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-- Sales Volumes Increase by More than 40% from Q1 2021 --
Q2 2021 AND RECENT KEY HIGHLIGHTS
- Sold 85,242 tons offrac and industrial sandduring Q2 2021, which was 42% higher than 59,970 tons sold in Q1 2021 and 61% higher than 53,009 tons sold for Q4 2020. Driving the increased sales volumes for Q2 2021 was further expansion in customer activities in response to an improved commodity price environment.
- Generated revenue of
$4.8 million and gross margin of$0.5 million in Q2 2021 – a significant improvement from$3.6 million of revenue and a gross loss of$0.04 million in Q1 2021, and substantially higher than revenue of$0.04 million and a gross loss of$0.6 million in Q2 2020. As discussed in the Company’s Q1 2021 earnings release, Q1 2021 cost of goods sold, excluding depreciation and depletion, included higher expenses for utilities and repairs and maintenance, as well as costs to restart the Company’s facilities as a result of the severe winter storm in February.- Reported net income of
$0.3 million , or$0.00 per diluted share, in Q2 2021, compared to a net loss of$0.8 million , or$0.01 loss per diluted share, in Q1 2021 and a net loss of$1.2 million , or$0.01 loss per diluted share, in Q2 2020.- Posted adjusted EBITDA(1)of
$0.2 million for Q2 2021, versus an adjusted EBITDA loss of$0.3 million in Q1 2020 and an adjusted EBITDA loss of$0.8 million in Q2 2020.
- As of
June 30, 2021 , cash and cash equivalents were$0.2 million , accounts receivable was$1.9 million , and inventory was$3.7 million .- As previously announced,
Select Sands recently successfully negotiated and entered into a new five-year$8.1 million loan agreement (the “Loan Agreement”) with its bank to restructure its existing loans. Separately,Select Sands received confirmation that the Company’s second Payroll Protection Program relief loan of$574,990 was forgiven, which was reflected as a one-time gain in Q2 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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For Q3 2021, the Company currently expects sales volumes of frac and industrial sand of 60,000 to 80,000 tons. The anticipated decrease from sales volumes levels for Q2 2021 is primarily associated with the timing of development activities for a certain customer. The Company continues to expect year over year sales volume growth as the backdrop for oil and gas drilling and completions activity continues to improve into 2022.
OPERATIONS UPDATE
As discussed previously, frac and industrial sand sales volumes increased sequentially by 42% from 59,970 tons in Q1 2021 to 85,242 tons in Q2 2021. The year-to-date sales volume of 145,212 tons marks a 147% increase from year-to-date volumes of 58,915 tons for the first half of 2020. Q2 2021 sales volumes were below theCompany’s full shipment capability, which presents the opportunity for continued improvement in sales volumes (and the opportunity to spread fixed costs over a wider base of tons produced) over time.
Supporting 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 before the market opens
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 2021, customer activity levels in the Eagle Ford and other shale basins, 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 actual events 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 CONTACT
Please visitwww.selectsands.com or contact:
------------------------------------------------------------------------- |Zigurds Vitols |W. Joe O’Rourke |Wesley Harris | |President&CEO |Vice President Sales&Marketing|Investor Inquiries | |Phone 844-806-7313|Phone: (713) 689-8000 |Phone: (832) 917-6030| | |Joe.orourke@selectsands.com |wes@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 table for the periods presented, the Company defines EBITDA as net loss before depreciation and depletion, interest on long-term debt, non-cash share-based compensation, and income taxes. The Company defines Adjusted EBITDA as net loss before depreciation and depletion, interest on long-term debt, non-cash share-based compensation, income taxes, unrealized gain on investment, gain on disposal of investments, gain on sale of equipment and gain on settlement of debt.
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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