Smart Sand, Inc. (NASDAQ:SND) Q2 2020 Earnings Conference Call August 5, 2020 10:00 AM ET Company Participants Josh Jayne - Finance Manager Chuck Young - Founder & Chief Executive Officer Lee Beckelman - Chief Financial Officer John Young - Chief Operating Officer Conference Call Participants Stephen Gengaro - Stifel Lucas Pipes - B. Riley FBR Operator Thank you for standing by and welcome to the Smart Sand Second Quarter 2020 Earnings Conference Call. At this time, all participant lines are in a listen-onl ...

Part I [Financial Statements](index=5&type=section&id=ITEM%201.%20Financial%20Statements) The company's Q2 2020 financial statements reflect significant declines in revenue and net income, with increased operating cash flow [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2020, total assets slightly decreased, while cash and cash equivalents significantly increased, and total liabilities declined Balance Sheet Summary (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $97,053 | $92,177 | | Cash and cash equivalents | $16,643 | $2,639 | | **Total Assets** | **$359,234** | **$363,403** | | **Total Current Liabilities** | $33,107 | $40,018 | | Long-term debt, net | $24,865 | $28,240 | | **Total Liabilities** | **$107,906** | **$117,847** | | **Total Stockholders' Equity** | **$251,328** | **$245,556** | [Condensed Consolidated Income Statements](index=7&type=section&id=Condensed%20Consolidated%20Income%20Statements) The company experienced significant year-over-year declines in Q2 2020 revenues and net income, primarily due to lower sales volumes Income Statement Comparison (in thousands, except per share amounts) | Metric | Q2 2020 | Q2 2019 | Change | Six Months 2020 | Six Months 2019 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $26,106 | $67,941 | -62% | $73,594 | $119,716 | -39% | | **Gross Profit** | $14,200 | $24,873 | -43% | $20,599 | $36,043 | -43% | | **Operating Income** | $8,654 | $19,205 | -55% | $9,188 | $25,156 | -63% | | **Net Income** | $4,640 | $14,276 | -67% | $4,556 | $18,309 | -75% | | **Diluted EPS** | $0.12 | $0.36 | -67% | $0.11 | $0.46 | -76% | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2020, operating cash flow increased, investing activities decreased, and financing activities primarily involved debt repayments Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $25,842 | $17,403 | | **Net cash used in investing activities** | ($6,423) | ($13,869) | | **Net cash provided by (used in) financing activities** | ($5,415) | ($3,747) | | **Net increase (decrease) in cash** | $14,004 | ($213) | | **Cash and cash equivalents at end of period** | $16,643 | $1,253 | [Notes to the Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the impact of COVID-19 and low oil prices, revenue disaggregation, significant customer concentration, and a corrected prior-period accounting error - The company's business is **significantly impacted** by low oil prices due to the COVID-19 pandemic and a global supply increase. In response, the company has **reduced capital expenditures**, implemented **headcount and salary reductions**, and **deferred some payments**[36](index=36&type=chunk)[37](index=37&type=chunk) Disaggregation of Revenue - Q2 2020 vs Q2 2019 (in thousands) | Revenue Type | Q2 2020 | % of Total | Q2 2019 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Sand sales revenue | $7,375 | 28% | $31,362 | 46% | | Shortfall revenue | $14,000 | 54% | $16,283 | 24% | | Logistics revenue | $4,731 | 18% | $20,296 | 30% | | **Total revenues** | **$26,106** | **100%** | **$67,941** | **100%** | - The company has **significant customer concentration**. As of June 30, 2020, one customer accounted for **98%** of total accounts receivable. For Q2 2020, two customers accounted for **91%** of revenues[103](index=103&type=chunk)[104](index=104&type=chunk) - The company is in **litigation with U.S. Well Services** over a take-or-pay contract. As of June 30, 2020, **$54.6 million** of accounts and unbilled receivables were attributable to this customer[112](index=112&type=chunk)[113](index=113&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2020 revenue decline due to lower sales volumes, cost-cutting measures, reduced capital expenditures, and liquidity, while noting litigation risk Q2 2020 vs Q2 2019 Performance (in thousands) | Metric | Q2 2020 | Q2 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $26,106 | $67,941 | $(41,835) | (62)% | | Tons Sold (thousands) | 208 | 741 | (533) | (72)% | | **Gross Profit** | $14,200 | $24,873 | $(10,673) | (43)% | | **Net Income** | $4,640 | $14,276 | $(9,636) | (67)% | - The company has **reduced its full-year 2020 capital expenditure budget to less than $10.0 million**, a **reduction of up to $20 million**, primarily by cutting SmartSystems manufacturing plans[193](index=193&type=chunk) Non-GAAP Reconciliation: Adjusted EBITDA (in thousands) | Metric | Q2 2020 | Q2 2019 | Six Months 2020 | Six Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Net income | $4,640 | $14,276 | $4,556 | $18,309 | | EBITDA | $14,273 | $25,929 | $20,377 | $38,304 | | **Adjusted EBITDA** | **$15,610** | **$26,243** | **$21,975** | **$38,665** | - As of June 30, 2020, the company had **$16.6 million** in cash and **$8.0 million** in undrawn availability on its ABL Credit Facility. Management believes this provides **sufficient liquidity for the next twelve months**[171](index=171&type=chunk)[174](index=174&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=48&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There have been no material changes to the company's market risk exposure since the prior annual report - There have been **no material changes** in the company's exposure to market risks during the six months ended June 30, 2020[209](index=209&type=chunk) [Controls and Procedures](index=48&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, despite identifying and correcting a significant deficiency related to a prior-period accounting error - An **accounting error** related to a vendor rebate from fiscal year 2018 was identified. While not material to prior periods, it was **corrected via revisions** to prior financial statements[211](index=211&type=chunk)[212](index=212&type=chunk) - Management determined the omission constituted a **'significant deficiency'** in internal control over financial reporting and has **added new review controls** to ensure contracts are accounted for completely[213](index=213&type=chunk) Part II [Legal Proceedings](index=49&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is engaged in significant litigation with a key customer, U.S. Well Services, LLC, over an alleged breach of a take-or-pay contract - Smart Sand is **suing U.S. Well Services, LLC** for **breach of a take-or-pay Master Product Purchase Agreement**, seeking unspecified monetary damages[112](index=112&type=chunk) - As of June 30, 2020, accounts and unbilled receivables from U.S. Well Services totaled **$54.6 million**[113](index=113&type=chunk)[227](index=227&type=chunk) [Risk Factors](index=49&type=section&id=ITEM%201A.%20Risk%20Factors) Key risks include dependence on the volatile oil and gas industry, reliance on a single production facility, and significant customer concentration with ongoing litigation - The business is **highly dependent on oil and natural gas industry activity**, which has been **depressed by the COVID-19 pandemic and an oil price war**, leading to a **material adverse impact** on the company's financial position and cash flows[218](index=218&type=chunk)[219](index=219&type=chunk)[221](index=221&type=chunk) - All sand sales are generated from a **single facility in Oakdale, Wisconsin**, creating a **significant operational risk**. Any disruption at this facility could **materially harm the business**[226](index=226&type=chunk) - A **substantial portion of accounts receivable ($54.6 million)** as of June 30, 2020 is due from **one customer**, and collection is subject to the **uncertain outcome of ongoing litigation**[227](index=227&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has an authorized share repurchase program, but no shares were repurchased during Q2 2020, with 633,500 shares remaining available - **No shares were repurchased** during the three months ended June 30, 2020[194](index=194&type=chunk)[230](index=230&type=chunk) - As of June 30, 2020, the company had authority to repurchase a maximum of **633,500** additional shares under its existing program[194](index=194&type=chunk)[230](index=230&type=chunk) [Defaults upon Senior Securities](index=52&type=section&id=ITEM%203.%20Defaults%20upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - None[231](index=231&type=chunk) [Mine Safety Disclosures](index=52&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) The company's mining operations are subject to MSHA and OSHA regulations, with a commitment to safety and adherence to industry standards - Operations are **subject to the Federal Mine Safety and Health Act**, with MSHA performing **at least two unannounced inspections annually**[232](index=232&type=chunk) - The company **monitors workplace exposure to respirable silica** and notes that **MSHA may adopt stricter rules**, which **could require capital expenditures**[233](index=233&type=chunk) [Other Information](index=52&type=section&id=ITEM%205.%20Other%20Information) No additional information is reported for this item - None[235](index=235&type=chunk) [Exhibits](index=54&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, and certifications - **Key exhibits filed** include a letter agreement to a Master Product Purchase Agreement, the Amended and Restated 2016 Omnibus Incentive Plan, CEO/CFO certifications, and Mine Safety Disclosures[237](index=237&type=chunk)

Smart Sand, Inc. (NASDAQ:SND) Q1 2020 Earnings Conference Call May 6, 2020 10:00 AM ET Company Participants Josh Jayne - Finance Manager Chuck Young - CEO & Director Lee Beckelman - CFO William Young - COO Conference Call Participants Lucas Pipes - B. Riley FBR, Inc. Stephen Gengaro - Stifel, Nicolaus & Company Dylan Glosser - Simmons & Company International Operator Ladies and gentlemen, thank you for standing by, and welcome to the Smart Sand, Inc. First Quarter 2020 Earnings Conference Call. [Operator In ...

For the Quarterly Period Ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from ___ to ___ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________________ FORM 10-Q _____________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-37936 SMART SAND, INC. ...

@ IS O 4 smartsand® February 2020 Investor Presentation 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," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters iden ...

Smart Sand, Inc. (NASDAQ:SND) Q4 2019 Earnings Conference Call February 26, 2020 10:00 AM ET Company Participants Josh Jayne - Finance Manager Charles Young - CEO & Director Lee Beckelman - CFO William Young - COO Conference Call Participants John Watson - Simmons Energy Daniel Day - B. Riley FBR, Inc. George O'Leary - Tudor, Pickering, Holt & Co. Stephen Gengaro - Stifel, Nicolaus & Company Operator Ladies and gentlemen, thank you for standing by, and welcome to the Smart Sand's Inc. Fourth Quarter 2019 Ea ...

Financial Performance - For the year ended December 31, 2019, Smart Sand generated net income of approximately $31.6 million, an increase of 68% compared to $18.7 million in 2018[18]. - Adjusted EBITDA for 2019 was approximately $87.1 million, up 32% from $66.0 million in 2018[18]. - The company has a cash balance of $2.6 million and an undrawn availability of $17.5 million under a $20 million senior secured asset-based lending credit facility as of December 31, 2019[26]. - Proppant demand in North America was approximately 111 million tons in 2019, a 5% increase from 105 million tons in 2018, with 2020 demand expected to remain flat at 111 million tons[39]. - For the year ended December 31, 2019, major customers included Liberty (23.8%), Rice Energy (19.0%), Hess Corporation (15.5%), and U.S. Well Services (14.7%), indicating a concentration of revenue among a few key clients[35]. Operations and Facilities - The Oakdale facility has approximately 316 million tons of proven recoverable sand reserves, with a current annual nameplate processing capacity of 5.5 million tons[15]. - The company operates a unit train capable transloading terminal in Van Hook, North Dakota, which became operational in April 2018, enhancing delivery options for customers in the Bakken Formation[16]. - Smart Sand's Oakdale facility has a minimum implied proven reserve life of approximately 57 years based on current processing capacity, with potential expansion to 9 million tons per year[22]. - The company has expanded its transloading terminal in Van Hook, North Dakota, which has allowed for more efficient delivery options and an expanded customer base[24]. - The company’s logistics infrastructure includes a facility capable of accommodating multiple unit trains simultaneously, which enhances operational efficiency and reduces transportation costs[25]. Market Trends and Demand - The market for frac sand has seen fluctuations, with a trend towards spot market purchases rather than long-term contracts by customers[20]. - Demand for frac sand is projected to remain strong in regions where regional sand is not widely available, such as the Bakken, Marcellus, and Utica formations[27]. - Demand for frac sand is driven by advancements in drilling technology, with an expected increase in proppant usage per well from 6,600 tons in 2019 to approximately 7,600 tons by the end of 2020[41]. - In-basin demand for sand in the Permian basin has more than tripled from 2017 to 2019, highlighting a substantial increase in market demand[42]. - The supply of high-quality Northern White frac sand is limited to specific areas, primarily in western Wisconsin, Minnesota, and Illinois, which constrains economic viability for new facilities[43]. Competitive Positioning - Smart Sand's competitive strengths include a strategically located high-quality reserve base and a low-cost structure due to the proximity of its mine and processing facilities[22]. - The company is positioned competitively due to low production costs, low debt levels, and patented SmartSystems wellsite proppant storage solutions[54]. - The proppant industry is highly competitive, with numerous large and small producers, including Badger Mining Corporation and U.S. Silica Holdings, Inc.[53]. - Competitors in the Northern White frac sand market have reduced capacity due to a shift towards finer sands, impacting the production of coarser grades[44]. Environmental and Safety Compliance - The company is committed to safety and environmental stewardship, having received ISO 9001 and ISO 14001 certifications for its management systems[26]. - The company has maintained ISO 9001/14001-2015 environmental and quality management systems for the past five years, demonstrating a commitment to environmental standards[45]. - The company was accepted as a Tier 1 participant in Wisconsin's voluntary Green Tier program in August 2014, demonstrating a strong record of environmental compliance[74]. - The company is subject to various state and local environmental review and permitting requirements, which may be more stringent than federal regulations[72]. - The company closely monitors airborne respirable silica at its sites, with potential capital expenditures required if exposure limits are significantly lowered[70]. Strategic Initiatives - The company plans to increase focus on shorter-term contracts and spot market sales due to customer reluctance for long-term contracts[28]. - The company aims to optimize its logistics infrastructure to maximize product shipment rates and lower transportation costs through dual-served rail capabilities[25]. - The company is developing new transload technology to complement existing solutions, enhancing its service offerings[17]. - The company continues to evaluate and expand its SmartSystems wellsite proppant storage solutions to enhance service offerings and reduce costs for customers[36]. - The company plans to articulate its ESG goals and vision for carbon neutrality in 2020, aligning with global sustainability movements[47].

Smart Sand, Inc. (NASDAQ:SND) Q3 2019 Earnings Conference Call November 6, 2019 10:00 AM ET Company Participants Josh Jayne - Finance Manager Charles Young - Chief Executive Officer Lee Beckelman - Chief Financial Officer William John Young - Chief Operating Officer Conference Call Participants John Watson - Simmons Energy George O’Leary - Tudor, Pickering, Holt & Co. Stephen Gengaro - Stifel Financial Corp. Lucas Pipes - B. Riley FBR, Inc. Operator Ladies and gentlemen, thank you for standing by, and welco ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________________ FORM 10-Q _____________________________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from ___ to ___ Commission file number 001-37936 SMART SAND, I ...

Financial Data and Key Metrics Changes - Smart Sand reported total revenues of $67.9 million in Q2 2019, an increase of $16.1 million from $51.8 million in Q1 2019 [19] - Adjusted EBITDA for Q2 2019 was $26.2 million, with net income of approximately $14.3 million, reflecting strong performance driven by increased sales volumes [24] - The company reduced total debt from $52.6 million at the end of Q1 to $46.6 million at the end of Q2 2019 [11] Business Line Data and Key Metrics Changes - Sales volume increased to approximately 741,000 tons in Q2 2019, a 14% increase over Q1 2019 [18] - Sand sales revenue rose to $31.4 million in Q2 from $25.6 million in Q1, while logistics revenue remained stable at approximately $20.3 million [19][20] - Contribution margin per ton increased to $41.80 in Q2 from $26.35 in Q1, primarily due to higher shortfall revenue [22] Market Data and Key Metrics Changes - Spot volumes represented 19% of total sales volumes in Q2 2019, with increased penetration in the Bakken, Marcellus, and Utica basins [10] - Approximately 50% of sales volumes are now directed to the Western United States, with about one-third to the Northeast and around 10% to Southern regions including the Permian basin [32] Company Strategy and Development Direction - The company focuses on supporting long-term contracted customers, extending spot market business, and maintaining low debt levels [6] - Smart Sand has rebranded its wellsite storage solutions as SmartSystems, which includes storage silos and aims to enhance logistics efficiency [7] - The company emphasizes the importance of quality and consistency in sand supply to meet customer needs [8] Management's Comments on Operating Environment and Future Outlook - Management expressed a conservative outlook for Q3 2019, expecting sales volumes between 625,000 to 725,000 tons, influenced by mixed customer expectations for activity levels [40] - The company anticipates continued positive cash flow from operations and plans to manage capital spending to minimize borrowings [25] Other Important Information - The company recognized $16.3 million in shortfall revenue in Q2, significantly higher than $5.8 million in Q1, providing a stable revenue source [20] - Capital expenditures for Q2 amounted to $5.4 million, with a total year-to-date spend of $13.9 million, primarily for SmartDepot silos and efficiency upgrades [24] Q&A Session Summary Question: Pricing trends for Northern White sand - Management noted that pricing for 100-mesh and 40/70 sands remains strong, with spot pricing flat to slightly down [29] Question: Status of shortfall payments from customers in litigation - Shortfall payments are included in receivables and have not yet contributed to cash flow; management remains confident in contract enforcement [31] Question: Breakdown of sales volumes by region - Approximately 50% of volumes are directed to the Western U.S., one-third to the Northeast, and around 10% to Southern regions [32] Question: Impact of shortfall revenue on EBITDA - Shortfall revenue is considered contractual payments owed, and while it contributes to EBITDA, management refrained from detailed comments due to ongoing litigation [34][35] Question: Outlook for completions activity in the second half - Management indicated mixed expectations from customers, leading to conservative guidance for Q3 [40] Question: Profitability of the extended EQT contract - Management did not disclose specific profitability details but stated it is consistent with existing agreements [42] Question: Operational status of SmartSystems - Three SmartSystems are currently operational, receiving positive feedback from customers, with plans for further deployment [43]