Press Release Details

Mammoth Energy Services, Inc. Announces Fourth Quarter and Full Year 2020 Operational and Financial Results

February 25, 2021 at 4:01 PM EST

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 )  

 


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