Mr. Zigurds Vitols reports

SELECT SANDS REPORTS RESULTS FOR FOURTH QUARTER AND FULL YEAR 2022

Select Sands Corp. has released operational and financial results for fourth quarter and full-year 2022, and has filed its financial statements and associated management's discussion and analysis on SEDAR. All dollar references in this release are in U.S. dollars.

Key highlights:

• Sold 81,451 tons of frack and industrial sand during Q4 2022 compared with 83,222 tons in third quarter 2022 and 94,670 tons in Q4 2021:
  • For full-year 2022, the company sold 355,307 tons of frack and industrial sand -- an 8-per-cent increase from 328,978 tons sold during full-year 2021;
• Recorded revenue of $5.4-million and gross margin of $500,000 in Q4 2022 versus $5.4-million of revenue and gross margin of $700,000 in Q3 2022, and revenue of $6.1-million and gross margin of $700,000 for Q4 2021:
  • For the 12 months ended Dec. 31, 2022, the company recorded revenue of $22.3-million and gross margin of $3.0-million -- an increase of 13 per cent and 86 per cent, respectively, from revenue of $19.7-million and gross margin of $1.6-million for the 12 months ended Dec. 31, 2021;
• Reported a net loss of $700,000, or one cent per share, in Q4 2022 compared with a net loss of $100,000, or nil per share, in Q3 2022 and a net loss of $800,000, or one cent per share, in Q4 2021:
  • For full-year 2022, the company reported a net loss of $900,000, or one cent per share, versus a net loss of $1.7-million, or two cents per share, for full-year 2021;
• Generated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) of $200,000 for Q4 2022 versus $500,000 in Q3 2022 and $500,000 for Q4 2021:
  • For the 12 months ended Dec. 31, 2022, the company generated adjusted EBITDA of $1.9-million -- 3.4 times higher than the $500,000 of adjusted EBITDA generated during the 12 months ended Dec. 31, 2021;
• As of Dec. 31, 2022, cash and cash equivalents were $600,000, accounts receivable were $1.0-million, inventory was $4.8-million, working capital was $1.1-million, and total debt was $8.4-million (including $7.3-million long term).

(1) Adjusted EBITDA is a non-international financial reporting standard measure.

Zig Vitols, president and chief executive officer, commented: "The fourth quarter marked the successful conclusion to another solid year for the company, which was highlighted by year-over-year growth in sales volumes, revenue, gross margin and adjusted EBITDA. Throughout the year, we continued to work closely with our customers to ensure we met their needs while also capitalizing on available opportunities to strategically enhance our cost structure for the benefit of our shareholders. Of course, none of this would have been possible without the efforts of our work force, and I want to thank them for their continued hard work and dedication. As in the past, we remain squarely focused on providing our customers with outstanding service as we meet growing demand for our premium quality northern white sand and other product offerings."

Financial summary

The attached table includes summarized financial results for the three months ended Dec. 31, 2022, Sept. 30, 2022, and Dec. 31, 2021, and for full-year 2022 and 2021.

Sales volumes

Select Sands sold 81,451 tons of frack and industrial sand during Q4 2022, with sales levels impacted by certain early shutdown of fracking operations late in the period, which was contrary to expectations developed during Q3 2022. Sales volume levels for Q4 2022 were below the full shipment capability of the company's Arkansas operations (approximately 150,000 tons per quarter). This presents the opportunity for continued improvement in sales volumes (and the ability to spread fixed costs over a wider base of tons produced) over time.

For Q1 2023, the company expects frack and industrial sand sales volumes of approximately 83,000 tons.

Operations update

Contributing to Select Sands' positive outlook is Baker Hughes's recently published weekly drilling rig count estimates that show a U.S. onshore count of 748 rigs as of April 14, 2023 -- an 8-per-cent increase from the same time last year. The company remains focused on positioning its operations to capitalize on this positive trend by further leveraging its high-quality product offerings. This includes serving the increasing needs of customers in the Eagle Ford shale basin in south Texas. Select Sands' George West transload facility continues to operate 24 hours per day and seven days per week, including offering transload for other rail shippers as appropriate.

Outlook

Mr. Vitols concluded: "Supported by an expected ongoing positive hydrocarbon pricing backdrop as a result of solid industry fundamentals, we anticipate oil and gas operators will continue to need significant volumes of frack sand to develop their respective asset bases throughout 2023. With the superior-quality characteristics of our northern white and other product offerings, we will continue to provide our customers excellent products and service at a compelling price point as our operations are located much closer to key oil basins in the southern U.S. compared to the majority of other northern white sand producers. We appreciate the ongoing support of our shareholders as we remain focused on growing the business through targeted internal initiatives. Complementing these efforts, we will also continue to evaluate external opportunities designed to prudently expand our scope and/or footprint of operations at attractive risk-adjusted rates of return on investment."

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 under the investors section before the market opens Tuesday, May 2, 2023.

About Select Sands Corp.

Select Sands is an industrial silica product company, which wholly owns a northern white silica sands property and related production facilities located near Sandtown, Ark. Select Sands' goal is to become a key supplier of premium industrial silica sand and frack sand to North American markets. Select Sands' Arkansas properties have a significant logistical advantage of being significantly closer to oil and gas markets located in Oklahoma, Texas, Louisiana and New Mexico than the majority of sources of similar sands from the northern Midwest area such as Wisconsin. Select Sands also operates a transload facility in George West, Tex., in Live Oak county, that serves customers operating in the Eagle Ford shale basin. The facility has a capacity for 180 railcars and is equipped with two offload/loading stations with dedicated silos for a high-throughput capacity. In addition to transloading Select Sands products, the company sells other sand products from this facility and is able to offer transload services.

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