Mammoth Energy Services, Inc. Announces Third Quarter 2020 Operational and Financial Results

OKLAHOMA CITY, Oct. 29, 2020 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. (Mammoth or the Company) (NASDAQ: TUSK) today reported financial and operational results for the third quarter ended September 30, 2020.

Financial Highlights for the Third Quarter 2020:

Total revenue was $70.5 million for the three months ended September 30, 2020, up 17% from $60.1 million for the three months ended June 30, 2020 and down 38% from $113.4 million for the three months ended September 30, 2019.

Net income for the three months ended September 30, 2020 was $3.4 million, or $0.07 per fully diluted share, as compared to a net loss of $15.2 million, or $0.33 per fully diluted share, for the three months ended June 30, 2020 and a net loss of $35.7 million, or $0.79 per fully diluted share, for the three months ended September 30, 2019.

Adjusted EBITDA (as defined and reconciled below) was $22.1 million for the three months ended September 30, 2020, as compared to $6.9 million for the three months ended June 30, 2020 and ($3.8) million for the three months ended September 30, 2019.

Arty Straehla, Mammoth's Chief Executive Officer, stated, The third quarter financial results showed the earnings power of our infrastructure segment with gross margin increasing to 34% and Adjusted EBITDA, excluding interest on trade accounts receivable, in this segment growing more than 350% quarter-over-quarter. The initiatives taken by our infrastructure management team have laid a solid foundation for growth in the years to come. While the oilfield portion of our service offerings continue to experience significant challenges, we continue to maintain our oilfield equipment and plan to be ready to ramp up our oilfield service offerings when oilfield demand, pricing and margins strengthen.

Infrastructure Services

Mammoth's infrastructure services division contributed revenue of $44.0 million, or approximately 62% of Mammoth's total revenue, for the three months ended September 30, 2020, an increase of 44% from $30.6 million for the three months ended June 30, 2020 and an increase of 18% from $37.3 million for the three months ended September 30, 2019 reflecting a strong market.

As of September 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 $15.8 million on 449 stages for the three months ended September 30, 2020, a decrease of 5% from $16.6 million on 658 stages for the three months ended June 30, 2020 and a decrease of 65% from $44.6 million on 783 stages for the three months ended September 30, 2019. On average, 0.9 of the Company's fleets were active for the three months ended September 30, 2020, compared to average utilization of 1.9 fleets during the three months ended June 30, 2020 and an average utilization of 1.2 fleets during the three months ended September 30, 2019.

Natural Sand Proppant Services

Mammoth's natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $6.0 million for the three months ended September 30, 2020, a decrease of 3% from $6.2 million for the three months ended June 30, 2020 and a decrease of 67% from $18.4 million for the three months ended September 30, 2019. The Company sold approximately 68,000 tons of sand during the three months ended September 30, 2020, a decrease of 85% from approximately 456,000 tons sold during the three months ended June 30, 2020 and a decrease of 17% from approximately 82,000 tons sold during the three months ended September 30, 2019. The Company's average sales price for the sand sold during the three months ended September 30, 2020 was $15.59 per ton, a slight increase from the $15.18 per ton average sales price during the three months ended June 30, 2020 and a decrease from the $26.84 per ton average sales price during the three months ended September 30, 2019.

Drilling Services

Mammoth's drilling services division contributed revenue (inclusive of inter-segment revenue) of $1.2 million for the three months ended September 30, 2020, a decrease of 8% from $1.3 million for the three months ended June 30, 2020 and a decrease of 80% from $6.1 million for the three months ended September 30, 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 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 $4.2 million for the three months ended September 30, 2020, a decrease of 35% from $6.5 million for the three months ended June 30, 2020 and a decrease of 70% from $14.0 million for the three months ended September 30, 2019.

Selling, General and Administrative Expenses

Selling, general and administrative (SG&A) expenses were $12.2 million for the three months ended September 30, 2020, as compared to $13.7 million for the three months ended June 30, 2020 and $14.4 million for the three months ended September 30, 2019.

Following is a breakout of SG&A expense (in thousands):

	Three Months Ended												Nine Months Ended
	September 30,								June 30,				September 30,
	2020				2019				2020				2020				2019
Cash expenses:
Compensation and benefits	$	3,449			$	4,777			$	3,720			$	11,138			$	16,161
Professional services	5,651				6,104				6,147				15,335				12,827
Other (a)	2,163				1,665				2,100				6,572				8,290
Total cash SG&A expense	11,263				12,546				11,967				33,045				37,278
Non-cash expenses:
Bad debt provision	626				964				1,624				2,306				1,230
Stock based compensation	291				913				135				1,326				2,705
Total non-cash SG&A expense	917				1,877				1,759				3,632				3,935
Total SG&A expense	$	12,180			$	14,423			$	13,726			$	36,677			$	41,213

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 17% for the three months ended September 30, 2020, as compared to 23% for the three months ended June 30, 2020 and 13% for the three months ended September 30, 2019.

Liquidity

As of September 30, 2020, Mammoth had cash on hand of $13.9 million and outstanding borrowings under its revolving credit facility of $89.8 million. As of September 30, 2020, the Company had $18.0 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 September 30, 2020, Mammoth had total liquidity of $31.9 million.

As of October 28, 2020, Mammoth had cash on hand of $12.4 million and outstanding borrowings under its revolving credit facility of $88.4 million. As of October 28, 2020, the Company had $28.1 million of available borrowing capacity under its revolving credit facility, after giving effect to $13.3 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												Nine Months Ended
	September 30,								June 30,				September 30,
	2020				2019				2020				2020				2019
Infrastructure services (a)	$	178			$	122			$	43			$	298			$	5,553
Pressure pumping services (b)	698				2,963				2,450				3,752				14,305
Natural sand proppant services (c)	194				728				354				1,069				2,703
Drilling services (d)	131				146				72				211				3,073
Other (e)	324				711				5				619				9,256
Total capital expenditures	$	1,525			$	4,670			$	2,924			$	5,949			$	34,890

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 Mammoths 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, October 29, 2020 at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss its third 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 2595308. 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. Mammoths suite of services and products include: infrastructure services, pressure pumping 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 managements 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 and contracts for our pressure pumping services and natural sand proppant services; 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		September 30,					December 31,
		2020					2019
CURRENT ASSETS		(in thousands)
Cash and cash equivalents		$	13,884				$	5,872
Accounts receivable, net		373,160					363,053
Receivables from related parties		38,676					7,523
Inventories		13,297					17,483
Prepaid expenses		3,363					12,354
Other current assets		4,413					695
Total current assets		446,793					406,980
Property, plant and equipment, net		270,624					352,772
Sand reserves		66,093					68,351
Operating lease right-of-use assets		25,927					43,446
Intangible assets, net - customer relationships		452					583
Intangible assets, net - trade names		4,576					5,205
Goodwill		12,608					67,581
Other non-current assets		4,026					7,467
Total assets		$	831,099				$	952,385
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable		$	33,428				$	39,220
Payables to related parties		18					526
Accrued expenses and other current liabilities		35,482					40,754
Current operating lease liability		10,657					16,432
Income taxes payable		31,789					33,465
Total current liabilities		111,374					130,397
Long-term debt		89,800					80,000
Deferred income tax liabilities		29,423					36,873
Long-term operating lease liability		15,291					27,102
Asset retirement obligation		4,683					4,241
Other liabilities		6,357					5,031
Total liabilities		256,928					283,644
COMMITMENTS AND CONTINGENCIES
EQUITY
Equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 45,765,533 and 45,108,545 issued and outstanding at September 30, 2020 and December 31, 2019		458					451
Additional paid in capital		536,685					535,094
Retained earnings		40,756					136,502
Accumulated other comprehensive loss		(3,728		)			(3,306		)
Total equity		574,171					668,741
Total liabilities and equity		$	831,099				$	952,385

MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended															Nine Months Ended
	September 30,										June 30,					September 30,
	2020					2019					2020					2020					2019
	(in thousands, except per share amounts)
REVENUE
Services revenue	$	55,279				$	85,783				$	44,878				$	169,002				$	394,645
Services revenue - related parties	8,565					15,000					8,650					35,228					95,910
Product revenue	4,815					9,710					4,706					18,171					40,381
Product revenue - related parties	1,875					2,924					1,875					5,625					26,439
Total revenue	70,534					113,417					60,109					228,026					557,375
COST AND EXPENSES
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $20,424, $25,749, $21,750, $65,728 and $77,028, respectively, for the three months ended September 30, 2020, September 30, 2019 and June 30, 2020 and nine months ended September 30, 2020 and 2019)	41,445					91,813					42,255					154,397					382,607
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 September 30, 2020, September 30, 2019 and June 30, 2020 and nine months ended September 30, 2020 and 2019)	131					774					97					329					4,138
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,689, $4,019, $2,346, $7,344 and $11,414, respectively, for the three months ended September 30, 2020, September 30, 2019 and June 30, 2020 and nine months ended September 30, 2020 and 2019)	4,353					18,547					6,401					21,862					81,475
Selling, general and administrative	11,979					14,029					13,528					36,063					39,726
Selling, general and administrative - related parties	201					394					198					614					1,487
Depreciation, depletion, amortization and accretion	23,132					29,791					24,116					73,130					88,512
Impairment of goodwill						3,194										54,973					3,194
Impairment of other long-lived assets						3,348										12,897					3,348
Total cost and expenses	81,241					161,890					86,595					354,265					604,487
Operating loss	(10,707		)			(48,473		)			(26,486		)			(126,239		)			(47,112		)
OTHER INCOME (EXPENSE)
Interest expense, net	(1,098		)			(1,398		)			(1,471		)			(4,207		)			(3,472		)
Other, net	7,943					6,368					8,137					23,489					34,944
Other, net - related parties	1,099										1,133					2,232
Total other income	7,944					4,970					7,799					21,514					31,472
Loss before income taxes	(2,763		)			(43,503		)			(18,687		)			(104,725		)			(15,640		)
(Benefit) provision for income taxes	(6,193		)			(7,794		)			(3,482		)			(8,979		)			2,625
Net income (loss)	$	3,430				$	(35,709	)			$	(15,205	)			$	(95,746	)			$	(18,265	)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net of tax of ($95), ($49), ($150), $116 and $134, respectively, for the three months ended September 30, 2020, September 30, 2019 and June 30, 2020 and nine months ended September 30, 2020 and 2019	324					(213		)			668					(422		)			493
Comprehensive income (loss)	$	3,754				$	(35,922	)			$	(14,537	)			$	(96,168	)			$	(17,772	)
Net income (loss) per share (basic)	$	0.07				$	(0.79	)			$	(0.33	)			$	(2.10	)			$	(0.41	)
Net income (loss) per share (diluted)	$	0.07				$	(0.79	)			$	(0.33	)			$	(2.10	)			$	(0.41	)
Weighted average number of shares outstanding (basic)	45,764					45,020					45,727					45,603					44,984
Weighted average number of shares outstanding (diluted)	46,571					45,020					45,727					45,603					44,984
Dividends declared per share	$					$					$					$					$	0.25

MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 30,
	2020					2019
	(in thousands)
Cash flows from operating activities:
Net loss	$	(95,746	)			$	(18,265	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Stock based compensation	1,598					3,367
Depreciation, depletion, accretion and amortization	73,130					88,512
Amortization of coil tubing strings	359					1,236
Amortization of debt origination costs	703					245
Bad debt expense	2,306					1,230
(Gain) loss on disposal of property and equipment	(927		)			245
Impairment of goodwill	54,973					3,194
Impairment of other long-lived assets	12,897					3,348
Inventory obsolescence						1,349
Deferred income taxes	(7,334		)			(32,183		)
Other	581					(539		)
Changes in assets and liabilities:
Accounts receivable, net	(11,707		)			(33,042		)
Receivables from related parties	(31,152		)			2,622
Inventories	3,827					1,415
Prepaid expenses and other assets	8,803					3,713
Accounts payable	(5,211		)			(27,187		)
Payables to related parties	(508		)			117
Accrued expenses and other liabilities	(3,166		)			(19,121		)
Income taxes payable	(1,644		)			(72,501		)
Net cash provided by (used in) operating activities	1,782					(92,245		)
Cash flows from investing activities:
Purchases of property and equipment	(5,873		)			(34,637		)
Purchases of property and equipment from related parties	(76		)			(253		)
Contributions to equity investee						(680		)
Proceeds from disposal of property and equipment	4,859					2,491
Net cash used in investing activities	(1,090		)			(33,079		)
Cash flows from financing activities:
Borrowings from lines of credit	30,800					138,000
Repayments of lines of credit	(21,000		)			(58,000		)
Dividends paid						(11,219		)
Principal payments on financing leases and equipment financing notes	(1,423		)			(1,534		)
Debt issuance costs	(1,000		)
Net cash provided by financing activities	7,377					67,247
Effect of foreign exchange rate on cash	(57		)			50
Net change in cash and cash equivalents	8,012					(58,027		)
Cash and cash equivalents at beginning of period	5,872					67,625
Cash and cash equivalents at end of period	$	13,884				$	9,598
Supplemental disclosure of cash flow information:
Cash paid for interest	$	3,637				$	3,280
Cash paid for income taxes	$	13				$	116,448
Supplemental disclosure of non-cash transactions:
Purchases of property and equipment included in accounts payable	$	2,032				$	1,203

MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS
(in thousands)

Three months ended September 30, 2020	Infrastructure				Pressure Pumping				Sand				Drilling				All Other				Eliminations				Total
Revenue from external customers	$	44,009			$	15,738			$	6,031			$	1,193			$	3,563			$				$	70,534
Intersegment revenues					53								26				672				(751		)
Total revenue	44,009				15,791				6,031				1,219				4,235				(751		)		70,534
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	29,074				6,881				3,784				1,964				4,226								45,929
Intersegment cost of revenues	162				449				26								114				(751		)
Total cost of revenue	29,236				7,330				3,810				1,964				4,340				(751		)		45,929
Selling, general and administrative	7,377				1,744				1,033				382				1,644								12,180
Depreciation, depletion, amortization and accretion	7,589				7,196				2,693				2,323				3,331								23,132
Operating loss	(193		)		(479		)		(1,505		)		(3,450		)		(5,080		)						(10,707		)
Interest expense, net	628				269				54				60				87								1,098
Other (income) expense, net	(9,204		)		(1,156		)		1,792				20				(494		)						(9,042		)
Income (loss) before income taxes	$	8,383			$	408			$	(3,351	)		$	(3,530	)		$	(4,673	)		$				$	(2,763	)

Three months ended September 30, 2019	Infrastructure				Pressure Pumping				Sand				Drilling				All Other				Eliminations				Total
Revenue from external customers	$	37,289			$	43,887			$	12,634			$	6,065			$	13,542			$				$	113,417
Intersegment revenues					725				5,727				58				417				(6,927		)
Total revenue	37,289				44,612				18,361				6,123				13,959				(6,927		)		113,417
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	36,940				33,059				18,547				7,203				15,385								111,134
Intersegment cost of revenues					6,054				326				185				362				(6,927		)
Total cost of revenue	36,940				39,113				18,873				7,388				15,747				(6,927		)		111,134
Selling, general and administrative	7,322				3,669				1,314				910				1,208								14,423
Depreciation, depletion, amortization and accretion	7,953				10,176				4,022				3,096				4,544								29,791
impairment of goodwill																	3,194								3,194
Impairment of other long-lived assets																	3,348								3,348
Operating loss	(14,926		)		(8,346		)		(5,848		)		(5,271		)		(14,082		)						(48,473		)
Interest expense, net	599				316				43				220				220								1,398
Other (income) expense, net	(6,239		)		(3		)		99				(100		)		(125		)						(6,368		)
Loss before income taxes	$	(9,286	)		$	(8,659	)		$	(5,990	)		$	(5,391	)		$	(14,177	)		$				$	(43,503	)

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 revenue25,395 9,077 6,053 2,048 7,231 (1,051) 48,753 Selling, general and administrative8,037 1,477 1,357 1,331 1,524 — 13,726 Depreciation, depletion, amortization and accretion7,816 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, net720 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)

Nine months ended September 30, 2020	Infrastructure				Pressure Pumping				Sand				Drilling				All Other				Eliminations				Total
Revenue from external customers	$	100,294			$	74,549			$	22,421			$	7,166			$	23,596			$	—			$	228,026
Intersegment revenues	—				1,435				95				107				2,026				(3,663		)		—
Total revenue	100,294				75,984				22,516				7,273				25,622				(3,663		)		228,026
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	81,389				41,833				20,465				9,627				23,274				—				176,588
Intersegment cost of revenues	197				1,410				355				151				1,550				(3,663		)		—
Total cost of revenue	81,586				43,243				20,820				9,778				24,824				(3,663		)		176,588
Selling, general and administrative	19,711				5,443				3,641				2,777				5,105				—				36,677
Depreciation, depletion, amortization and accretion	23,339				23,373				7,353				7,900				11,165				—				73,130
Impairment of goodwill	—				53,406				—				—				1,567				—				54,973
Impairment of other long-lived assets	—				4,203				—				326				8,368				—				12,897
Operating loss	(24,342		)		(53,684		)		(9,298		)		(13,508		)		(25,407		)		—				(126,239		)
Interest expense, net	2,105				907				167				473				555				—				4,207
Other (income) expense, net	(24,289		)		(2,444		)		1,753				(251		)		(490		)		—				(25,721		)
Loss before income taxes	$	(2,158	)		$	(52,147	)		$	(11,218	)		$	(13,730	)		$	(25,472	)		$	—			$	(104,725	)

Nine months ended September 30, 2019	Infrastructure				Pressure Pumping				Sand				Drilling				All Other				Eliminations				Total
Revenue from external customers	$	187,831			$	217,456			$	66,820			$	27,091			$	58,177			$	—			$	557,375
Intersegment revenues	—				3,936				29,795				484				1,870				(36,085		)		—
Total revenue	187,831				221,392				96,615				27,575				60,047				(36,085		)		557,375
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	140,768				157,106				81,475				29,030				59,841				—				468,220
Intersegment cost of revenues	1				31,388				2,513				686				1,557				(36,145		)		—
Total cost of revenue	140,769				188,494				83,988				29,716				61,398				(36,145		)		468,220
Selling, general and administrative	19,874				9,544				4,214				3,117				4,464				—				41,213
Depreciation, depletion, amortization and accretion	23,490				30,244				11,423				9,866				13,489				—				88,512
Impairment of goodwill	—				—				—				—				3,194				—				3,194
Impairment of other long-lived assets	—				—				—				—				3,348				—				3,348
Operating income (loss)	3,698				(6,890		)		(3,010		)		(15,124		)		(25,846		)		60				(47,112		)
Interest expense, net	1,024				965				145				679				659				—				3,472
Other (income) expense, net	(35,108		)		5				67				(122		)		214				—				(34,944		)
Income (loss) before income taxes	$	37,782			$	(7,860	)		$	(3,222	)		$	(15,681	)		$	(26,719	)		$	60			$	(15,640	)

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 goodwill, impairment of other long-lived assets, inventory obsolescence charges, 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 interest on trade accounts receivable) 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. 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															Nine Months Ended
	September 30,										June 30,					September 30,
Reconciliation of Adjusted EBITDA to net income (loss):	2020					2019					2020					2020					2019
Net income (loss)	$	3,430				$	(35,709	)			$	(15,205	)			$	(95,746	)			$	(18,265	)
Depreciation, depletion, amortization and accretion expense	23,132					29,791					24,116					73,130					88,512
Impairment of goodwill	—					3,194					—					54,973					3,194
Impairment of other long-lived assets	—					3,348					—					12,897					3,348
Inventory obsolescence charges	—					1,349					—					—					1,349
Acquisition related costs	—					—					—					—					45
Stock based compensation	353					1,134					196					1,598					3,367
Interest expense, net	1,098					1,398					1,471					4,207					3,472
Other income, net	(9,042		)			(6,368		)			(9,270		)			(25,721		)			(34,944		)
(Benefit) provision for income taxes	(6,193		)			(7,794		)			(3,482		)			(8,979		)			2,625
Interest on trade accounts receivable	9,285					5,896					9,071					26,052					34,865
Adjusted EBITDA	$	22,063				$	(3,761	)			$	6,897				$	42,411				$	87,568

Infrastructure Services

	Three Months Ended															Nine Months Ended
	September 30,										June 30,					September 30,
Reconciliation of Adjusted EBITDA to net income (loss):	2020					2019					2020					2020					2019
Net income (loss)	$	6,738				$	(10,763	)			$	(4,529	)			$	(7,242	)			$	31,113
Depreciation and amortization expense	7,589					7,953					7,816					23,339					23,490
Acquisition related costs	—					—					—					—					12
Stock based compensation	141					217					45					437					688
Interest expense	628					599					720					2,105					1,024
Other income, net	(9,204		)			(6,239		)			(7,809		)			(24,289		)			(35,108		)
Provision for income taxes	1,645					1,477					949					5,085					6,670
Interest on trade accounts receivable	8,170					5,896					7,929					23,796					34,865
Adjusted EBITDA	$	15,707				$	(860	)			$	5,121				$	23,231				$	62,754

Pressure Pumping Services

	Three Months Ended															Nine Months Ended
	September 30,										June 30,					September 30,
Reconciliation of Adjusted EBITDA to net income (loss):	2020					2019					2020					2020					2019
Net income (loss)	$	408				$	(8,659	)			$	(835	)			$	(52,149	)			$	(7,860	)
Depreciation and amortization expense	7,196					10,176					7,685					23,373					30,244
Impairment of goodwill	—					—					—					53,406					—
Impairment of other long-lived assets	—					—					—					4,203					—
Acquisition related costs	—					—					—					—					18
Stock based compensation	77					503					53					465					1,402
Interest expense	269					316					346					907					965
Other (income) expense, net	(1,156		)			(3		)			(1,179		)			(2,444		)			5
Interest on trade accounts receivable	1,073					—					1,133					2,205					—
Adjusted EBITDA	$	7,867				$	2,333				$	7,203				$	29,966				$	24,774

Natural Sand Proppant Services

	Three Months Ended															Nine Months Ended
	September 30,										June 30,					September 30,
Reconciliation of Adjusted EBITDA to net loss:	2020					2019					2020					2020					2019
Net loss	$	(3,351	)			$	(5,990	)			$	(3,572	)			$	(11,218	)			$	(3,222	)
Depreciation, depletion, amortization and accretion expense	2,693					4,022					2,348					7,353					11,423
Acquisition related costs	—					—					—					—					8
Stock based compensation	76					216					45					347					656
Interest expense	54					43					53					167					145
Other expense (income), net	1,792					99					(2		)			1,753					67
Interest on trade accounts receivable	26					—					—					26					—
Adjusted EBITDA	$	1,290				$	(1,610	)			$	(1,128	)			$	(1,572	)			$	9,077

Drilling Services

	Three Months Ended															Nine Months Ended
	September 30,										June 30,					September 30,
Reconciliation of Adjusted EBITDA to net loss:	2020					2019					2020					2020					2019
Net loss	$	(3,530	)			$	(5,391	)			$	(4,649	)			$	(13,730	)			$	(15,681	)
Depreciation expense	2,323					3,096					2,700					7,900					9,866
Impairment of other long-lived assets	—					—					—					326					—
Acquisition related costs	—					—					—					—					2
Stock based compensation	38					90					34					166					279
Interest expense	60					220					143					473					679
Other expense (income), net	20					(100		)			(298		)			(251		)			(122		)
Adjusted EBITDA	$	(1,089	)			$	(2,085	)			$	(2,070	)			$	(5,116	)			$	(4,977	)

Other Services^(a)

	Three Months Ended															Nine Months Ended
	September 30,										June 30,					September 30,
Reconciliation of Adjusted EBITDA to net income (loss):	2020					2019					2020					2020					2019
Net income (loss)	$	3,165				$	(4,905	)			$	(1,620	)			$	(11,407	)			$	(22,674	)
Depreciation, amortization and accretion expense	3,331					4,544					3,567					11,165					13,489
Impairment of goodwill	—					3,194					—					1,567					3,194
Impairment of other long-lived assets	—					3,348					—					8,368					3,348
Inventory obsolescence charges	—					1,349					—					—					1,349
Acquisition related costs	—					—					—					—					5
Stock based compensation	21					107					19					183					341
Interest expense, net	87					220					209					555					659
Other (income) expense, net	(494		)			(125		)			18					(490		)			214
Benefit for income taxes	(7,838		)			(9,272		)			(4,431		)			(14,064		)			(4,045		)
Interest on trade accounts receivable	16					—					9					25					—
Adjusted EBITDA	$	(1,712	)			$	(1,540	)			$	(2,229	)			$	(4,098	)			$	(4,120	)

1. 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 Income (Loss) and Adjusted Earnings (Loss) per Share

Adjusted net income (loss) and adjusted basic and diluted earnings (loss) 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 income (loss) and adjusted earnings (loss) per share should not be considered in isolation or as a substitute for net income (loss) and earnings (loss) 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 income (loss) and adjusted earnings (loss) per share to the GAAP financial measures of net income (loss) and earnings (loss) per share for the periods specified.

	Three Months Ended															Nine Months Ended
	September 30,										June 30,					September 30,
	2020					2019					2020					2020					2019
	(in thousands, except per share amounts)
Net income (loss), as reported	$	3,430				$	(35,709	)			$	(15,205	)			$	(95,746	)			$	(18,265	)
Impairment of goodwill	—					3,194					—					54,973					3,194
Impairment of other long-lived assets	—					3,348					—					12,897					3,348
Adjusted net income (loss)	$	3,430				$	(29,167	)			$	(15,205	)			$	(27,876	)			$	(11,723	)
Basic earnings (loss) per share, as reported	$	0.07				$	(0.79	)			$	(0.33	)			$	(2.10	)			$	(0.41	)
Impairment of goodwill	—					0.07					—					1.21					0.07
Impairment of other long-lived assets	—					0.07					—					0.28					0.07
Adjusted basic earnings (loss) per share	$	0.07				$	(0.65	)			$	(0.33	)			$	(0.61	)			$	(0.27	)
Diluted earnings (loss) per share, as reported	$	0.07				$	(0.79	)			$	(0.33	)			$	(2.10	)			$	(0.41	)
Impairment of goodwill	—					0.07					—					1.21					0.07
Impairment of other long-lived assets	—					0.07					—					0.28					0.07
Adjusted diluted earnings (loss) per share	$	0.07				$	(0.65	)			$	(0.33	)			$	(0.61	)			$	(0.27	)