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 11, 2020
 
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)
______________________________

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

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

Securities registered pursuant to Section 12(b) of The Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockTUSK(The Nasdaq Stock Market LLC)

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

Emerging Growth Company ¨

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









Item 2.02 Results of Operations and Financial Condition

On May 11, 2020, Mammoth Energy Services, Inc. (the “Company”) issued a press release announcing its financial and operational results for the first quarter ended March 31, 2020. 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 11, 2020, 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.





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 11, 2020By:/s/ Mark Layton
Mark Layton
Chief Financial Officer


Document

Exhibit 99.1


https://cdn.kscope.io/dd561ef5d45c4a435dc6d43106c2e266-mammotha061.jpg


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


OKLAHOMA CITY, OKLAHOMA, May 11, 2020 - Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ: TUSK) today reported financial and operational results for the first quarter ended March 31, 2020.

Financial Highlights for the First Quarter 2020:

Total revenue was $97.4 million for the three months ended March 31, 2020, up from $67.6 million for the three months ended December 31, 2019 and down from $262.1 million for the three months ended March 31, 2019.

Net loss for the three months ended March 31, 2020 was $84.0 million, or $1.85 per fully diluted share, as compared to net loss of $60.8 million, or $1.35 per fully diluted share, for the three months ended December 31, 2019 and net income of $28.3 million, or $0.63 per fully diluted share, for the three months ended March 31, 2019.

Adjusted net loss (as defined and reconciled below) for the three months ended March 31, 2020 was $16.1 million, or $0.36 per fully diluted share, as compared to adjusted net loss of $26.3 million, or $0.58 per fully diluted share, for the three months ended December 31, 2019 and adjusted net income of $28.3 million, or $0.63 per fully diluted share, for the three months ended March 31, 2019.

Adjusted EBITDA (as defined and reconciled below) was $13.5 million for the three months ended March 31, 2020, as compared to a loss of $10.3 million for the three months ended December 31, 2019 and a positive $82.8 million for the three months ended March 31, 2019.

Arty Straehla, Mammoth's Chief Executive Officer, stated, “The diversification strategy we implemented nearly three years ago is allowing us to focus on our infrastructure business. Infrastructure results are improving and we are encouraged by our new bidding opportunities. Working with our new infrastructure management team, we are cutting costs, streamlining operations and improving our operating margins. Conversely, our oilfield business remains under fundamental pressure from the volatility in oil prices. The unprecedented volatility in oil prices has been exacerbated by the outbreak of the COVID-19 pandemic, which has resulted in global oil demand destruction and economic decline. Our oilfield activity has been, and will likely continue to be, challenged by significantly reduced levels of capital expenditures by our customers. As a result, we have temporarily idled several of our oilfield services businesses and expect lower pricing and utilization in those that remain in operation.”

Infrastructure Services

Mammoth's infrastructure services division contributed revenue of $25.7 million for the three months ended March 31, 2020, a decrease from $26.6 million for the three months ended December 31, 2019 and from $108.7 million for the three months ended March 31, 2019.

As of March 31, 2020, Mammoth had a total of approximately 130 transmission and distribution crews operating in the continental United States.

Pressure Pumping Services

Mammoth's pressure pumping services division contributed revenue (inclusive of inter-segment revenue) of $43.6 million on 1,482 stages for the three months ended March 31, 2020, an increase from $25.0 million on 989 stages for the three months



ended December 31, 2019 and a decrease from $92.1 million on 1,889 stages for the three months ended March 31, 2019. On average, 2.7 of the Company's fleets were active for the three months ended March 31, 2020, compared to average utilization of 1.7 fleets during the three months ended December 31, 2019 and an average utilization of 4.4 fleets during the three months ended March 31, 2019.

The conversion of our pressure pumping fleets to dynamic gas blending capabilities is progressing, with nine units converted, all of which are operating today.
Natural Sand Proppant Services

Mammoth's natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $10.2 million for the three months ended March 31, 2020, an increase from $3.0 million for the three months ended December 31, 2019 and a decrease from $37.9 million for the three months ended March 31, 2019. The Company sold approximately 239,000 tons of sand during the three months ended March 31, 2020, an increase from approximately 76,000 tons sold during the three months ended December 31, 2019 and a decrease from approximately 666,000 tons sold during the three months ended March 31, 2019. The Company's average sales price for the sand sold during the three months ended March 31, 2020 was $13.67 per ton, a decrease from the $19.95 per ton average sales price during the three months ended December 31, 2019 and the $32.30 per ton average sales price during the three months ended March 31, 2019.

Drilling Services

Mammoth's drilling services division contributed revenue (inclusive of inter-segment revenue) of $4.8 million for the three months ended March 31, 2020, a slight increase from $4.7 million for the three months ended December 31, 2019 and a decrease from $13.8 million for the three months ended March 31, 2019. The decline is primarily due to reduced utilization. As a result of market conditions, the Company 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, remote accommodations, oilfield equipment manufacturing and infrastructure engineering and design services, contributed revenue (inclusive of inter-segment revenue) of $14.9 million for the three months ended March 31, 2020, an increase from $9.3 million for the three months ended December 31, 2019 and a decrease from $25.0 million for the three months ended March 31, 2019. An average of 490 pieces of equipment were rented to customers during the three months ended March 31, 2020, up 5% from an average of 467 pieces of equipment rented to customers during the three months ended December 31, 2019 and down 21% from an average of 621 pieces of equipment rented to customers for the three months ended March 31, 2019.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $10.8 million for the three months ended March 31, 2020, as compared to $10.3 million for the three months ended December 31, 2019 and $17.3 million for the three months ended March 31, 2019.
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Following is a breakout of SG&A expense (in thousands):
Three Months Ended
March 31,December 31,
202020192019
Cash expenses:
Compensation and benefits$3,969  $9,230  $3,203  
Professional services3,538  3,789  4,301  
Other(a)
2,309  3,244  2,010  
Total cash SG&A expense9,816  16,263  9,514  
Non-cash expenses:
Bad debt provision55   204  
Stock based compensation900  1,069  620  
Total non-cash SG&A expense955  1,073  824  
Total SG&A expense$10,771  $17,336  $10,338  
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 11% for the three months ended March 31, 2020, as compared to 15% for the three months ended December 31, 2019 and 7% for the three months ended March 31, 2019.

Impairment Expenses

As a result of the significant decline in oil prices as a result of geopolitical events coupled with effects of COVID-19, Mammoth recognized impairment of goodwill totaling $55.0 million during the three months ended March 31, 2020, primarily related to its pressure pumping services division. Additionally, the Company recognized impairment of other long-lived assets totaling $12.9 million, primarily related to water transfer, crude oil hauling, coil tubing and rental equipment during the three months ended March 31, 2020.
During the three months ended December 31, 2019, the Company recognized impairment of goodwill totaling $30.5 million, primarily related to its pressure pumping services division. Additionally, the Company recognized impairment of other long-lived assets totaling $4.0 million, primarily related to drilling rigs and related equipment during the three months ended December 31, 2019.
Liquidity
As of March 31, 2020, Mammoth had cash on hand of $13.2 million and outstanding borrowings under its revolving credit facility of $88.4 million. As of March 31, 2020, the Company had $19.4 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 March 31, 2020, Mammoth had total liquidity of $32.6 million.

As of May 6, 2020, Mammoth had cash on hand of $16.8 million and outstanding borrowings under its revolving credit facility of $94.0 million. As of May 6, 2020, the Company had $13.8 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.

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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,
202020192019
Infrastructure services(a)
$77  $3,254  $90  
Pressure pumping services(b)
604  7,329  398  
Natural sand proppant services(c)
521  985  174  
Drilling services(d)
 2,267  84  
Other(e)
290  6,438  125  
Total capital expenditures$1,500  $20,273  $871  
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 Monday, May 11, 2020 at 3:00 p.m. CDT (4:00 p.m. EDT) to discuss its first 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 9880304. 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
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(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 economic repercussions and the resulting negative impact on demand for oil and gas; 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; 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.

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MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED BALANCE SHEETS


ASSETSMarch 31,December 31,
20202019
CURRENT ASSETS(in thousands)
Cash and cash equivalents$13,180  $5,872  
Accounts receivable, net371,755  363,053  
Receivables from related parties17,790  7,523  
Inventories13,193  17,483  
Prepaid expenses8,250  12,354  
Other current assets866  695  
Total current assets425,034  406,980  
Property, plant and equipment, net316,068  352,772  
Sand reserves68,351  68,351  
Operating lease right-of-use assets38,838  43,446  
Intangible assets, net - customer relationships540  583  
Intangible assets, net - trade names4,996  5,205  
Goodwill12,608  67,581  
Other non-current assets7,576  7,467  
Total assets$874,011  $952,385  
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable$42,993  $39,220  
Payables to related parties82  526  
Accrued expenses and other current liabilities39,727  40,754  
Current operating lease liability15,484  16,432  
Income taxes payable28,699  33,465  
Total current liabilities126,985  130,397  
Long-term debt88,350  80,000  
Deferred income tax liabilities41,873  36,873  
Long-term operating lease liability23,236  27,102  
Asset retirement obligation4,586  4,241  
Other liabilities4,573  5,031  
Total liabilities289,603  283,644  
COMMITMENTS AND CONTINGENCIES
EQUITY
Equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 45,713,563 and 45,108,545 issued and outstanding at March 31, 2020 and December 31, 2019457  451  
Additional paid in capital536,140  535,094  
Retained earnings52,531  136,502  
Accumulated other comprehensive loss(4,720) (3,306) 
Total equity584,408  668,741  
Total liabilities and equity$874,011  $952,385  


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



Three Months Ended
March 31,December 31,
202020192019
(in thousands, except per share amounts)
REVENUE
Services revenue$68,845  $193,101  $57,950  
Services revenue - related parties18,013  44,073  6,714  
Product revenue8,650  12,309  1,724  
Product revenue - related parties1,875  12,655  1,249  
Total revenue97,383  262,138  67,637  
COST AND EXPENSES
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $23,554, $25,682 and $25,872, respectively, for the three months ended March 31, 2020, March 31, 2019 and December 31, 2019)70,697  158,106  68,599  
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, 2020, March 31, 2019 and December 31, 2019)101  713  633  
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,309, $2,871 and $2,626, respectively, for the three months ended March 31, 2020, March 31, 2019 and December 31, 2019)11,108  30,251  6,337  
Selling, general and administrative10,556  16,902  9,978  
Selling, general and administrative - related parties215  434  360  
Depreciation, depletion, amortization and accretion25,882  28,576  28,521  
Impairment of goodwill54,973  —  30,470  
Impairment of other long-lived assets12,897  —  4,010  
Total cost and expenses186,429  234,982  148,908  
Operating (loss) income(89,046) 27,156  (81,271) 
OTHER INCOME (EXPENSE)
Interest expense, net(1,638) (523) (1,486) 
Other, net7,409  24,557  7,272  
Total other income (expense)5,771  24,034  5,786  
(Loss) income before income taxes(83,275) 51,190  (75,485) 
Provision (benefit) for income taxes696  22,857  (14,706) 
Net (loss) income$(83,971) $28,333  $(60,779) 
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustment, net of tax of $361, ($90) and $69, respectively, for the three months ended March 31, 2020, March 31, 2019 and December 31, 2019(1,414) 356  282  
Comprehensive (loss) income$(85,385) $28,689  $(60,497) 
Net (loss) income per share (basic)$(1.85) $0.63  $(1.35) 
Net (loss) income per share (diluted)$(1.85) $0.63  $(1.35) 
Weighted average number of shares outstanding (basic)45,314  44,929  45,092  
Weighted average number of shares outstanding (diluted) 45,314  45,063  45,092  
Dividends declared per share$—  0.125  $—  

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MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS


Three Months Ended
March 31,
20202019
(in thousands)
Cash flows from operating activities:
Net (loss) income$(83,971) $28,333  
Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities:
Stock based compensation1,049  1,289  
Depreciation, depletion, accretion and amortization25,882  28,576  
Amortization of coil tubing strings237  535  
Amortization of debt origination costs452  82  
Bad debt expense55   
(Gain) loss on disposal of property and equipment(673) 94  
Impairment of goodwill54,973  —  
Impairment of other long-lived assets12,897  —  
Deferred income taxes5,361  (15,476) 
Other432  41  
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net(8,569) (67,093) 
Receivables from related parties(10,267) (33,868) 
Inventories4,053  1,854  
Prepaid expenses and other assets3,929  2,389  
Accounts payable2,078  (353) 
Payables to related parties(444) 239  
Accrued expenses and other liabilities(1,220) (4,956) 
Income taxes payable(4,713) (44,684) 
Net cash provided by (used in) operating activities1,541  (102,994) 
Cash flows from investing activities:
Purchases of property and equipment(1,424) (20,273) 
Purchases of property and equipment from related parties(76) —  
Contributions to equity investee—  (480) 
Proceeds from disposal of property and equipment558  1,500  
Net cash used in investing activities(942) (19,253) 
Cash flows from financing activities:
Borrowings from lines of credit17,300  82,000  
Repayments of lines of credit(8,950) —  
Dividends paid—  (5,610) 
Principal payments on financing leases and equipment financing notes(452) (457) 
Debt issuance costs(1,000) —  
Net cash provided by financing activities6,898  75,933  
Effect of foreign exchange rate on cash(189) 32  
Net change in cash and cash equivalents7,308  (46,282) 
Cash and cash equivalents at beginning of period5,872  67,625  
Cash and cash equivalents at end of period$13,180  $21,343  
Supplemental disclosure of cash flow information:
Cash paid for interest$1,285  $294  
Cash paid for income taxes$62  $91,955  
Supplemental disclosure of non-cash transactions:
Purchases of property and equipment included in accounts payable$4,347  $5,016  

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

Three months ended March 31, 2020InfrastructurePressure PumpingSandDrillingAll OtherEliminationsTotal
Revenue from external customers$25,705  $42,686  $10,154  $4,723  $14,115  $—  $97,383  
Intersegment revenues—  936  95  55  775  (1,861) —  
Total revenue25,705  43,622  10,249  4,778  14,890  (1,861) 97,383  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion26,946  26,208  10,657  5,635  12,460  —  81,906  
Intersegment cost of revenues 627  302  130  794  (1,861) —  
Total cost of revenue26,954  26,835  10,959  5,765  13,254  (1,861) 81,906  
Selling, general and administrative4,297  2,222  1,251  1,063  1,938  —  10,771  
Depreciation, depletion, amortization and accretion7,934  8,492  2,312  2,877  4,267  —  25,882  
Impairment of goodwill—  53,406  —  —  1,567  —  54,973  
Impairment of other long-lived assets—  4,203  —  326  8,368  —  12,897  
Operating loss(13,480) (51,536) (4,273) (5,253) (14,504) —  (89,046) 
Interest expense, net757  293  61  268  259  —  1,638  
Other (income) expense, net (7,276) (109) (37) 27  (14) —  (7,409) 
Loss before income taxes$(6,961) $(51,720) $(4,297) $(5,548) $(14,749) $—  $(83,275) 

Three months ended March 31, 2019InfrastructurePressure PumpingSandDrillingAll OtherEliminationsTotal
Revenue from external customers$108,721  $90,595  $24,964  $13,576  $24,282  $—  $262,138  
Intersegment revenues—  1,544  12,897  219  766  (15,426) —  
Total revenue108,721  92,139  37,861  13,795  25,048  (15,426) 262,138  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion58,965  64,211  30,252  12,652  22,990  —  189,070  
Intersegment cost of revenues—  13,537  1,047  272  552  (15,408) —  
Total cost of revenue58,965  77,748  31,299  12,924  23,542  (15,408) 189,070  
Selling, general and administrative9,517  3,213  1,519  1,363  1,724  —  17,336  
Depreciation, depletion, amortization and accretion7,719  9,893  2,873  3,578  4,513  —  28,576  
Operating income (loss)32,520  1,285  2,170  (4,070) (4,731) (18) 27,156  
Interest expense, net39  198  30  127  129  —  523  
Other (income) expense, net(24,824) (1) —  (22) 290  —  (24,557) 
Income (loss) before income taxes$57,305  $1,088  $2,140  $(4,175) $(5,150) $(18) $51,190  

9

MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS
(in thousands)
Three months ended December 31, 2019InfrastructurePressure PumpingSandDrillingAll OtherEliminationsTotal
Revenue from external customers$26,618  $24,515  $2,974  $4,637  $8,893  $—  $67,637  
Intersegment revenues—  442  —  14  362  (818) —  
Total revenue26,618  24,957  2,974  4,651  9,255  (818) 67,637  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion30,988  20,891  6,162  6,934  10,594  —  75,569  
Intersegment cost of revenues—  339  28  160  291  (818) —  
Total cost of revenue30,988  21,230  6,190  7,094  10,885  (818) 75,569  
Selling, general and administrative5,516  1,449  792  1,042  1,539  —  10,338  
Depreciation, depletion, amortization and accretion7,961  9,996  2,627  3,389  4,548  —  28,521  
Impairment of goodwill434  23,423  2,684  —  3,929  30,470  
Impairment of other long-lived assets—  —  —  2,955  1,055  —  4,010  
Operating loss(18,281) (31,141) (9,319) (9,829) (12,701) —  (81,271) 
Interest expense, net665  318  48  227  228  —  1,486  
Other (income) expense, net(7,679) 574  —  14  (181) —  (7,272) 
Loss before income taxes$(11,267) $(32,033) $(9,367) $(10,070) $(12,748) $—  $(75,485) 


10

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, 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
March 31,December 31,
Reconciliation of Adjusted EBITDA to net (loss) income:202020192019
Net (loss) income$(83,971) $28,333  $(60,779) 
Depreciation, depletion, amortization and accretion expense25,882  28,576  28,521  
Impairment of goodwill54,973  —  30,470  
Impairment of other long-lived assets12,897  —  4,010  
Stock based compensation1,049  1,289  811  
Interest expense, net1,638  523  1,486  
Other (income) expense, net(7,409) (24,557) (7,272) 
Provision (benefit) for income taxes696  22,857  (14,706) 
Interest on trade accounts receivable7,696  25,735  7,174  
Adjusted EBITDA$13,451  $82,756  $(10,285) 

Infrastructure Services
Three Months Ended
March 31,December 31,
Reconciliation of Adjusted EBITDA to net (loss) income:202020192019
Net (loss) income$(9,452) $35,665  $(14,005) 
Depreciation and amortization expense7,934  7,719  7,961  
Impairment of goodwill—  —  434  
Stock based compensation251  462  183  
Interest expense757  39  665  
Other (income) expense, net(7,276) (24,824) (7,679) 
Provision for income taxes2,491  21,639  2,738  
Interest on trade accounts receivable7,696  25,735  7,174  
Adjusted EBITDA$2,401  $66,435  $(2,529) 
11

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


Pressure Pumping Services
Three Months Ended
March 31,December 31,
Reconciliation of Adjusted EBITDA to net (loss) income:202020192019
Net (loss) income$(51,720) $1,088  $(32,033) 
Depreciation and amortization expense8,492  9,893  9,996  
Impairment of goodwill53,406  —  23,423  
Impairment of other long-lived assets4,203  —  —  
Stock based compensation335  410  297  
Interest expense293  198  318  
Other (income) expense, net(109) (1) 574  
Adjusted EBITDA$14,900  $11,588  $2,575  

Natural Sand Proppant Services
Three Months Ended
March 31,December 31,
Reconciliation of Adjusted EBITDA to net (loss) income:202020192019
Net (loss) income$(4,297) $2,140  $(9,367) 
Depreciation, depletion, amortization and accretion expense2,312  2,873  2,627  
Impairment of goodwill—  —  2,684  
Stock based compensation225  203  156  
Interest expense61  30  48  
Other expense (income), net(37) —  —  
Adjusted EBITDA$(1,736) $5,246  $(3,852) 

Drilling Services
Three Months Ended
March 31,December 31,
Reconciliation of Adjusted EBITDA to net (loss) income:202020192019
Net loss$(5,548) $(4,175) $(10,070) 
Depreciation expense2,877  3,578  3,389  
Impairment of other long-lived assets326  —  2,955  
Stock based compensation94  100  82  
Interest expense268  127  227  
Other expense (income), net27  (22) 14  
Adjusted EBITDA$(1,956) $(392) $(3,403) 

12

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 loss:202020192019
Net (loss) income$(12,954) $(6,367) $4,695  
Depreciation, amortization and accretion expense4,267  4,513  4,548  
Impairment of goodwill1,567  —  3,929  
Impairment of other long-lived assets8,368  —  1,055  
Stock based compensation144  114  93  
Interest expense, net259  129  228  
Other (income) expense, net(14) 290  (181) 
(Benefit) provision for income taxes(1,795) 1,217  (17,443) 
Adjusted EBITDA$(158) $(104) $(3,076) 
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
March 31,December 31,
202020192020
(in thousands, except per share amounts)
Net (loss) income, as reported$(83,971) $28,333  $(60,779) 
Impairment of goodwill54,973  —  30,470  
Impairment of other long-lived assets12,897  —  4,010  
Adjusted net (loss) income$(16,101) $28,333  $(26,299) 
Basic (loss) earnings per share, as reported$(1.85) $0.63  $(1.35) 
Impairment of goodwill1.21  —  0.68  
Impairment of other long-lived assets0.28  —  0.09  
Adjusted basic (loss) earnings per share$(0.36) $0.63  $(0.58) 
Diluted (loss) earnings per share, as reported$(1.85) $0.63  $(1.35) 
Impairment of goodwill1.21  —  0.68  
Impairment of other long-lived assets0.28  —  0.09  
Adjusted diluted (loss) earnings per share$(0.36) $0.63  $(0.58) 

13