Smart Sand(US:SND)2024-05-14 19:23Financial Data and Key Metrics Changes - In Q1 2024, the company sold 1.3 million tons of sand, a 31% increase from 1 million tons in Q4 2023 [27] - Total revenues for Q1 2024 were $83.1 million, up from $61.9 million in Q4 2023, primarily due to higher sand sales volumes and improved smart system revenues [27][28] - Contribution margin improved to $18.5 million in Q1 2024, compared to $9.2 million in Q4 2023, with adjusted EBITDA increasing to $9.3 million from $0.7 million [35][43] Business Line Data and Key Metrics Changes - The company has made significant investments in hydraulic mining to improve efficiency and reduce costs, which is expected to enhance yield by $1 to $2 per ton [7][40] - Changes in the wet plant process have allowed the company to wash out less demanded sand sizes, improving overall efficiency [5][6] Market Data and Key Metrics Changes - The company is optimistic about the long-term fundamentals of the natural gas market, despite short-term fluctuations due to lower natural gas prices [19][24] - The company expects the Utica basin to provide growth opportunities due to increasing oil drilling activities [21][38] Company Strategy and Development Direction - The company aims to expand its Northern White sand franchise, which is considered superior for energy and industrial applications [36] - Investments in new terminals in Northeast Ohio are intended to enhance market presence in the Utica shale basin [37] - The company is focused on organizational improvements to increase efficiency and sustainability in mining, processing, and logistics operations [40] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that while there may be a pullback in demand in the Marcellus due to lower natural gas prices, increased activity in the Bakken and Canada may mitigate this [47] - The company expects to be free cash flow positive for the year despite a negative cash flow in Q1 due to increased working capital investments [49] Other Important Information - The company ended Q1 2024 with $14 million in borrowings on its credit facility and approximately $4.6 million in cash and cash equivalents [45] - The company plans to formalize its approach to returning value to shareholders later in 2024 [22][23] Q&A Session Summary Question: Can you discuss the capital improvements to improve yield in your plants? - Management highlighted significant investments in hydraulic mining to reduce equipment needs and improve efficiency [4] Question: Are there still opportunities to grow your asset base? - The company currently has 10 million tons of Northern White capacity and is exploring terminal access to enhance sand movement [9][11] Question: How do you see the dynamics of the supply-demand in the US sand market? - The Northern White market remains in relative supply-demand balance, with stable pricing expected [60][62] Question: What percentage of the business is currently industrial sand, and how do you see it evolving? - Currently, industrial sand accounts for about 5% of total volumes, with a goal to grow it to at least 10% over the next few years [67]