ROG - Select Sands Reports Results for Second Quarter 2023

(TheNewswire)

Houston, TX, USA - TheNewswire - August 25, 2023 - Select Sands Corp. (“ SelectSands ”, “ We ” or the“ Company ”) (TSXV:SNS ) ( OTC:SLSDF) today announces operational andfinancial results for the three months ended June 30, 2023 (“Q22023”), and the filing of its financial statements and associatedmanagement’s discussion and analysis on www.sedar.com by end of day.All dollar references in this release are in U.S. dollars.

KEY HIGHLIGHTS

• Sold 53,894 tons of frac and industrial sand during Q2 2023 comparedto 83,027 tons in the three months ended March 31, 2023 (“Q12023”) and 83,207 tons in the three months ended June 30, 2022(“Q2 2022”).  As discussed in the Company’s Q1 2023 earningsrelease, Select Sand’s guidance for Q2 2023 frac and industrial sandsales volumes was 45,000 to 60,000 tons.

• Recorded revenue of $3.2 million and agross loss of $0.1 million in Q2 2023 versus $5.1 million of revenueand gross margin of $0.4 million in Q1 2023, and revenue of $5.3million and gross margin of $1.0 million for Q2 2022.

• Reported a net loss of $1.0 million, or $0.01 per share, in Q2 2023compared to a net loss of $0.5 million, or $0.01 per share, in Q1 2023and net income of $0.1 million, or $0.00 per share, in Q2 2022.

• Generated an Adjusted EBITDA(1) loss of $0.4 million for Q2 2023versus positive Adjusted EBITDA of $0.1 million in Q1 2023 and $0.7million for Q2 2022.

• As of June 30, 2023, cash and cash equivalents were $0.5 million,accounts receivable was $0.4 million, and inventory was $4.4 million. Of note, the Company has received full payment on all of itsaccounts receivable balance outstanding on June 30, 2023.

(1) Adjusted EBITDA is a non-IFRSfinancial measure and is described and reconciled to net (loss) incomein the table later in this release under the section titled“Non-IFRS Financial Measures”.

Zig Vitols, President and Chief Executive Officer,commented, “While clearly less than we would have liked, our secondquarter sales volumes levels did come in above the mid-point of ourguidance range. Substantially impacting second quarter sales tons wasthe continued evolvement of one of our largest customer’s scheduleof field development activities and previous product purchaseobligations. The industry dry spell has affected any brokerage andtransload opportunities at the George West facility as well. Unfortunately, this trend continued into the third quarter as U.S.rig activity levels measured last week declined 11% from three monthsearlier and more than 15% from this same time last year. We quicklyreacted to the lower sales volumes backdrop by reducing staffinglevels and temporarily halting certain production activities to saveon cash outlays for blasting, electricity, fuel and other expensesuntil our sales outlook improved. I am pleased to report that we havejust recently received an uptick in customer interest for products,although it is substantially for deliveries that will occur in thefourth quarter. In short, we look forward to an improved sales environmentbeginning in the fourth quarter based on recently scheduled frac sand jobs and additional schedulingconversations . ”

FINANCIAL SUMMARY

The following table includes summarized financialresults for the three months ended June 30, 2023, March 31, 2023 andJune 30, 2022, as well as for the six months ended June 30, 2023 andJune 30, 2022:

SALES VOLUMES

Select Sands sold 53,894 tons of frac and industrialsand during Q2 2023 compared to 83,027 tons in Q1 2023. Sales volumelevels for Q2 2023 were below the full shipment capability of theCompany’s Arkansas’ operations (approximately 150,000 tons perquarter). This presents the opportunity for continued improvement insales volumes (and the ability to spread fixed costs over a wider baseof tons produced) over time.

For Q3 2023, the Companyexpects frac and industrial sand sales volumes to be forecasted thesame as Q2 2023 at 45,000 to 60,000 tons. As previously discussed, theCompany has recently received an uptick in customer interest forproducts, although it is substantially for deliveries that will occurin the fourth quarter.

OUTLOOK

Mr. Vitols concluded, “While our sales volumes levelsfor the second quarter and third quarter to date have been lower thanwe anticipated at the beginning of the year, we continue to have apositive outlook on the long-term dynamics of the oil and gasindustry. Supporting this view is the U.S. EIA’s projection that hydrocarbons will remain the most used energysource in the U.S. through 2050. We look forward to continuing tosupport oil and gas operators in their ongoing field developmentefforts designed to maximize the ultimate recovery of their inventoryof assets through use of our premium Northern White Sand productofferings that are  located much closer to key oil basins in theSouthern U.S. compared to the majority of other Northern White Sandproducers. As in the past, I want to thank our workforce for theircontinued hard work and dedication. As important, we appreciate thesupport of our shareholders as we remain squarely focused on drivinglong-term value through our targeted sales efforts, efficientoperations and evaluation of external opportunities designed toprudently expand the business and provide a solid risk-adjusted returnon investment.”

ABOUTSELECT SANDS CORP.

Select SandsCorporation is an industrial silica productcompany, which wholly owns a Northern White silica sands property andrelated production facilities located near Sandtown, Arkansas. SelectSands’ goal is to become a key supplier of premium industrial silicasand and frac sand to North American markets. Select Sands’ Arkansasproperties have a significant logistical advantage of beingsignificantly closer to oil and gas markets located in Oklahoma,Texas, Louisiana, and New Mexico than the majority of sources ofsimilar sands from the Northern mid-west area such as Wisconsin.Select Sands also operates a transload facility in George West, Texasin Live Oak County that serves customers operating in the Eagle FordShale Basin. The facility has a capacity for 180 rail cars and isequipped with two offload/loading stations with dedicated silos for ahigh throughput capacity. In addition to transloading Select Sandsproducts, the Company sells other sand products from this facility andis able to offer 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 known and unknown risks,uncertainties, and other factors which may cause actual events,results, performance, or achievements of the Company to be materiallydifferent from future events, results, performance, and achievementsexpressed or implied by forward-looking information and statementsherein. Although the Company believes that any forward-lookinginformation and statements herein are reasonable, in light of the useof assumptions and the significant risks and uncertainties inherent insuch information and statements, there can be no assurance that anysuch forward-looking information and statements will prove to beaccurate, and accordingly readers are advised to rely on their ownevaluation of such risks and uncertainties and should not place unduereliance upon such forward-looking information and statements. Anyforward-looking information and statements herein are made as of thedate hereof, and except as required by applicable laws, the Companyassumes no obligation and disclaims any intention to update or reviseany forward-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.

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 these measurements are useful to measure acompany’s ability to service debt and to meet other paymentobligations or as a valuation measurement.

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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