8-K
MAMMOTH ENERGY SERVICES, INC. (TUSK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
| PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|
Date of Report (Date of earliest event reported): November 9, 2023
Mammoth Energy Services, Inc.
(Exact name of registrant as specified in its charter)
001-37917
(Commission File No.)
| Delaware | 32-0498321 | |||
|---|---|---|---|---|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
| 14201 Caliber Drive, | Suite 300 | |||
| Oklahoma City, | Oklahoma | (405) | 608-6007 | 73134 |
| (Address of principal executive offices) | (Registrant’s telephone number, including area code) | (Zip Code) |
______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Securities registered pursuant to Section 12(b) of The Act: | ||
|---|---|---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock | TUSK | The Nasdaq Stock Market LLC |
| NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§232.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(s) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition
On November 9, 2023, Mammoth Energy Services, Inc. (the “Company”) issued a press release announcing its operational and financial results for the third quarter ended September 30, 2023. A copy of that press release is furnished as Exhibit 99.1 to this report.
The information in this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified as being incorporated by reference in the registration statement.
Item 7.01 Regulation FD Disclosure
On November 9, 2023, the Company posted an investor presentation to the “investors” section of its website (www.mammothenergy.com), where the Company routinely posts announcements, updates, events, investor information and presentations and recent news releases. Information on the Company's website does not constitute part of this Current Report on Form 8-K.
The information in this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified as being incorporated by reference in the registration statement.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| 99.1 | Press release datedNovember9, 2023, entitled “Mammoth Energy Services, Inc. AnnouncesThirdQuarter 2023 Operational and Financial Results.” |
|---|---|
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MAMMOTH ENERGY SERVICES, INC. | |||
|---|---|---|---|
| Date: | November 9, 2023 | By: | /s/ Mark Layton |
| Mark Layton | |||
| Chief Financial Officer and Secretary |
Document
Exhibit 99.1
Mammoth Energy Services, Inc. Announces
Third Quarter 2023 Operational and Financial Results
OKLAHOMA CITY - November 9, 2023 - Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ: TUSK) today reported financial and operational results for the third quarter ended September 30, 2023.
Financial Overview for the Third Quarter 2023:
Total revenue was $65.0 million for the third quarter of 2023 compared to $107.2 million for the same quarter last year and $75.4 million for the second quarter of 2023.
Net loss for the third quarter of 2023 was $1.1 million, or $0.02 loss per diluted share, compared to net income of $7.7 million, or $0.16 per diluted share, for the same quarter last year and net loss of $4.5 million, or $0.09 loss per diluted share, for the second quarter of 2023.
Adjusted EBITDA (as defined and reconciled below) was $13.4 million for the third quarter of 2023, compared to $29.8 million for the same quarter last year and $16.4 million for the second quarter of 2023.
Arty Straehla, Chief Executive Officer of Mammoth commented, “We are pleased to have announced that we entered into a new revolving credit facility agreement and a new term loan agreement, which refinanced, in full, Mammoth’s indebtedness outstanding under our previous revolving credit facility. We believe these new agreements will provide Mammoth with a strong base of liquidity for years to come.
“Third quarter results, as expected, were challenged by the persistence of demand and activity pressures, in particular in natural gas basins, that negatively impacted our pressure pumping fleet utilization, thus impacting our overall performance. These market pressures that began earlier this year are largely attributable to commodity price fluctuations and delayed customer schedules. In response, we continue to closely manage our costs. Despite the softness we’ve experienced this year, we are now seeing encouraging signs of increasing activity and customer planning for 2024. We are also pleased with the improving line of sight for the next few quarters, and we expect an improvement in frac fleet counts in 2024.”
Straehla added, “During and subsequent to the end of the third quarter, we were pleased to have received $11.4 million from PREPA, bringing the total payments received this year from PREPA to $22.2 million. While this only represents a portion of what is still owed to us for the work completed by our subsidiary Cobra, we continue to pursue payment of the outstanding amounts owed by PREPA, including the associated interest that has accrued and is continuing to accrue.”
Well Completion Services
Mammoth’s well completion services division contributed revenue (inclusive of inter-segment revenue) of $20.3 million on 577 stages for the third quarter of 2023, compared to $51.5 million on 1,897 stages for the same quarter of 2022 and $27.6 million on 956 stages for the second quarter of 2023. On average, 1.2 of the Company’s fleets were active for the third quarter of 2023 compared to an average utilization of 3.5 fleets during the same quarter of 2022 and 1.6 fleets during the second quarter of 2023.
Infrastructure Services
Mammoth’s infrastructure services division contributed revenue of $26.7 million for the third quarter of 2023 compared to $33.3 million for the same quarter of 2022 and $28.3 million for the second quarter of 2023. Average crew count was 81 crews during the third quarter of 2023 compared to 96 crews during the same quarter of 2022 and 86 crews during the second quarter of 2023.
Natural Sand Proppant Services
Mammoth’s natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $10.6 million for the third quarter of 2023 compared to $12.9 million for the same quarter of 2022 and $11.6 million for the second quarter of 2023. In the third quarter of 2023, the Company sold approximately 352,000 tons of sand at an average sales price of $30.18 per ton compared to sales of approximately 341,000 tons of sand at an average sales price of $29.95 per ton during the same quarter of 2022. In the second quarter of 2023, sales were approximately 384,000 tons of sand at an average price of $30.08 per ton.
Drilling Services
Mammoth’s drilling services division contributed revenue (inclusive of inter-segment revenue) of $2.8 million for the third quarter of 2023 compared to $3.1 million for the same quarter of 2022 and $3.3 million for the second quarter of 2023. The decrease in drilling services revenue is primarily attributable to decreased utilization for our directional drilling business.
Other Services
Mammoth’s other services, including aviation, equipment rentals, remote accommodations and equipment manufacturing, contributed revenue (inclusive of inter-segment revenue) of $5.5 million for the third quarter of 2023 compared to $7.0 million for the same quarter of 2022 and $5.1 million for the second quarter of 2023.
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses were $10.4 million for the third quarter of 2023 compared to $9.7 million for the same quarter of 2022 and $10.4 million for the second quarter of 2023.
Following is a breakout of SG&A expense (in thousands):
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | September 30, | ||||||||
| 2023 | 2022 | 2023 | 2023 | 2022 | ||||||
| Cash expenses: | ||||||||||
| Compensation and benefits | $ | 3,392 | $ | 3,676 | $ | 3,996 | $ | 11,665 | $ | 9,796 |
| Professional services | 4,684 | 3,706 | 4,276 | 10,889 | 10,067 | |||||
| Other(a) | 2,105 | 2,059 | 1,868 | 5,884 | 6,127 | |||||
| Total cash SG&A expense | 10,181 | 9,441 | 10,140 | 28,438 | 25,990 | |||||
| Non-cash expenses: | ||||||||||
| Change in provision for expected credit losses | 11 | 3 | (44) | (414) | (112) | |||||
| Stock based compensation | 219 | 241 | 261 | 1,127 | 682 | |||||
| Total non-cash SG&A expense | 230 | 244 | 217 | 713 | 570 | |||||
| Total SG&A expense | $ | 10,411 | $ | 9,685 | $ | 10,357 | $ | 29,151 | $ | 26,560 |
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 16% for the third quarter of 2023 compared to 9% for the same quarter of 2022 and 14% for the second quarter of 2023.
Liquidity
As of September 30, 2023, Mammoth had cash on hand of $10.5 million, outstanding borrowings under its prior revolving credit facility of $69.0 million, a borrowing base of $96.4 million and $11.0 million of available borrowing capacity under the prior revolving credit facility, after giving effect to $6.4 million of outstanding letters of credit and the requirement to maintain a $10.0 million reserve out of the available borrowing capacity. As of September 30, 2023, Mammoth had total liquidity of $21.5 million.
On October 16, 2023, Mammoth entered into a new revolving credit facility agreement and a new term loan agreement, which refinanced, in full, Mammoth's indebtedness outstanding under its prior revolving credit facility. The new five-year revolving credit facility with Fifth Third Bank, National Association, provides for revolving commitments of up to $75 million, subject to a borrowing base calculation prepared monthly. The new five-year term loan agreement with Wexford Capital LP, an affiliate of Mammoth, provides for term commitments of $45 million.
As of November 7, 2023, Mammoth had cash on hand of $9.7 million, outstanding borrowings under its revolving credit facility of $28.2 million, and a borrowing base of $35.1 million. As of November 7, 2023, the Company had $6.9 million of available borrowing capacity under its revolving credit facility and total liquidity of $16.6 million.
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, | ||||||||
| 2023 | 2022 | 2023 | 2023 | 2022 | ||||||
| Well completion services(a) | $ | 4,651 | $ | 4,747 | $ | 4,348 | $ | 14,762 | $ | 8,048 |
| Infrastructure services(b) | 69 | 225 | 72 | 344 | 823 | |||||
| Natural sand proppant services(c) | — | 34 | — | — | 34 | |||||
| Drilling services(c) | 105 | 33 | — | 111 | 47 | |||||
| Other(d) | 65 | 53 | — | 68 | 275 | |||||
| Eliminations | (165) | 38 | 83 | (20) | (128) | |||||
| Total capital expenditures | $ | 4,725 | $ | 5,130 | $ | 4,503 | $ | 15,265 | $ | 9,099 |
a. Capital expenditures primarily for upgrades and maintenance to our pressure pumping fleet for the periods presented.
b. Capital expenditures primarily for truck, tooling and equipment purchases for the periods presented.
c. Capital expenditures primarily for maintenance for the periods presented.
d. Capital expenditures primarily for equipment for the Company’s rental businesses for the periods presented.
Conference Call Information
Mammoth will host a conference call on Thursday, November 9, 2023 at 9:00 a.m. Central time (10:00 a.m. Eastern time) to discuss its third quarter financial and operational results. The telephone number to access the conference call is 1-201-389-0872. The conference call will also be webcast live on https://ir.mammothenergy.com/events-presentations. Please submit any questions for management prior to the call via email to TUSK@dennardlascar.com.
About Mammoth Energy Services, Inc.
Mammoth is an integrated, growth-oriented energy services company focused on the providing products and services to enable the exploration and development of North American onshore unconventional oil and natural gas reserves as well as the construction and repair of the electric grid for private utilities, public investor-owned utilities and co-operative utilities through its infrastructure services businesses. Mammoth’s suite of services and products include: well completion services, infrastructure services, natural sand and proppant services, drilling services and other energy services. For more information, please visit www.mammothenergy.com.
Contacts:
Mark Layton, CFO
Mammoth Energy Services, Inc
investors@mammothenergy.com
Rick Black / Ken Dennard
Dennard Lascar Investor Relations
TUSK@dennardlascar.com
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, plans for stock repurchases under its stock repurchase program, 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: any continuing impacts of the COVID-19 pandemic, related global and national health concerns and economic repercussions; demand for our services; the volatility of oil and natural gas prices and actions by OPEC members and other exporting nations affecting commodities prices and production levels; the impact of the war in Ukraine and the Israel-Hamas war on the global energy and capital markets and global stability; performance of contracts and supply chain disruptions; inflationary pressures; high interest rates and their impact on the cost of capital; instability in the banking and financial services sectors; 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 ("Cobra") by the Puerto Rico Electric Power Authority ("PREPA"); the failure to receive or delays in receiving governmental authorizations, approvals and/or payments, including payments with respect to the PREPA account receivable for prior services to PREPA performed by Cobra; the Company’s inability to replace the prior levels of work in its business segments, including its infrastructure and well completion services segments; risks relating to economic conditions, including concerns over a potential economic slowdown or recession; impacts of the recent federal infrastructure bill on the infrastructure industry and our infrastructure services business; the loss of or interruption in operations of one or more of Mammoth’s significant suppliers or customers; the loss of management and/or crews; the outcome or settlement of our litigation matters and the effect on our financial condition and results of operations; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of capital resources and liquidity; Mammoth's ability to comply with the applicable financial covenants and other terms and conditions under Mammoth's new revolving credit facility and new term loan; weather; natural disasters; litigation; volatility in commodity markets; 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, | ||
|---|---|---|---|---|
| 2023 | 2022 | |||
| CURRENT ASSETS | (in thousands) | |||
| Cash and cash equivalents | $ | 10,527 | $ | 17,282 |
| Accounts receivable, net | 455,349 | 456,465 | ||
| Receivables from related parties, net | 266 | 223 | ||
| Inventories | 11,779 | 8,883 | ||
| Prepaid expenses | 3,717 | 13,219 | ||
| Other current assets | 616 | 620 | ||
| Total current assets | 482,254 | 496,692 | ||
| Property, plant and equipment, net | 119,151 | 138,066 | ||
| Sand reserves | 58,778 | 61,830 | ||
| Operating lease right-of-use assets | 11,147 | 10,656 | ||
| Intangible assets, net | 1,106 | 1,782 | ||
| Goodwill | 9,214 | 11,717 | ||
| Other non-current assets | 4,326 | 3,935 | ||
| Total assets | $ | 685,976 | $ | 724,678 |
| LIABILITIES AND EQUITY | ||||
| CURRENT LIABILITIES | ||||
| Accounts payable | $ | 39,304 | $ | 47,391 |
| Accrued expenses and other current liabilities | 30,508 | 52,297 | ||
| Current operating lease liability | 6,081 | 5,447 | ||
| Current portion of long-term debt | — | 83,520 | ||
| Income taxes payable | 56,506 | 48,557 | ||
| Total current liabilities | 132,399 | 237,212 | ||
| Long-term debt, net of current portion | 69,029 | — | ||
| Deferred income tax liabilities | 401 | 471 | ||
| Long-term operating lease liability | 4,912 | 4,913 | ||
| Asset retirement obligation | 4,083 | 3,981 | ||
| Other long-term liabilities | 9,580 | 15,485 | ||
| Total liabilities | 220,404 | 262,062 | ||
| COMMITMENTS AND CONTINGENCIES | ||||
| EQUITY | ||||
| Equity: | ||||
| Common stock, $0.01 par value, 200,000,000 shares authorized, 47,941,652 and 47,312,270 issued and outstanding at September 30, 2023 and December 31, 2022 | 479 | 473 | ||
| Additional paid in capital | 539,340 | 539,138 | ||
| Accumulated deficit | (70,361) | (73,154) | ||
| Accumulated other comprehensive loss | (3,886) | (3,841) | ||
| Total equity | 465,572 | 462,616 | ||
| Total liabilities and equity | $ | 685,976 | $ | 724,678 |
MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | September 30, | ||||||||
| 2023 | 2022 | 2023 | 2023 | 2022 | ||||||
| (in thousands, except per share amounts) | ||||||||||
| REVENUE | ||||||||||
| Services revenue | $ | 54,025 | $ | 93,879 | $ | 63,478 | $ | 221,140 | $ | 223,005 |
| Services revenue - related parties | 252 | 355 | 369 | 841 | 1,024 | |||||
| Product revenue | 10,682 | 12,968 | 11,584 | 34,729 | 35,149 | |||||
| Total revenue | 64,959 | 107,202 | 75,431 | 256,710 | 259,178 | |||||
| COST AND EXPENSES | ||||||||||
| Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $8,394, $12,968, $10,270, $30,426, and $43,727, respectively, for the three months ended September 30, 2023, September 30, 2022, and June 30, 2023 and nine months ended September 30, 2023 and 2022) | 45,082 | 68,821 | 52,846 | 178,905 | 173,821 | |||||
| Services cost of revenue - related parties | 120 | 142 | 210 | 360 | 405 | |||||
| Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,836, $2,863, $2,373, $6,395, and $6,711, respectively, for the three months ended September 30, 2023, September 30, 2022, and June 30, 2023 and nine months ended September 30, 2023 and 2022) | 7,615 | 9,493 | 7,196 | 22,796 | 27,496 | |||||
| Selling, general and administrative | 10,411 | 9,685 | 10,357 | 29,151 | 26,560 | |||||
| Depreciation, depletion, amortization and accretion | 11,233 | 15,842 | 12,650 | 36,839 | 50,485 | |||||
| Gains on disposal of assets, net | (2,450) | (599) | (473) | (3,284) | (3,738) | |||||
| Impairment of goodwill | 1,810 | — | — | 1,810 | — | |||||
| Total cost and expenses | 73,821 | 103,384 | 82,786 | 266,577 | 275,029 | |||||
| Operating (loss) income | (8,862) | 3,818 | (7,355) | (9,867) | (15,851) | |||||
| OTHER INCOME (EXPENSE) | ||||||||||
| Interest expense, net | (2,876) | (3,262) | (3,220) | (9,385) | (8,270) | |||||
| Other income, net | 14,088 | 10,989 | 8,339 | 31,051 | 30,175 | |||||
| Total other income | 11,212 | 7,727 | 5,119 | 21,666 | 21,905 | |||||
| Income (loss) before income taxes | 2,350 | 11,545 | (2,236) | 11,799 | 6,054 | |||||
| Provision for income taxes | 3,438 | 3,819 | 2,234 | 9,006 | 11,442 | |||||
| Net (loss) income | $ | (1,088) | $ | 7,726 | $ | (4,470) | $ | 2,793 | $ | (5,388) |
| OTHER COMPREHENSIVE (LOSS) INCOME | ||||||||||
| Foreign currency translation adjustment | (275) | (601) | 227 | (45) | (851) | |||||
| Comprehensive (loss) income | $ | (1,363) | $ | 7,125 | $ | (4,243) | $ | 2,748 | $ | (6,239) |
| Net (loss) income per share (basic) | $ | (0.02) | $ | 0.16 | $ | (0.09) | $ | 0.06 | $ | (0.11) |
| Net (loss) income per share (diluted) | $ | (0.02) | $ | 0.16 | $ | (0.09) | $ | 0.06 | $ | (0.11) |
| Weighted average number of shares outstanding (basic) | 47,942 | 47,312 | 47,718 | 47,721 | 47,129 | |||||
| Weighted average number of shares outstanding (diluted) | 47,942 | 47,843 | 47,718 | 47,973 | 47,129 |
MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended | ||||
|---|---|---|---|---|
| September 30, | ||||
| 2023 | 2022 | |||
| (in thousands) | ||||
| Cash flows from operating activities: | ||||
| Net income (loss) | $ | 2,793 | $ | (5,388) |
| Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||
| Stock based compensation | 1,127 | 682 | ||
| Depreciation, depletion, accretion and amortization | 36,839 | 50,485 | ||
| Amortization of debt origination costs | 565 | 588 | ||
| Change in provision for expected credit losses | (414) | (112) | ||
| Gains on disposal of assets | (3,284) | (3,738) | ||
| Gains from sales of equipment damaged or lost down-hole | (335) | (607) | ||
| Impairment of goodwill | 1,810 | — | ||
| Gain on sale of business | (2,080) | — | ||
| Deferred income taxes | (70) | 8,557 | ||
| Other | (273) | 104 | ||
| Changes in assets and liabilities: | ||||
| Accounts receivable, net | 1,489 | (55,472) | ||
| Receivables from related parties, net | (44) | (298) | ||
| Inventories | (2,896) | 35 | ||
| Prepaid expenses and other assets | 8,990 | 7,613 | ||
| Accounts payable | (7,537) | 9,472 | ||
| Accrued expenses and other liabilities | (19,679) | (20,777) | ||
| Income taxes payable | 7,950 | 2,790 | ||
| Net cash provided by (used in) operating activities | 24,951 | (6,066) | ||
| Cash flows from investing activities: | ||||
| Purchases of property and equipment | (15,265) | (9,099) | ||
| Business divestitures, net of cash transferred | 3,276 | — | ||
| Proceeds from disposal of property and equipment | 4,304 | 8,659 | ||
| Net cash used in investing activities | (7,685) | (440) | ||
| Cash flows from financing activities: | ||||
| Borrowings on long-term debt | 168,800 | 142,475 | ||
| Repayments of long-term debt | (183,291) | (134,674) | ||
| Proceeds from sale-leaseback transaction | — | 4,589 | ||
| Payments on sale-leaseback transaction | (3,711) | (3,249) | ||
| Principal payments on financing leases and equipment financing notes | (4,872) | (1,753) | ||
| Other | (919) | — | ||
| Net cash (used in) provided by financing activities | (23,993) | 7,388 | ||
| Effect of foreign exchange rate on cash | (28) | (164) | ||
| Net change in cash and cash equivalents | (6,755) | 718 | ||
| Cash and cash equivalents at beginning of period | 17,282 | 9,899 | ||
| Cash and cash equivalents at end of period | $ | 10,527 | $ | 10,617 |
| Supplemental disclosure of cash flow information: | ||||
| Cash paid for interest | $ | 8,951 | $ | 6,316 |
| Cash paid for income taxes, net of refunds received | $ | 788 | $ | 97 |
| Supplemental disclosure of non-cash transactions: | ||||
| Purchases of property and equipment included in accounts payable | $ | 4,197 | $ | 3,837 |
| Right-of-use assets obtained for financing lease liabilities | $ | 507 | $ | — |
MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS
(in thousands)
| Three Months Ended September 30, 2023 | Well Completion | Infrastructure | Sand | Drilling | All Other | Eliminations | Total | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue from external customers | $ | 20,166 | $ | 26,712 | $ | 10,633 | $ | 2,820 | $ | 4,628 | $ | — | $ | 64,959 | ||||||||||||||||
| Intersegment revenues | 161 | — | — | 2 | 909 | (1,072) | — | |||||||||||||||||||||||
| Total revenue | 20,327 | 26,712 | 10,633 | 2,822 | 5,537 | (1,072) | 64,959 | |||||||||||||||||||||||
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 17,528 | 22,042 | 6,977 | 2,599 | 3,671 | — | 52,817 | |||||||||||||||||||||||
| Intersegment cost of revenues | 325 | 10 | — | 109 | 628 | (1,072) | — | |||||||||||||||||||||||
| Total cost of revenue | 17,853 | 22,052 | 6,977 | 2,708 | 4,299 | (1,072) | 52,817 | |||||||||||||||||||||||
| Selling, general and administrative | 1,579 | 6,495 | 1,224 | 389 | 724 | — | 10,411 | |||||||||||||||||||||||
| Depreciation, depletion, amortization and accretion | 3,971 | 1,557 | 2,836 | 1,222 | 1,647 | — | 11,233 | |||||||||||||||||||||||
| (Gains) losses on disposal of assets, net | (2,016) | (311) | — | (138) | 15 | — | (2,450) | |||||||||||||||||||||||
| Impairment of goodwill | — | — | — | — | 1,810 | — | 1,810 | |||||||||||||||||||||||
| Operating loss | (1,060) | (3,081) | (404) | (1,359) | (2,958) | — | (8,862) | |||||||||||||||||||||||
| Interest expense, net | 774 | 1,647 | 117 | 151 | 187 | — | 2,876 | |||||||||||||||||||||||
| Other income, net | — | (11,348) | (6) | — | (2,734) | — | (14,088) | |||||||||||||||||||||||
| (Loss) income before income taxes | $ | (1,834) | $ | 6,620 | $ | (515) | $ | (1,510) | $ | (411) | $ | — | $ | 2,350 | Three Months Ended September 30, 2022 | Well Completion | Infrastructure | Sand | Drilling | All Other | Eliminations | Total | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||
| Revenue from external customers | $ | 51,378 | $ | 33,296 | $ | 12,910 | $ | 3,118 | $ | 6,500 | $ | — | $ | 107,202 | ||||||||||||||||
| Intersegment revenues | 154 | — | — | — | 468 | (622) | — | |||||||||||||||||||||||
| Total revenue | 51,532 | 33,296 | 12,910 | 3,118 | 6,968 | (622) | 107,202 | |||||||||||||||||||||||
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 35,414 | 26,495 | 9,206 | 2,695 | 4,646 | — | 78,456 | |||||||||||||||||||||||
| Intersegment cost of revenues | 403 | 17 | — | 109 | 93 | (622) | — | |||||||||||||||||||||||
| Total cost of revenue | 35,817 | 26,512 | 9,206 | 2,804 | 4,739 | (622) | 78,456 | |||||||||||||||||||||||
| Selling, general and administrative | 2,390 | 4,968 | 1,076 | 305 | 946 | — | 9,685 | |||||||||||||||||||||||
| Depreciation, depletion, amortization and accretion | 4,772 | 3,969 | 2,865 | 1,598 | 2,638 | — | 15,842 | |||||||||||||||||||||||
| (Gain) loss on disposal of assets, net | (339) | 73 | — | (286) | (47) | — | (599) | |||||||||||||||||||||||
| Operating income (loss) | 8,892 | (2,226) | (237) | (1,303) | (1,308) | — | 3,818 | |||||||||||||||||||||||
| Interest expense, net | 531 | 2,047 | 212 | 154 | 318 | — | 3,262 | |||||||||||||||||||||||
| Other income, net | (345) | (10,304) | (3) | — | (337) | — | (10,989) | |||||||||||||||||||||||
| Income (loss) before income taxes | $ | 8,706 | $ | 6,031 | $ | (446) | $ | (1,457) | $ | (1,289) | $ | — | $ | 11,545 | Three months ended June 30, 2023 | Well Completion | Infrastructure | Sand | Drilling | All Other | Eliminations | Total | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||
| Revenue from external customers | $ | 27,466 | $ | 28,315 | $ | 11,567 | $ | 3,329 | $ | 4,754 | $ | — | $ | 75,431 | ||||||||||||||||
| Intersegment revenues | 118 | — | — | 6 | 365 | (489) | — | |||||||||||||||||||||||
| Total revenue | 27,584 | 28,315 | 11,567 | 3,335 | 5,119 | (489) | 75,431 | |||||||||||||||||||||||
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 23,594 | 23,292 | 7,067 | 2,725 | 3,574 | — | 60,252 | |||||||||||||||||||||||
| Intersegment cost of revenues | 227 | 9 | — | 108 | 145 | (489) | — | |||||||||||||||||||||||
| Total cost of revenue | 23,821 | 23,301 | 7,067 | 2,833 | 3,719 | (489) | 60,252 | |||||||||||||||||||||||
| Selling, general and administrative | 1,776 | 6,385 | 954 | 337 | 905 | — | 10,357 | |||||||||||||||||||||||
| Depreciation, depletion, amortization and accretion | 4,500 | 2,436 | 2,374 | 1,284 | 2,056 | — | 12,650 | |||||||||||||||||||||||
| Gains on disposal of assets, net | — | — | — | — | (473) | — | (473) | |||||||||||||||||||||||
| Operating (loss) income | (2,513) | (3,807) | 1,172 | (1,119) | (1,088) | — | (7,355) | |||||||||||||||||||||||
| Interest expense, net | 824 | 1,869 | 149 | 170 | 208 | — | 3,220 | |||||||||||||||||||||||
| Other expense (income), net | 1 | (8,557) | (4) | — | 221 | — | (8,339) | |||||||||||||||||||||||
| (Loss) income before income taxes | $ | (3,338) | $ | 2,881 | $ | 1,027 | $ | (1,289) | $ | (1,517) | $ | — | $ | (2,236) |
MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS
(in thousands)
| Nine Months Ended September 30, 2023 | Well Completion | Infrastructure | Sand | Drilling | All Other | Eliminations | Total | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue from external customers | $ | 114,810 | $ | 83,308 | $ | 34,643 | $ | 7,972 | $ | 15,977 | $ | — | $ | 256,710 | ||||||||||||||||
| Intersegment revenues | 400 | — | 25 | 9 | 1,710 | (2,144) | $ | — | ||||||||||||||||||||||
| Total revenue | 115,210 | 83,308 | 34,668 | 7,981 | 17,687 | (2,144) | 256,710 | |||||||||||||||||||||||
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 93,158 | 67,810 | 21,905 | 7,246 | 11,942 | — | 202,061 | |||||||||||||||||||||||
| Intersegment cost of revenues | 1,029 | 29 | — | 326 | 760 | (2,144) | $ | — | ||||||||||||||||||||||
| Total cost of revenue | 94,187 | 67,839 | 21,905 | 7,572 | 12,702 | (2,144) | 202,061 | |||||||||||||||||||||||
| Selling, general and administrative | 5,847 | 17,091 | 2,682 | 1,039 | 2,492 | — | 29,151 | |||||||||||||||||||||||
| Depreciation, depletion, amortization and accretion | 13,288 | 7,366 | 6,397 | 3,873 | 5,915 | — | 36,839 | |||||||||||||||||||||||
| Gains on disposal of assets, net | (2,016) | (439) | (16) | (138) | (675) | — | (3,284) | |||||||||||||||||||||||
| Impairment of goodwill | — | — | — | — | 1,810 | — | 1,810 | |||||||||||||||||||||||
| Operating income (loss) | 3,904 | (8,549) | 3,700 | (4,365) | (4,557) | — | (9,867) | |||||||||||||||||||||||
| Interest expense, net | 2,527 | 5,361 | 422 | 481 | 594 | — | 9,385 | |||||||||||||||||||||||
| Other expense (income), net | 1 | (28,713) | (12) | — | (2,327) | — | (31,051) | |||||||||||||||||||||||
| Income (loss) before income taxes | $ | 1,376 | $ | 14,803 | $ | 3,290 | $ | (4,846) | $ | (2,824) | $ | — | $ | 11,799 | Nine Months Ended September 30, 2022 | Well Completion | Infrastructure | Sand | Drilling | All Other | Eliminations | Total | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||
| Revenue from external customers | $ | 118,580 | $ | 81,892 | $ | 35,098 | $ | 7,922 | $ | 15,686 | $ | — | $ | 259,178 | ||||||||||||||||
| Intersegment revenues | 643 | — | 2,450 | 22 | 1,044 | (4,159) | — | |||||||||||||||||||||||
| Total revenue | 119,223 | 81,892 | 37,548 | 7,944 | 16,730 | (4,159) | 259,178 | |||||||||||||||||||||||
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 88,740 | 67,190 | 26,701 | 7,100 | 11,991 | — | 201,722 | |||||||||||||||||||||||
| Intersegment cost of revenues | 3,419 | 49 | — | 430 | 265 | (4,163) | — | |||||||||||||||||||||||
| Total cost of revenue | 92,159 | 67,239 | 26,701 | 7,530 | 12,256 | (4,163) | 201,722 | |||||||||||||||||||||||
| Selling, general and administrative | 6,314 | 14,056 | 2,774 | 874 | 2,542 | — | 26,560 | |||||||||||||||||||||||
| Depreciation, depletion, amortization and accretion | 17,963 | 12,495 | 6,717 | 4,929 | 8,381 | — | 50,485 | |||||||||||||||||||||||
| Gains on disposal of assets, net | (547) | (795) | (90) | (286) | (2,020) | — | (3,738) | |||||||||||||||||||||||
| Operating income (loss) | 3,334 | (11,103) | 1,446 | (5,103) | (4,429) | 4 | (15,851) | |||||||||||||||||||||||
| Interest expense, net | 1,324 | 5,345 | 552 | 379 | 670 | — | 8,270 | |||||||||||||||||||||||
| Other (income) expense, net | (345) | (29,948) | (10) | — | 128 | — | (30,175) | |||||||||||||||||||||||
| Income (loss) before income taxes | $ | 2,355 | $ | 13,500 | $ | 904 | $ | (5,482) | $ | (5,227) | $ | 4 | $ | 6,054 |
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 (loss) income before depreciation, depletion, amortization and accretion expense, impairment of goodwill, gains on disposal of assets, net, stock based compensation, interest expense, net, other (income) expense, net (which is comprised of interest on trade accounts receivable and certain legal expenses) 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 (loss) income 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 (loss) income 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 (loss) income 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 net (loss) income to Adjusted EBITDA: | 2023 | 2022 | 2023 | 2023 | 2022 | |||||
| Net (loss) income | $ | (1,088) | $ | 7,726 | $ | (4,470) | $ | 2,793 | $ | (5,388) |
| Depreciation, depletion, amortization and accretion expense | 11,233 | 15,842 | 12,650 | 36,839 | 50,485 | |||||
| Gains on disposal of assets, net | (2,450) | (599) | (473) | (3,284) | (3,738) | |||||
| Impairment of goodwill | 1,810 | — | — | 1,810 | — | |||||
| Stock based compensation | 219 | 241 | 261 | 1,127 | 682 | |||||
| Interest expense, net | 2,876 | 3,262 | 3,220 | 9,385 | 8,270 | |||||
| Other income, net | (14,088) | (10,989) | (8,339) | (31,051) | (30,174) | |||||
| Provision for income taxes | 3,438 | 3,819 | 2,234 | 9,006 | 11,442 | |||||
| Interest on trade accounts receivable | 11,443 | 10,468 | 11,341 | 33,897 | 30,490 | |||||
| Adjusted EBITDA | $ | 13,393 | $ | 29,770 | $ | 16,424 | $ | 60,522 | $ | 62,069 |
MAMMOTH ENERGY SERVICES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Well Completion Services
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | September 30, | ||||||||
| Reconciliation of net (loss) income to Adjusted EBITDA: | 2023 | 2022 | 2023 | 2023 | 2022 | |||||
| Net (loss) income | $ | (1,834) | $ | 8,706 | $ | (3,338) | $ | 1,376 | $ | 2,357 |
| Depreciation and amortization expense | 3,971 | 4,772 | 4,500 | 13,288 | 17,963 | |||||
| Gains on disposal of assets, net | (2,016) | (339) | — | (2,016) | (547) | |||||
| Stock based compensation | 64 | 104 | 97 | 451 | 275 | |||||
| Interest expense | 774 | 531 | 824 | 2,527 | 1,324 | |||||
| Other (income) expense, net | — | (345) | 1 | 1 | (345) | |||||
| Adjusted EBITDA | $ | 959 | $ | 13,429 | $ | 2,084 | $ | 15,627 | $ | 21,027 |
Infrastructure Services
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | September 30, | ||||||||
| Reconciliation of net income to Adjusted EBITDA: | 2023 | 2022 | 2023 | 2023 | 2022 | |||||
| Net income | $ | 3,239 | $ | 2,630 | $ | 697 | $ | 6,392 | $ | 3,323 |
| Depreciation and amortization expense | 1,557 | 3,969 | 2,436 | 7,366 | 12,495 | |||||
| (Gains) losses on disposal of assets, net | (311) | 73 | — | (439) | (795) | |||||
| Stock based compensation | 99 | 89 | 107 | 436 | 261 | |||||
| Interest expense | 1,647 | 2,047 | 1,869 | 5,361 | 5,345 | |||||
| Other income, net | (11,348) | (10,304) | (8,557) | (28,713) | (29,948) | |||||
| Provision for income taxes | 3,381 | 3,402 | 2,184 | 8,411 | 10,178 | |||||
| Interest on trade accounts receivable | 11,443 | 10,468 | 11,341 | 33,897 | 30,490 | |||||
| Adjusted EBITDA | $ | 9,707 | $ | 12,374 | $ | 10,077 | $ | 32,711 | $ | 31,349 |
Natural Sand Proppant Services
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | September 30, | ||||||||
| Reconciliation of net (loss) income to Adjusted EBITDA: | 2023 | 2022 | 2023 | 2023 | 2022 | |||||
| Net (loss) income | $ | (515) | $ | (446) | $ | 1,027 | $ | 3,290 | $ | 904 |
| Depreciation, depletion, amortization and accretion expense | 2,836 | 2,865 | 2,374 | 6,397 | 6,717 | |||||
| Gains on disposal of assets, net | — | — | — | (16) | (90) | |||||
| Stock based compensation | 37 | 30 | 36 | 149 | 90 | |||||
| Interest expense | 117 | 212 | 149 | 422 | 552 | |||||
| Other income, net | (6) | (3) | (4) | (12) | (10) | |||||
| Adjusted EBITDA | $ | 2,469 | $ | 2,658 | $ | 3,582 | $ | 10,230 | $ | 8,163 |
MAMMOTH ENERGY SERVICES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Drilling Services
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | September 30, | ||||||||
| Reconciliation of net loss to Adjusted EBITDA: | 2023 | 2022 | 2023 | 2023 | 2022 | |||||
| Net loss | $ | (1,510) | $ | (1,457) | $ | (1,289) | $ | (4,846) | $ | (5,482) |
| Depreciation expense | 1,222 | 1,598 | 1,284 | 3,873 | 4,929 | |||||
| Gains on disposal of assets, net | (138) | (286) | — | (138) | (286) | |||||
| Stock based compensation | 6 | 4 | 6 | 25 | 13 | |||||
| Interest expense | 151 | 154 | 170 | 481 | 379 | |||||
| Adjusted EBITDA | $ | (269) | $ | 13 | $ | 171 | $ | (605) | $ | (447) |
Other Services(a)
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | September 30, | ||||||||
| Reconciliation of net loss to Adjusted EBITDA: | 2023 | 2022 | 2023 | 2023 | 2022 | |||||
| Net loss | $ | (468) | $ | (1,707) | $ | (1,567) | $ | (3,419) | $ | (6,492) |
| Depreciation, amortization and accretion expense | 1,647 | 2,638 | 2,056 | 5,915 | 8,381 | |||||
| Losses (gains) on disposal of assets, net | 15 | (47) | (473) | (675) | (2,020) | |||||
| Impairment of goodwill | 1,810 | — | — | 1,810 | — | |||||
| Stock based compensation | 13 | 14 | 15 | 66 | 43 | |||||
| Interest expense, net | 187 | 318 | 208 | 594 | 670 | |||||
| Other (income) expense, net | (2,734) | (337) | 221 | (2,327) | 128 | |||||
| Provision for income taxes | 57 | 417 | 50 | 595 | 1,264 | |||||
| Adjusted EBITDA | $ | 527 | $ | 1,296 | $ | 510 | $ | 2,559 | $ | 1,974 |
a. Includes results for Mammoth’s aviation, equipment rentals, remote accommodations and equipment manufacturing and corporate related activities. The Company’s corporate related activities do not generate revenue.
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