Mammoth Energy Services, Inc. Announces Third Quarter 2019 Operational and Financial Results
OKLAHOMA CITY, Nov. 07, 2019 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. ("Mammoth" or the "Company") (NASDAQ: TUSK) today reported financial and operational results for the third quarter ended September 30, 2019.
Financial Highlights for the Third Quarter of 2019:
Total revenue was $113.4 million for the three months ended September 30, 2019, down from $181.8 million for the three months ended June 30, 2019 and down from $384.0 million for the three months ended September 30, 2018.
Net loss for the three months ended September 30, 2019 was $35.7 million, or $0.79 per fully diluted share, as compared to net loss of $10.9 million, or $0.24 per fully diluted share, for the three months ended June 30, 2019 and net income of $69.5 million, or $1.54 per fully diluted share, for the three months ended September 30, 2018.
Adjusted EBITDA (as defined and reconciled below) was ($3.8) million for the three months ended September 30, 2019, down from $8.6 million for the three months ended June 30, 2019 and down from $183.6 million for the three months ended September 30, 2018.
Arty Straehla, Mammoth's Chief Executive Officer, stated, “Given the current state of the oilfield services market, we continue to look for investment opportunities in the industrial sector that enhance our current service offerings and further diversify our cash flow. With that objective in mind, during the third quarter we started two new businesses organically, engineering services and equipment manufacturing. The startup of a manufacturing business will enable us to repair our existing equipment in-house as well as manufacture equipment used across our businesses.”
Infrastructure Services
Mammoth's infrastructure services segment contributed revenues of $37.3 million for the three months ended September 30, 2019, a decrease from $41.8 million for the three months ended June 30, 2019 and a decline from $237.1 million for the three months ended September 30, 2018.
As of September 30, 2019, Mammoth had a total of approximately 140 transmission and distribution crews in the continental United States. Revenues for the Company's infrastructure operations in the continental United States increased approximately 21% from $30.9 million for the three months ended June 30, 2019 to $37.3 million for the three months ended September 30, 2019.
Pressure Pumping Services
Mammoth's pressure pumping division contributed revenues (inclusive of inter-segment revenues) of $44.6 million for the three months ended September 30, 2019, a decrease from $84.6 million for the three months ended June 30, 2019 and a decrease from $94.2 million for the three months ended September 30, 2018.
Mammoth's pressure pumping division completed a total of 783 stages for the three months ended September 30, 2019, as compared to 1,717 stages for the three months ended June 30, 2019 and 1,594 stages for the three months ended September 30, 2018. On average, 1.2 of our fleets were active for the three months ended September 30, 2019, compared to average utilization of 2.7 fleets during the three months ended June 30, 2019 and an average utilization of 3.5 fleets during the three months ended September 30, 2018.
Natural Sand Proppant Services
Mammoth's natural sand proppant division contributed revenues (inclusive of inter-segment revenues) of $18.4 million for the three months ended September 30, 2019, a decrease from $40.4 million for the three months ended June 30, 2019 and a decrease from $37.0 million for the three months ended September 30, 2018.
The Company sold 456,471 tons of sand during the three months ended September 30, 2019, a 44% decrease from the 812,611 tons sold during the three months ended June 30, 2019 and a 24% decrease from the 598,438 tons sold during the three months ended September 30, 2018. The Company's average sales price for the sand sold during the three months ended September 30, 2019 was $26.84 per ton, an 11% decrease from the $30.09 per ton average sales price during the three months ended June 30, 2019 and a 29% decrease from the $37.88 per ton average sales price during the three months ended September 30, 2018.
Blended production costs were approximately $12 per ton during the three months ended September 30, 2019, unchanged from the three months ended June 30, 2019 production costs and an 18% decrease from production costs of approximately $14.56 per ton during the three months ended September 30, 2018.
Other Services
Mammoth's other services, including contract land and directional drilling, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling and remote accommodations, contributed revenues (inclusive of inter-segment revenues) of $20.0 million for the three months ended September 30, 2019, a decrease from $28.4 million for the three months ended June 30, 2019 and a decrease from $35.7 million for the three months ended September 30, 2018.
An average of 541 pieces of equipment were rented during the three months ended September 30, 2019, down 10% from an average of 601 pieces of equipment rented during the three months ended June 30, 2019 and a 42% increase from an average of 381 pieces of equipment rented for the three months ended September 30, 2018. As a result of market conditions, the Company temporarily shut down its cementing and acidizing operations as well as its flowback operations during the third quarter of 2019.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses were $14.4 million for the three months ended September 30, 2019, as compared to $9.5 million for the three months ended June 30, 2019 and ($45.3) million for the three months ended September 30, 2018.
Following is a breakout of SG&A expense (in thousands):
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||
| 2019 | 2018 | 2019 | 2019 | 2018 | |||||||||||||||
| Cash expenses: | |||||||||||||||||||
| Compensation and benefits | $ | 4,777 | $ | 14,864 | $ | 2,154 | $ | 16,161 | $ | 33,541 | |||||||||
| Professional services | 6,104 | 3,267 | 2,934 | 12,827 | 8,835 | ||||||||||||||
| Other(a) | 1,665 | 3,701 | 3,381 | 8,290 | 9,243 | ||||||||||||||
| Total cash SG&A expense | 12,546 | 21,832 | 8,469 | 37,278 | 51,619 | ||||||||||||||
| Non-cash expenses: | |||||||||||||||||||
| Bad debt provision(b) | 964 | (68,333 | ) | 262 | 1,230 | (14,543 | ) | ||||||||||||
| Equity based compensation(c) | — | — | — | — | 17,487 | ||||||||||||||
| Stock based compensation | 913 | 1,177 | 724 | 2,705 | 3,751 | ||||||||||||||
| Total non-cash SG&A expense | 1,877 | (67,156 | ) | 986 | 3,935 | 6,695 | |||||||||||||
| Total SG&A expense | $ | 14,423 | $ | (45,324 | ) | $ | 9,455 | $ | 41,213 | $ | 58,314 | ||||||||
- Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.
- During the three months ended September 30, 2018, the Company received payment for amounts previously reserved in 2017. As a result, during the three months ended September 30, 2018, the Company reversed bad debt expense of $16.0 million recognized in 2017 and $53.6 million of the bad debt expense recognized in the first half of 2018.
- Represents compensation expense for non-employee awards, which were issued and are payable by certain affiliates of Wexford (the sponsor level).
SG&A expenses, as a percentage of total revenue, were 13% for the three months ended September 30, 2019 as compared to 5% for the three months ended June 30, 2019 and (12%) for the three months ended September 30, 2018. Excluding bad debt expense, SG&A expenses as a percentage of total revenue were 12% for the three months ended September 30, 2019 as compared to 5% for the three months ended June 30, 2019 and 6% for the three months ended September 30, 2018.
Liquidity
As of September 30, 2019, Mammoth had cash on hand totaling $9.6 million and outstanding borrowings under its revolving credit facility of $80.0 million. As of September 30, 2019, the Company had $96.1 million of available borrowing capacity under its revolving credit facility, after giving effect to $8.7 million of outstanding letters of credit, resulting in total liquidity of approximately $105.7 million. As of November 5, 2019, the Company had cash on hand of $9.7 million and outstanding borrowings under its revolving credit facility of $80.0 million.
Capital Expenditures
The following table summarizes Mammoth's capital expenditures by operating division for the periods indicated (in thousands):
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||
| 2019 | 2018 | 2019 | 2019 | 2018 | |||||||||||||||
| Infrastructure services(a) | $ | 122 | $ | 21,737 | $ | 2,177 | $ | 5,553 | $ | 78,293 | |||||||||
| Pressure pumping services(b) | 2,963 | 8,042 | 4,013 | 14,305 | 24,141 | ||||||||||||||
| Natural sand proppant services(c) | 728 | 3,145 | 990 | 2,703 | 15,803 | ||||||||||||||
| Other(d) | 857 | 7,821 | 2,767 | 12,329 | 31,293 | ||||||||||||||
| Total capital expenditures | $ | 4,670 | $ | 40,745 | $ | 9,947 | $ | 34,890 | $ | 149,530 | |||||||||
- Capital expenditures primarily for truck, tooling and other equipment for the periods presented.
- Capital expenditures primarily for pressure pumping and water transfer equipment for the periods presented.
- Capital expenditures primarily for maintenance for the 2019 periods presented and plant upgrades for the 2018 periods presented.
- Capital expenditures primarily for equipment for the Company's rental business and upgrades to its rig fleet 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 Report 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 Friday, November 8, 2019 at 2:00 p.m. CST (3:00 p.m. EST) to discuss its third quarter 2019 financial and operational results. The telephone number to access the conference call is 844-265-1561 in the U.S. and the international dial in is 216-562-0385. The conference ID for the call is 6576647. 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 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 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: the failure to receive or delays in receiving governmental authorizations, approvals and/or payments; the outcome of an ongoing government investigation and legal proceedings relating to the contracts awarded to our subsidiary Cobra Acquisitions LLC by the Puerto Rico Electric Power Authority; our inability to replace the prior levels of work in our infrastructure segment; 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 | ||||||||
| ASSETS | September 30, | December 31, | ||||||
| 2019 | 2018 | |||||||
| CURRENT ASSETS | (in thousands) | |||||||
| Cash and cash equivalents | $ | 9,598 | $ | 67,625 | ||||
| Accounts receivable, net | 369,313 | 337,460 | ||||||
| Receivables from related parties | 8,542 | 11,164 | ||||||
| Inventories | 17,303 | 21,302 | ||||||
| Prepaid expenses | 7,613 | 11,317 | ||||||
| Other current assets | 682 | 688 | ||||||
| Total current assets | 413,051 | 449,556 | ||||||
| Property, plant and equipment, net | 381,656 | 436,699 | ||||||
| Sand reserves | 68,423 | 71,708 | ||||||
| Operating lease right-of-use assets | 47,959 | — | ||||||
| Intangible assets, net - customer relationships | 1,433 | 1,711 | ||||||
| Intangible assets, net - trade names | 5,415 | 6,045 | ||||||
| Goodwill | 98,051 | 101,245 | ||||||
| Other non-current assets | 7,101 | 6,127 | ||||||
| Total assets | $ | 1,023,089 | $ | 1,073,091 | ||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 36,898 | $ | 68,843 | ||||
| Payables to related parties | 486 | 370 | ||||||
| Accrued expenses and other current liabilities | 40,552 | 59,652 | ||||||
| Current operating lease liability | 17,142 | — | ||||||
| Income taxes payable | 32,453 | 104,958 | ||||||
| Total current liabilities | 127,531 | 233,823 | ||||||
| Long-term debt | 80,000 | — | ||||||
| Deferred income tax liabilities | 47,260 | 79,309 | ||||||
| Long-term operating lease liability | 30,827 | — | ||||||
| Asset retirement obligation | 3,559 | 3,164 | ||||||
| Other liabilities | 5,485 | 2,743 | ||||||
| Total liabilities | 294,662 | 319,039 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY | ||||||||
| Equity: | ||||||||
| Common stock, $0.01 par value, 200,000,000 shares authorized, 45,021,461 and 44,876,649 issued and outstanding at September 30, 2019 and December 31, 2018 | 450 | 449 | ||||||
| Additional paid in capital | 534,284 | 530,919 | ||||||
| Retained earnings | 197,281 | 226,765 | ||||||
| Accumulated other comprehensive loss | (3,588 | ) | (4,081 | ) | ||||
| Total equity | 728,427 | 754,052 | ||||||
| Total liabilities and equity | $ | 1,023,089 | $ | 1,073,091 | ||||
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MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||
| 2019 | 2018 | 2019 | 2019 | 2018 | |||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||||
| REVENUE | |||||||||||||||||||
| Services revenue | $ | 85,783 | $ | 346,368 | $ | 115,760 | $ | 394,645 | $ | 1,210,572 | |||||||||
| Services revenue - related parties | 15,000 | 18,933 | 36,837 | 95,910 | 108,632 | ||||||||||||||
| Product revenue | 9,710 | 14,955 | 18,362 | 40,381 | 67,703 | ||||||||||||||
| Product revenue - related parties | 2,924 | 3,787 | 10,861 | 26,439 | 24,979 | ||||||||||||||
| Total revenue | 113,417 | 384,043 | 181,820 | 557,375 | 1,411,886 | ||||||||||||||
| COST AND EXPENSES | |||||||||||||||||||
| Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $25,749, $27,810, $25,597, $77,028 and $79,283, respectively, for the three months ended September 30, 2019, September 30, 2018 and June 30, 2019 and nine months ended September 30, 2019 and 2018) | 91,813 | 216,670 | 132,688 | 382,607 | 809,932 | ||||||||||||||
| 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 September 30, 2019, September 30, 2018 and June 30, 2019 and nine months ended September 30, 2019 and 2018) | 774 | 1,425 | 2,650 | 4,138 | 5,645 | ||||||||||||||
| Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $4,019, $4,183, $4,525, $11,414 and $10,376, respectively, for the three months ended September 30, 2019, September 30, 2018 and June 30, 2019 and nine months ended September 30, 2019 and 2018) | 18,547 | 29,470 | 32,677 | 81,475 | 97,917 | ||||||||||||||
| Selling, general and administrative | 14,029 | (45,761 | ) | 8,796 | 39,726 | 56,916 | |||||||||||||
| Selling, general and administrative - related parties | 394 | 437 | 659 | 1,487 | 1,398 | ||||||||||||||
| Depreciation, depletion, amortization and accretion | 29,791 | 32,015 | 30,145 | 88,512 | 89,718 | ||||||||||||||
| Impairment of long-lived assets | 6,542 | 4,582 | — | 6,542 | 4,769 | ||||||||||||||
| Total cost and expenses | 161,890 | 238,838 | 207,615 | 604,487 | 1,066,295 | ||||||||||||||
| Operating (loss) income | (48,473 | ) | 145,205 | (25,795 | ) | (47,112 | ) | 345,591 | |||||||||||
| OTHER INCOME (EXPENSE) | |||||||||||||||||||
| Interest expense, net | (1,398 | ) | (458 | ) | (1,551 | ) | (3,472 | ) | (2,654 | ) | |||||||||
| Other, net | 6,368 | (400 | ) | 4,019 | 34,944 | (914 | ) | ||||||||||||
| Total other income (expense) | 4,970 | (858 | ) | 2,468 | 31,472 | (3,568 | ) | ||||||||||||
| (Loss) income before income taxes | (43,503 | ) | 144,347 | (23,327 | ) | (15,640 | ) | 342,023 | |||||||||||
| (Benefit) provision for income taxes | (7,794 | ) | 74,835 | (12,438 | ) | 2,625 | 174,265 | ||||||||||||
| Net (loss) income | $ | (35,709 | ) | $ | 69,512 | $ | (10,889 | ) | $ | (18,265 | ) | $ | 167,758 | ||||||
| OTHER COMPREHENSIVE (LOSS) INCOME | |||||||||||||||||||
| Foreign currency translation adjustment, net of tax of ($49), ($87), $92, $134 and $185, respectively, for the three months ended September 30, 2019, September 30, 2018 and June 30, 2019 and nine months ended September 30, 2019 and 2018) | (213 | ) | 327 | 350 | 493 | (459 | ) | ||||||||||||
| Comprehensive (loss) income | $ | (35,922 | ) | $ | 69,839 | $ | (10,539 | ) | $ | (17,772 | ) | $ | 167,299 | ||||||
| Net (loss) income per share (basic) | $ | (0.79 | ) | $ | 1.55 | $ | (0.24 | ) | $ | (0.41 | ) | $ | 3.75 | ||||||
| Net (loss) income per share (diluted) | $ | (0.79 | ) | $ | 1.54 | $ | (0.24 | ) | $ | (0.41 | ) | $ | 3.73 | ||||||
| Weighted average number of shares outstanding (basic) | 45,020 | 44,756 | 45,003 | 44,984 | 44,718 | ||||||||||||||
| Weighted average number of shares outstanding (diluted) | 45,020 | 45,082 | 45,003 | 44,984 | 45,012 | ||||||||||||||
| Dividends declared per share | $ | — | 0.125 | $ | 0.125 | $ | 0.25 | 0.125 | |||||||||||
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MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| Nine Months Ended | |||||||
| September 30, | |||||||
| 2019 | 2018 | ||||||
| (in thousands) | |||||||
| Cash flows from operating activities: | |||||||
| Net (loss) income | $ | (18,265 | ) | $ | 167,758 | ||
| Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities: | |||||||
| Equity based compensation | — | 17,487 | |||||
| Stock based compensation | 3,367 | 4,331 | |||||
| Depreciation, depletion, accretion and amortization | 88,512 | 89,718 | |||||
| Amortization of coil tubing strings | 1,236 | 1,473 | |||||
| Amortization of debt origination costs | 245 | 299 | |||||
| Bad debt expense | 1,230 | (14,543 | ) | ||||
| Loss (gain) on disposal of property and equipment | 245 | (185 | ) | ||||
| Impairment of long-lived assets | 6,542 | 4,769 | |||||
| Inventory obsolescence | 1,349 | — | |||||
| Deferred income taxes | (32,183 | ) | 6,418 | ||||
| Other | (539 | ) | — | ||||
| Changes in assets and liabilities, net of acquisitions of businesses: | |||||||
| Accounts receivable, net | (33,042 | ) | (132,553 | ) | |||
| Receivables from related parties | 2,622 | 8,453 | |||||
| Inventories | 1,415 | (2,665 | ) | ||||
| Prepaid expenses and other assets | 3,713 | 1,814 | |||||
| Accounts payable | (27,187 | ) | (5,179 | ) | |||
| Payables to related parties | 117 | 24 | |||||
| Accrued expenses and other liabilities | (19,121 | ) | (405 | ) | |||
| Income taxes payable | (72,501 | ) | 135,578 | ||||
| Net cash (used in) provided by operating activities | (92,245 | ) | 282,592 | ||||
| Cash flows from investing activities: | |||||||
| Purchases of property and equipment | (34,637 | ) | (144,898 | ) | |||
| Purchases of property and equipment from related parties | (253 | ) | (4,632 | ) | |||
| Business acquisitions | — | (14,456 | ) | ||||
| Contributions to equity investee | (680 | ) | — | ||||
| Proceeds from disposal of property and equipment | 2,491 | 1,213 | |||||
| Net cash used in investing activities | (33,079 | ) | (162,773 | ) | |||
| Cash flows from financing activities: | |||||||
| Borrowings from lines of credit | 138,000 | 77,000 | |||||
| Repayments of lines of credit | (58,000 | ) | (176,900 | ) | |||
| Dividends paid | (11,219 | ) | (5,594 | ) | |||
| Principal payments on financing leases and equipment financing notes | (1,534 | ) | (219 | ) | |||
| Net cash provided by (used in) financing activities | 67,247 | (105,713 | ) | ||||
| Effect of foreign exchange rate on cash | 50 | (51 | ) | ||||
| Net change in cash and cash equivalents | (58,027 | ) | 14,055 | ||||
| Cash and cash equivalents at beginning of period | 67,625 | 5,637 | |||||
| Cash and cash equivalents at end of period | $ | 9,598 | $ | 19,692 | |||
| Supplemental disclosure of cash flow information: | |||||||
| Cash paid for interest | $ | 3,280 | $ | 2,726 | |||
| Cash paid for income taxes | $ | 116,448 | $ | 32,269 | |||
| Supplemental disclosure of non-cash transactions: | |||||||
| Purchases of property and equipment included in accounts payable | $ | 1,203 | $ | 21,124 | |||
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MAMMOTH ENERGY SERVICES, INC. SEGMENT INCOME STATEMENTS (in thousands) | ||||||||||||||||||
| Three months ended September 30, 2019 | Infrastructure | Pressure Pumping | Sand | All Other | Eliminations | Total | ||||||||||||
| Revenue from external customers | $ | 37,289 | $ | 43,887 | $ | 12,634 | $ | 19,607 | $ | — | $ | 113,417 | ||||||
| Intersegment revenues | — | 725 | 5,727 | 367 | (6,819 | ) | — | |||||||||||
| Total revenue | 37,289 | 44,612 | 18,361 | 19,974 | (6,819 | ) | 113,417 | |||||||||||
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 36,940 | 33,059 | 18,547 | 22,588 | — | 111,134 | ||||||||||||
| Intersegment cost of revenues | — | 6,054 | 326 | 439 | (6,819 | ) | — | |||||||||||
| Total cost of revenue | 36,940 | 39,113 | 18,873 | 23,027 | (6,819 | ) | 111,134 | |||||||||||
| Selling, general and administrative | 7,322 | 3,669 | 1,314 | 2,118 | — | 14,423 | ||||||||||||
| Depreciation, depletion, amortization and accretion | 7,953 | 10,176 | 4,022 | 7,640 | — | 29,791 | ||||||||||||
| Impairment of long-lived assets | — | — | — | 6,542 | — | 6,542 | ||||||||||||
| Operating (loss) income | (14,926 | ) | (8,346 | ) | (5,848 | ) | (19,353 | ) | — | (48,473 | ) | |||||||
| Interest expense, net | 599 | 316 | 43 | 440 | — | 1,398 | ||||||||||||
| Other (income) expense, net | (6,239 | ) | (3 | ) | 99 | (225 | ) | — | (6,368 | ) | ||||||||
| (Loss) income before income taxes | $ | (9,286 | ) | $ | (8,659 | ) | $ | (5,990 | ) | $ | (19,568 | ) | $ | — | $ | (43,503 | ) | |
| Three months ended September 30, 2018 | Infrastructure | Pressure Pumping | Sand | All Other | Eliminations | Total | ||||||||||||
| Revenue from external customers | $ | 237,052 | $ | 93,360 | $ | 18,742 | $ | 34,889 | $ | — | $ | 384,043 | ||||||
| Intersegment revenues | — | 809 | 18,268 | 781 | (19,858 | ) | — | |||||||||||
| Total revenue | 237,052 | 94,169 | 37,010 | 35,670 | (19,858 | ) | 384,043 | |||||||||||
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 128,267 | 55,490 | 29,470 | 34,338 | — | 247,565 | ||||||||||||
| Intersegment cost of revenues | 37 | 19,002 | 546 | 263 | (19,848 | ) | — | |||||||||||
| Total cost of revenue | 128,304 | 74,492 | 30,016 | 34,601 | (19,848 | ) | 247,565 | |||||||||||
| Selling, general and administrative | (54,200 | ) | 4,508 | 1,618 | 2,750 | — | (45,324 | ) | ||||||||||
| Depreciation, depletion, amortization and accretion | 6,591 | 12,720 | 4,184 | 8,520 | — | 32,015 | ||||||||||||
| Impairment of long-lived assets | — | 143 | — | 4,439 | — | 4,582 | ||||||||||||
| Operating income (loss) | 156,357 | 2,306 | 1,192 | (14,640 | ) | (10 | ) | 145,205 | ||||||||||
| Interest expense, net | 159 | 150 | 37 | 112 | — | 458 | ||||||||||||
| Other expense, net | 181 | 2 | 199 | 18 | — | 400 | ||||||||||||
| Income (loss) before income taxes | $ | 156,017 | $ | 2,154 | $ | 956 | $ | (14,770 | ) | $ | (10 | ) | $ | 144,347 | ||||
| Three months ended June 30, 2019 | Infrastructure | Pressure Pumping | Sand | All Other | Eliminations | Total | ||||||||||||
| Revenue from external customers | $ | 41,821 | $ | 82,973 | $ | 29,223 | $ | 27,803 | $ | — | $ | 181,820 | ||||||
| Intersegment revenues | — | 1,668 | 11,170 | 584 | (13,422 | ) | — | |||||||||||
| Total revenue | 41,821 | 84,641 | 40,393 | 28,387 | (13,422 | ) | 181,820 | |||||||||||
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 44,864 | 59,835 | 32,676 | 30,640 | — | 168,015 | ||||||||||||
| Intersegment cost of revenues | — | 11,797 | 1,141 | 562 | (13,500 | ) | — | |||||||||||
| Total cost of revenue | 44,864 | 71,632 | 33,817 | 31,202 | (13,500 | ) | 168,015 | |||||||||||
| Selling, general and administrative | 3,035 | 2,664 | 1,380 | 2,376 | — | 9,455 | ||||||||||||
| Depreciation, depletion, amortization and accretion | 7,818 | 10,174 | 4,528 | 7,625 | — | 30,145 | ||||||||||||
| Operating income (loss) | (13,896 | ) | 171 | 668 | (12,816 | ) | 78 | (25,795 | ) | |||||||||
| Interest expense, net | 386 | 452 | 72 | 641 | — | 1,551 | ||||||||||||
| Other expense, net | (4,045 | ) | 9 | (32 | ) | 49 | — | (4,019 | ) | |||||||||
| Income (loss) before income taxes | $ | (10,237 | ) | $ | (290 | ) | $ | 628 | $ | (13,506 | ) | $ | 78 | $ | (23,327 | ) | ||
| Nine months ended September 30, 2019 | Infrastructure | Pressure Pumping | Sand | All Other | Eliminations | Total | ||||||||||||
| Revenue from external customers | $ | 187,831 | $ | 217,456 | $ | 66,820 | $ | 85,268 | $ | — | $ | 557,375 | ||||||
| Intersegment revenues | — | 3,936 | 29,795 | 1,610 | (35,341 | ) | — | |||||||||||
| Total revenue | 187,831 | 221,392 | 96,615 | 86,878 | (35,341 | ) | 557,375 | |||||||||||
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 140,768 | 157,106 | 81,475 | 88,871 | — | 468,220 | ||||||||||||
| Intersegment cost of revenues | 1 | 31,388 | 2,513 | 1,499 | (35,401 | ) | — | |||||||||||
| Total cost of revenue | 140,769 | 188,494 | 83,988 | 90,370 | (35,401 | ) | 468,220 | |||||||||||
| Selling, general and administrative | 19,874 | 9,544 | 4,214 | 7,581 | — | 41,213 | ||||||||||||
| Depreciation, depletion, amortization and accretion | 23,490 | 30,244 | 11,423 | 23,355 | — | 88,512 | ||||||||||||
| Impairment of long-lived assets | — | — | — | 6,542 | — | 6,542 | ||||||||||||
| Operating income (loss) | 3,698 | (6,890 | ) | (3,010 | ) | (40,970 | ) | 60 | (47,112 | ) | ||||||||
| Interest expense, net | 1,024 | 965 | 145 | 1,338 | — | 3,472 | ||||||||||||
| Other (income) expense, net | (35,108 | ) | 5 | 67 | 92 | — | (34,944 | ) | ||||||||||
| Income (loss) before income taxes | $ | 37,782 | $ | (7,860 | ) | $ | (3,222 | ) | $ | (42,400 | ) | $ | 60 | $ | (15,640 | ) | ||
| Nine months ended September 30, 2018 | Infrastructure | Pressure Pumping | Sand | All Other | Eliminations | Total | ||||||||||||
| Revenue from external customers | $ | 922,761 | $ | 290,272 | $ | 92,684 | $ | 106,169 | $ | — | $ | 1,411,886 | ||||||
| Intersegment revenues | — | 6,441 | 48,186 | 4,974 | (59,601 | ) | — | |||||||||||
| Total revenue | 922,761 | 296,713 | 140,870 | 111,143 | (59,601 | ) | 1,411,886 | |||||||||||
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 532,532 | 183,695 | 97,917 | 99,350 | — | 913,494 | ||||||||||||
| Intersegment cost of revenues | 2,582 | 50,578 | 5,851 | 590 | (59,601 | ) | — | |||||||||||
| Total cost of revenue | 535,114 | 234,273 | 103,768 | 99,940 | (59,601 | ) | 913,494 | |||||||||||
| Selling, general and administrative | 17,437 | 27,993 | 5,049 | 7,835 | — | 58,314 | ||||||||||||
| Depreciation, depletion, amortization and accretion | 13,092 | 40,535 | 10,381 | 25,710 | — | 89,718 | ||||||||||||
| Impairment of long-lived assets | — | 143 | — | 4,626 | — | 4,769 | ||||||||||||
| Operating income (loss) | 357,118 | (6,231 | ) | 21,672 | (26,968 | ) | — | 345,591 | ||||||||||
| Interest expense, net | 341 | 995 | 193 | 1,125 | — | 2,654 | ||||||||||||
| Other expense (income), net | 513 | 94 | 222 | 85 | — | 914 | ||||||||||||
| Income (loss) before income taxes | $ | 356,264 | $ | (7,320 | ) | $ | 21,257 | $ | (28,178 | ) | $ | — | $ | 342,023 | ||||
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, inventory obsolescence charges, acquisition related costs, public offering costs, equity based compensation, stock based compensation, interest expense, net, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets) and provision (benefit) for income taxes, further adjusted to add back interest on trade accounts receivable. The Company excludes the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within the energy service industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (loss) or cash flows from operating activities as determined in accordance with GAAP or as an indicator of Mammoth's operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Mammoth's computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company believes that Adjusted EBITDA is a widely followed measure of operating performance and may also be used by investors to measure its ability to meet debt service requirements.
The following tables provide a reconciliation of Adjusted EBITDA to the GAAP financial measure of net income (loss) on a consolidated basis and for each of the Company's segments (in thousands):
Consolidated
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||
| Reconciliation of Adjusted EBITDA to net (loss) income: | 2019 | 2018 | 2019 | 2019 | 2018 | ||||||||||||||
| Net (loss) income | $ | (35,709 | ) | $ | 69,512 | $ | (10,889 | ) | $ | (18,265 | ) | $ | 167,758 | ||||||
| Depreciation, depletion, accretion and amortization expense | 29,791 | 32,015 | 30,145 | 88,512 | 89,718 | ||||||||||||||
| Impairment of long-lived assets | 6,542 | 4,582 | — | 6,542 | 4,769 | ||||||||||||||
| Inventory obsolescence charges | 1,349 | — | — | 1,349 | — | ||||||||||||||
| Acquisition related costs | — | 99 | 45 | 45 | 130 | ||||||||||||||
| Public offering costs | — | 260 | — | — | 991 | ||||||||||||||
| Equity based compensation | — | — | — | — | 17,487 | ||||||||||||||
| Stock based compensation | 1,134 | 1,415 | 944 | 3,367 | 4,331 | ||||||||||||||
| Interest expense, net | 1,398 | 458 | 1,551 | 3,472 | 2,654 | ||||||||||||||
| Other (income) expense, net | (6,368 | ) | 400 | (4,019 | ) | (34,944 | ) | 914 | |||||||||||
| Interest on trade accounts receivable | 5,896 | — | 3,234 | 34,865 | — | ||||||||||||||
| (Benefit) provision for income taxes | (7,794 | ) | 74,835 | (12,438 | ) | 2,625 | 174,265 | ||||||||||||
| Adjusted EBITDA | $ | (3,761 | ) | $ | 183,576 | $ | 8,573 | $ | 87,568 | $ | 463,017 | ||||||||
Infrastructure Services
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||
| Reconciliation of Adjusted EBITDA to net (loss) income: | 2019 | 2018 | 2019 | 2019 | 2018 | ||||||||||||||
| Net (loss) income | $ | (10,763 | ) | $ | 78,405 | $ | 6,210 | $ | 31,113 | $ | 178,064 | ||||||||
| Depreciation and amortization expense | 7,953 | 6,591 | 7,818 | 23,490 | 13,092 | ||||||||||||||
| Acquisition related costs | — | — | 12 | 12 | (4 | ) | |||||||||||||
| Public offering costs | — | 123 | — | — | 483 | ||||||||||||||
| Stock based compensation | 217 | 555 | 9 | 688 | 1,618 | ||||||||||||||
| Interest expense | 599 | 159 | 386 | 1,024 | 341 | ||||||||||||||
| Other (income) expense, net | (6,239 | ) | 181 | (4,045 | ) | (35,108 | ) | 513 | |||||||||||
| Interest on trade accounts receivable | 5,896 | — | 3,234 | 34,865 | — | ||||||||||||||
| Provision (benefit) for income taxes | 1,477 | 77,612 | (16,447 | ) | 6,670 | 178,200 | |||||||||||||
| Adjusted EBITDA | $ | (860 | ) | $ | 163,626 | $ | (2,823 | ) | $ | 62,754 | $ | 372,307 | |||||||
Pressure Pumping Services
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||
| Reconciliation of Adjusted EBITDA to net (loss) income: | 2019 | 2018 | 2019 | 2019 | 2018 | ||||||||||||||
| Net (loss) income | $ | (8,659 | ) | $ | 2,154 | $ | (290 | ) | $ | (7,860 | ) | $ | (7,320 | ) | |||||
| Depreciation and amortization expense | 10,176 | 12,720 | 10,174 | 30,244 | 40,535 | ||||||||||||||
| Impairment of long-lived assets | — | 143 | — | — | 143 | ||||||||||||||
| Acquisition related costs | — | 6 | 18 | 18 | 39 | ||||||||||||||
| Public offering costs | — | 62 | — | — | 264 | ||||||||||||||
| Equity based compensation | — | — | — | — | 17,487 | ||||||||||||||
| Stock based compensation | 503 | 423 | 489 | 1,402 | 1,294 | ||||||||||||||
| Interest expense | 316 | 150 | 452 | 965 | 995 | ||||||||||||||
| Other (income) expense, net | (3 | ) | 2 | 9 | 5 | 94 | |||||||||||||
| Adjusted EBITDA | $ | 2,333 | $ | 15,660 | $ | 10,852 | $ | 24,774 | $ | 53,531 | |||||||||
Natural Sand Proppant Services
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||
| Reconciliation of Adjusted EBITDA to net (loss) income: | 2019 | 2018 | 2019 | 2019 | 2018 | ||||||||||||||
| Net (loss) income | $ | (5,990 | ) | $ | 956 | $ | 628 | $ | (3,222 | ) | $ | 21,257 | |||||||
| Depreciation, depletion, accretion and amortization expense | 4,022 | 4,184 | 4,528 | 11,423 | 10,381 | ||||||||||||||
| Acquisition related costs | — | — | 8 | 8 | (38 | ) | |||||||||||||
| Public offering costs | — | 49 | — | — | 144 | ||||||||||||||
| Stock based compensation | 216 | 211 | 236 | 656 | 602 | ||||||||||||||
| Interest expense | 43 | 37 | 72 | 145 | 193 | ||||||||||||||
| Other expense (income), net | 99 | 199 | (32 | ) | 67 | 222 | |||||||||||||
| Adjusted EBITDA | $ | (1,610 | ) | $ | 5,636 | $ | 5,440 | $ | 9,077 | $ | 32,761 | ||||||||
Other Services(a)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||
| Reconciliation of Adjusted EBITDA to net loss: | 2019 | 2018 | 2019 | 2019 | 2018 | ||||||||||||||
| Net loss | $ | (10,297 | ) | $ | (11,993 | ) | $ | (17,515 | ) | $ | (38,356 | ) | $ | (24,243 | ) | ||||
| Depreciation and amortization expense | 7,640 | 8,520 | 7,625 | 23,355 | 25,710 | ||||||||||||||
| Impairment of long-lived assets | 6,542 | 4,439 | — | 6,542 | 4,626 | ||||||||||||||
| Inventory obsolescence charges | 1,349 | — | — | 1,349 | — | ||||||||||||||
| Acquisition related costs | — | 93 | 7 | 7 | 133 | ||||||||||||||
| Public offering costs | — | 26 | — | — | 100 | ||||||||||||||
| Stock based compensation | 198 | 226 | 210 | 621 | 817 | ||||||||||||||
| Interest expense, net | 440 | 112 | 641 | 1,338 | 1,125 | ||||||||||||||
| Other (income) expense, net | (225 | ) | 18 | 49 | 92 | 85 | |||||||||||||
| (Benefit) provision for income taxes | (9,271 | ) | (2,777 | ) | 4,009 | (4,045 | ) | (3,935 | ) | ||||||||||
| Adjusted EBITDA | $ | (3,624 | ) | $ | (1,336 | ) | $ | (4,974 | ) | $ | (9,097 | ) | $ | 4,418 | |||||
- Includes results for Mammoth's contract land and directional drilling, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling and remote accommodations services and corporate related activities. The Company's corporate related activities do not generate revenue.
Released November 7, 2019