair mine in the second quarter of 2023. The Blair mine includes a total of 1,285 acres that are owned outright by Smart Sand Blair, a wholly-owned subsidiary of Smart Sand, Inc. This ownership includes subsurface mineral and water rights.
Our premium sand is used as proppant used to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells and for a variety of industrial applications, including glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail, and recreation.
Our premium sand is used as proppant used to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells and for a variety of industrial applications, including glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail, and recreation.
Our premium sand is used as proppant used to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells and for a variety of industrial applications, including glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail, and recreation.
Our premium sand is used as proppant used to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells and for a variety of industrial applications, including glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail, and recreation.
The current annual processing capacity is estimated at 1.6 million tons. 47 The site is accessible by public roads. There is no rail onsite. All minerals are trucked from the site to a terminal that we own and operate in Peru, Illinois, on the Burlington Northern Santa Fe railroad a few miles away from the mine site.
The current annual processing capacity is estimated at 1.6 million tons. The site is accessible by public roads. There is no rail onsite. All minerals are trucked from the site to a terminal that we own and operate in Peru, Illinois, on the Burlington Northern Santa Fe railroad a few miles away from the mine site.
The Utica facility is regulated by the Illinois Department of Natural Resources, which requires a Surface Mining Permit and Reclamation Plan. The mine reclamation plan is submitted to both the LaSalle County, Illinois and Village of Utica, Illinois Boards. Air emissions are regulated by the Illinois Environmental Protection Agency.
The Ottawa facility is regulated by the Illinois Department of Natural Resources, which requires a Surface Mining Permit and Reclamation Plan. The mine reclamation plan is submitted to both the LaSalle County, Illinois and Village of Utica, Illinois Boards. Air emissions are regulated by the Illinois Environmental Protection Agency.
Geographically, the Blair site is located at approximately 44° 17’44.0” N latitude and 91° 10’05.5” W longitude. 49 The Blair site includes approximately 1,285 acres that we own outright. The mine site was initially developed in 2016 by HCR and shut down in 2020 due to the COVID-19 pandemic. On March 4, 2022, we acquired the Blair facility.
Geographically, the Blair site is located at approximately 44° 17’44.0” N latitude and 91° 10’05.5” W longitude. 48 The Blair site includes approximately 1,285 acres that we own outright. The mine site was initially developed in 2016 by HCR and shut down in 2020 due to the COVID-19 pandemic. On March 4, 2022, we acquired the Blair facility.
These production techniques allow the Utica site to meet a variety of focused specifications on product composition from customers. As such, the Utica site services multiple end markets, such as glass, building products, foundry, fillers and extenders, chemicals and oil and gas proppants. We believe that the Utica facility and its operating equipment are maintained in good working condition.
These production techniques allow the Ottawa site to meet a variety of focused specifications on product composition from customers. As such, the Ottawa site services multiple end markets, such as glass, building products, foundry, fillers and extenders, chemicals and oil and gas proppants. We believe that the Ottawa facility and its operating equipment are maintained in good working condition.
We have successfully completed the annual outside surveillance audit of our Environmental Management System to the ISO 14001:2015. The Oakdale site has secured necessary permits and is operating in compliance with all required licenses, registrations, and permits. A summary of Oakdale’s mineral resources and reserves as of December 31, 2023 and 2022 is shown below.
We have successfully completed the annual outside surveillance audit of our Environmental Management System to the ISO 14001:2015. The Oakdale site has secured necessary permits and is operating in compliance with all required licenses, registrations, and permits. A summary of Oakdale’s mineral resources and reserves as of December 31, 2024 and 2023 is shown below.
We have no inferred resources. 44 Material Mine Site Descriptions Oakdale, Wisconsin The Oakdale site is a surface proppant sand mining and processing operation located approximately 1 mile southwest of the town of Oakdale, Wisconsin in Monroe County, Wisconsin. Geographically, the Oakdale site is located at approximately 43° 57’06.1” N latitude and 90° 24’13.0” W longitude.
We have no inferred resources. 42 Material Mine Site Descriptions Oakdale, Wisconsin The Oakdale site is a surface proppant sand mining and processing operation located approximately 1 mile southwest of the town of Oakdale, Wisconsin in Monroe County, Wisconsin. Geographically, the Oakdale site is located at approximately 43° 57’06.1” N latitude and 90° 24’13.0” W longitude.
In the summer of 2018, a 1.6 million ton per year dry plant was constructed on site. In September 2020, we acquired the Utica Site from Eagle. We began operating the Utica, Illinois mine and Peru, Illinois transload facility in October 2020. There are no royalties associated with any minerals at this site.
In the summer of 2018, a 1.6 million ton per year dry plant was constructed on site. In September 2020, we acquired the Ottawa Site from Eagle. We began operating the Ottawa, Illinois mine and Peru, Illinois transload facility in October 2020. There are no royalties associated with any minerals at this site.
A reclamation plan for restoring the site to an agreed upon state is in place with Jackson County and the City of Blair. The Blair site has secured necessary permits and is in compliance with all required licenses, registrations, and permits. A summary of Blair’s mineral resources and reserves as of December 31, 2023 and 2022 is shown below.
A reclamation plan for restoring the site to an agreed upon state is in place with Jackson County and the City of Blair. The Blair site has secured necessary permits and is in compliance with all required licenses, registrations, and permits. A summary of Blair’s mineral resources and reserves as of December 31, 2024 and 2023 is shown below.
Production of silica sand is driven by market demand, and production can be modified in response to that demand. As such, the application of minimum mining thicknesses, maximum stripping ratios (the ratio of waste to sand excavated), or cut-off grades is not generally considered in the estimation of silica sand resources for the Utica site.
Production of silica sand is driven by market demand, and production can be modified in response to that demand. As such, the application of minimum mining thicknesses, maximum stripping ratios (the ratio of waste to sand excavated), or cut-off grades is not generally considered in the estimation of silica sand resources for the Ottawa site.
The information that follows related to the Oakdale, Utica and Blair facilities is derived, for the most part from, and in some instances is an extract from, the technical report summaries (“TRSs”) related to such properties prepared in compliance with the Item 601(b)(96) and subpart 1300 of Regulation S-K.
The information that follows related to the Oakdale, Ottawa and Blair facilities is derived, for the most part from, and in some instances is an extract from, the technical report summaries (“TRSs”) related to such properties prepared in compliance with the Item 601(b)(96) and subpart 1300 of Regulation S-K.
There are no royalties associated with this property. Our Utica facility is a surface mining operation involving heavy equipment and the hydraulic transfer of material to the processing plant. The processing plant uses natural gas, propane, and electricity to produce various grades of high-quality Northern White Sand.
There are no royalties associated with this property. Our Ottawa facility is a surface mining operation involving heavy equipment and the hydraulic transfer of material to the processing plant. The processing plant uses natural gas, propane, and electricity to produce various grades of high-quality Northern White Sand.
As such, the application of minimum mining thicknesses, maximum stripping ratios (the ratio of waste to sand excavated), or cut-off grades is not generally considered in the estimation of silica sand resources for the Blair site. The decrease in reserves from 2022 to 2023 is primarily attributable to excavation and mining activity in 2023.
As such, the application of minimum mining thicknesses, maximum stripping ratios (the ratio of waste to sand excavated), or cut-off grades is not generally considered in the estimation of silica sand resources for the Blair site. The decrease in reserves from 2023 to 2024 is primarily attributable to excavation and mining activity in 2024.
Our Utica site includes a wet plant and a dry plant, storage, and handling facility. The Utica site is connected to the local electrical and natural gas distribution systems. Water onsite is provided through public works, private wells and ponds supplied with recycled process water and groundwater pumped from the active mine.
Our Ottawa site includes a wet plant and a dry plant, storage, and handling facility. The Ottawa site is connected to the local electrical and natural gas distribution systems. Water onsite is provided through public works, private wells and ponds supplied with recycled process water and groundwater pumped from the active mine.
The site has offices holding administrative, engineering, and operations staff. In addition, there are several buildings that house the processing facilities, plant maintenance and support facilities. Utica production capabilities include ability to produce multiple products through various processing methods, including washing, hydraulic sizing and screening.
The site has offices holding administrative, engineering, and operations staff. In addition, there are several buildings that house the processing facilities, plant maintenance and support facilities. Ottawa production capabilities include ability to produce multiple products through various processing methods, including washing, hydraulic sizing and screening.
The Utica operation has obtained the necessary permits. Air emissions are regulated by the Illinois Environmental Protection Agency. A Title V permit for air emissions is currently issued to Northern White Sand, which is our wholly owned subsidiary. We monitor air emissions and have all required permits.
The Ottawa operation has obtained the necessary permits. Air emissions are regulated by the Illinois Environmental Protection Agency. A Title V permit for air emissions is currently issued to Northern White Sand, which is our wholly owned subsidiary. We monitor air emissions and have all required permits.
Only material that can be economically, safely, and legally extracted is contained in these ore reserve estimates. 48 Blair, Wisconsin The Blair site is a surface proppant sand mining and processing operation located approximately 3 miles southwest of the town of Taylor, Wisconsin in Trempealeau County, Wisconsin.
Only material that can be economically, safely, and legally extracted is contained in these ore reserve estimates. 47 Blair, Wisconsin The Blair site is a surface proppant sand mining and processing operation located approximately 3 miles southwest of the town of Taylor, Wisconsin in Trempealeau County, Wisconsin.
This is completed either in-house or by third-party contractors using heavy equipment including excavators, dozers and haul trucks. Next, a third-party contractor is used to drill and blast the sandstone. Heavy equipment, conveyors and pumps are used to transfer the blasted material to the processing plant.
This is completed either in-house or by third-party contractors using heavy equipment including excavators, dozers and haul trucks. Next, a third-party contractor is used to drill and blast the sandstone. Heavy equipment, conveyors, hydraulic monitors and pumps are used to transfer the blasted material to the processing plant.
Geographically, the Utica site is located at approximately 41° 20’48.6” N latitude and 88° 57’18.9” W longitude. The Utica site includes approximately 819 acres that we own outright. The mine site was initially developed in 2014 by Eagle Materials Inc., a Delaware corporation (“Eagle”), as a wash plant that railed wet sand to Corpus Christi, TX.
Geographically, the Ottawa site is located at approximately 41° 20’48.6” N latitude and 88° 57’18.9” W longitude. 45 The Ottawa site includes approximately 819 acres that we own outright. The mine site was initially developed in 2014 by Eagle Materials Inc., a Delaware corporation (“Eagle”), as a wash plant that railed wet sand to Corpus Christi, TX.
The decrease in reserves from 2022 to 2023 is primarily attributable to excavation and mining activity in 2023. For more information on our resources and reserves, please refer to Exhibit 10.24, the Technical Report Summary for our Oakdale site.
The decrease in reserves from 2023 to 2024 is primarily attributable to excavation and mining activity in 2024. For more information on our resources and reserves, please refer to Exhibit 10.24, the Technical Report Summary for our Oakdale site.
Utica, Illinois We, through Northern White Sand LLC, a wholly-owned subsidiary of Smart Sand, Inc., operate a surface mine and a silica sand processing plant near Utica, Illinois. The Utica mine includes a total of 819 acres that are owned outright by Smart Sand, Inc. This ownership includes subsurface mineral and water rights. The site has no leased property.
Ottawa, Illinois We, through Northern White Sand LLC, a wholly-owned subsidiary of Smart Sand, Inc., operate a surface mine and a silica sand processing plant near Ottawa, Illinois. The Ottawa mine includes a total of 819 acres that are owned outright by us. This ownership includes subsurface mineral and water rights. The site has no leased property.
The site is accessible by public roads and the Canadian National railroad spur. Our Blair site has an extensive rail-car loading, storage, and handling facility. The Blair site is connected to the local electrical and natural gas distribution systems. All water onsite is provided through private wells. The site has offices holding administrative, engineering, and operations staff.
The site is accessible by public roads and the Canadian National railroad spur. Our Blair site has an extensive railcar loading, storage, and handling facility. The Blair site is connected to the local electrical and natural gas distribution systems. All water onsite is provided through private wells. The site has offices holding administrative, engineering, and operations staff.
(2) Economic evaluation for Utica is based on $20.00/ton average minegate pricing as of September 2021, with no escalation. (3) Economic evaluation for Blair is based on $36.00/ton average minegate pricing, based on 2023 forecast, with no escalation.
(2) Economic evaluation for Ottawa is based on $20.00/ton average minegate pricing as of September 2021, with no escalation. (3) Economic evaluation for Blair is based on $36.00/ton average minegate pricing, based on 2023 forecast, with no escalation.
ITEM 2. — PROPERTIES Overview of our Properties and Logistics As of December 31, 2023, we owned and operated three frac sand mines and related processing facilities in Oakdale, Wisconsin; Utica, Illinois; and Blair, Wisconsin. Also, in addition to the onsite transloading capabilities at our Oakdale and Blair mines, we own nearby transloading facilities in Byron, Wisconsin and Peru, Illinois.
ITEM 2. — PROPERTIES Overview of our Properties and Logistics As of December 31, 2024, we owned and operated three frac sand mines and related processing facilities in Oakdale, Wisconsin; Ottawa, Illinois; and Blair, Wisconsin. Also, in addition to the onsite transloading capabilities at our Oakdale and Blair mines, we own nearby transloading facilities in Byron, Wisconsin and Peru, Illinois.
Only material that can be economically, safely, and legally extracted is contained in these ore reserve estimates. 46 Utica, Illinois The Utica site is a surface proppant sand mining and processing operation located approximately three miles east of the town of Utica, Illinois in LaSalle County, Illinois.
Only material that can be economically, safely, and legally extracted is contained in these ore reserve estimates. 44 Ottawa, Illinois The Ottawa site is a surface proppant sand mining and processing operation located approximately three miles east of the town of Ottawa, Illinois in LaSalle County, Illinois.
All required permits are secured, and the site is operating in full compliance. 43 Summary of Annual Production The table below shows annual dry tons produced at our mining properties for the years ended December 31, 2023, 2022 and 2021.
All required permits are secured, and the site is operating in full compliance. 41 Summary of Annual Production The table below shows annual dry tons produced at our mining properties for the years ended December 31, 2024, 2023 and 2022.
As of December 31, 2023, we had three operating mines and related processing facilities. 42 Oakdale, Wisconsin We, through Smart Sand, Inc. and SSI Oakdale, LLC, its wholly-owned subsidiary, operate a surface mine and silica sand processing plant near Oakdale, Wisconsin. The Oakdale mine includes a total of 1,256 acres that are owned outright by Smart Sand, Inc.
As of December 31, 2024, we had three operating mines and related processing facilities. 40 Oakdale, Wisconsin We, through Smart Sand, Inc. and Smart Sand Oakdale, LLC, its wholly-owned subsidiary, operate a surface mine and silica sand processing plant near Oakdale, Wisconsin. The Oakdale mine includes a total of 1,256 acres that are owned outright by Smart Sand, Inc.
Through multiple expansions, the Oakdale facility currently has an annual processing capacity of 5.5 million tons. 45 The site is accessible by public roads and a Canadian Pacific railroad spur. Our Oakdale site has an extensive rail-car loading, storage, and handling facility. The Oakdale site is connected to the local electrical and natural gas distribution systems.
Through multiple expansions, the Oakdale facility currently has an annual processing capacity of 5.5 million tons. 43 The site is accessible by public roads and a Canadian Pacific railroad spur. Our Oakdale site has an extensive railcar loading, storage, and handling facility. The Oakdale site is connected to the local electrical and natural gas distribution systems.
This table does not include mining activity prior to our acquisition of the Blair mine. 2023 2022 2021 (millions of tons) Silica Sand Oakdale mine 4.6 4.9 2.6 Utica mine 0.9 1.1 0.8 Blair mine 0.6 0.0 0.0 6.1 6.0 3.4 Summary of Mineral Reserves and Resources Supplies of high-quality Northern White frac sand are limited to select areas, predominantly in western Wisconsin and limited areas of Minnesota and Illinois.
This table does not include mining activity prior to our acquisition of the Blair mine. 2024 2023 2022 (millions of tons) Silica Sand Oakdale mine 4.9 4.6 4.9 Ottawa mine 0.6 0.9 1.1 Blair mine 1.7 0.6 0.0 7.2 6.1 6.0 Summary of Mineral Reserves and Resources Supplies of high-quality Northern White frac sand are limited to select areas, predominantly in western Wisconsin and limited areas of Minnesota and Illinois.
The total net book value of the Utica facility and related transload real property and tangible assets as of December 31, 2023 was $39.8 million. Current mining at the Utica facility is excavated using conventional surface mining methods. The first step in the mining process is the removal of the overburden from the sandstone layer.
The total net book value of the Ottawa facility and related transload real property and tangible assets as of December 31, 2024 was $39.2 million. Current mining at the Ottawa facility is excavated using conventional surface mining methods. The first step in the mining process is the removal of the overburden from the sandstone layer.
The total net book value of the Oakdale facility’s real property and tangible assets as of December 31, 2023 was $125.8 million. Current mining at the Oakdale facility is excavated using conventional surface mining methods. The first step in the mining process is the removal of the overburden from the sandstone layer.
The total net book value of the Oakdale facility’s real property and tangible assets as of December 31, 2024 was $101.6 million. Current mining at the Oakdale facility is excavated using conventional surface mining methods. The first step in the mining process is the removal of the overburden from the sandstone layer.
Year Ended December 31, Change 2023 2022 Volumes Percentage (millions of tons) Proven 114 115 -1 (1) % Probable 0 0 0 Not Meaningful Saleable 114 115 -1 (1) % When estimating mineral reserves, silica product pricing was assumed at $36/ton, which represents our budget for 2023.
Year Ended December 31, Change 2024 2023 Volumes Percentage (millions of tons) Proven 112 114 -2 (2) % Probable 0 0 0 Not Meaningful Saleable 112 114 -2 (2) % When estimating mineral reserves, silica product pricing was assumed at $36/ton, which represents our budget for 2024.
Year Ended December 31, Change 2023 2022 Volumes Percentage (millions of tons) Proven 138 142 -4 (3) % Probable 105 105 0 — % Saleable 243 247 -4 (2) % When estimating mineral reserves, silica product pricing was assumed at $20/ton. Only one commodity (silica sand) is mined, processed and sold at the Oakdale site.
Year Ended December 31, Change 2024 2023 Volumes Percentage (millions of tons) Proven 133 138 -5 (4) % Probable 105 105 0 — % Saleable 238 243 -5 (2) % When estimating mineral reserves, silica product pricing was assumed at $20/ton. Only one commodity (silica sand) is mined, processed and sold at the Oakdale site.
Year Ended December 31, Change 2023 2022 Volumes Percentage (millions of tons) Proven 95 96 -1 (1) % Probable 32 32 0 — % Saleable 127 128 -1 (1) % When estimating mineral reserves, silica product pricing was assumed at $20/ton. Only one commodity (silica sand) is mined, processed and sold at the Utica site.
Year Ended December 31, Change 2024 2023 Volumes Percentage (millions of tons) Proven 94 95 -1 (1) % Probable 32 32 0 — % Saleable 126 127 -1 (1) % When estimating mineral reserves, silica product pricing was assumed at $20/ton. Only one commodity (silica sand) is mined, processed and sold at the Ottawa site.
The Utica site has secured necessary permits and is operating in compliance with all required licenses, registrations, and permits. A summary of Utica’s mineral resources and reserves as of December 31, 2023 and 2022 is shown below.
The Ottawa site has secured necessary permits and is operating in compliance with all required licenses, registrations, and permits. A summary of Ottawa’s mineral resources and reserves as of December 31, 2024 and 2023 is shown below.
As of December 31, 2023, our individually material mining properties, as determined in accordance with subpart 1300 of Regulation S-K, were the Oakdale, Wisconsin mine and processing facility (“Oakdale”), Utica, Illinois mine and processing facility (“Utica”), and the currently idle Blair, Wisconsin facility (“Blair”).
As of December 31, 2024, our individually material mining properties, as determined in accordance with subpart 1300 of Regulation S-K, were the Oakdale, Wisconsin mine and processing facility (“Oakdale”), Ottawa, Illinois mine and processing facility (“Ottawa”), and the Blair, Wisconsin facility (“Blair”).
We also operate in-basin transloading facilities under long-term lease agreements in Van Hook, North Dakota, Waynesburg, Pennsylvania, and El Reno, Oklahoma. In December 2023, we Company acquired the rights to operate a unit train capable transloading terminal in Minerva, Ohio. We expect this terminal to become operational in the second quarter of 2024.
We also operate in-basin transloading facilities under long-term lease agreements in Van Hook, North Dakota, Waynesburg, Pennsylvania, and El Reno, Oklahoma. In December 2023, we acquired the rights to operate a unit train capable transloading terminal in Minerva, Ohio. In January 2024, we acquired the rights to operate a unit train capable transloading terminal in Dennison, Ohio.
The total net book value of the Blair facility real property and tangible assets as of December 31, 2023 was $15.7 million, which represents our purchase price of the facility. We began operating the Blair facility in the second quarter of 2023. Current mining at the Blair facility is excavated using conventional surface mining methods.
The total net book value of the Blair facility real property and tangible assets as of December 31, 2024 was $18.1 million. We began operating the Blair facility in the second quarter of 2023. Current mining at the Blair facility is excavated using conventional surface mining methods.
The following table summarizes our mineral reserves as of December 31, 2023: Total Saleable Reserves Proven Reserves Probable Reserves (millions of tons) Silica Sand Oakdale mine (1) 243 138 105 Utica mine (2) 127 95 32 Blair mine (3) 114 114 0 Total Reserves 484 347 137 (1) Economic evaluation for Oakdale is based on $20.00/ton average minegate pricing as of September 2021, with no escalation.
The following table summarizes our mineral reserves as of December 31, 2024: Total Saleable Reserves Proven Reserves Probable Reserves (millions of tons) Silica Sand Oakdale mine (1) 238 133 105 Ottawa mine (2) 126 94 32 Blair mine (3) 112 112 0 Total Reserves 476 339 137 (1) Economic evaluation for Oakdale is based on $20.00/ton average minegate pricing as of September 2021, with no escalation.
We lease a 56,000 square foot facility in Saskatoon, Saskatchewan, Canada where we manufacture our SmartSystems wellsite proppant storage solutions. 41 The map below shows the locations of our mine sites, rail terminals and transload facilities, manufacturing facilities and administrative facilities.
We closed our leased 56,000 square foot facility in Saskatoon, Saskatchewan, Canada where we previously manufactured our SmartSystems wellsite proppant storage solutions. We moved the manufacturing capabilities to existing space at our Oakdale facility in the United States. 39 The map below shows the locations of our mine sites, rail terminals and transload facilities, manufacturing facilities and administrative facilities.
Key assumptions and parameters relating to the mineral reserves at the Utica site are discussed in Sections 11.0 and 12.0, respectively, of the Utica TRS.
For more information on our resources and reserves, please refer to Exhibit 10.25, the Technical Report Summary for our Ottawa mine. 46 Key assumptions and parameters relating to the mineral reserves at the Ottawa site are discussed in Sections 11.0 and 12.0, respectively, of the Utica TRS.
Our Blair facility uses a surface mining technique to produce high-quality Northern White Sand. The processing plant uses natural gas, propane, and electricity to make various grades of high-quality Northern White Sand.
The site has no leased property. Royalties are paid on certain grades of silica sand in the estimated amount of $1.75/ton with certain minimum annual payments. Our Blair facility uses a surface mining technique to produce high-quality Northern White Sand. The processing plant uses natural gas, propane, and electricity to make various grades of high-quality Northern White Sand.
In addition to these currently operating facilities, we also acquired an idled mine and processing facility in New Auburn, Wisconsin as part of our acquisition of Eagle Oil and Gas Proppants Holdings, LLC, a Delaware limited liability company (“Eagle Proppants Holdings”), in 2020, which contains a higher concentration of coarser sand deposits.
Both Ohio terminals became operational in 2024. In addition to these currently operating facilities, we also own an idled mine and processing facility in New Auburn, Wisconsin, which contains a higher concentration of coarser sand deposits.
Only material that can be economically, safely, and legally extracted is contained in these ore reserve estimates. 50 Internal Controls Disclosure The modeling and analysis of our reserves has been developed by our personnel, reviewed by several levels of internal management and, in the case of the three material properties, reviewed by John T. Boyd.
Previously established modeling and analysis of our reserves has been developed by our personnel, reviewed by several levels of internal management and, in the case of the three material properties, reviewed by John T. Boyd. This section summarizes the internal control considerations for our development of estimations, including assumptions, used in resource and reserve analysis and modeling.
This section summarizes the internal control considerations for our development of estimations, including assumptions, used in resource and reserve analysis and modeling. When determining resources and reserves, as well as the differences between resources and reserves, management developed specific criteria, each of which must be met to qualify as a resource or reserve, respectively.
When determining resources and reserves, as well as the differences between resources and reserves, management developed specific criteria, each of which must be met to qualify as a resource or reserve, respectively. These criteria, such as demonstration of economic viability, repeatable geologic continuity, and meeting generally accepted quality specifications, are specific and attainable, as applicable.
These criteria, such as demonstration of economic viability, repeatable geologic continuity, and meeting generally accepted quality specifications, are specific and attainable, as applicable. Calculations using site specific criteria for the three material properties were reviewed by John T. Boyd. John T.
Calculations using site specific criteria for the three material properties were reviewed by John T. Boyd. John T.
The decrease in reserves from 2022 to 2023 is primarily attributable to excavation and mining activity in 2023. For more information on our resources and reserves, please refer to Exhibit 10.25, the Technical Report Summary for our Utica mine.
The decrease in reserves from 2023 to 2024 is primarily attributable to excavation and mining activity in 2024.
Removed
In January 2024, we acquired the rights to operate a unit train capable transloading terminal in Dennison, Ohio. We expect this terminal to become operational in the second quarter of 2024. In March 2022, acquired the Blair, Wisconsin mine and processing facility.
Added
Only material that can be economically, safely, and legally extracted is contained in these ore reserve estimates. 49 Internal Controls Disclosure The current year reported reserves have taken the previously reported amounts and subtracted excavation and mining activity to deduce the 2024 reserves.
Removed
The Blair facility has approximately 2.9 million tons of total annual processing capacity and contains an onsite, unit train capable rail terminal with access to the Class 1 Canadian National Railway. We began operating the Blair mine in the second quarter of 2023.
Added
There have been no material changes to our mining operations or economic considerations since the initial reserves were established in the TRS reports from 2021 and 2022.
Removed
All required permits are secured, and the site is operating in full compliance. Blair Wisconsin We began operating the Blair mine in the second quarter of 2023. It is an idle silica surface mine and processing plant in Blair, Wisconsin.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeNote 16 - Commitments and Contingencies - Litigation of the notes to the consolidated financial statements in this Form 10-K for the year ended December 31, 2023.
Biggest changeNote 16 - Commitments and Contingencies - Litigation of the notes to the consolidated financial statements in this Form 10-K for the year ended December 31, 2024.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeIf the workplace exposure limit is lowered significantly, we may be required to incur certain capital expenditures for equipment to reduce this exposure. We also adhere to NISA’s respiratory protection program, and ensures that workers are provided with fitted respirators and ongoing radiological monitoring.
Biggest changeWe do not expect to need to make any significant changes in operations or infrastructure to comply with the new rules. We also adhere to NISA’s respiratory protection program, and ensures that workers are provided with fitted respirators and ongoing radiological monitoring.
Mining Safety and Health Administration (“MSHA”) is the primary regulatory organization governing frac sand mining and processing. Accordingly, MSHA regulates quarries, surface mines, underground mines and the industrial mineral processing facilities associated with and located at quarries and mines.
Mining Safety and Health Administration (“MSHA”) is the primary regulatory 50 organization governing frac sand mining and processing. Accordingly, MSHA regulates quarries, surface mines, underground mines and the industrial mineral processing facilities associated with and located at quarries and mines.
The mission of MSHA is to administer the provisions of the Federal Mine Safety and Health Act of 1977 as amended by the Mine Improvement and 51 New Emergency Response (MINER) Act of 2006 and to enforce compliance with mandatory miner safety and health standards.
The mission of MSHA is to administer the provisions of the Federal Mine Safety and Health Act of 1977 as amended by the Mine Improvement and New Emergency Response (MINER) Act of 2006 and to enforce compliance with mandatory miner safety and health standards.
Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this Report. 52 PART II
Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this Report. 51 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTo date, we have not paid or declared any dividends on our common stock and there is no assurance that we will pay any cash dividends on our common stock in the future.
Biggest changeOur board of directors declared a special dividend of $0.10 per share of common stock on October 3, 2024, which was paid on October 28, 2024 to stockholders of record at the close of business on October 15, 2024. We can give no assurance that we will pay any cash dividends on our common stock in the future.
Dividends Our ability to pay dividends is governed by (i) the provisions of Delaware corporate law, (ii) our Certificate of Incorporation and Bylaws, and (iii) our ABL Credit Facility.
Dividends Our ability to pay dividends is governed by (i) the provisions of Delaware corporate law, (ii) our Certificate of Incorporation and Bylaws, and (iii) our FCB ABL Credit Facility.
The graph assumes $100 was invested on December 31, 2018, in our common stock, the Russell 3000, and the Standard and Poor’s Small Cap 600 GICS Oil & Gas Equipment & Services Sub-Industry Index. The cumulative total return assumes the reinvestment of all dividends. The information contained in this Smart Sand, Inc.
The graph assumes $100 was invested on December 31, 2019, in our common stock, the Russell 3000, and the Standard and Poor’s Small Cap 600 GICS Oil & Gas Equipment & Services Sub-Industry Index. The cumulative total return assumes the reinvestment of all dividends. The information contained in this Smart Sand, Inc.
The future payment of cash dividends on our common stock, if any, is within the discretion of our board of directors and will depend on our earnings, capital requirements, financial condition, and other relevant factors. Smart Sand, Inc.
The future payment of cash dividends on our common stock, if any, is within the discretion of our board of directors and will depend on our earnings, capital requirements, financial condition, restrictions under our FCB ABL Credit Facility and other relevant factors. Smart Sand, Inc.
Prior to that date, there was no public market for our stock. Holders of Record On March 4, 2024, there were 43,008,960 shares of our common stock outstanding, which were held by approximately 31 stockholders of record.
Prior to that date, there was no public market for our stock. Holders of Record On February 21, 2025, there were 42,876,756 shares of our common stock outstanding, which were held by approximately 31 stockholders of record.
Comparative Stock Performance Graph section shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act or the Exchange Act. 53 Unregistered Sales of Equity Securities and Use of Proceeds During the year ended December 31, 2023, no shares were sold by the Company without registration under the Securities Act of 1933.
Comparative Stock Performance Graph section shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of 52 Section 18 of the Exchange Act, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act or the Exchange Act.
Added
Unregistered Sales of Equity Securities and Use of Proceeds During the three months ended December 31, 2024, no shares were sold by the Company without registration under the Securities Act of 1933.
Added
Purchases of Equity Securities by the Issuer and Affiliated Purchasers On October 3, 2024, our board of directors approved an eighteen-month share repurchase program under which we may purchase up to $10.0 million of its ordinary shares (the “Repurchase Program”).
Added
Pursuant to the Repurchase Program, we may repurchase ordinary shares from time to time, in amounts, at prices and at such times as we deem appropriate, subject to market conditions and other considerations. We may make repurchases in the open market, privately negotiated transactions, accelerated repurchase programs or structured share repurchase programs.
Added
The Repurchase Program will be conducted in compliance with applicable legal requirements and shall be subject to market conditions and other factors. The Repurchase Program does not obligate us to acquire any particular amount of ordinary shares and the Repurchase Program may be modified or suspended at any time at our discretion.
Added
Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs October 2024 — $ — — 4,444,444 November 2024 — $ — — 4,444,444 December 2024 — $ — — 4,444,444 — $ — — At December 31, 2024, the maximum number of shares that the Company may repurchase under the current repurchase authority was 4,444,444 shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) GAAP Results of Operations Year Ended December 31, 2023 compared to the Year Ended December 31, 2022: Year Ended December 31, Change 2023 2022 Dollars Percentage (in thousands, except percentage change) Revenues: Sand sales revenue $ 283,160 $ 243,162 $ 39,998 16 % Shortfall revenue 4,304 5,010 (706) (14) % Logistics revenue 8,509 7,568 941 12 % Total revenue 295,973 255,740 40,233 16 % Cost of goods sold 254,418 226,149 28,269 13 % Gross profit 41,555 29,591 11,964 40 % Operating expenses: Salaries, benefits and payroll taxes 18,309 13,480 4,829 36 % Depreciation and amortization 2,535 2,244 291 13 % Selling, general and administrative 20,413 17,288 3,125 18 % Loss (gain) on disposal of fixed assets, net 1,802 (294) 2,096 (713) % Bad debt expense — 1 (1) (100) % Total operating expenses 43,059 32,719 10,340 32 % Operating loss (1,504) (3,128) 1,624 52 % Other (expenses) income: Interest expense, net (1,272) (1,608) 336 (21) % Other income 524 828 (304) (37) % Total other (expenses) income, net (748) (780) 32 4 % Loss before income tax benefit (2,252) (3,908) 1,656 42 % Income tax benefit (6,901) (3,205) (3,696) 115 % Net income (loss) $ 4,649 $ (703) $ 5,352 761 % Revenue Revenue was $296.0 million for the year ended December 31, 2023, during which we sold approximately 4,514,000 tons of sand.
Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022: Year Ended December 31, Change 2023 2022 Dollars Percentage (in thousands, except percentage change) Revenues: Sand revenue $ 287,479 $ 249,324 $ 38,155 15 % SmartSystems revenue 8,494 6,416 2,078 32 % Total revenue 295,973 255,740 40,233 16 % Cost of goods sold: Sand cost of goods sold 247,181 220,006 27,175 12 % SmartSystems cost of goods sold 7,237 6,143 1,094 18 % Total cost of goods sold 254,418 226,149 28,269 13 % Gross profit 41,555 29,591 11,964 40 % Operating expenses: Selling, general and administrative 38,722 30,769 7,953 26 % Depreciation and amortization 2,535 2,244 291 13 % Loss (gain) on disposal of fixed assets, net 1,802 (294) 2,096 (713) % Total operating expenses 43,059 32,719 10,340 32 % Operating income (loss) (1,504) (3,128) 1,624 (52) % Other (expenses) income: Interest expense, net (1,272) (1,608) 336 (21) % Other income 524 828 (304) (37) % Total other (expenses) income, net (748) (780) 32 (4) % Income (loss) before income tax benefit (2,252) (3,908) 1,656 (42) % Income tax expense (benefit) (6,901) (3,205) (3,696) 115 % Net income (loss) $ 4,649 $ (703) $ 5,352 (761) % Revenue Total revenue was $296.0 million for the year ended December 31, 2023 compared to $255.7 million for the year ended December 31, 2022.
Net Income (Loss) Net income was $4.6 million for year ended December 31, 2023 compared to net loss of $(0.7) million for the year ended December 31, 2022.
Net Income Net Income was $4.6 million for year ended December 31, 2023 compared to net loss of $(0.7) million for the year ended December 31, 2022.
We recognize rental revenue when the equipment is made available for the customer to use, services are provided, or other obligations in the contract are met. In the fourth quarter of 2021, we expanded our product line to begin offering sand through IPS.
We recognize revenue when the equipment is made available for the customer to use, services are provided, or other obligations in the contract are met. In the fourth quarter of 2021, we expanded our product line to begin offering sand through IPS.
Costs of Conducting Our Business The principal direct costs involved in operating our business are freight charges, which include transportation and railcar rental expenses, and production costs, which consists of labor, maintenance, utilities, equipment, excavation and depreciation of our property, plant and equipment.
Costs of Conducting Our Business The principal direct costs involved in operating our business are freight charges, which include transportation, railcar rental and transload expenses, and production costs, which consists of labor, maintenance, utilities, equipment, excavation and depreciation of our property, plant and equipment.
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, including continued investment in efficiency projects at Oakdale, Blair and Utica facilities, as well as expansion and customization of our newly acquired Ohio terminals.
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, including continued investment in efficiency projects at our Oakdale, Blair and Ottawa facilities, as well as expansion and customization of our newly acquired Ohio terminals.
We have recorded a liability of $2.2 million for uncertain tax positions included in deferred tax liabilities, long-term, net on our consolidated balance sheet as of December 31, 2023 and 2022, related to our depletion deduction methodology, and a corresponding increase to the income tax expense on our consolidated statements of operations.
We have recorded a liability of $2.2 million for uncertain tax positions included in deferred tax liabilities, long-term, net on our consolidated balance sheet as of December 31, 2024 and 2023, related to our depletion deduction methodology, and a corresponding increase to the income tax expense on our consolidated statements of operations.
We generally expect the level of drilling to correlate with long-term trends in commodity prices. Similarly, oil and natural gas production levels nationally and regionally generally tend to correlate with drilling activity. 60 SMART SAND, INC.
We generally expect the level of drilling to correlate with long-term trends in commodity prices. Similarly, oil and natural gas production levels nationally and regionally generally tend to correlate with drilling activity. 59 SMART SAND, INC.
The increase in net income is attributable to an increase in total volumes sold and higher average sale prices of our sand, which was partially offset by higher operating costs due to the opening of the Blair facility. Additionally, a larger benefit from income taxes was recorded in the current period. 62 SMART SAND, INC.
The increase in net income is attributable to an increase in total volumes sold and higher average sale prices of our sand, which was partially offset by higher operating costs due to the opening of the Blair facility. Additionally, a larger benefit from income taxes was recorded in the current period.
We believe higher demand driven by increased laterals and higher amounts of sand per well completed should lead to sand prices remaining relatively stable in 2024.
We believe higher demand driven by increased laterals and higher amounts of sand per well completed should lead to sand prices remaining relatively stable in 2025.
We have indoor wet processing facilities at our Oakdale and Utica 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 certain of the effects of this seasonality.
We have indoor wet processing facilities at our Oakdale and Ottawa plant locations that allow us to produce wet sand inventory year-round to support a portion of our dry sand processing capacity, which may reduce certain of the effects of this seasonality.
We believe that we are the only sand facility in Wisconsin that has dual served rail capabilities, which should create competition among our rail carriers and allow us to provide more competitive logistics options for our customers. 57 SMART SAND, INC.
We believe that we are the only sand facility in Wisconsin that has dual served rail capabilities, which should create competition among our rail carriers and allow us to provide more competitive logistics options for our customers.
We define Adjusted EBITDA as EBITDA, plus: (i) gain or loss on sale of fixed assets or discontinued operations; (ii) integration and transition costs associated with specified transactions; (iii) equity compensation; (iv) acquisition and development costs; (v) non-recurring cash charges related to restructuring, retention and other similar actions; (vi) earn-out, contingent consideration obligations and other acquisition and development costs; and (vii) 65 SMART SAND, INC.
We define Adjusted EBITDA as EBITDA, plus: (i) gain or loss on sale of fixed assets or discontinued operations; (ii) integration and transition costs associated with specified transactions; (iii) equity compensation; (iv) acquisition and development costs; (v) non-recurring cash charges related to restructuring, retention and other similar actions; (vi) earn-out, contingent consideration obligations and other acquisition and development costs; and (vii) non-cash charges and unusual or non-recurring charges.
Our SmartBelt conveyor is designed to work with our SmartPath transloader to directly feed sand into the blender. Our rapid deployment trailers are designed for quick setup, takedown and transportation of the entire SmartSystem, and they detach from the wellsite equipment, which allows for removal from the wellsite during operation.
Our SmartBelt conveyor is designed to work with our SmartPath wellsite proppant management system to directly feed sand into the blender. Our rapid deployment trailers are designed for quick setup, takedown and transportation of the entire SmartSystem, and they detach from the wellsite equipment, which allows for removal from the wellsite during operation.
As of December 31, 2023, we determined 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 valuation allowance against the deferred tax liabilities, long-term, net on our consolidated balance sheet in the amount of $0.9 million.
As of December 31, 2024, we determined 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 valuation allowance against the deferred tax liabilities, long-term, net on our consolidated balance sheet in the amount of $2.2 million.
Changes in the current estimate or the interest rates used for inflation or discount can have a material effect on the liability reported. In addition, due to the nature or our business, changes in mine planning can result in changes to our estimated future reclamation dates.
Changes in the current estimate or the interest rates used for inflation or discount can have a material effect on the liability reported. In addition, due to the nature or our business, changes in mine planning can result in changes to our estimated future reclamation dates. 68 SMART SAND, INC.
We now have direct access to four Class I rail lines and the ability to access all Class 1 rail lines within the United States and Canada. 58 SMART SAND, INC.
With this acquisition, we now have direct access to four Class I rail lines and the ability to access all Class 1 rail lines within the United States and Canada. 58 SMART SAND, INC.
Demand for both frac sand and our SmartSystems is influenced by the volume of oil and natural gas wells being drilled and completed, as well as the types of wells that are completed.
Demand for both frac sand and our SmartSystems is influenced by the number of oil and natural gas wells being drilled and completed, as well as the types of wells that are completed and the volume of sand being used in each well.
While our dry plants are able to process finished product volumes evenly throughout the year, our excavation and our wet sand processing activities have historically been limited to primarily non-winter months.
While our dry plants are able to process finished product volumes evenly throughout the year, our excavation and our wet sand processing activities have historically been limited to primarily non-winter months. As a 67 SMART SAND, INC.
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.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) 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.
Inventory Valuation Sand inventory is stated at the lower of cost or net realizable value using the average cost method. Costs applied to inventory include direct excavation costs, processing costs, overhead allocation, depreciation and depletion. Reserves are estimated for moisture loss and waste during production.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Inventory Valuation Sand inventory is stated at the lower of cost or net realizable value using the average cost method. Costs applied to inventory include direct excavation costs, processing costs, overhead allocation, depreciation and depletion. Reserves are estimated for moisture loss and waste during production.
The increase in gross profit for the year ended December 31, 2022 was primarily due to higher sales volumes and higher average sale prices of our sand relative to the cost to produce and deliver products to our customers.
The increase in gross profit for the year ended December 31, 2024 was primarily due to higher sand sales volumes which was partially offset by lower average sale prices of our sand relative to the cost to produce and deliver products to our customers.
We have approximately 243 million tons of proven and probable recoverable reserves with an estimated life of mine to approximately 61 years, based on current volumes. Our Oakdale facility is purpose-built to exploit the reserve profile in place and produce high-quality frac sand.
We have approximately 238 million tons of proven and probably recoverable reserves with an estimated life of mine of approximately 60 years, based on expected sales volumes. Our Oakdale facility is purpose-built to exploit the reserve profile in place and produce high-quality frac sand.
Logistics Through our transloading terminal in Van Hook, North Dakota, we provide one of the most efficient and lowest-cost sources of Northern White sand in-basin to customers operating in the Bakken Formation in the Williston Basin. In 2021, we acquired the right to operate the Waynesburg, Pennsylvania terminal.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Through our transloading terminal in Van Hook, North Dakota, we provide one of the most efficient and lowest-cost sources of Northern White sand in-basin to customers operating in the Bakken Formation in the Williston Basin. In 2021, we acquired the right to operate the Waynesburg, Pennsylvania terminal.
We also increased our production capacity with our acquisition of the Blair, Wisconsin mine and processing facility in 2022. This facility, which has approximately 2.9 million tons of total annual sand processing capacity, contains an onsite, unit train capable rail terminal with access to the Class 1 Canadian National Railway and became operational in the second quarter of 2023.
This facility, which has approximately 2.9 million tons of total annual sand processing capacity, contains an onsite, unit train capable rail terminal with access to the Class 1 Canadian National Railway and became operational in the second quarter of 2023.
For the year ended December 31, 2022, Equitable Gas Corporation, Halliburton Energy Services, Encino Energy, and Liberty Oilfield Services accounted for 22.3%, 15.4%, 14.4%, and 13.7%, respectively, of total revenue. For the year ended December 31, 2021, Equitable Gas Corporation, Halliburton Energy Services, and Liberty Oilfield Services accounted for 24.3%, 18.3%, and 14.8%, respectively, of total revenue.
For the year ended December 31, 2023, Equitable Gas Corporation and Liberty Oilfield Services accounted for 30.2% and 11.4%, respectively, of total revenue. For the year ended December 31, 2022, Equitable Gas Corporation, Halliburton Energy Services, Encino Energy, and Liberty Oilfield Services accounted for 22.3%, 15.4%, 14.4% and 13.7% respectively, of total revenue.
Revenue is generally recognized as products are delivered to customers in accordance with the contract. We generate revenue from our SmartSystems by renting equipment and providing services to our customers under contract terms tailored to meet their short-term or long-term needs with any number of SmartDepots, SmartPaths, SmartBelts or trailers they require.
We generate revenue from our SmartSystems by renting equipment and providing services to our customers under contract terms tailored to meet their short-term or long-term needs with any number of SmartDepots, SmartPaths, SmartBelts or trailers they require.
In 2023, we completed the installation of blending and cooling assets at our Utica, Illinois facility that we believe will provide new opportunities to increase our customer base in the IPS business.
In 2023, we completed the installation of blending and cooling equipment at our Ottawa, Illinois facility that we believe provides new opportunities to increase our customer base in the IPS business.
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 market our products and services to oil and natural gas exploration and production companies, oilfield service companies, and industrial manufacturers. 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.
Historically, much of the capital investment in Northern White frac sand mines was used for the development of coarser deposits in western Wisconsin, which is inconsistent with the increasing demand for finer mesh frac sand in recent years. As such, we’ve seen competitors in the Northern White frac sand market 59 SMART SAND, INC.
Historically, much of the capital investment in Northern White frac sand mines was used for the development of coarser deposits in western Wisconsin, which is inconsistent with the increasing demand for finer mesh frac sand in recent years.
The valuation allowance as of December 31, 2022 was $1.6 million. The corresponding increase to the income tax benefit on our consolidated statements of operations for the year ended December 31, 2023 was $0.7 million. 70
The valuation allowance as of December 31, 2023 was $0.9 million. The corresponding increase to the income tax benefit on our consolidated statements of operations for the year ended December 31, 2024 was $1.3 million. 69
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Utica & Peru, Illinois Our Utica facility also has a large high-quality reserve base of primarily fine-mesh sand that is contiguous to the production facility and in close proximity to our Peru transload facility located on the BNSF railway.
Ottawa & Peru, Illinois Our Ottawa facility also has a large high-quality reserve base of primarily fine-mesh sand that is contiguous to the production facility and in close proximity to our Peru transload facility located on the BNSF railway.
We produce low-cost, high quality Northern White sand, which is a premium sand used as proppant used 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 TM wellsite storage capabilities.
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 used to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells and for a variety of industrial applications.
As a consequence, we 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 overproduce wet sand to meet dry sand demand in the winter months.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) consequence, we 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 overproduce wet sand to meet dry sand demand in the winter months.
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 64 SMART SAND, INC.
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.
EBITDA and Adjusted EBITDA We define EBITDA as net income, plus: (i) depreciation, depletion and amortization expense; (ii) income tax expense (benefit); (iii) interest expense; and (iv) franchise taxes.
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; (iii) interest expense.
These performance bonds assure our performance under our reclamation plan, maintenance and restoration of public roadways. 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.
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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) reduce their capacity by shuttering or idling operations due to the shift to finer sands in hydraulic fracturing of oil and natural gas wells and due to lower cost regional sand sources that has eroded the ongoing economic viability of mines with coarser reserve deposits and inefficient mining and logistics facilities.
As such, we’ve seen competitors in the Northern White frac sand market reduce their capacity by shuttering or idling operations due to the shift to finer sands in hydraulic fracturing of oil and natural gas wells and due to lower cost regional sand sources that has eroded the ongoing economic viability of mines with coarser reserve deposits and inefficient mining and logistics facilities.
Year Ended December 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 30,991 $ 5,420 $ 32,438 Acquisition of Blair facility — (6,547) — Purchases of property, plant and equipment (23,031) (12,731) (11,220) Free cash flow $ 7,960 $ (13,858) $ 21,218 Free cash flow was $8.0 million for the year ended December 31, 2023.
Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 17,864 $ 30,991 $ 5,420 Acquisition of Blair facility — — (6,547) Purchases of property, plant and equipment (7,010) (23,031) (12,731) Free cash flow $ 10,854 $ 7,960 $ (13,858) Free cash flow was $10.9 million for the year ended December 31, 2024.
The increase in Adjusted EBITDA for the year ended December 31, 2023, as compared to the prior year, was primarily due to higher sales volumes and production costs savings, partially offset by higher freight costs. Adjusted EBITDA was $29.3 million for the year ended December 31, 2022 compared to $(30.5) million for the year ended December 31, 2021.
The increase in Adjusted EBITDA for the year ended December 31, 2023, as compared to the prior year, was primarily due to higher sales volumes and production costs savings, partially offset by higher freight costs. 65 SMART SAND, INC.
As discussed in the section entitled “Recent Developments” in this Item 7 of this Annual Report on form 10-K, we have been going through a period of substantial growth and expansion. In recent years we have added two mines, several terminals, and expanded our operations into industrial products.
As discussed in the section entitled “Recent Developments” in this Item 7 of this Annual Report on form 10-K, in recent years we have added the Blair mine and two new terminals, and expanded our operations into industrial products.
The increase was primarily due to higher volumes sold and the related increase in production costs and freight costs that accompany higher volumes. Gross Profit Gross profit was $41.6 million and $29.6 million for the years ended December 31, 2023 and December 31, 2022, respectively.
The increase was primarily due to higher volumes sold and the related increase in production costs and freight costs that accompany higher volumes. SmartSystems cost of goods sold was $7.2 million and $6.1 million, for the years ended December 31, 2023 and December 31, 2022, respectively.
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.
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 63 SMART SAND, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) under GAAP.
Through our SmartSystems offering, we have the technology, production capacity and management team to compete further in the frac sand supply chain for our customers by offering logistics services from the mine all the way to the wellsite. Our SmartSystems consist of our SmartDepot proppant storage silos, our SmartPath transloader, our SmartBelt conveyor and our rapid deployment trailer system.
Through our SmartSystems offering, we have the technology, production capacity and management team to compete further in the frac sand supply chain for our customers by offering logistics services from the mine all the way to the wellsite.
Year Ended December 31, 2023 2022 2021 (in thousands) Revenue $ 295,973 $ 255,740 $ 126,648 Cost of goods sold 254,418 226,149 140,384 Gross profit 41,555 29,591 (13,736) Depreciation, depletion, and accretion of asset retirement obligations included in cost of goods sold 25,469 25,038 24,258 Contribution margin $ 67,024 $ 54,629 $ 10,522 Contribution margin per ton $ 14.85 $ 12.61 $ 3.30 Total tons sold 4,514 4,333 3,189 Contribution margin was $67.0 million, or $14.85 per ton sold, for the year ended December 31, 2023 compared to $54.6 million, or $12.61 per ton sold, for the year ended December 31, 2022.
Year Ended December 31, 2024 2023 2022 (in thousands) Revenue $ 311,372 $ 295,973 $ 255,740 Cost of goods sold 266,549 254,418 226,149 Gross profit 44,823 41,555 29,591 Depreciation, depletion, and accretion of asset retirement obligations included in cost of goods sold 26,861 25,469 25,038 Contribution margin $ 71,684 $ 67,024 $ 54,629 Contribution margin per ton $ 13.62 $ 14.85 $ 12.61 Total tons sold 5,263 4,514 4,333 Contribution margin was $71.7 million, or $13.62 per ton sold, for the year ended December 31, 2024 compared to $67.0 million, or $14.85 per ton sold, for the year ended December 31, 2023.
Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors and commercial banks, to assess: • the financial performance of our assets without regard to the impact of financing methods, capital structure or historical cost basis of our assets; • the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities; • our ability to incur and service debt and fund capital expenditures; • our operating performance as compared to those of other companies in our industry without regard to the impact of financing methods or capital structure; and • our debt covenant compliance, as Adjusted EBITDA is a key component of critical covenants to the ABL Credit Facility.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) • the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities; • our ability to incur and service debt and fund capital expenditures; • our operating performance as compared to those of other companies in our industry without regard to the impact of financing methods or capital structure; and • our debt covenant compliance, as Adjusted EBITDA is a key component of critical covenants to the ABL Credit Facility.
Contribution margin was $54.6 million, or $12.61 per ton sold, for the year ended December 31, 2022 compared to $10.5 million, or $3.30 per ton sold, for the year ended December 31, 2021.
Contribution margin was $67.0 million, or $14.85 per ton sold, for the year ended December 31, 2023 compared to $54.6 million, or $12.61 per ton sold, for the year ended December 31, 2022.
We now serve the Appalachian Basin through three company-controlled terminals. In January 2022, we began operations at an additional unit train capable transloading terminal in Waynesburg, Pennsylvania, which we expanded in 2023.
We operate this terminal under a long-term agreement with Canadian Pacific Railway. We now 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 2023, we completed the installation of blending and cooling assets at our Utica, Illinois facility that we believe will provide new opportunities to increase our customer base in the IPS business.
In 2023, we completed the installation of blending and cooling assets at our Ottawa, Illinois facility that we believe will provide new opportunities to increase our customer base in the IPS business. We expect to continue to expand and diversify to serve the major industrial 57 SMART SAND, INC.
The year ended December 31, 2023 includes $271 of costs related to the asst acquisition of the Blair facility and $274 related to the Minerva, Ohio terminal.
The year ended December 31, 2023 includes $271 of costs related to the asst acquisition of the Blair facility and $274 related to the Minerva, Ohio terminal. _________________________ Adjusted EBITDA was $38.8 million for the year ended December 31, 2024 compared to $33.3 million for the year ended December 31, 2023.
While sales of IPS to customers were a small portion of our overall sand sales in 2022 and 2023, 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, recreation and more in 2024.
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, recreation and more in 2025.
The computation of the effective tax rate for the years ended December 31, 2023 and 2022 included modifications from the statutory rate such as income tax credits, depletion deductions, carrybacks as a result of the Coronavirus Aid, Relief and Economic Security Act, and state apportionment changes, among other items.
The computation of the effective tax rate for the years ended December 31, 2024 and 2023 included modifications from the statutory rate such as income tax credits, depletion deductions, and state taxes, NOL carrybacks and carryforwards, among other items.
The computation of the effective tax rate for the year ended December 31, 2022 and 2021 included modifications from the statutory rate such as income tax credits, depletion deductions, carrybacks as a result of the Coronavirus Aid, Relief and Economic Security Act, and state apportionment changes, among other items.
The computation of the effective tax rate for the year ended December 31, 2023 and 2022 included modifications from the statutory rate such as income tax credits, depletion deductions, NOL carrybacks and carryforwards and state income taxes, among other items.
We expect to fund these capital expenditures with existing cash, cash generated from operations, borrowings under the ABL Credit Facility or other financing sources, such as equipment finance providers. 67 SMART SAND, INC.
We expect to fund these capital expenditures with existing cash, cash generated from operations, borrowings under the FCB ABL Credit Facility or other financing sources, such as equipment finance providers. Indebtedness We have two primary debt facilities including the VFI Equipment Financing and our FCB ABL Credit Facility.
Since then, we have worked to expand and diversify our customer base to serve the major industrial markets throughout North America, including glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail and recreation. Our IPS business, while a small part of our overall sales, has continued to grow and we are investing to support this growth potential.
Since then, we have worked to expand and diversify our customer base to serve the major industrial markets throughout North America, including glass, foundry, building products, filtration, geothermal, renewables, ceramics, turf & landscape, retail and recreation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) How We Generate Revenue We generate revenue by excavating and processing frac sand, which we sell to our customers in the oil and gas industry under short and long-term contracts agreements or as spot sales at prevailing market rates.
How We Generate Revenue We generate revenue by excavating and processing frac sand, which we sell to our customers in the oil and gas industry under short and long-term contracts agreements or as spot sales at prevailing market rates. For in-basin sales, revenues also include a charge for transportation and handling services provided to customers.
Depreciation and amortization increased $0.3 million from 2023 as compared to 2022. Selling, general and administrative expenses increased from $17.3 million for the year ended December 31, 2022 to $20.4 million for the year ended December 31, 2023, driven by higher maintenance costs, royalty payments, insurance, and other costs primarily related to the addition of our Blair facility.
Selling, general and administrative expenses increased to $38.7 million for the year ended December 31, 2023, as compared to $30.8 million for the year ended December 31, 2022, primarily due to increased staffing to support our expanded operations, higher maintenance costs, royalty payments, insurance, and other costs primarily related to the addition of our Blair facility.
We directly control five in-basin transloading facilities and have access to third party transloading terminals in all operating basins. We operate a unit train capable transloading terminal in Van Hook, North Dakota to service the Bakken Formation in the Williston Basin. We operate this terminal under a long-term agreement with Canadian Pacific Railway.
We directly control five in-basin transloading facilities and have access to third party transloading terminals in 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.
Year Ended December 31, 2023 2022 2021 (in thousands) Net income (loss) $ 4,649 $ (703) $ (50,674) Depreciation, depletion and amortization 27,363 26,521 25,495 Income tax benefit (6,901) (3,205) (9,017) Interest expense 1,532 1,661 2,014 Franchise taxes 804 353 290 EBITDA $ 27,447 $ 24,627 $ (31,892) (Gain) loss on sale of fixed assets 1,802 (294) 555 Equity compensation 3,391 2,729 2,933 Royalty stock issuance — 639 — Employee retention credit — — (5,026) Acquisition and development costs (1) 545 675 28 Non-cash impairments (2) — — 2,170 Cash charges related to restructuring and retention 32 137 9 Accretion of asset retirement obligations 904 758 740 Adjusted EBITDA $ 34,121 $ 29,271 $ (30,483) (1) Represents costs incurred related to the business combinations and current development project activities.
Year Ended December 31, 2024 2023 2022 (in thousands) Net income (loss) $ 2,992 $ 4,649 $ (703) Depreciation, depletion and amortization 28,735 27,363 26,521 Income tax benefit and other taxes (2,740) (6,901) (3,205) Interest expense 1,838 1,532 1,661 EBITDA $ 30,825 $ 26,643 $ 24,274 Net loss (gain) on sale of fixed assets 1,062 1,802 (294) Equity compensation 2,855 3,391 2,729 Royalty stock issuance — — 639 Acquisition and development costs (1) 325 545 675 Bank and legal costs related to financing not closed 1,294 — — Cash charges related to restructuring and retention 149 32 137 Accretion of asset retirement obligations 996 904 758 Loss on extinguishment of debt 1,341 — — Adjusted EBITDA $ 38,847 $ 33,317 $ 28,918 (1) Represents costs incurred related to the business combinations and current development project activities.
Additionally sand prices have increased due to a shift in supply and demand, which we believe was driven by increased prices in oil and natural gas leading to increased completion activity of new oil and natural gas wells. • We had $5.0 million of contractual shortfall revenue for the year ended December 31, 2022 and $4.4 million for the year ended December 31, 2021, respectively.
Sand volumes increased by 4% from 2022 to 2023. Additionally sand prices increased in 2023 due to a shift in supply and demand, which we believe was driven by increased prices in oil and natural gas leading to increased completion activity of new oil and natural gas wells.
This capability creates efficiencies, flexibility, enhanced safety and reliability for customers. Through our SmartSystems wellsite proppant storage solutions, we offer the SmartDepot and SmartDepotXL™ silo systems, SmartPath transloader SmartBelt conveyor, and our rapid deployment trailers. Our SmartDepot silos include passive and active dust suppression technology, along with the capability of a gravity-fed operation.
Through our SmartSystems wellsite proppant storage solutions, we offer the SmartDepot and SmartDepotXL™ silo systems, the SmartBelt conveyor, the SmartPath wellsite proppant management system, and our rapid deployment trailers. The SmartDepot silos feature passive and active dust suppression technology and support gravity-fed operation.
This trend is leading to higher volumes of sand per well and the need for oil and natural gas exploration companies to manage larger volumes of sand at the wellsite.
The industry trends continue towards drilling and completing wells with longer laterals and more frac stages per lateral foot drilled. This trend is leading to higher volumes of sand per well and the need for oil and natural gas exploration companies to manage larger volumes of sand at the wellsite.
We expect the Bakken and Marcellus formations as well as the Canada markets to continue to be key markets for us and we look to expand our market share in these key areas through our current strategic initiatives. The industry trends continue towards drilling and completing wells with longer laterals and more frac stages per lateral foot drilled.
We expect the Bakken and Marcellus formations as well as the Montney and Douvernay shale basins in Canada to continue to be key markets for us and we look to expand our market share in these key areas through our current strategic initiatives.
In 2023, we completed the installation of blending and cooling assets at our Utica, Illinois facility that we believe will provide new opportunities to increase our customer base in the IPS business. We expect the demand for frac sand in 2024 to continue to be at healthy levels.
Our IPS business has continued to grow after we completed the installation of blending and cooling assets in 2023 and we believe will continue to expand this business in 2025 and beyond. We expect the demand for frac sand in 2025 to continue to be at healthy levels.
Net Loss Net loss was $(0.7) million for year ended December 31, 2022 compared to net loss of $(50.7) million for the year ended December 31, 2021.
Net Income (Loss) Net income was $3.0 million for year ended December 31, 2024 compared to net income of $4.6 million for the year ended December 31, 2023.
We expect these sites to become operational in the second quarter of 2024 and believe that they will provide us with the opportunity to sell additional sand to existing and potential customers in the Appalachian Basin. Blair Mine and Processing Facility In April 2023, our processing facility located in Blair, Wisconsin became operational.
These sites became operational in 2024 and we believe that they provide us with the opportunity to sell additional sand to existing and potential customers in the Appalachian Basin. 55 SMART SAND, INC.
We believe this mix of coarse and fine sand reserves, combined with demand for our products across a range of mesh sizes, provides us with relatively higher mining yields and lower processing costs than frac sand mines with predominantly coarse sand reserves.
With demand currently in the frac sand market being primarily for finer mesh sands, we believe our reserve mix provides us relatively higher mining yields and lower processing costs than frac sand mines with predominantly coarse sand reserves.
Minimum cash payments on these notes payable in 2024 are $1.1 million. There was $8.0 million in borrowings outstanding out our ABL Credit Facility as of December 31, 2023. The ABL facility matures on December 13, 2024. Operating Leases We use leases primarily to procure certain office space, railcars and heavy equipment as part of our operations.
There were no borrowings outstanding on our FCB ABL Credit Facility as of December 31, 2024. 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 December 31, 2024 were $24.5 million.
For in-basin sales, revenues also include a charge for transportation and handling services provided to customers. Our contracts typically contain a minimum volume purchase requirement and provide for delivery of frac sand from one of our processing facilities, transloading terminals or another location specified by our customers.
Our contracts typically contain a minimum volume purchase requirement and provide for delivery of frac sand from one of our processing facilities, transloading terminals or another location specified by our customers. Revenue is generally recognized as products are delivered to customers in accordance with the contract.
Material Cash Requirements Capital Requirements We expect 2024 capital expenditures, excluding any acquisitions, to be between $19.0 million and $23.0 million, consisting primarily of capital for efficiency projects at Oakdale, Blair and Utica facilities, as well as expansion and customization of our newly acquired Ohio terminals.
Capital Requirements We expect 2025 capital expenditures, excluding any acquisitions, to be between $13.0 million and $17.0 million, consisting primarily of capital to open new mining areas for development, efficiency projects at Oakdale, Blair and Ottawa facilities, expansion and customization of our newly acquired Ohio terminals and potential investment in one or more new terminals.
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 TM portable wellsite storage silos, SmartPath ® transloader and SmartBelt TM conveyor; (iv), access to all Class I rail lines; and (v) the industry experience of our senior management team make us as a highly attractive provider of sand and logistics services.
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 TM portable wellsite storage silos, SmartPath ® wellsite proppant management system, and SmartBelt TM conveyor; 54 SMART SAND, INC.
Beginning in 2021 and continuing throughout 2023, exploration and production companies have moved to a more disciplined approach to new drilling activity leading to less volatility in supply relative to demand and subsequently higher overall oil and natural gas prices.
Beginning in 2021 and continuing throughout 2024, exploration and production companies have been more disciplined in their drilling activity which has led to less volatility in supply and demand imbalance which has stabilized oil and natural gas prices at higher levels.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) SmartSystems reduce trucking and related fuel consumption for our customers, helping them reduce their carbon footprint in their daily operations. We have expanded our product line to offer Industrial Sand through IPS.
They detach from the wellsite equipment, allowing for removal from the wellsite during operations. We believe our SmartSystems help customers reduce trucking and related fuel consumption, reducing the carbon footprint of their daily operations. We have expanded our product line to offer Industrial Sand through IPS.
In September 2020, we acquired, all of the issued and outstanding interests in Eagle Proppants Holdings from Eagle, which included our Utica, Illinois processing facility, which has 1.6 million tons of annual sand processing capacity. In March 2022, we acquired all of the issued and outstanding interests in Hi-Crush Blair, LLC, which included our Blair, Wisconsin processing facility.
The Oakdale facility contains an onsite, unit train capable rail terminal with access to the Class 1 Canadian Pacific Railway. In September 2020, we acquired, all of the issued and outstanding interests in Eagle Proppants Holdings from Eagle, which included our Ottawa , Illinois processing facility, which has approximately 1.6 million tons of annual sand processing capacity.
We have approximately 127 million tons of proven and probable reserves, and an estimated life of mine of approximately 106 years, based on current volumes. Our owned Peru transload facility has significant logistics assets to support our Utica operations. This facility is capable of handling multiple unit trains simultaneously and provides access to operating basins in the Western United States.
We have approximately 126 million tons of proven and probable reserves, and an estimated life of mine of approximately 105 years, based on expected sales volumes. Our owned Peru transload facility has significant logistics assets to support our Ottawa operations.
The increase in logistics revenue was due to higher utilization of our SmartSystems equipment. 61 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 $254.4 million and $226.1 million, for the years ended December 31, 2023 and December 31, 2022, respectively.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Cost of Goods Sold Sand cost of goods sold was $247.2 million and $220.0 million, for the years ended December 31, 2023 and December 31, 2022, respectively.
We have increased the size of our terminal network by opening our Waynesburg, Pennsylvania transloading terminal in 2022 and expanding it in 2023, along with adding two transloading terminals in recent months in Minerva, Ohio and Dennison, Ohio.
We have increased the size of our terminal network by opening our Waynesburg, Pennsylvania transloading terminal in 2022, expanding it in 2023, and adding two transloading terminals at Minerva, Ohio and Dennison, Ohio. With these three terminals in the Appalachian Basin, we believe we are one of the premier providers of low-cost high-quality Northern White Sand into this key market.
Liquidity and Capital Resources Our primary sources of liquidity are cash flow generated from operations, availability under our ABL Credit Facility and other equipment financing sources. As of December 31, 2023, cash on hand was $6.1 million and we had $12.0 million in undrawn availability on our ABL Credit Facility. Our current ABL Credit Facility matures on December 13, 2024.
Liquidity and Capital Resources In September 2024 we refinanced the $20.0 million Former ABL Credit Facility to the new $30.0 million FCB ABL Credit Facility. Our primary sources of liquidity are cash flow generated from operations, availability under the FCB ABL Credit Facility and other equipment financing sources.
This growth and expansion reduces comparability of periods, due to increased revenue, cost of goods sold, operating costs, and capital investments. • Market Trends . In recent years, the increasing supply of sand, particularly in-basin sand, relative to demand, has led to continued volatility of frac sand prices.
This growth and expansion reduces comparability of periods, due to increased revenue, cost of goods sold, operating costs, and capital investments. • Market Trends . Beginning in the first quarter of 2022 and continuing through 2024, supply and demand fundamentals have improved and frac sand prices recovered from previous historic lows.
We believe that our SmartSystems reduce trucking and related fuel consumption for our customers, helping them reduce their carbon footprint in their daily operations. We expect to continue to capitalize on our three operating facilities logistics networks to maximize our product shipments, increase our railcar utilization and lower our transportation costs.
We believe that our SmartSystems reduce trucking and related fuel consumption for our customers, helping them reduce their carbon footprint in their daily operations.
During the year ended December 31, 2023, we did not record any impairment charges based on the analysis of our long-lived assets.
If the carrying value of our long-lived assets is less than the undiscounted cash flows, the assets are measured at fair value and an impairment is recorded if that fair value is less than the carrying value. During the year ended December 31, 2024, we did not record any impairment charges based on the analysis of our long-lived assets.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest Rate Risk The majority of our debt is financed under fixed interest rates. Borrowings under the ABL Credit Facility bear interest at a rate per annum equal to an applicable margin, plus, at our option, either a LIBOR rate or an alternate base rate (“ABR”). The applicable margin is 2.00% for LIBOR loans and 1.00% for ABR loans.
Biggest changeInterest Rate Risk The majority of our debt is financed under fixed interest rates. Borrowings under the FCB ABL Credit Facility bear interest at a rate equal to the secured overnight financing rate (“SOFR”) plus a margin of 2.75% or Prime plus a margin of 1.75%.
During the years ended December 31, 2023, 2022 and 2021, revenue, expenses, assets and liabilities transacted in Canada dollars were immaterial to the results of operations. 71
During the years ended December 31, 2024, 2023 and 2022, revenue, expenses, assets and liabilities transacted in Canada dollars were immaterial to the results of operations. 70
Foreign Currency Risk Our revenues and expenses are primarily in United States dollars; however, certain transactions are transacted in Canada dollars due to our SmartSystems manufacturing facility located in Canada.
Foreign Currency Risk Our revenues and expenses are primarily in United States dollars; however, certain transactions are transacted in Canada dollars.
There was a balance of $8.0 million our ABL Credit Facility as of December 31, 2023. We do not believe this represents a material interest rate risk.
There were no outstanding borrowings under our FCB ABL Credit Facility as of December 31, 2024. We do not believe this represents a material interest rate risk.
Removed
We do not believe that inflation has a material impact on our financial position or results of operations during periods covered by the financial statements included in this filing.

Other SND 10-K year-over-year comparisons