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Smart Sand(SND) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2023 was $8.1 million, a significant improvement compared to Q1 2022, despite seasonal production cost impacts [6] - Total revenues for Q1 2023 were $82.4 million, up from $73.8 million in Q4 2022, driven by improved average sales prices and $1.9 million in contractual shortfall revenue [15][17] - Contribution margin per ton increased to $14.89 in Q1 2023 from $14.77 in Q4 2022, with a total contribution margin of $17.8 million [18][34] Business Line Data and Key Metrics Changes - Sales volume for Q1 2023 was 1.195 million tons, a 40% increase compared to Q1 2022 and a slight increase from Q4 2022 [14] - The SmartSystems last-mile offering showed improvement, contributing positively in Q1 2023, with expectations for continued operational profitability growth [11][12] Market Data and Key Metrics Changes - The Canadian market is currently 80% supplied by Northern White sand, indicating strong long-term growth potential for this market [8] - Strong demand was noted in the Appalachian Basin, although some moderation is expected due to low natural gas prices [24][35] Company Strategy and Development Direction - The company is focused on generating higher returns from its existing asset base while maintaining prudent leverage levels [13] - Strategic investments in the Blair mine and processing facility are aimed at establishing the company as a premier provider of Northern White sand and logistics services [29][30] Management's Comments on Operating Environment and Future Outlook - Management anticipates that production costs will moderate in Q2 2023, with expected sales volumes in the range of 1 million to 1.2 million tons [45][48] - The company remains optimistic about long-term natural gas fundamentals, driven by increased LNG export activity in North America [24] Other Important Information - The company ended Q1 2023 with $7 million outstanding on its revolver and approximately $7.6 million in cash, with available liquidity exceeding $25 million [47] - Capital expenditures for the year are expected to be in the range of $20 million to $25 million, with higher expenditures anticipated in Q2 due to the Blair facility startup [49] Q&A Session Summary Question: Current frac sand price environment? - Management has not seen any deterioration in frac sand pricing to date, despite concerns about natural gas demand [50] Question: Any slowdown in demand from the Marcellus region? - There is a slight moderation in the Marcellus, but the company maintains good long-term contracts and logistical advantages in the region [52]