Mammoth Energy Services, Inc. ("Mammoth" or the "Company") (NASDAQ:
TUSK) today reported financial and operational results for the
quarter ended March 31, 2019.
Financial Highlights for the First Quarter of
2019:
Total revenue was $262.1 million for the three months ended
March 31, 2019, down 6% sequentially from $278.2 million for
the three months ended December 31, 2018 and down 47% from
$494.2 million for the three months ended March 31, 2018.
Net income for the three months ended March 31, 2019 was
$28.3 million, or $0.63 per fully diluted share, a 58% decrease
from $68.2 million, or $1.51 per fully diluted share, for the three
months ended December 31, 2018 and a 49% decrease from $55.5
million, or $1.24 per fully diluted share, for the three months
ended March 31, 2018.
Adjusted EBITDA (as defined and reconciled below) was $82.8
million for the three months ended March 31, 2019, a slight
decrease from $84.3 million for the three months ended
December 31, 2018 and a 37% decline from $130.8 million for
the three months ended March 31, 2018.
Arty Straehla, Mammoth's Chief Executive Officer, stated, "The
first quarter of 2019 saw improved utilization of our oilfield
completions focused businesses as E&P budgets were reset and
oil prices experienced a steady increase throughout the
quarter. While pressure pumping pricing remains challenged,
conversations with customers suggest the possibility for tighter
industry conditions for the back half of the year. Demand for
Northern White sand is strengthening, with our average pricing up
approximately 90% from the lows experienced in fourth quarter of
2018. The movement of our infrastructure equipment from Puerto Rico
back to the continental U.S. is progressing and beginning to
displace equipment currently being rented, allowing us to deploy
additional crews for our Continental U. S. customers."
Infrastructure Services
Mammoth's infrastructure services segment contributed revenues
of $108.7 million for the three months ended March 31, 2019, a
32% decrease from $159.6 million for the three months ended
December 31, 2018 and a 67% decrease from $325.5 million for
the three months ended March 31, 2018. During the first
quarter of 2019, our crew staffing levels in Puerto Rico reached a
high of approximately 500 in January. As of March 31, 2019, a small
contingent of non-billable personnel remained on the island to
facilitate the demobilization of our remaining equipment.
Pressure Pumping Services
Mammoth's pressure pumping division contributed revenues
(inclusive of inter-segment revenues) of $92.1 million for the
three months ended March 31, 2019, a 27% increase from $72.8
million for the three months ended December 31, 2018 and a 9%
decrease from $101.1 million for the three months ended
March 31, 2018.
Mammoth's pressure pumping division completed a total of 1,889
stages for the three months ended March 31, 2019, a 62%
increase from 1,164 stages for the three months ended
December 31, 2018 and a 13% increase from 1,672 stages for the
three months ended March 31, 2018. An average of 4.4 of our 6
fleets remained active throughout the first quarter of 2019.
Natural Sand Proppant Services
Mammoth's natural sand proppant division contributed revenues
(inclusive of inter-segment revenues) of $37.9 million for the
three months ended March 31, 2019, a 38% increase from $27.4
million for the three months ended December 31, 2018 and a 26%
decrease from $51.0 million for the three months ended
March 31, 2018.
The Company sold 665,806 tons of sand during the three months
ended March 31, 2019, a 17% increase from the 569,195 tons
sold during the three months ended December 31, 2018 and a 9%
decrease from the 735,584 tons sold during the three months ended
March 31, 2018. The Company's average production costs were
approximately $12 per ton during the first quarter of 2019.
Other Services
Mammoth's other services, including contract land and
directional drilling, coil tubing, pressure control, flowback,
cementing, acidizing, equipment rentals, crude oil hauling and
remote accommodations, contributed revenues (inclusive of
inter-segment revenues) of $38.5 million for the three months ended
March 31, 2019, a slight decrease from $38.8 million for the
three months ended December 31, 2018 and a slight increase
from $38.1 million for the three months ended March 31, 2018.
The Company’s rental division drove a majority of the increase from
the prior periods with the average amount of equipment on rent
increasing from 357 for the three months ended March 31, 2018
to 500 for the three months ended December 31, 2018. An
average of 621 pieces of equipment were rented during the three
months ended March 31, 2019.
Selling, General and Administrative
Expenses
Selling, general and administrative ("SG&A") expenses were
$17.3 million for the three months ended March 31, 2019,
compared to $14.8 million for the three months ended
December 31, 2018 and $38.5 million for the three months ended
March 31, 2018.
Following is a breakout of SG&A expense (in thousands):
|
Three Months Ended |
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
|
2018 |
Cash expenses: |
|
|
|
|
|
Compensation and benefits |
$ |
9,230 |
|
|
$ |
7,699 |
|
|
$ |
9,409 |
|
Professional services |
3,789 |
|
|
2,587 |
|
|
3,018 |
|
Other(a) |
3,244 |
|
|
1,607 |
|
|
1,475 |
|
Total
cash SG&A expense |
16,263 |
|
|
11,893 |
|
|
13,902 |
|
Non-cash expenses: |
|
|
|
|
|
Bad debt
provision(b) |
4 |
|
|
25,527 |
|
|
(34 |
) |
Stock
based compensation |
1,069 |
|
|
1,091 |
|
|
915 |
|
Total
non-cash SG&A expense |
1,073 |
|
|
26,618 |
|
|
881 |
|
Total
SG&A expense |
$ |
17,336 |
|
|
$ |
38,511 |
|
|
$ |
14,783 |
|
|
|
a. |
Includes travel-related costs, IT expenses, rent,
utilities and other general and administrative-related costs. |
b. |
$25.4 million of the bad debt expense recognized
during the three months ended March 31, 2018 was subsequently
reversed during the third quarter of 2018. |
SG&A expenses, as a percentage of total revenue, were 7% for
the three months ended March 31, 2019 compared to 5% for the
three months ended December 31, 2018 and 8% for the three
months ended March 31, 2018.
Liquidity
As of March 31, 2019, Mammoth had cash on hand totaling
$21.3 million and outstanding borrowings under its revolving credit
facility of $82.0 million. As of March 31, 2019, the Company
had $93.5 million of available borrowing capacity under its
revolving credit facility, after giving effect to $8.7 million of
outstanding letters of credit, resulting in total liquidity of
approximately $114.8 million. As of April 30, 2019, the Company had
cash on hand totaling $32.5 million and outstanding borrowings
under its revolving credit facility of $108.6 million.
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, |
|
2019 |
|
2018 |
|
2018 |
Infrastructure
services(a) |
$ |
3,254 |
|
|
$ |
15,778 |
|
|
$ |
22,409 |
|
Pressure pumping
services(b) |
7,329 |
|
|
7,866 |
|
|
9,632 |
|
Natural sand proppant
services(c) |
985 |
|
|
5,700 |
|
|
2,132 |
|
Other(d) |
8,705 |
|
|
6,430 |
|
|
8,240 |
|
Total capital
expenditures |
$ |
20,273 |
|
|
$ |
35,774 |
|
|
$ |
42,413 |
|
|
|
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 for the periods
presented |
c. |
Capital expenditures primarily for maintenance
for the three months ended March 31, 2019 and December 31,
2018 and plant upgrades for the three months ended March 31,
2018. |
d. |
Capital expenditures primarily for equipment for
the Company's rental business and upgrades to its rig fleet 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 Report to be 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 Thursday, May 2, 2019 at
10:00 a.m. CDT (11:00 am EDT) to discuss its first quarter 2019
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 9185999. 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 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
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 we expect, believe
or anticipate 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 our 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 our existing operations, experience and
perception of historical trends, current conditions, anticipated
future developments and their effect on us, 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, our
forward-looking statements are subject to significant risks and
uncertainties, including those described in our Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K and other filings we make with the SEC, including those
relating to our acquisitions and our contracts, many of which are
beyond our control, which may cause actual results to differ
materially from our historical experience and our 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
failure to receive or delays in receiving governmental
authorizations, approvals and/or payments; risks relating to
economic conditions; delays in or failure of delivery of current or
future orders of specialized equipment; 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; 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, |
|
|
2019 |
|
2018 |
CURRENT ASSETS |
|
(in thousands) |
Cash and
cash equivalents |
|
$ |
21,343 |
|
|
$ |
67,625 |
|
Accounts
receivable, net |
|
404,389 |
|
|
337,460 |
|
Receivables from related parties |
|
45,032 |
|
|
11,164 |
|
Inventories |
|
18,913 |
|
|
21,302 |
|
Prepaid
expenses |
|
8,913 |
|
|
11,317 |
|
Other
current assets |
|
706 |
|
|
688 |
|
Total current assets |
|
499,296 |
|
|
449,556 |
|
|
|
|
|
|
Property, plant and
equipment, net |
|
428,280 |
|
|
436,699 |
|
Sand reserves |
|
71,496 |
|
|
71,708 |
|
Operating lease
right-of-use assets |
|
56,234 |
|
|
— |
|
Intangible assets, net
- customer relationships |
|
1,637 |
|
|
1,711 |
|
Intangible assets, net
- trade names |
|
5,835 |
|
|
6,045 |
|
Goodwill |
|
101,245 |
|
|
101,245 |
|
Other non-current
assets |
|
6,484 |
|
|
6,127 |
|
Total assets |
|
$ |
1,170,507 |
|
|
$ |
1,073,091 |
|
LIABILITIES AND EQUITY |
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
Accounts
payable |
|
$ |
67,542 |
|
|
$ |
68,843 |
|
Payables
to related parties |
|
609 |
|
|
370 |
|
Accrued
expenses and other current liabilities |
|
55,258 |
|
|
59,652 |
|
Current
operating lease liability |
|
17,533 |
|
|
— |
|
Income
taxes payable |
|
60,272 |
|
|
104,958 |
|
Total current liabilities |
|
201,214 |
|
|
233,823 |
|
|
|
|
|
|
Long-term debt |
|
82,037 |
|
|
— |
|
Deferred income tax
liabilities |
|
63,923 |
|
|
79,309 |
|
Long-term operating
lease liability |
|
38,572 |
|
|
— |
|
Asset retirement
obligation |
|
3,056 |
|
|
3,164 |
|
Other liabilities |
|
3,285 |
|
|
2,743 |
|
Total liabilities |
|
392,087 |
|
|
319,039 |
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
Equity: |
|
|
|
|
Common
stock, $0.01 par value, 200,000,000 shares authorized, 44,876,649
issued and outstanding at March 31, 2019 and December 31, 2018,
respectively |
|
449 |
|
|
449 |
|
Additional paid in capital |
|
532,208 |
|
|
530,919 |
|
Retained
earnings |
|
249,488 |
|
|
226,765 |
|
Accumulated other comprehensive loss |
|
(3,725 |
) |
|
(4,081 |
) |
Total equity |
|
778,420 |
|
|
754,052 |
|
Total liabilities and equity |
|
$ |
1,170,507 |
|
|
$ |
1,073,091 |
|
MAMMOTH ENERGY SERVICES,
INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS) |
|
|
|
Three Months Ended |
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
|
2018 |
|
(in thousands, except per share
amounts) |
REVENUE |
|
Services
revenue |
$ |
193,101 |
|
|
$ |
408,659 |
|
|
$ |
260,513 |
|
Services
revenue - related parties |
44,073 |
|
|
49,088 |
|
|
9,551 |
|
Product
revenue |
12,309 |
|
|
25,040 |
|
|
8,063 |
|
Product
revenue - related parties |
12,655 |
|
|
11,462 |
|
|
71 |
|
Total revenue |
262,138 |
|
|
494,249 |
|
|
278,198 |
|
|
|
|
|
|
|
COST AND EXPENSES |
|
|
|
|
|
Services
cost of revenue (exclusive of depreciation, depletion, amortization
and accretion of $25,682, $24,575 and $26,999, respectively, for
the three months ended March 31, 2019, March 31, 2018 and December
31, 2018) |
158,106 |
|
|
290,979 |
|
|
151,273 |
|
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, 2019, March 31,
2018 and December 31, 2018) |
713 |
|
|
1,792 |
|
|
240 |
|
Product
cost of revenue (exclusive of depreciation, depletion,
amortization and accretion of $2,871, $2,314 and $3,136,
respectively, for the three months ended March 31, 2019, March 31,
2018 and December 31, 2018) |
30,251 |
|
|
33,330 |
|
|
28,797 |
|
Selling,
general and administrative |
16,902 |
|
|
38,082 |
|
|
14,283 |
|
Selling,
general and administrative - related parties |
434 |
|
|
429 |
|
|
500 |
|
Depreciation, depletion, amortization and accretion |
28,576 |
|
|
26,908 |
|
|
30,159 |
|
Impairment of long-lived assets |
— |
|
|
— |
|
|
4,086 |
|
Total cost and
expenses |
234,982 |
|
|
391,520 |
|
|
229,338 |
|
Operating income |
27,156 |
|
|
102,729 |
|
|
48,860 |
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE) |
|
|
|
|
|
Interest
expense, net |
(523 |
) |
|
(1,237 |
) |
|
(533 |
) |
Other,
net |
24,557 |
|
|
(28 |
) |
|
(1,122 |
) |
Total other income
(expense) |
24,034 |
|
|
(1,265 |
) |
|
(1,655 |
) |
Income before income
taxes |
51,190 |
|
|
101,464 |
|
|
47,205 |
|
Provision (benefit) for
income taxes |
22,857 |
|
|
45,918 |
|
|
(21,002 |
) |
Net income |
$ |
28,333 |
|
|
$ |
55,546 |
|
|
$ |
68,207 |
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME |
|
|
|
|
|
Foreign
currency translation adjustment, net of tax of ($90), $186 and
$212, respectively, for the three months ended March 31, 2019,
March 31, 2018 and December 31, 2018 |
356 |
|
|
(461 |
) |
|
(961 |
) |
Comprehensive
income |
$ |
28,689 |
|
|
$ |
55,085 |
|
|
$ |
67,246 |
|
|
|
|
|
|
|
Net income per share
(basic) |
$ |
0.63 |
|
|
$ |
1.24 |
|
|
$ |
1.52 |
|
Net income per share
(diluted) |
$ |
0.63 |
|
|
$ |
1.24 |
|
|
$ |
1.51 |
|
Weighted average number
of shares outstanding (basic) |
44,929 |
|
|
44,650 |
|
|
44,845 |
|
Weighted average number
of shares outstanding (diluted) |
45,063 |
|
|
44,884 |
|
|
45,048 |
|
Dividends declared per
share |
$ |
0.125 |
|
|
— |
|
|
$ |
0.125 |
|
MAMMOTH ENERGY SERVICES,
INC.CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
Three Months Ended |
|
March 31, |
|
2019 |
|
2018 |
|
(in thousands) |
Cash flows from
operating activities: |
|
|
|
Net
income |
$ |
28,333 |
|
|
$ |
55,546 |
|
Adjustments to reconcile net income to cash provided by operating
activities: |
|
|
|
Stock
based compensation |
1,289 |
|
|
1,256 |
|
Depreciation, depletion, accretion and amortization |
28,576 |
|
|
26,908 |
|
Amortization of coil tubing strings |
535 |
|
|
565 |
|
Amortization of debt origination costs |
82 |
|
|
100 |
|
Bad debt
expense |
4 |
|
|
25,527 |
|
Loss
(gain) on disposal of property and equipment |
94 |
|
|
(184 |
) |
Deferred
income taxes |
(15,476 |
) |
|
(12,117 |
) |
Other |
41 |
|
|
— |
|
Changes
in assets and liabilities, net of acquisitions of businesses: |
|
|
|
Accounts receivable, net |
(67,093 |
) |
|
(25,722 |
) |
Receivables from related parties |
(33,868 |
) |
|
(12,550 |
) |
Inventories |
1,854 |
|
|
5,060 |
|
Prepaid expenses and other assets |
2,389 |
|
|
294 |
|
Accounts payable |
(353 |
) |
|
8,302 |
|
Payables to related parties |
239 |
|
|
851 |
|
Accrued expenses and other liabilities |
(4,956 |
) |
|
1,636 |
|
Income taxes payable |
(44,684 |
) |
|
25,851 |
|
Net cash (used in)
provided by operating activities |
(102,994 |
) |
|
101,323 |
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Purchases
of property and equipment |
(20,273 |
) |
|
(35,176 |
) |
Purchases
of property and equipment from related parties |
— |
|
|
(598 |
) |
Contributions to equity investee |
(480 |
) |
|
— |
|
Proceeds
from disposal of property and equipment |
1,500 |
|
|
286 |
|
Net cash used in
investing activities |
(19,253 |
) |
|
(35,488 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Borrowings from lines of credit |
82,000 |
|
|
31,000 |
|
Repayments of lines of credit |
— |
|
|
(91,900 |
) |
Dividends
paid |
(5,610 |
) |
|
— |
|
Principal
payments on financing leases and equipment financing notes |
(457 |
) |
|
(72 |
) |
Net cash provided by
(used in) financing activities |
75,933 |
|
|
(60,972 |
) |
Effect of foreign
exchange rate on cash |
32 |
|
|
(53 |
) |
Net change in cash and
cash equivalents |
(46,282 |
) |
|
4,810 |
|
Cash and cash
equivalents at beginning of period |
67,625 |
|
|
5,637 |
|
Cash and cash
equivalents at end of period |
$ |
21,343 |
|
|
$ |
10,447 |
|
|
|
|
|
Supplemental disclosure
of cash flow information: |
|
|
|
Cash paid
for interest |
$ |
294 |
|
|
$ |
1,442 |
|
Cash paid
for income taxes |
$ |
91,955 |
|
|
$ |
32,184 |
|
Supplemental disclosure
of non-cash transactions: |
|
|
|
Purchases
of property and equipment included in accounts payable |
$ |
5,016 |
|
|
$ |
16,558 |
|
MAMMOTH ENERGY SERVICES, INC.SEGMENT
INCOME STATEMENTS(in thousands) |
|
|
|
|
|
|
|
Three
months ended March 31, 2019 |
Infrastructure |
Pressure Pumping |
Sand |
All Other |
Eliminations |
Total |
Revenue from external
customers |
$ |
108,721 |
|
$ |
90,595 |
|
$ |
24,964 |
|
$ |
37,858 |
|
$ |
— |
|
$ |
262,138 |
|
Intersegment
revenues |
— |
|
1,544 |
|
12,897 |
|
658 |
|
(15,099 |
) |
— |
|
Total revenue |
108,721 |
|
92,139 |
|
37,861 |
|
38,516 |
|
(15,099 |
) |
262,138 |
|
Cost of revenue,
exclusive of depreciation, depletion, amortization and
accretion |
58,965 |
|
64,211 |
|
30,252 |
|
35,642 |
|
— |
|
189,070 |
|
Intersegment cost of
revenues |
— |
|
13,537 |
|
1,047 |
|
497 |
|
(15,081 |
) |
— |
|
Total cost of
revenue |
58,965 |
|
77,748 |
|
31,299 |
|
36,139 |
|
(15,081 |
) |
189,070 |
|
Selling, general and
administrative |
9,517 |
|
3,213 |
|
1,519 |
|
3,087 |
|
— |
|
17,336 |
|
Depreciation,
depletion, amortization and accretion |
7,719 |
|
9,893 |
|
2,873 |
|
8,091 |
|
— |
|
28,576 |
|
Operating income
(loss) |
32,520 |
|
1,285 |
|
2,170 |
|
(8,801 |
) |
(18 |
) |
27,156 |
|
Interest expense,
net |
39 |
|
198 |
|
30 |
|
256 |
|
— |
|
523 |
|
Other (income) expense,
net |
(24,824 |
) |
(1 |
) |
— |
|
268 |
|
— |
|
(24,557 |
) |
Income (loss) before
income taxes |
$ |
57,305 |
|
$ |
1,088 |
|
$ |
2,140 |
|
$ |
(9,325 |
) |
$ |
(18 |
) |
$ |
51,190 |
|
Three
months ended March 31, 2018 |
Infrastructure |
Pressure Pumping |
Sand |
All Other |
Eliminations |
Total |
Revenue from external
customers |
$ |
325,459 |
|
$ |
96,579 |
|
$ |
36,503 |
|
$ |
35,708 |
|
$ |
— |
|
$ |
494,249 |
|
Intersegment
revenues |
— |
|
4,559 |
|
14,512 |
|
2,417 |
|
(21,488 |
) |
— |
|
Total revenue |
325,459 |
|
101,138 |
|
51,015 |
|
38,125 |
|
(21,488 |
) |
494,249 |
|
Cost of revenue,
exclusive of depreciation, depletion, amortization and
accretion |
194,076 |
|
66,612 |
|
33,330 |
|
32,083 |
|
— |
|
326,101 |
|
Intersegment cost of
revenues |
1,791 |
|
15,402 |
|
4,286 |
|
267 |
|
(21,746 |
) |
— |
|
Total cost of
revenue |
195,867 |
|
82,014 |
|
37,616 |
|
32,350 |
|
(21,746 |
) |
326,101 |
|
Selling, general and
administrative |
31,851 |
|
2,663 |
|
1,644 |
|
2,353 |
|
— |
|
38,511 |
|
Depreciation,
depletion, amortization and accretion |
2,407 |
|
13,986 |
|
2,316 |
|
8,199 |
|
— |
|
26,908 |
|
Operating income
(loss) |
95,334 |
|
2,475 |
|
9,439 |
|
(4,777 |
) |
258 |
|
102,729 |
|
Interest expense,
net |
76 |
|
504 |
|
80 |
|
577 |
|
— |
|
1,237 |
|
Other expense (income),
net |
2 |
|
12 |
|
(13 |
) |
27 |
|
— |
|
28 |
|
Income (loss) before
income taxes |
$ |
95,256 |
|
$ |
1,959 |
|
$ |
9,372 |
|
$ |
(5,381 |
) |
$ |
258 |
|
$ |
101,464 |
|
Three
months ended December 31, 2018 |
Infrastructure |
Pressure Pumping |
Sand |
All Other |
Eliminations |
Total |
Revenue from external
customers |
$ |
159,610 |
|
$ |
72,219 |
|
$ |
8,133 |
|
$ |
38,236 |
|
$ |
— |
|
$ |
278,198 |
|
Intersegment
revenues |
— |
|
560 |
|
19,273 |
|
542 |
|
(20,375 |
) |
— |
|
Total revenue |
159,610 |
|
72,779 |
|
27,406 |
|
38,778 |
|
(20,375 |
) |
278,198 |
|
Cost of revenue,
exclusive of depreciation, depletion, amortization and
accretion |
75,486 |
|
39,601 |
|
28,796 |
|
36,427 |
|
— |
|
180,310 |
|
Intersegment cost of
revenues |
— |
|
19,787 |
|
253 |
|
308 |
|
(20,348 |
) |
— |
|
Total cost of
revenue |
75,486 |
|
59,388 |
|
29,049 |
|
36,735 |
|
(20,348 |
) |
180,310 |
|
Selling, general and
administrative |
9,689 |
|
1,768 |
|
1,170 |
|
2,156 |
|
— |
|
14,783 |
|
Depreciation,
depletion, amortization and accretion |
7,425 |
|
10,952 |
|
3,138 |
|
8,644 |
|
— |
|
30,159 |
|
Impairment of
long-lived assets |
308 |
|
— |
|
— |
|
3,778 |
|
— |
|
4,086 |
|
Operating income
(loss) |
66,702 |
|
671 |
|
(5,951 |
) |
(12,535 |
) |
(27 |
) |
48,860 |
|
Interest expense,
net |
82 |
|
177 |
|
40 |
|
234 |
|
— |
|
533 |
|
Other expense, net |
60 |
|
340 |
|
304 |
|
418 |
|
— |
|
1,122 |
|
Income (loss) before
income taxes |
$ |
66,560 |
|
$ |
154 |
|
$ |
(6,295 |
) |
$ |
(13,187 |
) |
$ |
(27 |
) |
$ |
47,205 |
|
MAMMOTH ENERGY SERVICES,
INC.RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA
Adjusted EBITDA is a supplemental non-GAAP financial measure
that is used by management and external users of the Company's
financial statements, such as industry analysts, investors, lenders
and rating agencies. Mammoth defines Adjusted EBITDA as net income
(loss) before depreciation, depletion, amortization and accretion
expense, impairment of long-lived assets, acquisition related
costs, public offering costs, stock based compensation, interest
expense, net, other (income) expense, net (which is comprised of
the (gain) or loss on disposal of long-lived assets) and provision
(benefit) for income taxes, further adjusted to add back interest
on trade accounts receivable. The Company excludes the items listed
above from net income (loss) in arriving at Adjusted EBITDA because
these amounts can vary substantially from company to company within
the energy service industry depending upon accounting methods and
book values of assets, capital structures and the method by which
the assets were acquired. Adjusted EBITDA should not be considered
as an alternative to, or more meaningful than, net income (loss) or
cash flows from operating activities as determined in accordance
with GAAP or as an indicator of Mammoth's operating performance or
liquidity. Certain items excluded from Adjusted EBITDA are
significant components in understanding and assessing a company’s
financial performance, such as a company’s cost of capital and tax
structure, as well as the historic costs of depreciable assets,
none of which are components of Adjusted EBITDA. Mammoth's
computations of Adjusted EBITDA may not be comparable to other
similarly titled measures of other companies. The Company believes
that Adjusted EBITDA is a widely followed measure of operating
performance and may also be used by investors to measure its
ability to meet debt service requirements.
The following tables provide a reconciliation of Adjusted EBITDA
to the GAAP financial measure of net income (loss) on a
consolidated basis and for each of the Company's segments (in
thousands):
Consolidated
|
Three Months Ended |
|
March 31, |
|
December 31, |
Reconciliation
of Adjusted EBITDA to net income: |
2019 |
|
2018 |
|
2018 |
Net income |
$ |
28,333 |
|
|
$ |
55,546 |
|
|
$ |
68,207 |
|
Depreciation,
depletion, accretion and amortization expense |
28,576 |
|
|
26,908 |
|
|
30,159 |
|
Impairment of
long-lived assets |
— |
|
|
— |
|
|
4,086 |
|
Acquisition related
costs |
— |
|
|
(46 |
) |
|
61 |
|
Public offering
costs |
— |
|
|
— |
|
|
(10 |
) |
Stock based
compensation |
1,289 |
|
|
1,256 |
|
|
1,094 |
|
Interest expense,
net |
523 |
|
|
1,237 |
|
|
533 |
|
Other (income) expense,
net |
(24,557 |
) |
|
28 |
|
|
1,122 |
|
Interest on trade
accounts receivable |
25,735 |
|
|
— |
|
|
— |
|
Provision (benefit) for
income taxes |
22,857 |
|
|
45,918 |
|
|
(21,002 |
) |
Adjusted EBITDA |
$ |
82,756 |
|
|
$ |
130,847 |
|
|
$ |
84,250 |
|
Infrastructure Services
|
Three Months Ended |
|
March 31, |
|
December 31, |
Reconciliation
of Adjusted EBITDA to net income: |
2019 |
|
2018 |
|
2018 |
Net income |
$ |
35,665 |
|
|
$ |
47,299 |
|
|
$ |
141,875 |
|
Depreciation and
amortization expense |
7,719 |
|
|
2,407 |
|
|
7,425 |
|
Impairment of
long-lived assets |
— |
|
|
— |
|
|
308 |
|
Acquisition related
costs |
— |
|
|
(8 |
) |
|
61 |
|
Public offering
costs |
— |
|
|
— |
|
|
(10 |
) |
Stock based
compensation |
462 |
|
|
457 |
|
|
470 |
|
Interest expense |
39 |
|
|
76 |
|
|
82 |
|
Other (income) expense,
net |
(24,824 |
) |
|
2 |
|
|
60 |
|
Interest on trade
accounts receivable |
25,735 |
|
|
— |
|
|
— |
|
Provision (benefit) for
income taxes |
21,639 |
|
|
47,957 |
|
|
(75,315 |
) |
Adjusted EBITDA |
$ |
66,435 |
|
|
$ |
98,190 |
|
|
$ |
74,956 |
|
Pressure Pumping Services
|
Three Months Ended |
|
March 31, |
|
December 31, |
Reconciliation
of Adjusted EBITDA to net income: |
2019 |
|
2018 |
|
2018 |
Net income |
$ |
1,088 |
|
|
$ |
1,959 |
|
|
$ |
154 |
|
Depreciation and
amortization expense |
9,893 |
|
|
13,986 |
|
|
10,952 |
|
Stock based
compensation |
410 |
|
|
418 |
|
|
318 |
|
Interest expense |
198 |
|
|
504 |
|
|
177 |
|
Other (income) expense,
net |
(1 |
) |
|
12 |
|
|
340 |
|
Adjusted EBITDA |
$ |
11,588 |
|
|
$ |
16,879 |
|
|
$ |
11,941 |
|
Natural Sand Proppant Services
|
Three Months Ended |
|
March 31, |
|
December 31, |
Reconciliation
of Adjusted EBITDA to net income (loss): |
2019 |
|
2018 |
|
2018 |
Net income (loss) |
$ |
2,140 |
|
|
$ |
9,372 |
|
|
$ |
(6,295 |
) |
Depreciation,
depletion, accretion and amortization expense |
2,873 |
|
|
2,316 |
|
|
3,138 |
|
Acquisition related
costs |
— |
|
|
(38 |
) |
|
— |
|
Stock based
compensation |
203 |
|
|
186 |
|
|
181 |
|
Interest expense |
30 |
|
|
80 |
|
|
40 |
|
Other (income) expense,
net |
— |
|
|
(13 |
) |
|
304 |
|
Adjusted EBITDA |
$ |
5,246 |
|
|
$ |
11,903 |
|
|
$ |
(2,632 |
) |
Other Services(a)
|
Three Months Ended |
|
March 31, |
|
December 31, |
Reconciliation
of Adjusted EBITDA to net income (loss): |
2019 |
|
2018 |
|
2018 |
Net (loss) income |
$ |
(10,542 |
) |
|
$ |
(3,342 |
) |
|
$ |
(67,500 |
) |
Depreciation and
amortization expense |
8,091 |
|
|
8,199 |
|
|
8,644 |
|
Impairment of
long-lived assets |
— |
|
|
— |
|
|
3,778 |
|
Stock based
compensation |
214 |
|
|
195 |
|
|
125 |
|
Interest expense,
net |
256 |
|
|
577 |
|
|
234 |
|
Other expense, net |
268 |
|
|
27 |
|
|
418 |
|
Provision (benefit) for
income taxes |
1,217 |
|
|
(2,039 |
) |
|
54,313 |
|
Adjusted EBITDA |
$ |
(496 |
) |
|
$ |
3,617 |
|
|
$ |
12 |
|
|
|
a. |
Includes results for Mammoth's contract land and
directional drilling, coil tubing, pressure control, flowback,
cementing, acidizing, equipment rentals, crude oil hauling and
remote accommodations services and corporate related activities.
The Company's corporate related activities do not generate
revenue. |
After Tax Return on Invested Capital
After tax return on invested capital is a supplemental non-GAAP
measure that is used by management to evaluate the Company's
performance. Mammoth defines after tax return on invested capital
as net income divided by total capital employed, which is the
average of ending debt and equity for the last two years.
Management believes after tax return on invested capital is a
useful measure of how effectively the Company uses capital to
generate profits and it provides additional insight for analysts
and investors in evaluating the Company's financial and operating
performance. After tax return on invested capital should not be
considered in isolation or as a substitute for financial measures
reported in accordance with GAAP. The following table provides the
calculation of after tax return on invested capital using the GAAP
financial measures of net income, total debt and total equity.
|
Twelve Months Ended |
|
March 31, |
|
2019 |
|
2018 |
|
2017 |
|
(in thousands) |
Net income |
$ |
208,752 |
|
|
$ |
119,491 |
|
|
|
Capital Employed |
|
|
|
|
|
Total debt |
$ |
82,037 |
|
|
$ |
39,000 |
|
|
$ |
— |
|
Total equity |
778,420 |
|
|
564,137 |
|
|
418,597 |
|
Total capital
employed |
$ |
860,457 |
|
|
$ |
603,137 |
|
|
$ |
418,597 |
|
|
|
|
|
|
|
Average capital
employed(a) |
$ |
731,797 |
|
|
$ |
510,867 |
|
|
|
Trailing twelve month
after tax return on invested capital(b) |
29 |
% |
|
23 |
% |
|
|
|
|
a. |
Average capital employed is the average of total
capital employed as of end of the period and end of the prior
period. |
b. |
After tax return on invested capital is the ratio
of net income for the period to average capital employed. |
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