Press Release Details

Mammoth Energy Services, Inc. Announces Second Quarter 2020 Operational and Financial Results

July 30, 2020 at 4:01 PM EDT

OKLAHOMA CITY, July 30, 2020 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ: TUSK) today reported financial and operational results for the second quarter ended June 30, 2020.

Financial Highlights for the Second Quarter 2020:

Total revenue was $60.1 million for the three months ended June 30, 2020, down 38% from $97.4 million for the three months ended March 31, 2020 and down 67% from $181.8 million for the three months ended June 30, 2019.

Net loss for the three months ended June 30, 2020 was $15.2 million, or $0.33 per fully diluted share, as compared to net loss of $84.0 million, or $1.85 per fully diluted share, for the three months ended March 31, 2020 and net loss of $10.9 million, or $0.24 per fully diluted share, for the three months ended June 30, 2019.

Adjusted EBITDA (as defined and reconciled below) was $6.9 million for the three months ended June 30, 2020, as compared to $13.5 million for the three months ended March 31, 2020 and $8.6 million for the three months ended June 30, 2019.

Arty Straehla, Mammoth's Chief Executive Officer, stated, “The second quarter of 2020 saw the release of a very important report prepared by the Rand Corporation for the U.S. Department of Homeland Security. The report was prepared at the request of the Federal Emergency Management Agency to assess the reasonableness of our subsidiary Cobra’s Master Service Agreement with the Puerto Rico Electric Power Authority (“PREPA”) for repairs to PREPA's electrical grid following Hurricane Maria. This detailed 77-page report found, among other things, that the selection of Cobra was reasonable, that PREPA adhered to procurement statutes and policies in awarding the contract to Cobra and that Cobra’s rates were reasonable.  We believe these are important data points as we continue to pursue payment from PREPA for the quality work performed by our team.”

“In looking at our financial results, it is clear that our infrastructure services segment has turned a corner with gross margin increasing to 17% during the second quarter of 2020 and Adjusted EBITDA in this segment growing nearly 50% quarter-over-quarter for the last two consecutive quarters. The initiatives taken by our infrastructure management team have laid a solid foundation for growth.”

“While the oilfield portion of our service offerings have experienced significant challenges as of late given the current industry and macroeconomic environment, we continue to maintain our oilfield equipment and plan to be ready to ramp up our service lines once demand returns,” concluded Straehla. 

Infrastructure Services

Mammoth's infrastructure services division contributed revenue of $30.6 million for the three months ended June 30, 2020, an increase of 19% from $25.7 million for the three months ended March 31, 2020 and a decrease of 27% from $41.8 million for the three months ended June 30, 2019.

As of June 30, 2020, Mammoth had approximately 120 crews operating in the continental United States.

Pressure Pumping Services

Mammoth's pressure pumping services division contributed revenue (inclusive of inter-segment revenue) of $16.6 million on 658 stages for the three months ended June 30, 2020, a decrease of 62% from $43.6 million on 1,482 stages for the three months ended March 31, 2020 and a decrease of 80% from $84.6 million on 1,717 stages for the three months ended June 30, 2019. On average, 1.9 of the Company's fleets were active for the three months ended June 30, 2020, compared to average utilization of 2.7 fleets during the three months ended March 31, 2020 and an average utilization of 2.7 fleets during the three months ended June 30, 2019.

Natural Sand Proppant Services

Mammoth's natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $6.2 million for the three months ended June 30, 2020, a decrease of 39% from $10.2 million for the three months ended March 31, 2020 and a decrease of 85% from $40.4 million for the three months ended June 30, 2019. The Company sold approximately 82,000 tons of sand during the three months ended June 30, 2020, a decrease of 66% from approximately 239,000 tons sold during the three months ended March 31, 2020 and a decrease of 90% from approximately 813,000 tons sold during the three months ended June 30, 2019. The Company's average sales price for the sand sold during the three months ended June 30, 2020 was $15.18 per ton, an increase from the $13.67 per ton average sales price during the three months ended March 31, 2020 and a decrease from the $30.09 per ton average sales price during the three months ended June 30, 2019.

Drilling Services

Mammoth's drilling services division contributed revenue (inclusive of inter-segment revenue) of $1.3 million for the three months ended June 30, 2020, a decrease of 73% from $4.8 million for the three months ended March 31, 2020 and a decrease of 83% from $7.7 million for the three months ended June 30, 2019. The decline is primarily due to reduced utilization. As a result of market conditions, the Company has temporarily shut down its contract land drilling operations beginning in December 2019 and its rig hauling operations beginning in April 2020.

Other Services

Mammoth's other services, including coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation, remote accommodations, oilfield equipment manufacturing and infrastructure engineering and design services, contributed revenue (inclusive of inter-segment revenue) of $6.5 million for the three months ended June 30, 2020, a decrease of 56% from $14.9 million for the three months ended March 31, 2020 and a decrease of 69% from $21.0 million for the three months ended June 30, 2019.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $13.7 million for the three months ended June 30, 2020, as compared to $10.8 million for the three months ended March 31, 2020 and $9.5 million for the three months ended June 30, 2019.

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

  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
  2020   2019   2020   2020   2019
Cash expenses:                  
Compensation and benefits $ 3,720     $ 2,154     $ 3,969     $ 7,690     $ 11,384  
Professional services 6,147     2,934     3,538     9,684     6,723  
Other(a) 2,100     3,381     2,309     4,409     6,626  
Total cash SG&A expense 11,967     8,469     9,816     21,783     24,733  
Non-cash expenses:                  
Bad debt provision 1,624     262     55     1,679     266  
Stock based compensation 135     724     900     1,035     1,792  
Total non-cash SG&A expense 1,759     986     955     2,714     2,058  
Total SG&A expense $ 13,726     $ 9,455     $ 10,771     $ 24,497     $ 26,791  
                                       

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 23% for the three months ended June 30, 2020, as compared to 11% for the three months ended March 31, 2020 and 5% for the three months ended June 30, 2019.

Liquidity

As of June 30, 2020, Mammoth had cash on hand of $18.0 million and outstanding borrowings under its revolving credit facility of $89.3 million. As of June 30, 2020, the Company had $18.5 million of available borrowing capacity under its revolving credit facility. This available borrowing capacity reflects (i) a minimum excess availability covenant of 10% of the maximum revolving advance amount and (ii) $9.0 million of outstanding letters of credit. As of June 30, 2020, Mammoth had total liquidity of $36.5 million.

As of July 29, 2020, Mammoth had cash on hand of $16.3 million and outstanding borrowings under its revolving credit facility of $88.2 million. As of July 29, 2020, the Company had $19.5 million of available borrowing capacity under its revolving credit facility. This available borrowing capacity reflects (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   Six Months Ended
  June 30,   March 31,   June 30,
  2020   2019   2020   2020   2019
Infrastructure services(a) $ 43     $ 2,177     $ 77     $ 120     $ 5,431  
Pressure pumping services(b) 2,450     4,013     604     3,054     11,342  
Natural sand proppant services(c) 354     990     521     875     1,975  
Drilling services(d) 72     660     8     80     2,927  
Other(e) 5     2,107     290     295     8,545  
Total capital expenditures $ 2,924     $ 9,947     $ 1,500     $ 4,424     $ 30,220  
                                       

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 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 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.

Conference Call Information

Mammoth will host a conference call on Thursday, July 30, 2020 at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss its second quarter 2020 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 6816807. 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 severity and duration of the COVID-19 pandemic, related global and national health concerns and economic repercussions and the resulting negative impact on demand for our services; the current significant surplus in the supply of oil and the ability of the OPEC+ countries to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently resulting from the impact of the foregoing factors, which is negatively impacting our business; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; 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; 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 June 30,   December 31,
  2020   2019
CURRENT ASSETS (in thousands)
Cash and cash equivalents $ 18,025     $ 5,872  
Accounts receivable, net 353,912     363,053  
Receivables from related parties 27,316     7,523  
Inventories 12,473     17,483  
Prepaid expenses 6,236     12,354  
Other current assets 740     695  
Total current assets 418,702     406,980  
       
Property, plant and equipment, net 293,150     352,772  
Sand reserves 68,257     68,351  
Operating lease right-of-use assets 33,210     43,446  
Intangible assets, net - customer relationships 496     583  
Intangible assets, net - trade names 4,786     5,205  
Goodwill 12,608     67,581  
Other non-current assets 7,261     7,467  
Total assets $ 838,470     $ 952,385  
LIABILITIES AND EQUITY      
CURRENT LIABILITIES      
Accounts payable $ 31,866     $ 39,220  
Payables to related parties 14     526  
Accrued expenses and other current liabilities 36,741     40,754  
Current operating lease liability 13,387     16,432  
Income taxes payable 29,729     33,465  
Total current liabilities 111,737     130,397  
       
Long-term debt 89,250     80,000  
Deferred income tax liabilities 37,593     36,873  
Long-term operating lease liability 19,802     27,102  
Asset retirement obligation 4,640     4,241  
Other liabilities 5,383     5,031  
Total liabilities 268,405     283,644  
       
COMMITMENTS AND CONTINGENCIES      
       
EQUITY      
Equity:      
Common stock, $0.01 par value, 200,000,000 shares authorized, 45,762,200 and 45,108,545 issued and outstanding at June 30, 2020 and December 31, 2019 458     451  
Additional paid in capital 536,333     535,094  
Retained earnings 37,326     136,502  
Accumulated other comprehensive loss (4,052 )   (3,306 )
Total equity 570,065     668,741  
Total liabilities and equity $ 838,470     $ 952,385  
               

MAMMOTH ENERGY SERVICES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
  2020   2019   2020   2020   2019
  (in thousands, except per share amounts)
REVENUE  
Services revenue $ 44,878     $ 115,760     $ 68,845     $ 113,723     $ 308,861  
Services revenue - related parties 8,650     36,837     18,013     26,663     80,910  
Product revenue 4,706     18,362     8,650     13,356     30,671  
Product revenue - related parties 1,875     10,861     1,875     3,750     23,516  
Total revenue 60,109     181,820     97,383     157,492     443,958  
                   
COST AND EXPENSES                  
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $21,750, $25,597, $23,554, $45,305 and $51,280, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019) 42,255     132,688     70,697     112,952     290,794  
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 June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019) 97     2,650     101     198     3,363  
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,346, $4,525, $2,309, $4,654 and $7,395, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019) 6,401     32,677     11,108     17,509     62,928  
Selling, general and administrative 13,528     8,796     10,556     24,084     25,698  
Selling, general and administrative - related parties 198     659     215     413     1,093  
Depreciation, depletion, amortization and accretion 24,116     30,145     25,882     49,998     58,721  
Impairment of goodwill         54,973     54,973      
Impairment of other long-lived assets         12,897     12,897      
Total cost and expenses 86,595     207,615     186,429     273,024     442,597  
Operating (loss) income (26,486 )   (25,795 )   (89,046 )   (115,532 )   1,361  
                   
OTHER INCOME (EXPENSE)                  
Interest expense, net (1,471 )   (1,551 )   (1,638 )   (3,109 )   (2,074 )
Other, net 8,137     4,019     7,409     15,546     28,576  
Other, net - related parties 1,133             1,133      
Total other income 7,799     2,468     5,771     13,570     26,502  
(Loss) income before income taxes (18,687 )   (23,327 )   (83,275 )   (101,962 )   27,863  
(Benefit) provision for income taxes (3,482 )   (12,438 )   696     (2,786 )   10,419  
Net (loss) income $ (15,205 )   $ (10,889 )   $ (83,971 )   $ (99,176 )   $ 17,444  
                   
OTHER COMPREHENSIVE (LOSS) INCOME                  
Foreign currency translation adjustment, net of tax of ($150), $92, $361, $211 and $182, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019 668     350     (1,414 )   (746 )   706  
Comprehensive (loss) income $ (14,537 )   $ (10,539 )   $ (85,385 )   $ (99,922 )   $ 18,150  
                   
Net (loss) income per share (basic) $ (0.33 )   $ (0.24 )   $ (1.85 )   $ (2.18 )   $ 0.39  
Net (loss) income per share (diluted) $ (0.33 )   $ (0.24 )   $ (1.85 )   $ (2.18 )   $ 0.39  
Weighted average number of shares outstanding (basic) 45,727     45,003     45,314     45,521     44,966  
Weighted average number of shares outstanding (diluted) 45,727     45,003     45,314     45,521     45,060  
Dividends declared per share $     $ 0.125     $     $     $ 0.25  
                                       

MAMMOTH ENERGY SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

  Six Months Ended
  June 30,
  2020   2019
  (in thousands)
Cash flows from operating activities:      
Net (loss) income $ (99,176 )   $ 17,444  
Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities:      
Stock based compensation 1,246     2,233  
Depreciation, depletion, accretion and amortization 49,998     58,721  
Amortization of coil tubing strings 359     1,003  
Amortization of debt origination costs 577     163  
Bad debt expense 1,679     266  
(Gain) loss on disposal of property and equipment (1,451 )   176  
Impairment of goodwill 54,973      
Impairment of other long-lived assets 12,897      
Deferred income taxes 931     (22,911 )
Other 623     (199 )
Changes in assets and liabilities:      
Accounts receivable, net 7,782     (48,530 )
Receivables from related parties (19,793 )   (26,236 )
Inventories 4,651     (1,815 )
Prepaid expenses and other assets 6,079     1,115  
Accounts payable (7,514 )   7,366  
Payables to related parties (512 )   650  
Accrued expenses and other liabilities (2,818 )   (17,129 )
Income taxes payable (3,697 )   (74,172 )
Net cash provided by (used in) operating activities 6,834     (101,855 )
       
Cash flows from investing activities:      
Purchases of property and equipment (4,348 )   (30,085 )
Purchases of property and equipment from related parties (76 )   (135 )
Contributions to equity investee     (680 )
Proceeds from disposal of property and equipment 2,544     2,465  
Net cash used in investing activities (1,880 )   (28,435 )
       
Cash flows from financing activities:      
Borrowings from lines of credit 22,800     108,000  
Repayments of lines of credit (13,550 )   (25,964 )
Dividends paid     (11,219 )
Principal payments on financing leases and equipment financing notes (914 )   (992 )
Debt issuance costs (1,000 )    
Net cash provided by financing activities 7,336     69,825  
Effect of foreign exchange rate on cash (137 )   85  
Net change in cash and cash equivalents 12,153     (60,380 )
Cash and cash equivalents at beginning of period 5,872     67,625  
Cash and cash equivalents at end of period $ 18,025     $ 7,245  
       
Supplemental disclosure of cash flow information:      
Cash paid for interest $ 2,683     $ 1,830  
Cash (received) paid for income taxes $ (6 )   $ 116,442  
Supplemental disclosure of non-cash transactions:      
Purchases of property and equipment included in accounts payable $ 2,780     $ 2,339  
               

MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS
(in thousands)

Three months ended June 30, 2020 Infrastructure Pressure Pumping Sand Drilling All Other Eliminations Total
Revenue from external customers $ 30,579   $ 16,125   $ 6,237   $ 1,250   $ 5,918   $   $ 60,109  
Intersegment revenues   446     25   580   (1,051 )  
Total revenue 30,579   16,571   6,237   1,275   6,498   (1,051 ) 60,109  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 25,368   8,744   6,025   2,027   6,589     48,753  
Intersegment cost of revenues 27   333   28   21   642   (1,051 )  
Total cost of revenue 25,395   9,077   6,053   2,048   7,231   (1,051 ) 48,753  
Selling, general and administrative 8,037   1,477   1,357   1,331   1,524     13,726  
Depreciation, depletion, amortization and accretion 7,816   7,685   2,348   2,700   3,567     24,116  
Operating loss (10,669 ) (1,668 ) (3,521 ) (4,804 ) (5,824 )   (26,486 )
Interest expense, net 720   346   53   143   209     1,471  
Other (income) expense, net (7,809 ) (1,179 ) (2 ) (298 ) 18     (9,270 )
Loss before income taxes $ (3,580 ) $ (835 ) $ (3,572 ) $ (4,649 ) $ (6,051 ) $   $ (18,687 )


Three months ended June 30, 2019 Infrastructure Pressure Pumping Sand Drilling All Other Eliminations Total
Revenue from external customers $ 41,821   $ 82,973   $ 29,223   $ 7,450   $ 20,353   $   $ 181,820  
Intersegment revenues   1,668   11,170   207   687   (13,732 )  
Total revenue 41,821   84,641   40,393   7,657   21,040   (13,732 ) 181,820  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 44,864   59,835   32,676   9,175   21,465     168,015  
Intersegment cost of revenues   11,797   1,141   229   643   (13,810 )  
Total cost of revenue 44,864   71,632   33,817   9,404   22,108   (13,810 ) 168,015  
Selling, general and administrative 3,035   2,664   1,380   844   1,532     9,455  
Depreciation, depletion, amortization and accretion 7,818   10,174   4,528   3,193   4,432     30,145  
Operating (loss) income (13,896 ) 171   668   (5,784 ) (7,032 ) 78   (25,795 )
Interest expense, net 386   452   72   332   309     1,551  
Other (income) expense, net (4,045 ) 9   (32 )   49     (4,019 )
(Loss) income before income taxes $ (10,237 ) $ (290 ) $ 628   $ (6,116 ) $ (7,390 ) $ 78   $ (23,327 )


Three months ended March 31, 2020 Infrastructure Pressure Pumping Sand Drilling All Other Eliminations Total
Revenue from external customers $ 25,705   $ 42,686   $ 10,154   $ 4,723   $ 14,115   $   $ 97,383  
Intersegment revenues   936   95   55   775   (1,861 )  
Total revenue 25,705   43,622   10,249   4,778   14,890   (1,861 ) 97,383  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 26,946   26,208   10,657   5,635   12,460     81,906  
Intersegment cost of revenues 8   627   302   130   794   (1,861 )  
Total cost of revenue 26,954   26,835   10,959   5,765   13,254   (1,861 ) 81,906  
Selling, general and administrative 4,297   2,222   1,251   1,063   1,938     10,771  
Depreciation, depletion, amortization and accretion 7,934   8,492   2,312   2,877   4,267     25,882  
Impairment of goodwill   53,406       1,567     54,973  
Impairment of other long-lived assets   4,203     326   8,368     12,897  
Operating loss (13,480 ) (51,536 ) (4,273 ) (5,253 ) (14,504 )   (89,046 )
Interest expense, net 757   293   61   268   259     1,638  
Other (income) expense, net (7,276 ) (109 ) (37 ) 27   (14 )   (7,409 )
Loss before income taxes $ (6,961 ) $ (51,720 ) $ (4,297 ) $ (5,548 ) $ (14,749 ) $   $ (83,275 )


Six months ended June 30, 2020 Infrastructure Pressure Pumping Sand Drilling All Other Eliminations Total
Revenue from external customers $ 56,285   $ 58,810   $ 16,391   $ 5,973   $ 20,033   $   $ 157,492  
Intersegment revenues   1,382   95   81   1,354   (2,912 )  
Total revenue 56,285   60,192   16,486   6,054   21,387   (2,912 ) 157,492  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 52,314   34,952   16,682   7,662   19,049     130,659  
Intersegment cost of revenues 35   961   329   152   1,435   (2,912 )  
Total cost of revenue 52,349   35,913   17,011   7,814   20,484   (2,912 ) 130,659  
Selling, general and administrative 12,334   3,699   2,608   2,395   3,461     24,497  
Depreciation, depletion, amortization and accretion 15,750   16,177   4,661   5,577   7,833     49,998  
Impairment of goodwill   53,406       1,567     54,973  
Impairment of other long-lived assets   4,203     326   8,368     12,897  
Operating loss (24,148 ) (53,206 ) (7,794 ) (10,058 ) (20,326 )   (115,532 )
Interest expense, net 1,477   639   113   412   468     3,109  
Other (income) expense, net (15,086 ) (1,288 ) (39 ) (271 ) 5     (16,679 )
Loss before income taxes $ (10,539 ) $ (52,557 ) $ (7,868 ) $ (10,199 ) $ (20,799 ) $   $ (101,962 )


Six months ended June 30, 2019 Infrastructure Pressure Pumping Sand Drilling All Other Eliminations Total
Revenue from external customers $ 150,542   $ 173,568   $ 54,187   $ 21,026   $ 44,635   $   $ 443,958  
Intersegment revenues   3,212   24,067   426   1,453   (29,158 )  
Total revenue 150,542   176,780   78,254   21,452   46,088   (29,158 ) 443,958  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 103,828   124,047   62,928   21,826   44,456     357,085  
Intersegment cost of revenues   25,334   2,188   501   1,195   (29,218 )  
Total cost of revenue 103,828   149,381   65,116   22,327   45,651   (29,218 ) 357,085  
Selling, general and administrative 12,553   5,876   2,899   2,208   3,255     26,791  
Depreciation, depletion, amortization and accretion 15,537   20,068   7,401   6,770   8,945     58,721  
Operating income (loss) 18,624   1,455   2,838   (9,853 ) (11,763 ) 60   1,361  
Interest expense, net 425   649   102   460   438     2,074  
Other (income) expense, net (28,869 ) 8   (32 ) (22 ) 339     (28,576 )
Income (loss) before income taxes $ 47,068   $ 798   $ 2,768   $ (10,291 ) $ (12,540 ) $ 60   $ 27,863  
                                           

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, impairment of other long-lived assets, acquisition related costs, 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 (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   Six Months Ended
  June 30,   March 31,   June 30,
Reconciliation of Adjusted EBITDA to net (loss) income: 2020   2019   2020   2020   2019
Net (loss) income $ (15,205 )   $ (10,889 )   $ (83,971 )   $ (99,176 )   $ 17,444  
Depreciation, depletion, amortization and accretion expense 24,116     30,145     25,882     49,998     58,721  
Impairment of goodwill         54,973     54,973      
Impairment of other long-lived assets         12,897     12,897      
Acquisition related costs     45             45  
Stock based compensation 196     944     1,049     1,246     2,233  
Interest expense, net 1,471     1,551     1,638     3,109     2,074  
Other income, net (9,270 )   (4,019 )   (7,409 )   (16,679 )   (28,576 )
(Benefit) provision for income taxes (3,482 )   (12,438 )   696     (2,786 )   10,419  
Interest on trade accounts receivable 9,071     3,234     7,696     16,767     28,969  
Adjusted EBITDA $ 6,897     $ 8,573     $ 13,451     $ 20,349     $ 91,329  
                                       

Infrastructure Services

  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
Reconciliation of Adjusted EBITDA to net (loss) income: 2020   2019   2020   2020   2019
Net (loss) income $ (4,529 )   $ 6,210     $ (9,452 )   $ (13,980 )   $ 41,875  
Depreciation and amortization expense 7,816     7,818     7,934     15,750     15,537  
Acquisition related costs     12             12  
Stock based compensation 45     9     251     297     471  
Interest expense 720     386     757     1,477     425  
Other income, net (7,809 )   (4,045 )   (7,276 )   (15,086 )   (28,869 )
Provision for income taxes 949     (16,447 )   2,491     3,440     5,193  
Interest on trade accounts receivable 7,929     3,234     7,696     15,625     28,969  
Adjusted EBITDA $ 5,121     $ (2,823 )   $ 2,401     $ 7,523     $ 63,613  
                                       

Pressure Pumping Services

  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
Reconciliation of Adjusted EBITDA to net (loss) income: 2020   2019   2020   2020   2019
Net (loss) income $ (835 )   $ (290 )   $ (51,720 )   $ (52,556 )   $ 798  
Depreciation and amortization expense 7,685     10,174     8,492     16,177     20,068  
Impairment of goodwill         53,406     53,406      
Impairment of other long-lived assets         4,203     4,203      
Acquisition related costs     18             18  
Stock based compensation 53     489     335     388     899  
Interest expense 346     452     293     639     649  
Other (income) expense, net (1,179 )   9     (109 )   (1,288 )   8  
Interest on trade accounts receivable 1,133             1,133      
Adjusted EBITDA $ 7,203     $ 10,852     $ 14,900     $ 22,102     $ 22,440  
                                       

Natural Sand Proppant Services

  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
Reconciliation of Adjusted EBITDA to net (loss) income: 2020   2019   2020   2020   2019
Net (loss) income $ (3,572 )   $ 628     $ (4,297 )   $ (7,868 )   $ 2,768  
Depreciation, depletion, amortization and accretion expense 2,348     4,528     2,312     4,661     7,401  
Acquisition related costs     8             8  
Stock based compensation 45     236     225     271     439  
Interest expense 53     72     61     113     102  
Other income, net (2 )   (32 )   (37 )   (39 )   (32 )
Adjusted EBITDA $ (1,128 )   $ 5,440     $ (1,736 )   $ (2,862 )   $ 10,686  
                                       

Drilling Services

  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
Reconciliation of Adjusted EBITDA to net (loss) income: 2020   2019   2020   2020   2019
Net loss $ (4,649 )   $ (6,116 )   $ (5,548 )   $ (10,199 )   $ (10,291 )
Depreciation expense 2,700     3,193     2,877     5,577     6,770  
Impairment of other long-lived assets         326     326      
Acquisition related costs     2             2  
Stock based compensation 34     88     94     128     189  
Interest expense 143     332     268     412     460  
Other (income) expense, net (298 )       27     (271 )   (22 )
Adjusted EBITDA $ (2,070 )   $ (2,501 )   $ (1,956 )   $ (4,027 )   $ (2,892 )
                                       

Other Services(a)

  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
Reconciliation of Adjusted EBITDA to net loss: 2020   2019   2020   2020   2019
Net loss $ (1,620 )   $ (11,399 )   $ (12,954 )   $ (14,573 )   $ (17,766 )
Depreciation, amortization and accretion expense 3,567     4,432     4,267     7,833     8,945  
Impairment of goodwill         1,567     1,567      
Impairment of other long-lived assets         8,368     8,368      
Acquisition related costs     5             5  
Stock based compensation 19     122     144     162     235  
Interest expense, net 209     309     259     468     438  
Other expense (income), net 18     49     (14 )   5     339  
(Benefit) provision for income taxes (4,431 )   4,009     (1,795 )   (6,226 )   5,226  
Interest on trade accounts receivable 9             9      
Adjusted EBITDA $ (2,229 )   $ (2,473 )   $ (158 )   $ (2,387 )   $ (2,578 )
                                       

a.     Includes results for Mammoth's coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation and remote accommodations, oilfield equipment manufacturing and infrastructure engineering and design 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 of goodwill and impairment of other long-lived assets, 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   Six Months Ended
  June 30,   March 31,   June 30,
  2020   2019   2020   2020   2019
  (in thousands, except per share amounts)
Net (loss) income, as reported $ (15,205 )   $ (10,889 )   $ (83,971 )   $ (99,176 )   $ 17,444  
Impairment of goodwill         54,973     54,973      
Impairment of other long-lived assets         12,897     12,897      
Adjusted net (loss) income $ (15,205 )   $ (10,889 )   $ (16,101 )   $ (31,306 )   $ 17,444  
                   
Basic (loss) earnings per share, as reported $ (0.33 )   $ (0.24 )   $ (1.85 )   $ (2.18 )   $ 0.39  
Impairment of goodwill         1.21     1.21      
Impairment of other long-lived assets         0.28     0.28      
Adjusted basic (loss) earnings per share $ (0.33 )   $ (0.24 )   $ (0.36 )   $ (0.69 )   $ 0.39  
                   
Diluted (loss) earnings per share, as reported $ (0.33 )   $ (0.24 )   $ (1.85 )   $ (2.18 )   $ 0.39  
Impairment of goodwill         1.21     1.21      
Impairment of other long-lived assets         0.28     0.28      
Adjusted diluted (loss) earnings per share $ (0.33 )   $ (0.24 )   $ (0.36 )   $ (0.69 )   $ 0.39  
                                       

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Source: Mammoth Energy Services, Inc.