OKLAHOMA CITY, Feb. 25, 2021 (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, 2020.

Financial Highlights for the Fourth Quarter and Full Year 2020:

Total revenue was $85.1 million for the three months ended December 31, 2020, up 21% from $70.5 million for the three months ended September 30, 2020 and up 26% from $67.6 million for the three months ended December 31, 2019. Total revenue was $313.1 million for the year ended December 31, 2020, down 50% from $625.0 million for the year ended December 31, 2019.

Net loss for the three months ended December 31, 2020 was $11.9 million, or $0.26 per fully diluted share, as compared to net income of $3.4 million, or $0.07 per fully diluted share, for the three months ended September 30, 2020 and a net loss of $60.8 million, or $1.35 per fully diluted share, for the three months ended December 31, 2019. Net loss for the year ended December 31, 2020 was $107.6 million, or $2.36 per fully diluted share, as compared to net loss of $79.0 million, or $1.76 per fully diluted share for the year ended December 31, 2019.

Adjusted EBITDA (as defined and reconciled below) was $7.5 million for the three months ended December 31, 2020, as compared to $22.1 million for the three months ended September 30, 2020 and ($10.3) million for the three months ended December 31, 2019. Adjusted EBITDA was $50.0 million for the year ended December 31, 2020, as compared to $77.3 million for the year ended December 31, 2019.

“The fourth quarter of 2020 clearly shows that Mammoth continues to execute on its transition to an industrial focused company, with approximately 66% of our revenues derived from the industrial sector during the quarter. Given the anticipated demand in the industrial sector, we are well positioned to continue to grow our industrial business rapidly over the coming years. We expect to be ready to ramp up our oilfield service offerings when oilfield demand, pricing and margins strengthen. The recent signing of an agreement by our engineering group allows for significant expansion and brings us one step closer to being a fully integrated Engineering, Procurement and Construction “EPC” company,” commented Arty Straehla, Chief Executive Officer of Mammoth.

Infrastructure Services

Mammoth's infrastructure services division contributed revenue of $55.9 million, or approximately 66% of Mammoth's total revenue, for the three months ended December 31, 2020, an increase of 28% from $43.6 million for the three months ended September 30, 2020 and an increase of 118% from $25.6 million for the three months ended December 31, 2019 reflecting a strong demand for our services.

The infrastructure segment contributed revenues of $155.2 million for the year ended December 31, 2020, down from $213.3 million for the year ended December 31, 2019.

Mammoth had approximately 115 crews operating in the continental United States throughout 2020.

Well Completion Services

Mammoth's well completion services division contributed revenue (inclusive of inter-segment revenue) of $12.7 million on 291 stages for the three months ended December 31, 2020, a decrease of 20% from $15.8 million on 449 stages for the three months ended September 30, 2020 and a decrease of 49% from $24.9 million on 989 stages for the three months ended December 31, 2019. On average, 0.6 of the Company's fleets were active for the three months ended December 31, 2020, compared to average utilization of 0.9 fleets during the three months ended September 30, 2020 and an average utilization of 1.7 fleets during the three months ended December 31, 2019.

The well completion division contributed revenues (inclusive of inter-segment revenues) of $88.3 million on 2,880 stages for the year ended December 31, 2020, down from $243.8 million on 5,378 stages for the year ended December 31, 2019. On average, 1.5 of the Company's fleets were active for the year ended December 31, 2020 compared to 2.4 fleets for the year ended December 31, 2019.
  
Natural Sand Proppant Services

Mammoth's natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $11.8 million for the three months ended December 31, 2020, an increase of 97% from $6.0 million for the three months ended September 30, 2020 and an increase of 307% from $2.9 million for the three months ended December 31, 2019. The Company sold approximately 100,000 tons of sand during the three months ended December 31, 2020, an increase of 47% from approximately 68,000 tons sold during the three months ended September 30, 2020 and an increase of 32% from approximately 76,000 tons sold during the three months ended December 31, 2019. The Company's average sales price for the sand sold during the three months ended December 31, 2020 remained flat at $15.59 per ton, compared to the three months ended September 30, 2020 and decreased from the $19.95 per ton average sales price during the three months ended December 31, 2019.

The natural sand proppant division contributed revenues (inclusive of inter-segment revenues) of $34.4 million for the year ended December 31, 2020, as compared to $97.1 million for the year ended December 31, 2019. The Company sold 0.5 million tons of sand during the year ended December 31, 2020, a decline from 2.0 million tons of sand during the year ended December 31, 2019. The Company's average sales price for the sand sold during the year ended December 31, 2020 was $14.58 per ton, a decline from $29.70 per ton average sales price during the year ended December 31, 2019.

Drilling Services

Mammoth's drilling services division contributed revenue (inclusive of inter-segment revenue) of $0.6 million for the three months ended December 31, 2020, a decrease of 50% from $1.2 million for the three months ended September 30, 2020 and a decrease of 87% from $4.7 million for the three months ended December 31, 2019. The drilling services division contributed revenues of $7.8 million for the year ended December 31, 2020, as compared to $32.0 million for the year ended December 31, 2019.

As a result of market conditions, the Company 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, flowback, cementing, acidizing, 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 $4.7 million for the three months ended December 31, 2020, unchanged from the $4.7 million for the three months ended September 30, 2020 and a decrease of 54% from $10.3 million for the three months ended December 31, 2019.

The Company's other services contributed revenues of $31.3 million for the year ended December 31, 2020, as compared to $88.6 million for the year ended December 31, 2019.

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 $30.5 million for the three months ended December 31, 2020, as compared to $12.2 million for the three months ended September 30, 2020 and $10.3 million for the three months ended December 31, 2019.

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

	Three Months Ended												Years Ended December 31,
	December 31,								September 30,				December 31,
	2020				2019				2020				2020				2019
Cash expenses:
Compensation and benefits	$	3,738			$	3,203			$	3,449			$	14,876			$	19,364
Professional services	4,570				4,301				5,651				19,905				17,128
Other(a)	2,256				2,010				2,163				8,828				10,300
Total cash SG&A expense	10,564				9,514				11,263				43,609				46,792
Non-cash expenses:
Bad debt provision	19,652				204				626				21,958				1,434
Stock based compensation	292				620				291				1,618				3,326
Total non-cash SG&A expense	19,944				824				917				23,576				4,760
Total SG&A expense	$	30,508			$	10,338			$	12,180			$	67,185			$	51,552

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 36% for the three months ended December 31, 2020, as compared to 17% for the three months ended September 30, 2020 and 15% for the three months ended December 31, 2019. SG&A expenses, as a percentage of total revenue, were 21% for the year ended December 31, 2020, as compared to 8% for the year ended December 31, 2019. The bad debt provision for the three months ended December 31, 2020, includes $19.4 million related to the voluntary petitions for relief filed on November 13, 2020, by Gulfport Energy Corporation and certain of its subsidiaries.

Liquidity

As of December 31, 2020, Mammoth had cash on hand of $14.8 million and outstanding borrowings under its revolving credit facility of $78.0 million. As of December 31, 2020, the Company had $38.7 million of available borrowing capacity under its revolving credit facility, after giving effect to $13.0 million of outstanding letters of credit. As of December 31, 2020, Mammoth had total liquidity of $53.5 million.

As of February 24, 2021, Mammoth had cash on hand of $21.4 million and outstanding borrowings under its revolving credit facility of $75.0 million. As of February 24, 2021, the Company had $41.7 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												Years Ended December 31,
	December 31,								September 30,				December 31,
	2020				2019				2020				2020				2019
Infrastructure services(a)	$	37			$	—			$	178			$	258			$	3,456
Well completion services(b)	606				398				698				4,358				14,703
Natural sand proppant services(c)	4				174				194				1,073				2,877
Drilling services(d)	234				84				131				432				3,156
Other(e)	7				215				324				716				11,569
Total capital expenditures	$	888			$	871			$	1,525			$	6,837			$	35,761

a.   Capital expenditures primarily for truck, tooling and other equipment for the periods presented.
b.   Capital expenditures primarily for well completion 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) as well as a qualitative basis, such as nature of the product and service offerings and types of customers.

As of December 31, 2020, the Company’s four reportable segments include infrastructure services (“Infrastructure”), well completion services (“Well Completion”), natural sand proppant services (“Sand”) and drilling services (“Drilling”). In 2019, the Company included Barracuda Logistics LLC, or Barracuda, in its Well Completion segment, Cobra Aviation Services LLC, or Cobra Aviation, Air Rescue Systems Corporation, or ARS, and Leopard Aviation LLC, or Leopard, in its Infrastructure segment and Mako Acquisitions LLC, or 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 in 2020. The results for the year ended December 31, 2019 have been retroactively adjusted to reflect these changes.

Conference Call Information

Mammoth will host a conference call on Thursday, February 25, 2021 at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss its fourth quarter and full year 2020 financial and operational results. The telephone number to access the conference call is 844-265-1561 in the U.S. and the international dial in is 216-562-0385. The conference ID for the call is 7435949. 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; 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		December 31,					December 31,
		2020					2019
CURRENT ASSETS		(in thousands)
Cash and cash equivalents		$	14,822				$	5,872
Short-term investment		1,750					—
Accounts receivable, net		393,112					363,053
Receivables from related parties		28,461					7,523
Inventories		12,020					17,483
Prepaid expenses		13,825					12,354
Other current assets		758					695
Total current assets		464,748					406,980
Property, plant and equipment, net		251,262					352,772
Sand reserves		65,876					68,351
Operating lease right-of-use assets		20,179					43,446
Intangible assets, net - customer relationships		408					583
Intangible assets, net - trade names		4,366					5,205
Goodwill		12,608					67,581
Other non-current assets		5,115					7,467
Total assets		$	824,562				$	952,385
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable		$	40,316				$	39,220
Payables to related parties		3					526
Accrued expenses and other current liabilities		44,408					40,754
Current operating lease liability		8,618					16,432
Current portion of long-term debt		1,165					—
Income taxes payable		34,088					33,465
Total current liabilities		128,598					130,397
Long-term debt		81,338					80,000
Deferred income tax liabilities		24,741					36,873
Long-term operating lease liability		11,377					27,102
Asset retirement obligation		4,746					4,241
Other liabilities		10,435					5,031
Total liabilities		261,235					283,644
COMMITMENTS AND CONTINGENCIES
EQUITY
Equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 45,769,283 and 45,108,545 issued and outstanding at December 31, 2020 and 2019		458					451
Additional paid in capital		537,039					535,094
Retained earnings		28,895					136,502
Accumulated other comprehensive loss		(3,065		)			(3,306		)
Total equity		563,327					668,741
Total liabilities and equity		$	824,562				$	952,385

MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
	Three Months Ended															Years Ended December 31,
	December 31,										September 30,					December 31,
	2020					2019					2020					2020					2019
	(in thousands, except per share amounts)
REVENUE
Services revenue	$	65,079				$	57,950				$	55,279				$	234,081				$	452,594
Services revenue - related parties	7,862					6,714					8,565					43,091					102,624
Product revenue	10,234					1,724					4,815					28,404					42,105
Product revenue - related parties	1,875					1,249					1,875					7,500					27,689
Total revenue	85,050					67,637					70,534					313,076					625,012
COST AND EXPENSES
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $19,780, $25,872, $26,416, $85,481 and $102,901, respectively, for the three months ended December 31, 2020, December 31, 2019 and September 30, 2020 and years ended December 31, 2020 and 2019)	51,260					68,599					41,445					205,657					451,206
Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0, $0, $0 and $0, respectively, for the three months ended December 31, 2020, December 31, 2019 and September 30, 2020 and years ended December 31, 2020 and 2019)	90					633					131					418					4,770
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,387, $2,625, $2,697, $9,758 and $14,039, respectively, for the three months ended December 31, 2020, December 31, 2019 and September 30, 2020 and years ended December 31, 2020 and 2019)	4,083					6,337					4,353					25,946					87,812
Selling, general and administrative	30,364					9,978					11,979					66,427					49,705
Selling, general and administrative - related parties	144					360					201					758					1,847
Depreciation, depletion, amortization and accretion	22,187					28,521					23,132					95,317					117,033
Impairment of goodwill	—					30,470					—					54,973					33,664
Impairment of other long-lived assets	—					4,010					—					12,897					7,358
Total cost and expenses	108,128					148,908					81,241					462,393					753,395
Operating loss	(23,078		)			(81,271		)			(10,707		)			(149,317		)			(128,383		)
OTHER INCOME (EXPENSE)
Interest expense, net	(1,191		)			(1,486		)			(1,098		)			(5,397		)			(4,958		)
Other, net	9,559					7,272					7,943					33,048					42,216
Other, net - related parties	(341		)			—					1,099					1,890					—
Total other income	8,027					5,786					7,944					29,541					37,258
Loss before income taxes	(15,051		)			(75,485		)			(2,763		)			(119,776		)			(91,125		)
Benefit for income taxes	(3,190		)			(14,706		)			(6,193		)			(12,169		)			(12,081		)
Net (loss) income	$	(11,861	)			$	(60,779	)			$	3,430				$	(107,607	)			$	(79,044	)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net of tax of ($170), $69, ($95), ($54) and ($203), respectively, for the three months ended December 31, 2020, December 31, 2019 and September 30, 2020 and years ended December 31, 2020 and 2019	663					(213		)			324					241					775
Comprehensive (loss) income	$	(11,198	)			$	(60,992	)			$	3,754				$	(107,366	)			$	(78,269	)
Net (loss) income per share (basic)	$	(0.26	)			$	(1.35	)			$	0.07				$	(2.36	)			$	(1.76	)
Net (loss) income per share (diluted)	$	(0.26	)			$	(1.35	)			$	0.07				$	(2.36	)			$	(1.76	)
Weighted average number of shares outstanding (basic)	45,769					45,092					45,764					45,644					45,011
Weighted average number of shares outstanding (diluted)	45,769					45,092					46,571					45,644					45,011
Dividends declared per share	$	—				$	—				$	—				$	—				$	0.25

MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
	Years Ended December 31,
	December 31,
	2020					2019
	(in thousands)
Cash flows from operating activities:
Net loss	$	(107,607	)			$	(79,044	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Stock based compensation	1,952					4,177
Depreciation, depletion, accretion and amortization	95,317					117,033
Amortization of coil tubing strings	359					1,641
Amortization of debt origination costs	831					326
Bad debt expense	21,958					1,434
(Gain) loss on disposal of property and equipment	(1,379		)			55
Impairment of goodwill	54,973					33,664
Impairment of other long-lived assets	12,897					7,358
Inventory obsolescence	—					1,349
Deferred income taxes	(12,186		)			(42,639		)
Other	(143		)			(986		)
Changes in assets and liabilities:
Accounts receivable, net	(32,621		)			(27,006		)
Receivables from related parties	(40,333		)			3,641
Inventories	5,103					830
Prepaid expenses and other assets	1,996					(1,040		)
Accounts payable	2,526					(25,968		)
Payables to related parties	(522		)			156
Accrued expenses and other liabilities	3,198					(18,800		)
Income taxes payable	648					(71,499		)
Net cash provided by (used in) operating activities	6,967					(95,318		)
Cash flows from investing activities:
Purchases of property and equipment	(6,761		)			(35,417		)
Purchases of property and equipment from related parties	(76		)			(344		)
Contributions to equity investee	(490		)			(680		)
Proceeds from disposal of property and equipment	6,782					3,217
Purchase of short-term investment	(1,750		)			—
Net cash used in investing activities	(2,295		)			(33,224		)
Cash flows from financing activities:
Borrowings from lines of credit	35,351					156,000
Repayments of lines of credit	(32,800		)			(76,000		)
Proceeds from sale leaseback transaction	5,000					—
Payments on sale leaseback transaction	(268		)			—
Dividends paid	—					(11,219		)
Principal payments on financing leases and equipment financing notes	(1,966		)			(2,079		)
Debt issuance costs	(1,051		)			—
Net cash provided by financing activities	4,266					66,702
Effect of foreign exchange rate on cash	12					87
Net change in cash and cash equivalents	8,950					(61,753		)
Cash and cash equivalents at beginning of period	5,872					67,625
Cash and cash equivalents at end of period	$	14,822				$	5,872
Supplemental disclosure of cash flow information:
Cash paid for interest	$	4,729				$	4,741
Cash (recovered) paid for income taxes	$	(617	)			$	110,848
Supplemental disclosure of non-cash transactions:
Purchases of property and equipment included in accounts payable	$	1,312				$	2,303
Right-of-use assets obtained for financing lease liabilities	$	2,431				$	3,721

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

Three months ended December 31, 2019	Infrastructure				Well Completion				Sand				Drilling				All Other				Eliminations				Total
Revenue from external customers	$	25,601			$	24,515			$	2,946			$	4,637			$	9,938			$	—			$	67,637
Intersegment revenues	—				414				—				14				407				(835		)		—
Total revenue	25,601				24,929				2,946				4,651				10,345				(835		)		67,637
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	29,925				20,354				6,162				6,927				12,201				—				75,569
Intersegment cost of revenues	—				339				—				206				290				(835		)		—
Total cost of revenue	29,925				20,693				6,162				7,133				12,491				(835		)		75,569
Selling, general and administrative	5,097				1,428				792				1,063				1,958				—				10,338
Depreciation, depletion, amortization and accretion	7,662				9,985				2,628				3,361				4,885				—				28,521
Impairment of goodwill	—				23,423				2,684				—				4,363				—				30,470
Impairment of other long-lived assets	—				—				—				2,955				1,055				—				4,010
Operating loss	(17,083		)		(30,600		)		(9,320		)		(9,861		)		(14,407		)		—				(81,271		)
Interest expense, net	660				304				48				217				257				—				1,486
Other (income) expense, net	(7,236		)		574				—				14				(624		)		—				(7,272		)
Loss before income taxes	$	(10,507	)		$	(31,478	)		$	(9,368	)		$	(10,092	)		$	(14,040	)		$	—			$	(75,485	)

Three months ended September 30, 2020	Infrastructure				Well Completion				Sand				Drilling				All Other				Eliminations				Total
Revenue from external customers	$	43,582			$	15,738			$	6,031			$	1,193			$	3,990			$	—			$	70,534
Intersegment revenues	—				27				—				11				687				(725		)		—
Total revenue	43,582				15,765				6,031				1,204				4,677				(725		)		70,534
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	28,883				6,510				4,154				1,955				4,427				—				45,929
Intersegment cost of revenues	162				449				—				—				114				(725		)		—
Total cost of revenue	29,045				6,959				4,154				1,955				4,541				(725		)		45,929
Selling, general and administrative	7,227				1,721				1,056				382				1,794				—				12,180
Depreciation, depletion, amortization and accretion	7,294				7,189				2,700				2,294				3,655				—				23,132
Operating income (loss)	16				(104		)		(1,879		)		(3,427		)		(5,313		)		—				(10,707		)
Interest expense, net	623				253				70				60				92				—				1,098
Other (income) expense, net	(8,375		)		(1,156		)		1,792				20				(1,323		)		—				(9,042		)
Income (loss) before income taxes	$	7,768			$	799			$	(3,741	)		$	(3,507	)		$	(4,082	)		$	—			$	(2,763	)

Year ended December 31, 2020	Infrastructure				Well Completion				Sand				Drilling				All Other				Eliminations				Total
Revenue from external customers	$	155,241			$	87,201			$	34,265			$	7,746			$	28,623			$	—			$	313,076
Intersegment revenues	—				1,124				95				39				2,716				(3,974		)		—
Total revenue	155,241				88,325				34,360				7,785				31,339				(3,974		)		313,076
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	122,046				45,647				25,955				10,757				27,616				—				232,021
Intersegment cost of revenues	323				1,836				—				152				1,663				(3,974		)		—
Total cost of revenue	122,369				47,483				25,955				10,909				29,279				(3,974		)		232,021
Selling, general and administrative	26,058				23,039				7,807				3,149				7,132				—				67,185
Depreciation, depletion, amortization and accretion	29,373				30,411				9,771				10,039				15,723				—				95,317
Impairment of goodwill	—				53,406				—				—				1,567				—				54,973
Impairment of other long-lived assets	—				4,203				—				326				8,368				—				12,897
Operating loss	(22,559		)		(70,217		)		(9,173		)		(16,638		)		(30,730		)		—				(149,317		)
Interest expense, net	2,775				1,130				312				454				726				—				5,397
Other (income) expense, net	(32,437		)		(2,274		)		1,839				(227		)		(1,839		)		—				(34,938		)
Income (loss) before income taxes	$	7,103			$	(69,073	)		$	(11,324	)		$	(16,865	)		$	(29,617	)		$	—			$	(119,776	)

Year ended December 31, 2019	Infrastructure				Well Completion				Sand				Drilling				All Other				Eliminations				Total
Revenue from external customers	$	210,691			$	241,951			$	67,267			$	31,728			$	73,375			$	—			$	625,012
Intersegment revenues	2,573				1,851				29,796				236				15,232				(49,688		)		—
Total revenue	213,264				243,802				97,063				31,964				88,607				(49,688		)		625,012
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	160,449				174,816				87,637				35,925				84,961				—				543,788
Intersegment cost of revenues	12,820				31,727				15				1,028				4,158				(49,748		)		—
Total cost of revenue	173,269				206,543				87,652				36,953				89,119				(49,748		)		543,788
Selling, general and administrative	23,235				10,889				5,006				4,177				8,245				—				51,552
Depreciation, depletion, amortization and accretion	30,349				40,159				14,050				13,143				19,332				—				117,033
Impairment of goodwill	—				23,423				2,684				—				7,557				—				33,664
Impairment of other long-lived assets	—				—				—				2,955				4,403				—				7,358
Operating loss	(13,589		)		(37,212		)		(12,329		)		(25,264		)		(40,049		)		60				(128,383		)
Interest expense, net	1,674				1,228				193				862				1,001				—				4,958
Other (income) expense, net	(41,949		)		580				67				(9		)		(905		)		—				(42,216		)
Income (loss) before income taxes	$	26,686			$	(39,020	)		$	(12,589	)		$	(26,117	)		$	(40,145	)		$	60			$	(91,125	)

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, inventory obsolescence charges, acquisition related costs, stock based compensation, interest expense, net, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets and 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															Years Ended December 31,
	December 31,										September 30,					December 31,
Reconciliation of Adjusted EBITDA to net (loss) income:	2020					2019					2020					2020					2019
Net (loss) income	$	(11,861	)			$	(60,779	)			$	3,430				$	(107,607	)			$	(79,044	)
Depreciation, depletion, amortization and accretion expense	22,187					28,521					23,132					95,317					117,033
Impairment of goodwill	—					30,470					—					54,973					33,664
Impairment of other long-lived assets	—					4,010					—					12,897					7,358
Inventory obsolescence charges	—					—					—					—					1,349
Acquisition related costs	—					—					—					—					45
Stock based compensation	354					811					353					1,952					4,177
Interest expense, net	1,191					1,486					1,098					5,397					4,958
Other income, net	(9,218		)			(7,272		)			(9,042		)			(34,938		)			(42,216		)
Benefit for income taxes	(3,190		)			(14,706		)			(6,193		)			(12,169		)			(12,081		)
Interest on trade accounts receivable	8,077					7,174					9,285					34,130					42,040
Adjusted EBITDA	$	7,540				$	(10,285	)			$	22,063				$	49,952				$	77,283

Infrastructure Services

	Three Months Ended															Years Ended December 31,
	December 31,										September 30,					December 31,
Reconciliation of Adjusted EBITDA to net income (loss):	2020					2019					2020					2020					2019
Net income (loss)	$	6,150				$	(13,161	)			$	6,122				$	(30	)			$	18,778
Depreciation and amortization expense	6,957					7,662					7,294					29,373					30,349
Acquisition related costs	—					—					—					—					12
Stock based compensation	156					175					139					580					822
Interest expense	685					660					623					2,775					1,674
Other income, net	(8,355		)			(7,236		)			(8,375		)			(32,437		)			(41,949		)
Provision for income taxes	2,048					2,654					1,646					7,133					7,908
Interest on trade accounts receivable	8,418					7,174					8,170					32,214					42,040
Adjusted EBITDA	$	16,059				$	(2,072	)			$	15,619				$	39,608				$	59,634

Well Completion Services

	Three Months Ended															Years Ended December 31,
	December 31,										September 30,					December 31,
Reconciliation of Adjusted EBITDA to net (loss) income:	2020					2019					2020					2020					2019
Net (loss) income	$	(18,123	)			$	(31,478	)			$	799				$	(69,073	)			$	(39,020	)
Depreciation and amortization expense	7,066					9,985					7,189					30,411					40,159
Impairment of goodwill	—					23,423					—					53,406					23,423
Impairment of other long-lived assets	—					—					—					4,203					—
Acquisition related costs	—					—					—					—					18
Stock based compensation	70					296					76					527					1,693
Interest expense	273					304					253					1,130					1,228
Other expense (income), net	170					574					(1,156		)			(2,274		)			580
Interest on trade accounts receivable	(318		)			—					1,073					1,888					—
Adjusted EBITDA	$	(10,862	)			$	3,104				$	8,234				$	20,218				$	28,081

Natural Sand Proppant Services

	Three Months Ended															Years Ended December 31,
	December 31,										September 30,					December 31,
Reconciliation of Adjusted EBITDA to net income (loss):	2020					2019					2020					2020					2019
Net income (loss)	$	1,092				$	(9,368	)			$	(3,741	)			$	(11,324	)			$	(12,589	)
Depreciation, depletion, amortization and accretion expense	2,390					2,628					2,700					9,771					14,050
Impairment of goodwill	—					2,684					—					—					2,684
Acquisition related costs	—					—					—					—					8
Stock based compensation	70					156					77					425					812
Interest expense	95					48					70					312					193
Other expense, net	86					—					1,792					1,839					67
Interest on trade accounts receivable	(23		)			—					26					3					—
Adjusted EBITDA	$	3,710				$	(3,852	)			$	924				$	1,026				$	5,225

Drilling Services

	Three Months Ended															Years Ended December 31,
	December 31,										September 30,					December 31,
Reconciliation of Adjusted EBITDA to net loss:	2020					2019					2020					2020					2019
Net loss	$	(3,187	)			$	(10,092	)			$	(3,507	)			$	(16,865	)			$	(26,117	)
Depreciation expense	2,224					3,361					2,294					10,039					13,143
Impairment of other long-lived assets	—					2,955					—					326					2,955
Acquisition related costs	—					—					—					—					2
Stock based compensation	36					82					38					203					361
Interest expense	5					217					60					454					862
Other expense (income), net	23					14					20					(227		)			(9		)
Adjusted EBITDA	$	(899	)			$	(3,463	)			$	(1,095	)			$	(6,070	)			$	(8,803	)

Other Services^(a)

	Three Months Ended															Years Ended December 31,
	December 31,										September 30,					December 31,
Reconciliation of Adjusted EBITDA to net income (loss):	2020					2019					2020					2020					2019
Net income (loss)	$	2,207				$	3,320				$	3,757				$	(10,315	)			$	(20,156	)
Depreciation, amortization and accretion expense	3,550					4,885					3,655					15,723					19,332
Impairment of goodwill	—					4,363					—					1,567					7,557
Impairment of other long-lived assets	—					1,055					—					8,368					4,403
Inventory obsolescence charges	—					—					—					—					1,349
Acquisition related costs	—					—					—					—					5
Stock based compensation	22					102					23					217					489
Interest expense, net	133					257					92					726					1,001
Other income, net	(1,142		)			(624		)			(1,323		)			(1,839		)			(905		)
Benefit for income taxes	(5,238		)			(17,360		)			(7,839		)			(19,302		)			(19,989		)
Interest on trade accounts receivable	—					—					16					25					—
Adjusted EBITDA	$	(468	)			$	(4,002	)			$	(1,619	)			$	(4,830	)			$	(6,914	)

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) Income and Adjusted (Loss) Earnings per Share

Adjusted net (loss) income and adjusted basic and diluted (loss) earnings 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) income and adjusted (loss) earnings per share should not be considered in isolation or as a substitute for net (loss) income and (loss) earnings 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) income and adjusted (loss) earnings per share to the GAAP financial measures of net (loss) income and (loss) earnings per share for the periods specified.

	Three Months Ended														Years Ended December 31,
	December 31,										September 30,				December 31,
	2020					2019					2020				2020					2019
	(in thousands, except per share amounts)
Net (loss) income, as reported	$	(11,861	)			$	(60,779	)			$	3,430			$	(107,607	)			$	(79,044	)
Impairment of goodwill	—					30,470					—				54,973					33,664
Impairment of other long-lived assets	—					4,010					—				12,897					7,358
Adjusted net (loss) income	$	(11,861	)			$	(26,299	)			$	3,430			$	(39,737	)			$	(38,022	)
Basic (loss) earnings per share, as reported	$	(0.26	)			$	(1.35	)			$	0.07			$	(2.36	)			$	(1.76	)
Impairment of goodwill	—					0.68					—				1.20					0.75
Impairment of other long-lived assets	—					0.09					—				0.28					0.16
Adjusted basic (loss) earnings per share	$	(0.26	)			$	(0.58	)			$	0.07			$	(0.88	)			$	(0.85	)
Diluted (loss) earnings per share, as reported	$	(0.26	)			$	(1.35	)			$	0.07			$	(2.36	)			$	(1.76	)
Impairment of goodwill	—					0.68					—				1.20					0.75
Impairment of other long-lived assets	—					0.09					—				0.28					0.16
Adjusted diluted (loss) earnings per share	$	(0.26	)			$	(0.58	)			$	0.07			$	(0.88	)			$	(0.85	)

 

Source: Mammoth Energy Services, Inc.