Mammoth Energy Services, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Reporting Segments

Reporting Segments

6 Months Ended

Jun. 30, 2019

The Company principally provides electric infrastructure services to government-funded utilities, private utilities, public investor-owned utilities and co-operative utilities and services in connection with on-shore drilling of oil and natural gas wells for small to large domestic independent oil and natural gas producers. As of June 30, 2019, the Company's revenues, income before income taxes and identifiable assets are primarily attributable to three reportable segments including infrastructure services ("Infrastructure"), pressure pumping services ("Pressure Pumping") and natural sand proppant services ("Sand").

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.

Prior to the year ended December 31, 2018, the Company had four reportable segments, including infrastructure services, pressure pumping services, natural sand proppant services and contract land and directional drilling services. Based on its assessment of FASB ASC 280, Segment Reporting, guidance at December 31, 2018, the Company changed its reportable segment presentation in 2018, as it determined based upon both a quantitative and qualitative basis that the contract land and directional drilling services segment is not of continuing significance for accounting reporting purposes. The Company now includes the results of the entities previously included in the contract land and directional drilling services segment in the reconciling column titled "All Other" in the tables below. The results below for the three and six months ended June 30, 2018 have been retroactively adjusted to reflect this change.

During the periods presented, the infrastructure services segment provided electric utility infrastructure services to government-funded utilities, private utilities, public investor-owned utilities and co-operative utilities in Puerto Rico and the northeast, southwest and midwest portions of the United States. The pressure pumping services segment provides hydraulic fracturing and water transfer services primarily in the Utica Shale of Eastern Ohio, Marcellus Shale in Pennsylvania, Eagle Ford and Permian Basins in Texas and the mid-continent region. The sand segment mines, processes and sells sand for use in hydraulic fracturing. The sand segment primarily services the Utica Shale, Permian Basin, SCOOP, STACK and Montney Shale in British Columbia and Alberta, Canada.

During the periods presented, the Company also provided contract land and directional drilling services, coil tubing services, flowback services, cementing services, acidizing services, equipment rental services, crude oil hauling services and remote accommodation services. The businesses that provide these services are distinct operating segments, which the CODM reviews independently when making key operating and resource utilization decisions. None of these operating segments meet the quantitative thresholds of a reporting segment and do not meet the aggregation criteria set forth in ASC 280 Segment Reporting. Therefore, results for these operating segments are included in the column labeled "All Other" in the tables below. Additionally, assets for corporate activities, which primarily include cash and cash equivalents, inter-segment accounts receivable, prepaid insurance and certain property and equipment, are included in the All Other column. Although Mammoth LLC, which holds these corporate assets, meets one of the quantitative thresholds of a reporting segment, it does not engage in business activities from which it may earn revenues and its results are not regularly reviewed by the Company's CODM when making key operating and resource utilization decisions. Therefore, the Company does not include it as a reportable segment.

Sales from one segment to another are generally priced at estimated equivalent commercial selling prices. Total revenue and Total cost of revenue amounts included in the Eliminations column in the following tables include inter-segment transactions conducted between segments. Receivables due for sales from one segment to another and for corporate allocations to each segment are included in the Eliminations column for Total assets in the following tables. All transactions conducted between segments are eliminated in consolidation. Transactions conducted by companies within the same reporting segment are eliminated within each reporting segment. The following tables set forth certain financial information with respect to the Company’s reportable segments (in thousands):



Three months ended June 30, 2019	Infrastructure			Pressure Pumping			Sand			All Other			Eliminations			Total
Revenue from external customers	$	41,821		$	82,973		$	29,223		$	27,803		$	—		$	181,820
Intersegment revenues	—			1,668			11,170			584			(13,422		)	—
Total revenue	41,821			84,641			40,393			28,387			(13,422		)	181,820
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	44,864			59,835			32,676			30,640			—			168,015
Intersegment cost of revenues	—			11,797			1,141			562			(13,500		)	—
Total cost of revenue	44,864			71,632			33,817			31,202			(13,500		)	168,015
Selling, general and administrative	3,035			2,664			1,380			2,376			—			9,455
Depreciation, depletion, amortization and accretion	7,818			10,174			4,528			7,625			—			30,145
Operating (loss) income	(13,896		)	171			668			(12,816		)	78			(25,795		)
Interest expense, net	386			452			72			641			—			1,551
Other (income) expense, net	(4,045		)	9			(32		)	49			—			(4,019		)
(Loss) income before income taxes	$	(10,237	)	$	(290	)	$	628		$	(13,506	)	$	78		$	(23,327	)



Three months ended June 30, 2018	Infrastructure		Pressure Pumping			Sand		All Other			Eliminations			Total
Revenue from external customers	$	360,250	$	100,333		$	37,439	$	35,572		$	—		$	533,594
Intersegment revenues	—		1,073			15,406		1,776			(18,255		)	—
Total revenue	360,250		101,406			52,845		37,348			(18,255		)	533,594
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	210,189		61,593			35,117		32,929			—			339,828
Intersegment cost of revenues	754		16,174			1,019		60			(18,007		)	—
Total cost of revenue	210,943		77,767			36,136		32,989			(18,007		)	339,828
Selling, general and administrative	39,786		20,822			1,787		2,732			—			65,127
Depreciation, depletion, amortization and accretion	4,094		13,829			3,881		8,991			—			30,795
Impairment of long-lived assets	—		—			—		187			—			187
Operating income (loss)	105,427		(11,012		)	11,041		(7,551		)	(248		)	97,657
Interest expense, net	106		341			76		436			—			959
Other expense, net	330		80			36		40			—			486
Income (loss) before income taxes	$	104,991	$	(11,433	)	$	10,929	$	(8,027	)	$	(248	)	$	96,212



Six months ended June 30, 2019	Infrastructure			Pressure Pumping		Sand			All Other			Eliminations			Total
Revenue from external customers	$	150,542		$	173,568	$	54,187		$	65,661		$	—		$	443,958
Intersegment revenues	—			3,212		24,067			1,243			(28,522		)	—
Total revenue	150,542			176,780		78,254			66,904			(28,522		)	443,958
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	103,828			124,047		62,928			66,282			—			357,085
Intersegment cost of revenues	—			25,334		2,188			1,060			(28,582		)	—
Total cost of revenue	103,828			149,381		65,116			67,342			(28,582		)	357,085
Selling, general and administrative	12,553			5,876		2,899			5,463			—			26,791
Depreciation, depletion, amortization and accretion	15,537			20,068		7,401			15,715			—			58,721
Operating income (loss)	18,624			1,455		2,838			(21,616		)	60			1,361
Interest expense, net	425			649		102			898			—			2,074
Other (income) expense, net	(28,869		)	8		(32		)	317			—			(28,576		)
Income (loss) before income taxes	$	47,068		$	798	$	2,768		$	(22,831	)	$	60		$	27,863



Six months ended June 30, 2018	Infrastructure		Pressure Pumping			Sand		All Other			Eliminations			Total
Revenue from external customers	$	685,709	$	196,912		$	73,942	$	71,280		$	—		$	1,027,843
Intersegment revenues	—		5,632			29,918		4,193			(39,743		)	—
Total revenue	685,709		202,544			103,860		75,473			(39,743		)	1,027,843
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	404,265		128,205			68,447		65,012			—			665,929
Intersegment cost of revenues	2,545		31,576			5,305		327			(39,753		)	—
Total cost of revenue	406,810		159,781			73,752		65,339			(39,753		)	665,929
Selling, general and administrative	71,637		23,485			3,431		5,085			—			103,638
Depreciation, depletion, amortization and accretion	6,501		27,815			6,197		17,190			—			57,703
Impairment of long-lived assets	—		—			—		187			—			187
Operating income (loss)	200,761		(8,537		)	20,480		(12,328		)	10			200,386
Interest expense, net	182		845			156		1,013			—			2,196
Other expense, net	332		92			23		67			—			514
Income (loss) before income taxes	$	200,247	$	(9,474	)	$	20,301	$	(13,408	)	$	10		$	197,676



	Infrastructure		Pressure Pumping		Sand		All Other		Eliminations		Total
As of June 30, 2019:
Total assets	$	419,368	$	265,244	$	216,857	$	147,611	$	59,830	$	1,108,910
Goodwill	$	3,828	$	86,043	$	2,684	$	8,690	$	—	$	101,245
As of December 31, 2018:
Total assets	$	366,457	$	254,278	$	177,870	$	122,442	$	152,044	$	1,073,091
Goodwill	$	3,828	$	86,043	$	2,684	$	8,690	$	—	$	101,245