Press Release Details

Mammoth Energy Services, Inc. Announces Fourth Quarter and Full Year 2019 Operational and Financial Results

February 27, 2020 at 4:01 PM EST

OKLAHOMA CITY, Feb. 27, 2020 (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, 2019.

Financial Highlights for the Fourth Quarter and Full Year 2019:

Total revenue was $67.6 million for the three months ended December 31, 2019, down from $113.4 million for the three months ended September 30, 2019 and down from $278.2 million for the three months ended December 31, 2018. Total revenue was $625.0 million for the year ended December 31, 2019, down from $1.7 billion for the year ended December 31, 2018.

Net loss for the three months ended December 31, 2019 was $60.8 million, or $1.35 per fully diluted share, as compared to net loss of $35.7 million, or $0.79 per fully diluted share, for the three months ended September 30, 2019 and net income of $68.2 million, or $1.51 per fully diluted share, for the three months ended December 31, 2018. Net loss for the year ended December 31, 2019 was $79.0 million, or $1.76 per fully diluted share, as compared to net income of $236.0 million, or $5.24 per fully diluted share for the year ended December 31, 2018.

Adjusted net loss (as defined and reconciled below) for the three months ended December 31, 2019 was $26.3 million, or $0.58 per fully diluted share, as compared to adjusted net loss of $29.2 million, or $0.65 per fully diluted share, for the three months ended September 30, 2019 and adjusted net income of $72.3 million, or $1.60 per fully diluted share, for the three months ended December 31, 2018. Adjusted net loss for the year ended December 31, 2019 was $38.0 million, or $0.85 per fully diluted share, as compared to adjusted net income of $262.3 million, or $5.83 per fully diluted share for the year ended December 31, 2018.

Adjusted EBITDA (as defined and reconciled below) was a loss of $10.3 million for the three months ended December 31, 2019, as compared to a loss of $3.8 million for the three months ended September 30, 2019 and a positive $84.3 million for the three months ended December 31, 2018. Adjusted EBITDA was a positive $77.3 million for the year ended December 31, 2019, down from $547.3 million for the year ended December 31, 2018.

Arty Straehla, Mammoth's Chief Executive Officer, stated, “The hiring of a new president for our infrastructure division in November 2019 has stabilized operations, attracted experienced industry leaders to key management positions and improved the performance of the business. With this management team in place, we are confident we can grow our infrastructure business given that demand for the services we offer outstrips supply. Market fundamentals are challenging for our oil field businesses. Although we believe the reported retirement of equipment across the industry is beginning to help the market, pricing and utilization for our oil field businesses remain depressed. The conversion of our pressure pumping fleets to dynamic gas blending (“DGB”) capabilities is progressing, and all three of our staffed fleets are operating.”

Infrastructure Services

Mammoth's infrastructure services segment contributed revenues of $26.6 million for the three months ended December 31, 2019, a decrease from $37.3 million for the three months ended September 30, 2019 and a decline from $159.6 million for the three months ended December 31, 2018.

As of December 31, 2019, Mammoth had a total of approximately 140 transmission and distribution crews in the continental United States.

The infrastructure segment contributed revenues of $214.4 million for the year ended December 31, 2019, down from $1.1 billion for the year ended December 31, 2018. Revenues for the Company's infrastructure operations in the continental United States increased approximately 96% from $60.2 million for the year ended December 31, 2018 to $117.8 million for the year ended December 31, 2019.

Pressure Pumping Services

Mammoth's pressure pumping division contributed revenues (inclusive of inter-segment revenues) of $25.0 million on 989 stages for the three months ended December 31, 2019, a decrease from $44.6 million on 783 stages for the three months ended September 30, 2019 and a decrease from $72.8 million on 1,164 stages for the three months ended December 31, 2018. On average, 1.7 of our fleets were active for the three months ended December 31, 2019, compared to average utilization of 1.2 fleets during the three months ended September 30, 2019 and an average utilization of 3.7 fleets during the three months ended December 31, 2018.

The pressure pumping division contributed revenues (inclusive of inter-segment revenues) of $246.3 million on 5,378 stages for the year ended December 31, 2019, down from $369.5 million on 6,245 stages for the year ended December 31, 2018. On average, 2.4 of our fleets were active for the year ended December 31, 2019 compared to 3.6 fleets for the year ended December 31, 2018.

The conversion of our pressure pumping fleets to DGB is progressing with the initial converted units expected to be field tested in the coming weeks. All three of our staffed fleets are currently operating in the northeast.

Natural Sand Proppant Services

Mammoth's natural sand proppant division contributed revenues (inclusive of inter-segment revenues) of $3.0 million for the three months ended December 31, 2019, a decrease from $18.4 million for the three months ended September 30, 2019 and a decrease from $27.4 million for the three months ended December 31, 2018. The Company sold approximately 76,000 tons of sand during the three months ended December 31, 2019, a decline from approximately 456,000 tons sold during the three months ended September 30, 2019 and approximately 569,000 tons sold during the three months ended December 31, 2018. The Company's average sales price for the sand sold during the three months ended December 31, 2019 was $19.95 per ton, a decrease from $26.84 per ton average sales price during the three months ended September 30, 2019 and $28.30 per ton average sales price during the three months ended December 31, 2018.

The natural sand proppant division contributed revenues (inclusive of inter-segment revenues) of $99.6 million for the year ended December 31, 2019, as compared to $168.3 million for the year ended December 31, 2018. The Company sold 2.0 million tons of sand during the year ended December 31, 2019, a decline from 2.7 million tons of sand during the year ended December 31, 2018. The Company's average sales price for the sand sold during the year ended December 31, 2019 was $29.70 per ton, a decline from $39.16 per ton average sales price during the year ended December 31, 2018.

Drilling Services

Mammoth's drilling services division contributed revenues of $4.7 million for the three months ended December 31, 2019, a decrease from $6.1 million for the three months ended September 30, 2019 and a decrease from $18.3 million for the three months ended December 31, 2018. The decline is primarily due to reduced utilization. The Company's average active rigs was 0.2 for the three months ended December 31, 2019 compared to 1.0 for the three months ended September 30, 2019 and 4.2 for the three months ended December 31, 2018.

The drilling services division contributed revenues of $32.2 million for the year ended December 31, 2019, as compared to $66.7 million for the year ended December 31, 2018. The Company's average active rigs decreased from 4.3 in 2018 to 1.4 in 2019.

As a result of market conditions, the Company has temporarily shut down its contract land drilling operations beginning in December 2019.

Other Services

Mammoth's other services, including coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation and remote accommodations, contributed revenues (inclusive of inter-segment revenues) of $9.3 million for the three months ended December 31, 2019, a decrease from $14.0 million for the three months ended September 30, 2019 and a decrease from $20.8 million for the three months ended December 31, 2018. An average of 467 pieces of equipment were rented during the three months ended December 31, 2019, down 14% from an average of 541 pieces of equipment rented during the three months ended September 30, 2019 and down 7% from an average of 500 pieces of equipment rented for the three months ended December 31, 2018.

The Company's other services contributed revenues of $69.3 million for the year ended December 31, 2019, as compared to $83.7 million for the year ended December 31, 2018. The decrease was primarily due to a decline in utilization for our coil tubing business as well as reduced cementing and acidizing revenue. As a result of market conditions, the Company has temporarily shut down its cementing and acidizing operations as well as its flowback operations beginning in the third quarter of 2019.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses were $10.3 million for the three months ended December 31, 2019, as compared to $14.4 million for the three months ended September 30, 2019 and $14.8 million for the three months ended December 31, 2018. SG&A expenses were $51.6 million for the year ended December 31, 2019, down from $73.1 million for the year ended December 31, 2018.

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

   
  Three Months Ended   Twelve Months Ended
  December 31,   September 30,   December 31,
  2019   2018   2019   2019   2018
Cash expenses:                  
Compensation and benefits $ 3,203     $ 9,409     $ 4,777     $ 19,364     $ 42,950  
Professional services 4,301     3,018     6,104     17,128     11,854  
Other(a) 2,010     1,475     1,665     10,300     10,718  
Total cash SG&A expense 9,514     13,902     12,546     46,792     65,522  
Non-cash expenses:                  
Bad debt provision(b) 204     (34 )   964     1,434     (14,578 )
Equity based compensation(c)                 17,487  
Stock based compensation 620     915     913     3,326     4,666  
Total non-cash SG&A expense 824     881     1,877     4,760     7,575  
Total SG&A expense $ 10,338     $ 14,783     $ 14,423     $ 51,552     $ 73,097  

a.  Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.
b.  During the year ended December 31, 2018, the Company received payment for amounts previously reserved in 2017. As a result, during the year ended December 31, 2018, the Company reversed bad debt expense of $16.0 million recognized in 2017.
c.  Represents compensation expense for non-employee awards, which were issued and are payable by certain affiliates of Wexford (the sponsor level).

SG&A expenses, as a percentage of total revenue, were 15% for the three months ended December 31, 2019, as compared to 13% for the three months ended September 30, 2019 and 5% for the three months ended December 31, 2018. SG&A expenses, as a percentage of total revenue, were 8% for the year ended December 31, 2019, as compared to 4% for the year ended December 31, 2018.

Liquidity

As of December 31, 2019, Mammoth had cash on hand totaling $5.9 million and outstanding borrowings under its revolving credit facility of $80.0 million. As of December 31, 2019, the Company had $96.1 million of available borrowing capacity under its revolving credit facility, after giving effect to $8.7 million of outstanding letters of credit, resulting in total liquidity of approximately $102.0 million.

On February 26, 2020, the Company entered into a second amendment to its revolving credit facility to, among other things, (i) amend its financial covenants, as outlined below, (ii) decrease the maximum revolving advance amount from $185 million to $130 million, (iii) decrease the amount that the maximum revolving advance can be increased to (the accordion) from $350 million to $180 million, (iv) increase the applicable margin ranges from 2.00% to 2.50% per annum in the case of the alternate base rate and from 3.00% to 3.50% per annum in the case of LIBOR, (v) increase the aggregate amount of permitted asset dispositions, and (vi) permit certain sale-leaseback transactions.

The financial covenants under the revolving credit facility were amended as follows:

  • the minimum interest coverage ratio of 3.0 to 1.0 was eliminated;
  • the maximum leverage coverage ratio of 4.0 to 1.0 was eliminated for the first two fiscal quarters of 2020 and, beginning with the fiscal quarter ended September 30, 2020, changed to 2.5 to 1.0;
  • beginning with the fiscal quarter ended September 30, 2020, a minimum fixed charge coverage ratio of at least 1.1 to 1.0 was added; and
  • from the effective date of February 26, 2020 through September 30, 2020, a minimum excess availability covenant of 10% of the maximum revolving advance amount was added.

As of February 26, 2020, Mammoth had $87.4 million in borrowings outstanding under its revolving credit facility, leaving an aggregate of $20.6 million of available borrowing capacity under this facility, after giving effect to the recent amendment that reduced the maximum revolving advance amount to $130 million. The available borrowing capacity is reduced by (i) a minimum excess availability covenant of 10% of the maximum revolving advance amount and (ii) $9.0 million of outstanding letters of credit.

Capital Expenditures

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

  Three Months Ended   Twelve Months Ended
  December 31,   September 30,   December 31,
  2019   2018   2019   2019   2018
Infrastructure services(a) $ 90     $ 22,409     $ 122     $ 5,643     $ 100,701  
Pressure pumping services(b) 398     9,632     2,963     14,703     33,774  
Natural sand proppant services(c) 174     2,132     728     2,877     17,935  
Drilling services(d) 84     1,127     146     3,156     13,398  
Other(e) 125     7,113     711     9,382     26,135  
Total capital expenditures $ 871     $ 42,413     $ 4,670     $ 35,761     $ 191,943  

a.  Capital expenditures primarily for truck, tooling and other equipment for the periods presented.
b.  Capital expenditures primarily for pressure pumping and water transfer equipment for the periods presented.
c.  Capital expenditures primarily for maintenance for the 2019 periods presented and plant upgrades for the 2018 periods presented.
d.  Capital expenditures primarily for upgrades to the Company's rig fleet for the periods presented.
e.  Capital expenditures primarily for equipment for the Company's rental and crude hauling businesses for the periods presented.

Explanatory Note Regarding Financial Information

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

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

Based on its assessment of Financial Accounting Standards Board guidance at December 31, 2019, the Company identified four reportable segments: infrastructure services, pressure pumping services, natural sand proppant services and drilling services. For the year ended December 31, 2018, the Company identified three reportable segments consisting of infrastructure services, pressure pumping services and natural sand proppant services. The Company changed its reportable segment presentation in 2019 to include its drilling services, which includes Bison Drilling and Field Services, LLC, Bison Trucking LLC, Panther Drilling Systems LLC, Mako Acquisitions LLC and White Wing Tubular LLC, as its own reportable segment based on certain quantitative thresholds. The results of the entities were previously included in the reconciling column titled "All Other" in the tables below. The financial results by segment below for the three months ended September 30, 2019 and the three months and year ended December 31, 2018 have been retroactively adjusted to reflect this change in reportable segments.

Conference Call Information

Mammoth will host a conference call on Thursday, February 27, 2020 at 4:00 p.m. CST (5:00 p.m. EST) to discuss its fourth quarter and full year 2019 financial and operational results. The telephone number to access the conference call is 844-265-1561 in the U.S. and the international dial in is 216-562-0385. The conference ID for the call is 3895496. The conference call will also be webcast live on www.mammothenergy.com in the “Investors” section.

About Mammoth Energy Services, Inc.

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

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

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

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

Forward-Looking Statements and Cautionary Statements

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

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


MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
 
ASSETS December 31,   December 31,
  2019   2018
CURRENT ASSETS (in thousands)
Cash and cash equivalents $ 5,872     $ 67,625  
Accounts receivable, net 363,053     337,460  
Receivables from related parties 7,523     11,164  
Inventories 17,483     21,302  
Prepaid expenses 12,354     11,317  
Other current assets 695     688  
Total current assets 406,980     449,556  
       
Property, plant and equipment, net 352,772     436,699  
Sand reserves 68,351     71,708  
Operating lease right-of-use assets 43,446      
Intangible assets, net - customer relationships 583     1,711  
Intangible assets, net - trade names 5,205     6,045  
Goodwill 67,581     101,245  
Other non-current assets 7,467     6,127  
Total assets $ 952,385     $ 1,073,091  
LIABILITIES AND EQUITY      
CURRENT LIABILITIES      
Accounts payable $ 39,220     $ 68,843  
Payables to related parties 526     370  
Accrued expenses and other current liabilities 40,754     59,652  
Current operating lease liability 16,432      
Income taxes payable 33,465     104,958  
Total current liabilities 130,397     233,823  
       
Long-term debt 80,000      
Deferred income tax liabilities 36,873     79,309  
Long-term operating lease liability 27,102      
Asset retirement obligation 4,241     3,164  
Other liabilities 5,031     2,743  
Total liabilities 283,644     319,039  
       
COMMITMENTS AND CONTINGENCIES      
       
EQUITY      
Equity:      
Common stock, $0.01 par value, 200,000,000 shares authorized, 45,108,545 and 44,876,649
issued and outstanding at December 31, 2019 and 2018
451     449  
Additional paid in capital 535,094     530,919  
Retained earnings 136,502     226,765  
Accumulated other comprehensive loss (3,306 )   (4,081 )
Total equity 668,741     754,052  
Total liabilities and equity $ 952,385     $ 1,073,091  
               


 
MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
 
  Three Months Ended   Twelve Months Ended
  December 31,   September 30,   December 31,
  2019   2018   2019   2019   2018
  (in thousands, except per share amounts)
REVENUE  
Services revenue $ 57,950     $ 260,513     $ 85,783     $ 452,594     $ 1,471,085  
Services revenue - related parties 6,714     9,551     15,000     102,624     118,183  
Product revenue 1,724     8,063     9,710     42,105     75,766  
Product revenue - related parties 1,249     71     2,924     27,689     25,050  
Total revenue 67,637     278,198     113,417     625,012     1,690,084  
                   
COST AND EXPENSES                  
Services cost of revenue (exclusive of depreciation, depletion,
amortization and accretion of $25,872, $26,999, $25,749,
$102,901 and $106,282, respectively, for the three months
ended December 31, 2019, December 31, 2018 and September 30, 2019
and years ended December 31, 2019 and 2018)
68,599     151,273     91,813     451,206     961,205  
Services cost of revenue - related parties (exclusive of
depreciation, depletion, amortization and accretion of $0, $0,
$0, $0 and $0, respectively, for the three months ended
December 31, 2019, December 31, 2018 and September 30, 2019
and years ended December 31, 2019 and 2018)
633     240     774     4,770     5,885  
Product cost of revenue (exclusive of depreciation, depletion,
amortization and accretion of $2,626, $3,136, $4,019, $14,039
and $13,512, respectively, for the three months ended
December 31, 2019, December 31, 2018 and September 30, 2019
and years ended December 31, 2019 and 2018)
6,337     28,797     18,547     87,812     126,714  
Selling, general and administrative 9,978     14,283     14,029     49,705     71,199  
Selling, general and administrative - related parties 360     500     394     1,847     1,898  
Depreciation, depletion, amortization and accretion 28,521     30,159     29,791     117,033     119,877  
Impairment of goodwill 30,470         3,194     33,664     3,203  
Impairment of other long-lived assets 4,010     4,086     3,348     7,358     5,652  
Total cost and expenses 148,908     229,338     161,890     753,395     1,295,633  
Operating (loss) income (81,271 )   48,860     (48,473 )   (128,383 )   394,451  
                   
OTHER INCOME (EXPENSE)                  
Interest expense, net (1,486 )   (533 )   (1,398 )   (4,958 )   (3,187 )
Other, net 7,272     (1,122 )   6,368     42,216     (2,036 )
Total other income (expense) 5,786     (1,655 )   4,970     37,258     (5,223 )
(Loss) income before income taxes (75,485 )   47,205     (43,503 )   (91,125 )   389,228  
(Benefit) provision for income taxes (14,706 )   (21,002 )   (7,794 )   (12,081 )   153,263  
Net (loss) income $ (60,779 )   $ 68,207     $ (35,709 )   $ (79,044 )   $ 235,965  
                   
OTHER COMPREHENSIVE (LOSS) INCOME                  
Foreign currency translation adjustment, net of tax of $69,
$212, ($49), ($203) and $397, respectively, for the three
months ended December 31, 2019, December 31, 2018 and
September 30, 2019 and years ended December 31, 2019 and 2018)
282     (961 )   (213 )   775     (1,420 )
Comprehensive (loss) income $ (60,497 )   $ 67,246     $ (35,922 )   $ (78,269 )   $ 234,545  
                   
Net (loss) income per share (basic) $ (1.35 )   $ 1.52     $ (0.79 )   $ (1.76 )   $ 5.27  
Net (loss) income per share (diluted) $ (1.35 )   $ 1.51     $ (0.79 )   $ (1.76 )   $ 5.24  
Weighted average number of shares outstanding (basic) 45,092     44,845     45,020     45,011     44,750  
Weighted average number of shares outstanding (diluted) 45,092     45,048     45,020     45,011     45,021  
Dividends declared per share $     0.125     $     $ 0.25     0.25  
                                   


 
MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
  Twelve Months Ended
  December 31,
  2019   2018
  (in thousands)
Cash flows from operating activities:      
Net (loss) income $ (79,044 )   $ 235,965  
Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:      
Equity based compensation     17,487  
Stock based compensation 4,177     5,425  
Depreciation, depletion, accretion and amortization 117,033     119,877  
Amortization of coil tubing strings 1,641     2,193  
Amortization of debt origination costs 326     387  
Bad debt expense 1,434     (14,578 )
Loss on disposal of property and equipment 55     947  
Impairment of goodwill 33,664     3,203  
Impairment of other long-lived assets 7,358     5,652  
Inventory obsolescence 1,349      
Deferred income taxes (42,639 )   52,226  
Other (986 )   16  
Changes in assets and liabilities, net of acquisitions of businesses:      
Accounts receivable, net (27,006 )   (78,840 )
Receivables from related parties 3,641     22,624  
Inventories 830     (5,502 )
Prepaid expenses and other assets (1,040 )   1,423  
Accounts payable (25,968 )   (64,966 )
Payables to related parties 156     (1,008 )
Accrued expenses and other liabilities (18,800 )   15,445  
Income taxes payable (71,499 )   68,692  
Net cash (used in) provided by operating activities (95,318 )   386,668  
       
Cash flows from investing activities:      
Purchases of property and equipment (35,417 )   (187,285 )
Purchases of property and equipment from related parties (344 )   (4,658 )
Business acquisitions     (20,824 )
Contributions to equity investee (680 )   (702 )
Proceeds from disposal of property and equipment 3,217     1,514  
Net cash used in investing activities (33,224 )   (211,955 )
       
Cash flows from financing activities:      
Borrowings from lines of credit 156,000     77,000  
Repayments of lines of credit (76,000 )   (176,900 )
Dividends paid (11,219 )   (11,201 )
Principal payments on financing leases and equipment financing notes (2,079 )   (292 )
Debt issuance costs     (1,199 )
Net cash provided by (used in) financing activities 66,702     (112,592 )
Effect of foreign exchange rate on cash 87     (133 )
Net change in cash and cash equivalents (61,753 )   61,988  
Cash and cash equivalents at beginning of period 67,625     5,637  
Cash and cash equivalents at end of period $ 5,872     $ 67,625  
       
Supplemental disclosure of cash flow information:      
Cash paid for interest $ 4,741     $ 3,212  
Cash paid for income taxes $ 110,848     $ 32,757  
Supplemental disclosure of non-cash transactions:      
Purchases of property and equipment included in accounts payable $ 2,303     $ 11,908  
Right-of-use assets obtained for financing lease liabilities $ 3,721     $  
               


 
MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS
(in thousands)
 
Three months ended December 31, 2019 Infrastructure Pressure
Pumping
Sand Drilling All Other Eliminations Total
Revenue from external customers $ 26,618   $ 24,515   $ 2,974   $ 4,637   $ 8,893   $   $ 67,637  
Intersegment revenues   442     14   362   (818 )  
Total revenue 26,618   24,957   2,974   4,651   9,255   (818 ) 67,637  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 30,988   20,891   6,162   6,934   10,594     75,569  
Intersegment cost of revenues   339   28   160   291   (818 )  
Total cost of revenue 30,988   21,230   6,190   7,094   10,885   (818 ) 75,569  
Selling, general and administrative 5,516   1,449   792   1,042   1,539     10,338  
Depreciation, depletion, amortization and accretion 7,961   9,996   2,627   3,389   4,548     28,521  
Impairment of goodwill 434   23,423   2,684     3,929     30,470  
Impairment of other long-lived assets       2,955   1,055     4,010  
Operating loss (18,281 ) (31,141 ) (9,319 ) (9,829 ) (12,701 )   (81,271 )
Interest expense, net 665   318   48   227   228     1,486  
Other (income) expense, net (7,679 ) 574     14   (181 )   (7,272 )
Loss before income taxes $ (11,267 ) $ (32,033 ) $ (9,367 ) $ (10,070 ) $ (12,748 ) $   $ (75,485 )
                                           


Three months ended December 31, 2018 Infrastructure Pressure
Pumping
Sand Drilling All Other Eliminations Total
Revenue from external customers $ 159,610   $ 72,219   $ 8,133   $ 18,082   $ 20,154   $   $ 278,198  
Intersegment revenues   560   19,273   191   630   (20,654 )  
Total revenue 159,610   72,779   27,406   18,273   20,784   (20,654 ) 278,198  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 75,486   39,601   28,796   16,388   20,039     180,310  
Intersegment cost of revenues   19,787   253   274   313   (20,627 )  
Total cost of revenue 75,486   59,388   29,049   16,662   20,352   (20,627 ) 180,310  
Selling, general and administrative 9,689   1,768   1,170   1,137   1,019     14,783  
Depreciation, depletion, amortization and accretion 7,425   10,952   3,138   4,201   4,443     30,159  
Impairment of other long-lived assets 308       3,778       4,086  
Operating income (loss) 66,702   671   (5,951 ) (7,505 ) (5,030 ) (27 ) 48,860  
Interest expense, net 82   177   40   122   112     533  
Other expense, net 60   340   304   395   23     1,122  
Income (loss) before income taxes $ 66,560   $ 154   $ (6,295 ) $ (8,022 ) $ (5,165 ) $ (27 ) $ 47,205  
                                           


Three months ended September 30, 2019 Infrastructure Pressure Pumping Sand Drilling All Other Eliminations Total
Revenue from external customers $ 37,289   $ 43,887   $ 12,634   $ 6,065   $ 13,542   $   $ 113,417  
Intersegment revenues   725   5,727   58   417   (6,927 )  
Total revenue 37,289   44,612   18,361   6,123   13,959   (6,927 ) 113,417  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 36,940   33,059   18,547   7,203   15,385     111,134  
Intersegment cost of revenues   6,054   326   185   362   (6,927 )  
Total cost of revenue 36,940   39,113   18,873   7,388   15,747   (6,927 ) 111,134  
Selling, general and administrative 7,322   3,669   1,314   910   1,208     14,423  
Depreciation, depletion, amortization and accretion 7,953   10,176   4,022   3,096   4,544     29,791  
Impairment of goodwill         3,194     3,194  
Impairment of other long-lived assets         3,348     3,348  
Operating income (loss) (14,926 ) (8,346 ) (5,848 ) (5,271 ) (14,082 )   (48,473 )
Interest expense, net 599   316   43   220   220     1,398  
Other expense, net (6,239 ) (3 ) 99   (101 ) (124 )   (6,368 )
Income (loss) before income taxes $ (9,286 ) $ (8,659 ) $ (5,990 ) $ (5,390 ) $ (14,178 ) $   $ (43,503 )
                                           


Year ended December 31, 2019 Infrastructure Pressure
Pumping
Sand Drilling All Other Eliminations Total
Revenue from external customers $ 214,449   $ 241,972   $ 69,794   $ 31,728   $ 67,069   $   $ 625,012  
Intersegment revenues   4,378   29,796   498   2,231   (36,903 )  
Total revenue 214,449   246,350   99,590   32,226   69,300   (36,903 ) 625,012  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 171,756   177,997   87,637   35,963   70,435     543,788  
Intersegment cost of revenues   31,727   2,542   846   1,848   (36,963 )  
Total cost of revenue 171,756   209,724   90,179   36,809   72,283   (36,963 ) 543,788  
Selling, general and administrative 25,390   10,993   5,006   4,160   6,003     51,552  
Depreciation, depletion, amortization and accretion 31,451   40,240   14,050   13,255   18,037     117,033  
Impairment of goodwill 434   23,423   2,684     7,123     33,664  
Impairment of other long-lived assets       2,955   4,403     7,358  
Operating (loss) income (14,582 ) (38,030 ) (12,329 ) (24,953 ) (38,549 ) 60   (128,383 )
Interest expense, net 1,689   1,283   193   907   886     4,958  
Other (income) expense, net (42,787 ) 580   67   (109 ) 33     (42,216 )
Income (loss) before income taxes $ 26,516   $ (39,893 ) $ (12,589 ) $ (25,751 ) $ (39,468 ) $ 60   $ (91,125 )
                                           


Year ended December 31, 2018 Infrastructure Pressure
Pumping
Sand Drilling All Other Eliminations Total
Revenue from external customers $ 1,082,371   $ 362,491   $ 100,816   $ 66,237   $ 78,169   $   $ 1,690,084  
Intersegment revenues   7,001   67,459   416   5,541   (80,417 )  
Total revenue 1,082,371   369,492   168,275   66,653   83,710   (80,417 ) 1,690,084  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 608,017   223,296   126,714   60,248   75,529     1,093,804  
Intersegment cost of revenues 2,583   70,365   6,103   554   785   (80,390 )  
Total cost of revenue 610,600   293,661   132,817   60,802   76,314   (80,390 ) 1,093,804  
Selling, general and administrative 27,126   29,761   6,218   5,343   4,649     73,097  
Depreciation, depletion, amortization and accretion 20,516   51,487   13,519   18,233   16,122     119,877  
Impairment of goodwill         3,203     3,203  
Impairment of other long-lived assets 308   143     3,966   1,235     5,652  
Operating income (loss) 423,821   (5,560 ) 15,721   (21,691 ) (17,813 ) (27 ) 394,451  
Interest expense, net 423   1,171   234   835   524     3,187  
Other expense (income), net 573   434   525   461   43     2,036  
Income (loss) before income taxes $ 422,825   $ (7,165 ) $ 14,962   $ (22,987 ) $ (18,380 ) $ (27 ) $ 389,228  
                                           

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

Adjusted EBITDA

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

Consolidated

  Three Months Ended   Twelve Months Ended
  December 31,   September 30,   December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2019   2018   2019   2019   2018
Net (loss) income $ (60,779 )   $ 68,207     $ (35,709 )   $ (79,044 )   $ 235,965  
Depreciation, depletion, accretion and amortization expense 28,521     30,159     29,791     117,033     119,877  
Impairment of goodwill 30,470         3,194     33,664     3,203  
Impairment of other long-lived assets 4,010     4,086     3,348     7,358     5,652  
Inventory obsolescence charges         1,349     1,349      
Acquisition related costs     61         45     191  
Public offering costs     (10 )           982  
Equity based compensation                 17,487  
Stock based compensation 811     1,094     1,134     4,177     5,425  
Interest expense, net 1,486     533     1,398     4,958     3,187  
Other (income) expense, net (7,272 )   1,122     (6,368 )   (42,216 )   2,036  
(Benefit) provision for income taxes (14,706 )   (21,002 )   (7,794 )   (12,081 )   153,263  
Interest on trade accounts receivable 7,174         5,896     42,040      
Adjusted EBITDA $ (10,285 )   $ 84,250     $ (3,761 )   $ 77,283     $ 547,268  
                                       

Infrastructure Services

  Three Months Ended   Twelve Months Ended
  December 31,   September 30,   December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2019   2018   2019   2019   2018
Net (loss) income $ (14,005 )   $ 141,875     $ (10,763 )   $ 17,108     $ 319,940  
Depreciation and amortization expense 7,961     7,425     7,953     31,451     20,516  
Impairment of goodwill 434             434      
Impairment of other long-lived assets     308             308  
Acquisition related costs     61         12     58  
Public offering costs     (10 )           473  
Stock based compensation 183     470     217     870     2,089  
Interest expense 665     82     599     1,689     423  
Other (income) expense, net (7,679 )   60     (6,239 )   (42,787 )   573  
Provision (benefit) for income taxes 2,738     (75,315 )   1,477     9,408     102,885  
Interest on trade accounts receivable 7,174         5,896     42,040      
Adjusted EBITDA $ (2,529 )   $ 74,956     $ (860 )   $ 60,225     $ 447,265  
                                       

Pressure Pumping Services

  Three Months Ended   Twelve Months Ended
  December 31,   September 30,   December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2019   2018   2019   2019   2018
Net (loss) income $ (32,033 )   $ 154     $ (8,659 )   $ (39,893 )   $ (7,165 )
Depreciation and amortization expense 9,996     10,952     10,176     40,240     51,487  
Impairment of goodwill 23,423             23,423      
Impairment of other long-lived assets                 143  
Acquisition related costs             18     39  
Public offering costs                 264  
Equity based compensation                 17,487  
Stock based compensation 297     318     503     1,700     1,612  
Interest expense 318     177     316     1,283     1,171  
Other (income) expense, net 574     340     (3 )   580     434  
Adjusted EBITDA $ 2,575     $ 11,941     $ 2,333     $ 27,351     $ 65,472  
                                       

Natural Sand Proppant Services

  Three Months Ended   Twelve Months Ended
  December 31,   September 30,   December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2019   2018   2019   2019   2018
Net (loss) income $ (9,367 )   $ (6,295 )   $ (5,990 )   $ (12,589 )   $ 14,962  
Depreciation, depletion, accretion and amortization expense 2,627     3,138     4,022     14,050     13,519  
Impairment of goodwill 2,684             2,684      
Acquisition related costs             8     (38 )
Public offering costs                 144  
Stock based compensation 156     181     216     812     783  
Interest expense 48     40     43     193     234  
Other expense (income), net     304     99     67     525  
Adjusted EBITDA $ (3,852 )   $ (2,632 )   $ (1,610 )   $ 5,225     $ 30,129  
                                       

Drilling Services

  Three Months Ended   Twelve Months Ended
  December 31,   September 30,   December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2019   2018   2019   2019   2018
Net (loss) income $ (10,070 )   $ (8,022 )   $ (5,390 )   $ (25,751 )   $ (22,987 )
Depreciation, depletion, accretion and amortization expense 3,389     4,201     3,096     13,255     18,233  
Impairment of other long-lived assets 2,955     3,778         2,955     3,966  
Acquisition related costs             2      
Public offering costs                 45  
Stock based compensation 82     36     91     361     576  
Interest expense 227     122     220     907     835  
Other expense (income), net 14     395     (101 )   (109 )   461  
Adjusted EBITDA $ (3,403 )   $ 510     $ (2,084 )   $ (8,380 )   $ 1,129  
                                       

Other Services(a)

  Three Months Ended   Twelve Months Ended
  December 31,   September 30,   December 31,
Reconciliation of Adjusted EBITDA to net loss: 2019   2018   2019   2019   2018
Net loss $ 4,695     $ (59,478 )   $ (4,907 )   $ (17,980 )   $ (68,758 )
Depreciation and amortization expense 4,548     4,443     4,544     18,037     16,122  
Impairment of goodwill 3,929         3,194     7,123     3,203  
Impairment of other long-lived assets 1,055         3,348     4,403     1,235  
Inventory obsolescence charges         1,349     1,349      
Acquisition related costs             5     132  
Public offering costs                 56  
Stock based compensation 93     89     107     434     365  
Interest expense, net 228     112     220     886     524  
Other (income) expense, net (181 )   23     (124 )   33     43  
(Benefit) provision for income taxes (17,443 )   54,313     (9,271 )   (21,488 )   50,378  
Adjusted EBITDA $ (3,076 )   $ (498 )   $ (1,540 )   $ (7,198 )   $ 3,300  

a.  Includes results for Mammoth's coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation and remote accommodations services and corporate related activities. The Company's corporate related activities do not generate revenue.

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

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

  Three Months Ended   Twelve Months Ended
  December 31,   September 30,   December 31,
  2019   2018   2019   2019   2018
  (in thousands, except per share amounts)
Net (loss) income, as reported $ (60,779 )   $ 68,207     $ (35,709 )   $ (79,044 )   $ 235,965  
Impairment of goodwill 30,470         3,194     33,664     3,203  
Impairment of other long-lived assets 4,010     4,086     3,348     7,358     5,652  
Equity based compensation                 17,487  
Adjusted net (loss) income $ (26,299 )   $ 72,293     $ (29,167 )   $ (38,022 )   $ 262,307  
                   
Basic (loss) earnings per share, as reported $ (1.35 )   $ 1.52     $ (0.79 )   $ (1.76 )   $ 5.27  
Impairment of goodwill 0.68         0.07     0.75     0.07  
Impairment of other long-lived assets 0.09     0.09     0.07     0.16     0.13  
Equity based compensation                 0.39  
Adjusted basic (loss) earnings per share $ (0.58 )   $ 1.61     $ (0.65 )   $ (0.85 )   $ 5.86  
                   
Diluted (loss) earnings per share, as reported $ (1.35 )   $ 1.51     $ (0.79 )   $ (1.76 )   $ 5.24  
Impairment of goodwill 0.68         0.07     0.75     0.07  
Impairment of other long-lived assets 0.09     0.09     0.07     0.16     0.13  
Equity based compensation                 0.39  
Adjusted diluted (loss) earnings per share $ (0.58 )   $ 1.60     $ (0.65 )   $ (0.85 )   $ 5.83  

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Source: Mammoth Energy Services, Inc.