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Feb 21, 2018

Mammoth Energy Services, Inc. Announces Fourth Quarter and Full Year 2017 Operational and Financial Results

OKLAHOMA CITY, Feb. 21, 2018 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. ("Mammoth" or the "Company") (NASDAQ:TUSK) today reported financial and operational results for the fourth quarter and full year ended December 31, 2017.

Key Highlights for and subsequent to the Fourth Quarter 2017:

  • Total revenue was $369.0 million for the three months ended December 31, 2017, up 147% sequentially from $149.3 million for the three months ended September 30, 2017 and up 463% from $65.6 million for the three months ended December 31, 2016. Total revenue was $691.5 million for the year ended December 31, 2017, up 200% from $230.6 million for the year ended December 31, 2016.
  • Net income for the three months ended December 31, 2017 was $65.9 million, an improvement of $66.7 million from a net loss of $0.8 million for the three months ended September 30, 2017 and an improvement of $123.6 million from a net loss of $57.7 million for the three months ended December 31, 2016. Net income was $59.0 million for the year ended December 31, 2017, a $151.4 million improvement from a net loss of $92.5 million for the year ended December 31, 2016.
  • Adjusted EBITDA (as defined and reconciled below) was $110.5 million for the three months ended December 31, 2017, up 294% sequentially from $28.0 million for the three months ended September 30, 2017 and up 691% from $14.0 million for the three months ended December 31, 2016. Adjusted EBITDA was $165.3 million for the year ended December 31, 2017, up 301% from $41.3 million for the year ended December 31, 2016.
  • Executed an amendment to Mammoth subsidiary Cobra Acquisitions LLC's contract with the Puerto Rico Electric Power Authority, or PREPA, to aid in the restoration of the electric utility infrastructure in Puerto Rico, increasing the total contract value to approximately $445 million, up from $200 million originally.
  • 2018 capital expenditures expected to be approximately $125.0 million for expanding infrastructure operations, upgrading and expanding sand facilities, expanding the rental fleet into the mid-continent and adding selective equipment.

Arty Straehla, Mammoth's Chief Executive Officer, stated, "The expansion that Mammoth undertook in 2017 has built a base in three core areas - infrastructure, pressure pumping and sand - that will serve as a platform on which to grow going forward. With the core businesses now in place, we intend to strategically build upon these business segments throughout 2018 and we expect to begin generating significant free cash flows that will be used to bolster our balance sheet, while providing flexibility to expand into the areas where we see the best opportunities."

Pressure Pumping Services

Mammoth's pressure pumping segment contributed revenues (inclusive of intersegment revenues) of $111.9 million on 1,375 stages for the three months ended December 31, 2017, a 46% increase from $76.7 million on 1,617 stages for the three months ended September 30, 2017 and a 247% increase from $32.3 million on 764 stages for the three months ended December 31, 2016. Utilization during the three months ended December 31, 2017 remained strong. 

The pressure pumping segment contributed revenues (inclusive of intersegment revenues) of $279.4 million on 5,139 stages and $124.4 million on 2,442 stages, respectively, for the years ended December 31, 2017 and 2016.

During 2017, the Company expanded its pressure pumping services into the SCOOP/STACK and the Permian Basin with the startup of its fourth, fifth and sixth pressure pumping fleets in June, August and October, respectively.

Infrastructure Services

Mammoth's infrastructure services segment contributed revenues of $209.2 million for the three months ended December 31, 2017, a $195.7 million increase from $13.5 million for the three months ended September 30, 2017. The infrastructure segment contributed revenues of $224.4 million for the year ended December 31, 2017. During 2016, Mammoth did not provide infrastructure services. As of 2/20/2018, we had a total infrastructure backlog in excess of $500 million.

During 2017, Mammoth broadened its service offerings by expanding into the utility infrastructure business with the formation of Cobra Acquisitions, LLC ("Cobra") and the acquisitions of Higher Power Electrical, LLC in April 2017 and 5 Star Electric, LLC in July 2017. Effective October 19, 2017, Cobra entered into an emergency master services agreement with PREPA for repairs to PREPA's electrical grid as a result of Hurricane Maria. The initial PREPA contract has a one-year term and provided for up to $200.0 million of revenue. The initial PREPA contract was fully applied to services performed by Cobra as of January 3, 2018. On January 28, 2018, Cobra and PREPA amended the initial PREPA contract to increase the total contract amount by an additional $245.4 million of revenue up to a total of $445.4 million in revenue.

Natural Sand Proppant Production

Mammoth's natural sand proppant segment contributed revenues (inclusive of intersegment revenues) of $43.9 million for the three months ended December 31, 2017, a 34% increase from $32.7 million for the three months ended September 30, 2017 and a 285% increase from $11.4 million for the three months ended December 31, 2016. Tons of sand sold for the three months ended December 31, 2017 totaled 600,182 compared to 474,933 for the three months ended September 30, 2017 and 235,860 for the three months ended December 31, 2016.

Mammoth's natural sand proppant segment contributed revenues (inclusive of intersegment revenues) of $117.0 million for the year ended December 31, 2017, up 207% from $38.1 million for the year ended December 31, 2016. Tons of sand sold increased 147% from 683,768 for the year ended December 31, 2016 to 1,690,032 for the year ended December 31, 2017 .

The Company completed the acquisitions of Taylor Frac and the Chieftain Sand assets (renamed Piranha Proppant) during the second quarter of 2017 with sand sales from the Piranha Proppant facility commencing in June 2017. The expansion of the Taylor Frac facility is underway with the expectation of increasing capacity to 1.75 Mmtpa (up from 0.7 Mmtpa) by the end of the first quarter of 2018. Once the Taylor Frac expansion is completed, Mammoth's processing capacity will grow to approximately 4 Mmtpa. The Company intends to upgrade certain equipment at its Piranha facility, which is expected to further increase its total sand processing capacity to 4.4 Mmtpa by mid-year 2018.

Contract Land and Directional Drilling Services

Mammoth's contract land and directional drilling segment contributed revenues (inclusive of intersegment revenues) of $13.7 million for the three months ended December 31, 2017 compared to $13.6 million for the three months ended September 30, 2017 and $11.7 million for the three months ended December 31, 2016. Five horizontal rigs on average operated during the three months ended December 31, 2017 and September 30, 2017 compared to four during the three months ended December 31, 2016. The average drilling day rate was $15,964, $14,800 and $13,590, respectively, for the three months ended December 31, 2017, September 30, 2017 and December 31, 2016.

The drilling segment contributed revenues (inclusive of intersegment revenues) of $50.5 million for the year ended December 31, 2017, up 58% from $32.0 million for the year ended December 31, 2016. Five horizontal rigs on average operated during the year ended December 31, 2017, at an average day rate of $14,800 compared to four rigs at an average day rate of $12,900 during the year ended December 31, 2016. During 2018, Mammoth anticipates five to six rigs will operate on average throughout the year.

Other Services

Mammoth's other services, including coil tubing, pressure control, flowback, cementing, equipment rentals and remote accommodations, contributed revenues (inclusive of intersegment revenues) of $15.2 million for the three months ended December 31, 2017 compared to $17.4 million for the three months ended September 30, 2017 and $10.4 million for the three months ended December 31, 2016.

Revenues for other services (inclusive of intersegment revenues) were $51.7 million and $41.0 million, respectively, for the years ended December 31, 2017 and 2016. The increase is primarily due to revenues derived from Stingray Cementing and Stingray Energy Services, which were acquired in June 2017.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses increased to $27.4 million for the three months ended December 31, 2017 from $8.0 million for the three months ended September 30, 2017 and $6.0 million for the three months ended December 31, 2016. The sequential increase is primarily attributable to increased bad debt expense and increased compensation and benefits. SG&A expenses, as a percentage of total revenue, were 7% for the three months ended December 31, 2017 compared to 5% for the three months ended September 30, 2017 and 9% for the three months ended December 31, 2016.

SG&A expenses increased to $49.9 million for the year ended December 31, 2017 from $18.0 million for the year ended December 31, 2016. The increase was primarily attributable to increased compensation and benefits, bad debt expense, and professional service charges. SG&A expenses, as a percentage of total revenue, were 7% for the year ended December 31, 2017 compared to 8% for the year ended December 31, 2016.

Liquidity

As of December 31, 2017, we had net debt of approximately $94.3 million reflecting $99.9 million in borrowings outstanding under our $170.0 million revolving credit facility and $5.6 million of cash on hand. As of December 31, 2017, we had approximately $62.8 million of available borrowing capacity under our revolving credit facility, after giving effect to $6.5 million of outstanding letters of credit.

Capital Expenditures

The following table summarizes our capital expenditures by segment for the periods indicated (in thousands):

 Three Months Ended Years Ended
 December 31, September 30, December 31,
 2017 2016 2017 2017 2016
Pressure pumping services(a)$12,870  $6,410  $19,581  $85,853  $7,673 
Infrastructure services(b)8,131    8,055  20,144   
Natural sand proppant services(c)8,478  6  4,928  16,376  528 
Contract and directional drilling services(d)669  1,216  2,357  8,927  2,710 
Other(e)1,431     777  2,553  829 
Total capital expenditures$31,579  $7,632  $35,698  $133,853  $11,740 
                    

(a)  Capital expenditures include three new pressure pumping fleets during the year ended December 31, 2017 and various other pressure pumping equipment.
(b)  Capital expenditures primarily for truck and equipment purchases for the year ended December 31, 2017.
(c)  Capital expenditures include a conveyor and plant additions for the years ended December 31, 2017 and 2016.
(d)  Capital expenditures primarily for upgrades to the rig fleet for the years ended December 31, 2017 and 2016.
(e)  Capital expenditures primarily for equipment upgrades for the years ended December 31, 2017 and 2016.

Explanatory Note Regarding Financial Information

The historical financial information for periods prior to October 12, 2016, contained in this release relates to Mammoth Energy Partners LP, a Delaware limited partnership (the "Partnership"). On October 12, 2016, the Partnership was converted into a Delaware limited liability company named Mammoth Energy Partners LLC ("Mammoth LLC "), and then each member of Mammoth LLC contributed all of its membership interests in Mammoth LLC to the Company. Prior to the conversion and the contribution, the Company was a wholly-owned subsidiary of the Partnership. Following the conversion and the contribution, Mammoth LLC (as the converted successor to the Partnership) became a wholly-owned subsidiary of the Company.

In October 2016, Mammoth completed its initial public offering (the "IPO") and its common stock began trading on The NASDAQ Global Select Market under the symbol "TUSK." Unless the context otherwise requires, references in this release to Mammoth or the Company, when used in a historical context for periods prior to October 12, 2016 refer to the Partnership and its subsidiaries. References in this release to Mammoth or the Company, when used for periods beginning on or after October 12, 2016 refer to Mammoth and its subsidiaries.

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.

Based on the CODM's assessment, effective December 31, 2017, the Company identified four reportable segments: pressure pumping services; infrastructure services; natural sand proppant services; and contract land and directional drilling services. For the year ended December 31, 2016, the Company identified five reportable segments consisting of pressure pumping services, well services, natural sand proppant services, contract land and directional drilling services and other energy services. The Company changed its reportable segment presentation in 2017, as it no longer considers well services activities, which included Redback Energy Services, Redback Coil Tubing and Mammoth Energy Partners, and its other energy services activities, which included Sand Tiger, to be significant to the understanding of the Company's results. The Company now presents the results of its well service and other energy service activities as "Other." Additionally, during 2017, the Company added a new reportable segment for its infrastructure service activities. The financial results by segment below for the three months ended September 30, 2017 and the three months and years ended December 31, 2017 and 2016 reflect this change in reportable segments.

Prior to 2017, information used by the CODM in measuring segment profits or losses did not include intersegment revenues and costs as they were deemed immaterial for decision-making purposes. In 2017, the Company's CODM changed the way segment profits and losses are measured to include intersegment revenues and expenses. The financial results by segment below for the three months ended September 30, 2017 and the three months and years ended December 31, 2017 and 2016 reflect this change in measurement method.

On June 5, 2017, the Company completed the acquisition of (1) Sturgeon Acquisitions LLC and its wholly owned subsidiaries Taylor Frac, LLC, Taylor Real Estate Investments, LLC and South River Road, LLC (collectively, "Sturgeon"); (2) Stingray Energy Services, LLC and (3) Stingray Cementing, LLC (together with Stingray Energy Services, the "Stingray Acquisition") in exchange for the issuance by Mammoth of an aggregate of 7,000,000 shares of its common stock.

Prior to the acquisition, the Company and Sturgeon were under common control and it is required under accounting principles generally accepted in the United States of America to account for this common control acquisition in a manner similar to the pooling of interest method of accounting. Therefore, the Company's historical financial information has been recast to combine Sturgeon with the Company as if the acquisition had been completed at commencement of Sturgeon's operations on September 13, 2014.

Conference Call Information

Mammoth will host a conference call on Thursday, February 22, 2018 at 10:00 a.m. CST to discuss its fourth quarter 2017 financial and operational results. The telephone number to access the conference call is 844-265-1561 or international dial in 216-562-0385. The conference ID for the call is 1276679. Mammoth encourages those who would like to participate in the call to place calls between 9:50 a.m. and 10:00 a.m. CST.

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 corporate utilities through its infrastructure services. Mammoth's suite of services includes pressure pumping services, infrastructure services, natural sand proppant services, contract land and directional drilling services and other services. Other services consists of coil tubing, pressure control, flowback, cementing, equipment rentals and remote accommodation 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, Investor Relations
dcrist@mammothenergy.com
(405) 608-6048

Media Contact:
Andy Wilson
Andrew.wilson@edelman.com
(917) 607-6601

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 we expect, believe or anticipate 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 our 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 our existing operations, experience, and perception of historical trends, current conditions, anticipated future developments and their effect on us, 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, our forward-looking statements are subject to significant risks and uncertainties, including those described in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings we make with the Securities and Exchange Commission (the "SEC"), including those relating to our acquisitions and our contracts, many of which are beyond our control, which may cause actual results to differ materially from our historical experience and our 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, risks relating to economic conditions; volatility of crude oil and natural gas commodity prices; delays in or failure of delivery of current or future orders of specialized equipment; the loss of or interruption in operations of one or more key suppliers or customers; solvency of counterparties to our contracts and their ability to timely pay for our services; oil and gas market conditions; the effects of government regulation, permitting and other legal requirements, including new legislation or regulation of hydraulic fracturing; operating risks; the adequacy of our capital resources and liquidity; weather; litigation; competition in the oil and natural gas and infrastructure industries; and costs and availability of resources.

Readers 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 December 31,
  2017 2016
CURRENT ASSETS (in thousands)
Cash and cash equivalents $5,637  $29,239 
Accounts receivable, net 243,746  21,169 
Receivables from related parties 33,788  27,589 
Inventories 17,814  6,124 
Prepaid Expenses  12,552  4,426 
Other current assets 886  392 
Total current assets 314,423  88,939 
     
Property, plant and equipment, net 351,017  242,120 
Sand reserves 74,769  55,367 
Intangible assets, net - customer relationships  9,623  15,950 
Intangible assets, net - trade names 6,516  5,617 
Goodwill  99,811  88,727 
Deferred income tax asset 6,739   
Other non-current assets  4,345  5,642 
Total assets $867,243  $502,362 
     
LIABILITIES AND EQUITY    
CURRENT LIABILITIES    
Accounts payable $141,306  $20,469 
Payables to related parties 1,378  203 
Accrued expenses and other current liabilities 40,895  8,546 
Income taxes payable 36,409  28 
Total current liabilities 219,988  29,246 
     
Long-term debt 99,900   
Deferred income taxes 34,147  47,671 
Asset retirement obligation 2,123  260 
Other liabilities  3,289  2,404 
Total liabilities 359,447  79,581 
     
COMMITMENTS AND CONTINGENCIES    
     
EQUITY    
Equity:    
Common stock, $0.01 par value, 200,000,000 shares authorized, 44,589,306 and 446  375 
37,500,000 issued and outstanding at December 31, 2017 and 2016    
Additional paid in capital 508,010  400,206 
Accumulated Deficit 2,001  (56,323)
Members' equity   81,739 
Accumulated other comprehensive loss (2,661) (3,216)
Total equity 507,796  422,781 
Total liabilities and equity $867,243  $502,362 
         


MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 Three Months Ended Years Ended
 December 31, September 30, December 31,
 2017 2016 2017 2017 2016
REVENUE(in thousands, except per share amounts)
Services revenue$315,545  $23,678  $63,113  $435,409  $89,643 
Services revenue - related parties31,639  30,480  56,861  166,064  107,147 
Product revenue18,024  3,401  15,276   47,067  8,052 
Product revenue - related parties3,755  7,994  14,055  42,956  25,783 
Total Revenue 368,963  65,553  149,305  691,496  230,625 
          
COST AND EXPENSES         
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $25,044, $16,046 and $24,153,
respectively, for the three months ended December 31, 2017, December 31, 2016 and September 30, 2016 and $82,686 and
$65,705, respectively, for the years ended December 31, 2017 and 2016)
198,201  37,947  89,346  390,112  140,063 
Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0 and $0,
respectively, for the three months ended December 31, 2017, December 31, 2016 and September 30, 2016 and $0 and $0,
respectively, for the years ended December 31, 2017 and 2016)
707  279  9  1,408  1,063 
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,790, $1,747 and $3,033,
respectively, for the three months ended December 31, 2017, December 31, 2016 and September 30, 2016 and $9,389 and
$6,477, respectively, for the years ended December 31, 2017 and 2016)
33,290  9,043  25,178  91,049  31,892 
Product cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0 and $0,
respectively, for the three months ended December 31, 2017, December 31, 2016 and September 30, 2016 and $0 and $0,
respectively, for the years ended December 31, 2017 and 2016)
  2      3 
Selling, general and administrative26,931  5,732  7,668  48,405  17,290 
Selling, general and administrative - related parties495  301  355  1,481  758 
Depreciation, depletion, amortization and accretion27,770  17,832  27,224  92,124  72,315 
Impairment of long-lived assets4,146      4,146  1,871 
Total cost and expenses291,540  71,136  149,780  628,725  265,255 
Operating income (loss)77,423   (5,583) (475) 62,771  (34,630)
          
OTHER (EXPENSE) INCOME         
Interest expense(1,381) (763) (1,420) (4,310) (4,096)
Bargain purchase gain      4,012   
Other, net28  (214) (319) (677) 158 
Total other expense(1,353) (977) (1,739) (975) (3,938)
Income (loss) before income taxes76,070  (6,560) (2,214) 61,796  (38,568)
Provision (benefit) for income taxes10,155  51,146  (1,413) 2,832  53,885 
Net income (loss)$65,915  $(57,706) $(801) $58,964  $(92,453)
          
OTHER COMPREHENSIVE INCOME (LOSS)         
Foreign currency translation adjustment, net of tax of ($167), $1,732 and $358, respectively, for the three months ended
December 31, 2017, December 31, 2016 and September 30, 2016 and $645 and $1,732, respectively, for 2017 and 2016
(482) (605) 628  555  2,711 
Comprehensive income (loss)$65,433  $(58,311) $(173) $59,519  $(89,742)
          
Net income (loss) per share (basic)$1.48  $(1.61) $(0.02) $1.42  $(2.94)
Net income (loss) per share (diluted)1.48  (1.61) (0.02) 1.42  (2.94)
Weighted average number of shares outstanding44,579  35,951  44,502  41,548  31,500 
Weighted average number of shares outstanding, including dilutive effect44,683  35,951  44,502  41,639  31,500 
               


MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 Years Ended December 31,
 2017 2016
Cash flows from operating activities(in thousands)
Net income (loss)$58,964  $(92,453)
Adjustments to reconcile net income (loss) to cash provided by operating activities:   
Equity based compensation3,741  501 
Depreciation, depletion, amortization and accretion92,124  72,315 
Amortization of coil tubing strings2,855  2,028 
Amortization of debt origination costs399  603 
Bad debt expense16,206  1,968 
Loss (gain) on disposal of property and equipment69  (702)
Gain on bargain purchase(4,012)  
Impairment of long-lived assets4,146   1,871 
Deferred income taxes(25,379) 47,899 
Changes in assets and liabilities:   
Accounts receivable, net(231,751) (4,641)
Receivables from related parties(1,096) (2,462)
Inventories(14,238) (624)
Prepaid expenses and other assets(14,368) (198)
Accounts payable101,725  1,412 
Payables to related parties1,174  (249)
Accrued expenses and other liabilities30,662  2,420 
Income taxes payable36,395  1 
Net cash provided by operating activities57,616   29,689 
    
Cash flows from investing activities:   
Purchases of property and equipment(132,295) (11,740)
Purchases of property and equipment from related parties(1,558)  
Business acquisitions, net(42,008)  
Proceeds from disposal of property and equipment907  4,022 
Business combination cash acquired2,671   
Net cash used in investing activities(172,283) (7,718)
    
Cash flows from financing activities:   
Borrowings on long-term debt156,850  28,734 
Repayments of long-term debt(56,950) (123,734)
Proceeds from initial public offering  105,839 
Initial public offering costs  (2,764)
Debt issuance costs   
Repayment of acquisition-related long-term debt(8,851)  
Capital distributions  (5,000)
Net cash provided by financing activities91,049  3,075 
Effect of foreign exchange rate on cash16  154 
Net (decrease) increase in cash and cash equivalents(23,602) 25,200 
Cash and cash equivalents at beginning of period29,239  4,039 
Cash and cash equivalents at end of period$5,637  $29,239 
    
Supplemental disclosure of cash flow information:   
Cash paid for interest$3,656  $3,707 
Cash paid for income taxes$840  $3,588 
Supplemental disclosure of non-cash transactions:   
Acquisition of Sturgeon, Stingray Cementing LLC and Stingray Energy Services LLC$23,091  $ 
Purchases of property and equipment included in trade accounts payable$15,038  $2,789 
        


MAMMOTH ENERGY SERVICES, INC.
HISTORICAL SEGMENT DATA
(in thousands)
 
Three Months Ended December 31, 2017Pressure PumpingInfrastructureSandDrillingAll Other(a) EliminationsTotal
Revenue from external customers$111,244 $209,229 $21,779 $13,208 $13,503 $ $368,963 
Intersegment revenues617  22,167 446 1,708 (24,938)  
Total revenue111,861 209,229 43,946 13,654 15,211 (24,938)368,963 
Cost of revenues, exclusive of depreciation, depletion, amortization and accretion65,594 108,289 33,289  12,117 12,909  232,198 
Intersegment cost of revenues22,928 1,443 373 101 58 (24,903) 
Total cost of revenue88,522 109,732 33,662 12,218 12,967 (24,903)232,198 
Selling, general and administrative2,810 20,365 1,875 1,406 970  27,426 
Depreciation, depletion, amortization and accretion13,590 1,805 2,791 4,657  4,927  27,770 
Impairment of long-lived assets  324 3,822   4,146 
Operating income (loss)6,939 77,327 5,294 (8,449)(3,653)(35)77,423 
Interest expense599 168 107 467 40  1,381 
Other, net2 (4)(40)(6)20  (28)
Income (loss) before income taxes$6,338 $77,163 $5,227 $(8,910)$(3,713)$(35)$76,070 
Total expenditures for property, plant and equipment$12,870 $8,131 $ 8,478 $669 $1,431 $ 31,579 
                     


Three Months Ended December 31, 2016Pressure PumpingInfrastructureSandDrilling All Other(a)EliminationsTotal
Revenue from external customers$32,002 $ $11,408 $11,714 $10,429 $ $65,553 
Intersegment revenues264  4   (268) 
Total revenue32,266  11,412 11,714 10,429 (268)65,553 
Cost of revenues, exclusive of depreciation, depletion, amortization and accretion21,521  9,210 9,838 6,702  47,271 
Intersegment cost of revenues4  264   (268) 
Total cost of revenue21,525  9,474 9,838 6,702 (268)47,271 
Selling, general and administrative1,346  812 2,271  1,604  6,033 
Depreciation, depletion, amortization and accretion9,049  1,749  5,268 1,766  17,832 
Operating income (loss)346  (623)(5,663)357  (5,583)
Interest expense96  114 556 (3) 763 
Other, net 2  14 68 130  214 
Income (loss) before income taxes$248 $ $(751)$(6,287)$230 $ $(6,560)
Total expenditures for property, plant and equipment$6,410 $ $ 6 $1,216 $ $ 7,632 
                     


Three Months Ended September 30, 2017Pressure PumpingInfrastructureSandDrilling All Other(a)EliminationsTotal
Revenue from external customers$75,705 $13,486 $29,332 $13,644 $17,138 $ $149,305 
Intersegment revenues950  3,401  287 (4,638) 
Total revenue76,655 13,486 32,733 13,644  17,425 (4,638)149,305 
Cost of revenues, exclusive of depreciation, depletion, amortization and accretion52,961 10,117 25,178 11,598 14,679  114,533 
Intersegment cost of revenues3,688  905 45  (4,638) 
Total cost of revenue56,649 10,117 26,083 11,643 14,679 (4,638)114,533 
Selling, general and administrative2,511 886 1,842 1,374  1,410  8,023 
Depreciation, depletion, amortization and accretion13,039 1,039 3,034  5,036 5,076  27,224 
Operating income (loss)4,456 1,444 1,774 (4,409)(3,740) (475)
Interest expense592 68 87 570 103  1,420 
Other, net 120 10 98 38 53  319 
Income (loss) before income taxes$3,744 $1,366 $1,589 $(5,017)$(3,896)$ $(2,214)
Total expenditures for property, plant and equipment$19,581 $8,055 $ 4,928 $2,357 $777 $ 35,698 
                     


Year Ended December 31, 2017Pressure PumpingInfrastructureSandDrillingAll Other(a)EliminationsTotal
Revenue from external customers$277,326 $224,425 $90,023 $50,075 $49,647 $ $691,496 
Intersegment revenues2,026  27,014 446 2,081 (31,567) 
Total revenue279,352 224,425 117,037 50,521 51,728 (31,567)691,496 
Cost of revenues, exclusive of depreciation, depletion, amortization and accretion183,089 120,117 91,049 46,701 41,613  482,569 
Intersegment cost of revenues28,147 1,443 1,731 146 65 (31,532) 
Total cost of revenue211,236 121,560 92,780 46,847 41,678 (31,532)482,569 
Selling, general and administrative9,501 21,606 8,190 5,510 5,079  49,886 
Depreciation, depletion, amortization and accretion45,413 3,185 9,394  19,635 14,497  92,124 
Impairment of long-lived assets  324 3,822   4,146 
Operating income (loss)13,202 78,074 6,349 (25,293)(9,526)(35)62,771 
Interest expense1,622 241 679 1,695 73  4,310 
Bargain purchase gain, net of taxes  (4,012)   (4,012)
Other, net129 6 211 256 75  677 
Income (loss) before income taxes$11,451 $77,827 $9,471 $(27,244)$(9,674)$(35)$61,796 
Total expenditures for property, plant and equipment$85,853 $20,144 $16,376 $8,927 $2,553 $  $133,853 
                      


Year Ended December 31, 2016Pressure PumpingInfrastructureSandDrillingAll Other(a)EliminationsTotal
Revenue from external customers$123,856 $ $33,835 $32,043 $40,891  $ $230,625 
Intersegment revenues569  4,267  79 (4,915) 
Total revenue124,425  38,102 32,043 40,970 (4,915)230,625 
Cost of revenues, exclusive of depreciation, depletion, amortization and accretion82,552  31,895 31,848 26,726  173,021 
Intersegment cost of revenues4,336  561 (8)26 (4,915) 
Total cost of revenue86,888  32,456 31,840 26,752 (4,915)173,021 
Selling, general and administrative4,327  3,337 5,625 4,759  18,048 
Depreciation, depletion, amortization and accretion37,013  6,483 21,512 7,307  72,315 
Impairment of long-lived assets139   347 1,385  1,871 
Operating income (loss)(3,942) (4,174)(27,281)767  (34,630)
Interest expense599  434 2,829 234  4,096 
Other, net27  96 248 (529) (158)
Income (loss) before income taxes$(4,568)$ $(4,704)$(30,358)$1,062 $ $(38,568 )
Total expenditures for property, plant and equipment$7,673 $ $528 $2,709 $830 $ 11,740 
                     

a.  Includes results for operations for our coil tubing, pressure control, flowback, cementing, equipment rental and remote accommodations businesses.

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 long-lived assets, acquisition related costs, one-time compensation charges associated with the IPO, equity based compensation, interest expense, bargain purchase gain, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets) and provision (benefit) for income taxes. 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, none of which are components of Adjusted EBITDA. 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.

Consolidated

 Three Months Ended Years Ended
 December 31, September 30, December 31,
 2017  2016 2017 2017 2016
Reconciliation of Adjusted EBITDA to net income (loss):(in thousands)
Net income (loss)$65,915  $(57,706) $(801) $58,964  $(92,453)
Depreciation, depletion, amortization and accretion27,770  17,832  27,224  92,124  72,315 
Impairment of long-lived assets4,146      4,146  1,871 
Acquisition related costs51    264  2,506   
One-time IPO compensation charges  1,201       1,201 
Equity based compensation1,093  520  1,028  3,741  501 
Interest expense1,381   763  1,420  4,310  4,096 
Bargain purchase gain      (4,012)  
Other (income) expense, net(28) 214  319  677  (158)
Provision (benefit) for income taxes10,155  51,146  (1,413) 2,832  53,885 
Adjusted EBITDA$110,483  $13,970   $28,041  $165,288  $41,258 
                    

Pressure Pumping Services

 Three Months Ended Years Ended
 December 31, September 30, December 31,
 2017 2016 2017 2017 2016
Reconciliation of Adjusted EBITDA to net income (loss):(in thousands)
Net income (loss)$6,338  $248  $3,744  $11,451  $(4,568)
Depreciation, depletion, amortization and accretion13,590  9,049  13,039   45,413  37,013 
Impairment of long-lived assets        139 
Acquisition related costs    1  1   
One-time IPO compensation charges  102      102 
Equity based compensation438  176  428  1,641  176 
Interest expense599  96   592  1,622  599 
Other expense, net2  2  120  129  27 
Adjusted EBITDA$20,967  $9,673  $17,924   $60,257  $33,488 
                    

Infrastructure Services

 Three Months Ended Years Ended
 December 31, September 30, December 31,
 2017 2016  2017 2017 2016
Reconciliation of Adjusted EBITDA to net income (loss):(in thousands)
Net income (loss) $47,873  $  $1,366  $48,537  $ 
Depreciation, depletion, amortization and accretion1,805    1,039  3,185    
Acquisition related costs8    48  98   
Equity based compensation316    29  345   
Interest expense168    68   241   
Other expense, net(4)   10  6   
Provision for income taxes29,290       29,290   
Adjusted EBITDA$79,456  $  $2,560  $81,702  $ 
                    

Natural Sand Proppant Services

 Three Months Ended Years Ended
 December 31, September 30, December 31,
 2017 2016 2017 2017 2016
Reconciliation of Adjusted EBITDA to net income (loss):(in thousands)
Net income (loss)$5,263  $(751) $1,565  $9,474  $(4,709)
Depreciation, depletion, amortization and accretion2,791   1,749  3,034  9,394  6,483 
Impairment of long-lived assets324      324   
Acquisition related costs42    167  2,163   
One-time IPO compensation charges  33      33 
Equity based compensation184  57  272  708  57 
Interest expense107  114  87  679  434 
Bargain purchase gain      (4,012)  
Other (income) expense, net(40) 14  98  211  96 
(Benefit) provision for income taxes(36)   24  (4) 4 
Adjusted EBITDA$8,635  $1,216  $5,247  $18,937  $2,398 
                    

Contract Land and Directional Drilling Services

 Three Months Ended Years Ended
 December 31, September 30, December 31,
 2017 2016 2017 2017 2016
Reconciliation of Adjusted EBITDA to net loss:(in thousands)
Net loss$(8,910) $(6,287) $(5,017) $(27,244) $(30,358)
Depreciation, depletion, amortization and accretion4,657   5,268  5,036  19,635  21,512 
Impairment of long-lived assets3,822      3,822  347 
Acquisition related costs    (16) 8   
One-time IPO compensation charges  964      964 
Equity based compensation77  110  138  507  110 
Interest expense467  556  570  1,695  2,829 
Other (income) expense, net(6) 68  38  256  248 
Adjusted EBITDA$107  $679  $749  $(1,321) $(4,348)
                    

Other

 Three Months Ended Years Ended
 December 31, September 30, December 31,
 2017 2016 2017 2017 2016
Reconciliation of Adjusted EBITDA to net income (loss):(in thousands)
Net income (loss)$15,386  $(50,916) $(2,459) $16,780  $(52,820)
Depreciation, depletion, amortization and accretion4,927  1,766  5,076  14,497  7,307 
Impairment of long-lived assets        1,385 
Acquisition related costs2    65  237   
One-time IPO compensation charges  102      102 
Equity based compensation77  176  162  539  157 
Interest expense40  (3) 103  73  234 
Other expense (income), net20  130  53  75  (529)
(Benefit) provision for income taxes(19,099) 51,145  (1,437) (26,454) 53,881 
Adjusted EBITDA$1,353  $2,400  $1,563  $5,747  $9,717 
                     

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Source: Mammoth Energy Services, Inc.

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