Select Sands Corp. announced operational and financial results for the fourth quarter of 2018 and full-year 2018.
The company is reporting:
• Sold 363,610 tons of frac and industrial sand in 2018 – a 20% increase from 303,607 tons sold in 2017.
• Increased revenue by 32% to $20.1 million in 2018 as compared to $15.1 million in the prior year.
• Gross profit grew 59% to $4.6 million in 2018 from $2.9 million in 2017, which represented a 3.8% improvement in gross margin.
• Reported a net loss of $0.5 million, or $0.01 per basic and diluted share, in 2018 versus a net loss of $1.6 million, or $0.02 per basic and diluted share, in 2017; and
• Generated adjusted EBITDA of $2.5 million in 2018 as compared to an adjusted EBITDA loss of $0.1 million in the prior year.
Fourth quarter highlights include:
• Sold 24,897 tons of frac and industrial sand during Q4 2018 as compared to 81,626 tons in Q3 2018. Contributing to the decrease was an industry-wide reduction in frac sand demand driven by slowdown in well completions in the Permian Basin during Q4 2018 as a result of temporary takeaway capacity constraints, exploration and production budget exhaustion and continued in-basin supply additions.
• Generated revenue of $0.9 million and a gross loss of $0.5 million in Q4 2018, versus $4.0 million of revenue and gross profit of $0.7 million in the preceding quarter.
• Reported a Q4 2018 net loss of $2.5 million, or $0.03 per basic and diluted share, as compared to a net loss of $0.1 million, or $0.00 per basic and diluted share, in Q3 2018.
• As of Dec. 31, 2018, cash and cash equivalents were $4.8 million, inventory on hand was $2.1 million, combined accounts and current income taxes receivable were $0.4 million and working capital was $6.0 million. This is compared to cash and cash equivalents of $5.3 million, inventory on hand of $2.6 million, accounts receivable of $0.8 million and working capital of $6.4 million as of Sept. 30, 2018.
Zig Vitols, president and chief executive officer, commented, “We were clearly pleased to report significant year-over-year financial improvement in revenue, gross profit and adjusted EBITDA for the full year 2018, and I want to thank all of our employees for their continued hard work and dedication. As we discussed in our third quarter 2018 results press release and conference call, the significant downturn in the demand for frac sand impacted frac sand producers across the industry. In addition, we were negatively affected by a further move by E&Ps in the southern U.S. oil producing basins to use a much higher percentage of local brown sand being produced in the Texas basins instead of the high quality Northern White sand that we produce.
“Recognizing the critical importance of managing costs and preserving working capital, we responded quickly on a number of fronts, including moving to single shift operations to ensure optimal control of overhead and temporarily suspending activities on our proposed project to expand annual production capacity from 600,000 tons to 1 million tons,” he said. “On a positive note, we have seen a recent rebound in the demand for Northern White sand but will remain diligent in managing our cost profile as we wait for a continued gradual but steady frac sand market recovery, particularly in the demand for Northern White, that we expect to occur through the remainder of 2019.”