Slide 1: Barclays Presentation
September 2020 Barclays 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: Company Highlights
Company Highlights The Right Operating Model ▪ Oakdale is one of the largest single operating Northern White raw frac mines in United States ▪ 300+ million tons of high quality fine mesh reserves with 5.5 million tons current operating capacity ▪ 14+ miles of rail track servicing Oakdale from two Cl
Slide 5: Vertical Integration – A Key Differentiator
Vertical Integration – A Key Differentiator Smart Sand’s Business Offerings Premium Northern White Reserve Gigantic Rail Capacity Terminal & Forward Staging Management Last Mile Logistics Wellsite Storage Solutions Large Finer Mesh Northern White Reserve Dual-served (CP & UP) Planning ahead reduces
Slide 6: Summary Financials
Summary Financials Quarterly Sales Volumes Quarterly Revenue (thousands of tons) ($ in millions) 741 757 $67.9 $65.7 611 $47.7 $47.5 462 $26.1 208 Q2'19A Q3'19A Q4'19A Q1'20A Q2'20A Q2'19A(1) Q3'19A (2) Q4'19A (3) Q1'20A (4) Q2'20A(5) Contribution Margin/Ton Quarterly Adjusted EBITDA ($ in millions)
Slide 7: Market Update
Market Update ▪ E&P spending dropped 50-75% in the second quarter of 2020 and is expected to continue to be at low levels for the remainder of 2020 ▪ However, we are seeing some improvement in market activity from second quarter levels, but activity remains depressed relative to the beginning of the
Slide 8: The Value of Northern White Sand
The Value of Northern White Sand ▪ A recent study by Rystad Energy has linked proppant type to decreased production and profitability – while local sand has been cheaper to deliver to the wellsite than northern white sand, the loss in cash flow from lower production as a result of using the inferior
Slide 9: The Value of Northern White Sand (continued)
The Value of Northern White Sand (continued) 8
Slide 10: Insiders own ~50% of Smart Sand Equity
Insiders own ~50% of Smart Sand Equity % Equity Ownership of SND 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Clearlake Capital Partners II Charles E. Young, CEO Other Officers & Directors (Master), L.P. Source: Smart Sand proxy statement 9
Slide 11: Industry Overview
Industry Overview 10
Slide 12: Industry Trends Continue to Support Increasing Use of Frac Sand per Well
Industry Trends Continue to Support Increasing Use of Frac Sand per Well Source: Spears and Associates 2Q 2020 Proppant Market Report. 11
Slide 13: Industry Trends Continue to Support Increasing Use of Frac Sand per Well
Industry Trends Continue to Support Increasing Use of Frac Sand per Well Lateral lengths continue to get longer Source: Spears and Associates 2Q 2020 Proppant Market Report. 12
Slide 14: Company Overview
Company Overview 13
Slide 15: Smart Sand, Inc. (NASDAQ: SND)
Smart Sand, Inc. (NASDAQ: SND) Overview Reserve Locations Oakdale, WI – 1,256 acres (Monroe County, WI) • Fully integrated provider of high quality Hixton, WI – 959 acres 81% Finer Mesh Reserve Northern White frac sand (Jackson County, WI) (40/70, 100 mesh) • Large fine mesh (40/70 and 100 Mesh) Nor
Slide 16: Mining and Production
Mining and Production 15
Slide 17: 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 Basins ◼ Low Cost Structure Due to Several Key Attributes: − Low royalty rates ($0.50 per ton sol
Slide 18: Oakdale Facility: High Quality Northern White Raw Frac Sand in an Efficient Configuration
Oakdale Facility: High Quality Northern White Raw Frac Sand in an Efficient Configuration 17
Slide 19: Logistics and Wellsite Solutions
Logistics and Wellsite Solutions 18
Slide 20: Expansive Logistics Capabilities
Expansive Logistics Capabilities Key Logistical Advantages Highly Competitive Delivery Capabilities ◼ Dual Served Class I Rail Access – onsite service on Canadian Pacific rail line coupled with nearby terminal on Union Pacific rail line Van Hook allows access to multiple oil and gas plays, avoids in
Slide 21: Van Hook Terminal
Van Hook Terminal ◼ Location: Van Hook, ND ◼ Commenced operations in April 2018 ◼ We shipped 46% of our volumes year to date in 2020 through this terminal as customers recognized the value of Van Hook’s strategic location and efficient logistics solutions Van Hook Terminal 20
Slide 22: SmartSystems Wellsite Storage Solutions
SmartSystemsTM 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 23: Our SmartSystems Storage vs. the Competition
Our SmartSystemsTM Storage vs. the Competition Competitive Options SmartSystemsTM Storage Equipment Smart Sand: Silos: • Multiple Size Options With Custom • Belts Required, No Direct To Configurations Blender Offload • Engineered and Designed Specifically • Dust Can Be a Concern For Sand Storage on
Slide 24: SmartPath Proppant Handling System
SmartPathTM Proppant Handling System ▪ SmartPathtm is a patent-pending 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 Smar
Slide 25: Smart Sand Summary
Smart Sand Summary Sustainable Operating Model ▪ Large, high quality reserve base ▪ Low cost operations ▪ Efficient and sustainable logistics capabilities with access to all operating basins Prudent Capital Structure ▪ Low leverage levels (0.2x Net Debt / TTM EBITDA) allow Company the ability to man
Slide 26: Appendix
Appendix 25
Slide 27: Committed to Highest Corporate Standards
Committed to Highest Corporate Standards ◼ Management maintains close dialogue with 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 imp
Slide 28: EBITDA Reconciliation
EBITDA Reconciliation Year ended December 31, ($ in thousands) 2015 2016 2017 2018 2019 Net income (loss) $4,990 $10,379 $21,526 $18,688 $31,623 Depreciation, depletion, accretion and amortization 5,318 6,445 7,300 18,165 27,135 Income tax (benefit) expense 4,129 9,394 (2,809) 5,122 7,809 Interest e
Slide 29: EBITDA Reconciliation
EBITDA Reconciliation Quarter ended ($ in thousands) 6/30/2019 9/30/2019 12/31/2019 3/31/2020 6/30/2020 Net income (loss) $14,276 $10,887 $2,388 ($84) $4,640 Depreciation, depletion, accretion and amortization 6,590 6,992 7,250 5,487 5,450 Income tax expense (benefit) 3,973 2,608 294 165 3,470 Inter
Slide 30: Contribution Margin Reconciliation
Contribution Margin Reconciliation Quarter ended ($ in thousands) 6/30/2019 9/30/2019 12/31/2019 3/31/2020 6/30/2020 Revenue $67,941 $65,690 $47,667 $47,488 $26,106 Cost of goods sold 43,068 38,555 29,793 41,089 11,906 Gross profit 24,873 27,135 17,874 6,399 14,200 Depreciation, depletion, and accre