Smart Sand, Inc. · NASDAQ:SND
Smart Sand — Investor Presentation (March 2017)
30 slides from Smart Sand's investor presentation, Mar 16, 2017
Slide 1: Smart Sand, Inc. March 2017 Investor Presentation
CONFIDENTIAL | March 16, 2017 Smart Sand, Inc. March 2017 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: 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: 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 6: 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 7: 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) 332mm tons (101 year life) 100mm tons Probable Reserves(1) – – Total
Slide 8: Oakdale Facility: High Quality Northern White Raw Frac Sand
Oakdale Facility: High Quality Northern White Raw Frac Sand 1,196 contiguous acres with 332 million tons of proven reserves(1) − As of December 31, 2016, we have utilized 135 acres for facilities and mining operations, only 11.3% of total acreage Integrated facility with mining, wet and dry sand
Slide 9: 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 10: 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 11: 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 12: 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 13: 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 14: 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 15: Industry Overview
Ww ay ae ql ] —_ INDUSTRY OVERVIEW
Slide 16: 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 17: Market Growth Potential Jefferies U.S. Land Framework
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
Slide 18: 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 19: 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 20: 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 21: Financial Information
FINANCIAL INFORMATION
Slide 22: Summary Financials
Summary Financials Sales Volumes Quarterly Sales Volumes (thousands of tons) (thousands of tons) 3,300 274 230 2,475 193 1,558 129 1,255 751 826 2014A(1) 2015A(2) 2016A Q1'16 A Q2'16 A Q3'16 A Q4'16 A Sales Volumes Effective Capacity Revenue and Production Costs Adjusted EBITDA ($ in millions) ($ in
Slide 23: Summary Financials Per Ton
Summary Financials Per Ton Revenue Production costs ($ per ton) ($ per ton) $71.71 $16.48 $15.40 $63.52 $13.47 $54.34 2014A 2015A 2016A 2014A 2015A 2016A Adjusted EBITDA ($ per ton) $45.81 $31.82 $26.53 2014A 2015A 2016A On a per ton basis, our financial performance has remained strong despite the e
Slide 24: Financial Highlights
Financial Highlights Significant balance sheet flexibility and liquidity post IPO and following offering − Debt free − Approximately $70 million in cash available to support growth initiatives Minimal unused railcar exposure − 1,010 of 1,540 leased railcars assigned to customers as of March 13,
Slide 25: Appendix
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Slide 26: Income Statement
Income Statement For the Year ended Year ended Year ended Dec 31, 2014 Dec 31, 2015 Dec 31, 2016 ($ in millions) (Audited) (Audited) (Audited) Revenues (1) $68.2 $47.7 $59.2 Cost of sales 29.9 21.0 26.6 Gross profit 38.2 26.7 32.7 Operating expenses Salaries, benefits and payroll taxes 5.1 5.1 7.4 D
Slide 27: Balance Sheet
Balance Sheet As of Decem ber 31, 2014 Decem ber 31, 2015 Decem ber 31, 2016 ($ in millions) (Audited) (Audited) (Audited) Current assets Cash and cash equivalents $0.8 $3.9 $46.6 Accounts receivable 8.6 6.0 5.7 Inventory – ST 8.6 4.2 10.3 Prepaid expenses and other assets 4.1 1.5 1.4 Total current
Slide 28: Statement of Cash Flows
Statement of Cash Flows For the Year ended Year ended Year ended Decem ber 31, 2014 Decem ber 31, 2015 Decem ber 31, 2016 ($ in millions) (Audited) (Audited) (Audited) Operating activities Net income (loss) $7.6 $5.0 $10.4 Adjustments to reconcile net income (loss) to net cash provided by operating
Slide 29: EBITDA Reconciliation
EBITDA Reconciliation Year ended Decem ber 31, ($ in thousands) 2014 2015 2016 Net income (loss) $7,556 $4,990 $10,379 Depreciation, depletion, accretion and amortization 3,642 5,318 6,445 Income tax expense (benefit) 9,518 4,129 9,394 Interest expense 7,832 7,826 8,436 Franchise taxes 139 35 21 EBI
Slide 30: Production Cost Reconciliation
Production Cost Reconciliation Three m onths ended Year ended Decem ber 31, Decem ber 31, ($ in thousands) 2014 2015 2016 2016 Cost of goods sold $29,934 $21,003 $26,569 $8,770 Depreciation, depletion, and accretion of asset retirment obligations (3,481) (4,930) (6,076) (1,484) Freight charges (5,76