Smart Sand (SND) Sidoti Micro-Cap Virtual Conference summary

Business model and operations

• Operates three large sand mining and processing facilities in Wisconsin and Illinois with over 500 million tons of reserves and 10 million tons of processing capacity.

• Facilities are connected to Class I rail lines, enabling efficient logistics and large unit train shipments to key oil and gas basins.

• Focuses on high-quality, fine mesh Northern White sand, which constitutes 70%-80% of reserves and meets 90% of current market demand.

• Maintains low operating costs and a strong capital structure with high insider ownership (33%).

• Owns and operates terminals in Pennsylvania, Ohio, North Dakota, and Oklahoma, with access to third-party terminals for broader reach.

Financial performance and capital allocation

• Achieved a rebound in performance in the first two quarters of the year, with improved volumes and contribution margins.

• Maintains low leverage, enabling resilience through industry cycles and downturns.

• Repurchased 11% of shares last year and is considering future dividends or additional buybacks, with plans to clarify capital return strategy by early 2025.

• CapEx guidance for the year is $10–$13 million, focused on existing projects and logistics assets rather than new mining assets.

• Normal annual maintenance CapEx is expected to remain in the $10–$15 million range.

Market trends and competitive positioning

• Northern White sand market has rationalized from 80–100 million tons of capacity in 2017 to 40–50 million tons today, with much idle capacity being coarse and inefficient.

• Holds the position as the second-largest Northern White provider in North America, with 10 million tons of capacity.

• Excess capacity allows for efficient capture of incremental market share as demand grows.

• Regional sand offers upfront cost savings, but Northern White delivers better long-term well performance and cash flow.

• Well-positioned to benefit from LNG export growth in the Marcellus and Canadian markets, with ongoing efforts to secure terminal access in Canada.