SND - Earnings call 3 2023 | Smart Sand, Inc.

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Operator

Good morning, and welcome to the Smart Sand Inc.

Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. And now I would like to turn the conference over to Christopher Green, Vice President of Accounting. Please go ahead.

Christopher Green

you Earnings us Call. thank Third Smart and XXXX Quarter morning, for for joining Sand's Good

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

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

such risks company's of uncertainties, please our For on the discussion a the and refer to press documents complete and release SEC. file with

Smart Sand future live and only as disclaims whether X, revise today, obligation call or any forward-looking of is projections accurate November because conference to information events update any statements, intention broadcast XXXX. time-sensitive the or or of otherwise. or information, new This financial contains

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

Young. CEO, would the now our over Chuck I like turn to to call

Charles Young

improvements results. in and quarter quarter, and third and results tons. sold million second good million contribution results. and approximately Sand Thanks, Chris, million both XXXX quarter adjusted third generated EBITDA, $XX.X strong another morning. Smart we margin $XX XXXX solid in We financial of over delivered In the quarter operating X.X

to generate Additionally, in flow. free positive quarter, we cash the continued

generated in for Smart report the cash million first cash XXXX, will I'm and to Sand months positive XXXX. $XX.X free that flow, pleased we have be X of For flow

our XXXX. balance to sheet. this in free the of over We $X million year through We cash debt our to off flow months have paid delever continue used X first

Earlier our to common shares we Return value generating back our core philosophy. cash and discipline to focus remain returning shareholders. to will plan year, sheet on approximately We shareholders. free bought principles balance value our this flow, outstanding. Sand business to and maintaining true continue Smart to XX% of operating

high-quality, sand simple: is and services partner goal in the sustainable but their Our to be friendly America. long-term sand customer, our providing be only provider and of We North White environmentally premier be a Northern to of efficient, to sand not supplier supply. strive to efficiently in logistics

not could efforts without employees the frac We continues have Smart I Sand. want continued to our quarter. commitment their Bakken achieved consistent We be strong. in demand work to these Northern had dedication employees. Appalachian our the and sand to thank results the Demand and for hard during and White of for basins

Canada in sales sales quarter sales was increased our approximately as quarter represented our Our XX% third volume. well. facility. Canadian fully first of Blair operating This

Northern our mine's the continuing expand We growth are of potential part effort sand White about our Blair as to franchise. excited

constructing our and segment. of grow XXXX. volume over expansion market to capabilities. respect industrial the sales broader been at to to last in we capabilities sales expect sales a Utica With our quarter approximately product products the have serve in blending to we The X% cooling our our are us will fourth industrial and quarters, of Industrial sand add those volumes solutions, few improvements allow facility

market. penetrating last the progress We mile continue make to

proprietary Smartbelt minimizing payload trucking offering SmartSystems demand, our In SmartPath truck our With Smartbelt fracs per the technology, customer direct blender fleet to and system unload faster introduction now our less through our and they delivering we are to what response want, of includes transloader. times. customers maximizing to and conveyor

last we quarter, demand, prospects X in we're silo growing SmartSystems operated about excited feedback our customer Based business the and for and fleets the fleets. During mile only on XXXX. X

Bakken at months. seasonal Looking the as move into we the expect to normal winter the fourth quarter, currently see in slowdown we

are who Appalachian accelerated of X expecting however, activity sales budget customers spending similar some and do in quarter, in in months exhaustion starting November. in we in Additionally, from first Canada fourth seeing the expect we year; the increased the the we're basin

line We third expect quarter be to the fourth in results. with in industrial sales quarter

October, In are We about contracts. in our new prospects excited we X XXXX. signed

the one these customer the in current X approximately to handle continue gas and we this LNG expect our have now expected online. in Two for Bakken. in sales strong key North our expected location in and market to market increased currently of have positive and Appalachian generation products volumes gas and new for be with capability demand for contracted XX% in we Smart the fundamentals for these Sand electricity XXXX. be to terminal. the at continued support America comes the growth positive the of long-term multiple a conditions natural in expanded commodity markets Waynesburg, in Marcellus, for XXXX. We are Pennsylvania volumes customers plants We is basins volumes. contracts on fundamentals have capacity new Natural To Based as prices, increased

sales higher completed, we in industrial XXXX. are With improvements our volume anticipating

the blending foundry effectively in capabilities sand glass us allow Our new markets. compete industrial and more cooling and to

details budgeting year-end our in still XXXX our our process XXXX for for are XXXX, call. on so we'll We for expectations have more

XXXX we at overall current However, higher based conditions, XXXX XX% be to expect least on for volumes sand than levels. sales sales market

Smartbelt with have in the XX last field. we systems SmartPath our deploy For mile business, year-end, to by and technology ready will smart

in to we to White course the Northern fleet XXXX, the Building utilization year. continue increase focus. our our expect of over of our franchise have an our sand will into primary Going SmartSystems be

utilization expand we and of Utica, in to market X our and Our goal is serve. share mines: every increase operating to Blair, the our Oakdale, basin

X serve capacity the available sand Class industrial frac We have capacity This markets. to into of railroads. approximately tied high-quality XX sand Northern I directly million tons and White is

North serving basins low-cost customers terminals We looking third-party best-in-class and Bakken well-positioned Appalachian our our efficient the the SmartSystems wellsite safe in manner. market delivered sand serve America a volume partners. of in through can have a for higher key increasing of the footprint. and we meet demand of and every to network high-quality, technology, We With can logistics terminal efficient

that been We are in for the long-term team also the delivering long-term management have and over our of employees success. shareholders. Most a well-tenured XX Smart business are years team are executive Sand the committed owners on has with current to company's focusing and value and for

to for shareholder continue increase will value. to look ways We

levels allows advantage us to industry, the in cycles ability through We which have manage move in the a the strong opportunities effectively the balance provides energy of new leverage in quickly and sheet with of take market. the one to to us lowest the business

to energy of product industrial being believe both look White is will goal to the Sand to and and also Smart markets, deliver White continue a leading be opportunities the return grow our to ways a key positive sand the to provider sand value advantage of business, Our Northern sand. free to continue is Northern shareholders. we continue to flow for cash will while for taking committed We to

mind in always, our shareholder interest we everything keep we'll As and in do. employee

to can our We value shareholders. continue evaluate to return ways we

of approximately XXXX. earnings year-end back shares call bought our and XX% year, have on be will in there this more early come our We to

the Lee turn over with that, CFO, call I'll to Beckelman. And our

Lee Beckelman

Chuck. Thanks,

highlights Total for third revenues some go over results. revenue recognized Total second of sales of the quarter. million the tons tons. million to third of million we'll X.X $XX.X were in We quarter compared third in quarter. due quarter quarter, contractual volumes the were through primarily revenues quarter higher third to second sold increase quarter, our in the million to the $XX.X Now shortfall the a quarter second compared the XXXX X.X XXXX in XX%

million cost Our the in for operating second lower sales quarter expenses results. $XX.X $X.X expenses marginally flat were of quarter than were of the second million, operating third quarter Total of quarter basically million. with $X.X

margin $XX.XX quarter. or third Contribution in $XX was the per ton million

third the relatively margin The to and $XX.X in and sold second in $XX.XX was revenue Second quarter and or flat margin was third quarter recognized increase $XX.X of quarter. the $XX Adjusted in the million primarily cost shortfall sequential per operating million EBITDA quarter EBITDA ton. to goods in was in expenses. million adjusted the contribution compared the contribution quarter due

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

credit the between facility, cash at through third the in of $X.X million the free facility. We our in Year-to-date, cash activities, third end excess million availability less approximately operating borrowings outstanding million capital currently with have by cash from $XX.X provided and $XX our We end from expenditures. million. credit available cash generated the have on in And $XX.X no in flow of net quarter. of liquidity million in ended and quarter September, $XX.X cash we equivalents had we

As highlighted, range. slowdown million volumes do end XXX,XXX the quarter we quarter the in and Currently, normal moderate to the expect demand be in we expect some seasonal the customers X.X in at to to exhaustion fourth fourth budget of due from to ton Chuck Bakken the year. sales

ton the summer Normally will we quarters Currently, our in be that sales to we of the quarter, volumes. due the first months range and costs capitalized meet fourth have in ton. year, down of contribution to quarter $XX reported drawing margin $XX the calendar production the have per we inventory per believe fourth mid-double-digit winter higher to for

to year capabilities the of $XX terminal, which blending includes cooling the our related expenditures $XX expenditures the facility. the million in and expect the and the facility, investment be expansion to the for Blair Utica capital start-up of We the range, in to capital at million Waynesburg

As to positive the free Chuck for year. cash flow we be highlighted, expect

comments, will up prepared questions. our for open concludes now This we the and call

Operator

from Partners. Our from Instructions] John Daniel comes question Daniel [Operator Energy first

John Daniel

changing, customer? 'XX color a Just activity? may. sense that XX%, it it it completion are per for up one Just XX% incremental volume in more volumes any rise your I be would if is well? commentary being about so question Is it's new appreciated. Is designs The is me,

Lee Beckelman

Yes, I'll start with that, John.

couple it we volumes think signed I of and some with -- actually a customers. is customers some existing new increasing actually of have

So continue lateral. laterals with then the increased to per and that. stages activity I some of that And more longer we related see to is think trends

of a helping you been we've to seeing. flat kind per more continue don't well, even which is driving spending is if sand where if see trends more while know the trends I I for John... We see think sand

William Young

see would in to to just up, what that market new also, participated that ramp add we as haven't prior. is I continue our Canadian we market And a that's

So for attacking facility is Blair our really market. that positioned well

Charles Young

have and a higher there's the space servicing, fine as that of of to much to some also we do a we're good have, of the feel John the as that doesn't the sand demand like add White service. And lot so in a we find we're Appalachian is existing other Northern for infrastructure basins basin sand, in

Operator

from Our next Stifel. comes Patrick from question Ouellette

Patrick Ouellette

for on Gengaro Pat today. Stephen It's

So there? part It's of in insight attributable margin or other there. if to to market, We're the same obviously, about on of quarter-over-quarter think how margin attributable increased the to Canadian if you to market step-up regards Blair Canadian could any as the regions in all? provide curious kind the volumes at

Lee Beckelman

with regions. consistent relatively are other margins Well,

I it's the -- little U.S. not on and product, currently. in in but dramatically depends Canada, the we're seeing think than different maybe higher pricing what so we're seeing we it a

William Young

come I plant, would to should continue load and mine, down ramp mean a to similar operational it's as situated processing very logistically white out up from other on that I operations we the similarly to standpoint all dry thing Oakdale. an site. levels to at production and Blair, Yes, costs add

from that to out -- drive production have margin of get think costs driving able plant, we we be more So utilization. too should as down we I

Charles Young

good looks before super never market year. can well the have excited us as growth that's up the pretty but on actually plant Blair, in Appalachian for We CN can That that utilize so have Canadian -- other we send gets we it Basin, some that that the referring to plant providers, we're which Wisconsin. in next our to because sands to plant U.S. a had rail

Operator

comes question Capital William next from Our Partners. from Bremer Vanquish

William Bremer

and is sheet first balance well, the fantastic. foremost, Chuck, looking

and have so done echo you're allocation and guys a supplying? you My to question in on a more you regarding comments terms your You is might what have market if a leverage fantastic wondering lot you compared little penetrate you the give granularity the peers, could I And of provide at Canadian industrial done made markets secondly, of there. on industrial was that, well this job to able in the time? us your capital end side. And been credit

Charles Young

of [indiscernible], question. sands, definitely answer from well But in yes, But... that as let kind from is on focused the the focus I'll sands part So on standpoint. John industrial Canada we're the that him on my so industrial

William Young

Yes, William.

the in falls So then there, types foundry markets of things. traditional mean of yes, glass, other I be kind and focused industrial it'd on off we're order kind volume, recreational and of of and

the blending of of there, of us With markets that and out our to and gets addition having capability pursuing prior Utica our into grow to we're we continue cooling that capability. blending market, expect that capability incapable industrial to cooling having plant

is out So be specialized the applications, but is that big in we're some and again, to dog a industrial volume frac. base. can our industrial compared in on products, is industrial the volume have always really that's focused Frac of going high-margin from relatively our what lag you world, to expectation

Operator

this turn remarks. And session. over for some Chuck back concludes question-and-answer to conference very much. like Thank the our I closing to would Young you

Charles Young

you for today. joining to next call speaking on early the you call us year. our forward look on again We Thank QX to

Operator

concludes Thank conference. this for And you today's the presentation. attending much very

You may now disconnect.

Smart Sand (SND) 8 Nov 232023 Q3 Earnings call transcript