SNS:CC - Select Sands Reports Results for Fourth Quarter and Full Year 2022

(TheNewswire)

Houston, TX - TheNewswire - M ay 1, 2023 - Select Sands Corp. (“ Select Sands ” or the “ Company ”) (TSXV:SNS ) ( OTC:SLSDF) today announced operational andfinancial results for Q4 and full year 2022, and the filing of itsfinancial statements and associated management’s discussion andanalysis on www.sedar.com . All dollarreferences in this release are in U.S. dollars.

KEY HIGHLIGHTS

• Sold 81,451 tons of frac and industrial sand during Q4 2022 comparedto 83,222 tons in Q3 2022 and 94,670 tons in Q4 2021.

  • For full year 2022, the Company sold 355,307 tons of frac andindustrial sand – an 8% increase from 328,978 tons sold during fullyear 2021.

• Recorded revenue of $5.4 million andgross margin of $0.5 million in Q4 2022 versus $5.4 million of revenueand gross margin of $0.7 million in Q3 2022, and revenue of $6.1million and gross margin of $0.7 million for Q4 2021.

  • For the twelve months ended December 31, 2022, the Company recordedrevenue of $22.3 million and gross margin of $3.0 million – anincrease of 13% and 86%, respectively, from revenue of $19.7 millionand gross margin of $1.6 million for the twelve months ended December31, 2021.

• Reported a net loss of $0.7 million, or $0.01 per share, in Q4 2022compared to a net loss of $0.1 million, or $0.00 per share, in Q3 2022and a net loss of $0.8 million, or $0.01 per share, in Q4 2021.

  • For full year 2022, the Company reported a net loss of $0.9 million,or $0.01 per share, versus a net loss of $1.7 million, or $0.02 pershare, for full year 2021.

• Generated adjusted EBITDA(1) of $0.2 million for Q4 2022 versus $0.5million in Q3 2022 and $0.5 million for Q4 2021.

  • For the twelve months ended December 31, 2022, the Company generatedadjusted EBITDA of $1.9 million – 3.4 times higher than the $0.5million of adjusted EBITDA generated during the twelve months endedDecember 31, 2021.

• As of December 31, 2022, cash and cash equivalents were $0.6 million,accounts receivable was $1.0 million, inventory was $4.8 million,working capital was $1.1 million and total debt was $8.4 million(including $7.3 million long-term).

1. Adjusted EBITDA is a non-IFRS financial measure and is described andreconciled to net (loss) income in the table later in this releaseunder the section titled “Non-IFRS Financial Measures”.

Zig Vitols, President and Chief Executive Officer,commented, “The fourth quarter marked the successful conclusion toanother solid year for the Company, which was highlighted byyear-over-year growth in sales volumes, revenue, gross margin andadjusted EBITDA. Throughout the year we continued to work closely withour customers to ensure we met their needs while also capitalizing onavailable opportunities to strategically enhance our cost structurefor the benefit of our shareholders. Of course, none of this wouldhave been possible without the efforts of our workforce and I want tothank them for their continued hard work and dedication. As in thepast, we remain squarely focused on providing our customers withoutstanding service as we meet growing demand for our premium qualityNorthern White Sand and other product offerings.”

FINANCIAL SUMMARY

The following table includes summarized financialresults for the three months ended December 31, 2022, September 30,2022 and December 31, 2021, and for full year 2022 and 2021:

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SALES VOLUMES

Select Sands sold 81,451 tons of frac and industrialsand during Q4 2022, with sales levels impacted by certain earlyshutdown of fracking operations late in the period, which was contraryto expectations developed during Q3 2022. Sales volume levels for Q42022 were below the full shipment capability of the Company’sArkansas’ operations (approximately 150,000 tons per quarter). Thispresents the opportunity for continued improvement in sales volumes(and the ability to spread fixed costs over a wider base of tonsproduced) over time.

For Q1 2023, the Company expects frac and industrialsand sales volumes of approximately 83,000 tons.

OPERATIONS UPDATE

Contributing to Select Sands’ positive outlook isBaker Hughes’ recently published weekly drilling rig count estimatesthat show a U.S. onshore count of 748 rigs as of April 14, 2023 – an8% increase from the same time last year. The Company remains focusedon positioning its operations to capitalize on this positive trend byfurther leveraging its high-quality product offerings. This includesserving the increasing needs of customers in the Eagle Ford shalebasin in South Texas. Select Sands’ George West transload facilitycontinues to operate 24 hours per day and seven days per week,including offering transload for other rail shippers as appropriate.

OUTLOOK

Mr. Vitols concluded, “Supported by an expectedongoing positive hydrocarbon pricing backdrop as a result of solidindustry fundamentals, we anticipate oil and gas operators willcontinue to need significant volumes of frac sand to develop theirrespective asset bases throughout 2023. With the superior qualitycharacteristics of our Northern White and other product offerings, wewill continue to provide our customers excellent products and serviceat a compelling price point as our operations are located much closerto key oil basins in the Southern U.S. compared to the majority ofother Northern White Sand producers. We appreciate the ongoing supportof our shareholders as we remain focused on growing the businessthrough targeted internal initiatives. Complementing these efforts, wewill also continue to evaluate external opportunities designed toprudently expand our scope and/or footprint of operations atattractive risk-adjusted rates of return on investment.”

ADDITIONAL MANAGEMENT COMMENTARY

An audio recording ofmanagement’s additional comments related to its results and outlookwill be posted to the Company’s website(https://www.selectsands.com/) under the Investors section before themarket opens Tuesday, May 2, 2023.

ABOUTSELECT SANDS CORP.

Select Sands Corporationis an industrial silica product company, which wholly owns a NorthernWhite silica sands property and related production facilities locatednear Sandtown, Arkansas. Select Sands’ goal is to become a keysupplier of premium industrial silica sand and frac sand to NorthAmerican markets. Select Sands’ Arkansas properties have asignificant logistical advantage of being significantly closer to oiland gas markets located in Oklahoma, Texas, Louisiana, and New Mexicothan the majority of sources of similar sands from the Northernmid-west area such as Wisconsin. Select Sands also operates atransload facility in George West, Texas in Live Oak County thatserves customers operating in the Eagle Ford Shale Basin. The facilityhas a capacity for 180 rail cars and is equipped with twooffload/loading stations with dedicated silos for a high throughputcapacity. In addition to transloading Select Sands products, theCompany sells other sand products from this facility and is able tooffer transload services.

FORWARD-LOOKING STATEMENTS

This news release includes forward-looking informationand statements, which may include, but are not limited to, informationand statements regarding or inferring the future business, operations,financial performance, prospects, and other plans, intentions,expectations, estimates, and beliefs of the Company. Information andstatements which are not purely historical fact are forward-lookingstatements. The forward-looking statements in this press releaserelate to comments that include, but are not limited to, statementsrelated to expected current and future state of operations, salesvolumes for 2023, customer activity levels, and the unique marketposition of the Company. Forward-looking information and statementsinvolve and are subject to assumptions and knownand unknown risks, uncertainties, and other factors which may causeactual events, results, performance, or achievements of the Company tobe materially different from future events, results, performance, andachievements expressed or implied by forward-looking information andstatements herein. Although the Company believes that anyforward-looking information and statements herein are reasonable, inlight of the use of assumptions and the significant risks anduncertainties inherent in such information and statements, there canbe no assurance that any such forward-looking information andstatements will prove to be accurate, and accordingly readers areadvised to rely on their own evaluation of such risks anduncertainties and should not place undue reliance upon suchforward-looking information and statements. Any forward-lookinginformation and statements herein are made as of the date hereof, andexcept as required by applicable laws, the Company assumes noobligation and disclaims any intention to update or revise anyforward-looking information and statements herein or to update thereasons that actual events or results could or do differ from thoseprojected in any forward-looking information and statements herein,whether as a result of new information, future events or results, orotherwise, except as required by applicable laws.

COMPANY CONTACTS

Please visit www.selectsands.com orcontact:

Neither TSXVenture Exchange nor its Regulation Services Provider (as that term isdefined in the policies of the TSX Venture Exchange) acceptsresponsibility for the adequacy or accuracy of this release.

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NON-IFRS FINANCIAL MEASURES

The following information is included for convenience only. Generally,a non-IFRS financial measure is a numerical measure of a company’sperformance, cash flows or financial position that either excludes orincludes amounts that are not normally excluded or included in themost directly comparable measure calculated and presented inaccordance with IFRS. Adjusted EBITDA is not a measure of financialperformance (nor does it have a standardized meaning) under IFRS. Inevaluating non-IFRS financial measures, investors should consider thatthe methodology applied in calculating such measures may differ amongcompanies and analysts.

The Company uses both IFRS and certain non-IFRS measures to assessoperational performance and as a component of employee remuneration.Management believes certain non-IFRS measures provide usefulsupplemental information to investors in order that they may evaluateSelect Sands' financial performance using the same measures asmanagement. Management believes that, as a result, the investor isafforded greater transparency in assessing the financial performanceof the Company. These non-IFRS financial measures should not beconsidered as a substitute for, nor superior to, measures of financialperformance prepared in accordance with IFRS.

As reflected in the above tables for the periodspresented, the Company defines EBITDA as net loss adjusted for itemslisted. The Company defines Adjusted EBITDA as net loss adjusted forselect items used to estimate EBITDA with additional adjustments aslisted in the above table to estimate Adjusted EBITDA. Select Sandsuses Adjusted EBITDA as a supplemental financial measure of itsoperational performance. Management believes Adjusted EBITDA to be animportant measure as they exclude the effects of items that primarilyreflect the impact of long-term investment and financing decisions,rather than the performance of the Company’s day-to-day operations.As compared to net loss according to IFRS, this measure is limited inthat it does not reflect the periodic costs of certain capitalizedtangible and intangible assets used in generating revenues in theCompany's business, the charges associated with impairments,termination costs, transaction costs or other items management viewsas unusual or one-time in nature. Management evaluates such itemsthrough other financial measures such as capital expenditures and cashflow provided by operating activities. The Company believes that thesemeasurements are useful to measure a company’s ability to servicedebt and to meet other payment obligations or as a valuationmeasurement.

INDICATED RESOURCES DISCLOSURE

The Company advises thatthe production decision on the Sandtown deposit (the Company’scurrent “Sand Operations”) was not based on a Feasibility Study ofmineral reserves, demonstrating economic and technical viability, and,as a result, there may be an increased uncertainty of achieving anylevel of recovery of minerals or the cost of such recovery, includingincreased risks associated with developing a commercially mineabledeposit. Historically, such projects have a much higher risk ofeconomic and technical failure. There is no guarantee that productionwill occur as anticipated or that anticipated production costs will beachieved.

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