Document




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 2, 2018
 
Mammoth Energy Services, Inc.

(Exact name of registrant as specified in its charter)

001-37917
(Commission File No.)
 
 
 
Delaware
 
32-0498321
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
14201 Caliber Drive, Suite 300
Oklahoma City, Oklahoma
 
73134
(Address of principal executive offices)
 
(Zip Code)
(405) 608-6007
(Registrant’s telephone number, including area code)
______________________________

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§232.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company ý

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(s) of the Exchange Act.  ý

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act(17 CFR 240.13e-4(c))



















Item 2.02 Results of Operations and Financial Condition

On May 2, 2018, Mammoth Energy Services, Inc. (the “Company”) issued a press release announcing its financial and operational results for the quarter ended March 31, 2018. A copy of that press release is furnished as Exhibit 99.1 to this report.

The information in this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified as being incorporated by reference in the registration statement.

Item 7.01 Regulation FD Disclosure
On May 2, 2018, the Company posted an investor presentation to the “investors” section of its website (www.mammothenergy.com), where the Company routinely posts announcements, updates, events, investor information and presentations and recent news releases. Information on the Company's website does not constitute part of this Current Report on Form 8-K.

The information in this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified as being incorporated by reference in the registration statement.

Item 9.01 Financial Statements and Exhibits.

(d)    Exhibits.

99.1     Press release dated May 2, 2018, entitled "Mammoth Energy Services, Inc. Announces First Quarter 2018 Operational and Financial Results."






Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
 
 
 
MAMMOTH ENERGY SERVICES, INC.
Date:
May 2, 2018
 
By:
 
/s/ Mark Layton
 
 
 
 
 
Mark Layton
 
 
 
 
 
Chief Financial Officer
 
 
 
 
 
 
 
 
 
 
 
 



Exhibit

EXHIBIT 99.1

https://cdn.kscope.io/990c9c657e0f470b957077dd3876d9d1-mammotha06.jpg

FOR IMMEDIATE RELEASE
May 2, 2018

Mammoth Energy Services, Inc. Announces
First Quarter 2018 Operational and Financial Results


OKLAHOMA CITY, OKLAHOMA, May 2, 2018 - Mammoth Energy Services, Inc. ("Mammoth" or the "Company") (NASDAQ: TUSK) today reported financial and operational results for the three months ended March 31, 2018.

Key Highlights for the First Quarter 2018:


Total revenue was $494.2 million for the three months ended March 31, 2018, up 34% sequentially from $369.0 million for the three months ended December 31, 2017 and up 559% from $75.0 million for the three months ended March 31, 2017.
Net income for the three months ended March 31, 2018 was $55.5 million, a $10.4 million decrease from $65.9 million for the three months ended December 31, 2017 and an improvement of $60.5 million from a net loss of $5.0 million for the three months ended March 31, 2017. The three months ended December 31, 2017 included a provisional benefit of $31.0 million due to changes in tax policy as a result of the Tax Cut and Jobs Act ("Tax Act").
Adjusted EBITDA (as defined and reconciled below) was $130.8 million for the three months ended March 31, 2018, up 18% sequentially from $110.5 million for the three months ended December 31, 2017 and up 1,037% from $11.5 million for the three months ended March 31, 2017.
Reduced debt to $39.0 million as of March 31, 2018, which is down $60.9 million from December 31, 2017.
Executed two amendments to Mammoth subsidiary Cobra Acquisitions LLC's contract with the Puerto Rico Electric Power Authority ("PREPA") to aid in the restoration of the electric utility infrastructure in Puerto Rico, increasing the total contract value to approximately $945 million, up from $200 million originally.
Completed the expansion of Mammoth subsidiary Taylor Frac LLC's sand facility, increasing company-wide functional sand production capacity to approximately 4.0 million tons per year, up from 3.0 million tons per year at December 31, 2017.

Arty Straehla, Mammoth's Chief Executive Officer, stated, "The first quarter was challenging due to several factors including harsh working environments, severe winter weather and logistics issues, but our teams were able to overcome these obstacles and continue to execute at a high level. The first quarter of 2018 was our third sequential record quarter on an EBITDA basis, which was underpinned by the hard work performed by our teams in Puerto Rico. Debt was reduced by $61 million during the quarter, despite spending approximately $36 million on growth capital, highlighting our significant cash flow. The outlook for all of our operating divisions is strong and we intend to continue to grow both organically and through accretive acquisitions."

Pressure Pumping Services

Mammoth's pressure pumping division contributed revenues (inclusive of inter-segment revenues) of $101.1 million on 1,672 stages for the three months ended March 31, 2018, a 10% decrease from $111.9 million on 1,375 stages for the three months ended December 31, 2017 and a 149% increase from $40.6 million on 860 stages for the three months ended March 31, 2017.




The sequential decline in the first quarter of 2018 was a result of a combination of significant winter weather and sand logistics contraints.

Infrastructure Services

Mammoth's infrastructure services segment contributed revenues of $325.5 million for the three months ended March 31, 2018, a 56% increase from $209.2 million for the three months ended December 31, 2017. The infrastructure services segment did not generate revenues during the three months ended March 31, 2017.

During the first quarter of 2018, Cobra and PREPA amended the initial PREPA contract to increase the total contract amount by an additional $745.4 million.

Natural Sand Proppant Services

Mammoth's natural sand proppant division contributed revenues (inclusive of inter-segment revenues) of $51.0 million for the three months ended March 31, 2018, up 16% from $43.9 million for the three months ended December 31, 2017 and up 227% from $15.6 million for the three months ended March 31, 2017. The Company sold 735,584 tons of sand for the three months ended March 31, 2018, a 23% increase from 600,182 for the three months ended December 31, 2017 and a 187% increase from 255,865 for the three months ended March 31, 2017.

The Company completed the expansion of its Taylor Frac facility during the first quarter of 2018, increasing Mammoth's total processing capacity to approximately 4.0 million tons per year. The Company is currently upgrading certain equipment at its Piranha facility, which is expected to further increase Mammoth's total sand processing capacity to 4.4 million tons per year by mid 2018.

Contract Land and Directional Drilling Services

Mammoth's contract land and directional drilling services division contributed revenues (inclusive of inter-segment revenues) of $15.2 million for the three months ended March 31, 2018, an 11% increase from $13.7 million for the three months ended December 31, 2017 and a 41% increase from $10.8 million for the three months ended March 31, 2017. The average drilling day rate was $16,541, $15,964 and $14,400, respectively, for the three months ended March 31, 2018, December 31, 2017 and March 31, 2017.

Mammoth anticipates that it will operate, on average, five to six rigs throughout 2018.

Other Services

Mammoth's other services, including coil tubing, pressure control, flowback, cementing, equipment rentals and remote accommodations, contributed revenues (inclusive of inter-segment revenues) of $22.9 million for the three months ended March 31, 2018, a 51% increase from $15.2 million for the three months ended December 31, 2017 and a 157% increase from $8.9 million for the three months ended March 31, 2017. The increase in revenues was primarily due to increase in utilization.


Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses increased to $38.5 million for the three months ended March 31, 2018 from $27.4 million for the three months ended December 31, 2017 and $6.7 million for the three months ended March 31, 2017. The increase is primarily attributable to increased bad debt expense and increased compensation and benefits.
SG&A expenses, as a percentage of total revenue, were 8% for the three months ended March 31, 2018 compared to 7% for the three months ended December 31, 2017 and 9% for the three months ended March 31, 2017.

Liquidity

As of March 31, 2018, Mammoth had cash on hand totaling $10.4 million and borrowings outstanding under its revolving credit facility of $39.0 million. As of March 31, 2018, the Company had approximately $123.7 million of available borrowing capacity under its revolving credit facility, after giving effect to $6.5 million of outstanding letters of credit.


2



Capital Expenditures

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

 
Three Months Ended
 
March 31,
 
December 31,
 
2018
 
2017
 
2017
Pressure pumping services(a)
$
7,866

 
$
28,665

 
$
12,870

Infrastructure services(b)
15,778

 

 
8,131

Natural sand proppant services(c)
5,700

 
175

 
8,478

Contract and directional drilling services(d)
3,618

 
2,269

 
669

Other services (e)
2,812

 
1

 
1,431

Net change in cash
$
35,774

 
$
31,110

 
$
31,579

a.
Capital expenditures primarily for pressure pumping equipment for the three months ended March 31, 2018, March 31, 2017 and December 31, 2017.
b.     Capital expenditures primarily for trucks and other equipment for the three months ended March 31, 2018 and December 31, 2017.
c.    Capital expenditures primarily for plant upgrades for the three months ended March 31, 2018 and December 31, 2017.
d.
Capital expenditures primarily for upgrades to our rig fleet for the three months ended March 31, 2018, March 31, 2017 and December 31, 2017.
e.    Capital expenditures primarily for equipment for our rental business for the three months ended March 31, 2018 and December 31, 2017.


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 Report filed on Form 10-K with the Securities and Exchange Commission ("SEC") on February 28, 2018, 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.

On June 5, 2017, the Company completed the acquisition of (1) Sturgeon Acquisitions, LLC and its wholly owned subsidiaries Taylor Frac LLC, Taylor RE, LLC and South River, LLC (collectively, "Sturgeon"); (2) Stingray Energy Services and (3) Stingray Cementing (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 Unites States of America ("GAAP") 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, May 3, 2018 at 10:00 a.m. CST (11:00 am EST) to discuss its first quarter 2018 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 4096257. 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 (i) companies engaged in the exploration and development of North American onshore unconventional oil and natural gas reserves and (ii) government-funded utilities,

3



private utilities, public investor-owned utilities and co‑operative utilities through its energy infrastructure services division. Mammoth’s suite of services and products include: pressure pumping services, infrastructure services, natural sand and proppant services, contract land and directional drilling services and other 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 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 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.

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.




4

MAMMOTH ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)


ASSETS
 
March 31,
 
December 31,
 
 
2018
 
2017
CURRENT ASSETS
 
(in thousands)
Cash and cash equivalents
 
$
10,447

 
$
5,637

Accounts receivable, net
 
243,913

 
243,746

Receivables from related parties
 
46,338

 
33,788

Inventories
 
12,189

 
17,814

Prepaid expenses
 
12,030

 
12,552

Other current assets
 
1,112

 
886

Total current assets
 
326,029

 
314,423

 
 
 
 
 
Property, plant and equipment, net
 
365,757

 
351,017

Sand reserves
 
74,682

 
74,769

Intangible assets, net - customer relationships
 
7,436

 
9,623

Intangible assets, net - trade names
 
6,296

 
6,516

Goodwill
 
99,811

 
99,811

Deferred income tax asset
 
16,829

 
6,739

Other non-current assets
 
4,245

 
4,345

Total assets
 
$
901,085

 
$
867,243

LIABILITIES AND EQUITY
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
Accounts payable
 
$
151,509

 
$
141,306

Payables to related parties
 
2,228

 
1,378

Accrued expenses and other current liabilities
 
42,919

 
40,895

Income taxes payable
 
62,272

 
36,409

Total current liabilities
 
258,928

 
219,988

 
 
 
 
 
Long-term debt
 
39,000

 
99,900

Deferred income tax liabilities
 
31,897

 
34,147

Asset retirement obligation
 
3,124

 
2,123

Other liabilities
 
3,999

 
3,289

Total liabilities
 
336,948

 
359,447

 
 
 
 
 
COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
 
 
 
EQUITY
 
 
 
 
Equity:
 
 
 
 
Common stock, $0.01 par value, 200,000,000 shares authorized, 44,714,296 and 44,589,306 issued and outstanding at March 31, 2018 and December 31, 2017, respectively
 
447

 
446

Additional paid in capital
 
509,265

 
508,010

Retained earnings
 
57,547

 
2,001

Accumulated other comprehensive loss
 
(3,122
)
 
(2,661
)
Total equity
 
564,137

 
507,796

Total liabilities and equity
 
$
901,085

 
$
867,243




5

MAMMOTH ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)



 
Three Months Ended
 
March 31,
 
December 31,
 
2018
 
2017
 
2017
 
(in thousands, except per share amounts)
REVENUE
 
 
 
 
 
Services revenue
$
408,659

 
$
27,092

 
$
315,545

Services revenue - related parties
49,088

 
32,962

 
31,639

Product revenue
25,040

 
3,372

 
18,024

Product revenue - related parties
11,462

 
11,540

 
3,755

Total revenue
494,249

 
74,966

 
368,963

 
 
 
 
 
 
COST AND EXPENSES
 
 
 
 
 
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $24,575, $15,838 and $25,044, respectively, for the three months ended March 31, 2018, March 31, 2017 and December 31, 2017)
290,979

 
45,461

 
198,201

Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0 and $0, respectively, for the three months ended March 31, 2018, March 31, 2017 and December 31, 2017)
1,792

 
430

 
707

Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,314, $1,362 and $2,790, respectively, for the three months ended March 31, 2018, March 31, 2017 and December 31, 2017)
33,330

 
12,607

 
33,290

Selling, general and administrative
38,082

 
6,413

 
26,931

Selling, general and administrative - related parties
429

 
324

 
495

Depreciation, depletion, amortization and accretion
26,908

 
17,237

 
27,770

Impairment of long-lived assets

 

 
4,146

Total cost and expenses
391,520

 
82,472

 
291,540

Operating income (loss)
102,729

 
(7,506
)
 
77,423

 
 
 
 
 
 
OTHER (EXPENSE) INCOME
 
 
 
 
 
Interest expense, net
(1,237
)
 
(397
)
 
(1,381
)
Other, net
(28
)
 
(184
)
 
28

Total other expense
(1,265
)
 
(581
)
 
(1,353
)
Income (loss) before income taxes
101,464

 
(8,087
)
 
76,070

Provision (benefit) for income taxes
45,918

 
(3,106
)
 
10,155

Net income (loss)
$
55,546

 
$
(4,981
)
 
$
65,915

 
 
 
 
 
 
OTHER COMPREHENSIVE INCOME (LOSS)
 
 
 
 
 
Foreign currency translation adjustment, net of tax of $186, $20 and ($167), respectively, for the three months ended March 31, 2018, March 31, 2017 and December 31, 2017
(461
)
 
228

 
(482
)
Comprehensive income (loss)
$
55,085

 
$
(4,753
)
 
$
65,433

 
 
 
 
 
 
Net income (loss) per share (basic)
$
1.24

 
$
(0.13
)
 
$
1.48

Net income (loss) per share (diluted)
$
1.24

 
$
(0.13
)
 
$
1.48

Weighted average number of shares outstanding (basic)
44,650

 
37,500

 
44,579

Weighted average number of shares outstanding (diluted)
44,884

 
37,500

 
44,683



6

MAMMOTH ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


 
Three Months Ended
 
March 31,
 
2018
 
2017
 
(in thousands)
Cash flows from operating activities:
 
 
 
Net income (loss)
$
55,546

 
$
(4,981
)
Adjustments to reconcile net loss to cash provided by operating activities:
 
 
 
Equity based compensation
1,256

 
570

Depreciation, depletion, accretion and amortization
26,908

 
17,237

Amortization of coil tubing strings
565

 
492

Amortization of debt origination costs
100

 
151

Bad debt expense
25,527

 
(41
)
Gain on disposal of property and equipment
(184
)
 
(79
)
Deferred income taxes
(12,117
)
 
(3,801
)
Changes in assets and liabilities, net of acquisitions of businesses:
 
 
 
Accounts receivable, net
(25,722
)
 
(4,357
)
Receivables from related parties
(12,550
)
 
(4,842
)
Inventories
5,060

 
(466
)
Prepaid expenses and other assets
294

 
77

Accounts payable
8,302

 
13,302

Payables to related parties
851

 
451

Accrued expenses and other liabilities
1,636

 
733

Income taxes payable
25,851

 
(28
)
Net cash provided by operating activities
101,323

 
14,418

 
 
 
 
Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(35,176
)
 
(31,110
)
Purchases of property and equipment from related parties
(598
)
 

Proceeds from disposal of property and equipment
286

 
369

Net cash used in investing activities
(35,488
)
 
(30,741
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Borrowings from lines of credit
31,000

 

Repayments of lines of credit
(91,900
)
 

Repayments of equipment financing note
(72
)
 

Net cash used in financing activities
(60,972
)
 

Effect of foreign exchange rate on cash
(53
)
 
11

Net change in cash and cash equivalents
4,810

 
(16,312
)
Cash and cash equivalents at beginning of period
5,637

 
29,239

Cash and cash equivalents at end of period
$
10,447

 
$
12,927

 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Cash paid for interest
$
1,442

 
$
254

Cash paid for income taxes
$
32,184

 
$
701

Supplemental disclosure of non-cash transactions:
 
 
 
Purchases of property and equipment included in trade accounts payable
$
16,558

 
$
9,346



7

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

Three months ended March 31, 2018
Pressure Pumping
Infrastructure
Sand
Drilling
All Other
Eliminations
Total
Revenue from external customers
$
96,579

$
325,459

$
36,503

$
15,228

$
20,480

$

$
494,249

Intersegment revenues
4,559


14,512

2

2,415

(21,488
)

Total revenue
101,138

325,459

51,015

15,230

22,895

(21,488
)
494,249

Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
66,612

194,076

33,330

14,475

17,608


326,101

Intersegment cost of revenues
15,402

1,791

4,286

162

105

(21,746
)

Total cost of revenue
82,014

195,867

37,616

14,637

17,713

(21,746
)
326,101

Selling, general and administrative
2,663

31,851

1,644

1,253

1,100


38,511

Depreciation, depletion, amortization and accretion
13,986

2,407

2,316

4,355

3,844


26,908

Operating income (loss)
2,475

95,334

9,439

(5,015
)
238

258

102,729

Interest expense
504

76

80

395

182


1,237

Other expense
12

2

(13
)
40

(13
)

28

Income (loss) before income taxes
$
1,959

$
95,256

$
9,372

$
(5,450
)
$
69

$
258

$
101,464

Total expenditures for property, plant and equipment
$
7,866

$
15,778

$
5,700

$
3,618

$
2,812

$

$
35,774



Three months ended March 31, 2017
Pressure Pumping
Infrastructure
Sand
Drilling
All Other
Eliminations
Total
Revenue from external customers
$
40,453

$

$
14,912

$
10,751

$
8,850

$

$
74,966

Intersegment revenues
187


685



(872
)

Total revenue
40,640


15,597

10,751

8,850

(872
)
74,966

Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
28,707

86

12,608

10,953

6,144


58,498

Intersegment cost of revenues
685


187



(872
)

Total cost of revenue
29,392

86

12,795

10,953

6,144

(872
)
58,498

Selling, general and administrative
1,777

48

2,058

1,293

1,561


6,737

Depreciation, depletion, amortization and accretion
9,158


1,363

4,968

1,748


17,237

Operating income (loss)
313

(134
)
(619
)
(6,463
)
(603
)

(7,506
)
Interest expense
128


133

217

(81
)

397

Other expense
3


14

164

3


184

Income (loss) before income taxes
$
182

$
(134
)
$
(766
)
$
(6,844
)
$
(525
)
$

$
(8,087
)
Total expenditures for property, plant and equipment
$
28,665

$

$
175

$
2,269

$
1

$

$
31,110


8

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

Three Months Ended December 31, 2017
Pressure Pumping
Infrastructure
Sand
Drilling
All Other
Eliminations
Total
Revenue from external customers
$
111,244

$
209,229

$
21,779

$
13,208

$
13,503

$

$
368,963

Intersegment revenues
617


22,167

446

1,708

(24,938
)

Total revenue
111,861

209,229

43,946

13,654

15,211

(24,938
)
368,963

Cost of revenues, exclusive of depreciation, depletion, amortization and accretion
65,594

108,289

33,289

12,117

12,909


232,198

Intersegment cost of revenues
22,928

1,443

373

101

58

(24,903
)

Total cost of revenue
88,522

109,732

33,662

12,218

12,967

(24,903
)
232,198

Selling, general and administrative
2,810

20,365

1,875

1,406

970


27,426

Depreciation, depletion, amortization and accretion
13,590

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 expense
599

168

107

467

40


1,381

Other, net
2

(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



9

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, equity 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. 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
 
March 31,
 
December 31,
Reconciliation of Adjusted EBITDA to net income (loss):
2018
 
2017
 
2017
Net income (loss)
$
55,546

 
$
(4,981
)
 
$
65,915

Depreciation, depletion, accretion and amortization expense
26,908

 
17,237

 
27,770

Impairment of long-lived assets

 

 
4,146

Acquisition related costs
(46
)
 
1,247

 
51

Equity based compensation
1,256

 
570

 
1,093

Interest expense, net
1,237

 
397

 
1,381

Other expense, net
28

 
184

 
(28
)
Provision (benefit) for income taxes
45,918

 
(3,106
)
 
10,155

Adjusted EBITDA
$
130,847

 
$
11,548

 
$
110,483


Pressure Pumping Services
 
Three Months Ended
 
March 31,
 
December 31,
Reconciliation of Adjusted EBITDA to net income (loss):
2018
 
2017
 
2017
Net income
$
1,959

 
$
182

 
$
6,338

Depreciation and amortization expense
13,986

 
9,158

 
13,590

Equity based compensation
418

 
271

 
438

Interest expense
504

 
128

 
599

Other expense, net
12

 
3

 
2

Adjusted EBITDA
$
16,879

 
$
9,742

 
$
20,967



10

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


Infrastructure Services
 
Three Months Ended
 
March 31,
 
December 31,
Reconciliation of Adjusted EBITDA to net income (loss):
2018
 
2017
 
2017
Net income (loss)
$
47,299

 
$
(134
)
 
$
47,873

Depreciation and amortization expense
2,407

 

 
1,805

Acquisition related costs
(8
)
 

 
8

Equity based compensation
457

 

 
316

Interest expense
76

 

 
168

Other expense (income), net
2

 

 
(4
)
Provision for income taxes
47,957

 

 
29,290

Adjusted EBITDA
$
98,190

 
$
(134
)
 
$
79,456


Natural Sand Proppant Services
 
Three Months Ended
 
March 31,
 
December 31,
Reconciliation of Adjusted EBITDA to net income (loss):
2018
 
2017
 
2017
Net income (loss)
$
9,372

 
$
(766
)
 
$
5,263

Depreciation, depletion, accretion and amortization expense
2,316

 
1,363

 
2,791

Impairment of long-lived assets

 

 
324

Acquisition related costs
(38
)
 
1,038

 
42

Equity based compensation
186

 
70

 
184

Interest expense
80

 
133

 
107

Other (income) expense, net
(13
)
 
14

 
(40
)
Benefit for income taxes

 

 
(36
)
Adjusted EBITDA
$
11,903

 
$
1,852

 
$
8,635


Contract Land and Directional Drilling Services
 
Three Months Ended
 
March 31,
 
December 31,
Reconciliation of Adjusted EBITDA to net loss:
2018
 
2017
 
2017
Net loss
$
(5,450
)
 
$
(6,844
)
 
$
(8,910
)
Depreciation expense
4,355

 
4,968

 
4,657

Impairment of long-lived assets

 

 
3,822

Acquisition related costs

 
22

 

Equity based compensation
107

 
112

 
77

Interest expense, net
395

 
217

 
467

Other expense (income), net
40

 
164

 
(6
)
Adjusted EBITDA
$
(553
)
 
$
(1,361
)
 
$
107



11

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


Other Services(a) 
 
Three Months Ended
 
March 31,
 
December 31,
Reconciliation of Adjusted EBITDA to net income:
2018
 
2017
 
2017
Net income
$
2,107

 
$
2,581

 
$
15,386

Depreciation and amortization expense
3,844

 
1,748

 
4,927

Acquisition related costs

 
187

 
2

Equity based compensation
89

 
117

 
77

Interest expense (income), net
182

 
(81
)
 
40

Other (income) expense, net
(13
)
 
3

 
20

Benefit for income taxes
(2,038
)
 
(3,106
)
 
(19,099
)
Adjusted EBITDA
$
4,171

 
$
1,449

 
$
1,353


(a) Includes results for the Company's coil tubing, pressure control, flowback, cementing, equipment rentals and remote accommodations services and corporate related activities.



12