SND - Earnings call transcript Q2 2021

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Operator

Good day and thank you for standing by and welcome to the Sand Inc.

Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. Instructions]. [Operator like Finance conference and now Jayne, to hand of Director Assistant to would over the Josh I Treasurer. Please go ahead.

Josh Jayne

Good us for earnings you for second thank XXXX call. morning quarter Smart and Sand's joining

we have Beckelman, Officer. Lee Officer; On the Financial call Chuck Founder Executive Chief Chief and Young, John Young, and Officer; Chief Operating today

uncertainties actual begin, we made to subject will or forward include like certain today those materially which to participants different are cause all anticipated. Before remind would that risks to events and looking results I comments that could statements, from our

statements, and For release a complete uncertainties, file Sand discussion please information, only documents accurate Xth, today obligation or our intention to of conference XXXX. because This of otherwise. projections with press revise such broadcast future to company's or of any SEC. or Smart risks contains financial time-sensitive disclaims and new call August the live the on the any refer and forward-looking information or events, as is update whether

we of combination free EBITDA, over gross Young. press provide contribution I turn the to or flow activities. non-GAAP to Please flow adjusted these margin, financial CEO, our believe measures like our recent to EBITDA, to profit, our in results, by and to income, may useful with cash our Chuck margin our provided with better release investors contribution and and most to to understand reconciliations now our public measures filings when during our call cash of that for would GAAP operating EBITDA flow net adjusted free cash used and the us EBITDA, refer information refer Additionally, call. this We to business.

Charles Young

good We similar Thanks enjoyed volume first the quarter and with Josh quarter. morning. for good to tonnage another

up negatively the began are from Second quarter our when levels pandemic impact tons XXX% second to the XXXX of business. XXX,XXX quarter volumes

of six than XXXX. XX% sales volumes of XXXX approximately were first half sand the Additionally, first months higher in the

impacted This So, while previous this overall industry. so activity. our far than activity our flagged oil in upcycles pandemic is gas than before and trending quarter-to-quarter, our is upcycle activity was higher severely the year the different

While than within flow. year discipline a focus cash today This to stronger a markets. has sand is market core it continue slower E&Ps spending their led ago, demand spending on for activity recovery in our much to was

with with flow, We to to pursuing cash have expand capacity are our to investment. business. levels, incremental sand but managing our while We're line additional committed opportunities within current living the our minimal operating costs still activity more sell in

end respond new by as even sand and mileage trucking by White be site. a there, delivery. mine intend associated pursuing well to supply supply new to logistics the the week, transloading to to at the the a market quickly expect should This we we our towards emissions of With pursuing operational contract keep greater in our We're have provide terminal sand very and long-term including we Northern Sand key capabilities solutions markets. new EQT, we to for positioned begin continued diversified can this customers. remain our our to activity increase. our year. This expand supplier long-term asset Frac to the actively new three-year key a Appalachian customer sustainable announced we Basin commitment and sheet, uniquely carbon benefit from premium So, sand and base The Sand opportunities strong base to reducing is to to offer balance to while move customers, and we strategy logistics Smart to market demonstrates related ESG that providing our of to adding agreement long-term also efficiency terminal

million $XX Well that Services a strengthened liquidity. quarter. pleased cash payment June our reached balance in are U.S. our and with settlement sheet the received increased we we We The during further second

dust. anticipate more additional year. deployments the we including of affiliates will during In continued Even smart back We the second the the while our the Sand customers, First quarter for on Services time striving through By for believe the by is Smart a Refusal was the to Services last-mile XXXX cash Right carbon has U.S. Using first in We We the through to to solution Well spending and transloader, people Xst, our with systems, providing keeping Well covering in agreement estimate a Continental quarter. that off reduced we respect half needed in reasons. are in we about the as for XXst, approximately our we to ESG noise, Frac our liquidity. number work to of our road, trucks entered on balance to and we're with of States United of than will accidents, the uniquely and million sheet from U.S. meet anything and a two-year Sand reliable, into well the safer to cash, noise of sheet, We're goals competitors' excited cash the customer and forward the all its in the U.S. purchases accidents industry. again to White a deliver future look reduced, a and efficient unlike systems flow. maximizing reduced, remain emissions addition though which carbon million $XX focused committed capital reducing offerings. versus and Northern number Smart by to industry. are XX% and Smart we By reduced. with dust, January XXXX. have soon. site having Today, Well first Sand are systems, sand is designed SmartPath smart also of $XX SmartPath be strong emissions, deployed our remain our have market reduce balance taking last-mile trucks disciplined successfully December

and they years. at the today in point trending remain higher above beyond. three are commodity yield other any XXXX than XXXX far should balance prices and We XXXX sheet levels up, have than more last cash volumes. higher Strong on are volumes the over spending Sales

any to increased We capacity, quarters, expanding share. market and Having well-positioned strong market forward of liquidity, balance take with our our we sheet. two last-mile for ample look are successfully available to operated SmartPath activity advantage

continue As eye keep to always I'll the to future do. in always, on Lee over mind we CFO, And everything call the and we'll Beckelman. interest our our employees' turn shareholders' and our with that, we'll and keep

Lee Beckelman

Chuck. Thanks

spinning pickup we are in we the cash their seen by thus stayed to E&Ps While have in have XXXX, respect encouraged disciplined within flow. with far activity

first volumes quarter second indicated, higher quarter Chuck volumes. As XXXX were XXXX than slightly

base prudent diverse more quarter levels. and flow believe strengthen forward. cash second base structure, a positive free our low will year, committed liquidity maintaining expand going to customer remain during leverage our for continue the generating a capital We the to adequate levels, customer We business and

our compared higher through revenue more the of increase results. $X.X by revenue first $XX.X million in We million increase second to compared second XXXX, quarter. the volumes the offset a second XXXX which higher quarter quarter tons quarter million. sales the the to first driven $X.X were quarter The some of Total XXXX. the revenues in-basin with go of Starting to tons. first Sand over of compared in sales the volumes. first slight the million, were logistics second than quarter quarter was quarter the for by in XXXX highlights I'll $XX.X decline Now, XXXX sold XXX,XXX in revenues XXX,XXX

saw litigation debt in the as to Our decline expenses sold, million difference million operating revenues the current and increase quarter-over-quarter quarter driven settlement X%. the $XX in by that tons $XX cost last the U.S. a of compared with Services in were million was received Well compared The last approximately the accounts bad subject slight Total a is the receivable first litigation. $XX.X between of expense in quarter. actually in such we $X.X sales for is million period, non-cash cash quarter $XX.X Despite the cost our million cash primarily production to to million were million the from balance quarter. increase $XX.X $XX.X recorded by which company's

it of receivables proceeds recorded wrote the to in $XX a million that company had the the Well, as by it portion received result his position disputed the down U.S. settlement. increased a While related contract of with the previously cash

XXXX million and $X million of and EBITDA $X.X million adjusted had margin million. was of adjusted contribution margin $XX.X quarter negative EBITDA of we quarter negative $X.X contribution compared Second to first

litigation Although Well. the XXXX, first of we bad XXXX lower generate the quarter with a and the second million selling production a higher result primarily the in declined contribution of to second in of margin from of EBITDA settlement XXXX expense prices improved to average debt recorded quarter compared quarter U.S. related adjusted $XX.X cost, of as the cash

on spending free flow, free investments. of million systems cash For quarter $XX.X capital smart investments the on we on had in while $XX.X generating flows, majority million year-to-date have $XX.X $X cash new had $XX.X of million been The million cash investments. flows, in million of operating capital we XXXX, while operating Year-to-date, spending million flow, second capital cash generating $X.X units.

revolver we no of have $X.X other still the credit. quarter, During a didn't and than borrowings million use letters outstanding in

million. Our current revolver is under $XX the unused availability

the our we approximately availability quarter equipment acquisition. in the with had down We the unused notes in place Facility $X.X and paid million Liquidity Proppants have payable million from put million Eagle year-to-date. against Acquisition in $X paid Support business $X.X Additionally, financing we and

a similar amount in ended and second $XX the this therefore, $X.X our We quarter with half year. down We year in approximately cash. million debt the expect pay will second approximately by to of reduce million the

our remainder currently borrowings do year, have to credit. $XX approximately have the in million is expect balance our of revolver ABL on Between liquidity. are cash current available we cash any approximately facilities, the not than for other of availability and Our $XX million. letters We in

of decline levels. for of customers, questions. to anticipated anticipate comments be we to due and quarter prepared to to drop year. concludes now million $XX the a second cash We're range particularly sales for be $XX second is in for between quarter, our pads. primarily capital timing in new open third and well and free seeing sales the to whitespace XXXX activity The will volumes this This programs guidance from terms the wells completed current call in million the XX% positive quarter full our to start-up the in we expect by Bakken. for some a We volumes flow well expenditures expect from region in and the In XX%

Operator

question Bill Daniel from [Operator Austin Energy Instructions] And Partners. first our from comes

now line open. Your is

Bill Austin

guys. Hey,

Charles Young

Bill. Hey

Lee Beckelman

Hey, Bill.

Bill Austin

with wouldn't a Hey, start White just the you're Northern in characterizing competitive market that -- seeing to if you today? I little wanted on just landscape mind

Charles Young

Yes, sure Bill.

the -- seeing a then in little and and White Northern we've bit market in kind healthy. servicing The traditional Northeast, south Northern market out Oklahoma. we're the is some Midwest what up got there down providers Northern opportunities White of is So, into sand relatively is of

a smaller there, U.S. provide our of There's mentioned the single retool when operators customers into We asset a were on our up but primarily origination, our regard his seeing we're rail, with couple bit little as where out are we in railroad. seeing only as end competing there, both now for with Lee who to push of towards are there CP, comments [ph] It's and had a deliveries our that BN diversity well North there? Silica the to as of and opposed we Covia. competitors sand we're up year. pretty With main whitespace Dakota, UP,

pretty So, about we good it. feel

Bill Austin

these any of you happening? then logistics down amount bit, road seen Great. this kind more, problems to [ph] touched little fracs fracs of final a Thanks. that on that all are going Is guys final create in the [ph] seeing one market? the we're have with but challenges the with And you

Charles Young

of problem. evidence touching there kind you're you're heard trucks on we've anecdotal what think your And I are trucking, is certainly Well, right? that

strong is link your weakest view the that Last-mile supply is been always and trucking your as is difficult. as Our traditionally only on you've respect. in has trucking -- got difficult that chain your --

that our make more is what truckers so is, got And on you've view you've to efficient. got do to

load shorter. times make You've got their to

trouble, as So, load transloads keeping possible. to located, focused those a loaded so We translators be distances want those as we're as out to well-site, is there, the that times to offload build get as the line possible. as truck be trucker we time as shorter. when our want quick waits And when trucks we to in keeping short the we short strategically then on

a done lot or system, we And trucking, do one other also unload commodity have much. the a they what weigh what heck as we businesses a in to Hopper they don't they than throughput to Bottom they've that's also truck load look very things of traditional use more us about so quickly, think quickly. is of obvious when they pneumatic is trucks, And because bulk very And box of trucking. they a right, for Dump the

that throughput. you're more able translates -- into advantage So, get to that

So, that dump out leg the this our about business, of we efficient focus making are come chain. into a trucking is encourage really trucks, in with helping the we thinking smart and long-term, of more bottom and systems to those or of kind supply them how some alleviate truckers our on think that doing up capable competition of got kind there. we've And truckers

Bill Austin

seeing that briefly how you you anything Okay. seeing there? the of how it too from that quarter? the And are out potential at terms like one, you touched seasonality? in real Thanks. about of the more is the end. of what it, I my briefly were budget early tell? in it, Any know on In terms hit think guys last shortfall operators, guys QX but you that fourth on to again, you Or are guys guys seeing do you

Charles Young

Yes, pick we I a really in timing I are can And think issues, that do up. Bill activity the pickup seeing are will really Bakken in back it's be volumes quarter the I we year, year. there's But too little slowdown dependent the into quarter. expect -- some and to early next some in back the our other on at on little the spending basically first how mean to Western it's a or that quarter-to-quarter think of States their northeast the it into go fourth weather, continue in end activity the and move look budget and also of to half fourth up E&Ps and pick that of United going tell.

it's do going it's quarter northeast, So, the see is in hard of now but think early to picked other how a bases Bakken Western planning up to for a But little in. competing little say. do expect some in I the the we we're and fourth the

Lee Beckelman

years flooding that Yes, the the seasonality with as out I we commodity at terminal the oil to of ability or we've the if whatever some natural blend see of that any in could is of there, we up seasonality gas thing Northeast, only is with the past look the associated of weather get think that difficult and seen the we're in add with and in new or would Bill we throughput building to Northeast. kind we kind both on and pricing

Bill Austin

and Okay. Well, I turn appreciate I'll it, guys thanks. it back over.

Operator

And our Stifel. comes Gengaro question And thank next you. from Stephen from

open. now is line Your

Stephen Gengaro

Thanks. Good morning gentlemen. Morning

Charles Young

morning Good Stephen.

Lee Beckelman

Good morning.

Stephen Gengaro

if things couple prior to mind, don't the following question. up think and A on I of me, you one is

mentioned a your the drop systems is of well curious, see market? in the I'm XX% You smart site. benefit? the container about to versus you that relative comments prepared is to sort and in silo trucks within something just your that Or systems

Charles Young

what truck. get specifically you Stephen, a yes, of So, the there to amount throughput we're through referring is

an North you Dakota throughputs has we XX gross get there. pound trucks as see too Dakota but tons has right. as high not up per give technical, in to -- to for truck, XXX,XXX example, up North Dakota, -- So, North weight

down that when you makes your trailer, ton box, have result And as a box, brought which of so of box light right? got is grain cuts using grain relatively steel or what a on that. type that XX throughput you've about is the trailer throughput, A effectively that versus them a a up the

are trailer amount were So, you of XX% of that throughput. these or traditional between get bring -- grain much a can this able trailers versus some are estimate to an a you there of now, difference huge is as how that out on the box pneumatic throughput

where to So, at you're your throughput your kind of load, XX by tons XX%. call that's per increasing you if get that

Stephen Gengaro

Got it. Thank you.

side the I think any just in-basin comments think average in on was and price And are a there pricing sales up the kind the and backdrop? ton on but the this per prepared in it there? to Lee quarter, the was I bit it touched was what related revenue curious as seeing well, of is you sequentially I

Lee Beckelman

stable being pricing managing improvement logistics seeing in-basin of we're now kind delivering having right to margin our opportunities and improvement and there. some overall think by and for I cost

it's been when right now improvement, we but relatively think a some And see. we little opportunity stable. I see So, for don't

relatively right we're it pricing for basically I think now. viewing as market stable a

Stephen Gengaro

came And you I think that as probably can in sort about environment, depending seasonality, of you kind of sort the tie tend of, we -- think is the point? a because blends quarter. in cost to If that you margin mid-single-digits, in where guess around that contribution all the but starting on about Is goods per reasonable? at of to mean, it ton as reasonable current we sold I it -- the

Lee Beckelman

Yes, consistent did that in looking at at level of I that and think in second current, the volumes -- what of, range kind in we what would we're mid-single-digits be ended our quarter. we be and the

Stephen Gengaro

Thanks. and so don't you cash to to final over The the use Services you'd lot cash the , behind sheet cash, is CapEx. the have -- a thinking balance in then to on U.S. time? some got shareholders great my ways how over I much one have one issue just How return like end. know think you And maybe -- I'm some evolves on to about using have run then this sure you a mind balance of time? it business sheet you if in Great. And you Rail do of shape, you,

Lee Beckelman

to strategic our of a opportunities existing how utilize Well, But we a We I'll to increase in look early. as it cash incremental see think help can having terms growth utilization of chime is that assets. position. our we liquidity start little I We our asset like like it's to definitely us in maybe Chuck well. and can that

think uses some where of I we we cash utilization investment, business I and and through focus, then we once think is, on shareholders. improving some balance the or our throughput that's where our whether kind a we of cash to sheet, has a more do get it stabilized other of have, base? see key smart use type be utilization return can can How And consider asset from the systems? our of, albeit terminals existing

Charles Young

to Smart other to thing would shareholder and is And that by XX%, abide of that. don’t one like try we're I I that add going Sand,

Stephen Gengaro

gentlemen. you, Thank great. Okay,

Operator

you. Thank from ISI. Hoh from And next Evercore our question comes Samantha

open. line Your now is

Samantha Hoh

Hey guys.

on real me. Just quick

guidance $XX that terms meanwhile, of I XX the guidance? upper CapEx your I new to the you're was reduced think movement in kind there CapEx transload heard on million. you facility. this end me But Can through of walk from building million out

Lee Beckelman

is CapEx to of guidance that help we Yes, transload. for from sources other some that really anything pay separate have transload and kind

So, million smart And we're spending. capital, $XX discretionary million and to the is we $XX finalizing tighter that what a but back of is, separate $XX guidance to from from million based that that. using business CapEx we're that $XX systems, range on still pulling normal are our under million, we gave the the of guidance to the number for

Samantha Hoh

are end still smart you deployed is lower? So, year thinking you'll by have that XX system or

Charles Young

we'll said XX eight said, have in the we that No. available be and XX have XX never potentially what probably range. to we'd could We've we be deployed,

Samantha Hoh

potential of expanding this there opportunity new the in going What's base are on new with customer discussions transload your Okay. customers? using Appalachia,

Charles Young

to transload -- really and where a it's in is the be Yes, good spot. are going Samantha, there really,

is things is of is our managed and large a of, we Van yard to ability to logistics we've North relatively one is a Hook, heart this and that in Appalachia that a of and where suggest the currently new of are would a that there Dakota provide in has rail and terminal -- unique location, build advantages finding spot fantastic we're operators fracking. the excited I multiple provide the so interesting difficult to enough the the find spot terrain kind reasons out it's around and significant about One of mountainous transload be about

right conversations So, actively addition with in We're having yes, we're EQT. really to excited. now others

we're terminal. new about So, really, excited really this

Samantha Hoh

of in just in-basin. that one be you curious Is think could great. mean I sneak if half? And was logistics from I trend is Or to little you more. with second the the the going operator shift trends in maybe bit I just to speak through what's perspective that can terms on a something Okay, going there? about a

Charles Young

in-basin sales? to referring you Are

Samantha Hoh

in-basin just more about Yes, curious being last than kind quarter I'm mix the prior? of this

Lee Beckelman

more pricing John think in-basin and going seen I can in delivery pricing. of movements we FOB and and -- versus in chime but general, Chuck general spot. mine have I'd in, a call what Spot, and our pickup into

Charles Young

And versus new more this probably see with certainly as I pricing Yes, look we'll up I agree to the transload bit we to mine. in-basin a would and that. movement running, get think FOB

a handle rail can of the -- that number Although, to we FOB logistics on we've They don't out logistics management. to the at you take of customers of kind if But that. still any do side sell the least and mine necessarily take prove up ultimately, got spun more of a the want that advantage have there. entire group customers logistics,

Samantha Hoh

Thanks Okay, great. guys.

Operator

And follow Stifel. up we have And from thank Gengaro a Stephen from you.

open. Your line is now

Stephen Gengaro

Thanks. Thanks taking the for follow-up.

index the a a to -- So, two of the that the works ones it is related, agreement a of dynamic think yesterday kind are is on that pricing on -- sort that -- how price that with spot EQT, long-term I is contract? announced that you quick but is

Charles Young

we Yes, into we contract pricing Stephen. with specifically don't don't customers, get

not going that. we're So, to comment on

Stephen Gengaro

Okay.

Pennsylvania, the help terminal Okay. will in believe to that And an it tend and that time. margin in accurate terms, ton over Is general pricing statement? per I you're help that building tends -- contribution transload to

Charles Young

that. work only an margin capture provide and accurate. that yes, through EQT, particularly have and pricing general, In we'll have opportunity as terminal the in-basin to that full It's more looked others with value but -- we that's not with hopefully,

Lee Beckelman

us It the efficiency drive railroads. also helps with

to which railroads the in help efficiencies smoothly, sides, able large and with the can railroads, pricing. take to in which larger that sized trains, demonstrate should we're to we trains drives ability move out, both effectively, we the So, on have

Charles Young

firm thing market. our would good for into I And provides that products to is the add it last us a that to Yes. base last-mile continue then marketing

kind new with smart base customers. of we've the unified chain supply together all things and for tying those terminal, So, systems in got a home a for

Stephen Gengaro

appreciate the I color Great, Thank you.

Charles Young

you. Thank

Operator

am CEO for And Thank you. to remark. would back you. Young over no I call Chuck further Thank showing I closing turn like now to questions. the

Charles Young

Thank you on us again for to joining We second earnings Sand Smart call. you November. in to talking quarter's forward look

Operator

Thank you you concludes participating. Thank This today's call. conference for

may You now--.

Smart Sand (SND) 4 Aug 212021 Q2 Earnings call transcript