- Earnings call transcript Q3 2022

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Operator

Good day and thank you for standing by. Welcome to the Third Quarter 2022 Smart Sand Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. to Green, conference Corporate like speaker to now Chris today, Controller. would hand over the your I Please go ahead.

Christopher Green

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

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

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

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

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

Charles Young

million million contribution in X.X Sand quarter X.X of morning. quarter, margin million and good second through we This third the Year-to-date, adjusted tons, our tons. adjusted since and contribution is EBITDA. Smart September Chris, million highest delivered margin EBITDA sales Thanks, XXXX. the sold $XX volumes have of in and $XX.X In

on pace in XXXX. volumes are We record to sell

cash flow positive of the $X.X million. we free generated quarter, During

and the the well model continues value to Northern from efficiently quarter of in financial strong sustainably to our the business the high-quality mine deliver sand to performance Our demonstrate site. White

committed quarter, that with maintaining the operate third any remain In the cycle. saw the to activity also all market operating in strong and fundamentals. current we quarter to operating successfully strong We provide we demand will through basins continued serve. currently in balance supply expected pricing long-term the and strong Pricing us to a that based we durability sheet expect on improved, levels maintain

focus the Pennsylvania terminals capable of our train to Waynesburg, long-term bulk customers. unit Sales and commodities on in sufficient North rail value transloading Van of Our our to fashion Hook, continue and sustainable delivering demonstrate in Dakota a due our quarter see served typically the into fourth by a Van XX% by Hook and to approximately clients. in management budget Van in weather Bakken volume by our the sequentially. slowdown terminal increased Basin activity in We Hook

last slowdown our to balanced demands. to be multiple seasonal activity to SmartSystems year to mile into allows flexibility out this this meet looks However, switch Having Marcellus. offering Utilization of Waynesburg increased terminal terminals greater continues improve. supply market the changing our us with through

well of penetrate for competitors' And savings margin. cost we improved our customers with needed equipment, sand site our reduce positive to our generated it trucks to number delivered to providing performance. to the going have forward, SmartPath, versus deliver our customers We expect the the XX% our through momentum the deliver up SmartPath using can our SmartSystems sand Year-to-date start to as By to wellhead. are technology. contribution gaining market we substantial September, with financial

emissions, improving goals customers, by noise and to trucks helps by and reducing those reducing and dust. accidents, Additionally, road, ESG the its achieve benefit SmartSystems impact. Smart we goals communities by taking important off are carbon our efficiency Sand and

last and terminal rail, and site customers well more chain. provides mile safer, to our reliable approach mine cost-efficient supply a Our

volume XX% quarter. in sales beyond effectively continue to our with we build time improvements a oil industrial Solutions beyond. to asset this utilize to and our the see our to set business, steps XXXX It base. in Product and will now for Industrial taking our strong in Industrial gas are long-term Product us business more commitment segment division increasing take diversify but business We growth needed Solutions in to this and is

balance $XX remains we in strong. have liquidity. Today, million cash sheet balance $X our sheet approximately in approximately million Our on and

with will to while spending, We will value. pursuing continue disciplined that capital remain long-term projects generate

future a of for We number our are excited reasons. about

over have current we White reserves Northern base, tons. million sand of capacity asset of high-quality XXX X.X million and tons Our processing annual

earlier last capability the Blair X that Utica in capacity tons Northern facility. tons, and flex low the $X White a million of have from we tons million opened this X.X thus XXXX of of developed of years million for very to we million. Over with to flex XXXX when in capacity adding our year, online our X.X capacity X.X XX million acquisition annual late tons acquisition We brought the Utica cost approximately

take the market for of Northern to of White capacity on on positions the information This Blair year-end We March. this sand. advantage demand evaluating the additional actively our strategically opening timing call incremental earnings have are expect growing Smart Sand facility in and to

of primarily mesh is long-term the sands meet needs market. Our reserve the finer that base

facilities us operations efficient low-cost, operate allow to cycles. effectively through all that Our are market

basins Marcellus and Pennsylvania of in-basin strategically in in to Hook, heart effectively located Dakota us Waynesburg, to the our and years terminals, a are Bakken in competitive Our advantage located which gives terminals the come. North basins, Van these for compete

a offering, for provides margins this delivering contribution management and customers, mile business to start and storage forward. last improved our sand SmartSystems site we technology sustainable our well expect superior going superior we Our believe

business continues grow growing strong this sand Our margins. our business, solutions with industrial business segment rapidly, diversifying to

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

Lee Beckelman

Chuck. Thanks,

of decrease quarter the second sales the starting in of timing go volumes quarter, with sequentially customers. our the third tons of highlights third quarter I'll X,XXX,XXX Overall, We the through to quarter, the of volume. slightly some Volumes were well approximately of tons. during continue $X.X in to shortfall in over sold Now primarily of $XX.X a in of quarter high at completions continued levels third lower to due second activity quarter X,XXX,XXX our were third by revenue. higher the quarter. the contractual $XX.X in some Revenues levels. sand, sales third were compared increased be million to million the our and fleet prices XXXX for primarily average improvement SmartSystems Total the utilization million revenues X% of

operating third to were $X.X sales XXXX. $XX.X million of compared basically the diluted period-over-period share were per with at net for of million million quarter $X.X to the to basic the third out. to expenses consistent remaining cost or or in $XX,XXX loss compared Our relatively for last call significant $XX.X million share last Total quarter. the and diluted million second flat quarter $X.XX quarter, compared quarter quarter and Net $X.XX basic was for income $X.X a nothing per

EBITDA contribution recognized due compared was margin the $XX.X and margin and contribution The the of revenue primarily $XX.X adjusted $X.X second to million was to quarter million was sequentially For of million. increase quarter shortfall adjusted in $XX.X million EBITDA third third XXXX, quarter.

ton per third per was last ton quarter. $XX.XX per ton to For $XX.XX the margin compared contribution quarter,

For $XX.X leading in cash operating in we by cash capital the to of million on spent million we million flow generated $X.X XXXX, net third free provided quarter after $X.X activities, expenditures.

million $X liquidity. in ended drew approximately cash During on with $X $XX.X and million our and availability ended available million Between facility. We on with revolver our approximately we facilities, the we have and additional million the cash third in an on equivalents. our currently cash quarter, outstanding $XX our quarter

of fourth be quarter, million $X volumes sales for million guidance terms to the In expect range. we the $X.X in to

by can weather primarily completions in leading timing and the from year-end delayed customers could due completions lower potentially sales sequentially in and this budgets, XXXX. quarter sales activity of Our activity into to volumes fourth XXXX to managing shifting volumes into impacted year being result be

revenue fourth it the quarter, likely quarter. but be We expected results be will EBITDA shortfall lower in as will adjusted third than any in to positive quarter recognize we not fourth the

expect believe will year the remain now full our in the margin Blair the ton million expenditures double-digit fourth capital to quarter. year range, for to we be $XX earlier facility We call This will capital the questions. million volumes in per record concludes includes for in sales the For contribution year. the for open which the $XX range We comments, expenditures of have expect we company. to XXXX, the and the the acquisition our prepared in still and

Operator

Stifel. Our question comes Thank Stephen first you. Instructions] Gengaro [Operator from from

open. Your line is

Stephen Gengaro

Thanks. Good morning, everybody.

Charles Young

Good morning.

Stephen Gengaro

me. questions Two for

look we the your us give you fundamentals sand can perspective first, into for supply-demand on as frac currently XXXX? The out

Charles Young

sure, Yes, Steve.

appears primarily a and to basins, now, be drilling right fundamentals little continue supply Appalachian to Demand be So a growing particularly bit, demand Northern White in positive. the market. gas

kind We add levels. price idle expect the remain of we've at the Northern long lot There can this steady of the that Western year gas and new And fluctuations don't other out capacity of time the in only that, due a of see as some and potential incremental returning here the White thing inefficient we remember course I'd sand supply of the both constraints pockets with been long But first high the time seeing some seen processing to reserves on if is, be pricing nat weather a quarter -- any, has as in seasonal oil. We're the yields, and Bakken, the with first I much, that for mines that the and of come there, fourth than not quarter. online. most back other may supply. the margin commodity of basins current capital

And past generating we or seen of And that basins, basins. activity in been have both would in gas those high versa. so vice of low activity are past, generally types in it those things those in both high oil, haven't or the the of two basins

about we've So kind of a an talking demand that's market lot. that interesting been

Stephen Gengaro

it at by I the quarter. per and number system you seen normally And to the -- of you think, what given, is efficiency believe, double-digit that you. quarter? what's level cost driven sold is allows strong in And -- I fourth a fourth that's winter of typically that hold you cost contribution Thank the year dynamics price cost a margin that -- last some pretty over Can in the ton just softer Great. some just kind mentioned, increases. the you've of goods

Lee Beckelman

a drop of consistent off. that. the -- being think volumes typically have driving in I of relatively are to a Stephen, little bit things fourth we're Yes, a we guiding that couple We're versus quarter seeing

better fixed little allowing normally the it's fourth cost So quarter in us absorb we a to our do.

level. current we're helping. also, so And think kind seeing of at And that's I then pricing, stabilize

kind remaining levels. see pricing we at of So good

that of combination good I the to the the than we'll revenue think volumes So shortfall in us with this leaves even that environment, be more the in for seen backing confident second quarter third of third number. per contribution in couple of the versus feel the drop-off years, last quarter a and the we've saw fourth a quarter ton having margin out consistent quarter you in coupled pricing levels

Stephen Gengaro

Great. Thank That’s helpful. you color. for the

Operator

question -- have Bryan Shealy a moment, from And Investing. with from one Exploit we

Your open. line is

Bryan Shealy

there. for me Thank Hi on. you having

do you any in quarter still sand question, given First next quarter.

do example, three? quarter feel sand four in you quarter For like

Lee Beckelman

me, sell what? Excuse do we

Bryan Shealy

quarter. sand any given quarter in Next

you example, have do that sell quarter quarter for -- does So three? four -- when And in sand you in it does contracts? like differ quarter

Lee Beckelman

question. your on I'm in activity quarter sell volumes each understand in get not booked quarter. sure those sand that I We and the based

in So QX, et are QX, from in from QX. we QX volumes cetera, volumes sales whatever sold in whatever have we have sold sales in we we

Bryan Shealy

was like sand Well, question people Thanks. do actually number increased the have like have basically you actually on Okay. -- the the sell you of you contracts.

much able see contract. you have people volume next you the to possibly could you are and number increased actually into have on the have how of quarter So you

Lee Beckelman

contracts. we've couple added a smaller Yes, of

to starting in But And so, contracts a and our we smaller will we of are then them current year. associated basis. actually to are contracts with place don't in kind and volumes be of have we added in -- we volumes disclose visibility know of have with our going the but that next quarter we with fourth a on contracts first spot quarter their do couple quarterly have have pretty and have monthly outstanding, where customers good the terms of them percent working

Bryan Shealy

Thanks. Okay.

Just one more.

currently Into is trading discount shareholder to stock next value. enormous net possibly implementing So are your at asset year looking you an an at return tangible aggressive program?

Lee Beckelman

see cash our able in of you something trend. cash our positive in to on And flow that's Right continue flow, flow being thinking other shareholders anticipate evaluate terms dividends being through we confident will got then think evaluate. once cash being free I the and saw providing this and quarter. we'll of numbers, in consistent now, have to we return opportunities or that of are we we terms continue kind the positive to about we measures. as And

So And overall of on that, we it's early more something have but for that still depending activity is, little we'll get that's on into evaluate. the cash we're flow but discussion a as and flow. -- how we'll we'll free consistency generating that cash XXXX,

Bryan Shealy

Thank right. you. All

Charles Young

you. Thank

Operator

Thank to I've back Chuck closing for like Young to questions had. turn the you. call over that's And would all I any remarks. the

Charles Young

look with We Thank forward you to us joining again you March. in talking for today.

Operator

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

disconnect. now may You

Smart Sand (SND) 9 Nov 222022 Q3 Earnings call transcript