Smart Sand, Inc. · NASDAQ:SND
Smart Sand — Q2 2018 Earnings Presentation
31 slides from Smart Sand's earnings presentation, Aug 30, 2018
Slide 1: Mine to Wellsite Solutions 2Q 2018 Investor Presentation
Mine to Wellsite Solutions 2Q 2018 Investor Presentation August 2018
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 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 wet and dry plants enclosed 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 - pure-play, low-cost producer of high- Oakdale, WI – 1,196 acres quality Northern White raw frac sand (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
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 years leases with the option to renew for an additional 20 years Low minimum royalty Positions Smart Sand to be able 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 $15.5 million paid consideration Evaluating options to increase capacity Expected to result in incremental in-basin sales volumes
Slide 16: Last Mile Acquisition
Last Mile Acquisition Quickthree Solutions, Inc. – Overview Quickstand Silo Line Acquisition closed in June 2018 Manufacturer of portable vertical frac sand storage solutions at the wellsite Our goal is to provide a total service solution to deliver sand from mine to wellsite for our customers
Slide 17: Industry Overview
Industry Overview
Slide 18: Industry Trends Driving Growth in Sand Demand
Industry Trends Driving Growth in Sand Demand U.S. New Well Drilling & Proppant Demand 30,000 180 160 25,000 140 20,000 120 100 15,000 80 10,000 60 40 5,000 20 New US Horizontal Wells Horizontal US New 0 - Proppant of Tons of Millions 2013 2014 2015 2016 2017 2018E 2019E 2020E New Horizontal Wells P
Slide 19: Market Growth Potential
Market Growth Potential More Wells Drilled … More Stages/Well … More Proppant/Foot … More Proppant/ Well … More Proppant Demand 2014 Average 2015 Average 2016 Average 2017 Average 2018E New Horizontal Rigs Drilled 24,622 16,492 9,275 17,619 19,975 Avg. Lateral Length/Well 6,801 ft. 6,883 ft. 7,088 f
Slide 20: Growing Demand for Fine Sand Mesh Sizes
Growing Demand for Fine Sand Mesh Sizes Market Outlook for Fine Sand Proppant size is characterized by mesh size According to Kelrik LLC, a notable driver which is determined by sieving the proppant impacting demand for fine mesh sand is through mesh screens increased proppant loadings, specific
Slide 21: Financial Overview
Financial Overview
Slide 22: Summary Financials
Summary Financials Quarterly Sales Volumes Quarterly Revenue (thousands of tons) ($ in millions) $54.4 839 706 723 $43.0 $42.6 653 $39.3 531 $29.8 (3) Q2'17A Q3'17A Q4'17A Q1'18A Q2'18A Q2'17A (1) Q3'17A (2) Q4'17A Q1'18A Q2'18A Contribution Margin/Ton Quarterly Adjusted EBITDA ($ in millions) $ 28.
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 High Quality Long-lived, high-quality reserve base to support existing operations 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 Six months ended Dec 31, 2015 Dec 31, 2016 Dec 31, 2017 June 30, 2018 ($ in millions) (audited) (audited) (audited) (unaudited) Revenues (1) $47.7 $59.2 $137.2 97.1 Cost of sales 21.0 26.6 100.3 70.1 Gross profit 26.7 32.7 36.9 27.0
Slide 27: Balance Sheet
APPENDIX Balance Sheet As of Dec 31, 2015 Dec 31, 2016 Dec 31, 2017 June 30, 2018 ($ in millions) (audited) (audited) (audited) (unaudited) Current assets Cash and cash equivalents $3.9 $47.5 $35.2 $1.7 Accounts receivable 6.0 5.7 24.6 29.0 Inventory – ST 4.2 10.3 9.1 11.5 Prepaid expenses and other
Slide 28: Statement of Cash Flows
APPENDIX Statement of Cash Flows For the Year ended Year ended Year ended Six months ended Dec 31, 2015 Dec 31, 2016 Dec 31, 2017 June 30, 2018 ($ in millions) (audited) (audited) (audited) (unaudited) Operating activities Net income (loss) $5.0 $10.4 $21.5 $11.0 Adjustments to reconcile net income
Slide 29: EBITDA Reconciliation
APPENDIX EBITDA Reconciliation Year ended December 31, ($ in thousands) 2015 2016 2017 Net income (loss) $4,990 $10,379 $21,526 Depreciation, depletion, accretion and amortization 5,318 6,445 7,300 Income tax (benefit) expense 4,129 9,394 (2,809) Interest expense 7,826 8,436 700 Franchise taxes 35 2
Slide 30: EBITDA Reconciliation (Quarterly)
APPENDIX EBITDA Reconciliation Quarter ended ($ in thousands) 6/30/2017 9/30/2017 12/31/2017 3/31/2018 6/30/2018 Net income (loss) $2,624 $7,047 $10,886 $975 $10,021 Depreciation, depletion, accretion and amortization 1,693 1,756 2,184 3,160 4,296 Income tax expense (benefit) 1,154 1,686 (6,165) 232
Slide 31: Contribution Margin Reconciliation
APPENDIX Contribution Margin Reconciliation Quarter ended ($ in thousands) 6/30/2017 9/30/2017 12/30/2017 3/31/2018 6/30/2018 Revenue $29,787 $39,329 $43,037 $42,628 $54,448 Cost of goods sold 21,407 26,297 32,938 35,413 34,678 Gross profit 8,380 13,032 10,099 7,215 19,770 Depreciation, depletion, a