tusk-20200730
0001679268FALSE00016792682020-07-302020-07-30



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): July 30, 2020
 
Mammoth Energy Services, Inc.

(Exact name of registrant as specified in its charter)

001-37917
(Commission File No.)
Delaware32-0498321
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
14201 Caliber Drive,Suite 300
Oklahoma City,Oklahoma(405)608-600773134
(Address of principal executive offices)(Registrant’s telephone number, including area code)(Zip 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 StockTUSKThe Nasdaq Stock Market LLC
NASDAQ Global Select Market

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 July 30, 2020, Mammoth Energy Services, Inc. (the “Company”) issued a press release announcing its financial and operational results for the second quarter ended June 30, 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 July 30, 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.

104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.





Signature

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:July 30, 2020By:/s/ Mark Layton
Mark Layton
Chief Financial Officer and Secretary





Document

Exhibit 99.1


https://cdn.kscope.io/2b0682f47d827e82fc5bed6b66513586-mammotha0611.jpg


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


OKLAHOMA CITY, OKLAHOMA, July 30, 2020 - 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.
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Following is a breakout of SG&A expense (in thousands):
Three Months EndedSix Months Ended
June 30,March 31,June 30,
20202019202020202019
Cash expenses:
Compensation and benefits$3,720  $2,154  $3,969  $7,690  $11,384  
Professional services6,147  2,934  3,538  9,684  6,723  
Other(a)
2,100  3,381  2,309  4,409  6,626  
Total cash SG&A expense11,967  8,469  9,816  21,783  24,733  
Non-cash expenses:
Bad debt provision1,624  262  55  1,679  266  
Stock based compensation135  724  900  1,035  1,792  
Total non-cash SG&A expense1,759  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 EndedSix Months Ended
June 30,March 31,June 30,
20202019202020202019
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   80  2,927  
Other(e)
 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.
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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
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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.

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MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED BALANCE SHEETS


ASSETSJune 30,December 31,
20202019
CURRENT ASSETS(in thousands)
Cash and cash equivalents$18,025  $5,872  
Accounts receivable, net353,912  363,053  
Receivables from related parties27,316  7,523  
Inventories12,473  17,483  
Prepaid expenses6,236  12,354  
Other current assets740  695  
Total current assets418,702  406,980  
Property, plant and equipment, net293,150  352,772  
Sand reserves68,257  68,351  
Operating lease right-of-use assets33,210  43,446  
Intangible assets, net - customer relationships496  583  
Intangible assets, net - trade names4,786  5,205  
Goodwill12,608  67,581  
Other non-current assets7,261  7,467  
Total assets$838,470  $952,385  
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable$31,866  $39,220  
Payables to related parties14  526  
Accrued expenses and other current liabilities36,741  40,754  
Current operating lease liability13,387  16,432  
Income taxes payable29,729  33,465  
Total current liabilities111,737  130,397  
Long-term debt89,250  80,000  
Deferred income tax liabilities37,593  36,873  
Long-term operating lease liability19,802  27,102  
Asset retirement obligation4,640  4,241  
Other liabilities5,383  5,031  
Total liabilities268,405  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, 2019458  451  
Additional paid in capital536,333  535,094  
Retained earnings37,326  136,502  
Accumulated other comprehensive loss(4,052) (3,306) 
Total equity570,065  668,741  
Total liabilities and equity$838,470  $952,385  


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



Three Months EndedSix Months Ended
June 30,March 31,June 30,
20202019202020202019
(in thousands, except per share amounts)
REVENUE
Services revenue$44,878  $115,760  $68,845  $113,723  $308,861  
Services revenue - related parties8,650  36,837  18,013  26,663  80,910  
Product revenue4,706  18,362  8,650  13,356  30,671  
Product revenue - related parties1,875  10,861  1,875  3,750  23,516  
Total revenue60,109  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 $7,395, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019)6,401  32,677  11,108  17,509  62,928  
Selling, general and administrative13,528  8,796  10,556  24,084  25,698  
Selling, general and administrative - related parties198  659  215  413  1,093  
Depreciation, depletion, amortization and accretion24,116  30,145  25,882  49,998  58,721  
Impairment of goodwill—  —  54,973  54,973  —  
Impairment of other long-lived assets—  —  12,897  12,897  —  
Total cost and expenses86,595  207,615  186,429  273,024  442,597  
Operating (loss) income(26,486) (25,795) (89,046) (115,532) 1,361  
OTHER INCOME (EXPENSE)
Interest expense, net(1,471) (1,551) (1,638) (3,109) (2,074) 
Other, net8,137  4,019  7,409  15,546  28,576  
Other, net - related parties1,133  —  —  1,133  —  
Total other income7,799  2,468  5,771  13,570  26,502  
(Loss) income before income taxes(18,687) (23,327) (83,275) (101,962) 27,863  
(Benefit) provision for income taxes(3,482) (12,438) 696  (2,786) 10,419  
Net (loss) income$(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 $182, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019668  350  (1,414) (746) 706  
Comprehensive (loss) income$(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  

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MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS


Six Months Ended
June 30,
20202019
(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 compensation1,246  2,233  
Depreciation, depletion, accretion and amortization49,998  58,721  
Amortization of coil tubing strings359  1,003  
Amortization of debt origination costs577  163  
Bad debt expense1,679  266  
(Gain) loss on disposal of property and equipment(1,451) 176  
Impairment of goodwill54,973  —  
Impairment of other long-lived assets12,897  —  
Deferred income taxes931  (22,911) 
Other623  (199) 
Changes in assets and liabilities:
Accounts receivable, net7,782  (48,530) 
Receivables from related parties(19,793) (26,236) 
Inventories4,651  (1,815) 
Prepaid expenses and other assets6,079  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 activities6,834  (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 equipment2,544  2,465  
Net cash used in investing activities(1,880) (28,435) 
Cash flows from financing activities:
Borrowings from lines of credit22,800  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 activities7,336  69,825  
Effect of foreign exchange rate on cash(137) 85  
Net change in cash and cash equivalents12,153  (60,380) 
Cash and cash equivalents at beginning of period5,872  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  

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

Three months ended June 30, 2020InfrastructurePressure PumpingSandDrillingAll OtherEliminationsTotal
Revenue from external customers$30,579  $16,125  $6,237  $1,250  $5,918  $—  $60,109  
Intersegment revenues—  446  —  25  580  (1,051) —  
Total revenue30,579  16,571  6,237  1,275  6,498  (1,051) 60,109  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion25,368  8,744  6,025  2,027  6,589  —  48,753  
Intersegment cost of revenues27  333  28  21  642  (1,051) —  
Total cost of revenue25,395  9,077  6,053  2,048  7,231  (1,051) 48,753  
Selling, general and administrative8,037  1,477  1,357  1,331  1,524  —  13,726  
Depreciation, depletion, amortization and accretion7,816  7,685  2,348  2,700  3,567  —  24,116  
Operating loss(10,669) (1,668) (3,521) (4,804) (5,824) —  (26,486) 
Interest expense, net720  346  53  143  209  —  1,471  
Other (income) expense, net (7,809) (1,179) (2) (298) 18  —  (9,270) 
Loss before income taxes$(3,580) $(835) $(3,572) $(4,649) $(6,051) $—  $(18,687) 

Three months ended June 30, 2019InfrastructurePressure PumpingSandDrillingAll OtherEliminationsTotal
Revenue from external customers$41,821  $82,973  $29,223  $7,450  $20,353  $—  $181,820  
Intersegment revenues—  1,668  11,170  207  687  (13,732) —  
Total revenue41,821  84,641  40,393  7,657  21,040  (13,732) 181,820  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion44,864  59,835  32,676  9,175  21,465  —  168,015  
Intersegment cost of revenues—  11,797  1,141  229  643  (13,810) —  
Total cost of revenue44,864  71,632  33,817  9,404  22,108  (13,810) 168,015  
Selling, general and administrative3,035  2,664  1,380  844  1,532  —  9,455  
Depreciation, depletion, amortization and accretion7,818  10,174  4,528  3,193  4,432  —  30,145  
Operating (loss) income(13,896) 171  668  (5,784) (7,032) 78  (25,795) 
Interest expense, net386  452  72  332  309  —  1,551  
Other (income) expense, net(4,045)  (32) —  49  —  (4,019) 
(Loss) income before income taxes$(10,237) $(290) $628  $(6,116) $(7,390) $78  $(23,327) 

Three months ended March 31, 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) 
9

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

Six months ended June 30, 2020InfrastructurePressure PumpingSandDrillingAll OtherEliminationsTotal
Revenue from external customers$56,285  $58,810  $16,391  $5,973  $20,033  $—  $157,492  
Intersegment revenues—  1,382  95  81  1,354  (2,912) —  
Total revenue56,285  60,192  16,486  6,054  21,387  (2,912) 157,492  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion52,314  34,952  16,682  7,662  19,049  —  130,659  
Intersegment cost of revenues35  961  329  152  1,435  (2,912) —  
Total cost of revenue52,349  35,913  17,011  7,814  20,484  (2,912) 130,659  
Selling, general and administrative12,334  3,699  2,608  2,395  3,461  —  24,497  
Depreciation, depletion, amortization and accretion15,750  16,177  4,661  5,577  7,833  —  49,998  
Impairment of goodwill—  53,406  —  —  1,567  —  54,973  
Impairment of other long-lived assets—  4,203  —  326  8,368  —  12,897  
Operating loss(24,148) (53,206) (7,794) (10,058) (20,326) —  (115,532) 
Interest expense, net1,477  639  113  412  468  —  3,109  
Other (income) expense, net (15,086) (1,288) (39) (271)  —  (16,679) 
Loss before income taxes$(10,539) $(52,557) $(7,868) $(10,199) $(20,799) $—  $(101,962) 

Six months ended June 30, 2019InfrastructurePressure PumpingSandDrillingAll OtherEliminationsTotal
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 revenue150,542  176,780  78,254  21,452  46,088  (29,158) 443,958  
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion103,828  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 revenue103,828  149,381  65,116  22,327  45,651  (29,218) 357,085  
Selling, general and administrative12,553  5,876  2,899  2,208  3,255  —  26,791  
Depreciation, depletion, amortization and accretion15,537  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, net425  649  102  460  438  —  2,074  
Other (income) expense, net(28,869)  (32) (22) 339  —  (28,576) 
Income (loss) before income taxes$47,068  $798  $2,768  $(10,291) $(12,540) $60  $27,863  

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, 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 EndedSix Months Ended
June 30,March 31,June 30,
Reconciliation of Adjusted EBITDA to net (loss) income:20202019202020202019
Net (loss) income$(15,205) $(10,889) $(83,971) $(99,176) $17,444  
Depreciation, depletion, amortization and accretion expense24,116  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 compensation196  944  1,049  1,246  2,233  
Interest expense, net1,471  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 receivable9,071  3,234  7,696  16,767  28,969  
Adjusted EBITDA$6,897  $8,573  $13,451  $20,349  $91,329  

Infrastructure Services
Three Months EndedSix Months Ended
June 30,March 31,June 30,
Reconciliation of Adjusted EBITDA to net (loss) income:20202019202020202019
Net (loss) income$(4,529) $6,210  $(9,452) $(13,980) $41,875  
Depreciation and amortization expense7,816  7,818  7,934  15,750  15,537  
Acquisition related costs—  12  —  —  12  
Stock based compensation45   251  297  471  
Interest expense720  386  757  1,477  425  
Other income, net(7,809) (4,045) (7,276) (15,086) (28,869) 
Provision for income taxes949  (16,447) 2,491  3,440  5,193  
Interest on trade accounts receivable7,929  3,234  7,696  15,625  28,969  
Adjusted EBITDA$5,121  $(2,823) $2,401  $7,523  $63,613  
11

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


Pressure Pumping Services
Three Months EndedSix Months Ended
June 30,March 31,June 30,
Reconciliation of Adjusted EBITDA to net (loss) income:20202019202020202019
Net (loss) income$(835) $(290) $(51,720) $(52,556) $798  
Depreciation and amortization expense7,685  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 compensation53  489  335  388  899  
Interest expense346  452  293  639  649  
Other (income) expense, net(1,179)  (109) (1,288)  
Interest on trade accounts receivable1,133  —  —  1,133  —  
Adjusted EBITDA$7,203  $10,852  $14,900  $22,102  $22,440  

Natural Sand Proppant Services
Three Months EndedSix Months Ended
June 30,March 31,June 30,
Reconciliation of Adjusted EBITDA to net (loss) income:20202019202020202019
Net (loss) income$(3,572) $628  $(4,297) $(7,868) $2,768  
Depreciation, depletion, amortization and accretion expense2,348  4,528  2,312  4,661  7,401  
Acquisition related costs—   —  —   
Stock based compensation45  236  225  271  439  
Interest expense53  72  61  113  102  
Other income, net(2) (32) (37) (39) (32) 
Adjusted EBITDA$(1,128) $5,440  $(1,736) $(2,862) $10,686  

Drilling Services
Three Months EndedSix Months Ended
June 30,March 31,June 30,
Reconciliation of Adjusted EBITDA to net (loss) income:20202019202020202019
Net loss$(4,649) $(6,116) $(5,548) $(10,199) $(10,291) 
Depreciation expense2,700  3,193  2,877  5,577  6,770  
Impairment of other long-lived assets—  —  326  326  —  
Acquisition related costs—   —  —