Slide 1: 3Q 2018 Investor Presentation
Mine to Wellsite Solutions 3Q 2018 Investor Presentation November 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 and Last Mile Environmental Advantage Stewardship Mine to Wellsite Solutions Significant Strong Organic Balance Sheet Growth and Financial Potential Experienced Flexibility Mana
Slide 5: Multi-Faceted Growth Strategy
Multi-Faceted Growth Strategy Maximize Significant Organic Growth Potential at Oakdale Annual nameplate capacity increased to 5.5 million tons during 2Q 2018 Strong O&G industry fundamentals driving organic growth Development of Future Expansion Opportunities Hixton available for future develo
Slide 6: Significant Organic Growth Potential
Significant Organic Growth Potential Oakdale Expansion Expanded to 5.5 million tons of annual nameplate capacity during 2Q 2018 Integrated plant design with new enclosed wet and dry plants for year-round processing Transloading Terminal (Van Hook, North Dakota) Commenced operations in April 20
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 – fully integrated frac sand services Oakdale, WI – 1,196 acres company and low-cost producer of high-quality (Monroe County, WI) Northern White raw frac sand Hixton, WI – 959 acres 81% Finer Mesh Reserve (Jackson
Slide 9: Oakdale Facility: High Quality Northern White Raw Frac Sand
Oakdale Facility: High Quality Northern White Raw Frac Sand 8
Slide 10: Byron Transload
Byron Transload 9
Slide 11: 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 12: 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 year leases with the option to renew for an additional 20 years Low minimum royalty Provides Smart Sand with ability to provide
Slide 13: Logistics
Logistics
Slide 14: 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 15: 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 $15.5 million paid consideration Evaluating options to increase capacity Expected to result in incremental in-basin sales volumes
Slide 16: Last Mile Acquisition
Last Mile Acquisition Quickthree Solutions, Inc. – Overview Vertical Storage at the wellsite Acquisition closed in June 2018 Manufacturer of portable vertical frac sand storage solutions at the wellsite Our goal is to provide a total service solution to deliver sand from mine to wellsite for o
Slide 17: Industry Overview
Industry Overview
Slide 18: Industry Trends Driving Growth in Sand Demand
Industry Trends Driving Growth in Sand Demand U.S. New Well Drilling & Proppant Demand 30,000 180 Millions of Tons of Proppant New US Horizontal Wells 160 25,000 140 20,000 120 100 15,000 80 10,000 60 40 5,000 20 0 - 2013 2014 2015 2016 2017 2018E 2019E 2020E New Horizontal Wells Proppant Demand (Mi
Slide 19: Market Growth Potential
Market Growth Potential More Wells Drilled … More Stages/Well … More Proppant/Foot … More Proppant/ Well … More Proppant Demand 2014 Average 2015 Average 2016 Average 2017 Average 2018E New Horizontal Rigs Drilled 24,622 16,492 9,275 17,619 19,975 Avg. Lateral Length/Well 6,801 ft. 6,883 ft. 7,088 f
Slide 20: Growing Demand for Fine Sand
Growing Demand for Fine Sand Mesh Sizes Market Outlook for Fine Sand Proppant size is characterized by mesh size According to Kelrik LLC, a notable driver which is determined by sieving the proppant impacting demand for fine mesh sand is through mesh screens increased proppant loadings, specific
Slide 21: Financial Overview
Financial Overview
Slide 22: Summary Financials
Summary Financials Quarterly Sales Volumes Quarterly Revenue (thousands of tons) ($ in millions) $63.1 839 823 $54.4 706 723 653 $43.0 $42.6 $39.3 (1) Q3'17A Q4'17A Q1'18A Q2'18A Q3'18A Q3'17A Q4'17A Q1'18A Q2'18A (2) Q3'18A (3) Contribution Margin/Ton Quarterly Adjusted EBITDA ($ in millions) $ 32.
Slide 23: Why Smart Sand?
Why Smart Sand? Expanded Oakdale to 5.5 million tons of annual nameplate processing capacity in 2Q 2018 Available capacity at Oakdale to capture near-term volume growth Long-lived, high-quality reserve base to support existing operations High Quality as well as potential future expansions Core
Slide 24: Appendix
Appendix
Slide 25: 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 26: Income Statement
APPENDIX Income Statement For the Year ended Year ended Year ended Nine m onths ended Dec 31, 2015 Dec 31, 2016 Dec 31, 2017 Septem ber 30, 2018 ($ in millio ns) (audited) (audited) (audited) (unaudited) Revenues (1) $47.7 $59.2 $137.2 160.2 Cost of sales 21.0 26.6 100.3 110.7 Gross profit 26.7 32.7
Slide 27: Balance Sheet
APPENDIX Balance Sheet Dec 31, 2015 Dec 31, 2016 As of Dec 31, 2017 Sep 30, 2018 ($ in millio ns) (audited) (audited) (audited) (unaudited) Current assets Cash and cash equivalents $3.9 $47.5 $35.2 $1.2 Accounts receivable 6.0 5.7 24.6 31.1 Inventory – ST 4.2 10.3 9.1 16.4 Prepaid expenses and other
Slide 28: Statement of Cash Flows
APPENDIX Statement of Cash Flows Year ended Year ended Year ended Nine m onths ended Dec 31, 2015 Dec 31, 2016 Dec 31, 2017 Septem ber 30, 2018 ($ in millio ns) (audited) (audited) (audited) (unaudited) Operating activities Net income (loss) $5.0 $10.4 $21.5 $23.1 Adjustments to reconcile net income
Slide 29: EBITDA Reconciliation
APPENDIX EBITDA Reconciliation Year ended Decem ber 31, ($ in tho usands) 2015 2016 2017 Net income (loss) $4,990 $10,379 $21,526 Depreciation, depletion, accretion and amortization 5,318 6,445 7,300 Income tax (benefit) expense 4,129 9,394 (2,809) Interest expense 7,826 8,436 700 Franchise taxes 35
Slide 30: EBITDA Reconciliation
APPENDIX EBITDA Reconciliation Quarter ended ($ in tho usands) 9/30/2017 12/31/2017 3/31/2018 6/30/2018 9/30/2018 Net income (loss) $7,047 $10,886 $975 $10,021 $12,125 Depreciation, depletion, accretion and amortization 1,756 2,184 3,160 4,296 4,929 Income tax expense (benefit) 1,686 (6,165) 232 2,4
Slide 31: Contribution Margin Reconciliation
APPENDIX Contribution Margin Reconciliation Quarter ended ($ in tho usands) 9/30/2017 12/30/2017 3/31/2018 6/30/2018 9/30/2018 Revenue $39,329 $43,037 $42,628 $54,448 $63,146 Cost of goods sold 26,297 32,938 35,413 34,678 40,595 Gross profit 13,032 10,099 7,215 19,770 22,551 Depreciation, depletion,