Q3 2023 Smart Sand Inc Earnings Call

Good morning, and welcome to the Smart Sand's, Inc. Third quarter 2023 earnings conference call.

Speaker 1: Good morning and welcome to the SmartSanth Inc. 3rd quarter, 2023 earnings conference call.

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Speaker 1: And now I would like to turn the conference over to Christopher Green, Vice President of Accounting. Please, go ahead.

And now I would like to turn the conference over to Christopher Green Vice President of accounting.

Please go ahead.

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Good morning, and thank you for joining us for Smart Sand's third quarter 2023 earnings call on the call today, we have Chuck Young founder and Chief Executive Officer, <unk>, <unk>, Chief Financial Officer, and John Young Chief operating Officer.

Speaker 2: Good morning and thank you for joining us for Smart

Before we begin I would like to remind all participants that our comments made today will include forward looking statements, which are subject to certain risks and uncertainties that could cause actual results or events to materially differ from those anticipated.

Speaker 2: Before we begin, I would like to remind all participants that our comments made today will include forward-looking statements, which are subject to certain risks and uncertainties that could cause actual results or events to materially differ from those anticipated. For a complete discussion of such risks and uncertainties, please refer to the company's press release and our documents on file with the SEC.

For a complete discussion of such risks and uncertainties. Please refer to the company's press release and our documents on file with the SEC.

Speaker 2: Mark and disclaims any intention or obligation to update or revise any financial projections or forward looking statements whether because of new information, future events or otherwise.

<unk> disclaims any intention or obligation to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.

Speaker 2: This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 8, 2023.

This conference call contains time sensitive information.

Accurate only as of the live broadcast today November eight 2023.

Additionally, we will refer to the non-GAAP financial measures are contribution margin adjusted EBITDA and free cash flow during this call.

Speaker 2: Additionally, we will refer to the non-GAAP financial measures of contribution margin, adjusted EBITDA, and free cash flow during this call.

Speaker 2: These measures, when used in combination with our GAAP results, provide us and our investors with useful information to better understand our business.

These measures when used in combination with our GAAP results provide us and our investors with useful information to better understand our business.

Speaker 2: Please refer to our most recent press release or our public filings for our reconciliations of gross profit to contribution margins, net income to adjust the impetus, and cash flow provided by operating activities to free cash flow. I would now like to turn the call over to our CEO , Chuck Jones.

Please refer to our most recent press release or our public filings for a reconciliation of gross profit contribution margin net income to adjusted EBITDA and cash flow provided by operating activities to free cash flow I would now like to turn the call over to our CEO Chuck Young.

Thanks, Chris and good morning.

Speaker 3: Smart Sam delivered another quarter of strong operating and financial results. In the third quarter, we sold approximately 1.2 million tons. We generated $21 million in contribution margin and $13.3 million in adjusted EVITA. Both saw the improvements over third quarter 2022 results and second quarter 2023 results.

<unk> delivered another quarter of strong operating and financial results in the third quarter. We sold approximately 1.2 million tons, we generated $21 million and contribution margin and $13 3 million and adjusted EBITDA, both solid improvements over third quarter 2022 results in second quarter 2023 results.

Speaker 3: Additionally, in the quarter, we continue to generate positive free cash flow. For the first nine months of 2023, we have generated 17 and a half million in free cash flow. And I'm pleased to report that Smart Sam will be cash flow positive for 2023.

Additionally, in the quarter, we continued to generate positive free cash flow for the first nine months of 2023, we generated $17 5 million in free cash flow and I'm pleased to report that smart sand will be cash flow positive for 2023.

Speaker 3: We have used our free cash flow this year to continue to de-lever our balance sheet. We've paid off over $9 million in debt for the first nine months of 2023.

We have used our free cash flow this year to continue to Delever, our balance sheet, we paid off over $9 million in debt for the first nine months of 2023.

Speaker 3: Return value to shareholders. Earlier this year, we bought back approximately 11% of our common shares outstanding.

Returned value to shareholders earlier this year, we bought back approximately 11% of our common shares outstanding.

Speaker 3: SmartSan will continue to focus on generating free cash flow, maintaining balance sheet discipline, and returning value to our shareholders.

Smart sand will continue to focus on generating free cash flow maintaining balance sheet discipline and returning value to our shareholders.

Speaker 3: We plan to remain true to our core business principles and operating for the loss of the youth. Our goal is simple to be the premier provider of Northern White Stand and Logistics Services in North America.

We plan to remain true to our core business principles and operating philosophy and our goal is simple to be the premier provider of northern White sand and logistics services in North America.

We strive to not only be a supplier of sand to our customer but to be their partner inefficiently, providing high quality efficient environmentally friendly and sustainable long term sand supply.

Speaker 3: We strive to not only be a supplier of sand to our customer, but to be their partner in efficiently providing high quality, efficient, environmentally friendly, and sustainable long-term sand supply.

We could not have achieved these results without the dedication and hard work of our employees I want to thank our employees for their efforts and continued commitment to smartphone.

Speaker 3: We could not have achieved these results without the dedication and hard work of our employees. I want to thank our employees for their efforts and continued commitment to SmartSAN.

Speaker 3: Demand for northern white frac sand continues to be strong. We had consistent demand of the Bakken and Appalachian basins during the quarter. Our sales in Canada increased as well. This was our first quarter fully operating our Blair facility. Canadian sales represented approximately 10% of third quarter sales volume. We're excited about the Blair mines growth potential as part of our continuing effort to expand our northern white sand franchise.

Demand for northern White Frac sand continues to be strong we had consistent demand in the Bakken and Appalachian basins during the quarter.

Sales in Canada increased as well this was our first quarter fully operating our Blair facility.

Canadian sales represented approximately 10% of third quarter sales volume. We are excited about the Blair minus growth potential as part of our continuing effort to expand our northern white sand franchise with respect to our industrial product solutions, we're constructing improvements at our Utica facility in the fourth quarter to add cooling and blending capabilities.

Speaker 3: With respect to our industrial product solutions, we're constructing improvements at our Utica facility in the fourth quarter to add cooling and blending capabilities. The expansion of our industrial products capabilities will allow us to serve a broader market segment. Industrial stand sales volumes have been approximately 5% of our sales volume over the last few quarters, and we expect those sales to grow in 2024.

The expansion of our industrial products capabilities will allow us to serve a broader market segment industrial sand sales volumes have been approximately 5% of our sales volume over the last few quarters and we expect those sales to grow in 2024.

Speaker 3: We continue to make progress penetrating the last mile market. With the introduction of our Smart Belt Direct-Ablender technology, we're delivering the customers what they want, faster fracks and less trucking through maximizing payload or truck, and minimizing unload times. In response to customer demand, our Smart Systems fleet offering now includes our Smart Belt and Fair system and our proprietary SmartPath Transloader.

We continue to make progress penetrating the last mile market with the introduction of our smart belt directed Blender technology, we're delivering to customers, what they want faster fracs and less trucking through maximizing payload per truck and minimizing unload times in response to customer demand our smart systems fleet offering now includes <unk>.

Smart belt conveyor system, and our proprietary smart pass translator.

Speaker 3: During the quarter, we operated four smart systems leads and four silo-only fleets. Based on customer feedback and demand, we were excited about the prospects for growing our last mile business in 2024.

During the quarter, we operated fourth smart system fleets and four silo only fleets based on customer feedback and demand. We're excited about the prospects for growing our lifestyle business in 2024.

Speaker 3: Looking at the fourth quarter, we currently expect to see normal seasonal slowdown in the bucket as we move into the winter months. Additionally, we are seeing some budget exhaustion from customers who have accelerated spending in the first nine months of the year. However, we do expect similar sales in Canada in the fourth quarter and we are expecting increased activity in the operation basin starting in November . We expect industrial sales in the fourth quarter to be in line with third quarter results.

Looking at the fourth quarter, we currently expect to see normal seasonal slowdown in the Bakken as we move into the winter months. Additionally, we are seeing some budget exhaustion from customers, who accelerated spending in the first nine months of the year. However, we do expect similar sales in Canada in the fourth quarter and we're expecting increased activity in the <unk>.

Malaysian basin, starting in November we expect industrial sales in the fourth quarter to be in line with third quarter results.

Speaker 3: We're excited about our prospects in 2024. In October , we signed three new contracts. We currently have approximately 50% of our expected sales volumes contracted for 2024. Two of these new contracts are for customers in the Appalachian Basins, and one is for a customer in the Bacchus.

We are excited about our prospects in 2024.

Tober, we signed three new contracts. We currently have approximately 50% of our expected sales volumes contracted for 2024.

Two of these new contracts are from customers in the Appalachian basins and one is for a customer in the Bakken.

Speaker 3: Based on the current market conditions and commodity prices, we expect volumes in these two key markets for Svarats fans to be strong in 2024. Natural gas fundamentals continue to be positive, with continued growth in natural gas plants for electricity generation, and increased LNG demand as new capacity in North America comes online.

Based on the current market conditions and commodity prices, we expect volumes in these two key markets for smart sand to be strong in 2024 natural gas fundamentals continue to be positive with continued growth in natural gas plants for electricity generation and increased LNG demand as new capacity in North America comes online to support.

Speaker 3: Support the expected long-term positive market fundamentals in the Mars Fellows. We have expanded our Wainsburg, Pennsylvania terminal. We now have the capability to handle multiple products at this location and increased volumes. With our improvements completed, we are anticipating higher industrial sales volume in 2024. Our new cooling and blending capabilities allows to compete more effectively in the Foundry and Glass industrial Samark.

The expected long term positive market fundamentals in the Marcellus we have expanded our Waynesboro, Pennsylvania terminal, we now have the capability to handle multiple products at this location and increased volumes with our improvements completed we are anticipating higher industrial sales volume in 2024, our new cooling and blending capabilities.

How's the compete more effectively in the foundry and glass industrial sand markets. We are still in our budgeting process for 2024. So we will have more details for expectations for 2024 on our 2020 for yearend call. However, based on current market conditions, we expect overall sand sales volumes for 2020.

Speaker 3: We are still in our budgeting process for 2024, so we'll have more details for our expectations for 2024 on our 2024 year end call. However, based on current market conditions, we expect overall same sales volumes for 2024 to be at least 10% higher than 2023 sales level.

Or to be at least 10% higher than 2023 sales levels.

Speaker 3: For our last mile business, by year end, we will have 10 smart systems with smart path and smart belt technology ready to deploy in the field. Going into 2024, we expect to have increase in our utilization of our smart systems fleet over the course of the year.

For our last mile business by year end, we will have 10 smart systems with smart path and smart belt technology ready to deploy in the field.

Going into 2024, we expect to have increase in our utilization of our smart systems sleep over the course of the year.

Building, our northern White sand franchise will continue to be our primary focus our goal is to increase the utilization of our three operating mines, Oakdale, Utica and Blair and to expand our market share in every basin. We serve we have approximately 10 million tons of high quality, northern white sand capacity available to us.

Speaker 3: Building our northern white sand franchise will continue to be our primary focus. Our goal is to increase the utilization of our three operating mines, Oakdale, Utica and Blair, and to expand our market share in every basin we serve. We have approximately 10 million tons of high quality northern white sand capacity available to serve the frac fan industrial market.

Serve the Frac sand and industrial markets.

Speaker 3: This capacity is tied directly into four-class one railroads. We have the best in-class terminals serving the key block and in-appulation basins and a network of high-quality, well-positioned third-party terminal partners. We can serve every market in North America through our efficient low-cost logistics book.

This capacity is tied directly into four class one railroads. We are the best in class terminal, serving the key Bakken and Appalachian basins, and a network of high quality well positioned third party terminal partners. We can serve every market in North America is where our efficient low cost logistics footprint.

Speaker 3: With our smart system technology, we can meet increasing demand of customers looking for higher volume of fan delivered to the well site and a safe and efficient manner.

With our smart systems technology, we can meet increasing demand of customers looking for higher volume of sand delivered to the well site and a safe and efficient manner.

Speaker 3: We also have a well-tannured management team that are owners in the business and are focusing on delivering long-term value for our employees and shareholders. Most of the current executive team has been with smarts and for over 10 years and are committed to the company's long-term success.

We also have a well tenured management team that our owners in the business and are focusing on delivering long term value for our employees and shareholders. Most of the current executive team has been with smart sand for over 10 years and are committed to the company's long term success.

Speaker 3: We will continue to look for ways to increase shareholder value. We have a strong balance sheet with one of the lowest leverage levels in the industry, which allows us to manage effectively through the cycles in the energy business, and provides us the ability to move quickly to take advantage of new opportunities in the more.

We will continue to look for ways to increase shareholder value, we have a strong balance sheet with one of the lowest leverage levels in the industry, which allows us to manage effectively through cycles in the energy business and provides us the ability to move quickly to take advantage of new opportunities in the market.

Our goal is to continue to deliver positive free cash flow, while taking advantage of opportunities to grow the business. We will also continue to look for ways to return value to our shareholders.

Speaker 3: Our goal is to continue to deliver positive free cash flow while taking advantage of opportunities to grow the business. We will also continue to look for ways to return value to our shareholders.

Speaker 3: We believe the Northern White Sand will continue to be a key product for both the energy and industrial sand.

We believe the northern White sand will continue to be a key product for both the energy and industrial sand markets.

Speaker 3: And SmartSand is committed to being a leading provider of northern white sand, as always, we'll keep our employee and shareholders interest in mind and everything. We do. We continue to evaluate ways. We can return value to our shareholders. We have bought back approximately 11% of our shares this year.

Smart sand is committed to being a leading provider of northern white sand as.

As always we will keep our employee and shareholders' interest in mind in everything we do we continue to evaluate ways. We can return value to our shareholders. We have bought back approximately 11% of our shares this year.

Speaker 3: and there will be more to come on our year-end earnings call in early 2024. And with that, I'll turn the call over to our CFO , Lee Beckelman.

And there will be more to come on our year end earnings call in early 2024, and with that I'll turn the call over to our CFO Lee <unk>.

Thanks, Jeff now we'll go through some of the highlights of the third quarter 2023, compared to our second quarter 2023 results.

Speaker 4: Thanks, Chuck. Now we'll go through some of the highlights of the third quarter 2023 compared to our second quarter 2023 results.

Speaker 4: We sold 1.2 million tons in the third quarter, a 12% increase over second quarter sales volumes of 1.1 million.

The $1 2 million tons in the third quarter.

12% increase over second quarter sales volumes of one 1 million tons.

Speaker 4: Total revenues for the third quarter were 76.9 million compared to 74.8 million in the second quarter.

Total revenues for the third quarter were $76 9 million compared to $74 8 million in the second quarter.

Speaker 4: Total revenues were higher in the third quarter, primarily due to contractual shortfall revenue recognized in the quarter.

Total revenues were higher in the third quarter, primarily due to contractual shortfall revenue recognized in the quarter.

Speaker 4: Our cost of sales recorder was $62.5 million. Basically flat with second quarter result.

Our cost of sales for the quarter was $62 5 million basically flat with second quarter results.

Speaker 4: Total operating expenses of 9.5 million in the third quarter were marginally lower than second quarter operating expenses of 9.6.

Operating expenses of nine.

$5 million in the third quarter were marginally lower than second quarter operating expenses of $9 6 million.

Speaker 4: Contributions margin was $21 million or $17.20 per ton in the third quarter. Second quarter contribution margin was $19 million or $17.57 per ton.

Contribution margin was 21 million or $17 20 per ton in the third quarter second quarter contribution margin was $19 million or $17 57 per ton.

Speaker 4: Adjusted evadonna third quarter was 13.3 million compared to 11.4 million in the second quarter.

Adjusted EBITDA in the third quarter was $13 3 million.

<unk> to $11 4 million in the second quarter.

Speaker 4: The sequential increase in contribution margin and adjusted EBITDA in the third quarter was primarily due to the shortfall revenue recognized in the quarter and relatively flat cost of goods sold and operating.

The sequential increase in contribution margin and adjusted EBITDA in the third quarter was primarily due to the shortfall revenue recognized in the quarter and relatively flat cost of goods sold and operating expenses.

For the third quarter of 2023, we generated $12 5 million in net cash provided by operating activities, leading to $5 6 million of free cash flow. After we spent $6 9 million on capital expenditures.

Speaker 4: For the third quarter 2023, we generated $12.5 million in net cash provided by operating activities.

Speaker 4: leading to $5.6 million in free cash flow after we spent $6.9 million on capital expenditures.

Speaker 4: Year-to-date, through the end of September , we have generated $17.5 million in free cash flow from $33.6 million in net cash provided by operating activities, less $16.1 million in capital expenditures.

Year to date through the end of September we had generated $17 5 million and free cash flow from $33 6 million in net cash provided by operating activities less $16 1 million in capital expenditures.

Speaker 4: We ended the third quarter with no outstanding borrowings on our credit facility. We had approximately $9.3 million in cash and cash equivalents at the end of the third quarter.

We ended the third quarter with no outstanding borrowings on our credit facility, we had approximately $9 3 million in cash and cash equivalents at the end of the third quarter.

Speaker 4: and between cash and availability from our credit facility, we currently have available liquidity and excess of 28 notes.

And between cash and availability from our credit facility. We currently have available liquidity in excess of $28 million.

Speaker 4: As Chuck highlighted, we do expect demand to moderate some in the fourth quarter due to normal seasonal slowdown in the Bakken and budget exhaustion from customers at the end of the year.

As Chuck highlighted we do expect demand to moderate some in the fourth quarter due to normal seasonal slowdown in the Bakken and budget exhaustion from our customers at the end of the year.

Speaker 4: Currently we expect fourth quarter sales volumes to be in the 900,000 to 1.1 million times.

Currently we expect fourth quarter sales volumes to be in the 900000 to 1.1 million ton range.

Speaker 4: In the Northern Fourth Quarter and First Quarter of the County of the Year, we have higher reported production costs due to drawing down inventory that we have capitalized in the summer months to meet our winter sales life.

No one in the fourth quarter and first quarters of the calendar year, we have higher reported production cost due to drawing down inventory that we have capitalized in the summer months to meet our winter sales volumes.

Speaker 4: Currently for the fourth quarter, we believe contribution margin for time will be in the mid double digit range of 12 to 16 dollars per

Currently for the fourth quarter, we believe contribution margin per ton will be in the mid double digit range of 12 to $16 per ton.

We expect capital expenditures for the year to be in the 20 million to $23 million range, which includes the capital expenditures related to the startup of the Blair facility. The expansion of the Williamsburg terminal and investment in the cooling and blending capabilities at our Utica facility.

That capital spenders for the year to be in the 20 million to 23 million range, which includes the capital expenditure related to the start-up of the Blair facility, the expansion of the Wainsburg terminal, and investment in the cooling and blending capabilities that are eutica.

As Chuck highlighted, we expect to be free cash flow positive for the year.

Chuck highlighted we expect to be free cash flow positive for.

For the year.

This concludes our prepared comments and we will now open the call up for questions.

This concludes our prepared comments and we will now open the call up for questions.

Thank you.

We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone thought.

If youre using a speakerphone please pick up your handset before pressing the keys.

If at any time your question has been addressed then you would like to withdraw your question. Please press star then to.

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At this time, we will pause momentarily to assemble our roster. And again, star one for questions.

At this time, we will pause momentarily to assemble our roster.

And again star one for questions.

Oh yeah.

Our first question comes from John Daniel from Daniel Energy Partners. John .

Our first question comes from John Daniel from Daniel Energy Partners.

John Please go ahead.

Thank you, good morning guys. Just one question for me if I may. The commentary about 24 volumes being up 10%.

Good morning, guys.

Just just one question for me.

If I may the the commentary about 24 volumes being up 10%.

Do you see your sense? Is that 10% rise in activity? Is it completion design, completion design or change in sales more volume for well? Is it a new customer? Just any incremental color would be appreciated.

Is it your sense is that a 10% rise in activity is it completion design completion designs are changing so it's more volume per well is it a new customer just any incremental color would be appreciated.

Yeah, I'll start with that John I think some of it's actually we have actually signed a couple of new customers and increasing volumes with some existing customers. So some of that is increased activity.

Yeah, I'll start with that, John . I think some of it is actually we have actually signed to a couple of new customers, and in some volumes with some existing customers, some of that is increased activity related to that. And then I think we continue to see trends with the longer laterals and more stages per lateral. We continue to see trends were more sand per well, which I think is helping driving, even if you see kind of a lot of spending, more sand per well is the trends.

Related to that and then I think we continue to see trends with the longer laterals and more stages per lateral we continue to see trends, where more and more sand per well, which I think is helping driving even if you see kind of flat spending more sand per well as the trends, we've been saying I'm not sure. It's a.

With the blend and what I would add to that is just also, as we continue to see our Canadian market ramp up at the new market that we hadn't participated in prior. So, you know, our Blair facility is positioned really well for attack.

Blaine.

And what I would add to that is just that you'd also as we continue to see our Canadian market ramp up that's a new market that we haven't participated in prior so Blair facility is positioned really well for attacking that market got it okay.

Got it. Okay. That John is the, you know, in the application and some of the other basings that we're servicing.

John is that.

In the Appalachian Basin, and some of the other basins that were servicing.

Or is it a higher demand for fine sand a lot of the existing northern white infrastructure doesn't have as much as we do that.

We feel like we're building a good space for the service. Perfect. Thank you all very much for including me.

We feel like we're really in it.

Good spaces.

Okay perfect. Thank you all very much for including me.

Yeah.

Okay.

And our next question comes from Patrick Hulett, from Stiffle. Patrick, you may proceed.

And our next question comes from Patrick let from Stifel.

You May proceed.

Hey, it's Pat O. for Steven J. Garcia. Thanks for taking the questions.

Hey, it's Pat on for Stephen J J, Thanks for taking the questions.

Yeah. So in regards to the Canadian market, obviously part of the increased volumes, attributable to Blair there, we're curious to be able to ride any insight on how to think about margin there. It was kind of the same as other regions or if the quarter over quarter step up in margin, attributable Canadian Indian market at all.

Yeah. So in regards to the Canadian market.

Obviously part of the increase volumes attributable both to blur there.

We're curious if you could provide any insight on how to think about margin. There. It was kind of the same as other regions.

Or if the quarter over quarter step up in margin.

Attributable Canadian market at all.

Well, margins are relatively consistent with other regions. I think it depends on the product. And so we're seeing maybe a little higher pricing in Canada, but it's not dramatically different than what we're seeing in the US.

Well margins are relatively consistent with other regions I think we.

It depends on the product and so we're seeing maybe a little higher pricing in Canada.

But it's not dramatically different than what we're seeing in the U S.

Currently yes.

Yeah, and the other thing I would add to that from an operational standpoint, as we continue to ramp up operations that the layer, you know, production costs should come down to level similar to Oakdale. I mean, it's a very similarly logistically situated plant, you know, mine, wet and dry processing, low down all on site. So we have, I think from a driving margin on that plant, we should be able to drive down production costs too, as we get more utilization. We can utilize that plant.

And the other thing I would add to that from an operational standpoint, as we continue to ramp up.

Operations at the where production costs should come down to levels similar to Oakdale very similarly, logistically situated plant.

Mine are wet and dry processing loadout all on site. So we have.

I think from a driving margin out of that plant, we should be able to drive down production cost too as we get more utilization.

Yes, we can utilize that plant that's actually referring to the CN plant that we have in Blair, Wisconsin.

You know, that plan can send sand to the US as well, up to the Appalachian Basin, but we're super excited to begin to get this up to a Canadian market that we never had before on our other rail providers. So, which looks to have some pretty good growth next.

That plant can sense and to the U S as well to the Appalachian basin, but we're super excited because it gets us up to a Canadian market that we never had before.

Our other rail providers, so which looks to have some pretty good growth next year.

Got it okay. Thanks, that's great color there that's all for me I'll turn it back.

Thank you.

And our next question comes from William Bremmer, from Vanquish Capital Partners. William, please go ahead. Good morning.

And our next question comes from William Bremmer from Vanquish capital partners.

William Please go ahead.

Good morning, gentlemen.

Good morning.

Hey Chuck, well first and foremost, the balance sheet is looking fantastic. Guys with Donnie, fantastic job.

Hey, Chuck well first and foremost the balance sheet is looking fantastic guys have done a fantastic job.

a capillard allocation and I might give you a lot of credit on that.

And capital allocation and that might give you a lot of credit on that.

and echo the comments you made regarding your leverage compared to your peers. So well done there. My question is on the industrial side. And I was wondering if you could provide us a little more granularity in terms of what end markets you're supplying. And secondly, have you been able to penetrate the Canadian industrial market at the same time?

And I Echo the.

Comment you made regarding your leverage compared to your peers, so well done there.

Question is on the industrial side.

And I was wondering if you could provide us a little more granularity in terms of what end markets you're supplying.

And secondly have you been able to penetrate the Canadian industrial market at this time.

So John has kind of been the focus on that on the professional sandspark, along with Rick Scher, so I'll let him answer that question, but we're definitely focused on Canada.

So John has kind of been the focus on that on the industrial SaaS part along with great share. So let him answer that question, but yes, we are.

Definitely focus on Canada as well the industrial Santos from my standpoint, Yeah. William So, yes, we're focused on the traditional industrial markets.

Yeah, William, so yeah, I mean, we're focused on the traditional industrial markets and you know, in order of kind of volume, it be glass, foundry, and then kind of it falls off their recreational.

In order of volume would be glass foundry, and then kind of it falls off their recreational and other type thing.

of our blending and cooling capability out of our Utica plant there. We expect to continue to grow that industrial market, the having blending and cooling capability gets us into markets that we're incapable of pursuing prior to having that capability. So, again, industrial is always gonna be a lag from volume compared to frack, frack is the big dog in the volume world. But our expectation is that, you know, in some industrial applications you can have relatively high margin specialized products and that's really what we're focused on, you know, out of our industrial.

With the addition of our blending and cooling capability out of our Utica plant. There, we expect to continue to grow that industrial market, having blending and cooling capability gets us into markets that were incapable of pursuing prior to having that capability. So again industrial.

It's always going to be a lag from volume.

Compared to Frac Frac.

It is the big dog in the volume world, but our expectation is that.

And some industrial applications you can have relatively high margin specialized products and thats really what were focused on.

You'll out of our industrial base.

Out of our industrial base.

Well said John Thank you.

Thanks for the question.

Thank you very much and this concludes our question and answer session I would like to turn the conference back over to Chuck Young for some closing remarks.

Thank you very much. And this concludes our question and answer session. I would like to turn the conference back over to Chuck Young for some closing remarks.

Thank you for joining us on the call today, we look forward to speaking to you again for.

Thank you for joining us on the call today. We look forward to speaking to you again for our Q call.

Our Q call Q4 call early next year.

Yeah.

And this concludes the conference. Thank you very much for attending today's presentation. You may now disconnect.

And this concludes the conference. Thank you very much for attending today's presentation. You may now disconnect.