Smart Sand(US:SND)2022-03-09 19:59Financial Data and Key Metrics Changes - Fourth quarter volumes reached 872,000 tons, a 43% increase from Q4 2020 and a 10% increase from Q3 2021 [5][19] - Total revenues for Q4 2021 were $35.1 million, up from $34.5 million in Q3 2021, with sand revenues at $34.1 million, a 9% sequential increase [20] - The company reported a net loss of $12.2 million for Q4 2021, compared to a net loss of $7.3 million in Q3 2021, driven by higher expenses and a $2.2 million inventory impairment [22][23] - Contribution margin for Q4 2021 was $1.9 million, down from $4.1 million in Q3 2021, with adjusted EBITDA at negative $4.5 million compared to negative $1 million in Q3 2021 [22] Business Line Data and Key Metrics Changes - The Industrial Product Solutions division began generating sales in Q4 2021, with expectations for rapid growth and diversification into this segment [11] - The Waynesburg terminal is operational, expected to transload over 1 million tons of frac sand annually, enhancing logistics and market share in the Appalachian Basin [9][10] Market Data and Key Metrics Changes - The sand market is anticipated to experience strong demand and higher prices in 2022, with FOB mine pricing currently in the $30-plus range compared to $15-$20 last year [6][32] - The company has less than 20% of its capacity under long-term contracts, indicating potential for increased spot sales as demand rises [6][48] Company Strategy and Development Direction - The company aims to expand its logistics footprint and operational efficiency through acquisitions, such as the Blair frac sand mine, which adds significant capacity and direct rail access [7][8] - The focus on ESG benefits through reduced trucking mileage and carbon emissions aligns with the company's strategy to enhance sustainability in logistics [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving record volumes in 2022, driven by improved commodity pricing and customer spending [5][6] - The company is committed to maintaining a strong balance sheet, with $11 million in cash and $30 million in liquidity, while pursuing disciplined capital spending [13][24] Other Important Information - The company reduced its debt levels by $7 million in 2021 and remains focused on maintaining low leverage and adequate liquidity [18] - Capital expenditures for 2022 are projected to be in the $25 million to $30 million range, including investments in the Blair facility and other terminals [27] Q&A Session Summary Question: Guidance on price moves relative to input costs - Management indicated that pricing is currently higher than last year, with expectations for continued increases due to strong demand [32] Question: Operational status of the Blair facility - The Blair facility has been idle since June 2020, and management is assessing what is needed to bring it back online, with updates expected in the next quarter [38] Question: Interest in long-term contracts - There is increased interest in long-term contracts as spot pricing rises, with discussions ongoing to secure these contracts [52] Question: Impact of Smart system on margins - The Smart system had a negative impact on contribution margins last year, estimated at $2 million to $3 million, but is expected to generate positive margins in 2022 [54] Question: Current market conditions for frac sand - Management noted that a significant amount of Northern White capacity has been taken off the market, leading to improved supply-demand balance and pricing [70][72]