Smart Sand, Inc. · NASDAQ:SND
Smart Sand — Jefferies 2017 Energy Conference
26 slides from Smart Sand's conference presentation, Nov 28, 2017
Slide 1: Smart Sand, Inc. Jefferies 2017 Energy Conference
November 28, 2017 Smart Sand, Inc. Jefferies 2017 Energy Conference
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: 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 5: Our Strategy
Our Strategy Increasing capacity utilization and processing capacity at Oakdale Focus on increasing our capacity utilization as we expand annual processing capacity to 5.5 million tons by early 2018 Pursuing strategic long-term opportunities for capacity expansion and geographic diversification
Slide 6: Company Overview
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 81% Finer Mesh Reserve (Jackson
Slide 7: Oakdale Facility: High Quality Northern White Raw Frac Sand
Oakdale Facility: High Quality Northern White Raw Frac Sand 6
Slide 8: 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 9: 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 10: 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 Expanding to be a unit-train capable facility Expected to result in incremental sale volumes due to more competitive rail rates Oakdale Oakdale
Slide 11: 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 12: Industry Overview
INDUSTRY OVERVIEW
Slide 13: Market Growth Potential
Market Growth Potential 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 per • 17.4 HZ Wells per • 17.0
Slide 14: 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 15: 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 16: Financial Information
FINANCIAL INFORMATION
Slide 17: Summary Quarterly Sales Volumes
Summary Quarterly Sales Volumes Quarterly Sales Volumes (thousands of tons) 653 559 531 274 230 193 129 Q1'16A Q2'16A Q3'16A Q4'16A Q1'17A Q2'17A Q3'17A(1) (1) Approximately 80% of sales volume in Q3’17 were to contracted customers. Approximately 77% of sales volumes were shipped via unit train in Q
Slide 18: Summary Financials
Summary Financials Sales Volumes Revenue (thousands of tons) ($ in millions) $94.2 3,300 2,475 2,475 $59.2 1,743 $47.7 751 826 2015A (1) 2016A YTD 2017A(2) Sales Volumes Effective Capacity 2015A (3) 2016A (4) YTD 2017A (5) Production Costs Adjusted EBITDA ($ in millions) ($ in millions) $22.9 $37.8
Slide 19: Summary Financials Per Ton
Summary Financials Per Ton Revenue (1) Production costs ($ per ton) ($ per ton) $71.71 $15.40 $63.52 $54.04 $13.47 $13.13 2015A 2016A YTD 2017A 2015A 2016A YTD 2017A Adjusted EBITDA (1) ($ per ton) $45.81 $31.82 $12.45 2015A 2016A YTD 2017A On a per ton basis, our financial performance remained stro
Slide 20: Summary
Summary Significant balance sheet flexibility and liquidity − Minimal debt − Approximately $52 million in cash available to support growth initiatives Efficient management of railcar fleet − 1,250 of 1,798 leased railcars assigned to customers as of October 31, 2017 − Intend to add 625 railcars
Slide 21: Appendix
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Slide 22: Income Statement
Income Statement For the Year ended Year ended Year ended Nine m onths ended Dec 31, 2014 Dec 31, 2015 Dec 31, 2016 Sep 30, 2017 ($ in millio ns) (Audited) (Audited) (Audited) (Unaudited) Revenues (1) $68.2 $47.7 $59.2 94.2 Cost of sales 29.9 21.0 26.6 67.4 Gross profit 38.2 26.7 32.7 26.8 Operating
Slide 23: Balance Sheet
Balance Sheet As of Decem ber 31, 2014 Decem ber 31, 2015 Decem ber 31, 2016 Sep 30, 2017 ($ in millio ns) (Audited) (Audited) (Audited) (Unaudited) Current assets Cash and cash equivalents $0.8 $3.9 $46.6 $51.8 Accounts receivable 8.6 6.0 5.7 21.5 Inventory – ST 8.6 4.2 10.3 7.7 Prepaid expenses an
Slide 24: Statement of Cash Flows
Statement of Cash Flows For the Year ended Year ended Year ended Nine m onths ended Decem ber 31, 2014 Decem ber 31, 2015 Decem ber 31, 2016 Sep 30, 2017 ($ in millio ns) (Audited) (Audited) (Audited) (Unaudited) Operating activities Net income (loss) $7.6 $5.0 $10.4 $10.6 Adjustments to reconcile n
Slide 25: EBITDA Reconciliation
EBITDA Reconciliation Nine m onths ended Year ended Decem ber 31, Septem ber 30, ($ in tho usands) 2014 2015 2016 2017 Net income (loss) $7,556 $4,990 $10,379 $10,648 Depreciation, depletion, accretion and amortization 3,642 5,318 6,445 5,116 Income tax expense (benefit) 9,518 4,129 9,394 3,354 Inte
Slide 26: Production Cost Reconciliation
Production Cost Reconciliation Nine m onths ended Year ended Decem ber 31, Septem ber 30, ($ in tho usands) 2014 2015 2016 2017 Cost of goods sold $29,934 $21,003 $26,569 $67,360 Depreciation, depletion, and accretion of asset retirment obligations (3,481) (4,930) (6,076) (4,799) Freight charges (5,