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 CristDirector of Investor Relationsdcrist@mammothenergy.com405-608-6048

Media Contact:Peter Mirijanianpeter@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.

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    
  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       $    
  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    
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    
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 )  

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 )  

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 )  

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   2019
  (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 )  

 

Mammoth Energy Services (NASDAQ:TUSK)
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