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Q4 2021 Highlighted by Continued Growth in Sales Volumes, Revenue and Adjusted EBITDA Supported by Solid Industry Backdrop
Q4 & FULL YEAR 2021 AND RECENT HIGHLIGHTS
- Sold 94,670 tons offrac and industrial sandduring Q4 2021, which was 6% higher than 89,096 tons sold in Q3 2021 and 79% higher than 53,009 tons sold for Q4 2020. For full year 2021,
Select Sands sold 328,978 tons of frac and industrial sand, which was more than double than the 161,149 tons sold in 2020. Driving the consistent increase in quarterly sales volumes throughout 2021 was higher demand for the Company’s premium quality product offerings as petroleum pricing remained strong. Recorded revenue of
$6.1 million and gross margin of$0.7 million in Q4 2021 compared to$5.3 million of revenue and gross margin of$0.4 million in Q3 2021, and revenue of$3.1 million and gross margin of$1.0 million for Q4 2020. For full year 2021,Select Sands recorded revenue of$19.7 million and gross margin of$1.6 million , compared to revenue of$9.7 million and a gross loss of$0.3 million for 2020.- Reported a net loss of
$0.8 million , or$0.01 per share, in Q4 2021, compared to a net loss of$0.3 million , or$0.00 per share, in Q3 2021 and net income of$0.4 million , or$0.00 per share, in Q4 2020. For full year 2021, the Company reported a net loss of$1.7 million , or$0.02 per share, versus a net loss of$2.9 million , or$0.03 per share, in 2020. The increasing net loss from Q3 2021 to Q4 2021 was partially impacted by impairments/loss on sale of assets, and settlement of a disputed natural gas bill as a result of excessively high natural gas pricing driven by the severe winter storm in February of 2021. Generated adjusted EBITDA(1)of
$0.5 million for Q4 2021 compared to$0.2 million in Q3 2021 and$0.8 million for Q4 2020. For full year 2021,Select Sands generated adjusted EBITDA of$0.5 million versus an adjusted EBITDA loss of$1.4 million for 2020.As of
December 31, 2021 , working capital was$1.3 million (including cash and cash equivalents of$0.6 million ), accounts receivable was$1.1 million , and inventory was$3.9 million .For Q1 2022, the Company sold more than 107,000 tons of frac and industrial sand, which was more than 13% higher than Q4 2021. Sales revenue for Q1 2022 will not increase in a correlative manner as over 40% of sales were priced at the mine gate, which excludes any charges to the customer for rail transportation or other logistics. Mine gate sales were virtually non-existent in Q4 2021.
(1)Adjusted EBITDA is a non-IFRS financial measure and is described and reconciled to net (loss) income in the table later in this release under the section titled “Non-IFRS Financial Measures”.
FINANCIAL SUMMARY
The following table includes summarized financial results for the three months ended
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SALES VOLUMES
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As previously discussed,
For Q1 2022, the Company sold just over 107,000 tons of frac and industrial sand – more than 13% higher than Q4 2021.
OPERATIONS UPDATE
Spot pricing for frac sand for the oil and gas sector has increased steadily since the beginning of 2022. Some customers are now purchasing at mine gate prices and will subsequently pay directly for all transportation costs. Mine gate sales exceeded 40% of total sales in Q1 2022 as compared to minimal volumes in Q4 2021. As a result, Q1 2022 revenues will not directly correlate to increasing prices, but gross margin – from a dollars perspective – will be unaffected as any transportation costs incurred on behalf of a customer is included in the price per ton
Supporting the Company’s positive outlook is Baker Hughes’ recently published weekly drilling rig count estimates that show a
This includes serving the increasing needs of customers in the Eagle Ford shale basin in
OUTLOOK
ADDITIONAL MANAGEMENT COMMENTARY
An audio recording of management’s additional comments related to its results and outlook will be posted to the Company’s website (https://www.selectsands.com/) under the Investors section on
ABOUT
The Tier-1 reference above is a classification of frac sand developed by
FORWARD-LOOKING STATEMENTS
This news release includes forward-looking information and statements, which may include, but are not limited to, information and statements regarding or inferring the future business, operations, financial performance, prospects, and other plans, intentions, expectations, estimates, and beliefs of the Company. Information and statements which are not purely historical fact are forward-looking statements. The forward-looking statements in this press release relate to comments that include, but are not limited to, statements related to expected current and future state of operations, sales volumes for 2022, customer activity levels, and the unique market position of the Company. Forward-looking information and statements involve 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 materially different from future events, results, performance, and achievements expressed or implied by forward-looking information and statements herein. Although the Company believes that any forward-looking information and statements herein are reasonable, in light of the use of assumptions and the significant risks and uncertainties inherent in such information and statements, there can be no assurance that any such forward-looking information and statements will prove to be accurate, and accordingly readers are advised to rely on their own evaluation of such risks and uncertainties and should not place undue reliance upon such forward-looking information and statements. Any forward-looking information and statements herein are made as of the date hereof, and except as required by applicable laws, the Company assumes no obligation and disclaims any intention to update or revise any forward-looking information and statements herein or to update the reasons that actualevents or results could or do differ from those projected in any forward-looking information and statements herein, whether as a result of new information, future events or results, or otherwise, except as required by applicable laws.
COMPANY CONTACTS
Please visitwww.selectsands.com or contact:
President & CEO Phone 844-806-7313 | W. Joe O’Rourke Vice President Sales & Marketing Phone: (713) 689-8000 Joe.orourke@selectsands.com |
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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’s performance, cash flows or financial position that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with IFRS. Adjusted EBITDA is not a measure of financial performance (nor does it have a standardized meanings) under IFRS. In evaluating non-IFRS financial measures, investors should consider that the methodology applied in calculating such measures may differ among companies and analysts.
The Company uses both IFRS and certain non-IFRS measures to assess operational performance and as a component of employee remuneration. Management believes certain non-IFRS measures provide useful supplemental information to investors in order that they may evaluate
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As reflected in the above tables for the periods presented, the Company defines EBITDA as net (loss) income before depreciation and depletion, interest on long-term debt and non-cash share-based compensation, and income taxes. The Company defines Adjusted EBITDA as net loss (income) before depreciation and depletion, interest on long-term debt, non-cash share-based compensation, gain on extinguishment of debt, loss (gain) on sale of investments, unrealized (gain) loss on investments, provision for impairment of property, plant and equipment, loss (gain) on sale of property, plant and equipment, reversal of accrual for repairs and maintenance in a prior year period, and loss on settlement with gas utility.
INDICATED RESOURCES DISCLOSURE
The Company advises that the production decision on the Sandtown deposit (the Company’s current “Sand Operations”) was not based on a Feasibility Study of mineral reserves, demonstrating economic and technical viability, and, as a result, there may be an increased uncertainty of achieving any level of recovery of minerals or the cost of such recovery, including increased risks associated with developing a commercially mineable deposit. Historically, such projects have a much higher risk of economic and technical failure. There is no guarantee that production will occur as anticipated or that anticipated production costs will be achieved.
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