Smart Sand, Inc. · NASDAQ:SND
Smart Sand — Investor Presentation (May 2018)
33 slides from Smart Sand's investor presentation, May 2018
Slide 1: May 2018 Investor Presentation
May 2018 Investor Presentation May 2018
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: Key Investment Highlights
Key Investment Highlights Long-lived, Strong High-Quality Industry Reserve Base Fundamentals Focus on Logistics Safety and Advantage Environmental Stewardship Significant Strong Organic Balance Sheet Growth and Financial Potential Experienced Flexibility Management Team
Slide 5: Multi-Faceted Growth Strategy
Multi-Faceted Growth Strategy Maximize Significant Organic Growth Potential at Oakdale Focus on increasing nameplate capacity to 5.5 million tons by the end of 2Q 2018 Strong O&G industry fundamentals driving organic growth Development of Future Expansion Opportunities Hixton available for fut
Slide 6: Significant Organic Growth Potential
Significant Organic Growth Potential Oakdale Expansion Expanding to 5.5 million tons of annual nameplate capacity by the end of Q2 2018 Integrated plant design with new wet plant, for expanded capacity, and new dry plants enclosed for year-round processing Transloading Terminal (Van Hook, North
Slide 7: Mining and Production
Mining and Production
Slide 8: Northern White Operations Overview
Northern White Operations Overview Smart Sand – Overview Reserve Locations Smart Sand - pure-play, low-cost producer of high- quality Northern White raw frac sand Oakdale, WI – 1,196 acres (Monroe County, WI) The Company owns a Northern White raw frac sand mine, Hixton, WI – 959 acres 81% Finer Me
Slide 9: Oakdale Facility: High Quality Northern White Raw Frac Sand – 2016
Oakdale Facility: High Quality Northern White Raw Frac Sand – 2016 8
Slide 10: Oakdale Facility: High Quality Northern White Raw Frac Sand - Now
Oakdale Facility: High Quality Northern White Raw Frac Sand - Now Coulee C Mine 60/140 Winter Storage Pile 20/70 Winter Storage Pile Phase 2 Mine Mine Phase 1.5 Phase 1 Wet Plant Dry Plant 3 Mine Process Water Settling Pond Pond Dry Plant 1 Main office Dry Plant 2 Load Out 3 Mine Access Road Load Ou
Slide 11: Byron Transload
Byron Transload Crossing Truck Loadout Storm Water Pond Entrance Exit 10
Slide 12: 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 Basin Low Cost Structure Due to Several Key Attributes: − Low royalty rates ($0.50 per ton on 2
Slide 13: West Texas Mine Options (Permian Basin)
West Texas Mine Options (Permian Basin) 4,219 acres under lease in Winkler and Crane counties in the Permian Basin Total upfront consideration paid <$5 million 20 years leases with the option to renew for an additional 20 years Low minimum royalty Positions Smart Sand to be able to provide
Slide 14: Logistics
Logistics
Slide 15: Expansive Logistics Capabilities
Expansive Logistics Capabilities Key Logistical Advantages Highly Competitive Delivery Capabilities On-Site Rail – Eliminates significant trucking costs Class I Rail Access – Location on Canadian Pacific rail line allows access to multiple high-growth oil and gas plays and avoids interchange fee
Slide 16: Van Hook Terminal
Van Hook Terminal Location: Van Hook, ND Commenced operations in April 2018 Signed long-term take-or-pay contract with an anchor customer at “in-basin” pricing $15.5 million paid consideration Evaluating options to increase capacity Expected to result in incremental “in-basin” sales volu
Slide 17: Quickthree Solutions Acquisition
Quickthree Solutions Acquisition Quickthree Solutions – Overview Quickstand Silo Line Expected close at the end of May 2018 Manufacturer of portable “last mile” vertical frac sand storage solutions at the wellsite Our goal is to provide a total service solution to deliver sand from mine to wel
Slide 18: Industry Overview
Industry Overview
Slide 19: Industry Trends Driving Growth in Sand Demand
Industry Trends Driving Growth in Sand Demand U.S. New Well Drilling & Proppant Demand 30,000 180 Millions of Tons of Proppant New US Horizontal Wells 160 25,000 140 20,000 120 100 15,000 80 10,000 60 40 5,000 20 0 - 2013 2014 2015 2016 2017 2018E 2019E 2020E New Horizontal Wells Proppant Demand (Mi
Slide 20: Market Growth Potential
Market Growth Potential More Wells Drilled … More Stages/Well … More Proppant/Foot … More Proppant/ Well … More Proppant Demand 2014 Average 2015 Average 2016 Average 2017 Average 2018E New Horizontal Rigs Drilled 24,622 16,492 9,275 17,619 19,975 Avg. Lateral Length/Well 6,801 ft. 6,883 ft. 7,088 f
Slide 21: Growing Demand for Fine Sand
Growing Demand for Fine Sand Mesh Sizes Market Outlook for Fine Sand Proppant size is characterized by mesh size According to Kelrik LLC, a notable driver which is determined by sieving the proppant impacting demand for fine mesh sand is through mesh screens increased proppant loadings, specific
Slide 22: Financial Overview
Financial Overview
Slide 23: Summary Financials
Summary Financials Quarterly Sales Volumes Quarterly Revenue (thousands of tons) ($ in millions) 723 $43.0 $42.6 706 $39.3 653 559 531 $29.8 $25.1 (1) Q1'17A Q2'17A Q3'17A Q4'17A Q1'18A Q1'17A Q2'17A (2) Q3'17A Q4'17A Q1'18A Quarterly Production Costs & Contribution Margin/Ton Quarterly Adjusted EBI
Slide 24: Why Smart Sand?
Why Smart Sand? Expanding Oakdale to 5.5 MM annual nameplate production capacity Available capacity at Oakdale to capture near-term volume growth Long-lived, high-quality reserve base to support existing operations as well as potential future expansions High Quality On-site multi-unit train
Slide 25: Appendix
Appendix
Slide 26: Committed to Highest Corporate Standards
APPENDIX Committed to Highest Corporate Standards Management maintains close dialogue with its customers regarding the oil and gas industry’s rigorous regulatory environment Legal & ISO registered Quality System and Environmental Management System in Regulatory place Minimal environmental and
Slide 27: Income Statement
APPENDIX Income Statement For the Year ended Year ended Year ended Three months ended Dec 31, 2015 Dec 31, 2016 Dec 31, 2017 Mar 31, 2018 ($ in millions) (audited) (audited) (audited) (unaudited) (1) Revenues $47.7 $59.2 $137.2 42.6 Cost of sales 21.0 26.6 100.3 35.4 Gross profit 26.7 32.7 36.9 7.2
Slide 28: Balance Sheet
APPENDIX Balance Sheet As of Dec 31, 2015 Dec 31, 2016 Dec 31, 2017 Mar 31, 2018 ($ in millions) (audited) (audited) (audited) (unaudited) Current assets Cash and cash equivalents $3.9 $47.5 $35.2 $2.6 Accounts receivable 6.0 5.7 24.6 27.9 Inventory – ST 4.2 10.3 9.1 5.3 Prepaid expenses and other a
Slide 29: Statement of Cash Flows
APPENDIX Statement of Cash Flows For the Year ended Year ended Year ended Three months ended Dec 31, 2015 Dec 31, 2016 Dec 31, 2017 Mar 31, 2018 ($ in millions) (audited) (audited) (audited) (unaudited) Operating activities Net income (loss) $5.0 $10.4 $21.5 $1.0 Adjustments to reconcile net income
Slide 30: EBITDA Reconciliation
APPENDIX EBITDA Reconciliation Year ended December 31, ($ in thousands) 2015 2016 2017 Net income (loss) $4,990 $10,379 $21,526 Depreciation, depletion, accretion and amortization 5,318 6,445 7,300 Income tax (benefit) expense 4,129 9,394 (2,809) Interest expense 7,826 8,436 700 Franchise taxes 35 2
Slide 31: EBITDA Reconciliation
APPENDIX EBITDA Reconciliation Quarter ended ($ in thousands) 3/31/2017 6/30/2017 9/30/2017 12/31/2017 3/31/2018 Net income (loss) $969 $2,624 $7,047 $10,886 $975 Depreciation, depletion, accretion and amortization 1,667 1,693 1,756 2,184 3,160 Income tax expense (benefit) 515 1,154 1,686 (6,165) 23
Slide 32: Production Cost Reconciliation
APPENDIX Production Cost Reconciliation Year ended December 31, ($ in thousands) 2015 2016 2017 Cost of goods sold $21,003 $26,569 $100,304 Depreciation, depletion, and accretion of asset retirment obligations (4,930) (6,076) (7,289) (1) Freight charges (6,186) (7,924) (59,684) Production costs $9,8
Slide 33: Contribution Margin Reconciliation
APPENDIX Contribution Margin Reconciliation Quarter ended ($ in thousands) 3/31/2017 6/30/2017 9/30/2017 12/30/2017 3/31/2018 Revenue $25,059 $29,787 $39,329 $43,037 $42,628 Cost of goods sold 19,662 21,407 26,297 32,938 35,413 Gross profit 5,397 8,380 13,032 10,099 7,215 Depreciation, depletion, an