Smart Sand(US:SND)2022-11-09 20:47Financial Data and Key Metrics Changes - In Q3 2022, Smart Sand reported sales volumes of 1.1 million tons, a 7% decrease from 1.196 million tons in Q2 2022 [23] - Revenues increased to $71.6 million in Q3 2022 from $68.7 million in Q2 2022, driven by improved average sales prices and increased utilization of SmartSystems [24] - Contribution margin reached $17.8 million and adjusted EBITDA was $11.3 million, up from $15.3 million and $9.2 million in Q2 2022 respectively [26] - Net income for Q3 2022 was $2.7 million, compared to a net loss of $90,000 in Q2 2022 [25] - Free cash flow for the quarter was $6.4 million after capital expenditures of $4.4 million [27] Business Line Data and Key Metrics Changes - Industrial Product Solutions division saw a 28% increase in sales volume during the quarter [14] - SmartSystems last mile offering is gaining momentum, generating positive contribution margin year-to-date [12] Market Data and Key Metrics Changes - Sales volume into the Bakken Basin increased by approximately 40% sequentially [11] - Pricing improved in Q3 2022, with expectations to maintain current pricing levels due to strong market supply and demand fundamentals [9] Company Strategy and Development Direction - Smart Sand aims to diversify its business beyond oil and gas through its Industrial Product Solutions division, which is expected to grow significantly in 2023 and beyond [15] - The company is focused on maintaining a strong balance sheet and disciplined capital spending while pursuing long-term value-generating projects [16] - Smart Sand has over 400 million tons of Northern White sand reserves and the capability to flex annual processing capacity from 5.5 million tons to 10 million tons [17][18] Management's Comments on Operating Environment and Future Outlook - Management noted that Northern White supply and demand fundamentals remain positive, with growing demand particularly in the Appalachian basins [36] - The company expects to achieve record sales volumes for the full year 2022, with contribution margin per ton remaining in the double-digit range in Q4 2022 [30] Other Important Information - The company ended Q3 2022 with approximately $10.4 million in cash and cash equivalents, and $23 million in available liquidity [28] - Management is evaluating the timing of opening the Blair facility and expects to provide updates in the year-end earnings call [18] Q&A Session Summary Question: Perspective on supply-demand fundamentals for frac sand in 2023 - Management indicated that Northern White supply and demand fundamentals are positive, with growing demand in the Appalachian basins and steady activity in the Bakken [36][38] Question: Contribution margin per ton in Q4 - Management explained that consistent volumes and stable pricing are expected to help maintain contribution margin per ton at levels seen in Q2 and Q3 [39][41] Question: Contracts and visibility into future volumes - Management confirmed the addition of smaller contracts and good visibility with spot customers regarding future volumes [47] Question: Shareholder return program - Management stated that while evaluating shareholder return options, the focus remains on maintaining positive free cash flow before making decisions [48][49]