Mammoth Energy Service, Inc. Announces Third Quarter 2017 Operational and Financial Results

OKLAHOMA CITY, Nov. 01, 2017 (GLOBE NEWSWIRE) -- Mammoth Energy Service, Inc. ("Mammoth" or the "Company") (NASDAQ:TUSK) today reported financial and operational results for the three and nine months ended September 30, 2017.

Key Highlights for and subsequent to the Third Quarter 2017:

  • Total revenue was $149.3 million for the three months ended September 30, 2017, up 136% from $63.3 million for the three months ended September 30, 2016 and up 52% sequentially from $98.3 million for the three months ended June 30, 2017.

  • Net loss for the three months ended September 30, 2017 was $0.8 million, an improvement of $2.2 million from a net loss of $3.0 million for the three months ended September 30, 2016. Mammoth reported Adjusted EBITDA (as defined and reconciled below) of $28.0 million and $17.3 million for the three months ended September 30, 2017 and 2016, respectively.

  • Expanded pressure pumping, sand deliveries and last-mile trucking into the SCOOP/STACK with the startup of our fifth pressure pumping fleet in August 2017 and the startup of our sixth fleet on October 20, 2017. Pricing is continuing to increase pricing across both pressure pumping and sand along with our other completions services.

  • Introduced our broadened energy services offering with the formation of Cobra, an electric utility infrastructure business active across 5 states and recently completed storm restoration work in Texas and Florida. Cobra signed a contract, worth up to $200 million in revenue, to aid in the restoration of the electric utility infrastructure in Puerto Rico.

Arty Straehla, Mammoth's Chief Executive Officer, stated, “The third quarter of 2017 was a very active one for the entire Mammoth team and a pivotal point in our portfolio’s development. We expanded our pressure pumping segment organically, integrated the two sand mines that were purchased in the prior quarter and rapidly expanded the development of our energy infrastructure business. Our team executed flawlessly and the fruits of their hard work are starting to show up in our financial results across the broader portfolio of services. With a majority of our growth capex for 2017 already spent, we expect to begin generating free cash flow later this year, while we continue to explore ways to grow and pay down debt in the interim."

Pressure Pumping Services

Mammoth's pressure pumping division contributed revenue of $75.7 million on 1,617 stages for the three months ended September 30, 2017 compared to $35.5 million on 511 stages for the three months ended September 30, 2016, increases of 113% and 216%, respectively. Sequentially, the number of stages pumped during the quarter grew by 26% from 1,287 in the three months ended June 30, 2017. We were nearly fully utilized during 3Q 2017 despite adding a partial spread during the period, similar to our full effective utilization during the prior year period.

Mammoth's pressure pumping division contributed revenue of $166.1 million on 3,764 stages for the nine months ended September 30, 2017 compared to $91.9 million on 1,678 stages for the nine months ended September 30, 2016, increases of 81% and 124%, respectively.

During the three months ended September 30, 2017, we expanded pressure pumping operations into the SCOOP/STACK. Demand remains strong with our frac calendar fully booked into early 2018 in both the Utica and Mid-Continent. All six of our fleets are operating today for quality operators.

Well Services

Mammoth's well services division contributed revenue of $16.2 million for the three months ended September 30, 2017 compared to $2.3 million for the three months ended September 30, 2016, an increase of 604%. The acquisitions of Stingray Cementing LLC and Stingray Energy Services LLC were completed on June 5, 2017. The inclusion of these businesses added $9.1 million in revenue during the three months ended September 30, 2017. Our coil tubing services accounted for $4.1 million of our operating division increase as a result of an increase in utilization and an increase in average day rates from approximately $16,800 for the three months ended September 30, 2016 to approximately $30,200 for the three months ended September 30, 2017. Our flowback services accounted for $0.7 million of our operating division increase as a result of an increase in utilization.

Mammoth's well services division contributed revenue of $27.6 million for the nine months ended September 30, 2017 compared to $7.2 million for the nine months ended September 30, 2016, an increase of 283%. Stingray Cementing and Stingray Energy Services added $11.7 million in revenue. Our coil tubing services accounted for $7.9 million of our operating division increase as a result of an increase utilization and an increase in average day rates from approximately $17,933 for the nine months ended September 30, 2016 to approximately $26,933 for the nine months ended September 30, 2017. Our flowback services accounted for $0.8 million of our operating division increase as a result of increased utilization.

Natural Sand Proppant Services

Mammoth's natural sand proppant division contributed revenue of $29.3 million for the three months ended September 30, 2017 compared to $8.2 million for the three months ended September 30, 2016, an increase of 257%. The Company sold 438,800 and 188,018 tons of sand for the three months ended September 30, 2017 and 2016, respectively. Sequentially, sand volumes sold increased by approximately 25% in the third quarter of 2017 as compared to the second quarter of 2017.

Mammoth's natural sand proppant division contributed revenue of $68.2 million for the nine months ended September 30, 2017 compared to $22.4 million for the nine months ended September 30, 2016, an increase of 204%. The Company sold 1,035,506 and 447,908 tons of sand for the nine months ended September 30, 2017 and 2016, respectively.

The average FOB mine gate price increased to $41.14 per ton in the three months ended September 30, 2017, as industry activity increased and the demand for frac sand remained strong. Our sales of purchased sand, as a percentage of overall sales, fell to 25% in 3Q 2017 (from 49% in 2Q 2017) as the production from our mines increased.

Contract Land and Directional Drilling Services

Mammoth's contract land and directional drilling services division contributed revenue of $13.6 million for the three months ended September 30, 2017 compared to $8.7 million for the three months ended September 30, 2016, an increase of 56%. The increase in revenue resulted primarily from increased utilization and day rates for both land rigs and directional drilling services.

Mammoth's contract land and directional drilling services division contributed revenue of $36.9 million for the nine months ended September 30, 2017 compared to $20.3 million for the nine months ended September 30, 2016, an increase of 82%. The increase in revenue resulted primarily from increased utilization and day rates for both land rigs and directional drilling services.

Five horizontal rigs on average operated in 3Q 2017, at an average day rate of $14,800, with five horizontal rigs operating today. For the remainder of 2017, we expect between five and six of our horizontal rigs to operate in the Permian Basin.

Other Energy Services

Mammoth's other energy services division contributed revenue of $14.5 million and $8.6 million for the three months ended September 30, 2017 and 2016, respectively. The increase was driven by our energy infrastructure operations that accounted for $13.5 million of the revenue in the third quarter of 2017. The increase from infrastructure services was partially offset by a decrease from our remote accommodations division driven by decreased occupancy levels.

Mammoth's other energy services division contributed revenues of $23.7 million and $23.3 million for the nine months ended September 30, 2017 and 2016, respectively.

During 3Q 2017, we deployed capital to grow our electric utility infrastructure business, Cobra. This business currently has 58 crews working in two geographic areas of the U.S. and participated in the restoration of electric utility infrastructure in both Texas and Florida following Hurricanes Harvey and Irma. Cobra also recently signed a contract to aid in the rebuilding of electric utility infrastructure in Puerto Rico, which provides for revenues of up to $200 million.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses increased by 150% to $8.0 million from $3.2 million for the three months ended September 30, 2017 and 2016, respectively. The increase was primarily attributable to increased compensation and benefits along with increased professional service charges.

SG&A expenses increased by 88% to $22.5 million from $12.0 million for the nine months ended September 30, 2017 and 2016, respectively. The increase was primarily attributable to increased compensation and benefits along with increased professional service charges.

SG&A expenses, as a percentage of total revenue, came in at 5.4% in the third quarter of 2017 as compared to 5% during the third quarter of 2016.

Liquidity

As of September 30, 2017, we had net debt of approximately $80 million reflecting $94.0 million in borrowings outstanding under our $170.0 million revolving credit facility and $14.3 million of cash on hand. We have approximately $75.2 million of available borrowing capacity.

Capital Expenditures

The following table summarizes our capital expenditures by operating division for the periods indicated:

  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2017   2016   2017   2016
Pressure pumping services (a) $ 19,580,804     $ 335,312     $ 72,982,713     $ 1,262,854  
Well services (b) 777,399     156,783     1,121,873     404,612  
Natural sand proppant services (c) 4,927,935     359,656     7,897,818     522,267  
Contract and directional drilling services (d) 2,356,885     1,069,381     8,257,702     1,492,476  
Other energy services (e) 8,054,748     12,706     12,013,384     425,838  
Net change in cash $ 35,697,771     $ 1,933,838     $ 102,273,490     $ 4,108,047  

(a).    Capital expenditures primarily for pressure pumping equipment for the three and nine months ended September 30, 2017 and 2016.
(b).    Capital expenditures primarily for equipment upgrades for the three and nine months ended September 30, 2017 and 2016.
(c).    Capital expenditures included a conveyor and plant additions for the three and nine months ended September 30, 2017 and 2016.
(d).    Capital expenditures primarily for upgrades to our rig fleet for the three and nine months ended September 30, 2017 and 2016.
(e).    Capital expenditures primarily for an intersection upgrade for the nine months ended September 30, 2016. Capital expenditures for the nine months ended September 30, 2017 represent property and equipment for energy infrastructure services.

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.

On October 13, 2016, Mammoth priced 7,750,000 shares of its common stock in its initial public offering (the "IPO") at a price to the public of $15.00 per share and, on October 14, 2016, Mammoth’s common stock began trading on The Nasdaq Global Select Market under the symbol “TUSK.” On October 19, 2016, Mammoth closed its IPO. 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 financial information contained in this release should be read in conjunction with the financial information contained in Mammoth’s Annual Report filed on Form 10-K with the Securities and Exchange Commission ("SEC") on February 24, 2017, Subsequent 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 our 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 net income (loss) before income taxes prior to depreciation and amortization, impairment of long-lived assets, acquisition related costs, one-time compensation charges associated with the IPO, equity based compensation, interest income, interest expense and other (income) expense, net (which is comprised of the (gain) loss on disposal of long-lived assets) 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, 2016, the Company updated the reportable segments to align with its new CODM designated reporting structure and business activities. The Company now has five segments consisting of pressure pumping services, well services, natural sand proppant, contract land and directional drilling services and other energy services. Prior to this change, the reportable segments were comprised of four segments for financial reporting purposes: completion and production services, completion and production - natural sand proppant, land and directional drilling services and remote accommodation services. We have conformed our presentation for prior periods to reflect this new segment presentation.

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

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

Conference Call Information

Mammoth will host a conference call on Thursday, November 2, 2017 at 10:00 a.m. CST (11:00 am EST) to discuss its third quarter 2017 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 9587499. 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 energy infrastructure. Mammoth’s suite of services includes pressure pumping services, well services, natural sand proppant services, contract land and directional drilling services and other energy services. Other energy services currently consists of remote accommodation services and energy infrastructure services. For additional information about Mammoth, please visit our website at www.mammothenergy.com, where we routinely post announcements, updates, events, investor information and presentations and recent news releases. Information on our website is not part of this news release.

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. 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 Report filed on Form 10-K filed with the SEC on February 24, 2017, our 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 industry; 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.

Contact:
Mammoth Energy Services, Inc.,
14201 Caliber Drive, Suite 300
Oklahoma City, Oklahoma 73134

Investor Contact:
Don Crist
Director Investor Relations
dcrist@mammothenergy.com
405-608-6048

Media Contact:
Andrew Wilson
Andrew.wilson@edelman.com
212-704-4490

 
MAMMOTH ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
 
ASSETS   September 30,   December 31,
CURRENT ASSETS   2017   2016 (a)
Cash and cash equivalents   $ 14,278,328     $ 29,238,618  
Accounts receivable, net   65,490,189     21,169,579  
Receivables from related parties   44,772,661     27,589,283  
Inventories   12,164,225     6,124,201  
Prepaid expenses   2,753,800     4,425,872  
Other current assets   335,513     391,599  
Total current assets   139,794,716     88,939,152  
         
Property, plant and equipment, net   347,317,716     242,119,663  
Sand reserves   75,210,457     55,367,295  
Intangible assets, net - customer relationships   11,770,375     15,949,772  
Intangible assets, net - trade names   6,722,197     5,617,057  
Goodwill   99,810,819     88,726,875  
Other non-current assets   4,509,500     5,642,661  
Total assets   $ 685,135,780     $ 502,362,475  
LIABILITIES AND EQUITY        
CURRENT LIABILITIES        
Accounts payable   $ 70,229,349     $ 20,469,542  
Payables to related parties   211,352     203,209  
Accrued expenses and other current liabilities   21,556,542     8,546,198  
Income taxes payable       28,156  
Total current liabilities   91,997,243     29,247,105  
         
Long-term debt   94,000,000      
Deferred income taxes   51,086,739     47,670,789  
Asset retirement obligation   2,031,119     259,804  
Other liabilities   4,755,414     2,404,422  
Total liabilities   243,870,515     79,582,120  
         
COMMITMENTS AND CONTINGENCIES (Note 14)        
         
EQUITY        
Equity:        
Common stock, $0.01 par value, 200,000,000 shares authorized, 44,502,223 and   445,022     375,000  
37,500,000 issued and outstanding at September 30, 2017 and December 31, 2016, respectively.        
Additional paid in capital   506,274,038     400,205,921  
Member's equity       81,738,675  
Accumulated deficit   (63,274,499 )   (56,322,878 )
Accumulated other comprehensive loss   (2,179,296 )   (3,216,363 )
Total equity   441,265,265     422,780,355  
Total liabilities and equity   $ 685,135,780     $ 502,362,475  

(a) Financial information has been recast to include the financial position and results attributable to Sturgeon.


 
MAMMOTH ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)
 
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
REVENUE 2017   2016 (b)   2017 (a)   2016 (b)
Services revenue $ 63,112,621     $ 19,077,680     $ 119,863,654     $ 65,964,774  
Services revenue - related parties 56,860,754     36,028,399     134,425,170     76,679,011  
Product revenue 15,276,279     1,675,230     29,043,367     4,651,673  
Product revenue - related parties 14,055,246     6,557,237     39,200,789     17,788,581  
Total revenue 149,304,900     63,338,546     322,532,980     165,084,039  
               
COST AND EXPENSES              
Services cost of revenue 89,345,946     35,850,660     191,910,453     102,113,120  
Services cost of revenue - related parties 8,899     587,087     701,008     787,079  
Product cost of revenue 25,177,849     6,429,040     57,759,173     22,861,407  
Selling, general and administrative 7,667,419     3,063,445     21,473,039     11,558,114  
Selling, general and administrative - related parties 355,242     131,162     986,126     456,505  
Depreciation, depletion, accretion and amortization 27,223,733     17,921,471     64,354,383     54,483,158  
Impairment of long-lived assets             1,870,885  
Total cost and expenses 149,779,088     63,982,865     337,184,182     194,130,268  
Operating loss (474,188 )   (644,319 )   (14,651,202 )   (29,046,229 )
               
OTHER (EXPENSE) INCOME              
Interest expense (1,420,067 )   (1,024,514 )   (2,928,859 )   (3,332,901 )
Bargain purchase gain, net of tax         4,011,512      
Other, net (319,252 )   (253,832 )   (705,894 )   371,894  
Total other (expense) income (1,739,319 )   (1,278,346 )   376,759     (2,961,007 )
Loss before income taxes (2,213,507 )   (1,922,665 )   (14,274,443 )   (32,007,236 )
(Benefit) provision for income taxes (1,412,680 )   1,055,961     (7,322,822 )   2,739,696  
Net loss $ (800,827 )   $ (2,978,626 )   $ (6,951,621 )   $ (34,746,932 )
               
OTHER COMPREHENSIVE INCOME (LOSS)              
Foreign currency translation adjustment (1) 627,515     (386,265 )   1,037,067     1,583,593  
Comprehensive loss $ (173,312 )   $ (3,364,891 )   $ (5,914,554 )   $ (33,163,339 )
               
Net loss per share (basic and diluted) $ (0.02 )   $ (0.10 )   $ (0.17 )   $ (1.16 )
Weighted average number of shares outstanding 44,501,885     30,000,000     40,526,276     30,000,000  
               
(1) Net of tax 357,594         811,906      

(a) Financial information includes the financial position and results attributable to Sturgeon for the entire period presented.
(b) Financial information has been recast to include the financial position and results attributable to Sturgeon.


 
MAMMOTH ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 
  Nine Months Ended
  September 30,
Cash flows from operating activities 2017 (a)   2016 (b)
Net loss $ (6,951,621 )   $ (34,746,932 )
Adjustments to reconcile net loss to cash provided by operating activities:      
Equity based compensation 2,648,211     (18,683 )
Depreciation, depletion, accretion and amortization 64,354,383     54,483,158  
Amortization of coil tubing strings 2,144,231     1,386,856  
Amortization of debt origination costs 299,104     452,343  
Bad debt expense 117,426     1,779,870  
(Gain) loss on disposal of property and equipment 125,653     (426,917 )
Gain on bargain purchase (4,011,512 )    
Impairment of long-lived assets     1,870,885  
Deferred income taxes (8,151,410 )   (18,906 )
Changes in assets and liabilities, net of acquisitions of businesses:      
Accounts receivable, net (37,439,781 )   (2,139,172 )
Receivables from related parties (12,080,870 )   167,964  
Inventories (7,878,174 )   (119,260 )
Prepaid expenses and other assets 2,643,797     59,940  
Accounts payable 30,444,904     2,099,991  
Payables to related parties 7,934     (394,292 )
Accrued expenses and other liabilities 14,392,715     (1,292,176 )
Income taxes payable (28,156 )   (4,052 )
Net cash provided by operating activities 40,636,834     23,140,617  
       
Cash flows from investing activities:      
Purchases of property and equipment (102,273,490 )   (4,108,047 )
Business acquisitions (42,008,187 )    
Proceeds from disposal of property and equipment 782,432     3,399,705  
Business combination cash acquired (Note 3) 2,671,558      
Net cash used in investing activities (140,827,687 )   (708,342 )
       
Cash flows from financing activities:      
Borrowings from lines of credit 118,850,000     22,776,411  
Repayments of lines of credit (24,850,000 )   (45,776,411 )
Repayment of Stingray acquisition long-term debt (8,851,063 )    
Net cash provided by (used in) financing activities 85,148,937     (23,000,000 )
Effect of foreign exchange rate on cash 81,626     186,967  
Net decrease in cash and cash equivalents (14,960,290 )   (380,758 )
Cash and cash equivalents at beginning of period 29,238,618     4,038,899  
Cash and cash equivalents at end of period $ 14,278,328     $ 3,658,141  
       
Supplemental disclosure of cash flow information:      
Cash paid for interest $ 2,300,250     $ 2,972,072  
Cash paid for income taxes $ 840,421     $ 2,755,562  
Supplemental disclosure of non-cash transactions:      
Purchases of property and equipment included in trade accounts payable $ 13,647,557     $ 1,832,892  
Acquisition of Sturgeon, Stingray Cementing LLC and Stingray Energy Services LLC (Note 3) $ 23,090,580     $  

(a) Financial information includes the financial position and results attributable to Sturgeon for the entire period presented.
(b) Financial information has been recast to include the financial position and results attributable to Sturgeon.


 
MAMMOTH ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED SEGMENT INCOME STATEMENTS (unaudited)
 
  Completion and Production        
Nine Months Ended September 30, 2017 (a) Pressure
Pumping
Services
Well Services Sand Drilling Other
Energy
Services
Total
Revenue from external customers $ 46,511,384   $ 15,852,372   $ 29,043,367   $ 33,805,844   $ 23,694,054   $ 148,907,021  
Revenue from related parties $ 119,570,520   $ 11,793,299   $ 39,200,789   $ 3,060,826   $ 525   $ 173,625,959  
Cost of revenue $ 117,494,570   $ 24,288,693   $ 57,759,173   $ 34,584,336   $ 16,243,862   $ 250,370,634  
Selling, general and administrative expenses $ 6,690,812   $ 2,789,881   $ 6,314,182   $ 4,103,053   $ 2,561,237   $ 22,459,165  
Earnings before interest, other expense, impairment, taxes and depreciation and amortization $ 41,896,522   $ 567,097   $ 4,170,801   $ (1,820,719 ) $ 4,889,480   $ 49,703,181  
Other expense $ 126,650   $ 36,195   $ 251,520   $ 262,560   $ 28,969   $ 705,894  
Bargain purchase gain $   $   $ (4,011,512 ) $   $   $ (4,011,512 )
Interest expense (income) $ 1,023,519   $ (14,019 ) $ 572,096   $ 1,227,422   $ 119,841   $ 2,928,859  
Depreciation, depletion, accretion and amortization $ 31,823,408   $ 7,939,784   $ 6,603,001   $ 14,978,300   $ 3,009,890   $ 64,354,383  
Income tax (benefit) provision $   $ (7,778,970 ) $ 32,326   $   $ 423,822   $ (7,322,822 )
Net income (loss) $ 8,922,945   $ 384,107   $ 723,370   $ (18,289,001 ) $ 1,306,958   $ (6,951,621 )
Total expenditures for property, plant and equipment $ 72,982,713   $ 1,121,873   $ 7,897,818   $ 8,257,702   $ 12,013,384   $ 102,273,490  
             
             
Three Months Ended September 30, 2017            
Revenue from external customers $ 29,003,286   $ 7,055,718   $ 15,276,279   $ 12,590,622   $ 14,462,995   $ 78,388,900  
Revenue from related parties $ 46,701,582   $ 9,105,851   $ 14,055,246   $ 1,053,321   $   $ 70,916,000  
Cost of revenue $ 52,960,761   $ 13,852,628   $ 25,177,849   $ 11,597,757   $ 10,943,699   $ 114,532,694  
Selling, general and administrative expenses $ 2,511,147   $ 1,091,378   $ 1,840,746   $ 1,374,275   $ 1,205,115   $ 8,022,661  
Earnings before interest, other expense, impairment, taxes and depreciation and amortization $ 20,232,960   $ 1,217,563   $ 2,312,930   $ 671,911   $ 2,314,181   $ 26,749,545  
Other expense $ 120,261   $ 38,186   $ 97,744   $ 38,324   $ 24,737   $ 319,252  
Interest expense $ 591,724   $ 94,357   $ 86,857   $ 570,364   $ 76,765   $ 1,420,067  
Depreciation, depletion, accretion and amortization $ 13,038,962   $ 4,511,622   $ 3,034,342   $ 5,035,990   $ 1,602,817   $ 27,223,733  
Income tax (benefit) provision $   $ (1,278,456 ) $ 23,824   $   $ (158,048 ) $ (1,412,680 )
Net income (loss) $ 6,482,013   $ (2,148,146 ) $ (929,837 ) $ (4,972,767 ) $ 767,910   $ (800,827 )
Total expenditures for property, plant and equipment $ 19,580,804   $ 777,399   $ 4,927,935   $ 2,356,885   $ 8,054,748   $ 35,697,771  


 
MAMMOTH ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED SEGMENT INCOME STATEMENTS (unaudited)
 
  Completion and Production        
Nine Months Ended September 30, 2016 (b) Pressure
Pumping
Services
Well Services Sand Drilling Other
Energy
Services
Total
Revenue from external customers $ 18,294,739   $ 6,470,485   $ 4,651,673   $ 17,946,458   $ 23,253,092   $ 70,616,447  
Revenue from related parties $ 73,559,413   $ 732,740   $ 17,788,581   $ 2,381,446   $ 5,412   $ 94,467,592  
Cost of revenue $ 60,866,617   $ 10,030,214   $ 22,861,407   $ 22,010,295   $ 9,993,073   $ 125,761,606  
Selling, general and administrative expenses $ 2,981,718   $ 1,512,824   $ 2,525,310   $ 3,353,243   $ 1,641,524   $ 12,014,619  
Earnings before interest, other expense (income), impairment, taxes and depreciation and amortization $ 28,005,817   $ (4,339,813 ) $ (2,946,463 ) $ (5,035,634 ) $ 11,623,907   $ 27,307,814  
Other expense (income) $ 25,087   $ (671,986 ) $ 82,422   $ 179,639   $ 12,944   $ (371,894 )
Interest expense $ 502,781   $ 178,584   $ 319,855   $ 2,272,913   $ 58,768   $ 3,332,901  
Depreciation, depletion, accretion and amortization $ 27,964,092   $ 3,903,924   $ 4,734,540   $ 16,243,626   $ 1,636,976   $ 54,483,158  
Impairment of long-lived assets $ 138,587   $ 1,384,751   $   $ 347,547   $   $ 1,870,885  
Income tax provision $   $ 2,835   $ 3,716   $   $ 2,733,145   $ 2,739,696  
Net (loss) income $ (624,730 ) $ (9,137,921 ) $ (8,086,996 ) $ (24,079,359 ) $ 7,182,074   $ (34,746,932 )
Total expenditures for property, plant and equipment $ 1,262,854   $ 404,612   $ 522,267   $ 1,492,476   $ 425,838   $ 4,108,047  
             
             
Three Months Ended September 30, 2016 (b)            
Revenue from external customers $ 137,626   $ 2,109,874   $ 1,675,230   $ 8,230,625   $ 8,599,555   $ 20,752,910  
Revenue from related parties $ 35,393,855   $ 164,854   $ 6,557,237   $ 464,850   $ 4,840   $ 42,585,636  
Cost of revenue $ 20,782,936   $ 3,068,159   $ 6,429,040   $ 9,042,242   $ 3,544,410   $ 42,866,787  
Selling, general and administrative expenses $ 916,176   $ 499,346   $ 415,505   $ 786,008   $ 577,572   $ 3,194,607  
Earnings before interest, other expense, impairment, taxes and depreciation and amortization $ 13,832,369   $ (1,292,777 ) $ 1,387,922   $ (1,132,775 ) $ 4,482,413   $ 17,277,152  
Other expense $ 1,262   $ 1,159   $ 9,439   $ 237,211   $ 4,761   $ 253,832  
Interest expense $ 134,017   $ 29,489   $ 108,744   $ 718,706   $ 33,558   $ 1,024,514  
Depreciation, depletion, accretion and amortization $ 9,050,605   $ 1,233,702   $ 1,784,689   $ 5,297,694   $ 554,781   $ 17,921,471  
Impairment of long-lived assets $   $   $   $   $   $  
Income tax provision $   $ 5,929   $ 3,716   $   $ 1,046,316   $ 1,055,961  
Net income (loss) $ 4,646,485   $ (2,563,056 ) $ (518,666 ) $ (7,386,386 ) $ 2,842,997   $ (2,978,626 )
Total expenditures for property, plant and equipment $ 335,312   $ 156,783   $ 359,656   $ 1,069,381   $ 12,706   $ 1,933,838  

(a) Financial information includes the financial position and results attributable to Sturgeon for the entire period presented.
(b) Financial information has been recast to include the financial position and results attributable to Sturgeon.


MAMMOTH ENERGY PARTNERS LP
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 our financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDA as net income (loss) before depreciation, depletion, accretion and amortization, impairment of long-lived assets, acquisition related costs, equity based compensation, bargain purchase gain, interest expense, other expense (income), net (which is comprised of the (gain) or loss on disposal of long-lived assets) and (benefit) provision for income taxes. We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our 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 our 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. Our computations of Adjusted EBITDA may not be comparable to other similarly titled measure of other companies. We believe that Adjusted EBITDA is a widely followed measure of operating performance and may also be used by investors to measure our ability to meet debt service requirements.

  • is widely used by investors in the energy services industry to measure a company’s operating performance without regard to items excluded from the calculation of such measure, which can vary substantially from company to company depending upon accounting methods, book value of assets, capital structure and the method by which assets were acquired, among other factors;
  • is a financial measurement that is used by rating agencies, lenders and other parties to evaluate our creditworthiness; and
  • is used by our management for various purposes, including as a measure of performance of our operating entities and as a basis for strategic planning and forecasting.

There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect our net income or loss. Additionally, because Adjusted EBITDA excludes some, but not all, items that affect net income and is defined differently by different companies in our industry, our definition of Adjusted EBITDA used in this release may not be comparable to similarly titled measures of other companies or used in our various agreements. 

MAMMOTH ENERGY PARTNERS LP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The following tables also provide a reconciliation of Adjusted EBITDA to the GAAP financial measure of net income or loss for each of our operating segments.

Consolidated

  Three Months Ended   Nine Months Ended
  September 30,   September 30,
Reconciliation of Adjusted EBITDA to net income (loss): 2017   2016   2017   2016
Net loss $ (800,827 )   $ (2,978,626 )   $ (6,951,621 )   $ (34,746,932 )
Depreciation, depletion, accretion and amortization expense 27,223,733     17,921,471     64,354,383     54,483,158  
Impairment of long-lived assets             1,870,885  
Acquisition related costs 264,091         2,454,840      
Equity based compensation 1,028,317     (18,683 )   2,648,210     (18,683 )
Bargain purchase gain         (4,011,512 )    
Interest expense 1,420,067     1,024,514     2,928,859     3,332,901  
Other expense (income), net 319,252     253,832     705,894     (371,894 )
(Benefit) provision for income taxes (1,412,680 )   1,055,961     (7,322,822 )   2,739,696  
Adjusted EBITDA $ 28,041,953     $ 17,258,469     $ 54,806,231     $ 27,289,131  
                               

Pressure Pumping Services

  Three Months Ended Nine Months Ended
  September 30,   September 30,
Reconciliation of Adjusted EBITDA to net income (loss): 2017   2016   2017   2016
Net income (loss) $ 6,482,013     $ 4,646,485     $ 8,922,945     $ (624,730 )
Depreciation and amortization expense 13,038,962     9,050,605     31,823,408     27,964,092  
Impairment of long-lived assets             138,587  
Acquisition related costs 500         500      
Equity based compensation 428,398         1,202,687      
Interest expense 591,724     134,017     1,023,519     502,781  
Other expense, net 120,261     1,262     126,650     25,087  
Adjusted EBITDA $ 20,661,858     $ 13,832,369     $ 43,099,709     $ 28,005,817  
                               

MAMMOTH ENERGY PARTNERS LP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Other Well Services

  Three Months Ended Nine Months Ended
  September 30,   September 30,
Reconciliation of Adjusted EBITDA to net income (loss): 2017   2016   2017   2016
Net (loss) income $ (2,148,146 )   $ (2,563,056 )   $ 384,107     $ (9,137,921 )
Depreciation and amortization expense 4,511,622     1,233,702     7,939,784     3,903,924  
Impairment of long-lived assets             1,384,751  
Acquisition related costs 65,394         235,526      
Equity based compensation 127,930     (18,683 )   265,380     (18,683 )
Interest expense, net 94,357     29,489     (14,019 )   178,584  
Other expense (income), net 38,186     1,159     36,195     (671,986 )
(Benefit) provision for income taxes (1,278,456 )   5,929     (7,778,970 )   2,835  
Adjusted EBITDA $ 1,410,887     $ (1,311,460 )   $ 1,068,003     $ (4,358,496 )
                               

Natural Sand Proppant Services

  Three Months Ended Nine Months Ended
  September 30,   September 30,
Reconciliation of Adjusted EBITDA to net income (loss): 2017   2016   2017   2016
Net (loss) income $ (929,837 )   $ (518,666 )   $ 723,370     $ (8,086,996 )
Depreciation, depletion, accretion and amortization expense 3,034,342     1,784,689     6,603,001     4,734,540  
Acquisition related costs 166,654         2,120,733      
Equity based compensation 271,762         524,223      
Bargain purchase gain         (4,011,512 )    
Interest expense 86,857     108,744     572,096     319,855  
Other expense, net 97,744     9,439     251,520     82,422  
Provision for income taxes 23,824     3,716     32,326     3,716  
Adjusted EBITDA $ 2,751,346     $ 1,387,922     $ 6,815,757     $ (2,946,463 )
                               

Contract Land and Directional Drilling Services

  Three Months Ended Nine Months Ended
  September 30,   September 30,
Reconciliation of Adjusted EBITDA to net income (loss): 2017   2016   2017   2016
Net loss $ (4,972,767 )   $ (7,386,386 )   $ (18,289,001 )   $ (24,079,359 )
Depreciation and amortization expense 5,035,990     5,297,694     14,978,300     16,243,626  
Impairment of long-lived assets             347,547  
Acquisition related costs (16,328 )       8,187      
Equity based compensation 137,637         429,901      
Interest expense 570,364     718,706     1,227,422     2,272,913  
Other expense, net 38,324     237,211     262,560     179,639  
Adjusted EBITDA $ 793,220     $ (1,132,775 )   $ (1,382,631 )   $ (5,035,634 )
                               

MAMMOTH ENERGY PARTNERS LP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Other Energy Services

  Three Months Ended Nine Months Ended
  September 30,   September 30,
Reconciliation of Adjusted EBITDA to net income (loss): 2017   2016   2017   2016
Net income $ 767,910     $ 2,842,997     $ 1,306,958     $ 7,182,074  
Depreciation and amortization expense 1,602,817     554,781     3,009,890     1,636,976  
Impairment of long-lived assets              
Acquisition related costs 47,871         89,894      
Equity based compensation 62,590         226,019      
Interest expense 76,765     33,558     119,841     58,768  
Other expense, net 24,737     4,761     28,969     12,944  
(Benefit) provision for income taxes (158,048 )   1,046,316     423,822     2,733,145  
Adjusted EBITDA $ 2,424,642     $ 4,482,413     $ 5,205,393     $ 11,623,907  

 

Source: Mammoth Energy Services, Inc.