Mammoth Energy Services, Inc. Announces Fourth Quarter and Full Year 2017 Operational and Financial Results

OKLAHOMA CITY, Feb. 21, 2018 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. ("Mammoth" or the "Company") (NASDAQ:TUSK) today reported financial and operational results for the fourth quarter and full year ended December 31, 2017.

Key Highlights for and subsequent to the Fourth Quarter 2017:

  • Total revenue was $369.0 million for the three months ended December 31, 2017, up 147% sequentially from $149.3 million for the three months ended September 30, 2017 and up 463% from $65.6 million for the three months ended December 31, 2016. Total revenue was $691.5 million for the year ended December 31, 2017, up 200% from $230.6 million for the year ended December 31, 2016.
  • Net income for the three months ended December 31, 2017 was $65.9 million, an improvement of $66.7 million from a net loss of $0.8 million for the three months ended September 30, 2017 and an improvement of $123.6 million from a net loss of $57.7 million for the three months ended December 31, 2016. Net income was $59.0 million for the year ended December 31, 2017, a $151.4 million improvement from a net loss of $92.5 million for the year ended December 31, 2016.
  • Adjusted EBITDA (as defined and reconciled below) was $110.5 million for the three months ended December 31, 2017, up 294% sequentially from $28.0 million for the three months ended September 30, 2017 and up 691% from $14.0 million for the three months ended December 31, 2016. Adjusted EBITDA was $165.3 million for the year ended December 31, 2017, up 301% from $41.3 million for the year ended December 31, 2016.
  • Executed an amendment to Mammoth subsidiary Cobra Acquisitions LLC's contract with the Puerto Rico Electric Power Authority, or PREPA, to aid in the restoration of the electric utility infrastructure in Puerto Rico, increasing the total contract value to approximately $445 million, up from $200 million originally.
  • 2018 capital expenditures expected to be approximately $125.0 million for expanding infrastructure operations, upgrading and expanding sand facilities, expanding the rental fleet into the mid-continent and adding selective equipment.

Arty Straehla, Mammoth's Chief Executive Officer, stated, "The expansion that Mammoth undertook in 2017 has built a base in three core areas - infrastructure, pressure pumping and sand - that will serve as a platform on which to grow going forward. With the core businesses now in place, we intend to strategically build upon these business segments throughout 2018 and we expect to begin generating significant free cash flows that will be used to bolster our balance sheet, while providing flexibility to expand into the areas where we see the best opportunities."

Pressure Pumping Services

Mammoth's pressure pumping segment contributed revenues (inclusive of intersegment revenues) of $111.9 million on 1,375 stages for the three months ended December 31, 2017, a 46% increase from $76.7 million on 1,617 stages for the three months ended September 30, 2017 and a 247% increase from $32.3 million on 764 stages for the three months ended December 31, 2016. Utilization during the three months ended December 31, 2017 remained strong. 

The pressure pumping segment contributed revenues (inclusive of intersegment revenues) of $279.4 million on 5,139 stages and $124.4 million on 2,442 stages, respectively, for the years ended December 31, 2017 and 2016.

During 2017, the Company expanded its pressure pumping services into the SCOOP/STACK and the Permian Basin with the startup of its fourth, fifth and sixth pressure pumping fleets in June, August and October, respectively.

Infrastructure Services

Mammoth's infrastructure services segment contributed revenues of $209.2 million for the three months ended December 31, 2017, a $195.7 million increase from $13.5 million for the three months ended September 30, 2017. The infrastructure segment contributed revenues of $224.4 million for the year ended December 31, 2017. During 2016, Mammoth did not provide infrastructure services. As of 2/20/2018, we had a total infrastructure backlog in excess of $500 million.

During 2017, Mammoth broadened its service offerings by expanding into the utility infrastructure business with the formation of Cobra Acquisitions, LLC ("Cobra") and the acquisitions of Higher Power Electrical, LLC in April 2017 and 5 Star Electric, LLC in July 2017. Effective October 19, 2017, Cobra entered into an emergency master services agreement with PREPA for repairs to PREPA’s electrical grid as a result of Hurricane Maria. The initial PREPA contract has a one-year term and provided for up to $200.0 million of revenue. The initial PREPA contract was fully applied to services performed by Cobra as of January 3, 2018. On January 28, 2018, Cobra and PREPA amended the initial PREPA contract to increase the total contract amount by an additional $245.4 million of revenue up to a total of $445.4 million in revenue.

Natural Sand Proppant Production

Mammoth's natural sand proppant segment contributed revenues (inclusive of intersegment revenues) of $43.9 million for the three months ended December 31, 2017, a 34% increase from $32.7 million for the three months ended September 30, 2017 and a 285% increase from $11.4 million for the three months ended December 31, 2016. Tons of sand sold for the three months ended December 31, 2017 totaled 600,182 compared to 474,933 for the three months ended September 30, 2017 and 235,860 for the three months ended December 31, 2016.

Mammoth's natural sand proppant segment contributed revenues (inclusive of intersegment revenues) of $117.0 million for the year ended December 31, 2017, up 207% from $38.1 million for the year ended December 31, 2016. Tons of sand sold increased 147% from 683,768 for the year ended December 31, 2016 to 1,690,032 for the year ended December 31, 2017.

The Company completed the acquisitions of Taylor Frac and the Chieftain Sand assets (renamed Piranha Proppant) during the second quarter of 2017 with sand sales from the Piranha Proppant facility commencing in June 2017. The expansion of the Taylor Frac facility is underway with the expectation of increasing capacity to 1.75 Mmtpa (up from 0.7 Mmtpa) by the end of the first quarter of 2018. Once the Taylor Frac expansion is completed, Mammoth's processing capacity will grow to approximately 4 Mmtpa. The Company intends to upgrade certain equipment at its Piranha facility, which is expected to further increase its total sand processing capacity to 4.4 Mmtpa by mid-year 2018.

Contract Land and Directional Drilling Services

Mammoth's contract land and directional drilling segment contributed revenues (inclusive of intersegment revenues) of $13.7 million for the three months ended December 31, 2017 compared to $13.6 million for the three months ended September 30, 2017 and $11.7 million for the three months ended December 31, 2016. Five horizontal rigs on average operated during the three months ended December 31, 2017 and September 30, 2017 compared to four during the three months ended December 31, 2016. The average drilling day rate was $15,964, $14,800 and $13,590, respectively, for the three months ended December 31, 2017, September 30, 2017 and December 31, 2016.

The drilling segment contributed revenues (inclusive of intersegment revenues) of $50.5 million for the year ended December 31, 2017, up 58% from $32.0 million for the year ended December 31, 2016. Five horizontal rigs on average operated during the year ended December 31, 2017, at an average day rate of $14,800 compared to four rigs at an average day rate of $12,900 during the year ended December 31, 2016. During 2018, Mammoth anticipates five to six rigs will operate on average throughout the year.

Other Services

Mammoth's other services, including coil tubing, pressure control, flowback, cementing, equipment rentals and remote accommodations, contributed revenues (inclusive of intersegment revenues) of $15.2 million for the three months ended December 31, 2017 compared to $17.4 million for the three months ended September 30, 2017 and $10.4 million for the three months ended December 31, 2016.

Revenues for other services (inclusive of intersegment revenues) were $51.7 million and $41.0 million, respectively, for the years ended December 31, 2017 and 2016. The increase is primarily due to revenues derived from Stingray Cementing and Stingray Energy Services, which were acquired in June 2017.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses increased to $27.4 million for the three months ended December 31, 2017 from $8.0 million for the three months ended September 30, 2017 and $6.0 million for the three months ended December 31, 2016. The sequential increase is primarily attributable to increased bad debt expense and increased compensation and benefits. SG&A expenses, as a percentage of total revenue, were 7% for the three months ended December 31, 2017 compared to 5% for the three months ended September 30, 2017 and 9% for the three months ended December 31, 2016.

SG&A expenses increased to $49.9 million for the year ended December 31, 2017 from $18.0 million for the year ended December 31, 2016. The increase was primarily attributable to increased compensation and benefits, bad debt expense, and professional service charges. SG&A expenses, as a percentage of total revenue, were 7% for the year ended December 31, 2017 compared to 8% for the year ended December 31, 2016.

Liquidity

As of December 31, 2017, we had net debt of approximately $94.3 million reflecting $99.9 million in borrowings outstanding under our $170.0 million revolving credit facility and $5.6 million of cash on hand. As of December 31, 2017, we had approximately $62.8 million of available borrowing capacity under our revolving credit facility, after giving effect to $6.5 million of outstanding letters of credit.

Capital Expenditures

The following table summarizes our capital expenditures by segment for the periods indicated (in thousands):

  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,
  2017   2016   2017   2017   2016
Pressure pumping services(a) $ 12,870     $ 6,410     $ 19,581     $ 85,853     $ 7,673  
Infrastructure services(b) 8,131         8,055     20,144      
Natural sand proppant services(c) 8,478     6     4,928     16,376     528  
Contract and directional drilling services(d) 669     1,216     2,357     8,927     2,710  
Other(e) 1,431         777     2,553     829  
Total capital expenditures $ 31,579     $ 7,632     $ 35,698     $ 133,853     $ 11,740  
                                       

(a)  Capital expenditures include three new pressure pumping fleets during the year ended December 31, 2017 and various other pressure pumping equipment.
(b)  Capital expenditures primarily for truck and equipment purchases for the year ended December 31, 2017.
(c)  Capital expenditures include a conveyor and plant additions for the years ended December 31, 2017 and 2016.
(d)  Capital expenditures primarily for upgrades to the rig fleet for the years ended December 31, 2017 and 2016.
(e)  Capital expenditures primarily for equipment upgrades for the years ended December 31, 2017 and 2016.

Explanatory Note Regarding Financial Information

The historical financial information for periods prior to October 12, 2016, contained in this release relates to Mammoth Energy Partners LP, a Delaware limited partnership (the "Partnership"). On October 12, 2016, the Partnership was converted into a Delaware limited liability company named Mammoth Energy Partners LLC ("Mammoth LLC"), and then each member of Mammoth LLC contributed all of its membership interests in Mammoth LLC to the Company. Prior to the conversion and the contribution, the Company was a wholly-owned subsidiary of the Partnership. Following the conversion and the contribution, Mammoth LLC (as the converted successor to the Partnership) became a wholly-owned subsidiary of the Company.

In October 2016, Mammoth completed its initial public offering (the "IPO") and its common stock began trading on The NASDAQ Global Select Market under the symbol “TUSK.” Unless the context otherwise requires, references in this release to Mammoth or the Company, when used in a historical context for periods prior to October 12, 2016 refer to the Partnership and its subsidiaries. References in this release to Mammoth or the Company, when used for periods beginning on or after October 12, 2016 refer to Mammoth and its subsidiaries.

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.

Based on the CODM's assessment, effective December 31, 2017, the Company identified four reportable segments: pressure pumping services; infrastructure services; natural sand proppant services; and contract land and directional drilling services. For the year ended December 31, 2016, the Company identified five reportable segments consisting of pressure pumping services, well services, natural sand proppant services, contract land and directional drilling services and other energy services. The Company changed its reportable segment presentation in 2017, as it no longer considers well services activities, which included Redback Energy Services, Redback Coil Tubing and Mammoth Energy Partners, and its other energy services activities, which included Sand Tiger, to be significant to the understanding of the Company's results. The Company now presents the results of its well service and other energy service activities as "Other." Additionally, during 2017, the Company added a new reportable segment for its infrastructure service activities. The financial results by segment below for the three months ended September 30, 2017 and the three months and years ended December 31, 2017 and 2016 reflect this change in reportable segments.

Prior to 2017, information used by the CODM in measuring segment profits or losses did not include intersegment revenues and costs as they were deemed immaterial for decision-making purposes. In 2017, the Company's CODM changed the way segment profits and losses are measured to include intersegment revenues and expenses. The financial results by segment below for the three months ended September 30, 2017 and the three months and years ended December 31, 2017 and 2016 reflect this change in measurement method.

On June 5, 2017, the Company completed the acquisition of (1) Sturgeon Acquisitions LLC and its wholly owned subsidiaries Taylor Frac, LLC, Taylor Real Estate Investments, LLC and South River Road, LLC (collectively, "Sturgeon"); (2) Stingray Energy Services, LLC and (3) Stingray Cementing, LLC (together with Stingray Energy Services, the “Stingray Acquisition”) in exchange for the issuance by Mammoth of an aggregate of 7,000,000 shares of its common stock.

Prior to the acquisition, the Company and Sturgeon were under common control and it is required under accounting principles generally accepted in the United States of America to account for this common control acquisition in a manner similar to the pooling of interest method of accounting. Therefore, the Company's historical financial information has been recast to combine Sturgeon with the Company as if the acquisition had been completed at commencement of Sturgeon's operations on September 13, 2014.

Conference Call Information

Mammoth will host a conference call on Thursday, February 22, 2018 at 10:00 a.m. CST to discuss its fourth quarter 2017 financial and operational results. The telephone number to access the conference call is 844-265-1561 or international dial in 216-562-0385. The conference ID for the call is 1276679. Mammoth encourages those who would like to participate in the call to place calls between 9:50 a.m. and 10:00 a.m. CST.

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 corporate utilities through its infrastructure services. Mammoth’s suite of services includes pressure pumping services, infrastructure services, natural sand proppant services, contract land and directional drilling services and other services. Other services consists of coil tubing, pressure control, flowback, cementing, equipment rentals and remote accommodation 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, Investor Relations
dcrist@mammothenergy.com
(405) 608-6048

Media Contact:
Andy Wilson
Andrew.wilson@edelman.com
(917) 607-6601

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 Securities and Exchange Commission (the “SEC”), including those relating to our acquisitions and our contracts, many of which are beyond our control, which may cause actual results to differ materially from our historical experience and our present expectations or projections which are implied or expressed by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, risks relating to economic conditions; volatility of crude oil and natural gas commodity prices; delays in or failure of delivery of current or future orders of specialized equipment; the loss of or interruption in operations of one or more key suppliers or customers; solvency of counterparties to our contracts and their ability to timely pay for our services; oil and gas market conditions; the effects of government regulation, permitting and other legal requirements, including new legislation or regulation of hydraulic fracturing; operating risks; the adequacy of our capital resources and liquidity; weather; litigation; competition in the oil and natural gas and infrastructure industries; and costs and availability of resources.

Readers are cautioned not to place undue reliance on any forward-looking statement which speaks only as of the date on which such statement is made. We undertake no obligation to correct, revise or update any forward-looking statement after the date such statement is made, whether as a result of new information, future events or otherwise, except as required by applicable law.


MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
 
ASSETS   December 31,
    2017   2016
CURRENT ASSETS   (in thousands)
Cash and cash equivalents   $ 5,637     $ 29,239  
Accounts receivable, net   243,746     21,169  
Receivables from related parties   33,788     27,589  
Inventories   17,814     6,124  
Prepaid Expenses   12,552     4,426  
Other current assets   886     392  
Total current assets   314,423     88,939  
         
Property, plant and equipment, net   351,017     242,120  
Sand reserves   74,769     55,367  
Intangible assets, net - customer relationships   9,623     15,950  
Intangible assets, net - trade names   6,516     5,617  
Goodwill   99,811     88,727  
Deferred income tax asset   6,739      
Other non-current assets   4,345     5,642  
Total assets   $ 867,243     $ 502,362  
         
LIABILITIES AND EQUITY        
CURRENT LIABILITIES        
Accounts payable   $ 141,306     $ 20,469  
Payables to related parties   1,378     203  
Accrued expenses and other current liabilities   40,895     8,546  
Income taxes payable   36,409     28  
Total current liabilities   219,988     29,246  
         
Long-term debt   99,900      
Deferred income taxes   34,147     47,671  
Asset retirement obligation   2,123     260  
Other liabilities   3,289     2,404  
Total liabilities   359,447     79,581  
         
COMMITMENTS AND CONTINGENCIES        
         
EQUITY        
Equity:        
Common stock, $0.01 par value, 200,000,000 shares authorized, 44,589,306 and   446     375  
37,500,000 issued and outstanding at December 31, 2017 and 2016        
Additional paid in capital   508,010     400,206  
Accumulated Deficit   2,001     (56,323 )
Members' equity       81,739  
Accumulated other comprehensive loss   (2,661 )   (3,216 )
Total equity   507,796     422,781  
Total liabilities and equity   $ 867,243     $ 502,362  
                 


MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,
  2017   2016   2017   2017   2016
REVENUE (in thousands, except per share amounts)
Services revenue $ 315,545     $ 23,678     $ 63,113     $ 435,409     $ 89,643  
Services revenue - related parties 31,639     30,480     56,861     166,064     107,147  
Product revenue 18,024     3,401     15,276     47,067     8,052  
Product revenue - related parties 3,755     7,994     14,055     42,956     25,783  
Total Revenue 368,963     65,553     149,305     691,496     230,625  
                   
COST AND EXPENSES                  
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $25,044, $16,046 and $24,153,
respectively, for the three months ended December 31, 2017, December 31, 2016 and September 30, 2016 and $82,686 and
$65,705, respectively, for the years ended December 31, 2017 and 2016)
198,201     37,947     89,346     390,112     140,063  
Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0 and $0,
respectively, for the three months ended December 31, 2017, December 31, 2016 and September 30, 2016 and $0 and $0,
respectively, for the years ended December 31, 2017 and 2016)
707     279     9     1,408     1,063  
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,790, $1,747 and $3,033,
respectively, for the three months ended December 31, 2017, December 31, 2016 and September 30, 2016 and $9,389 and
$6,477, respectively, for the years ended December 31, 2017 and 2016)
33,290     9,043     25,178     91,049     31,892  
Product cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0 and $0,
respectively, for the three months ended December 31, 2017, December 31, 2016 and September 30, 2016 and $0 and $0,
respectively, for the years ended December 31, 2017 and 2016)
    2             3  
Selling, general and administrative 26,931     5,732     7,668     48,405     17,290  
Selling, general and administrative - related parties 495     301     355     1,481     758  
Depreciation, depletion, amortization and accretion 27,770     17,832     27,224     92,124     72,315  
Impairment of long-lived assets 4,146             4,146     1,871  
Total cost and expenses 291,540     71,136     149,780     628,725     265,255  
Operating income (loss) 77,423     (5,583 )   (475 )   62,771     (34,630 )
                   
OTHER (EXPENSE) INCOME                  
Interest expense (1,381 )   (763 )   (1,420 )   (4,310 )   (4,096 )
Bargain purchase gain             4,012      
Other, net 28     (214 )   (319 )   (677 )   158  
Total other expense (1,353 )   (977 )   (1,739 )   (975 )   (3,938 )
Income (loss) before income taxes 76,070     (6,560 )   (2,214 )   61,796     (38,568 )
Provision (benefit) for income taxes 10,155     51,146     (1,413 )   2,832     53,885  
Net income (loss) $ 65,915     $ (57,706 )   $ (801 )   $ 58,964     $ (92,453 )
                   
OTHER COMPREHENSIVE INCOME (LOSS)                  
Foreign currency translation adjustment, net of tax of ($167), $1,732 and $358, respectively, for the three months ended
December 31, 2017, December 31, 2016 and September 30, 2016 and $645 and $1,732, respectively, for 2017 and 2016
(482 )   (605 )   628     555     2,711  
Comprehensive income (loss) $ 65,433     $ (58,311 )   $ (173 )   $ 59,519     $ (89,742 )
                   
Net income (loss) per share (basic) $ 1.48     $ (1.61 )   $ (0.02 )   $ 1.42     $ (2.94 )
Net income (loss) per share (diluted) 1.48     (1.61 )   (0.02 )   1.42     (2.94 )
Weighted average number of shares outstanding 44,579     35,951     44,502     41,548     31,500  
Weighted average number of shares outstanding, including dilutive effect 44,683     35,951     44,502     41,639     31,500  
                             


MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
  Years Ended December 31,
  2017   2016
Cash flows from operating activities (in thousands)
Net income (loss) $ 58,964     $ (92,453 )
Adjustments to reconcile net income (loss) to cash provided by operating activities:      
Equity based compensation 3,741     501  
Depreciation, depletion, amortization and accretion 92,124     72,315  
Amortization of coil tubing strings 2,855     2,028  
Amortization of debt origination costs 399     603  
Bad debt expense 16,206     1,968  
Loss (gain) on disposal of property and equipment 69     (702 )
Gain on bargain purchase (4,012 )    
Impairment of long-lived assets 4,146     1,871  
Deferred income taxes (25,379 )   47,899  
Changes in assets and liabilities:      
Accounts receivable, net (231,751 )   (4,641 )
Receivables from related parties (1,096 )   (2,462 )
Inventories (14,238 )   (624 )
Prepaid expenses and other assets (14,368 )   (198 )
Accounts payable 101,725     1,412  
Payables to related parties 1,174     (249 )
Accrued expenses and other liabilities 30,662     2,420  
Income taxes payable 36,395     1  
Net cash provided by operating activities 57,616     29,689  
       
Cash flows from investing activities:      
Purchases of property and equipment (132,295 )   (11,740 )
Purchases of property and equipment from related parties (1,558 )    
Business acquisitions, net (42,008 )    
Proceeds from disposal of property and equipment 907     4,022  
Business combination cash acquired 2,671      
Net cash used in investing activities (172,283 )   (7,718 )
       
Cash flows from financing activities:      
Borrowings on long-term debt 156,850     28,734  
Repayments of long-term debt (56,950 )   (123,734 )
Proceeds from initial public offering     105,839  
Initial public offering costs     (2,764 )
Debt issuance costs      
Repayment of acquisition-related long-term debt (8,851 )    
Capital distributions     (5,000 )
Net cash provided by financing activities 91,049     3,075  
Effect of foreign exchange rate on cash 16     154  
Net (decrease) increase in cash and cash equivalents (23,602 )   25,200  
Cash and cash equivalents at beginning of period 29,239     4,039  
Cash and cash equivalents at end of period $ 5,637     $ 29,239  
       
Supplemental disclosure of cash flow information:      
Cash paid for interest $ 3,656     $ 3,707  
Cash paid for income taxes $ 840     $ 3,588  
Supplemental disclosure of non-cash transactions:      
Acquisition of Sturgeon, Stingray Cementing LLC and Stingray Energy Services LLC $ 23,091     $  
Purchases of property and equipment included in trade accounts payable $ 15,038     $ 2,789  
               


MAMMOTH ENERGY SERVICES, INC.
HISTORICAL SEGMENT DATA
(in thousands)
 
Three Months Ended December 31, 2017 Pressure Pumping Infrastructure Sand Drilling All Other(a) Eliminations Total
Revenue from external customers $ 111,244   $ 209,229   $ 21,779   $ 13,208   $ 13,503   $   $ 368,963  
Intersegment revenues 617     22,167   446   1,708   (24,938 )  
Total revenue 111,861   209,229   43,946   13,654   15,211   (24,938 ) 368,963  
Cost of revenues, exclusive of depreciation, depletion, amortization and accretion 65,594   108,289   33,289   12,117   12,909     232,198  
Intersegment cost of revenues 22,928   1,443   373   101   58   (24,903 )  
Total cost of revenue 88,522   109,732   33,662   12,218   12,967   (24,903 ) 232,198  
Selling, general and administrative 2,810   20,365   1,875   1,406   970     27,426  
Depreciation, depletion, amortization and accretion 13,590   1,805   2,791   4,657   4,927     27,770  
Impairment of long-lived assets     324   3,822       4,146  
Operating income (loss) 6,939   77,327   5,294   (8,449 ) (3,653 ) (35 ) 77,423  
Interest expense 599   168   107   467   40     1,381  
Other, net 2   (4 ) (40 ) (6 ) 20     (28 )
Income (loss) before income taxes $ 6,338   $ 77,163   $ 5,227   $ (8,910 ) $ (3,713 ) $ (35 ) $ 76,070  
Total expenditures for property, plant and equipment $ 12,870   $ 8,131   $ 8,478   $ 669   $ 1,431   $   31,579  
                                         


Three Months Ended December 31, 2016 Pressure Pumping Infrastructure Sand Drilling All Other(a) Eliminations Total
Revenue from external customers $ 32,002   $   $ 11,408   $ 11,714   $ 10,429   $   $ 65,553  
Intersegment revenues 264     4       (268 )  
Total revenue 32,266     11,412   11,714   10,429   (268 ) 65,553  
Cost of revenues, exclusive of depreciation, depletion, amortization and accretion 21,521     9,210   9,838   6,702     47,271  
Intersegment cost of revenues 4     264       (268 )  
Total cost of revenue 21,525     9,474   9,838   6,702   (268 ) 47,271  
Selling, general and administrative 1,346     812   2,271   1,604     6,033  
Depreciation, depletion, amortization and accretion 9,049     1,749   5,268   1,766     17,832  
Operating income (loss) 346     (623 ) (5,663 ) 357     (5,583 )
Interest expense 96     114   556   (3 )   763  
Other, net 2     14   68   130     214  
Income (loss) before income taxes $ 248   $   $ (751 ) $ (6,287 ) $ 230   $   $ (6,560 )
Total expenditures for property, plant and equipment $ 6,410   $   $ 6   $ 1,216   $   $   7,632  
                                         


Three Months Ended September 30, 2017 Pressure Pumping Infrastructure Sand Drilling All Other(a) Eliminations Total
Revenue from external customers $ 75,705   $ 13,486   $ 29,332   $ 13,644   $ 17,138   $   $ 149,305  
Intersegment revenues 950     3,401     287   (4,638 )  
Total revenue 76,655   13,486   32,733   13,644   17,425   (4,638 ) 149,305  
Cost of revenues, exclusive of depreciation, depletion, amortization and accretion 52,961   10,117   25,178   11,598   14,679     114,533  
Intersegment cost of revenues 3,688     905   45     (4,638 )  
Total cost of revenue 56,649   10,117   26,083   11,643   14,679   (4,638 ) 114,533  
Selling, general and administrative 2,511   886   1,842   1,374   1,410     8,023  
Depreciation, depletion, amortization and accretion 13,039   1,039   3,034   5,036   5,076     27,224  
Operating income (loss) 4,456   1,444   1,774   (4,409 ) (3,740 )   (475 )
Interest expense 592   68   87   570   103     1,420  
Other, net 120   10   98   38   53     319  
Income (loss) before income taxes $ 3,744   $ 1,366   $ 1,589   $ (5,017 ) $ (3,896 ) $   $ (2,214 )
Total expenditures for property, plant and equipment $ 19,581   $ 8,055   $ 4,928   $ 2,357   $ 777   $   35,698  
                                         


Year Ended December 31, 2017 Pressure Pumping Infrastructure Sand Drilling All Other(a) Eliminations Total
Revenue from external customers $ 277,326   $ 224,425   $ 90,023   $ 50,075   $ 49,647   $   $ 691,496  
Intersegment revenues 2,026     27,014   446   2,081   (31,567 )  
Total revenue 279,352   224,425   117,037   50,521   51,728   (31,567 ) 691,496  
Cost of revenues, exclusive of depreciation, depletion, amortization and accretion 183,089   120,117   91,049   46,701   41,613     482,569  
Intersegment cost of revenues 28,147   1,443   1,731   146   65   (31,532 )  
Total cost of revenue 211,236   121,560   92,780   46,847   41,678   (31,532 ) 482,569  
Selling, general and administrative 9,501   21,606   8,190   5,510   5,079     49,886  
Depreciation, depletion, amortization and accretion 45,413   3,185   9,394   19,635   14,497     92,124  
Impairment of long-lived assets     324   3,822       4,146  
Operating income (loss) 13,202   78,074   6,349   (25,293 ) (9,526 ) (35 ) 62,771  
Interest expense 1,622   241   679   1,695   73     4,310  
Bargain purchase gain, net of taxes     (4,012 )       (4,012 )
Other, net 129   6   211   256   75     677  
Income (loss) before income taxes $ 11,451   $ 77,827   $ 9,471   $ (27,244 ) $ (9,674 ) $ (35 ) $ 61,796  
Total expenditures for property, plant and equipment $ 85,853   $ 20,144   $ 16,376   $ 8,927   $ 2,553   $   $ 133,853  
                                           


Year Ended December 31, 2016 Pressure Pumping Infrastructure Sand Drilling All Other(a) Eliminations Total
Revenue from external customers $ 123,856   $   $ 33,835   $ 32,043   $ 40,891   $   $ 230,625  
Intersegment revenues 569     4,267     79   (4,915 )  
Total revenue 124,425     38,102   32,043   40,970   (4,915 ) 230,625  
Cost of revenues, exclusive of depreciation, depletion, amortization and accretion 82,552     31,895   31,848   26,726     173,021  
Intersegment cost of revenues 4,336     561   (8 ) 26   (4,915 )  
Total cost of revenue 86,888     32,456   31,840   26,752   (4,915 ) 173,021  
Selling, general and administrative 4,327     3,337   5,625   4,759     18,048  
Depreciation, depletion, amortization and accretion 37,013     6,483   21,512   7,307     72,315  
Impairment of long-lived assets 139       347   1,385     1,871  
Operating income (loss) (3,942 )   (4,174 ) (27,281 ) 767     (34,630 )
Interest expense 599     434   2,829   234     4,096  
Other, net 27     96   248   (529 )   (158 )
Income (loss) before income taxes $ (4,568 ) $   $ (4,704 ) $ (30,358 ) $ 1,062   $   $ (38,568 )
Total expenditures for property, plant and equipment $ 7,673   $   $ 528   $ 2,709   $ 830   $   11,740  
                                         

a.  Includes results for operations for our coil tubing, pressure control, flowback, cementing, equipment rental and remote accommodations businesses.

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

Adjusted EBITDA

Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. Mammoth defines Adjusted EBITDA as net income (loss) before depreciation, depletion, amortization and accretion expense, impairment of long-lived assets, acquisition related costs, one-time compensation charges associated with the IPO, equity based compensation, interest expense, bargain purchase gain, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets) and provision (benefit) for income taxes. The Company excludes the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within the energy service industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (loss) or cash flows from operating activities as determined in accordance with GAAP or as an indicator of Mammoth's operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Mammoth's computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company believes that Adjusted EBITDA is a widely followed measure of operating performance and may also be used by investors to measure its ability to meet debt service requirements.

The following tables provide a reconciliation of Adjusted EBITDA to the GAAP financial measure of net income (loss) on a consolidated basis and for each of the Company's segments.

Consolidated

  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,
  2017   2016   2017   2017   2016
Reconciliation of Adjusted EBITDA to net income (loss): (in thousands)
Net income (loss) $ 65,915     $ (57,706 )   $ (801 )   $ 58,964     $ (92,453 )
Depreciation, depletion, amortization and accretion 27,770     17,832     27,224     92,124     72,315  
Impairment of long-lived assets 4,146             4,146     1,871  
Acquisition related costs 51         264     2,506      
One-time IPO compensation charges     1,201             1,201  
Equity based compensation 1,093     520     1,028     3,741     501  
Interest expense 1,381     763     1,420     4,310     4,096  
Bargain purchase gain             (4,012 )    
Other (income) expense, net (28 )   214     319     677     (158 )
Provision (benefit) for income taxes 10,155     51,146     (1,413 )   2,832     53,885  
Adjusted EBITDA $ 110,483     $ 13,970     $ 28,041     $ 165,288     $ 41,258  
                                       

Pressure Pumping Services

  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,
  2017   2016   2017   2017   2016
Reconciliation of Adjusted EBITDA to net income (loss): (in thousands)
Net income (loss) $ 6,338     $ 248     $ 3,744     $ 11,451     $ (4,568 )
Depreciation, depletion, amortization and accretion 13,590     9,049     13,039     45,413     37,013  
Impairment of long-lived assets                 139  
Acquisition related costs         1     1      
One-time IPO compensation charges     102             102  
Equity based compensation 438     176     428     1,641     176  
Interest expense 599     96     592     1,622     599  
Other expense, net 2     2     120     129     27  
Adjusted EBITDA $ 20,967     $ 9,673     $ 17,924     $ 60,257     $ 33,488  
                                       

Infrastructure Services

  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,
  2017   2016   2017   2017   2016
Reconciliation of Adjusted EBITDA to net income (loss): (in thousands)
Net income (loss) $ 47,873     $     $ 1,366     $ 48,537     $  
Depreciation, depletion, amortization and accretion 1,805         1,039     3,185      
Acquisition related costs 8         48     98      
Equity based compensation 316         29     345      
Interest expense 168         68     241      
Other expense, net (4 )       10     6      
Provision for income taxes 29,290             29,290      
Adjusted EBITDA $ 79,456     $     $ 2,560     $ 81,702     $  
                                       

Natural Sand Proppant Services

  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,
  2017   2016   2017   2017   2016
Reconciliation of Adjusted EBITDA to net income (loss): (in thousands)
Net income (loss) $ 5,263     $ (751 )   $ 1,565     $ 9,474     $ (4,709 )
Depreciation, depletion, amortization and accretion 2,791     1,749     3,034     9,394     6,483  
Impairment of long-lived assets 324             324      
Acquisition related costs 42         167     2,163      
One-time IPO compensation charges     33             33  
Equity based compensation 184     57     272     708     57  
Interest expense 107     114     87     679     434  
Bargain purchase gain             (4,012 )    
Other (income) expense, net (40 )   14     98     211     96  
(Benefit) provision for income taxes (36 )       24     (4 )   4  
Adjusted EBITDA $ 8,635     $ 1,216     $ 5,247     $ 18,937     $ 2,398  
                                       

Contract Land and Directional Drilling Services

  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,
  2017   2016   2017   2017   2016
Reconciliation of Adjusted EBITDA to net loss: (in thousands)
Net loss $ (8,910 )   $ (6,287 )   $ (5,017 )   $ (27,244 )   $ (30,358 )
Depreciation, depletion, amortization and accretion 4,657     5,268     5,036     19,635     21,512  
Impairment of long-lived assets 3,822             3,822     347  
Acquisition related costs         (16 )   8      
One-time IPO compensation charges     964             964  
Equity based compensation 77     110     138     507     110  
Interest expense 467     556     570     1,695     2,829  
Other (income) expense, net (6 )   68     38     256     248  
Adjusted EBITDA $ 107     $ 679     $ 749     $ (1,321 )   $ (4,348 )
                                       

Other

  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,
  2017   2016   2017   2017   2016
Reconciliation of Adjusted EBITDA to net income (loss): (in thousands)
Net income (loss) $ 15,386     $ (50,916 )   $ (2,459 )   $ 16,780     $ (52,820 )
Depreciation, depletion, amortization and accretion 4,927     1,766     5,076     14,497     7,307  
Impairment of long-lived assets                 1,385  
Acquisition related costs 2         65     237      
One-time IPO compensation charges     102             102  
Equity based compensation 77     176     162     539     157  
Interest expense 40     (3 )   103     73     234  
Other expense (income), net 20     130     53     75     (529 )
(Benefit) provision for income taxes (19,099 )   51,145     (1,437 )   (26,454 )   53,881  
Adjusted EBITDA $ 1,353     $ 2,400     $ 1,563     $ 5,747     $ 9,717  
                                       

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Source: Mammoth Energy Services, Inc.