SNS:CC - Select Sands Reports Results for Third Quarter 2022
(TheNewswire)
NOVEMBER 16, 2022 – TheNewswire - HOUSTON, TX, USA – Select Sands Corp. (“Select Sands” or the “Company”) (TSXV:SNS ) , ( OTC:SLSDF) today announced operational and financial resultsfor Q3 2022, and the filing of its financial statements and associatedmanagement’s discussion and analysis on www.sedar.com . All dollarreferences in this release are in U.S. dollars.
KEY HIGHLIGHTS
-
Sold 83,222 tons of frac and industrial sand during Q3 2022 compared to83,207 tons in Q2 2022 and 89,096 tons in Q3 2021.
-
Recorded revenue of $5.4 million and gross margin of $0.7million in Q3 2022 versus $5.3 million of revenue and gross margin of$1.0 million in Q2 2022, and revenue of $5.3 million and gross marginof $0.4 million for Q3 2021.
-
Generated adjusted EBITDA (1) of $0.5million for Q3 2022 versus $0.7 million in Q2 2022 and $0.2 millionfor Q3 2021.
-
As of September 30, 2022, cash and cash equivalentswere $0.5 million, accounts receivable was $1.5 million, inventory was$5.2 million and working capital was $1.5 million.
-
(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, “We were pleased to see a continued solid energy pricingbackdrop during the third quarter, which supported further oil and gasfield development activities and related demand for our products. Similar to our second quarter, impacting our third quarter salesvolumes was the continued unprecedented holding of rail cars atmultiple customer unload locations that limited us from taking furtherorders to increase sales. We took a number of steps to address thesituation and I am happy to report that since the end of third quarterall of the related rail cars have been returned from customers. Assuch, we are now in a much better position to capitalize on the growthin demand for our premium quality Northern White Sand and otherproduct offerings.”
The following table includes summarized financialresults for the three months ended September 30, 2022, June 30, 2022,and September 30, 2021, and for the first nine months of calendar year2022 and 2021:
SALES VOLUMES
Select Sands sold 83,222 tons of frac and industrialsand during Q3 2022, which was below the full shipment capability ofSelect Sands’ 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 2022, the Company expects frac and industrialsand sales volumes of 55,000 to 80,000 tons.
OPERATIONS UPDATE
Supporting the Company’s positive outlook is BakerHughes’ recently published weekly drilling rig count estimates thatshow a U.S. onshore count of 779 rigs as of November 11, 2022 – a40% increase from the same time last year. The Company remains focusedon positioning its operations to capitalize onthis positive trend by further leveraging its high-quality productofferings. This includes serving the increasing needs of customers inthe Eagle Ford shale basin in South Texas. The Company’s George Westtransload facility continues to operate 24 hours per day and sevendays per week and offering transload for other rail shippers.
OUTLOOK
Mr. Vitols concluded, “We continue to have a positiveoutlook for the remainder of this year and into 2023. Assuming theexpected solid energy commodity price environment is ongoing, weanticipate oil and gas operators will continue to develop theirrespective asset bases. This will require a significant amount of fracsand and we remain uniquely positioned to benefit from this landscapedue to the superior quality characteristics of our Northern White andother product offerings sourced from operations that are located muchcloser to key oil basins in the Southern U.S. compared to the majorityof other Northern White Sand producers. In addition to ourinternal efforts to increase sales while driving further operatingefficiencies, we continue to evaluate external opportunities tostrategically grow the business. As in past, we remain squarelyfocused on ensuring we meet or exceed the needs of our customers, andappreciate the continued dedication of our workforce and the ongoingsupport of our shareholders.”
Elliott A. Mallard, PG of Kleinfelder is thequalified person as per the NI-43-101 and has reviewed and approvedthe technical contents of this news release.
Select Sands Corporationis an industrial silica product company, which wholly owns a Tier-1(Northern White), silica sands property and related productionfacilities located near Sandtown, Arkansas. Select Sands’ goal is tobecome a key supplier of premium industrial silica sand and frac sandto North American 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 product, theCompany sells other sand products from this facility and is able tooffer transload services.
The Tier-1 referenceabove is a classification of frac sand developed by PropTester, Inc.,an independent laboratory specializing in the research and testing ofproducts utilized in hydraulic fracturing and cement operations,following ISO 13503-2:2006/API RP19C:2008 standards. Select Sands’Sandtown project has NI 43-101 compliant Indicated Mineral Resourcesof 42.0MM tons (TetraTech Report; February, 2016). The Sandtowndeposit is considered Northern White finer-grade sand deposits of40-70 Mesh and 100 Mesh.
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 2022, customer activity levels, and the unique marketposition of the Company. Forward-looking information and statements involve and are subject toassumptions and known and unknown risks, uncertainties, and otherfactors which may cause actual events, results, performance, orachievements of the Company to be materially different from futureevents, results, performance, and achievements expressed or implied byforward-looking information and statements herein. Although theCompany believes that any forward-looking information and statementsherein are reasonable, in light of the use of assumptions and thesignificant risks and uncertainties inherent in such information andstatements, there can be no assurance that any such forward-lookinginformation and statements will prove to be accurate, and accordinglyreaders are advised 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:
| Zigurds Vitols President & CEO Phone 844-806-7313 |
| W. Joe O’Rourke Vice President Sales & Marketing Phone: (713) 689-8000 |
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 meanings) 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) income adjustedfor items listed. The Company defines Adjusted EBITDA as net loss(income) adjusted for select items used to estimate EBITDA withadditional adjustments as listed in the above table to estimateAdjusted EBITDA. Select Sands uses Adjusted EBITDA as a supplementalfinancial measure of its operational performance. Management believesAdjusted EBITDA to be an important measure as they exclude the effectsof items that primarily reflect the impact of long-term investment andfinancing decisions, rather than the performance of the Company’sday-to-day operations. As compared to net income (loss) according toIFRS, this measure is limited in that it does not reflect the periodiccosts of certain capitalized tangible and intangible assets used ingenerating revenues in the Company's business, the charges associatedwith impairments, termination costs, transaction costs or other itemsmanagement views as unusual or one-time in nature. Managementevaluates such items through other financial measures such as capitalexpenditures and cash flow provided by operating activities. The Company believes that these measurements areuseful to measure a company’s ability to service debt and to meetother payment obligations 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.
Copyright (c) 2022 TheNewswire - All rights reserved.