Mammoth Energy Services, Inc. Announces Second Quarter 2020 Operational and Financial Results
OKLAHOMA CITY, July 30, 2020 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ: TUSK) today reported financial and operational results for the second quarter ended June 30, 2020.
Financial Highlights for the Second Quarter 2020:
Total revenue was $60.1 million for the three months ended June 30, 2020, down 38% from $97.4 million for the three months ended March 31, 2020 and down 67% from $181.8 million for the three months ended June 30, 2019.
Net loss for the three months ended June 30, 2020 was $15.2 million, or $0.33 per fully diluted share, as compared to net loss of $84.0 million, or $1.85 per fully diluted share, for the three months ended March 31, 2020 and net loss of $10.9 million, or $0.24 per fully diluted share, for the three months ended June 30, 2019.
Adjusted EBITDA (as defined and reconciled below) was $6.9 million for the three months ended June 30, 2020, as compared to $13.5 million for the three months ended March 31, 2020 and $8.6 million for the three months ended June 30, 2019.
Arty Straehla, Mammoth's Chief Executive Officer, stated, “The second quarter of 2020 saw the release of a very important report prepared by the Rand Corporation for the U.S. Department of Homeland Security. The report was prepared at the request of the Federal Emergency Management Agency to assess the reasonableness of our subsidiary Cobra’s Master Service Agreement with the Puerto Rico Electric Power Authority (“PREPA”) for repairs to PREPA's electrical grid following Hurricane Maria. This detailed 77-page report found, among other things, that the selection of Cobra was reasonable, that PREPA adhered to procurement statutes and policies in awarding the contract to Cobra and that Cobra’s rates were reasonable. We believe these are important data points as we continue to pursue payment from PREPA for the quality work performed by our team.”
“In looking at our financial results, it is clear that our infrastructure services segment has turned a corner with gross margin increasing to 17% during the second quarter of 2020 and Adjusted EBITDA in this segment growing nearly 50% quarter-over-quarter for the last two consecutive quarters. The initiatives taken by our infrastructure management team have laid a solid foundation for growth.”
“While the oilfield portion of our service offerings have experienced significant challenges as of late given the current industry and macroeconomic environment, we continue to maintain our oilfield equipment and plan to be ready to ramp up our service lines once demand returns,” concluded Straehla.
Infrastructure Services
Mammoth's infrastructure services division contributed revenue of $30.6 million for the three months ended June 30, 2020, an increase of 19% from $25.7 million for the three months ended March 31, 2020 and a decrease of 27% from $41.8 million for the three months ended June 30, 2019.
As of June 30, 2020, Mammoth had approximately 120 crews operating in the continental United States.
Pressure Pumping Services
Mammoth's pressure pumping services division contributed revenue (inclusive of inter-segment revenue) of $16.6 million on 658 stages for the three months ended June 30, 2020, a decrease of 62% from $43.6 million on 1,482 stages for the three months ended March 31, 2020 and a decrease of 80% from $84.6 million on 1,717 stages for the three months ended June 30, 2019. On average, 1.9 of the Company's fleets were active for the three months ended June 30, 2020, compared to average utilization of 2.7 fleets during the three months ended March 31, 2020 and an average utilization of 2.7 fleets during the three months ended June 30, 2019.
Natural Sand Proppant Services
Mammoth's natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $6.2 million for the three months ended June 30, 2020, a decrease of 39% from $10.2 million for the three months ended March 31, 2020 and a decrease of 85% from $40.4 million for the three months ended June 30, 2019. The Company sold approximately 82,000 tons of sand during the three months ended June 30, 2020, a decrease of 66% from approximately 239,000 tons sold during the three months ended March 31, 2020 and a decrease of 90% from approximately 813,000 tons sold during the three months ended June 30, 2019. The Company's average sales price for the sand sold during the three months ended June 30, 2020 was $15.18 per ton, an increase from the $13.67 per ton average sales price during the three months ended March 31, 2020 and a decrease from the $30.09 per ton average sales price during the three months ended June 30, 2019.
Drilling Services
Mammoth's drilling services division contributed revenue (inclusive of inter-segment revenue) of $1.3 million for the three months ended June 30, 2020, a decrease of 73% from $4.8 million for the three months ended March 31, 2020 and a decrease of 83% from $7.7 million for the three months ended June 30, 2019. The decline is primarily due to reduced utilization. As a result of market conditions, the Company has temporarily shut down its contract land drilling operations beginning in December 2019 and its rig hauling operations beginning in April 2020.
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 $6.5 million for the three months ended June 30, 2020, a decrease of 56% from $14.9 million for the three months ended March 31, 2020 and a decrease of 69% from $21.0 million for the three months ended June 30, 2019.
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses were $13.7 million for the three months ended June 30, 2020, as compared to $10.8 million for the three months ended March 31, 2020 and $9.5 million for the three months ended June 30, 2019.
Following is a breakout of SG&A expense (in thousands):
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | |||||||||||||||
Cash expenses: | |||||||||||||||||||
Compensation and benefits | $ | 3,720 | $ | 2,154 | $ | 3,969 | $ | 7,690 | $ | 11,384 | |||||||||
Professional services | 6,147 | 2,934 | 3,538 | 9,684 | 6,723 | ||||||||||||||
Other(a) | 2,100 | 3,381 | 2,309 | 4,409 | 6,626 | ||||||||||||||
Total cash SG&A expense | 11,967 | 8,469 | 9,816 | 21,783 | 24,733 | ||||||||||||||
Non-cash expenses: | |||||||||||||||||||
Bad debt provision | 1,624 | 262 | 55 | 1,679 | 266 | ||||||||||||||
Stock based compensation | 135 | 724 | 900 | 1,035 | 1,792 | ||||||||||||||
Total non-cash SG&A expense | 1,759 | 986 | 955 | 2,714 | 2,058 | ||||||||||||||
Total SG&A expense | $ | 13,726 | $ | 9,455 | $ | 10,771 | $ | 24,497 | $ | 26,791 | |||||||||
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 23% for the three months ended June 30, 2020, as compared to 11% for the three months ended March 31, 2020 and 5% for the three months ended June 30, 2019.
Liquidity
As of June 30, 2020, Mammoth had cash on hand of $18.0 million and outstanding borrowings under its revolving credit facility of $89.3 million. As of June 30, 2020, the Company had $18.5 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 June 30, 2020, Mammoth had total liquidity of $36.5 million.
As of July 29, 2020, Mammoth had cash on hand of $16.3 million and outstanding borrowings under its revolving credit facility of $88.2 million. As of July 29, 2020, the Company had $19.5 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 | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | |||||||||||||||
Infrastructure services(a) | $ | 43 | $ | 2,177 | $ | 77 | $ | 120 | $ | 5,431 | |||||||||
Pressure pumping services(b) | 2,450 | 4,013 | 604 | 3,054 | 11,342 | ||||||||||||||
Natural sand proppant services(c) | 354 | 990 | 521 | 875 | 1,975 | ||||||||||||||
Drilling services(d) | 72 | 660 | 8 | 80 | 2,927 | ||||||||||||||
Other(e) | 5 | 2,107 | 290 | 295 | 8,545 | ||||||||||||||
Total capital expenditures | $ | 2,924 | $ | 9,947 | $ | 1,500 | $ | 4,424 | $ | 30,220 | |||||||||
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 Thursday, July 30, 2020 at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss its second 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 6816807. 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 global and national health concerns and economic repercussions and the resulting negative impact on demand for our services; 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; 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 | June 30, | December 31, | |||||
2020 | 2019 | ||||||
CURRENT ASSETS | (in thousands) | ||||||
Cash and cash equivalents | $ | 18,025 | $ | 5,872 | |||
Accounts receivable, net | 353,912 | 363,053 | |||||
Receivables from related parties | 27,316 | 7,523 | |||||
Inventories | 12,473 | 17,483 | |||||
Prepaid expenses | 6,236 | 12,354 | |||||
Other current assets | 740 | 695 | |||||
Total current assets | 418,702 | 406,980 | |||||
Property, plant and equipment, net | 293,150 | 352,772 | |||||
Sand reserves | 68,257 | 68,351 | |||||
Operating lease right-of-use assets | 33,210 | 43,446 | |||||
Intangible assets, net - customer relationships | 496 | 583 | |||||
Intangible assets, net - trade names | 4,786 | 5,205 | |||||
Goodwill | 12,608 | 67,581 | |||||
Other non-current assets | 7,261 | 7,467 | |||||
Total assets | $ | 838,470 | $ | 952,385 | |||
LIABILITIES AND EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Accounts payable | $ | 31,866 | $ | 39,220 | |||
Payables to related parties | 14 | 526 | |||||
Accrued expenses and other current liabilities | 36,741 | 40,754 | |||||
Current operating lease liability | 13,387 | 16,432 | |||||
Income taxes payable | 29,729 | 33,465 | |||||
Total current liabilities | 111,737 | 130,397 | |||||
Long-term debt | 89,250 | 80,000 | |||||
Deferred income tax liabilities | 37,593 | 36,873 | |||||
Long-term operating lease liability | 19,802 | 27,102 | |||||
Asset retirement obligation | 4,640 | 4,241 | |||||
Other liabilities | 5,383 | 5,031 | |||||
Total liabilities | 268,405 | 283,644 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
EQUITY | |||||||
Equity: | |||||||
Common stock, $0.01 par value, 200,000,000 shares authorized, 45,762,200 and 45,108,545 issued and outstanding at June 30, 2020 and December 31, 2019 | 458 | 451 | |||||
Additional paid in capital | 536,333 | 535,094 | |||||
Retained earnings | 37,326 | 136,502 | |||||
Accumulated other comprehensive loss | (4,052 | ) | (3,306 | ) | |||
Total equity | 570,065 | 668,741 | |||||
Total liabilities and equity | $ | 838,470 | $ | 952,385 | |||
MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
REVENUE | |||||||||||||||||||
Services revenue | $ | 44,878 | $ | 115,760 | $ | 68,845 | $ | 113,723 | $ | 308,861 | |||||||||
Services revenue - related parties | 8,650 | 36,837 | 18,013 | 26,663 | 80,910 | ||||||||||||||
Product revenue | 4,706 | 18,362 | 8,650 | 13,356 | 30,671 | ||||||||||||||
Product revenue - related parties | 1,875 | 10,861 | 1,875 | 3,750 | 23,516 | ||||||||||||||
Total revenue | 60,109 | 181,820 | 97,383 | 157,492 | 443,958 | ||||||||||||||
COST AND EXPENSES | |||||||||||||||||||
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $21,750, $25,597, $23,554, $45,305 and $51,280, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019) | 42,255 | 132,688 | 70,697 | 112,952 | 290,794 | ||||||||||||||
Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0, $0, $0 and $0, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019) | 97 | 2,650 | 101 | 198 | 3,363 | ||||||||||||||
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,346, $4,525, $2,309, $4,654 and $7,395, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019) | 6,401 | 32,677 | 11,108 | 17,509 | 62,928 | ||||||||||||||
Selling, general and administrative | 13,528 | 8,796 | 10,556 | 24,084 | 25,698 | ||||||||||||||
Selling, general and administrative - related parties | 198 | 659 | 215 | 413 | 1,093 | ||||||||||||||
Depreciation, depletion, amortization and accretion | 24,116 | 30,145 | 25,882 | 49,998 | 58,721 | ||||||||||||||
Impairment of goodwill | — | — | 54,973 | 54,973 | — | ||||||||||||||
Impairment of other long-lived assets | — | — | 12,897 | 12,897 | — | ||||||||||||||
Total cost and expenses | 86,595 | 207,615 | 186,429 | 273,024 | 442,597 | ||||||||||||||
Operating (loss) income | (26,486 | ) | (25,795 | ) | (89,046 | ) | (115,532 | ) | 1,361 | ||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||||||
Interest expense, net | (1,471 | ) | (1,551 | ) | (1,638 | ) | (3,109 | ) | (2,074 | ) | |||||||||
Other, net | 8,137 | 4,019 | 7,409 | 15,546 | 28,576 | ||||||||||||||
Other, net - related parties | 1,133 | — | — | 1,133 | — | ||||||||||||||
Total other income | 7,799 | 2,468 | 5,771 | 13,570 | 26,502 | ||||||||||||||
(Loss) income before income taxes | (18,687 | ) | (23,327 | ) | (83,275 | ) | (101,962 | ) | 27,863 | ||||||||||
(Benefit) provision for income taxes | (3,482 | ) | (12,438 | ) | 696 | (2,786 | ) | 10,419 | |||||||||||
Net (loss) income | $ | (15,205 | ) | $ | (10,889 | ) | $ | (83,971 | ) | $ | (99,176 | ) | $ | 17,444 | |||||
OTHER COMPREHENSIVE (LOSS) INCOME | |||||||||||||||||||
Foreign currency translation adjustment, net of tax of ($150), $92, $361, $211 and $182, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019 | 668 | 350 | (1,414 | ) | (746 | ) | 706 | ||||||||||||
Comprehensive (loss) income | $ | (14,537 | ) | $ | (10,539 | ) | $ | (85,385 | ) | $ | (99,922 | ) | $ | 18,150 | |||||
Net (loss) income per share (basic) | $ | (0.33 | ) | $ | (0.24 | ) | $ | (1.85 | ) | $ | (2.18 | ) | $ | 0.39 | |||||
Net (loss) income per share (diluted) | $ | (0.33 | ) | $ | (0.24 | ) | $ | (1.85 | ) | $ | (2.18 | ) | $ | 0.39 | |||||
Weighted average number of shares outstanding (basic) | 45,727 | 45,003 | 45,314 | 45,521 | 44,966 | ||||||||||||||
Weighted average number of shares outstanding (diluted) | 45,727 | 45,003 | 45,314 | 45,521 | 45,060 | ||||||||||||||
Dividends declared per share | $ | — | $ | 0.125 | $ | — | $ | — | $ | 0.25 | |||||||||
MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended | |||||||
June 30, | |||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
Cash flows from operating activities: | |||||||
Net (loss) income | $ | (99,176 | ) | $ | 17,444 | ||
Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities: | |||||||
Stock based compensation | 1,246 | 2,233 | |||||
Depreciation, depletion, accretion and amortization | 49,998 | 58,721 | |||||
Amortization of coil tubing strings | 359 | 1,003 | |||||
Amortization of debt origination costs | 577 | 163 | |||||
Bad debt expense | 1,679 | 266 | |||||
(Gain) loss on disposal of property and equipment | (1,451 | ) | 176 | ||||
Impairment of goodwill | 54,973 | — | |||||
Impairment of other long-lived assets | 12,897 | — | |||||
Deferred income taxes | 931 | (22,911 | ) | ||||
Other | 623 | (199 | ) | ||||
Changes in assets and liabilities: | |||||||
Accounts receivable, net | 7,782 | (48,530 | ) | ||||
Receivables from related parties | (19,793 | ) | (26,236 | ) | |||
Inventories | 4,651 | (1,815 | ) | ||||
Prepaid expenses and other assets | 6,079 | 1,115 | |||||
Accounts payable | (7,514 | ) | 7,366 | ||||
Payables to related parties | (512 | ) | 650 | ||||
Accrued expenses and other liabilities | (2,818 | ) | (17,129 | ) | |||
Income taxes payable | (3,697 | ) | (74,172 | ) | |||
Net cash provided by (used in) operating activities | 6,834 | (101,855 | ) | ||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (4,348 | ) | (30,085 | ) | |||
Purchases of property and equipment from related parties | (76 | ) | (135 | ) | |||
Contributions to equity investee | — | (680 | ) | ||||
Proceeds from disposal of property and equipment | 2,544 | 2,465 | |||||
Net cash used in investing activities | (1,880 | ) | (28,435 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings from lines of credit | 22,800 | 108,000 | |||||
Repayments of lines of credit | (13,550 | ) | (25,964 | ) | |||
Dividends paid | — | (11,219 | ) | ||||
Principal payments on financing leases and equipment financing notes | (914 | ) | (992 | ) | |||
Debt issuance costs | (1,000 | ) | — | ||||
Net cash provided by financing activities | 7,336 | 69,825 | |||||
Effect of foreign exchange rate on cash | (137 | ) | 85 | ||||
Net change in cash and cash equivalents | 12,153 | (60,380 | ) | ||||
Cash and cash equivalents at beginning of period | 5,872 | 67,625 | |||||
Cash and cash equivalents at end of period | $ | 18,025 | $ | 7,245 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest | $ | 2,683 | $ | 1,830 | |||
Cash (received) paid for income taxes | $ | (6 | ) | $ | 116,442 | ||
Supplemental disclosure of non-cash transactions: | |||||||
Purchases of property and equipment included in accounts payable | $ | 2,780 | $ | 2,339 | |||
MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS
(in thousands)
Three months ended June 30, 2020 | Infrastructure | Pressure Pumping | Sand | Drilling | All Other | Eliminations | Total | ||||||||||||||
Revenue from external customers | $ | 30,579 | $ | 16,125 | $ | 6,237 | $ | 1,250 | $ | 5,918 | $ | — | $ | 60,109 | |||||||
Intersegment revenues | — | 446 | — | 25 | 580 | (1,051 | ) | — | |||||||||||||
Total revenue | 30,579 | 16,571 | 6,237 | 1,275 | 6,498 | (1,051 | ) | 60,109 | |||||||||||||
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 25,368 | 8,744 | 6,025 | 2,027 | 6,589 | — | 48,753 | ||||||||||||||
Intersegment cost of revenues | 27 | 333 | 28 | 21 | 642 | (1,051 | ) | — | |||||||||||||
Total cost of revenue | 25,395 | 9,077 | 6,053 | 2,048 | 7,231 | (1,051 | ) | 48,753 | |||||||||||||
Selling, general and administrative | 8,037 | 1,477 | 1,357 | 1,331 | 1,524 | — | 13,726 | ||||||||||||||
Depreciation, depletion, amortization and accretion | 7,816 | 7,685 | 2,348 | 2,700 | 3,567 | — | 24,116 | ||||||||||||||
Operating loss | (10,669 | ) | (1,668 | ) | (3,521 | ) | (4,804 | ) | (5,824 | ) | — | (26,486 | ) | ||||||||
Interest expense, net | 720 | 346 | 53 | 143 | 209 | — | 1,471 | ||||||||||||||
Other (income) expense, net | (7,809 | ) | (1,179 | ) | (2 | ) | (298 | ) | 18 | — | (9,270 | ) | |||||||||
Loss before income taxes | $ | (3,580 | ) | $ | (835 | ) | $ | (3,572 | ) | $ | (4,649 | ) | $ | (6,051 | ) | $ | — | $ | (18,687 | ) | |
Three months ended June 30, 2019 | Infrastructure | Pressure Pumping | Sand | Drilling | All Other | Eliminations | Total | ||||||||||||||
Revenue from external customers | $ | 41,821 | $ | 82,973 | $ | 29,223 | $ | 7,450 | $ | 20,353 | $ | — | $ | 181,820 | |||||||
Intersegment revenues | — | 1,668 | 11,170 | 207 | 687 | (13,732 | ) | — | |||||||||||||
Total revenue | 41,821 | 84,641 | 40,393 | 7,657 | 21,040 | (13,732 | ) | 181,820 | |||||||||||||
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 44,864 | 59,835 | 32,676 | 9,175 | 21,465 | — | 168,015 | ||||||||||||||
Intersegment cost of revenues | — | 11,797 | 1,141 | 229 | 643 | (13,810 | ) | — | |||||||||||||
Total cost of revenue | 44,864 | 71,632 | 33,817 | 9,404 | 22,108 | (13,810 | ) | 168,015 | |||||||||||||
Selling, general and administrative | 3,035 | 2,664 | 1,380 | 844 | 1,532 | — | 9,455 | ||||||||||||||
Depreciation, depletion, amortization and accretion | 7,818 | 10,174 | 4,528 | 3,193 | 4,432 | — | 30,145 | ||||||||||||||
Operating (loss) income | (13,896 | ) | 171 | 668 | (5,784 | ) | (7,032 | ) | 78 | (25,795 | ) | ||||||||||
Interest expense, net | 386 | 452 | 72 | 332 | 309 | — | 1,551 | ||||||||||||||
Other (income) expense, net | (4,045 | ) | 9 | (32 | ) | — | 49 | — | (4,019 | ) | |||||||||||
(Loss) income before income taxes | $ | (10,237 | ) | $ | (290 | ) | $ | 628 | $ | (6,116 | ) | $ | (7,390 | ) | $ | 78 | $ | (23,327 | ) | ||
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 | ) | |
Six months ended June 30, 2020 | Infrastructure | Pressure Pumping | Sand | Drilling | All Other | Eliminations | Total | ||||||||||||||
Revenue from external customers | $ | 56,285 | $ | 58,810 | $ | 16,391 | $ | 5,973 | $ | 20,033 | $ | — | $ | 157,492 | |||||||
Intersegment revenues | — | 1,382 | 95 | 81 | 1,354 | (2,912 | ) | — | |||||||||||||
Total revenue | 56,285 | 60,192 | 16,486 | 6,054 | 21,387 | (2,912 | ) | 157,492 | |||||||||||||
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 52,314 | 34,952 | 16,682 | 7,662 | 19,049 | — | 130,659 | ||||||||||||||
Intersegment cost of revenues | 35 | 961 | 329 | 152 | 1,435 | (2,912 | ) | — | |||||||||||||
Total cost of revenue | 52,349 | 35,913 | 17,011 | 7,814 | 20,484 | (2,912 | ) | 130,659 | |||||||||||||
Selling, general and administrative | 12,334 | 3,699 | 2,608 | 2,395 | 3,461 | — | 24,497 | ||||||||||||||
Depreciation, depletion, amortization and accretion | 15,750 | 16,177 | 4,661 | 5,577 | 7,833 | — | 49,998 | ||||||||||||||
Impairment of goodwill | — | 53,406 | — | — | 1,567 | — | 54,973 | ||||||||||||||
Impairment of other long-lived assets | — | 4,203 | — | 326 | 8,368 | — | 12,897 | ||||||||||||||
Operating loss | (24,148 | ) | (53,206 | ) | (7,794 | ) | (10,058 | ) | (20,326 | ) | — | (115,532 | ) | ||||||||
Interest expense, net | 1,477 | 639 | 113 | 412 | 468 | — | 3,109 | ||||||||||||||
Other (income) expense, net | (15,086 | ) | (1,288 | ) | (39 | ) | (271 | ) | 5 | — | (16,679 | ) | |||||||||
Loss before income taxes | $ | (10,539 | ) | $ | (52,557 | ) | $ | (7,868 | ) | $ | (10,199 | ) | $ | (20,799 | ) | $ | — | $ | (101,962 | ) | |
Six months ended June 30, 2019 | Infrastructure | Pressure Pumping | Sand | Drilling | All Other | Eliminations | Total | ||||||||||||||
Revenue from external customers | $ | 150,542 | $ | 173,568 | $ | 54,187 | $ | 21,026 | $ | 44,635 | $ | — | $ | 443,958 | |||||||
Intersegment revenues | — | 3,212 | 24,067 | 426 | 1,453 | (29,158 | ) | — | |||||||||||||
Total revenue | 150,542 | 176,780 | 78,254 | 21,452 | 46,088 | (29,158 | ) | 443,958 | |||||||||||||
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 103,828 | 124,047 | 62,928 | 21,826 | 44,456 | — | 357,085 | ||||||||||||||
Intersegment cost of revenues | — | 25,334 | 2,188 | 501 | 1,195 | (29,218 | ) | — | |||||||||||||
Total cost of revenue | 103,828 | 149,381 | 65,116 | 22,327 | 45,651 | (29,218 | ) | 357,085 | |||||||||||||
Selling, general and administrative | 12,553 | 5,876 | 2,899 | 2,208 | 3,255 | — | 26,791 | ||||||||||||||
Depreciation, depletion, amortization and accretion | 15,537 | 20,068 | 7,401 | 6,770 | 8,945 | — | 58,721 | ||||||||||||||
Operating income (loss) | 18,624 | 1,455 | 2,838 | (9,853 | ) | (11,763 | ) | 60 | 1,361 | ||||||||||||
Interest expense, net | 425 | 649 | 102 | 460 | 438 | — | 2,074 | ||||||||||||||
Other (income) expense, net | (28,869 | ) | 8 | (32 | ) | (22 | ) | 339 | — | (28,576 | ) | ||||||||||
Income (loss) before income taxes | $ | 47,068 | $ | 798 | $ | 2,768 | $ | (10,291 | ) | $ | (12,540 | ) | $ | 60 | $ | 27,863 | |||||
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, acquisition related 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 (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 | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
Reconciliation of Adjusted EBITDA to net (loss) income: | 2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||||||
Net (loss) income | $ | (15,205 | ) | $ | (10,889 | ) | $ | (83,971 | ) | $ | (99,176 | ) | $ | 17,444 | |||||
Depreciation, depletion, amortization and accretion expense | 24,116 | 30,145 | 25,882 | 49,998 | 58,721 | ||||||||||||||
Impairment of goodwill | — | — | 54,973 | 54,973 | — | ||||||||||||||
Impairment of other long-lived assets | — | — | 12,897 | 12,897 | — | ||||||||||||||
Acquisition related costs | — | 45 | — | — | 45 | ||||||||||||||
Stock based compensation | 196 | 944 | 1,049 | 1,246 | 2,233 | ||||||||||||||
Interest expense, net | 1,471 | 1,551 | 1,638 | 3,109 | 2,074 | ||||||||||||||
Other income, net | (9,270 | ) | (4,019 | ) | (7,409 | ) | (16,679 | ) | (28,576 | ) | |||||||||
(Benefit) provision for income taxes | (3,482 | ) | (12,438 | ) | 696 | (2,786 | ) | 10,419 | |||||||||||
Interest on trade accounts receivable | 9,071 | 3,234 | 7,696 | 16,767 | 28,969 | ||||||||||||||
Adjusted EBITDA | $ | 6,897 | $ | 8,573 | $ | 13,451 | $ | 20,349 | $ | 91,329 | |||||||||
Infrastructure Services
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
Reconciliation of Adjusted EBITDA to net (loss) income: | 2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||||||
Net (loss) income | $ | (4,529 | ) | $ | 6,210 | $ | (9,452 | ) | $ | (13,980 | ) | $ | 41,875 | ||||||
Depreciation and amortization expense | 7,816 | 7,818 | 7,934 | 15,750 | 15,537 | ||||||||||||||
Acquisition related costs | — | 12 | — | — | 12 | ||||||||||||||
Stock based compensation | 45 | 9 | 251 | 297 | 471 | ||||||||||||||
Interest expense | 720 | 386 | 757 | 1,477 | 425 | ||||||||||||||
Other income, net | (7,809 | ) | (4,045 | ) | (7,276 | ) | (15,086 | ) | (28,869 | ) | |||||||||
Provision for income taxes | 949 | (16,447 | ) | 2,491 | 3,440 | 5,193 | |||||||||||||
Interest on trade accounts receivable | 7,929 | 3,234 | 7,696 | 15,625 | 28,969 | ||||||||||||||
Adjusted EBITDA | $ | 5,121 | $ | (2,823 | ) | $ | 2,401 | $ | 7,523 | $ | 63,613 | ||||||||
Pressure Pumping Services
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
Reconciliation of Adjusted EBITDA to net (loss) income: | 2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||||||
Net (loss) income | $ | (835 | ) | $ | (290 | ) | $ | (51,720 | ) | $ | (52,556 | ) | $ | 798 | |||||
Depreciation and amortization expense | 7,685 | 10,174 | 8,492 | 16,177 | 20,068 | ||||||||||||||
Impairment of goodwill | — | — | 53,406 | 53,406 | — | ||||||||||||||
Impairment of other long-lived assets | — | — | 4,203 | 4,203 | — | ||||||||||||||
Acquisition related costs | — | 18 | — | — | 18 | ||||||||||||||
Stock based compensation | 53 | 489 | 335 | 388 | 899 | ||||||||||||||
Interest expense | 346 | 452 | 293 | 639 | 649 | ||||||||||||||
Other (income) expense, net | (1,179 | ) | 9 | (109 | ) | (1,288 | ) | 8 | |||||||||||
Interest on trade accounts receivable | 1,133 | — | — | 1,133 | — | ||||||||||||||
Adjusted EBITDA | $ | 7,203 | $ | 10,852 | $ | 14,900 | $ | 22,102 | $ | 22,440 | |||||||||
Natural Sand Proppant Services
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
Reconciliation of Adjusted EBITDA to net (loss) income: | 2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||||||
Net (loss) income | $ | (3,572 | ) | $ | 628 | $ | (4,297 | ) | $ | (7,868 | ) | $ | 2,768 | ||||||
Depreciation, depletion, amortization and accretion expense | 2,348 | 4,528 | 2,312 | 4,661 | 7,401 | ||||||||||||||
Acquisition related costs | — | 8 | — | — | 8 | ||||||||||||||
Stock based compensation | 45 | 236 | 225 | 271 | 439 | ||||||||||||||
Interest expense | 53 | 72 | 61 | 113 | 102 | ||||||||||||||
Other income, net | (2 | ) | (32 | ) | (37 | ) | (39 | ) | (32 | ) | |||||||||
Adjusted EBITDA | $ | (1,128 | ) | $ | 5,440 | $ | (1,736 | ) | $ | (2,862 | ) | $ | 10,686 | ||||||
Drilling Services
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
Reconciliation of Adjusted EBITDA to net (loss) income: | 2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||||||
Net loss | $ | (4,649 | ) | $ | (6,116 | ) | $ | (5,548 | ) | $ | (10,199 | ) | $ | (10,291 | ) | ||||
Depreciation expense | 2,700 | 3,193 | 2,877 | 5,577 | 6,770 | ||||||||||||||
Impairment of other long-lived assets | — | — | 326 | 326 | — | ||||||||||||||
Acquisition related costs | — | 2 | — | — | 2 | ||||||||||||||
Stock based compensation | 34 | 88 | 94 | 128 | 189 | ||||||||||||||
Interest expense | 143 | 332 | 268 | 412 | 460 | ||||||||||||||
Other (income) expense, net | (298 | ) | — | 27 | (271 | ) | (22 | ) | |||||||||||
Adjusted EBITDA | $ | (2,070 | ) | $ | (2,501 | ) | $ | (1,956 | ) | $ | (4,027 | ) | $ | (2,892 | ) | ||||
Other Services(a)
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
Reconciliation of Adjusted EBITDA to net loss: | 2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||||||
Net loss | $ | (1,620 | ) | $ | (11,399 | ) | $ | (12,954 | ) | $ | (14,573 | ) | $ | (17,766 | ) | ||||
Depreciation, amortization and accretion expense | 3,567 | 4,432 | 4,267 | 7,833 | 8,945 | ||||||||||||||
Impairment of goodwill | — | — | 1,567 | 1,567 | — | ||||||||||||||
Impairment of other long-lived assets | — | — | 8,368 | 8,368 | — | ||||||||||||||
Acquisition related costs | — | 5 | — | — | 5 | ||||||||||||||
Stock based compensation | 19 | 122 | 144 | 162 | 235 | ||||||||||||||
Interest expense, net | 209 | 309 | 259 | 468 | 438 | ||||||||||||||
Other expense (income), net | 18 | 49 | (14 | ) | 5 | 339 | |||||||||||||
(Benefit) provision for income taxes | (4,431 | ) | 4,009 | (1,795 | ) | (6,226 | ) | 5,226 | |||||||||||
Interest on trade accounts receivable | 9 | — | — | 9 | — | ||||||||||||||
Adjusted EBITDA | $ | (2,229 | ) | $ | (2,473 | ) | $ | (158 | ) | $ | (2,387 | ) | $ | (2,578 | ) | ||||
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 | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
Net (loss) income, as reported | $ | (15,205 | ) | $ | (10,889 | ) | $ | (83,971 | ) | $ | (99,176 | ) | $ | 17,444 | |||||
Impairment of goodwill | — | — | 54,973 | 54,973 | — | ||||||||||||||
Impairment of other long-lived assets | — | — | 12,897 | 12,897 | — | ||||||||||||||
Adjusted net (loss) income | $ | (15,205 | ) | $ | (10,889 | ) | $ | (16,101 | ) | $ | (31,306 | ) | $ | 17,444 | |||||
Basic (loss) earnings per share, as reported | $ | (0.33 | ) | $ | (0.24 | ) | $ | (1.85 | ) | $ | (2.18 | ) | $ | 0.39 | |||||
Impairment of goodwill | — | — | 1.21 | 1.21 | — | ||||||||||||||
Impairment of other long-lived assets | — | — | 0.28 | 0.28 | — | ||||||||||||||
Adjusted basic (loss) earnings per share | $ | (0.33 | ) | $ | (0.24 | ) | $ | (0.36 | ) | $ | (0.69 | ) | $ | 0.39 | |||||
Diluted (loss) earnings per share, as reported | $ | (0.33 | ) | $ | (0.24 | ) | $ | (1.85 | ) | $ | (2.18 | ) | $ | 0.39 | |||||
Impairment of goodwill | — | — | 1.21 | 1.21 | — | ||||||||||||||
Impairment of other long-lived assets | — | — | 0.28 | 0.28 | — | ||||||||||||||
Adjusted diluted (loss) earnings per share | $ | (0.33 | ) | $ | (0.24 | ) | $ | (0.36 | ) | $ | (0.69 | ) | $ | 0.39 | |||||
