Smart Sand, Inc. · NASDAQ:SND
Smart Sand — Houlihan Lokey 2017 Global Industrials Conference
31 slides from Smart Sand's conference presentation, May 18, 2017
Slide 1: Smart Sand, Inc.
CONFIDENTIAL | May 18, 2017 Smart Sand, Inc. Houlihan Lokey 2017 Global Industrials 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: 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) s
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 – Rail Access Served by two Class I rail lines Access to one Class I rail line 332mm tons (60.4
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 pro
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 per
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 plays
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 Expanding to be a unit-train capable facility by end of Q3 2017 Expected to result in incremental sale volumes due to more competitive rail rates Near-t
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 proven
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 impac
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 Tak
Slide 15: Industry Overview
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
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 Wells
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 varies widely C
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, specifically
Slide 21: Financial Information
FINANCIAL INFORMATION
Slide 22: Summary Financials
Summary Financials Sales Volumes Revenue (thousands of tons) ($ in millions) 3,300 $59.2 2,475 $47.7 $25.1 751 826 825 559 2015A (1) 2016A Q1 2017A (2) (3) (4) Sales Volumes Effective Capacity 2015A 2016A Q1 2017A Production Costs Adjusted EBITDA ($ in millions) ($ in millions) $12.7 $37.8 $10.1 $8.
Slide 23: Summary Financials Per Ton
Summary Financials Per Ton Revenue (1) Production costs ($ per ton) ($ per ton) $71.71 $15.84 $63.52 $15.40 $44.87 $13.47 2015A 2016A Q1 2017A 2015A 2016A Q1 2017A Adjusted EBITDA (1) ($ per ton) $45.81 $31.82 $6.64 2015A 2016A Q1 2017A On a per ton basis, our financial performance remained strong d
Slide 24: Summary Quarterly Sales Volumes
Summary Quarterly Sales Volumes Quarterly Sales Volumes (thousands of tons) 559 274 230 193 129 Q1'16A Q2'16A Q3'16A Q4'16A Q1'17A 23
Slide 25: Financial Highlights
Financial Highlights Significant balance sheet flexibility and liquidity post IPO and February 2017 equity offering − Minimal debt − Approximately $70 million in cash available to support growth initiatives Minimal unused railcar exposure − 1,410 of 1,540 leased railcars assigned to customers as of
Slide 26: Appendix
att ee ti a 4 oh APPENDIX
Slide 27: Income Statement
Income Statement For the Year ended Year ended Year ended Three m onths ended Dec 31, 2014 Dec 31, 2015 Dec 31, 2016 Mar 31, 2017 ($ in millio ns) (Audited) (Audited) (Audited) (Unaudited) Revenues (1) $68.2 $47.7 $59.2 25.1 Cost of sales 29.9 21.0 26.6 19.7 Gross profit 38.2 26.7 32.7 5.4 Operating
Slide 28: Balance Sheet
Balance Sheet As of Decem ber 31, 2014 Decem ber 31, 2015 Decem ber 31, 2016 March 31, 2017 ($ in millio ns) (Audited) (Audited) (Audited) (Unaudited) Current assets Cash and cash equivalents $0.8 $3.9 $46.6 $73.6 Accounts receivable 8.6 6.0 5.7 10.8 Inventory – ST 8.6 4.2 10.3 9.1 Prepaid expenses
Slide 29: Statement of Cash Flows
Statement of Cash Flows For the Year ended Year ended Year ended Three m onths ended Decem ber 31, 2014 Decem ber 31, 2015 Decem ber 31, 2016 March 31, 2017 ($ in millions) (Audited) (Audited) (Audited) (Unaudited) Operating activities Net income (loss) $7.6 $5.0 $10.4 $1.0 Adjustments to reconcile
Slide 30: EBITDA Reconciliation
EBITDA Reconciliation Three m onths Year ended Decem ber 31, ended March 31, ($ in tho usands) 2014 2015 2016 2017 Net income (loss) $7,556 $4,990 $10,379 $969 Depreciation, depletion, accretion and amortization 3,642 5,318 6,445 1,667 Income tax expense (benefit) 9,518 4,129 9,394 515 Interest expe
Slide 31: Production Cost Reconciliation
Production Cost Reconciliation Three m onths ended Year ended Decem ber 31, March 31, ($ in thousands) 2014 2015 2016 2017 Cost of goods sold $29,934 $21,003 $26,569 $19,662 Depreciation, depletion, and accretion of asset retirment obligations (3,481) (4,930) (6,076) (1,579) Freight charges (5,763)
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