Good day, ladies and gentlemen, and welcome to the Mammoth Energy Services First Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call 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, Mammoth Energy Services Director of Investor Relations. Sir, you may begin.

Thank you, Ann. Good afternoon and welcome to Mammoth Energy Services first quarter 2021 earnings conference call. Joining me on today's call are Arty Straehla, Chief Executive Officer; and Mark Layton, Chief Financial Officer.

Thank you, Don, and good afternoon, everyone. The first quarter of 2021 came in as expected as restoration work was completed on the Gulf Coast and infrastructure work moderated slightly. Since the start of the year, we have seen a significant ramp-up in the bidding activity across the infrastructure space, as the new administration set its renewable agenda and announced an Infrastructure Bill to rebuild a broad array of the nation's infrastructure assets. The roughly $2 trillion plan, which is making its way through Congress, includes several areas in which our teams have expertise, including the modernization of the electric grid and the shift to renewables. In addition to the recent policy announcements, the extension of the renewable and electric vehicle investment tax credits has resulted in an increase in activity levels across the electrical infrastructure space. These policy extensions added work to our industry, which is undergoing a significant rebuilding and hardening effort to make the grid more reliable. As it relates to Mammoth, we have signed two significant multi-year contracts with major utilities over the past several months, which we expect will provide a base of business, and in the case of our engineering company, allow for an expansion of projects engineered. As the industry activity has increased, our bidding opportunities have increased, and we believe that our backlog will grow over the coming quarters. Our infrastructure management team has an impressive resume of construction and renewable projects, and we believe that their background combined with our vertically integrated service offering positions us well to compete and win renewable projects. Our engineering business has seen a ramp-up in revenue and projects following the recent signing of a multi-year contract with a major utility. We currently anticipate growth over the coming months as additional jobs are assigned to them. In addition, we continue to work closely with our infrastructure segment to jointly bid projects as we progress towards being an engineering, procurement, and construction or EPC company.

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 first quarter of 2021 came in at $67 million as compared to $85 million during the fourth quarter of 2020. A majority of the change quarter-over-quarter was due to a decrease in infrastructure revenue as a result of the completion of restoration work on the Gulf Coast. The net loss for the first quarter of 2021 was $12 million, as compared to a net loss of $12 million during the fourth quarter of 2020. On a per share basis, the net loss for the first quarter came in at $0.27 per diluted share. Adjusted EBITDA for the first quarter of 2021 was $6 million, as compared to $8 million during the fourth quarter of 2020. We saw positive operating cash flows of $14 million in the first quarter. As a result, net debt was reduced by approximately $14 million during the first quarter. CapEx during the first quarter of 2021 was approximately $1 million. Our full year 2021 CapEx budget remains at $9 million. As of March 31, 2021, we had cash on hand of approximately $14 million and debt of approximately $67 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.

We have our first question from the line of Daniel Burke from Johnson Rice. Your line is now open.

Good afternoon, everyone. I want to address a few different points. First, regarding the PREPA situation, I understand that you are aware of the upcoming FEMA report since PREPA has informed you about it. Can you clarify whether you anticipate this report will be made publicly available?

Yes. And Daniel, the way the story goes, on April 6, we filed our motion to lift the stay. And a few days after that, PREPA's attorneys reached out to our attorneys, and we talked then, and that type of thing. And they asked us if we would withdraw; we ended up coming to an agreement with a joint motion to withdraw. The omnibus hearing was held yesterday. The one we withdrew from, the next one occurs in June. So it's not that much time left, but we were told that a FEMA report was imminent and would be coming out. We expect to see that in the next month, month and a half. So we believe that it will be another affirmation of the things that we've already released four times that our rates were reasonable. Our work was in a very, very tough position on the island. It was an emergency situation, and we believe that it will be a good report.

Okay. All right. Well, we'll watch the docket on the PREPA side, stay tuned. All right, so to shift gears, I guess. One, that's almost a housekeeping item, but I'll cram it in second. When we look at the segment results, where is the $10 million of bad debt expense embedded?

Primarily embedded inside of the well completion segment, inside of SG&A.

Right, right, okay, so, can you talk about, if we don't include Mark if we don't? Or if we try to make allowance for that charge, I mean, it would seem like you guys were highly profitable in well completion, am I missing anything?

Now, there's, you know, a little bit of flow through from Gulfport inside of well completion. If you strip that activity out, we're still EBITDA positive, but we are getting some pickup inside of the segment relative to the Gulfport lever.

Okay, so alright, that helps me understand. So you all are still feeling Gulfport, under the terms of the contract.

There was some recognition relative to the rejection of both the pressure pumping agreement inside of the well completion segment, as well as the sand supply agreement, which isn't reflected in the sand segment. But we expect that Q1 should be the last of what we say, relative to the financial impact on those contracts.

Okay, got it. And then, I guess to pivot over to infrastructure. Just a final question, I guess. Mark, I think we kind of go through this one each quarter. But, you know, Q1 was supposed to be kind of a tricky quarter. I mean, a transitional quarter away from the hurricane work that helped in the second half of last year, and a quarter where I'm sure you face whether disruption just like just about any U.S. business active in the central U.S. I guess, as we look ahead here to Q2, I mean, there's been good news on the business development front with the contracts, but maybe just talk a little bit about what's a realistic outlook for sort of revenue progression. And again, you know, sort of EBITDA margin progression as we look at the next couple quarters?

I think, as we look to the next couple of quarters, we would expect an increase on top line and on margin. We still expect margin for that business to be in the 12% to 18% range. As Arty mentioned in his comments, we're seeing increased bidding opportunities, and we expect that to increase throughout the remainder of the year.

Okay. And then on the 12% to 18% EBITDA range, maybe, again just the clarification, is that excluding interest on AR? Or is that inclusive of interest on AR? And then, regardless of which of the two you pick, Mark, I mean, does that margin level come into the frame here in the second half of this year? Or is it going to take longer to get there?

We think that margin comes into frame in the back half of the year, and that would exclude the interest related to Puerto Rico.

Okay. All right. Perfect, guys. Thank you for the time.

And Daniel, just add one thing to your previous comments. Whenever we get the report from FEMA, and that's made public, we will make it public as well, putting it on our website with the other.

Okay, thank you.

I am showing no further questions at this time. I would now like to turn the conference back to our team.

Thank you. 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 the company. While the current oilfield market conditions are challenging and the infrastructure side of the business is seeing opportunities, we're working hard to control costs and continue to pivot Mammoth into a more industrial-focused company. This concludes our first quarter 2021 conference call. Good afternoon, everyone.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.