Investor Presentaiton
Disclaimer (cont'd)
Reserves
This presentation includes frac sand reserve and resource estimates based on engineering, economic and geological data assembled, analyzed and periodically reviewed by the Company and its outside consultants.
However, frac sand reserve estimates are by nature imprecise and depend to some extent on statistical inferences drawn from available data, which may prove unreliable. There are numerous uncertainties inherent in
estimating quantities and qualities of frac sand reserves and non-reserve frac sand deposits and costs to mine recoverable reserves, many of which are beyond our control and any of which could cause actual results to
differ materially from our expectations. These uncertainties include: geological and mining conditions that may not be fully identified by available data or that may differ from experience; assumptions regarding the
effectiveness of our mining, quality control and training programs; assumptions concerning future prices of frac sand, operating costs, mining technology improvements, development costs and reclamation costs; and
assumptions concerning future effects of regulation, including the issuance of required permits and taxes by governmental agencies.
Non-GAAP Information
This presentation also contains information about the Company's contribution margin, EBITDA, Adjusted EBITDA, and free cash flow which are not measures derived in accordance with U.S. generally accepted
accounting principles ("GAAP") and which exclude components that are important to understanding the Company's financial performance.
We use contribution margin, which we define as total revenues less costs of goods sold excluding depreciation, depletion and accretion of asset retirement obligations, to measure our financial and operating
performance. Contribution margin excludes other operating expenses and income, including costs not directly associated with the operations of our business such as accounting, human resources, information
technology, legal, sales and other administrative activities. Gross profit is the GAAP measure most directly comparable to contribution margin. We believe contribution margin is a meaningful measure because it
provides an operating and financial measure of our ability to generate margin in excess of our operating cost base.
We define EBITDA as our net income, plus (i) depreciation, depletion, and amortization expense; (ii) income tax expense (benefit); (iii) interest expense and (iv) franchise taxes. We define Adjusted EBITDA as EBITDA,
plus (i) gain or loss on sale of fixed assets or discontinued operations, (ii) integration and transition costs associated with specified transactions, (iii) equity compensation, (iv) acquisition and development costs, (v) non-
recurring cash charges related to restructuring, retention and other similar actions, (vi) earn-out, contingent consideration obligations and other acquisition and development costs, (vii) non-cash charges and unusual
or non-recurring charges. We believe that our presentation of EBITDA and Adjusted EBITDA will provide useful information to investors in assessing our financial condition and results of operations. Net income is the
GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA should not be considered alternatives to net income presented in accordance with GAAP.
Free cash flow, which we define as net cash provided by operating activities less purchases of property, plant and equipment, is used as a supplemental financial measure by our management and by external users of
our financial statements, such as investors and commercial banks, to measure the liquidity of our business.
You should not consider contribution margin, EBITDA, Adjusted EBITDA, or free cash flow in isolation or as substitutes for an analysis of our results as reported under GAAP. Because contribution margin, EBITDA,
Adjusted EBITDA, and free cash flow may be defined differently by other companies in our industry, our definitions on these non-GAAP financials measures may not be comparable to similarly titled measures of other
companies, thereby diminishing their utility.
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