Slide 1: Investor Presentation – August 2023
Investor Presentation – August 2023
Slide 2: Disclaimer: Forward-Looking Statements
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 This presentation includes frac sand reserve and resource estimates based on engineering, economic and geological data assembled, analyzed and periodically reviewed by the Company and its outside consultants. However, frac sand reserve estimates are by nature imprecise a
Slide 4: Company Highlights
Company Highlights • The Right Operating Model High quality Northern White Sand mining and processing facilities located on Class 1 rail lines Oakdale, WI: 247 million tons of reserves, 5.5 million tons of annual processing capacity, unit train capable access to CP and UP rail lines Utica, IL:
Slide 5: Company Overview
Company Overview 5
Slide 6: Smart Sand’s Business Offerings
Terminal & Forward Staging ManagementGigantic Rail CapacityPremium Northern White Reserve Last Mile Logistics Wellsite Storage Solutions Smart Sand’s Business Offerings Large Finer Mesh Northern White Reserve Consistent high-quality proppant Up to approximately 10 million tons annual production capa
Slide 7: Summary Financials
1,196 1,110 1,175 1,195 1,084 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 (thousands of tons) 7 • Quarterly Adjusted EBITDA • Quarterly Sales Volumes $9.2 $11.3 $10.7 $8.4 $11.4 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 ($ in millions) (1) Includes monthly minimum / shortfall payments of $2.7 million for 3Q ‘22 (2) Incl
Slide 8: Market Overview
Market Overview 8
Slide 9: Industry Trends Continue to Support Increasing Levels of Frac Sand Demand
Industry Trends Continue to Support Increasing Levels of Frac Sand Demand 9Source: Spears & Associates 2Q 2023 Proppant Report
Slide 10: 2023 North America Proppant Demand Projected to Increase by ~5%
2023 North America Proppant Demand Projected to Increase by ~5% Source: Spears & Associates 2Q 2023 Proppant Report 10
Slide 11: Northern White Sand Market Fundamentals Remain Positive
Northern White Sand Market Fundamentals Remain Positive Note: The chart above compares sand demand to sand supply by basin. Northern White Sand supply (WI/IL/MO) is available to meet frac sand demand in basins where in-basin supply is not sufficient to meet in-basin demand Source: Spears & Associate
Slide 12: Second Largest Annual Capacity of Northern White Sand Providers
Smart Sand now has Second Largest Annual Capacity of Northern White Sand Providers in North America 12
Slide 13: The Value of Northern White Sand
The Value of Northern White Sand Rystad Energy has performed a study, commissioned by Wisconsin Industrial Sand Association (WISA), which has linked proppant type to decreased production and profitability The study was initially done in 2019 and has been updated in 2020 and 2022 to allow a data
Slide 14: The Value of Northern White Sand (continued)
The Value of Northern White Sand (continued) 14
Slide 15: The Value of Northern White Sand (continued)
The Value of Northern White Sand (continued) 15
Slide 16: Mining and Production
Mining and Production 16
Slide 17: Mining and Production Highlights
Mining and Production Highlights • Blair, WI mine began processing sand in Q2 2023 • Efficient operations at three facilities bringing total plant annual capacity to approximately 10 million tons • Direct access to four Class 1 rail lines with quality connections to the NS and CSX allows Smart Sand
Slide 18: Cost-Effective, Differentiated Process
Cost-Effective, Differentiated Process 18 On-site Mining / Excavation Conveyer Belt to On-site Wet Plant Wet Plant Cleans and Sorts Product Unit Trains Deliver Dry Sand to BasinsDry Plant Dries and Sorts Product Low-Cost Structure Due to Several Key Attributes: − Low royalty rates − Higher mining
Slide 19: Oakdale Facility: High Quality Northern White Raw Frac Sand
19 Oakdale Facility: High Quality Northern White Raw Frac Sand in an Efficient Configuration
Slide 20: Oakdale Facility: Logistics Capabilities and Rail Access
Oakdale Facility: High Quality Logistics Capabilities and Rail Access provides access to all North American Sand Markets
Slide 21: Utica Facility: Efficient Operations with Enclosed Wet Plant
Utica Facility: Efficient Operations with Enclosed Wet Plant to Allow Year-Round Mining Operations
Slide 22: Blair Facility: Opportunity to Expand into Canadian Market
Blair Facility: Efficient Operation that provides Opportunity to Expand into the Canadian Market
Slide 23: Logistics and Wellsite Solutions
Logistics and Wellsite Solutions 23
Slide 24: Key Logistical Advantages
• Key Logistical Advantages Dual Served Class 1 Rail Access at Oakdale – onsite service on Canadian Pacific rail line coupled with nearby terminal on Union Pacific rail line allows access to multiple oil and gas plays, avoids interchange fees on local short- hauls and allows opportunity to reduce
Slide 25: Van Hook Terminal
Van Hook Terminal Location: Van Hook, ND Commenced operations in April 2018 Customers recognize the value of Van Hook’s strategic location and efficient logistics solutions Approximately three million tons annual transload capacity Van Hook Terminal
Slide 26: Waynesburg Terminal
Waynesburg Terminal Location: Waynesburg, PA Commenced operations in January 2022 The unit train capable terminal has more than four miles of track, is located on Norfolk Southern’s Class 1 rail line, services the southwestern portion of the Marcellus basin Currently investing in Waynesburg
Slide 27: ESG Focus – Sand by Rail vs. In-Basin Sand
ESG Focus – Sand by Rail vs. In-Basin Sand Proppant customers have a choice: use in-basin Sand delivered by truck from the mine or Northern White Sand delivered by rail into a terminal. To deliver 1 million tons per year, ~40,000 truckloads required to deliver sand to the wellsite In-basin San
Slide 28: SmartSystem Wellsite Storage Solutions
SmartSystemTM 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 29: SmartPath Proppant Handling System
SmartPathTM Proppant Handling System SmartPathTM is a patented mobile transloading system, designed to work with bottom dump trailers, featuring a drive over conveyor, surge bin, dust collection system, on-board generator, and redundant conveyance circuits for transferring proppant into SmartDepot
Slide 30: Our SmartSystem Storage vs. the Competition
Our SmartSystemTM Storage vs. the Competition SmartSystemsTM Storage EquipmentCompetitive Options Silos: • Belts Required, No Direct To Blender Offload • Dust Can Be a Concern • Large Footprint • Not Fully Integrated Box Design: • Limited Tonnage Per Truck Resulting In Poor Optimization • Moving Equ
Slide 31: Industrial Products Solutions
Industrial Products Solutions 31
Slide 32: Industrial Product Solutions (IPS)
Industrial Product Solutions (IPS) Currently raising awareness and building our IPS brand in the marketplace Broadening our IPS service capabilities with sand cooling and custom blending as well as adding finer grade products IPS has begun to build positions in several key industrial markets i
Slide 33: Summary: Smart Sand Long Term Value Drivers
Summary: Smart Sand Long Term Value Drivers • Sustainable Operating Model Large, high quality reserve base Low-cost operations Unit Train capable connections to four Class 1 rail lines Efficient and sustainable logistics capabilities with access to all operating basins Last mile service of
Slide 34: Appendix
Appendix 34
Slide 35: Committed to Highest Corporate Standards
35 Committed to Highest Corporate Standards Safety Environmental Legal & Regulatory Management maintains close dialogue with customers regarding the oil and gas industry’s rigorous regulatory environment ISO registered Quality System and Environmental Management System in place Minimal environ
Slide 36: Contribution Margin Reconciliation
Contribution Margin Reconciliation Quarter ended ($ in thousands, except per ton amounts) 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 Revenue 68,714$ 71,592$ 73,829$ 82,350$ 74,776$ Cost of goods sold 59,743 60,163 62,657 70,713 62,087 Gross profit 8,971 11,429 11,172 11,637 12,689 Depreciati
Slide 37: EBITDA and Adjusted EBITDA Reconciliation
EBITDA and Adjusted EBITDA Reconciliation ($ in thousands) 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 Net income (loss) (90)$ 2,683$ 2,627$ (3,599)$ 6,307$ Depreciation, depletion, accretion and amortization 6,658 6,705 6,590 6,551 6,750 Income tax expense (benefit) 1,127 831 (923) 1,598 (3,
Slide 38: Free Cash Flow
Free Cash Flow Quarter ended ($ in thousands) 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 Net cash (used in) provided by operating activities (2,287)$ 10,780$ 5,589$ 5,105$ 16,068$ Purchases of property, plant and equipment (1,369) (4,398) (3,196) (4,018) (5,227) Free Cash Flow (3,656)$ 6,382