Select Sands Corp. announced operational and financial results for the first quarter of 2021, and the filing of its audited financial statements and associated management’s discussion and analysis.
The company:
• Sold 59,970 tons of frac and industrial sand during the first quarter of 2021, compared to 53,009 tons in the fourth quarter of 2020 and 58,842 tons in the first quarter of 2020.
• Sales volumes for the first quarter of 2021 were impacted by a widespread harsh winter storm in February, during which Select Sands was informed by its natural gas supplier to curtail usage of gas to preserve supply for regional subsistence demand and to expect the possibility of supply curtailment orders. The combined impact of well-head freeze-offs and the failure of gas processing plants and pipelines resulted in more than a week of downtime for the company’s Arkansas production facilities.
• Generated revenue of $3.6 million and a gross loss of $0.04 million in the first quarter of 2021, versus $3.1 million of revenue and a gross margin of $1.0 million in the fourth quarter of 2020, and revenue of $3.6 million and a gross loss of $0.8 million in the first quarter of 2020. Contributing to the $1.0 million decline in gross margin from the fourth quarter of 2020 to the first quarter of 2021 were certain adjustments recorded in the fourth quarter of 2020 for the Employee Retention Credit program (ERC) that was granted by the U.S. government, reclassification of year-to-date lease expenses out of cost of goods sold, and other costs associated with the company’s project to optimize and consolidate processing assets to improve its cost structure (the “Plant Reconfiguration Project). Also impacting sequential results was 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 the first quarter of 2021.
• Reported a net loss of $0.8 million, or $0.01 loss per diluted share, in the first quarter of 2021, compared to net income of $0.4 million, or $0.00 per diluted share, in the fourth quarter of 2020 and a net loss of $1.5 million, or $0.02 loss per diluted share, in the first quarter of 2020.
Zig Vitols, president and chief executive officer, commented, “We were encouraged to see our frac and industrial sand sales volumes for the first quarter increase 13% from the fourth quarter. Our sales volumes growth would have been even higher if not for the more than a week’s worth of plant downtime due to the severe winter storm in the first quarter. The storm resulted in higher utility costs, repairs and maintenance, and other expenses associated with restarting our operations. Also impacting our sequential financial performance were a number of cost adjustments made during the fourth quarter that significantly benefitted that period’s results. Looking at our ongoing expense profile, we are clearly seeing the advantages afforded by the Plant Reconfiguration Project. We look forward to seeing even higher margins as production volumes increase over time, which will allow us to spread our fixed costs over a larger number of tons.”