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

3 Months Ended

Mar. 31, 2020

As of March 31, 2020, the Company's revenues, income before income taxes and identifiable assets are primarily attributable to four reportable segments. The Company principally provides electric infrastructure services to 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.

The Company's Chief Executive Officer and Chief Financial Officer comprise the Company's Chief Operating Decision Maker function (“CODM”). Segment information is prepared on the same basis that the CODM manages the segments, evaluates the segment financial statements and makes key operating and resource utilization decisions. Segment evaluation is determined on a quantitative basis based on a function of operating income (loss) less impairment expense, as well as a qualitative basis, such as nature of the product and service offerings and types of customers.

Prior to the year ended December 31, 2019, the Company had three reportable segments, including infrastructure services, pressure pumping services and natural sand proppant services. Based on its assessment of FASB ASC 280, Segment Reporting, guidance at December 31, 2019, the Company changed its reportable segment presentation in 2019 to include its drilling services, which includes Bison Drilling and Field Services LLC, Bison Trucking LLC, Panther Drilling Systems LLC, Mako Acquisitions LLC and White Wing Tubular LLC, as its own reportable segment. The results of the entities were previously included in the reconciling column titled “All Other” in the table below for the three months ended March 31, 2019. As of March 31, 2020, the Company’s four reportable segments include infrastructure services (“Infrastructure”), pressure pumping services (“Pressure Pumping”), natural sand proppant services (“Sand”) and drilling services (“Drilling”). The results for the three months ended March 31, 2019 have been retroactively adjusted to reflect his change in reportable segments.

During certain of the periods presented, the Infrastructure 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 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 certain of the periods presented, the Drilling segment provided contract land and directional drilling services primarily in the Permian Basin and mid-continent region.

During certain of the periods presented, the Company also provided coil tubing services, flowback services, cementing services, acidizing services, equipment rental services, full service transportation, crude oil hauling services, remote accommodation, oilfield equipment manufacturing and infrastructure engineering and design 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 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


	Infrastructure		Pressure Pumping		Sand		Drilling		All Other		Eliminations		Total
As of March 31, 2020:
Total assets	$	411,768	$	124,693	$	185,782	$	58,357	$	132,730	$	(39,319)	$	874,011
As of December 31, 2019:
Total assets	$	420,285	$	175,259	$	190,382	$	61,545	$	142,731	$	(37,817)	$	952,385