Exhibit 99.1
Mammoth Energy Services, Inc. Announces
First Quarter 2020 Operational and Financial Results
OKLAHOMA CITY, OKLAHOMA, May 11, 2020 - Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ: TUSK) today reported financial and operational results for the first quarter ended March 31, 2020.
Financial Highlights for the First Quarter 2020:
Total revenue was $97.4 million for the three months ended March 31, 2020, up from $67.6 million for the three months ended December 31, 2019 and down from $262.1 million for the three months ended March 31, 2019.
Net loss for the three months ended March 31, 2020 was $84.0 million, or $1.85 per fully diluted share, as compared to net loss of $60.8 million, or $1.35 per fully diluted share, for the three months ended December 31, 2019 and net income of $28.3 million, or $0.63 per fully diluted share, for the three months ended March 31, 2019.
Adjusted net loss (as defined and reconciled below) for the three months ended March 31, 2020 was $16.1 million, or $0.36 per fully diluted share, as compared to adjusted net loss of $26.3 million, or $0.58 per fully diluted share, for the three months ended December 31, 2019 and adjusted net income of $28.3 million, or $0.63 per fully diluted share, for the three months ended March 31, 2019.
Adjusted EBITDA (as defined and reconciled below) was $13.5 million for the three months ended March 31, 2020, as compared to a loss of $10.3 million for the three months ended December 31, 2019 and a positive $82.8 million for the three months ended March 31, 2019.
Arty Straehla, Mammoth's Chief Executive Officer, stated, “The diversification strategy we implemented nearly three years ago is allowing us to focus on our infrastructure business. Infrastructure results are improving and we are encouraged by our new bidding opportunities. Working with our new infrastructure management team, we are cutting costs, streamlining operations and improving our operating margins. Conversely, our oilfield business remains under fundamental pressure from the volatility in oil prices. The unprecedented volatility in oil prices has been exacerbated by the outbreak of the COVID-19 pandemic, which has resulted in global oil demand destruction and economic decline. Our oilfield activity has been, and will likely continue to be, challenged by significantly reduced levels of capital expenditures by our customers. As a result, we have temporarily idled several of our oilfield services businesses and expect lower pricing and utilization in those that remain in operation.”
Infrastructure Services
Mammoth's infrastructure services division contributed revenue of $25.7 million for the three months ended March 31, 2020, a decrease from $26.6 million for the three months ended December 31, 2019 and from $108.7 million for the three months ended March 31, 2019.
As of March 31, 2020, Mammoth had a total of approximately 130 transmission and distribution crews operating in the continental United States.
Pressure Pumping Services
Mammoth's pressure pumping services division contributed revenue (inclusive of inter-segment revenue) of $43.6 million on 1,482 stages for the three months ended March 31, 2020, an increase from $25.0 million on 989 stages for the three months
ended December 31, 2019 and a decrease from $92.1 million on 1,889 stages for the three months ended March 31, 2019. On average, 2.7 of the Company's fleets were active for the three months ended March 31, 2020, compared to average utilization of 1.7 fleets during the three months ended December 31, 2019 and an average utilization of 4.4 fleets during the three months ended March 31, 2019.
The conversion of our pressure pumping fleets to dynamic gas blending capabilities is progressing, with nine units converted, all of which are operating today.
Natural Sand Proppant Services
Mammoth's natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $10.2 million for the three months ended March 31, 2020, an increase from $3.0 million for the three months ended December 31, 2019 and a decrease from $37.9 million for the three months ended March 31, 2019. The Company sold approximately 239,000 tons of sand during the three months ended March 31, 2020, an increase from approximately 76,000 tons sold during the three months ended December 31, 2019 and a decrease from approximately 666,000 tons sold during the three months ended March 31, 2019. The Company's average sales price for the sand sold during the three months ended March 31, 2020 was $13.67 per ton, a decrease from the $19.95 per ton average sales price during the three months ended December 31, 2019 and the $32.30 per ton average sales price during the three months ended March 31, 2019.
Drilling Services
Mammoth's drilling services division contributed revenue (inclusive of inter-segment revenue) of $4.8 million for the three months ended March 31, 2020, a slight increase from $4.7 million for the three months ended December 31, 2019 and a decrease from $13.8 million for the three months ended March 31, 2019. The decline is primarily due to reduced utilization. As a result of market conditions, the Company temporarily shut down its contract land drilling operations beginning in December 2019.
Other Services
Mammoth's other services, including coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation, remote accommodations, oilfield equipment manufacturing and infrastructure engineering and design services, contributed revenue (inclusive of inter-segment revenue) of $14.9 million for the three months ended March 31, 2020, an increase from $9.3 million for the three months ended December 31, 2019 and a decrease from $25.0 million for the three months ended March 31, 2019. An average of 490 pieces of equipment were rented to customers during the three months ended March 31, 2020, up 5% from an average of 467 pieces of equipment rented to customers during the three months ended December 31, 2019 and down 21% from an average of 621 pieces of equipment rented to customers for the three months ended March 31, 2019.
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses were $10.8 million for the three months ended March 31, 2020, as compared to $10.3 million for the three months ended December 31, 2019 and $17.3 million for the three months ended March 31, 2019.
Following is a breakout of SG&A expense (in thousands):
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | |
| March 31, | | | | December 31, | | | | |
| 2020 | | 2019 | | 2019 | | | | |
| Cash expenses: | | | | | | | | | |
| Compensation and benefits | $ | 3,969 | | | $ | 9,230 | | | $ | 3,203 | | | | | |
| Professional services | 3,538 | | | 3,789 | | | 4,301 | | | | | |
Other(a) | 2,309 | | | 3,244 | | | 2,010 | | | | | |
| Total cash SG&A expense | 9,816 | | | 16,263 | | | 9,514 | | | | | |
| Non-cash expenses: | | | | | | | | | |
| Bad debt provision | 55 | | | 4 | | | 204 | | | | | |
| | | | | | | | | |
| Stock based compensation | 900 | | | 1,069 | | | 620 | | | | | |
| Total non-cash SG&A expense | 955 | | | 1,073 | | | 824 | | | | | |
| Total SG&A expense | $ | 10,771 | | | $ | 17,336 | | | $ | 10,338 | | | | | |
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 11% for the three months ended March 31, 2020, as compared to 15% for the three months ended December 31, 2019 and 7% for the three months ended March 31, 2019.
Impairment Expenses
As a result of the significant decline in oil prices as a result of geopolitical events coupled with effects of COVID-19, Mammoth recognized impairment of goodwill totaling $55.0 million during the three months ended March 31, 2020, primarily related to its pressure pumping services division. Additionally, the Company recognized impairment of other long-lived assets totaling $12.9 million, primarily related to water transfer, crude oil hauling, coil tubing and rental equipment during the three months ended March 31, 2020.
During the three months ended December 31, 2019, the Company recognized impairment of goodwill totaling $30.5 million, primarily related to its pressure pumping services division. Additionally, the Company recognized impairment of other long-lived assets totaling $4.0 million, primarily related to drilling rigs and related equipment during the three months ended December 31, 2019.
Liquidity
As of March 31, 2020, Mammoth had cash on hand of $13.2 million and outstanding borrowings under its revolving credit facility of $88.4 million. As of March 31, 2020, the Company had $19.4 million of available borrowing capacity under its revolving credit facility. This available borrowing capacity reflects (i) a minimum excess availability covenant of 10% of the maximum revolving advance amount and (ii) $9.0 million of outstanding letters of credit. As of March 31, 2020, Mammoth had total liquidity of $32.6 million.
As of May 6, 2020, Mammoth had cash on hand of $16.8 million and outstanding borrowings under its revolving credit facility of $94.0 million. As of May 6, 2020, the Company had $13.8 million of available borrowing capacity under its revolving credit facility. This available borrowing capacity reflects (i) a minimum excess availability covenant of 10% of the maximum revolving advance amount and (ii) $9.0 million of outstanding letters of credit.
Capital Expenditures
The following table summarizes Mammoth's capital expenditures by operating division for the periods indicated (in thousands):
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | |
| March 31, | | | | December 31, | | | | |
| 2020 | | 2019 | | 2019 | | | | |
Infrastructure services(a) | $ | 77 | | | $ | 3,254 | | | $ | 90 | | | | | |
Pressure pumping services(b) | 604 | | | 7,329 | | | 398 | | | | | |
Natural sand proppant services(c) | 521 | | | 985 | | | 174 | | | | | |
Drilling services(d) | 8 | | | 2,267 | | | 84 | | | | | |
Other(e) | 290 | | | 6,438 | | | 125 | | | | | |
| Total capital expenditures | $ | 1,500 | | | $ | 20,273 | | | $ | 871 | | | | | |
a. Capital expenditures primarily for truck, tooling and other equipment for the periods presented.
b. Capital expenditures primarily for pressure pumping 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.
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.
Conference Call Information
Mammoth will host a conference call on Monday, May 11, 2020 at 3:00 p.m. CDT (4:00 p.m. EDT) to discuss its first quarter 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 9880304. The conference call will also be webcast live on www.mammothenergy.com in the “Investors” section.
About Mammoth Energy Services, Inc.
Mammoth is an integrated, growth-oriented energy service company serving companies engaged in the exploration and development of North American onshore unconventional oil and natural gas reserves and government-funded utilities, private utilities, public investor-owned utilities and co-operative utilities through its energy infrastructure services. Mammoth’s suite of services and products include: pressure pumping services, infrastructure 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 economic repercussions and the resulting negative impact on demand for oil and gas; 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; the Company's inability to replace the prior levels of work in its business segments, including its infrastructure and pressure pumping segments; risks relating to economic conditions; the loss of or interruption in operations of one or more key suppliers or customers; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of capital resources and liquidity; weather; natural disasters; global or national health concerns, including the outbreak of pandemic or contagious disease, such as the coronavirus; litigation; competition in the oil and natural gas and infrastructure industries; and costs and availability of resources.
Investors are cautioned not to place undue reliance on any forward-looking statement which speaks only as of the date on which such statement is made. We undertake no obligation to correct, revise or update any forward-looking statement after the date such statement is made, whether as a result of new information, future events or otherwise, except as required by applicable law.
MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | | | | |
| ASSETS | | March 31, | | December 31, |
| | 2020 | | 2019 |
| CURRENT ASSETS | | (in thousands) | | |
| Cash and cash equivalents | | $ | 13,180 | | | $ | 5,872 | |
| Accounts receivable, net | | 371,755 | | | 363,053 | |
| Receivables from related parties | | 17,790 | | | 7,523 | |
| Inventories | | 13,193 | | | 17,483 | |
| Prepaid expenses | | 8,250 | | | 12,354 | |
| Other current assets | | 866 | | | 695 | |
| Total current assets | | 425,034 | | | 406,980 | |
| | | | |
| Property, plant and equipment, net | | 316,068 | | | 352,772 | |
| Sand reserves | | 68,351 | | | 68,351 | |
| Operating lease right-of-use assets | | 38,838 | | | 43,446 | |
| Intangible assets, net - customer relationships | | 540 | | | 583 | |
| Intangible assets, net - trade names | | 4,996 | | | 5,205 | |
| Goodwill | | 12,608 | | | 67,581 | |
| | | | |
| Other non-current assets | | 7,576 | | | 7,467 | |
| Total assets | | $ | 874,011 | | | $ | 952,385 | |
| LIABILITIES AND EQUITY | | | | |
| CURRENT LIABILITIES | | | | |
| Accounts payable | | $ | 42,993 | | | $ | 39,220 | |
| Payables to related parties | | 82 | | | 526 | |
| Accrued expenses and other current liabilities | | 39,727 | | | 40,754 | |
| Current operating lease liability | | 15,484 | | | 16,432 | |
| Income taxes payable | | 28,699 | | | 33,465 | |
| Total current liabilities | | 126,985 | | | 130,397 | |
| | | | |
| Long-term debt | | 88,350 | | | 80,000 | |
| Deferred income tax liabilities | | 41,873 | | | 36,873 | |
| Long-term operating lease liability | | 23,236 | | | 27,102 | |
| Asset retirement obligation | | 4,586 | | | 4,241 | |
| Other liabilities | | 4,573 | | | 5,031 | |
| Total liabilities | | 289,603 | | | 283,644 | |
| | | | |
| COMMITMENTS AND CONTINGENCIES | | | | |
| | | | |
| EQUITY | | | | |
| Equity: | | | | |
| Common stock, $0.01 par value, 200,000,000 shares authorized, 45,713,563 and 45,108,545 issued and outstanding at March 31, 2020 and December 31, 2019 | | 457 | | | 451 | |
| Additional paid in capital | | 536,140 | | | 535,094 | |
| Retained earnings | | 52,531 | | | 136,502 | |
| Accumulated other comprehensive loss | | (4,720) | | | (3,306) | |
| Total equity | | 584,408 | | | 668,741 | |
| Total liabilities and equity | | $ | 874,011 | | | $ | 952,385 | |
MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | |
| March 31, | | | | December 31, | | | | |
| 2020 | | 2019 | | 2019 | | | | |
| (in thousands, except per share amounts) | | | | | | | | |
| REVENUE | | | | | | | | | |
| Services revenue | $ | 68,845 | | | $ | 193,101 | | | $ | 57,950 | | | | | |
| Services revenue - related parties | 18,013 | | | 44,073 | | | 6,714 | | | | | |
| Product revenue | 8,650 | | | 12,309 | | | 1,724 | | | | | |
| Product revenue - related parties | 1,875 | | | 12,655 | | | 1,249 | | | | | |
| Total revenue | 97,383 | | | 262,138 | | | 67,637 | | | | | |
| | | | | | | | | |
| COST AND EXPENSES | | | | | | | | | |
| Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $23,554, $25,682 and $25,872, respectively, for the three months ended March 31, 2020, March 31, 2019 and December 31, 2019) | 70,697 | | | 158,106 | | | 68,599 | | | | | |
| Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0 and $0, respectively, for the three months ended March 31, 2020, March 31, 2019 and December 31, 2019) | 101 | | | 713 | | | 633 | | | | | |
| Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,309, $2,871 and $2,626, respectively, for the three months ended March 31, 2020, March 31, 2019 and December 31, 2019) | 11,108 | | | 30,251 | | | 6,337 | | | | | |
| | | | | | | | | |
| Selling, general and administrative | 10,556 | | | 16,902 | | | 9,978 | | | | | |
| Selling, general and administrative - related parties | 215 | | | 434 | | | 360 | | | | | |
| Depreciation, depletion, amortization and accretion | 25,882 | | | 28,576 | | | 28,521 | | | | | |
| Impairment of goodwill | 54,973 | | | — | | | 30,470 | | | | | |
| Impairment of other long-lived assets | 12,897 | | | — | | | 4,010 | | | | | |
| Total cost and expenses | 186,429 | | | 234,982 | | | 148,908 | | | | | |
| Operating (loss) income | (89,046) | | | 27,156 | | | (81,271) | | | | | |
| | | | | | | | | |
| OTHER INCOME (EXPENSE) | | | | | | | | | |
| Interest expense, net | (1,638) | | | (523) | | | (1,486) | | | | | |
| Other, net | 7,409 | | | 24,557 | | | 7,272 | | | | | |
| Total other income (expense) | 5,771 | | | 24,034 | | | 5,786 | | | | | |
| (Loss) income before income taxes | (83,275) | | | 51,190 | | | (75,485) | | | | | |
| Provision (benefit) for income taxes | 696 | | | 22,857 | | | (14,706) | | | | | |
| Net (loss) income | $ | (83,971) | | | $ | 28,333 | | | $ | (60,779) | | | | | |
| | | | | | | | | |
| OTHER COMPREHENSIVE (LOSS) INCOME | | | | | | | | | |
| Foreign currency translation adjustment, net of tax of $361, ($90) and $69, respectively, for the three months ended March 31, 2020, March 31, 2019 and December 31, 2019 | (1,414) | | | 356 | | | 282 | | | | | |
| Comprehensive (loss) income | $ | (85,385) | | | $ | 28,689 | | | $ | (60,497) | | | | | |
| | | | | | | | | |
| Net (loss) income per share (basic) | $ | (1.85) | | | $ | 0.63 | | | $ | (1.35) | | | | | |
| Net (loss) income per share (diluted) | $ | (1.85) | | | $ | 0.63 | | | $ | (1.35) | | | | | |
| Weighted average number of shares outstanding (basic) | 45,314 | | | 44,929 | | | 45,092 | | | | | |
| Weighted average number of shares outstanding (diluted) | 45,314 | | | 45,063 | | | 45,092 | | | | | |
| Dividends declared per share | $ | — | | | 0.125 | | | $ | — | | | | | |
MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | | | | |
| Three Months Ended | | |
| March 31, | | |
| 2020 | | 2019 |
| (in thousands) | | |
| Cash flows from operating activities: | | | |
| Net (loss) income | $ | (83,971) | | | $ | 28,333 | |
| Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities: | | | |
| | | |
| Stock based compensation | 1,049 | | | 1,289 | |
| Depreciation, depletion, accretion and amortization | 25,882 | | | 28,576 | |
| Amortization of coil tubing strings | 237 | | | 535 | |
| Amortization of debt origination costs | 452 | | | 82 | |
| Bad debt expense | 55 | | | 4 | |
| (Gain) loss on disposal of property and equipment | (673) | | | 94 | |
| Impairment of goodwill | 54,973 | | | — | |
| Impairment of other long-lived assets | 12,897 | | | — | |
| | | |
| Deferred income taxes | 5,361 | | | (15,476) | |
| Other | 432 | | | 41 | |
| Changes in assets and liabilities, net of acquisitions of businesses: | | | |
| Accounts receivable, net | (8,569) | | | (67,093) | |
| Receivables from related parties | (10,267) | | | (33,868) | |
| Inventories | 4,053 | | | 1,854 | |
| Prepaid expenses and other assets | 3,929 | | | 2,389 | |
| Accounts payable | 2,078 | | | (353) | |
| Payables to related parties | (444) | | | 239 | |
| Accrued expenses and other liabilities | (1,220) | | | (4,956) | |
| Income taxes payable | (4,713) | | | (44,684) | |
| Net cash provided by (used in) operating activities | 1,541 | | | (102,994) | |
| | | |
| Cash flows from investing activities: | | | |
| Purchases of property and equipment | (1,424) | | | (20,273) | |
| Purchases of property and equipment from related parties | (76) | | | — | |
| | | |
| Contributions to equity investee | — | | | (480) | |
| Proceeds from disposal of property and equipment | 558 | | | 1,500 | |
| | | |
| Net cash used in investing activities | (942) | | | (19,253) | |
| | | |
| Cash flows from financing activities: | | | |
| Borrowings from lines of credit | 17,300 | | | 82,000 | |
| Repayments of lines of credit | (8,950) | | | — | |
| Dividends paid | — | | | (5,610) | |
| Principal payments on financing leases and equipment financing notes | (452) | | | (457) | |
| Debt issuance costs | (1,000) | | | — | |
| | | |
| Net cash provided by financing activities | 6,898 | | | 75,933 | |
| Effect of foreign exchange rate on cash | (189) | | | 32 | |
| Net change in cash and cash equivalents | 7,308 | | | (46,282) | |
| Cash and cash equivalents at beginning of period | 5,872 | | | 67,625 | |
| Cash and cash equivalents at end of period | $ | 13,180 | | | $ | 21,343 | |
| | | |
| Supplemental disclosure of cash flow information: | | | |
| Cash paid for interest | $ | 1,285 | | | $ | 294 | |
| Cash paid for income taxes | $ | 62 | | | $ | 91,955 | |
| Supplemental disclosure of non-cash transactions: | | | |
| Purchases of property and equipment included in accounts payable | $ | 4,347 | | | $ | 5,016 | |
| | | |
MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended March 31, 2020 | Infrastructure | Pressure Pumping | Sand | Drilling | All Other | Eliminations | Total |
| Revenue from external customers | $ | 25,705 | | $ | 42,686 | | $ | 10,154 | | $ | 4,723 | | $ | 14,115 | | $ | — | | $ | 97,383 | |
| Intersegment revenues | — | | 936 | | 95 | | 55 | | 775 | | (1,861) | | — | |
| Total revenue | 25,705 | | 43,622 | | 10,249 | | 4,778 | | 14,890 | | (1,861) | | 97,383 | |
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 26,946 | | 26,208 | | 10,657 | | 5,635 | | 12,460 | | — | | 81,906 | |
| Intersegment cost of revenues | 8 | | 627 | | 302 | | 130 | | 794 | | (1,861) | | — | |
| Total cost of revenue | 26,954 | | 26,835 | | 10,959 | | 5,765 | | 13,254 | | (1,861) | | 81,906 | |
| Selling, general and administrative | 4,297 | | 2,222 | | 1,251 | | 1,063 | | 1,938 | | — | | 10,771 | |
| Depreciation, depletion, amortization and accretion | 7,934 | | 8,492 | | 2,312 | | 2,877 | | 4,267 | | — | | 25,882 | |
| Impairment of goodwill | — | | 53,406 | | — | | — | | 1,567 | | — | | 54,973 | |
| Impairment of other long-lived assets | — | | 4,203 | | — | | 326 | | 8,368 | | — | | 12,897 | |
| Operating loss | (13,480) | | (51,536) | | (4,273) | | (5,253) | | (14,504) | | — | | (89,046) | |
| Interest expense, net | 757 | | 293 | | 61 | | 268 | | 259 | | — | | 1,638 | |
| Other (income) expense, net | (7,276) | | (109) | | (37) | | 27 | | (14) | | — | | (7,409) | |
| Loss before income taxes | $ | (6,961) | | $ | (51,720) | | $ | (4,297) | | $ | (5,548) | | $ | (14,749) | | $ | — | | $ | (83,275) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended March 31, 2019 | Infrastructure | Pressure Pumping | Sand | Drilling | All Other | Eliminations | Total |
| Revenue from external customers | $ | 108,721 | | $ | 90,595 | | $ | 24,964 | | $ | 13,576 | | $ | 24,282 | | $ | — | | $ | 262,138 | |
| Intersegment revenues | — | | 1,544 | | 12,897 | | 219 | | 766 | | (15,426) | | — | |
| Total revenue | 108,721 | | 92,139 | | 37,861 | | 13,795 | | 25,048 | | (15,426) | | 262,138 | |
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 58,965 | | 64,211 | | 30,252 | | 12,652 | | 22,990 | | — | | 189,070 | |
| Intersegment cost of revenues | — | | 13,537 | | 1,047 | | 272 | | 552 | | (15,408) | | — | |
| Total cost of revenue | 58,965 | | 77,748 | | 31,299 | | 12,924 | | 23,542 | | (15,408) | | 189,070 | |
| Selling, general and administrative | 9,517 | | 3,213 | | 1,519 | | 1,363 | | 1,724 | | — | | 17,336 | |
| Depreciation, depletion, amortization and accretion | 7,719 | | 9,893 | | 2,873 | | 3,578 | | 4,513 | | — | | 28,576 | |
| | | | | | | |
| Operating income (loss) | 32,520 | | 1,285 | | 2,170 | | (4,070) | | (4,731) | | (18) | | 27,156 | |
| Interest expense, net | 39 | | 198 | | 30 | | 127 | | 129 | | — | | 523 | |
| Other (income) expense, net | (24,824) | | (1) | | — | | (22) | | 290 | | — | | (24,557) | |
| Income (loss) before income taxes | $ | 57,305 | | $ | 1,088 | | $ | 2,140 | | $ | (4,175) | | $ | (5,150) | | $ | (18) | | $ | 51,190 | |
MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended December 31, 2019 | Infrastructure | Pressure Pumping | Sand | Drilling | All Other | Eliminations | Total |
| Revenue from external customers | $ | 26,618 | | $ | 24,515 | | $ | 2,974 | | $ | 4,637 | | $ | 8,893 | | $ | — | | $ | 67,637 | |
| Intersegment revenues | — | | 442 | | — | | 14 | | 362 | | (818) | | — | |
| Total revenue | 26,618 | | 24,957 | | 2,974 | | 4,651 | | 9,255 | | (818) | | 67,637 | |
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 30,988 | | 20,891 | | 6,162 | | 6,934 | | 10,594 | | — | | 75,569 | |
| Intersegment cost of revenues | — | | 339 | | 28 | | 160 | | 291 | | (818) | | — | |
| Total cost of revenue | 30,988 | | 21,230 | | 6,190 | | 7,094 | | 10,885 | | (818) | | 75,569 | |
| Selling, general and administrative | 5,516 | | 1,449 | | 792 | | 1,042 | | 1,539 | | — | | 10,338 | |
| Depreciation, depletion, amortization and accretion | 7,961 | | 9,996 | | 2,627 | | 3,389 | | 4,548 | | — | | 28,521 | |
| Impairment of goodwill | 434 | | 23,423 | | 2,684 | | — | | 3,929 | | | 30,470 | |
| Impairment of other long-lived assets | — | | — | | — | | 2,955 | | 1,055 | | — | | 4,010 | |
| Operating loss | (18,281) | | (31,141) | | (9,319) | | (9,829) | | (12,701) | | — | | (81,271) | |
| Interest expense, net | 665 | | 318 | | 48 | | 227 | | 228 | | — | | 1,486 | |
| Other (income) expense, net | (7,679) | | 574 | | — | | 14 | | (181) | | — | | (7,272) | |
| Loss before income taxes | $ | (11,267) | | $ | (32,033) | | $ | (9,367) | | $ | (10,070) | | $ | (12,748) | | $ | — | | $ | (75,485) | |
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 (loss) income before depreciation, depletion, amortization and accretion expense, impairment of goodwill, impairment of other long-lived assets, stock based compensation, interest expense, net, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets) and provision (benefit) for income taxes, further adjusted to add back interest on trade accounts receivable. The Company excludes the items listed above from net (loss) income 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 (loss) income 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 (loss) income on a consolidated basis and for each of the Company's segments (in thousands):
Consolidated
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | |
| March 31, | | | | December 31, | | | | |
| Reconciliation of Adjusted EBITDA to net (loss) income: | 2020 | | 2019 | | 2019 | | | | |
| Net (loss) income | $ | (83,971) | | | $ | 28,333 | | | $ | (60,779) | | | | | |
| Depreciation, depletion, amortization and accretion expense | 25,882 | | | 28,576 | | | 28,521 | | | | | |
| Impairment of goodwill | 54,973 | | | — | | | 30,470 | | | | | |
| Impairment of other long-lived assets | 12,897 | | | — | | | 4,010 | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Stock based compensation | 1,049 | | | 1,289 | | | 811 | | | | | |
| Interest expense, net | 1,638 | | | 523 | | | 1,486 | | | | | |
| Other (income) expense, net | (7,409) | | | (24,557) | | | (7,272) | | | | | |
| Provision (benefit) for income taxes | 696 | | | 22,857 | | | (14,706) | | | | | |
| Interest on trade accounts receivable | 7,696 | | | 25,735 | | | 7,174 | | | | | |
| Adjusted EBITDA | $ | 13,451 | | | $ | 82,756 | | | $ | (10,285) | | | | | |
Infrastructure Services
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | |
| March 31, | | | | December 31, | | | | |
| Reconciliation of Adjusted EBITDA to net (loss) income: | 2020 | | 2019 | | 2019 | | | | |
| Net (loss) income | $ | (9,452) | | | $ | 35,665 | | | $ | (14,005) | | | | | |
| Depreciation and amortization expense | 7,934 | | | 7,719 | | | 7,961 | | | | | |
| Impairment of goodwill | — | | | — | | | 434 | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Stock based compensation | 251 | | | 462 | | | 183 | | | | | |
| Interest expense | 757 | | | 39 | | | 665 | | | | | |
| Other (income) expense, net | (7,276) | | | (24,824) | | | (7,679) | | | | | |
| Provision for income taxes | 2,491 | | | 21,639 | | | 2,738 | | | | | |
| Interest on trade accounts receivable | 7,696 | | | 25,735 | | | 7,174 | | | | | |
| Adjusted EBITDA | $ | 2,401 | | | $ | 66,435 | | | $ | (2,529) | | | | | |
MAMMOTH ENERGY SERVICES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Pressure Pumping Services
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | |
| March 31, | | | | December 31, | | | | |
| Reconciliation of Adjusted EBITDA to net (loss) income: | 2020 | | 2019 | | 2019 | | | | |
| Net (loss) income | $ | (51,720) | | | $ | 1,088 | | | $ | (32,033) | | | | | |
| Depreciation and amortization expense | 8,492 | | | 9,893 | | | 9,996 | | | | | |
| Impairment of goodwill | 53,406 | | | — | | | 23,423 | | | | | |
| Impairment of other long-lived assets | 4,203 | | | — | | | — | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Stock based compensation | 335 | | | 410 | | | 297 | | | | | |
| Interest expense | 293 | | | 198 | | | 318 | | | | | |
| Other (income) expense, net | (109) | | | (1) | | | 574 | | | | | |
| Adjusted EBITDA | $ | 14,900 | | | $ | 11,588 | | | $ | 2,575 | | | | | |
Natural Sand Proppant Services
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | |
| March 31, | | | | December 31, | | | | |
| Reconciliation of Adjusted EBITDA to net (loss) income: | 2020 | | 2019 | | 2019 | | | | |
| Net (loss) income | $ | (4,297) | | | $ | 2,140 | | | $ | (9,367) | | | | | |
| Depreciation, depletion, amortization and accretion expense | 2,312 | | | 2,873 | | | 2,627 | | | | | |
| Impairment of goodwill | — | | | — | | | 2,684 | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Stock based compensation | 225 | | | 203 | | | 156 | | | | | |
| Interest expense | 61 | | | 30 | | | 48 | | | | | |
| Other expense (income), net | (37) | | | — | | | — | | | | | |
| | | | | | | | | |
| Adjusted EBITDA | $ | (1,736) | | | $ | 5,246 | | | $ | (3,852) | | | | | |
Drilling Services
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | |
| March 31, | | | | December 31, | | | | |
| Reconciliation of Adjusted EBITDA to net (loss) income: | 2020 | | 2019 | | 2019 | | | | |
| Net loss | $ | (5,548) | | | $ | (4,175) | | | $ | (10,070) | | | | | |
| Depreciation expense | 2,877 | | | 3,578 | | | 3,389 | | | | | |
| Impairment of other long-lived assets | 326 | | | — | | | 2,955 | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Stock based compensation | 94 | | | 100 | | | 82 | | | | | |
| Interest expense | 268 | | | 127 | | | 227 | | | | | |
| Other expense (income), net | 27 | | | (22) | | | 14 | | | | | |
| Adjusted EBITDA | $ | (1,956) | | | $ | (392) | | | $ | (3,403) | | | | | |
MAMMOTH ENERGY SERVICES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Other Services(a)
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | |
| March 31, | | | | December 31, | | | | |
| Reconciliation of Adjusted EBITDA to net loss: | 2020 | | 2019 | | 2019 | | | | |
| Net (loss) income | $ | (12,954) | | | $ | (6,367) | | | $ | 4,695 | | | | | |
| Depreciation, amortization and accretion expense | 4,267 | | | 4,513 | | | 4,548 | | | | | |
| Impairment of goodwill | 1,567 | | | — | | | 3,929 | | | | | |
| Impairment of other long-lived assets | 8,368 | | | — | | | 1,055 | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Stock based compensation | 144 | | | 114 | | | 93 | | | | | |
| Interest expense, net | 259 | | | 129 | | | 228 | | | | | |
| Other (income) expense, net | (14) | | | 290 | | | (181) | | | | | |
| (Benefit) provision for income taxes | (1,795) | | | 1,217 | | | (17,443) | | | | | |
| Adjusted EBITDA | $ | (158) | | | $ | (104) | | | $ | (3,076) | | | | | |
a. Includes results for Mammoth's coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation and remote accommodations, oilfield 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 | | | | | | | | |
| March 31, | | | | December 31, | | | | |
| 2020 | | 2019 | | 2020 | | | | |
| (in thousands, except per share amounts) | | | | | | | | |
| Net (loss) income, as reported | $ | (83,971) | | | $ | 28,333 | | | $ | (60,779) | | | | | |
| Impairment of goodwill | 54,973 | | | — | | | 30,470 | | | | | |
| Impairment of other long-lived assets | 12,897 | | | — | | | 4,010 | | | | | |
| Adjusted net (loss) income | $ | (16,101) | | | $ | 28,333 | | | $ | (26,299) | | | | | |
| | | | | | | | | |
| Basic (loss) earnings per share, as reported | $ | (1.85) | | | $ | 0.63 | | | $ | (1.35) | | | | | |
| Impairment of goodwill | 1.21 | | | — | | | 0.68 | | | | | |
| Impairment of other long-lived assets | 0.28 | | | — | | | 0.09 | | | | | |
| Adjusted basic (loss) earnings per share | $ | (0.36) | | | $ | 0.63 | | | $ | (0.58) | | | | | |
| | | | | | | | | |
| Diluted (loss) earnings per share, as reported | $ | (1.85) | | | $ | 0.63 | | | $ | (1.35) | | | | | |
| Impairment of goodwill | 1.21 | | | — | | | 0.68 | | | | | |
| Impairment of other long-lived assets | 0.28 | | | — | | | 0.09 | | | | | |
| Adjusted diluted (loss) earnings per share | $ | (0.36) | | | $ | 0.63 | | | $ | (0.58) | | | | | |
