Press Release Details

Mammoth Energy Services, Inc. Announces First Quarter 2021 Operational and Financial Results

April 29, 2021 at 4:01 PM EDT

OKLAHOMA CITY, April 29, 2021 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ: TUSK) today reported financial and operational results for the first quarter ended March 31, 2021.

Financial Overview for the First Quarter 2021:

Total revenue was $66.8 million for the three months ended March 31, 2021, down 22% from $85.1 million for the three months ended December 31, 2020 and down 31% from $97.4 million for the three months ended March 31, 2020.

Net loss for the three months ended March 31, 2021 was $12.4 million, or $0.27 per fully diluted share, as compared to a net loss of $11.9 million, or $0.26 per fully diluted share, for the three months ended December 31, 2020 and a net loss of $84.0 million, or $1.85 per fully diluted share, for the three months ended March 31, 2020.

Adjusted EBITDA (as defined and reconciled below) was $6.4 million for the three months ended March 31, 2021, as compared to $7.5 million for the three months ended December 31, 2020 and $13.5 million for the three months ended March 31, 2020.

Arty Straehla, Chief Executive Officer of Mammoth commented, “The first quarter of 2021 came in as expected as restoration work on the Gulf Coast came to an end and our infrastructure work moderated slightly. Bidding opportunities for both traditional transmission and distribution work as well as renewable work has increased significantly over the past several months. We expect this increase in bidding opportunities to continue to increase in the coming years as the new administration advances its infrastructure bill to rebuild a broad array of the nation's infrastructure assets. The roughly $2 trillion plan includes several areas in which our teams have expertise, including modernization of the electric grid and a shift to renewables.”

Infrastructure Services

Mammoth's infrastructure services division contributed revenue (inclusive of inter-segment revenue) of $29.3 million, or approximately 44% of Mammoth's total revenue, for the three months ended March 31, 2021, a decrease of 48% from $55.9 million for the three months ended December 31, 2020 and an increase of 15% from $25.5 million for the three months ended March 31, 2020.

Well Completion Services

Mammoth's well completion services division contributed revenue (inclusive of inter-segment revenue) of $23.0 million on 445 stages for the three months ended March 31, 2021, an increase of 81% from $12.7 million on 291 stages for the three months ended December 31, 2020 and a decrease of 47% from $43.3 million on 1,482 stages for the three months ended March 31, 2020. On average, 0.9 of the Company's fleets were active for the three months ended March 31, 2021, compared to average utilization of 0.6 fleets during the three months ended December 31, 2020 and an average utilization of 2.7 fleets during the three months ended March 31, 2020.
  
Natural Sand Proppant Services

Mammoth's natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $8.7 million for the three months ended March 31, 2021, a decrease of 26% from $11.8 million for the three months ended December 31, 2020 and a decrease of 15% from $10.2 million for the three months ended March 31, 2020. The Company sold approximately 171,000 tons of sand during the three months ended March 31, 2021, an increase of 71% from approximately 100,000 tons sold during the three months ended December 31, 2020 and a decrease of 28% from approximately 239,000 tons sold during the three months ended March 31, 2020. The Company's average sales price for the sand sold during the three months ended March 31, 2021 was $16.83 per ton, as compared to $15.59 per ton during the three months ended December 31, 2020 and $13.67 per ton during the three months ended March 31, 2020.

Drilling Services

Mammoth's drilling services division contributed revenue (inclusive of inter-segment revenue) of $0.9 million for the three months ended March 31, 2021, an increase of 50% from $0.6 million for the three months ended December 31, 2020 and a decrease of 81% from $4.7 million for the three months ended March 31, 2020.

As a result of market conditions, the Company has temporarily shut down its contract land drilling operations beginning in December 2019 and its rig hauling operations beginning in April 2020.

Other Services

Mammoth's other services, including aviation, coil tubing, pressure control, equipment rentals, crude oil hauling, full service transportation, remote accommodations, equipment manufacturing and infrastructure engineering and design services, contributed revenue (inclusive of inter-segment revenue) of $5.7 million for the three months ended March 31, 2021, an increase of 21% from $4.7 million for the three months ended December 31, 2020 and a decrease of 62% from $15.1 million for the three months ended March 31, 2020.

As a result of market conditions, the Company has temporarily shut down its cementing and acidizing operations as well as its flowback operations beginning in July 2019 and its coil tubing and full service transportation operations beginning in July 2020.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $20.8 million for the three months ended March 31, 2021, as compared to $30.5 million for the three months ended December 31, 2020 and $10.8 million for the three months ended March 31, 2020.

Following is a breakout of SG&A expense (in thousands):

  Three Months Ended
  March 31,   December 31,
  2021   2020   2020
Cash expenses:          
Compensation and benefits $ 4,694     $ 3,969     $ 3,738  
Professional services 3,405     3,538     4,570  
Other(a) 2,342     2,309     2,256  
Total cash SG&A expense 10,441     9,816     10,564  
Non-cash expenses:          
Bad debt provision 10,125     55     19,652  
Stock based compensation 282     900     292  
Total non-cash SG&A expense 10,407     955     19,944  
Total SG&A expense $ 20,848     $ 10,771     $ 30,508  


a. Includes travel-related costs, information technology expenses, rent, utilities and other general and administrative-related costs.

SG&A expenses, as a percentage of total revenue, were 31% for the three months ended March 31, 2021, as compared to 36% for the three months ended December 31, 2020 and 11% for the three months ended March 31, 2020. The bad debt provision for the three months ended March 31, 2021 and December 31, 2020, includes $10.0 million and $19.4 million, respectively, related to the voluntary petitions for relief filed on November 13, 2020, by Gulfport Energy Corporation and its subsidiaries.

Liquidity

As of March 31, 2021, Mammoth had cash on hand of $14.4 million, outstanding borrowings under its revolving credit facility of $64.0 million and $48.7 million of available borrowing capacity under its revolving credit facility, after giving effect to $13.0 million of outstanding letters of credit. As of March 31, 2021, Mammoth had total liquidity of $63.1 million.

As of April 27, 2021, Mammoth had cash on hand of $14.8 million, outstanding borrowings under its revolving credit facility of $67.0 million and $45.7 million of available borrowing capacity under its revolving credit facility, after giving effect to $13.0 million of outstanding letters of credit.

Capital Expenditures
The following table summarizes Mammoth's capital expenditures by operating division for the periods indicated (in thousands):

  Three Months Ended
  March 31,   December 31,
  2021   2020   2020
Infrastructure services(a) $ 189     $     $ 37  
Well completion services(b) 412     604     606  
Natural sand proppant services(c) 408     521     4  
Drilling services(d) 37         234  
Other(e) 102     375     7  
Total capital expenditures $ 1,148     $ 1,500     $ 888  


a. Capital expenditures primarily for tooling and other equipment for the periods presented.
b. Capital expenditures primarily for upgrades to our pressure pumping fleet to reduce greenhouse gas emissions and water transfer equipment for the periods presented.
c. Capital expenditures primarily for maintenance for the periods presented.
d. Capital expenditures primarily for upgrades to the Company's rig fleet for the periods presented.
e. Capital expenditures primarily for equipment for the Company's rental businesses for the periods presented.

Explanatory Note Regarding Financial Information

The financial information contained in this release should be read in conjunction with the financial information contained in Mammoth’s Annual Reports filed on Form 10-K with the Securities and Exchange Commission (“SEC”), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the SEC.

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) less impairment expense as well as a qualitative basis, such as nature of the product and service offerings and types of customers.

As of March 31, 2021, the Company’s four reportable segments include infrastructure services (“Infrastructure”), well completion services (“Well Completion”), natural sand proppant services (“Sand”) and drilling services (“Drilling”). Prior to the fourth quarter of 2020, the Company included Barracuda Logistics LLC (“Barracuda”) in its Well Completion segment, Cobra Aviation Services LLC (“Cobra Aviation”), Air Rescue Systems Corporation (“ARS”) and Leopard Aviation LLC (“Leopard”) in its Infrastructure segment and Mako Acquisitions LLC (“Mako”) in its Drilling segment. Based on its assessment of FASB ASC 280, Segment Reporting, guidance at December 31, 2020, the Company changed its presentation in 2020 to move Barracuda to the Sand segment and Cobra Aviation, ARS, Leopard and Mako to the reconciling column titled “All Other”. Additionally, Mammoth changed the name of its pressure pumping segment to the well completion segment during the fourth quarter of 2020. The results for the three months ended March 31, 2020 have been retroactively adjusted to reflect these changes.

Conference Call Information

Mammoth will host a conference call on Thursday, April 29, 2021 at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss its first quarter 2021 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 2449776. 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 construction and repair of the electric grid for private utilities, public investor-owned utilities and co-operative utilities through its energy infrastructure services and the exploration and development of North American onshore unconventional oil and natural gas reserves. Mammoth’s suite of services and products include: infrastructure services, well completion services, natural sand and proppant services, drilling services and other energy services.

For additional information about Mammoth, please visit its website at www.mammothenergy.com, where Mammoth routinely posts announcements, updates, events, investor information and presentations and recent news releases.

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

Media Contact:
Peter Mirijanian
peter@pmpadc.com
(202) 464-8803

Forward-Looking Statements and Cautionary Statements

This news release (and any oral statements made regarding the subjects of this release, including on the conference call announced herein) contains certain statements and information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts that address activities, events or developments that Mammoth expects, believes or anticipates will or may occur in the future are forward-looking statements. The words “anticipate,” “believe,” “ensure,” “expect,” “if,” “intend,” “plan,” “estimate,” “project,” “forecasts,” “predict,” “outlook,” “aim,” “will,” “could,” “should,” “potential,” “would,” “may,” “probable,” “likely” and similar expressions, and the negative thereof, are intended to identify forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include statements, estimates and projections regarding the Company's business outlook and plans, future financial position, liquidity and capital resources, operations, performance, acquisitions, returns, capital expenditure budgets, costs and other guidance regarding future developments. Forward-looking statements are not assurances of future performance. These forward-looking statements are based on management’s current expectations and beliefs, forecasts for the Company's existing operations, experience and perception of historical trends, current conditions, anticipated future developments and their effect on Mammoth, and other factors believed to be appropriate. Although management believes that the expectations and assumptions reflected in these forward-looking statements are reasonable as and when made, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all). Moreover, the Company's forward-looking statements are subject to significant risks and uncertainties, including those described in its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings it makes with the SEC, including those relating to the Company's acquisitions and contracts, many of which are beyond the Company's control, which may cause actual results to differ materially from historical experience and present expectations or projections which are implied or expressed by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the severity and duration of the COVID-19 pandemic, related global and national health concerns and economic repercussions and the resulting negative impact on demand for our services; the current significant surplus in the supply of oil and the ability of the OPEC+ countries to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently resulting from the impact of the foregoing factors, which is negatively impacting our business; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; the failure to receive or delays in receiving governmental authorizations, approvals and/or payments; the outcome of ongoing government investigations and other legal proceedings, including those relating to the contracts awarded to the Company's subsidiary Cobra Acquisitions LLC by the Puerto Rico Electric Power Authority and contracts for our pressure pumping services and natural sand proppant services; the Company's inability to replace the prior levels of work in its business segments, including its infrastructure and well completion services segments; risks relating to economic conditions; the loss of or interruption in operations of one or more of Mammoth's significant suppliers or customers; the outcome of Gulfport Energy Corporation's chapter 11 bankruptcy filing and the treatment of Mammoth's contracts and claims in such proceeding and subsequent related proceedings; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of capital resources and liquidity; weather; natural disasters; litigation; volatility in commodity markets; 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.


MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED BALANCE SHEETS

ASSETS   March 31,   December 31,
    2021   2020
CURRENT ASSETS   (in thousands)
Cash and cash equivalents   $ 14,366       $ 14,822    
Short-term investment   1,753       1,750    
Accounts receivable, net   369,434       393,112    
Receivables from related parties, net   33,115       28,461    
Inventories   11,356       12,020    
Prepaid expenses   10,740       13,825    
Other current assets   718       758    
Other current assets - related parties   2,228          
Total current assets   443,710       464,748    
         
Property, plant and equipment, net   231,321       251,262    
Sand reserves   65,876       65,876    
Operating lease right-of-use assets   17,958       20,179    
Intangible assets, net - customer relationships   365       408    
Intangible assets, net - trade names   4,156       4,366    
Goodwill   12,608       12,608    
Other non-current assets   4,450       5,115    
Total assets   $ 780,444       $ 824,562    
LIABILITIES AND EQUITY        
CURRENT LIABILITIES        
Accounts payable   $ 36,690       $ 40,316    
Payables to related parties   2       3    
Accrued expenses and other current liabilities   36,823       44,408    
Current operating lease liability   8,122       8,618    
Current portion of long-term debt   1,412       1,165    
Income taxes payable   36,558       34,088    
Total current liabilities   119,607       128,598    
         
Long-term debt, net of current portion   66,977       81,338    
Deferred income tax liabilities   19,722       24,741    
Long-term operating lease liability   9,626       11,377    
Asset retirement obligation   3,617       4,746    
Other liabilities   9,496       10,435    
Total liabilities   229,045       261,235    
         
COMMITMENTS AND CONTINGENCIES        
         
EQUITY        
Equity:        
Common stock, $0.01 par value, 200,000,000 shares authorized, 46,272,617 and 45,769,283 issued and outstanding at March 31, 2021 and December 31, 2020   463       458    
Additional paid in capital   537,378       537,039    
Retained earnings   16,455       28,895    
Accumulated other comprehensive loss   (2,897 )     (3,065 )  
Total equity   551,399       563,327    
Total liabilities and equity   $ 780,444       $ 824,562    
                     

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

  Three Months Ended
  March 31,   December 31,
  2021   2020   2020
  (in thousands, except per share amounts)
REVENUE  
Services revenue $ 42,691       $ 68,845       $ 65,079    
Services revenue - related parties 14,986       18,013       7,862    
Product revenue 6,982       8,650       10,234    
Product revenue - related parties 2,145       1,875       1,875    
Total revenue 66,804       97,383       85,050    
           
COST AND EXPENSES          
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $18,989, $23,554 and $19,780, respectively, for the three months ended March 31, 2021, March 31, 2020 and December 31, 2020) 42,062       70,697       51,260    
Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0 and $0, respectively, for the three months March 31, 2021, March 31, 2020 and December 31, 2020) 109       101       90    
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,137, $2,309 and $2,387, respectively, for the three months ended March 31, 2021, March 31, 2020 and December 31, 2020) 5,909       11,108       4,083    
Selling, general and administrative 20,655       10,556       30,364    
Selling, general and administrative - related parties 193       215       144    
Depreciation, depletion, amortization and accretion 21,146       25,882       22,187    
Impairment of goodwill       54,973          
Impairment of other long-lived assets       12,897          
Total cost and expenses 90,074       186,429       108,128    
Operating loss (23,270 )     (89,046 )     (23,078 )  
           
OTHER INCOME (EXPENSE)          
Interest expense, net (1,225 )     (1,638 )     (1,191 )  
Other, net 9,947       7,409       9,559    
Other, net - related parties (515 )           (341 )  
Total other income 8,207       5,771       8,027    
Loss before income taxes (15,063 )     (83,275 )     (15,051 )  
(Benefit) provision for income taxes (2,623 )     696       (3,190 )  
Net loss $ (12,440 )     $ (83,971 )     $ (11,861 )  
           
OTHER COMPREHENSIVE INCOME (LOSS)          
Foreign currency translation adjustment, net of tax of ($42), $361 and ($170), respectively, for the three months ended March 31, 2021, March 31, 2020 and December 31, 2020 168       (1,414 )     663    
Comprehensive loss $ (12,272 )     $ (85,385 )     $ (11,198 )  
           
Net loss per share (basic) $ (0.27 )     $ (1.85 )     $ (0.26 )  
Net loss per share (diluted) $ (0.27 )     $ (1.85 )     $ (0.26 )  
Weighted average number of shares outstanding (basic) 45,932       45,314       45,769    
Weighted average number of shares outstanding (diluted) 45,932       45,314       45,769    
                       

MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

  Three Months Ended
  March 31,
  2021   2020
  (in thousands)
Cash flows from operating activities:      
Net loss $ (12,440 )     $ (83,971 )  
Adjustments to reconcile net loss to cash provided by operating activities:      
Stock based compensation 344       1,049    
Depreciation, depletion, accretion and amortization 21,146       25,882    
Amortization of coil tubing strings       237    
Amortization of debt origination costs 142       452    
Bad debt expense 10,125       55    
Gain on disposal of property and equipment (615 )     (673 )  
Impairment of goodwill       54,973    
Impairment of other long-lived assets       12,897    
Deferred income taxes (5,061 )     5,361    
Other 558       432    
Changes in assets and liabilities:      
Accounts receivable, net 23,437       (8,569 )  
Receivables from related parties (14,611 )     (10,267 )  
Inventories 664       4,053    
Prepaid expenses and other assets 3,105       3,929    
Other current assets - related parties (2,228 )        
Accounts payable (4,283 )     2,078    
Payables to related parties (2 )     (444 )  
Accrued expenses and other liabilities (8,516 )     (1,220 )  
Income taxes payable 2,469       (4,713 )  
Net cash provided by operating activities 14,234       1,541    
       
Cash flows from investing activities:      
Purchases of property and equipment (1,148 )     (1,424 )  
Purchases of property and equipment from related parties       (76 )  
Proceeds from disposal of property and equipment 1,457       558    
Net cash provided by (used in) investing activities 309       (942 )  
       
Cash flows from financing activities:      
Borrowings on long-term debt 1,500       17,300    
Repayments of long-term debt (15,617 )     (8,950 )  
Payments on sale leaseback transaction (330 )        
Principal payments on financing leases and equipment financing notes (577 )     (452 )  
Debt issuance costs       (1,000 )  
Net cash (used in) provided by financing activities (15,024 )     6,898    
Effect of foreign exchange rate on cash 25       (189 )  
Net change in cash and cash equivalents (456 )     7,308    
Cash and cash equivalents at beginning of period 14,822       5,872    
Cash and cash equivalents at end of period $ 14,366       $ 13,180    
       
Supplemental disclosure of cash flow information:      
Cash paid for interest $ 1,093       $ 1,285    
Cash (recovered) paid for income taxes $ (32 )     $ 62    
Supplemental disclosure of non-cash transactions:      
Purchases of property and equipment included in accounts payable $ 1,954       $ 4,347    
                   

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

Three months ended March 31, 2021 Infrastructure Well Completion Sand Drilling All Other Eliminations Total
Revenue from external customers $ 29,257     $ 22,901     $ 8,705     $ 919     $ 5,022     $     $ 66,804    
Intersegment revenues     54         14     640     (708 )      
Total revenue 29,257     22,955     8,705     933     5,662     (708 )   66,804    
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 26,458     9,003     5,862     1,604     5,153         48,080    
Intersegment cost of revenues 45     394             269     (708 )      
Total cost of revenue 26,503     9,397     5,862     1,604     5,422     (708 )   48,080    
Selling, general and administrative 6,253     10,612     2,049     422     1,512         20,848    
Depreciation, depletion, amortization and accretion 6,667     6,683     2,140     2,165     3,491         21,146    
Operating loss (10,166 )   (3,737 )   (1,346 )   (3,258 )   (4,763 )       (23,270 )  
Interest expense, net 661     254     93     63     154         1,225    
Other (income) expense, net (9,310 )   439     (794 )   (9 )   242         (9,432 )  
Loss before income taxes $ (1,517 )   $ (4,430 )   $ (645 )   $ (3,312 )   $ (5,159 )   $     $ (15,063 )  


Three months ended March 31, 2020 Infrastructure Well Completion Sand Drilling All Other Eliminations Total
Revenue from external customers $ 25,475     $ 42,686     $ 10,154     $ 4,723     $ 14,345     $     $ 97,383    
Intersegment revenues     634     95     4     775     (1,508 )      
Total revenue 25,475     43,320     10,249     4,727     15,120     (1,508 )   97,383    
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 26,681     25,568     11,297     5,625     12,735         81,906    
Intersegment cost of revenues 8     627         130     743     (1,508 )      
Total cost of revenue 26,689     26,195     11,297     5,755     13,478     (1,508 )   81,906    
Selling, general and administrative 3,944     2,171     1,303     1,063     2,290         10,771    
Depreciation, depletion, amortization and accretion 7,622     8,482     2,322     2,849     4,607         25,882    
Impairment of goodwill     53,406             1,567         54,973    
Impairment of other long-lived assets     4,203         326     8,368         12,897    
Operating loss (12,780 )   (51,137 )   (4,673 )   (5,266 )   (15,190 )       (89,046 )  
Interest expense, net 752     275     79     257     275         1,638    
Other (income) expense, net (7,703 )   (110 )   (37 )   27     414         (7,409 )  
Loss before income taxes $ (5,829 )   $ (51,302 )   $ (4,715 )   $ (5,550 )   $ (15,879 )   $     $ (83,275 )  


Three months ended December 31, 2020 Infrastructure Well Completion Sand Drilling All Other Eliminations Total
Revenue from external customers $ 55,934     $ 12,653     $ 11,843   $ 580     $ 4,040     $     $ 85,050    
Intersegment revenues     44       23     670     (737 )      
Total revenue 55,934     12,697     11,843   603     4,710     (737 )   85,050    
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 41,265     5,194     4,110   1,165     3,699         55,433    
Intersegment cost of revenues 127     426           184     (737 )      
Total cost of revenue 41,392     5,620     4,110   1,165     3,883     (737 )   55,433    
Selling, general and administrative 7,057     17,691     4,070   373     1,317         30,508    
Depreciation, depletion, amortization and accretion 6,957     7,066     2,390   2,224     3,550         22,187    
Operating income (loss) 528     (17,680 )   1,273   (3,159 )   (4,040 )       (23,078 )  
Interest expense, net 685     273     95   5     133         1,191    
Other (income) expense, net (8,355 )   170     86   23     (1,142 )       (9,218 )  
Income (loss) before income taxes $ 8,198     $ (18,123 )   $ 1,092   $ (3,187 )   $ (3,031 )   $     $ (15,051 )  
                                                       

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 goodwill, impairment of other long-lived assets, stock based compensation, interest expense, net, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets and interest on trade accounts receivable) 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. 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
  March 31,   December 31,
Reconciliation of Adjusted EBITDA to net loss: 2021   2020   2020
Net loss $ (12,440 )     $ (83,971 )     $ (11,861 )  
Depreciation, depletion, amortization and accretion expense 21,146       25,882       22,187    
Impairment of goodwill       54,973          
Impairment of other long-lived assets       12,897          
Stock based compensation 344       1,049       354    
Interest expense, net 1,225       1,638       1,191    
Other income, net (9,432 )     (7,409 )     (9,218 )  
(Benefit) provision for income taxes (2,623 )     696       (3,190 )  
Interest on trade accounts receivable 8,158       7,696       8,077    
Adjusted EBITDA $ 6,378       $ 13,451       $ 7,540    
                             

Infrastructure Services

  Three Months Ended
  March 31,   December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2021   2020   2020
Net (loss) income $ (3,945 )     $ (8,320 )     $ 6,150    
Depreciation and amortization expense 6,667       7,622       6,957    
Stock based compensation 135       241       156    
Interest expense 661       752       685    
Other income, net (9,310 )     (7,703 )     (8,355 )  
Provision for income taxes 2,428       2,491       2,048    
Interest on trade accounts receivable 8,673       7,696       8,418    
Adjusted EBITDA $ 5,309       $ 2,779       $ 16,059    
                             

Well Completion Services

  Three Months Ended
  March 31,   December 31,
Reconciliation of Adjusted EBITDA to net loss: 2021   2020   2020
Net loss $ (4,430 )     $ (51,302 )     $ (18,123 )  
Depreciation and amortization expense 6,683       8,482       7,066    
Impairment of goodwill       53,406          
Impairment of other long-lived assets       4,203          
Stock based compensation 83       329       70    
Interest expense 254       275       273    
Other expense (income), net 439       (110 )     170    
Interest on trade accounts receivable (514 )           (318 )  
Adjusted EBITDA $ 2,515       $ 15,283       $ (10,862 )  
                             

Natural Sand Proppant Services

  Three Months Ended
  March 31,   December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2021   2020   2020
Net (loss) income $ (645 )     $ (4,715 )     $ 1,092    
Depreciation, depletion, amortization and accretion expense 2,140       2,322       2,390    
Stock based compensation 64       232       70    
Interest expense 93       79       95    
Other (income) expense, net (794 )     (37 )     86    
Interest on trade accounts receivable (1 )           (23 )  
Adjusted EBITDA $ 857       $ (2,119 )     $ 3,710    
                             

Drilling Services

  Three Months Ended
  March 31,   December 31,
Reconciliation of Adjusted EBITDA to net loss: 2021   2020   2020
Net loss $ (3,312 )     $ (5,550 )     $ (3,187 )  
Depreciation expense 2,165       2,849       2,224    
Impairment of other long-lived assets       326          
Stock based compensation 38       94       36    
Interest expense 63       257       5    
Other (income) expense, net (9 )     27       23    
Adjusted EBITDA $ (1,055 )     $ (1,997 )     $ (899 )  
                             

Other Services(a)

  Three Months Ended
  March 31,   December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2021   2020   2020
Net (loss) income $ (108 )     $ (14,084 )     $ 2,207    
Depreciation, amortization and accretion expense 3,491       4,607       3,550    
Impairment of goodwill       1,567          
Impairment of other long-lived assets       8,368          
Stock based compensation 24       153       22    
Interest expense, net 154       275       133    
Other expense (income), net 242       414       (1,142 )  
Benefit for income taxes (5,051 )     (1,795 )     (5,238 )  
Adjusted EBITDA $ (1,248 )     $ (495 )     $ (468 )  


a. Includes results for Mammoth's aviation, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation and remote accommodations, equipment manufacturing and infrastructure engineering and design services and corporate related activities. The Company's corporate related activities do not generate revenue.

Adjusted Net Loss and Adjusted Loss per Share

Adjusted net loss and adjusted basic and diluted loss per share are supplemental non-GAAP financial measures that are used by management to evaluate the Company's operating and financial performance. Management believes these measures provide meaningful information about the Company's performance by excluding certain non-cash charges, such as impairment of goodwill and impairment of other long-lived assets, that may not be indicative of the Company's ongoing operating results. Adjusted net loss and adjusted loss per share should not be considered in isolation or as a substitute for net loss and loss per share prepared in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The following tables provide a reconciliation of adjusted net loss and adjusted loss per share to the GAAP financial measures of net loss and loss per share for the periods specified.

  Three Months Ended
  March 31,   December 31,
  2021   2020   2020
  (in thousands, except per share amounts)
Net loss, as reported $ (12,440 )     $ (83,971 )     $ (11,861 )  
Impairment of goodwill       54,973          
Impairment of other long-lived assets       12,897          
Adjusted net loss $ (12,440 )     $ (16,101 )     $ (11,861 )  
           
Basic loss per share, as reported $ (0.27 )     $ (1.85 )     $ (0.26 )  
Impairment of goodwill       1.21          
Impairment of other long-lived assets       0.28          
Adjusted basic loss per share $ (0.27 )     $ (0.36 )     $ (0.26 )  
           
Diluted loss per share, as reported $ (0.27 )     $ (1.85 )     $ (0.26 )  
Impairment of goodwill       1.21          
Impairment of other long-lived assets       0.28          
Adjusted diluted loss per share $ (0.27 )     $ (0.36 )     $ (0.26 )  


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Source: Mammoth Energy Services, Inc.