Smart Sand, Inc. · NASDAQ:SND
Smart Sand — Investor Presentation (May 2020)
27 slides from Smart Sand's investor presentation, May 2020
Slide 1: May 2020 Investor Presentation
May 2020 Investor Presentation
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: Company Highlights
Company Highlights The Right Operating Model ▪ Oakdale is one of the largest single operating Northern White raw frac mines in United States ▪ 300+ million tons of high quality fine mesh reserves with 5.5 million tons current operating capacity ▪ 14+ miles of rail track servicing Oakdale from two Cl
Slide 5: Vertical Integration – A Key Differentiator
Vertical Integration – A Key Differentiator Smart Sand’s Business Offerings Premium Northern White Reserve Gigantic Rail Capacity Terminal & Forward Staging Management Last Mile Logistics Wellsite Storage Solutions Large Finer Mesh Northern White Reserve Dual-served (CP & UP) Planning ahead reduces
Slide 6: Summary Financials
Summary Financials Quarterly Sales Volumes Quarterly Revenue (thousands of tons) ($ in millions) 741 757 $67.9 $65.7 648 611 $51.8 $47.7 $47.5 462 Q1'19A Q2'19A Q3'19A Q4'19A Q1'20A Q1'19A(1) Q2'19A (2) Q3'19A (3) Q4'19A (4) Q1'20A(5) Contribution Margin/Ton Quarterly Adjusted EBITDA ($ in millions)
Slide 7: Market Update
Market Update ▪ E&Ps have announced dramatic decreases to capital spending for 2020, which in some cases will be down more than 40% from 2019 levels ▪ In response to this abrupt slowdown in completion activity from our customers, we have taken the following steps to manage through this period: ▪ Red
Slide 8: Insiders own ~50% of Smart Sand Equity
Insiders own ~50% of Smart Sand Equity % Equity Ownership of SND 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Clearlake Capital Partners II Charles E. Young, CEO Other Officers & Directors (Master), L.P. Source: Smart Sand proxy statement 7
Slide 9: Industry Overview
Industry Overview 8
Slide 10: Industry Trends Continue to Support Increasing Use of Frac Sand per Well
Industry Trends Continue to Support Increasing Use of Frac Sand per Well Source: Spears and Associates 1Q 2020 Proppant Market Report. 9
Slide 11: Industry Trends Continue to Support Increasing Use of Frac Sand per Well
Industry Trends Continue to Support Increasing Use of Frac Sand per Well Lateral lengths continue to get longer Source: Spears and Associates 1Q 2020 Proppant Market Report. 10
Slide 12: Finer Sand is the Standard
Finer Sand is the Standard Mesh Sizes Market Outlook for Fine Sand ◼ Proppant size is characterized by mesh size, ◼ According to Kelrik LLC, a notable driver which is determined by sieving the proppant impacting demand for fine mesh sand is through mesh screens increased proppant loadings, specifica
Slide 13: Company Overview
Company Overview 12
Slide 14: Smart Sand, Inc. (NASDAQ: SND)
Smart Sand, Inc. (NASDAQ: SND) Overview Reserve Locations Oakdale, WI – 1,256 acres (Monroe County, WI) • Fully integrated provider of high quality Hixton, WI – 959 acres 81% Finer Mesh Reserve Northern White frac sand (Jackson County, WI) (40/70, 100 mesh) • Large fine mesh (40/70 and 100 Mesh) Nor
Slide 15: Mining and Production
Mining and Production 14
Slide 16: Cost-Effective, Differentiated Process
Cost-Effective, Differentiated Process On-site Mining / Excavation Conveyer Belt to On-site Wet Plant Wet Plant Cleans and Sorts Product Dry Plant Dries and Sorts Product Unit Trains Deliver Dry Sand to Basins ◼ Low Cost Structure Due to Several Key Attributes: − Low royalty rates ($0.50 per ton sol
Slide 17: Oakdale Facility: High Quality Northern White Raw Frac Sand in an Efficient Configuration
Oakdale Facility: High Quality Northern White Raw Frac Sand in an Efficient Configuration 16
Slide 18: Logistics and Wellsite Solutions
Logistics and Wellsite Solutions 17
Slide 19: Expansive Logistics Capabilities
Expansive Logistics Capabilities Key Logistical Advantages Highly Competitive Delivery Capabilities ◼ Dual Served Class I Rail Access – onsite service on Canadian Pacific rail line coupled with nearby terminal on Union Pacific rail line Van Hook allows access to multiple oil and gas plays, avoids in
Slide 20: Van Hook Terminal
Van Hook Terminal ◼ Location: Van Hook, ND ◼ Commenced operations in April 2018$15.5 million paid consideration ◼ We shipped 56% of our volumes in Q12020 through this terminal as customers recognized the value of Van Hook’s strategic location and efficient logistics solutions Van Hook Terminal 19
Slide 21: SmartSystems Wellsite Storage Solutions Features
SmartSystemsTM Wellsite Storage Solutions Features • Transported using specialized trailer for unassisted setup in five minutes. • Tri-axle trailer design with reinforced steel frame and remote control operation. • Direct to blender delivery, controls dust, stops and starts proppant flow. • Passive
Slide 22: Our SmartSystems Storage vs. the Competition
Our SmartSystemsTM Storage vs. the Competition Competitive Options SmartSystemsTM Storage Equipment Smart Sand: Silos: • Multiple Size Options With Custom • Belts Required, No Direct To Configurations Blender Offload • Engineered and Designed Specifically • Dust Can Be a Concern For Sand Storage on
Slide 23: Appendix
Appendix 22
Slide 24: Committed to Highest Corporate Standards
Committed to Highest Corporate Standards ◼ Management maintains close dialogue with customers regarding the oil and gas industry’s rigorous regulatory environment Legal & ◼ ISO registered Quality System and Environmental Management System in Regulatory place ◼ Minimal environmental and community imp
Slide 25: EBITDA Reconciliation
EBITDA Reconciliation Year ended December 31, ($ in thousands) 2015 2016 2017 2018 2019 Net income (loss) $4,990 $10,379 $21,526 $18,688 $31,623 Depreciation, depletion, accretion and amortization 5,318 6,445 7,300 18,165 27,135 Income tax (benefit) expense 4,129 9,394 (2,809) 5,122 7,809 Interest e
Slide 26: EBITDA Reconciliation
EBITDA Reconciliation Quarter ended ($ in thousands) 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 Net income (loss) $4,033 $14,276 $10,887 $2,388 ($84) Depreciation, depletion, accretion and amortization 6,303 6,590 6,992 7,250 5,487 Income tax expense (benefit) 974 3,973 2,608 294 165 Interes
Slide 27: Contribution Margin Reconciliation
Contribution Margin Reconciliation Quarter ended ($ in thousands) 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 Revenue $51,775 $67,941 $65,690 $47,667 $47,488 Cost of goods sold 40,605 43,068 38,555 29,793 41,089 Gross profit 11,170 24,873 27,135 17,874 6,399 Depreciation, depletion, and accre