(TheNewswire)
~ Targeted Ongoing Internal Growth InitiativesComplemented by Aggressive Pursuit of Near and Long-Term Market DemandOpportunities Beyond Oil and Gas ~
NOVEMBER 16, 2023 – TheNewswire - HOUSTON, TX, USA –Select Sands Corp. (“Select Sands”, “We”, or the“Company”) (TSXV:SNS ) , ( OTC:SLSDF) todayannounced operational and financial results for the three months endedSeptember 30, 2023 (“Q3 2023”), and a discussion concerning theopportunities to expand the sale of the Company’s product offeringsbeyond the oil and gas industry. In addition, Select announced thefiling of its financial statements and associated management’sdiscussion and analysis on www.sedar.com . All dollarreferences in this release are in U.S. dollars.
KEY HIGHLIGHTS
- Sold 43,081 tons of frac and industrial sand during Q3 2023 compared to53,894 tons in the three months ended June 30, 2023 (“Q2 2023”)and 83,222 tons in the three months ended September 30, 2022 (“Q32022”).
- Recorded revenue of $2.1million and a gross loss of $0.2 million in Q3 2023 versus $3.2million of revenue and a gross loss of $0.1 million in Q2 2023, andrevenue of $5.4 million and gross margin of $0.7 million for Q3 2022.
- Reported a net loss of $1.0 million, or$0.01 per share, in Q3 2023 compared to a net loss of $1.0 million, or$0.01 per share, in Q2 2023 and a net loss of $0.1 million, or $0.00per share, in Q3 2022.
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Generated an Adjusted EBITDA (1) loss of $0.4million for Q3 2023 versus an Adjusted EBITDA loss of $0.4 million inQ2 2023 and Adjusted EBITDA of $0.5 million for Q3 2022.
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As of September 30, 2023, cash and cash equivalentswere $0.3 million, accounts receivable was $1.0 million, and inventorywas $3.6 million.
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(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, “The reduction in sequential sales volumes reflects thecontinued evolvement of one of our largest customer’s schedule offield development activities and previous product purchaseobligations. In addition, we faced a challenging spot sales marketthat, along with other considerations, affected brokerage andtransload opportunities at our flagship George West facility locatedin the heart of the Eagle Ford. While we expect this trend to continuethrough the fourth quarter, we have been pleased to recently see anuptick in orders albeit primarily for delivery beginning in the firstquarter of next year. Also impacting sales volumes is the furtherevolution by the balance of the Company’s oil and gas customers tonow primarily focus on our coarser mesh product offerings. Thisprovides the opportunity to market our finer mesh sand products inalternative markets as we continue to serve the evolving needs of ourhighly-valued base of loyal oil and gas customers.”
FINANCIAL SUMMARY
The following table includes summarized financialresults for the three months ended September 30, 2023, June 30, 2023,and September 30, 2022, as well as for the nine months ended September30, 2023 and September 30, 2022:
SALES VOLUMES
Select Sands sold 43,081 tons of frac and industrialsand during Q32 2023 compared to 53,894 tons in Q2 2023. Sequentialquarterly sales volumes were primarily impacted by lower salesactivity from the Company’s [historically] largest customer as theirfield development schedule continues to evolve, as well as achallenging spot sales market that, along with other considerations,affected brokerage and transload opportunities at the Company’sGeorge West facility. As a result, sales volume levels for Q3 2023were below the full shipment capability of the Company’s Arkansas’operations (approximately 150,000 tons per quarter). This presents theopportunity for continued improvement in sales volumes (and theability to spread fixed costs over a wider base of tons produced) overtime.
For Q4 2023, the Company expects frac and industrialsand sales volumes of 25,000 to 40,000 tons. In addition to theimpacts discussed previously, contributing to the expected decrease insales volumes for Q4 2023 is anticipated seasonal holiday slowdown incustomers’ development activities. On a positive note, Select Sandshas recently received an uptick in customer interest for products,although it is substantially for deliveries that will occur beginningin the first quarter of 2024.
ADDITIONAL MARKET OPPORTUNITIES
The Company is continually reviewing potentialacquisitions and joint venture transactions and opportunities thatcould enhance shareholder value. Recently, the Company initiated astrategic move to introduce glass sand supply as a supplementaryoffering to bolster its sales in the petroleum sector. Previously, theCompany had maintained a singular focus on the petroleum sector,adapting to the fluctuations in demand for its diverse product range. The petroleum industry seems to have established preferences forspecific products offered by the Company, leaving room for the sale ofother products in alternative markets. The glass industry has welcomedthese products positively, and there is a vision that both sectors mayembrace Select Sands’ entire product range.
OUTLOOK
Mr. Vitols further commented, “Over the past years,the petroleum sector has shown varying preferences, alternatingbetween a propensity for predominantly fine or coarse sands suppliedby the Company. However, it appears that the industry – or at leastour current oil and gas customer base with development activitiesunderway in the Eagle Ford – has now shifted towards to primarilyprocuring the coarse fractions of our product range. In our commitmentto our loyal oilfield customers, we have consistently ensured a steadysupply of both fine and coarse sand products in response to changingdemands. The current trend, where the industry seems to clearly besettling on coarse fractions to support development in the Eagle Ford,presents an exciting opportunity for us to focus on two industriesthat consistently seek specific products offered by Select Sands. As aresult, we are strategically adjusting our marketing efforts to nowcater to both the petroleum and glass industries.”
Mr. Vitols concluded, “We will remain squarelyfocused on continuing to serve the oil and gas industry, but given thecontinued evolvement in our current customers’ requirement ofcoarser products, we are squarely focused on capitalizing on therecent enthusiastic reception from the glass industry regarding ourfine sand product offerings. Given our capability to meet thestringent specifications of the glass industry, we are optimisticabout the potential opportunity for future sales and market expansionfor our complete product line. It's important to note that while theseactions are not guaranteed, they underline the proactive steps we havetaken in the past and will continue to take to further position theCompany in response to continued evolving market dynamics. We continueto have a positive outlook as we continue to capitalize on thepotential opportunities afforded by our business. More important, weappreciate the continued support of our shareholders and look forwardto keeping everyone apprised on our progress.”
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.
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 inthis press release relate to comments that include, but are notlimited to, statements related to expected current and future state ofoperations, sales volumes for 2023, customer activity levels, theunique market position of the Company, and opportunities beingexplored for marketing the Company’s products to sectors andindustries in addition to oil and gas. Forward-looking information andstatements involve and are subject to assumptions and known andunknown risks, uncertainties, and other factors which may cause actualevents, results, performance, or achievements of the Company to bematerially 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:
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 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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