Smart Sand, Inc. · NASDAQ:SND
Smart Sand — Credit Suisse 2017 Energy Summit
32 slides from Smart Sand's conference presentation, Feb 16, 2017
Slide 1: Smart Sand, Inc. Credit Suisse 2017 Energy Summit
CONFIDENTIAL | February 16, 2017 Smart Sand, Inc. Credit Suisse 2017 Energy Summit
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the federal securities laws. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words “believe,” “expect,” “anticipate
Slide 3: Disclaimer (cont'd)
Disclaimer (cont’d) Reserves Mineral resources and reserves are typically classified by confidence (reliability) levels based on the level of exploration, consistency and assurance of geologic knowledge of the deposit. This classification system considers different levels of geoscientific knowledge
Slide 4: Disclaimer (cont'd)
Disclaimer (cont’d) Industry and Market Data This presentation has been prepared by the Company and includes market data and other statistical information from third-party sources, including independent industry publications, or other published independent sources. Although the Company believes thes
Slide 5: Management Presenters
Management Presenters Lee Beckelman, CFO CFO and EVP of Hilcorp Energy Company from December 2009 until February 2014 CFO and EVP of Price Gregory Services Inc. from February 2008 to October 2009 Also served in various positions at Hanover Compressor Company B.B.A. in Finance from the Univer
Slide 6: Smart Sand Key Highlights
Smart Sand Key Highlights Long-lived, strategically located, high-quality reserve base Intrinsic logistics advantage Significant organic growth potential Focus on safety and environmental stewardship Experienced management team Strong industry fundamentals Strong balance sheet and financial flexibil
Slide 7: Smart Sand Company Overview
Smart Sand Company Overview Company Overview Reserve Locations Smart Sand is a pure-play, low-cost producer of high-quality Oakdale, WI – 1,196 acres Northern White raw frac sand (Monroe County, WI) The Company owns and operates a Northern White raw frac Hixton, WI – 959 acres (Jackson County, WI)
Slide 8: Summary of Smart Sand's Strategic Assets
Summary of Smart Sand’s Strategic Assets Oakdale (Existing Operation) Hixton (Potential Future Development) Location Monroe County, WI Jackson County, WI Mine – Processing Facility – Rail Loading Facility – Proven Reserves(1) 244mm tons (73 year life) 100mm tons Probable Reserves(1) 92mm tons
Slide 9: Oakdale Facility: High Quality Northern White Raw Frac Sand
Oakdale Facility: High Quality Northern White Raw Frac Sand 1,196 contiguous acres with 244 million tons of proven reserves and 92 million tons of probable reserves(1) − As of November 30, 2016, we have utilized 135 acres for facilities and mining operations, only 11.3% of total acreage Integrat
Slide 10: Cost-Effective, Differentiated Process
Cost-Effective, Differentiated Process Onsite Mining / Excavation Conveyer Belt to Onsite Wet Plant Wet Plant Cleans and Sorts Dry Plant Dries and Sorts Product Unit Trains Deliver Dry Sand to Basin Low cost operating structure results from a number of key attributes: − Low royalty rates ($0.50 pe
Slide 11: Expansive Logistics Capabilities
Expansive Logistics Capabilities Key Logistical Advantages Highly Competitive Delivery Capabilities On-site rail – eliminates trucking to a rail load-out facility and associated costs Class I access – current location on Canadian Pacific rail line provides direct access to multiple high-growth p
Slide 12: Significant Organic Growth Potential
Significant Organic Growth Potential UP Rail Siding (Byron, WI) Commenced operations in June 2016 Dual-serve rail origination capability at Oakdale Ability to expand into a unit train capable facility Expected to result in incremental sale volumes due to more competitive rail rates Near-term
Slide 13: Hixton Facility Opportunity
Hixton Facility Opportunity Hixton Site Highlights Hixton Reserve Mix In addition to our Oakdale facility, we own a second site comprising 959 acres in Jackson County, Wisconsin 100 Mesh situated adjacent to a Class I rail line, the Canadian 28% National Site consists of ~100 million tons of pro
Slide 14: Committed to Highest Corporate Standards
Committed to Highest Corporate Standards Management maintains close dialogue with its customers regarding the oil and gas industry’s rigorous regulatory environment Legal & ISO registered Quality System and Environmental Management System in Regulatory place Minimal environmental and community
Slide 15: Our Strategy
Our Strategy Focusing on increasing capacity utilization and processing capacity Continue to position ourselves as a pure play producer of high-quality Northern White raw frac sand Continue to evaluate economically attractive facility enhancement opportunities Optimizing logistics infrastructure
Slide 16: Industry Overview
INDUSTRY OVERVIEW
Slide 17: Industry Trends Driving Growth in Sand Demand
Industry Trends Driving Growth in Sand Demand Average Active U.S. Rig Count U.S. Horizontal vs. Vertical Well Mix 2,000 100% 30000 1,862 80% 37% 37% 38% 40% 41% 25000 1,500 1,762 49% 44% 1,180 55% 20000 983 1,079 60% 870 1,000 708 15000 40% 63% 63% 62% 60% 59% 10000 500 51% 56% 20% 45% 511 5000 0 –
Slide 18: Market Growth Potential
Market Growth Potential Jefferies U.S. Land Framework 2016 Average 2017 Average 2018 Average 2014 Peak Rig Count • 484 (-48% y/y) •t 825 (+70% y/y) •t 1,120 (+36% y/y) t • 1,789 Ave Rigs % HZ Rigs • 83% (+344 bps y/y) • 82% (-35 bps y/y) • 82% (↔ y/y) • 71% Horizontal s s s Ave. Rig • 17.3 HZ Wells
Slide 19: Proppant Industry Outlook
Proppant Industry Outlook Total Market Proppant Demand 25,000 23,674 140 125 20,236 120 113 20,000 Millions of tons of Proppant 16,860 100 New US Horizontal Wells 16,029 85 15,755 15,000 80 12,656 65 74 10,520 60 10,000 58 8,169 54 40 5,000 36 20 0 - 2013 2014 2015 2016 2017 2018 2019 2020 New Hz We
Slide 20: Raw Sand Established as Proppant of Choice
Raw Sand Established as Proppant of Choice Comparison of Key Proppant Characteristics Brown Raw Frac Sand Northern White Raw Frac Sand Resin-coated Ceramics Product and Natural resource Natural resource Raw frac sand substrate with Manufactured product Characteristics Quality of sand varie
Slide 21: Growing Demand for Fine Sand
Growing Demand for Fine Sand Mesh Sizes Market Outlook for Fine Sand Proppant size is characterized by mesh size which is According to Kelrik LLC, a notable driver impacting determined by sieving the proppant through mesh demand for fine mesh sand is increased proppant screens loadings, specific
Slide 22: Financial Information
FINANCIAL INFORMATION
Slide 23: Summary Financials
Summary Financials Sales Volumes Quarterly Sales Volumes (thousands of tons) (thousands of tons) 274 (3) 2,475 2,475 230 193 1,558 1,255 129 751 825 2014A(1) 2015A(2) YTD 2016 Q1'16 A Q2'16 A Q3'16 A Q4'16 E Sales Volumes Effective Capacity Revenue and Production Costs Adjusted EBITDA ($ in millions
Slide 24: Summary Financials Per Ton
Summary Financials Per Ton Revenue Production costs ($ per ton) ($ per ton) $63.52 $16.48 $15.00 $54.34 $13.47 $39.87 (1) 2014A 2015A YTD 2016 2014A 2015A YTD 2016 (1) Adjusted EBITDA ($ per ton) $31.82 $26.53 $19.89 2014A 2015A YTD 2016 (1) On a per ton basis, our financial performance has remained
Slide 25: Financial Highlights
Financial Highlights Significant balance sheet flexibility and liquidity post IPO and following offering − Debt free − Approximately $70 million in cash available to support growth initiatives Minimal unused railcar exposure − 1,010 of 1,217 leased railcars assigned to customers as of January 26
Slide 26: Smart Sand Key Highlights
Smart Sand Key Highlights Long-lived, strategically located, high-quality reserve base Intrinsic logistics advantage Significant organic growth potential Focus on safety and environmental stewardship Experienced management team Strong industry fundamentals Strong balance sheet and financial flexibil
Slide 27: Appendix
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Slide 28: Income Statement
Income Statement For the Year ended Year ended 9 m onths ended Dec 31, 2014 Dec 31, 2015 Septem ber 30, 2016 ($ in millio ns) (Audited) (Audited) (Unaudited) Revenues (1) $68.2 $47.7 $29.8 Cost of sales 29.9 21.0 17.8 Gross profit 38.2 26.7 12.0 Operating expenses Salaries, benefits and payroll taxe
Slide 29: Balance Sheet
Balance Sheet As of Decem ber 31, 2014 Decem ber 31, 2015 Septem ber 30, 2016 ($ in millio ns) (Audited) (Audited) (Unaudited) Current assets Cash and cash equivalents $0.8 $3.9 $0.7 Accounts receivable 8.6 6.0 2.8 Inventory – ST 8.6 4.2 6.2 Prepaid expenses and other assets 4.1 1.5 1.3 Total curren
Slide 30: Statement of Cash Flows
Statement of Cash Flows For the Year ended Year ended 9 m onths ended Decem ber 31, 2014 Decem ber 31, 2015 Septem ber 30, 2016 ($ in millions) (Audited) (Audited) (Unaudited) Operating activities Net income (loss) $7.6 $5.0 ($2.1) Adjustments to reconcile net income (loss) to net cash provided by o
Slide 31: EBITDA Reconciliation
EBITDA Reconciliation Year ended Decem ber 31, 9 m onths ended Septem ber 30, ($ in tho usands) 2014 2015 2015 2016 LTM Septem ber 30, 2016 Net income (loss) $7,556 $4,990 $2,725 ($2,062) $2,094 Depreciation, depletion, accretion and amortization 3,642 5,318 3,682 4,821 6,185 Income tax expense (ben
Slide 32: Production Cost Reconciliation
Production Cost Reconciliation Year ended Decem ber 31, 9 m onths ended Septem ber 30, ($ in tho usands) 2014 2015 2015 2016 Cost of goods sold $29,934 $21,003 $17,136 $17,799 Depreciation, depletion, and accretion of asset retirment obligations (3,481) (4,930) (3,484) (4,591) Freight charges (5,763