Welcome, everyone, to the Mammoth Energy Services Fourth Quarter and Full Year 2020 Earnings Conference Call. This conference is being recorded and will be available for replay on Mammoth Energy Services’ website. I would now like to introduce your host for today’s conference, Mr. Don Crist, Director of Investor Relations at Mammoth Energy Services. Please proceed.

Thank you, Julian. Good afternoon, and welcome to Mammoth Energy Services’ Fourth Quarter and Full Year 2020 Earnings Conference Call. Joining me on today’s call are Arty Straehla, Chief Executive Officer; and Mark Layton, Chief Financial Officer. Before I turn the call over to them, I’d like to read our safe harbor statement. Some of the comments today may include forward-looking statements reflecting Mammoth Energy Services’ views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements. These risks are discussed in Mammoth Energy Services’ Form 10-K, Forms 10-Q, current reports on Form 8-K and other Securities and Exchange Commission filings. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Our comments today may also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures are included in our fourth quarter and full year 2020 press release, which can be found on our website along with an updated presentation. Now, I’ll turn the call over to Arty.

Thank you, Don, and good afternoon, everyone. 2020 was a very active year for our team as they adapted to the ongoing COVID-19 pandemic and its effects on business today. Since the outbreak of the pandemic, nearly every aspect of our daily lives has been impacted, but our first priority is and has always been the safety and health of our team, and we continue to take steps to protect our team members from the virus. Now that the vaccine is being administered, infection rates appear to be trending down. The turnaround in our infrastructure business throughout 2020 was significant as the management team, which was hired in November of 2019, evaluated the businesses, eliminated costs, streamlined operations, and began the transition of our job mix. The actions taken throughout 2020 can be seen in our financials as the U.S. business reversed losses and turned positive throughout the year. Demand for our infrastructure business increased throughout the back half of the year. In addition to our normal operations, our teams continue to work on the Gulf Coast to restore damage caused by multiple hurricanes. A majority of this work was completed during the fourth quarter with some storm cleanup continuing into the first quarter of 2021. Our diversification strategy into infrastructure is working. The gross margin of the infrastructure division came in at 26% during the fourth quarter of 2020, with EBITDA growing marginally quarter-over-quarter when excluding interest on the PREPA receivable. The infrastructure management team is leveraging current operations to introduce our capabilities to potential customers. We believe industry demand and bidding opportunities will remain robust in years to come as the shift towards more renewable energy sources is realized. Our management team has an impressive resume in renewables, and we believe that their background, combined with our vertically-integrated service offering, positions us well to compete and win renewable projects. With the work our team has done on the cost structure and a core base of operations, we have built a solid foundation and believe we are positioned to grow both our customer base and geographic footprint over the coming years. Our infrastructure operating subsidiaries, Higher Power and 5 Star, are well respected by the utilities they work for and are expanding their customer base. These businesses have grown significantly since we acquired them and are currently comprised of approximately 500 experienced field personnel spread across 115 crews. Aquawolf, our engineering business, is expected to expand both the number of engineers and the breadth of work performed following the recent signing of a multi-year contract with a major utility. While we’re limited on what we can disclose about the agreement, this three-year contract is expected to generate up to $40 million in revenue over the contract term. This is a significant award and brings us one step closer to being an engineering, procurement, and construction, or EPC, company. In addition, the integration of our manufacturing operation into our infrastructure offering is progressing through the manufacturing and refurbishment of equipment and products used by our infrastructure teams. We are encouraged by what our infrastructure, engineering, and manufacturing teams have accomplished and what the future holds. Turning to the oilfield. While oil prices have rebounded from recent lows, activity levels remain depressed industry-wide as a result of capital discipline among E&Ps. We currently expect an increase in activity as we progress through 2021, but we believe E&Ps will generally keep production flat with year-end 2020 levels. During the fourth quarter of 2020, we pumped 291 stages with approximately 0.6 fleets utilized throughout the quarter on average. We have continued to upgrade additional pumps to dynamic gas blending, or DGB, to meet current anticipated industry demand. Our sand division sold approximately 100,000 tons of sand during the fourth quarter of 2020. The average sales price for the sand sold during the fourth quarter of 2020 was approximately $15.59 per ton. While Northern White sand pricing remains challenged, we believe a significant reduction in supply has positioned our mines well to benefit from an increase in completion activity levels. While the events of the past year have caused significant impacts on both our daily and professional lives, Mammoth has adapted quickly to the changing environment. Our diverse portfolio of companies across several entry points has performed as expected. The infrastructure business has a solid foundation from which to grow as it looks for ways to further integrate into our other businesses and continue to lower costs. Let me now turn the call over to Mark to take you through the financial performance during the fourth quarter and full year of 2020, after which we will take questions.

Thank you, Arty, and good afternoon, everyone. I hope that all of you have had a chance to read our press release, so I will keep my financial comments brief and focus on certain highlights. Mammoth’s revenue during the fourth quarter of 2020 came in at $85 million as compared to $71 million during the third quarter of 2020. A majority of the change quarter-over-quarter was due to an increase in infrastructure revenue. Revenue for the full year of 2020 came in at $313 million as compared to $625 million in 2019. The majority of the reduction in revenue year-over-year was due to the completion of our restoration work in Puerto Rico, which contributed $96 million in 2019, and a reduction of revenue in the oilfield side of the business due to pandemic-related impacts. As a result of the November announcement that Gulfport Energy and certain of its subsidiaries filed petitions for voluntary relief under Chapter 11 of the United States bankruptcy code, we reserved a portion of our pre-petition accounts receivable based on Gulfport’s disclosure statement. The reserve was approximately $20 million and negatively impacted our fourth quarter and full year 2020 results. As of December 31, 2020, our net pre-petition receivable from Gulfport was $24 million and our post-petition receivable was $4 million for a total of $28 million. The net loss for the fourth quarter of 2020 was $12 million as compared to net income of $3 million during the third quarter of 2020. The majority of the reduction in net income quarter-over-quarter was related to the provision for bad debt associated with the Gulfport bankruptcy petitions. On a per share basis, the net loss for the fourth quarter came in at $0.26 per diluted share. Net loss for the full year of 2020 came in at $108 million as compared to a net loss of $79 million in 2019. On a per share basis, the net loss for the full year 2020 came in at $2.36 per diluted share. Adjusted EBITDA for the fourth quarter of 2020 was $8 million as compared to $22 million during the third quarter of 2020. When excluding the bad debt reserve related to Gulfport, our adjusted EBITDA for the fourth quarter would have been $27 million. For the full year of 2020, EBITDA came in at $50 million as compared to $77 million in 2019. We saw positive operating cash flows of $5 million in the fourth quarter and $7 million for the full year. In addition, we executed a sale-leaseback of certain of our infrastructure assets with total proceeds of $5 million and entered into a $5 million loan secured by our helicopters. As a result, net debt was reduced by approximately $7 million during the fourth quarter. CapEx during the fourth quarter of 2020 was approximately $1 million with a total of approximately $7 million spent in 2020. Our full year 2021 CapEx budget has been set at $9 million. We ended 2020 with cash on hand of approximately $15 million and debt of approximately $83 million. We thank our stockholders for their support. This concludes our prepared remarks, and we thank you for your time and attention. We will now open the call for questions.

Our first question comes from Mr. Daniel Burke.

Hey, guys, afternoon.

Hey, Daniel. How are you?

Fine.

Good.

I wanted to discuss the infrastructure segment. Arty, I think you mentioned, or perhaps it was you, Mark, that the work related to the hurricane has mostly concluded. I'm looking for insights into Q1 2021. We've experienced some winter weather disruptions that likely affected some of your operations temporarily, but they may have also increased workload on the backend. I'm curious about how to consider Q1, both in terms of revenue and margins, especially since the margin in Q4 was slightly below our expectations.

As we look at Q1, as you touched on, we have some storm work that continued into Q1. I think historically, what you’ve seen in Q1 is there’s some seasonal impact. So we would look more towards full year 2021. And as we look at 2021, we’re excited about our sales pipeline. And what we see currently in regards to projects. We think that sales pipeline will continue to increase throughout the year. The team has done an excellent job of executing on those projects and winning a number of projects. In regards to full year margin, we’re looking at the 15% to 18% range at the EBITDA level for 2021 out of the infrastructure segment, excluding interest.

Yes. I want to expand on what Mark mentioned about the financials. A year ago, as we began this call, we discussed the arrival of new management and their need to build out the team, which they have successfully accomplished. We have brought in additional management, forged new relationships, and acquired new customers. The key point to emphasize is our vertical integration. Recently, we announced the Aquawolf contract with a major utility, which enables us to enhance our capabilities and cover our costs as we expand our offerings. Our engineering team has grown from 18 engineers at the end of last year to 20, and now we have a total of 26 team members, with ongoing growth. This progress allows us to diversify into new areas; we already had a focus on transmission and distribution, and we are now extending our expertise to fiber, substations, and other sectors. The vertical integration model is crucial for us. Additionally, with the transition to manufacturing in our 75,000 square-foot facility, our strategy is proving to be effective. We have access to helicopters for the type of business we are pursuing. I am very pleased with the team's progress; it may not follow a straight path, but we are definitely making advancements and continuing to grow that business. Our pivot is showing positive results.

Arty, I mean I guess to follow up on that, did you guys have a previous relationship with this utility? I mean what were the competencies you were able to bring to bear to capture this award or grant? It does seem like it’s a bit of a step out in terms of scale for you guys as a win.

It certainly is. We had done some subcontracting work previously, and when they released their three-year RFP, we were able to submit a bid and were fortunate to win the project. The mention in our press release that the contract could be up to $40 million may very well exceed that as we move forward.

Okay. That’s helpful. I guess then to pivot to the oilfield service side of the business. Could you maybe just give us around-the-horn update on what you’re seeing out there in the market? What your deployments look like across, I guess, most prominently, the pumping market, but maybe touching on some of the other mostly idled segments as well?

We’ve always considered sand to be a key economic indicator for pumping, as it's one of the first resources we acquire in pressure pumping. Recently, we've observed a significant increase in demand, which has led us to hire more staff at our sand mines. We anticipate that production will ramp up, although we have to manage factors like the number of railcars available. We're also witnessing a rise in activity and pricing in the sector, with prices increasing slightly. On the pressure pumping front, we're seeing more bidding opportunities, and they are materializing. We still expect exploration and production companies to remain disciplined throughout the year. If you pay attention to their calls, many are discussing variable dividends and maintaining cash flow. Therefore, we anticipate they will stay disciplined, and it doesn't seem to reflect the market conditions of 2017-2018 or 2010-2014. However, we do plan to continue expanding our business.

Got it. Maybe just one last one and not to focus with too great a amount of time on pressure pumping. But you guys had a contract that was pretty supportive of reported results over the last couple of years. I guess I’m not clear what’s going to happen here in 2021. Do you expect to be positive EBITDA in pressure pumping in the first half of this year?

Yes, we do.

Okay. All right. That’s helpful. Arty, Mark, appreciate the time. Have a good afternoon, guys.

Thank you, Daniel.

Excuse me, presenters, we currently have no questions in the queue. Please go ahead.

We want to thank everyone for dialing in today. I want to personally thank our team. We believe the future is bright for Mammoth and our team members as we intend to strategically develop our service offerings to grow and deliver stockholder value in the years to come. Thank you to our stockholders for your support and interest in our company. While the current oilfield market conditions are still challenging, the infrastructure side of the business is seeing growth. We are working hard to control costs and continue to pivot Mammoth into a more industrial-focused company. This concludes our fourth quarter and full year 2020 conference call. Thank you very much. Goodbye.

This concludes today’s conference. You may now disconnect.