Mammoth Energy Services, Inc. Announces Third Quarter 2020 Operational and Financial Results

Thursday, 29. October 2020 21:01

OKLAHOMA CITY, Oct. 29, 2020 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ: TUSK) today reported financial and operational results for the third quarter ended September 30, 2020.

Financial Highlights for the Third Quarter 2020:

Total revenue was $70.5 million for the three months ended September 30, 2020, up 17% from $60.1 million for the three months ended June 30, 2020 and down 38% from $113.4 million for the three months ended September 30, 2019.

Net income for the three months ended September 30, 2020 was $3.4 million, or $0.07 per fully diluted share, as compared to a net loss of $15.2 million, or $0.33 per fully diluted share, for the three months ended June 30, 2020 and a net loss of $35.7 million, or $0.79 per fully diluted share, for the three months ended September 30, 2019.

Adjusted EBITDA (as defined and reconciled below) was $22.1 million for the three months ended September 30, 2020, as compared to $6.9 million for the three months ended June 30, 2020 and ($3.8) million for the three months ended September 30, 2019.

Arty Straehla, Mammoth's Chief Executive Officer, stated, “The third quarter financial results showed the earnings power of our infrastructure segment with gross margin increasing to 34% and Adjusted EBITDA, excluding interest on trade accounts receivable, in this segment growing more than 350% quarter-over-quarter. The initiatives taken by our infrastructure management team have laid a solid foundation for growth in the years to come. While the oilfield portion of our service offerings continue to experience significant challenges, we continue to maintain our oilfield equipment and plan to be ready to ramp up our oilfield service offerings when oilfield demand, pricing and margins strengthen.”

Infrastructure Services

Mammoth's infrastructure services division contributed revenue of $44.0 million, or approximately 62% of Mammoth's total revenue, for the three months ended September 30, 2020, an increase of 44% from $30.6 million for the three months ended June 30, 2020 and an increase of 18% from $37.3 million for the three months ended September 30, 2019 reflecting a strong market.

As of September 30, 2020, Mammoth had approximately 120 crews operating in the continental United States.

Pressure Pumping Services

Mammoth's pressure pumping services division contributed revenue (inclusive of inter-segment revenue) of $15.8 million on 449 stages for the three months ended September 30, 2020, a decrease of 5% from $16.6 million on 658 stages for the three months ended June 30, 2020 and a decrease of 65% from $44.6 million on 783 stages for the three months ended September 30, 2019. On average, 0.9 of the Company's fleets were active for the three months ended September 30, 2020, compared to average utilization of 1.9 fleets during the three months ended June 30, 2020 and an average utilization of 1.2 fleets during the three months ended September 30, 2019.

Natural Sand Proppant Services

Mammoth's natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $6.0 million for the three months ended September 30, 2020, a decrease of 3% from $6.2 million for the three months ended June 30, 2020 and a decrease of 67% from $18.4 million for the three months ended September 30, 2019. The Company sold approximately 68,000 tons of sand during the three months ended September 30, 2020, a decrease of 85% from approximately 456,000 tons sold during the three months ended June 30, 2020 and a decrease of 17% from approximately 82,000 tons sold during the three months ended September 30, 2019. The Company's average sales price for the sand sold during the three months ended September 30, 2020 was $15.59 per ton, a slight increase from the $15.18 per ton average sales price during the three months ended June 30, 2020 and a decrease from the $26.84 per ton average sales price during the three months ended September 30, 2019.

Drilling Services

Mammoth's drilling services division contributed revenue (inclusive of inter-segment revenue) of $1.2 million for the three months ended September 30, 2020, a decrease of 8% from $1.3 million for the three months ended June 30, 2020 and a decrease of 80% from $6.1 million for the three months ended September 30, 2019. The decline is primarily due to reduced utilization. As a result of market conditions, the Company temporarily shut down its contract land drilling operations beginning in December 2019 and its rig hauling operations beginning in April 2020.

Other Services

Mammoth's other services, including coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation, remote accommodations, oilfield equipment manufacturing and infrastructure engineering and design services, contributed revenue (inclusive of inter-segment revenue) of $4.2 million for the three months ended September 30, 2020, a decrease of 35% from $6.5 million for the three months ended June 30, 2020 and a decrease of 70% from $14.0 million for the three months ended September 30, 2019.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $12.2 million for the three months ended September 30, 2020, as compared to $13.7 million for the three months ended June 30, 2020 and $14.4 million for the three months ended September 30, 2019.

Following is a breakout of SG&A expense (in thousands):

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30,
 2020 2019 2020 2020 2019
Cash expenses:         
Compensation and benefits$3,449   $4,777   $3,720   $11,138   $16,161  
Professional services5,651   6,104   6,147   15,335   12,827  
Other(a)2,163   1,665   2,100   6,572   8,290  
Total cash SG&A expense11,263   12,546   11,967   33,045   37,278  
Non-cash expenses:         
Bad debt provision626   964   1,624   2,306   1,230  
Stock based compensation291   913   135   1,326   2,705  
Total non-cash SG&A expense917   1,877   1,759   3,632   3,935  
  Total SG&A expense$12,180   $14,423   $13,726   $36,677   $41,213  

a.     Includes travel-related costs, information technology expenses, rent, utilities and other general and administrative-related costs.

SG&A expenses, as a percentage of total revenue, were 17% for the three months ended September 30, 2020, as compared to 23% for the three months ended June 30, 2020 and 13% for the three months ended September 30, 2019.

Liquidity

As of September 30, 2020, Mammoth had cash on hand of $13.9 million and outstanding borrowings under its revolving credit facility of $89.8 million. As of September 30, 2020, the Company had $18.0 million of available borrowing capacity under its revolving credit facility. This available borrowing capacity reflects (i) a minimum excess availability covenant of 10% of the maximum revolving advance amount and (ii) $9.0 million of outstanding letters of credit. As of September 30, 2020, Mammoth had total liquidity of $31.9 million.

As of October 28, 2020, Mammoth had cash on hand of $12.4 million and outstanding borrowings under its revolving credit facility of $88.4 million. As of October 28, 2020, the Company had $28.1 million of available borrowing capacity under its revolving credit facility, after giving effect to $13.3 million of outstanding letters of credit.

Capital Expenditures

The following table summarizes Mammoth's capital expenditures by operating division for the periods indicated (in thousands):

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30,
 2020 2019 2020 2020 2019
Infrastructure services(a)$178   $122   $43   $298   $5,553  
Pressure pumping services(b)698   2,963   2,450   3,752   14,305  
Natural sand proppant services(c)194   728   354   1,069   2,703  
Drilling services(d)131   146   72   211   3,073  
Other(e)324   711     619   9,256  
Total capital expenditures$1,525   $4,670   $2,924   $5,949   $34,890  

a.     Capital expenditures primarily for truck, tooling and other equipment for the periods presented.
b.     Capital expenditures primarily for pressure pumping and water transfer equipment for the periods presented.
c.     Capital expenditures primarily for maintenance for the periods presented.
d.     Capital expenditures primarily for upgrades to the Company's rig fleet for the periods presented.
e.     Capital expenditures primarily for equipment for the Company's rental businesses for the periods presented.

Explanatory Note Regarding Financial Information

The financial information contained in this release should be read in conjunction with the financial information contained in Mammoth’s Annual Reports filed on Form 10-K with the Securities and Exchange Commission (“SEC”), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings.

The Company's Chief Executive Officer and Chief Financial Officer comprise the Company's Chief Operating Decision Maker function (“CODM”). Segment information is prepared on the same basis that the CODM manages the segments, evaluates the segment financial statements and makes key operating and resource utilization decisions. Segment evaluation is determined on a quantitative basis based on a function of operating income (loss) as well as a qualitative basis, such as nature of the product and service offerings and types of customers.

Conference Call Information

Mammoth will host a conference call on Thursday, October 29, 2020 at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss its third quarter 2020 financial and operational results. The telephone number to access the conference call is 844-265-1561 in the U.S. and the international dial in is 216-562-0385. The conference ID for the call is 2595308. The conference call will also be webcast live on www.mammothenergy.com in the “Investors” section.

About Mammoth Energy Services, Inc.

Mammoth is an integrated, growth-oriented energy service company serving companies engaged in the exploration and development of North American onshore unconventional oil and natural gas reserves and government-funded utilities, private utilities, public investor-owned utilities and co-operative utilities through its energy infrastructure services. Mammoth’s suite of services and products include: infrastructure services, pressure pumping services, natural sand and proppant services, drilling services and other energy services.

For additional information about Mammoth, please visit its website at www.mammothenergy.com, where Mammoth routinely posts announcements, updates, events, investor information and presentations and recent news releases.

Investor Contact:
Don Crist
Director of Investor Relations
dcrist@mammothenergy.com
405-608-6048

Media Contact:
Peter Mirijanian
peter@pmpadc.com
(202) 464-8803

Forward-Looking Statements and Cautionary Statements

This news release (and any oral statements made regarding the subjects of this release, including on the conference call announced herein) contains certain statements and information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts that address activities, events or developments that Mammoth expects, believes or anticipates will or may occur in the future are forward-looking statements. The words “anticipate,” “believe,” “ensure,” “expect,” “if,” “intend,” “plan,” “estimate,” “project,” “forecasts,” “predict,” “outlook,” “aim,” “will,” “could,” “should,” “potential,” “would,” “may,” “probable,” “likely” and similar expressions, and the negative thereof, are intended to identify forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include statements, estimates and projections regarding the Company's business outlook and plans, future financial position, liquidity and capital resources, operations, performance, acquisitions, returns, capital expenditure budgets, costs and other guidance regarding future developments. Forward-looking statements are not assurances of future performance. These forward-looking statements are based on management’s current expectations and beliefs, forecasts for the Company's existing operations, experience and perception of historical trends, current conditions, anticipated future developments and their effect on Mammoth, and other factors believed to be appropriate. Although management believes that the expectations and assumptions reflected in these forward-looking statements are reasonable as and when made, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all). Moreover, the Company's forward-looking statements are subject to significant risks and uncertainties, including those described in its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings it makes with the SEC, including those relating to the Company's acquisitions and contracts, many of which are beyond the Company's control, which may cause actual results to differ materially from historical experience and present expectations or projections which are implied or expressed by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the severity and duration of the COVID-19 pandemic, related global and national health concerns and economic repercussions and the resulting negative impact on demand for our services; the current significant surplus in the supply of oil and the ability of the OPEC+ countries to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently resulting from the impact of the foregoing factors, which is negatively impacting our business; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; the failure to receive or delays in receiving governmental authorizations, approvals and/or payments; the outcome of ongoing government investigations and other legal proceedings, including those relating to the contracts awarded to the Company's subsidiary Cobra Acquisitions LLC by the Puerto Rico Electric Power Authority and contracts for our pressure pumping services and natural sand proppant services; the Company's inability to replace the prior levels of work in its business segments, including its infrastructure and pressure pumping segments; risks relating to economic conditions; the loss of or interruption in operations of one or more key suppliers or customers; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of capital resources and liquidity; weather; natural disasters; litigation; competition in the oil and natural gas and infrastructure industries; and costs and availability of resources.

Investors are cautioned not to place undue reliance on any forward-looking statement which speaks only as of the date on which such statement is made. We undertake no obligation to correct, revise or update any forward-looking statement after the date such statement is made, whether as a result of new information, future events or otherwise, except as required by applicable law.

MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED BALANCE SHEETS

ASSETS September 30, December 31,
  2020 2019
CURRENT ASSETS (in thousands)
Cash and cash equivalents $13,884    $5,872   
Accounts receivable, net 373,160    363,053   
Receivables from related parties 38,676    7,523   
Inventories 13,297    17,483   
Prepaid expenses 3,363    12,354   
Other current assets 4,413    695   
Total current assets 446,793    406,980   
     
Property, plant and equipment, net 270,624    352,772   
Sand reserves 66,093    68,351   
Operating lease right-of-use assets 25,927    43,446   
Intangible assets, net - customer relationships 452    583   
Intangible assets, net - trade names 4,576    5,205   
Goodwill 12,608    67,581   
Other non-current assets 4,026    7,467   
Total assets $831,099    $952,385   
LIABILITIES AND EQUITY    
CURRENT LIABILITIES    
Accounts payable $33,428    $39,220   
Payables to related parties 18    526   
Accrued expenses and other current liabilities 35,482    40,754   
Current operating lease liability 10,657    16,432   
Income taxes payable 31,789    33,465   
Total current liabilities 111,374    130,397   
     
Long-term debt 89,800    80,000   
Deferred income tax liabilities 29,423    36,873   
Long-term operating lease liability 15,291    27,102   
Asset retirement obligation 4,683    4,241   
Other liabilities 6,357    5,031   
Total liabilities 256,928    283,644   
     
COMMITMENTS AND CONTINGENCIES    
     
EQUITY    
Equity:    
Common stock, $0.01 par value, 200,000,000 shares authorized, 45,765,533 and 45,108,545 issued and outstanding at September 30, 2020 and December 31, 2019 458    451   
Additional paid in capital 536,685    535,094   
Retained earnings 40,756    136,502   
Accumulated other comprehensive loss (3,728)  (3,306) 
Total equity 574,171    668,741   
Total liabilities and equity $831,099    $952,385   
           

MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30,
 2020 2019 2020 2020 2019
  
 (in thousands, except per share amounts)
REVENUE 
Services revenue$55,279    $85,783    $44,878    $169,002    $394,645   
Services revenue - related parties8,565    15,000    8,650    35,228    95,910   
Product revenue4,815    9,710    4,706    18,171    40,381   
Product revenue - related parties1,875    2,924    1,875    5,625    26,439   
Total revenue70,534    113,417    60,109    228,026    557,375   
          
COST AND EXPENSES         
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $20,424, $25,749, $21,750, $65,728 and $77,028, respectively, for the three months ended September 30, 2020, September 30, 2019 and June 30, 2020 and nine months ended September 30, 2020 and 2019)41,445    91,813    42,255    154,397    382,607   
Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0, $0, $0 and $0, respectively, for the three months ended September 30, 2020, September 30, 2019 and June 30, 2020 and nine months ended September 30, 2020 and 2019)131    774    97    329    4,138   
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,689, $4,019, $2,346, $7,344 and $11,414, respectively, for the three months ended September 30, 2020, September 30, 2019 and June 30, 2020 and nine months ended September 30, 2020 and 2019)4,353    18,547    6,401    21,862    81,475   
Selling, general and administrative11,979    14,029    13,528    36,063    39,726   
Selling, general and administrative - related parties201    394    198    614    1,487   
Depreciation, depletion, amortization and accretion23,132    29,791    24,116    73,130    88,512   
Impairment of goodwill—    3,194    —    54,973    3,194   
Impairment of other long-lived assets—    3,348    —    12,897    3,348   
Total cost and expenses81,241    161,890    86,595    354,265    604,487   
Operating loss(10,707)  (48,473)  (26,486)  (126,239)  (47,112) 
          
OTHER INCOME (EXPENSE)         
Interest expense, net(1,098)  (1,398)  (1,471)  (4,207)  (3,472) 
Other, net7,943    6,368    8,137    23,489    34,944   
Other, net - related parties1,099    —    1,133    2,232    —   
Total other income7,944    4,970    7,799    21,514    31,472   
Loss before income taxes(2,763)  (43,503)  (18,687)  (104,725)  (15,640) 
(Benefit) provision for income taxes(6,193)  (7,794)  (3,482)  (8,979)  2,625   
Net income (loss)$3,430    $(35,709)  $(15,205)  $(95,746)  $(18,265) 
          
OTHER COMPREHENSIVE INCOME (LOSS)         
Foreign currency translation adjustment, net of tax of ($95), ($49), ($150), $116 and $134, respectively, for the three months ended September 30, 2020, September 30, 2019 and June 30, 2020 and nine months ended September 30, 2020 and 2019324    (213)  668    (422)  493   
Comprehensive income (loss)$3,754    $(35,922)  $(14,537)  $(96,168)  $(17,772) 
          
Net income (loss) per share (basic)$0.07    $(0.79)  $(0.33)  $(2.10)  $(0.41) 
Net income (loss) per share (diluted)$0.07    $(0.79)  $(0.33)  $(2.10)  $(0.41) 
Weighted average number of shares outstanding (basic)45,764    45,020    45,727    45,603    44,984   
Weighted average number of shares outstanding (diluted)46,571    45,020    45,727    45,603    44,984   
Dividends declared per share$—    $—    $—    $—    $0.25   
                         

MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS 

 Nine Months Ended
 September 30,
 2020 2019
  
 (in thousands)
Cash flows from operating activities:   
Net loss$(95,746)  $(18,265) 
Adjustments to reconcile net loss to cash provided by (used in) operating activities:   
Stock based compensation1,598    3,367   
Depreciation, depletion, accretion and amortization73,130    88,512   
Amortization of coil tubing strings359    1,236   
Amortization of debt origination costs703    245   
Bad debt expense2,306    1,230   
(Gain) loss on disposal of property and equipment(927)  245   
Impairment of goodwill54,973    3,194   
Impairment of other long-lived assets12,897    3,348   
Inventory obsolescence—    1,349   
Deferred income taxes(7,334)  (32,183) 
Other581    (539) 
Changes in assets and liabilities:   
Accounts receivable, net(11,707)  (33,042) 
Receivables from related parties(31,152)  2,622   
Inventories3,827    1,415   
Prepaid expenses and other assets8,803    3,713   
Accounts payable(5,211)  (27,187) 
Payables to related parties(508)  117   
Accrued expenses and other liabilities(3,166)  (19,121) 
Income taxes payable(1,644)  (72,501) 
Net cash provided by (used in) operating activities1,782    (92,245) 
    
Cash flows from investing activities:   
Purchases of property and equipment(5,873)  (34,637) 
Purchases of property and equipment from related parties(76)  (253) 
Contributions to equity investee—    (680) 
Proceeds from disposal of property and equipment4,859    2,491   
Net cash used in investing activities(1,090)  (33,079) 
    
Cash flows from financing activities:   
Borrowings from lines of credit30,800    138,000   
Repayments of lines of credit(21,000)  (58,000) 
Dividends paid—    (11,219) 
Principal payments on financing leases and equipment financing notes(1,423)  (1,534) 
Debt issuance costs(1,000)  —   
Net cash provided by financing activities7,377    67,247   
Effect of foreign exchange rate on cash(57)  50   
Net change in cash and cash equivalents8,012    (58,027) 
Cash and cash equivalents at beginning of period5,872    67,625   
Cash and cash equivalents at end of period$13,884    $9,598   
    
Supplemental disclosure of cash flow information:   
Cash paid for interest$3,637    $3,280   
Cash paid for income taxes$13    $116,448   
Supplemental disclosure of non-cash transactions:   
Purchases of property and equipment included in accounts payable$2,032    $1,203   
          

MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS
(in thousands)

Three months ended September 30, 2020InfrastructurePressure
Pumping
SandDrillingAll OtherEliminationsTotal
Revenue from external customers$44,009   $15,738   $6,031   $1,193   $3,563   $—   $70,534   
Intersegment revenues—   53   —   26   672   (751) —   
Total revenue44,009   15,791   6,031   1,219   4,235   (751) 70,534   
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion29,074   6,881   3,784   1,964   4,226   —   45,929   
Intersegment cost of revenues162   449   26   —   114   (751) —   
Total cost of revenue29,236   7,330   3,810   1,964   4,340   (751) 45,929   
Selling, general and administrative7,377   1,744   1,033   382   1,644   —   12,180   
Depreciation, depletion, amortization and accretion7,589   7,196   2,693   2,323   3,331   —   23,132   
Operating loss(193) (479) (1,505) (3,450) (5,080) —   (10,707) 
Interest expense, net628   269   54   60   87   —   1,098   
Other (income) expense, net(9,204) (1,156) 1,792   20   (494) —   (9,042) 
Income (loss) before income taxes$8,383   $408   $(3,351) $(3,530) $(4,673) $—   $(2,763) 


Three months ended September 30, 2019InfrastructurePressure
Pumping
SandDrillingAll OtherEliminationsTotal
Revenue from external customers$37,289   $43,887   $12,634   $6,065   $13,542   $—   $113,417   
Intersegment revenues—   725   5,727   58   417   (6,927) —   
Total revenue37,289   44,612   18,361   6,123   13,959   (6,927) 113,417   
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion36,940   33,059   18,547   7,203   15,385   —   111,134   
Intersegment cost of revenues—   6,054   326   185   362   (6,927) —   
Total cost of revenue36,940   39,113   18,873   7,388   15,747   (6,927) 111,134   
Selling, general and administrative7,322   3,669   1,314   910   1,208   —   14,423   
Depreciation, depletion, amortization and accretion7,953   10,176   4,022   3,096   4,544   —   29,791   
impairment of goodwill—   —   —   —   3,194   —   3,194   
Impairment of other long-lived assets—   —   —   —   3,348   —   3,348   
Operating loss(14,926) (8,346) (5,848) (5,271) (14,082) —   (48,473) 
Interest expense, net599   316   43   220   220   —   1,398   
Other (income) expense, net(6,239) (3) 99   (100) (125) —   (6,368) 
Loss before income taxes$(9,286) $(8,659) $(5,990) $(5,391) $(14,177) $—   $(43,503) 


Three months ended June 30, 2020InfrastructurePressure
Pumping
SandDrillingAll OtherEliminationsTotal
Revenue from external customers$30,579   $16,125   $6,237   $1,250   $5,918   $—   $60,109   
Intersegment revenues—   446   —   25   580   (1,051) —   
Total revenue30,579   16,571   6,237   1,275   6,498   (1,051) 60,109   
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion25,368   8,744   6,025   2,027   6,589   —   48,753   
Intersegment cost of revenues27   333   28   21   642   (1,051) —   
Total cost of revenue25,395   9,077   6,053   2,048   7,231   (1,051) 48,753   
Selling, general and administrative8,037   1,477   1,357   1,331   1,524   —   13,726   
Depreciation, depletion, amortization and accretion7,816   7,685   2,348   2,700   3,567   —   24,116   
Operating loss(10,669) (1,668) (3,521) (4,804) (5,824) —   (26,486) 
Interest expense, net720   346   53   143   209   —   1,471   
Other (income) expense, net(7,809) (1,179) (2) (298) 18   —   (9,270) 
Loss before income taxes$(3,580) $(835) $(3,572) $(4,649) $(6,051) $—   $(18,687) 


Nine months ended September 30, 2020InfrastructurePressure
Pumping
SandDrillingAll OtherEliminationsTotal
Revenue from external customers$100,294   $74,549   $22,421   $7,166   $23,596   $—   $228,026   
Intersegment revenues—   1,435   95   107   2,026   (3,663) —   
Total revenue100,294   75,984   22,516   7,273   25,622   (3,663) 228,026   
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion81,389   41,833   20,465   9,627   23,274   —   176,588   
Intersegment cost of revenues197   1,410   355   151   1,550   (3,663) —   
Total cost of revenue81,586   43,243   20,820   9,778   24,824   (3,663) 176,588   
Selling, general and administrative19,711   5,443   3,641   2,777   5,105   —   36,677   
Depreciation, depletion, amortization and accretion23,339   23,373   7,353   7,900   11,165   —   73,130   
Impairment of goodwill—   53,406   —   —   1,567   —   54,973   
Impairment of other long-lived assets—   4,203   —   326   8,368   —   12,897   
Operating loss(24,342) (53,684) (9,298) (13,508) (25,407) —   (126,239) 
Interest expense, net2,105   907   167   473   555   —   4,207   
Other (income) expense, net(24,289) (2,444) 1,753   (251) (490) —   (25,721) 
Loss before income taxes$(2,158) $(52,147) $(11,218) $(13,730) $(25,472) $—   $(104,725) 


Nine months ended September 30, 2019InfrastructurePressure
Pumping
SandDrillingAll OtherEliminationsTotal
Revenue from external customers$187,831   $217,456   $66,820   $27,091   $58,177   $—   $557,375   
Intersegment revenues—   3,936   29,795   484   1,870   (36,085) —   
Total revenue187,831   221,392   96,615   27,575   60,047   (36,085) 557,375   
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion140,768   157,106   81,475   29,030   59,841   —   468,220   
Intersegment cost of revenues  31,388   2,513   686   1,557   (36,145) —   
Total cost of revenue140,769   188,494   83,988   29,716   61,398   (36,145) 468,220   
Selling, general and administrative19,874   9,544   4,214   3,117   4,464   —   41,213   
Depreciation, depletion, amortization and accretion23,490   30,244   11,423   9,866   13,489   —   88,512   
Impairment of goodwill—   —   —   —   3,194   —   3,194   
Impairment of other long-lived assets—   —   —   —   3,348   —   3,348   
Operating income (loss)3,698   (6,890) (3,010) (15,124) (25,846) 60   (47,112) 
Interest expense, net1,024   965   145   679   659   —   3,472   
Other (income) expense, net(35,108)   67   (122) 214   —   (34,944) 
Income (loss) before income taxes$37,782   $(7,860) $(3,222) $(15,681) $(26,719) $60   $(15,640) 
                             

MAMMOTH ENERGY SERVICES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA

Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. Mammoth defines Adjusted EBITDA as net income (loss) before depreciation, depletion, amortization and accretion expense, impairment of goodwill, impairment of other long-lived assets, inventory obsolescence charges, acquisition related costs, stock based compensation, interest expense, net, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets and interest on trade accounts receivable) and provision (benefit) for income taxes, further adjusted to add back interest on trade accounts receivable. The Company excludes the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within the energy service industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (loss) or cash flows from operating activities as determined in accordance with GAAP or as an indicator of Mammoth's operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets. Mammoth's computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company believes that Adjusted EBITDA is a widely followed measure of operating performance and may also be used by investors to measure its ability to meet debt service requirements.

The following tables provide a reconciliation of Adjusted EBITDA to the GAAP financial measure of net income (loss) on a consolidated basis and for each of the Company's segments (in thousands):

Consolidated

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30,
Reconciliation of Adjusted EBITDA to net income (loss):2020 2019 2020 2020 2019
Net income (loss)$3,430    $(35,709)  $(15,205)  $(95,746)  $(18,265) 
Depreciation, depletion, amortization and accretion expense23,132    29,791    24,116    73,130    88,512   
Impairment of goodwill—    3,194    —    54,973    3,194   
Impairment of other long-lived assets—    3,348    —    12,897    3,348   
Inventory obsolescence charges—    1,349    —    —    1,349   
Acquisition related costs—    —    —    —    45   
Stock based compensation353    1,134    196    1,598    3,367   
Interest expense, net1,098    1,398    1,471    4,207    3,472   
Other income, net(9,042)  (6,368)  (9,270)  (25,721)  (34,944) 
(Benefit) provision for income taxes(6,193)  (7,794)  (3,482)  (8,979)  2,625   
Interest on trade accounts receivable9,285    5,896    9,071    26,052    34,865   
Adjusted EBITDA$22,063    $(3,761)  $6,897    $42,411    $87,568   

Infrastructure Services

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30,
Reconciliation of Adjusted EBITDA to net income (loss):2020 2019 2020 2020 2019
Net income (loss)$6,738    $(10,763)  $(4,529)  $(7,242)  $31,113   
Depreciation and amortization expense7,589    7,953    7,816    23,339    23,490   
Acquisition related costs—    —    —    —    12   
Stock based compensation141    217    45    437    688   
Interest expense628    599    720    2,105    1,024   
Other income, net(9,204)  (6,239)  (7,809)  (24,289)  (35,108) 
Provision for income taxes1,645    1,477    949    5,085    6,670   
Interest on trade accounts receivable8,170    5,896    7,929    23,796    34,865   
Adjusted EBITDA$15,707    $(860)  $5,121    $23,231    $62,754   

Pressure Pumping Services

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30,
Reconciliation of Adjusted EBITDA to net income (loss):2020 2019 2020 2020 2019
Net income (loss)$408    $(8,659)  $(835)  $(52,149)  $(7,860) 
Depreciation and amortization expense7,196    10,176    7,685    23,373    30,244   
Impairment of goodwill—    —    —    53,406    —   
Impairment of other long-lived assets—    —    —    4,203    —   
Acquisition related costs—    —    —    —    18   
Stock based compensation77    503    53    465    1,402   
Interest expense269    316    346    907    965   
Other (income) expense, net(1,156)  (3)  (1,179)  (2,444)    
Interest on trade accounts receivable1,073    —    1,133    2,205    —   
Adjusted EBITDA$7,867    $2,333    $7,203    $29,966    $24,774   

Natural Sand Proppant Services

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30,
Reconciliation of Adjusted EBITDA to net loss:2020 2019 2020 2020 2019
Net loss$(3,351)  $(5,990)  $(3,572)  $(11,218)  $(3,222) 
Depreciation, depletion, amortization and accretion expense2,693    4,022    2,348    7,353    11,423   
Acquisition related costs—    —    —    —      
Stock based compensation76    216    45    347    656   
Interest expense54    43    53    167    145   
Other expense (income), net1,792    99    (2)  1,753    67   
Interest on trade accounts receivable26    —    —    26    —   
Adjusted EBITDA$1,290    $(1,610)  $(1,128)  $(1,572)  $9,077   

Drilling Services

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30,
Reconciliation of Adjusted EBITDA to net loss:2020 2019 2020 2020 2019
Net loss$(3,530)  $(5,391)  $(4,649)  $(13,730)  $(15,681) 
Depreciation expense2,323    3,096    2,700    7,900    9,866   
Impairment of other long-lived assets—    —    —    326    —   
Acquisition related costs—    —    —    —      
Stock based compensation38    90    34    166    279   
Interest expense60    220    143    473    679   
Other expense (income), net20    (100)  (298)  (251)  (122) 
Adjusted EBITDA$(1,089)  $(2,085)  $(2,070)  $(5,116)  $(4,977) 

Other Services(a)

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30,
Reconciliation of Adjusted EBITDA to net income (loss):2020 2019 2020 2020 2019
Net income (loss)$3,165    $(4,905)  $(1,620)  $(11,407)  $(22,674) 
Depreciation, amortization and accretion expense3,331    4,544    3,567    11,165    13,489   
Impairment of goodwill—    3,194    —    1,567    3,194   
Impairment of other long-lived assets—    3,348    —    8,368    3,348   
Inventory obsolescence charges—    1,349    —    —    1,349   
Acquisition related costs—    —    —    —      
Stock based compensation21    107    19    183    341   
Interest expense, net87    220    209    555    659   
Other (income) expense, net(494)  (125)  18    (490)  214   
Benefit for income taxes(7,838)  (9,272)  (4,431)  (14,064)  (4,045) 
Interest on trade accounts receivable16    —       25    —   
Adjusted EBITDA$(1,712)  $(1,540)  $(2,229)  $(4,098)  $(4,120) 
  1. Includes results for Mammoth's coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation and remote accommodations, oilfield equipment manufacturing and infrastructure engineering and design services and corporate related activities. The Company's corporate related activities do not generate revenue.

Adjusted Net Income (Loss) and Adjusted Earnings (Loss) per Share

Adjusted net income (loss) and adjusted basic and diluted earnings (loss) per share are supplemental non-GAAP financial measures that are used by management to evaluate the Company's operating and financial performance. Management believes these measures provide meaningful information about the Company's performance by excluding certain non-cash charges, such as impairment of goodwill and impairment of other long-lived assets, that may not be indicative of the Company's ongoing operating results. Adjusted net income (loss) and adjusted earnings (loss) per share should not be considered in isolation or as a substitute for net income (loss) and earnings (loss) per share prepared in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The following tables provide a reconciliation of adjusted net income (loss) and adjusted earnings (loss) per share to the GAAP financial measures of net income (loss) and earnings (loss) per share for the periods specified.

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30,
 2020 2019 2020 2020 2019
  
 (in thousands, except per share amounts)
Net income (loss), as reported$3,430    $(35,709)  $(15,205)  $(95,746)  $(18,265) 
Impairment of goodwill—    3,194    —    54,973    3,194   
Impairment of other long-lived assets—    3,348    —    12,897    3,348   
Adjusted net income (loss)$3,430    $(29,167)  $(15,205)  $(27,876)  $(11,723) 
          
Basic earnings (loss) per share, as reported$0.07    $(0.79)  $(0.33)  $(2.10)  $(0.41) 
Impairment of goodwill—    0.07    —    1.21    0.07   
Impairment of other long-lived assets—    0.07    —    0.28    0.07   
Adjusted basic earnings (loss) per share$0.07    $(0.65)  $(0.33)  $(0.61)  $(0.27) 
          
Diluted earnings (loss) per share, as reported$0.07    $(0.79)  $(0.33)  $(2.10)  $(0.41) 
Impairment of goodwill—    0.07    —    1.21    0.07   
Impairment of other long-lived assets—    0.07    —    0.28    0.07   
Adjusted diluted earnings (loss) per share$0.07    $(0.65)  $(0.33)  $(0.61)  $(0.27) 

 

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