Smart Sand(US:SND)2022-05-12 19:47Financial Data and Key Metrics Changes - First quarter volumes of 852,000 tonnes increased by 12% compared to the first quarter of 2021 but were flat compared to the previous quarter due to logistics and weather issues [7] - Total revenues for Q1 2022 were $41.6 million, up from $35.1 million in Q4 2021, with sand revenues increasing by 12% sequentially to $38.3 million [22] - The company reported a net loss of $5.9 million or $0.14 per share for Q1 2022, an improvement from a net loss of $12.2 million or $0.29 per share in Q4 2021 [24] - Contribution margin for Q1 2022 was $4.3 million, with a negative adjusted EBITDA of $1.9 million, compared to a contribution margin of $1.9 million and a negative adjusted EBITDA of $4.5 million in the previous quarter [25] Business Line Data and Key Metrics Changes - The Industrial Product Solutions division is expanding quickly, with a growing product list and geographical reach [13] - The company plans to broaden service capabilities with blending, packaging, and finer-grade products in the second half of 2022 [14] Market Data and Key Metrics Changes - Commodity prices remain strong, with expectations of record volumes in 2022 [9] - The company has less than 15% of its capacity signed under long-term contracts, allowing for potential price increases due to improved market fundamentals [10] Company Strategy and Development Direction - The company completed the purchase of a sand mining and processing facility in Blair, Wisconsin, with a processing capacity of 2.9 million tonnes per year [9] - The new transloading terminal in Waynesburg, Pennsylvania, is expected to drive higher margins and expand the company's presence in the Appalachian Basin [12] - The company aims to achieve a long-term contracted volume of 60% to 70% [36] Management's Comments on Operating Environment and Future Outlook - Management expects improved operating and financial results starting in the second quarter due to increased sales volumes and pricing [10][28] - The company anticipates sales volumes to increase by more than 25% from Q1 levels in the second quarter [28] - Management highlighted the importance of logistics and rail capacity in meeting market demand [45][47] Other Important Information - The company has a strong balance sheet with $5 million in cash and approximately $24 million in liquidity [17] - Capital expenditures for the year are expected to be in the range of $25 million to $30 million, focusing on efficiency projects and supporting the growing IPS business [29] Q&A Session Summary Question: Current pricing trends and willingness to lock up volumes - Management noted that pricing has increased from low to mid-20s to well into the 30s as they exit Q1 [32] - There is an appetite for contracts due to the tight market for sand [34] Question: Contribution margin per tonne and future expectations - Management indicated that contribution margins should approach $10 per tonne in the second half of the year, driven by improved pricing and volumes [43] Question: Sustainable volume potential given acquisitions - Management expects to achieve over 1 million tonnes per quarter, with potential for higher volumes if market conditions remain favorable [46][48] Question: Working capital and receivables management - Management anticipates a buildup in working capital due to increased sales activity, with cash conversion expected in the second half of the year [50] Question: Impact of industrial sales on volumes and margins - Industrial sales are expected to grow significantly over the next year or two, with a more meaningful impact anticipated in late 2022 or early 2023 [52][54]