Q3 2023 Mammoth Energy Services Inc Earnings Call
Participants
Arty Straehla; CEO & Director; Mammoth Energy Services, Inc.
Mark Layton; CFO & Company Secretary; Mammoth Energy Services, Inc.
Carter W. Dunlap; President; Dunlap Equity Management, LLC.
Michael Mathison
Rick Black; EVP; Dennard Lascar Associates, LLC
Presentation
Operator
Greetings, and welcome to the Mammoth Energy Services Third Quarter Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black, Investor Relations. Thank you. Please go ahead.
Rick Black
Thank you, operator, and good morning, everyone. We appreciate you joining us for the Mammoth Energy conference call to review 2023 third quarter results. This call is also being webcast and can be accessed through the audio link on the Events and Presentations page of the Investor Relations section of mammothenergy.com. Information reported on this call speaks only as of today, November 9, 2023.
Please be advised that any time-sensitive information may no longer be accurate as of any subsequent date. I would also like to remind you that statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial performance, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
We will be making forward-looking statements as part of today's call that, by their nature, are uncertain and outside of the company's control. Actual results may differ materially. Please refer to the earnings press release that was issued today for our disclosure on forward-looking statements.
These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission.
Management may also refer to non-GAAP measures, including adjusted EBITDA. The definition of this non-GAAP measure and its reconciliations to the most comparable GAAP measures can be found at the end of the earnings press release and in our investor presentation, which can be found on the company's website. Mammoth Energy assumes no obligation to publicly update or revise any forward-looking statements.
And now I would like to turn the call over to Mammoth Energy's CEO, and Arty Straehla. Arty?
Arty Straehla
Thank you, Rick, and good morning, everyone. I'll start with some overview comments about our business in the quarter, including our successful refinancing with a new revolving credit facility and term loan agreement that we announced last month. I'll conclude with the update related to PREPA and then hand the call over to Mark to cover the financials in more detail.
On October 16, we entered into a new revolving credit facility agreement and a new term loan agreement, which refinanced in full the company's indebtedness outstanding under our previous revolving credit facility. We now have a new 5-year revolving credit facility with Fifth Third Bank that provides for revolving commitments of up to $75 million, subject to a monthly borrowing base calculation, and a new 5-year term loan agreement with Wexford Capital, an affiliate of Mammoth, that provides for term commitments of $45 million. We are pleased to have these agreements in place that position the company with a strong base of liquidity for years to come.
Turning now to the third quarter. As expected, the challenges associated with the lower U.S. onshore activity and sustained weakness in natural gas basins persisted from the second quarter and resulted in continued utilization pressures in our well completion services division. Mammoth activity levels during the quarter tracked roughly in line with the decline in rig count and lower customer demand for pressure pumping services. This sequential decline in our active fleet count was reflected in our revenue for the third quarter.
We remain extremely focused on managing costs and constraining capital expenditures. Despite the softness we've experienced this year, we are now seeing signs of increasing completion activity as we hold discussions and plan for 2024 with our customers. This is helping to improve our line of sight for the next few quarters, and we are encouraged by what we are seeing. We expect this trend to improve fleet counts in 2024.
In the sand business, pricing remained relatively stable, and our tonnage was up year-over-year, but down sequentially due to the lower pressure pumping activity. Our team is managing this business effectively, and we are building momentum that we believe will result in performance improvements in 2024.
In our infrastructure segment, we continue to expect improved funding for projects created from the Infrastructure Investment and Jobs Act as those dollars are expected to flow through into increased bidding activity in late 2023 and into 2024, especially in the fiber and substation business. We remain very encouraged about the potential for continued growth in this sector, and we feel strongly that Mammoth's infrastructure business is well positioned for long-term growth into 2024 and beyond.
As we have demonstrated throughout our history, we have a resilient and diversified business comprised of talented and hard-working teams that will continue to find solutions that optimize our operational efficiencies with a customer and safety-first focus. We believe our diverse portfolio and ability to adapt quickly to changing environments positions us well in these segments. Despite a tough quarter, we see many bright spots ahead across all of our business segments, and we expect to exit this year and enter 2024 better positioned for growth.
Turning now to an update regarding PREPA. During and subsequent to the end of the third quarter, we received $11.4 million from PREPA, bringing our total payments received since June to $22.2 million. On October 16, 2023, pursuant to the bankruptcy court's prior order, PREPA and Cobra submitted a joint status report. In the joint status report, PREPA informed the court that, among other things, it intended to process and submit to COR3 for reimbursement the remaining approximately $82 million in approved, but unpaid invoices.
While we were pleased to have received some payments from PREPA, they have still only paid a portion of what is owed and a fraction of what FEMA has made available to PREPA for the work performed by Cobra. Cobra's work has been affirmed by FEMA and numerous independent reviewers. However, as of today, we are still owed over $394 million by PREPA, and we will continue to pursue payment for that work we completed.
Now let me turn the call over to Mark and take you through our financial performance in greater detail.
Mark Layton
Thank you, Arty. I hope everyone is doing well, and we appreciate you joining us today. As I usually do, I'm going to take this time to provide additional details on some meaningful metrics and several key highlights. A detailed breakdown of our results can be found in our earnings release and in our third quarter 10-Q once it is on file with the SEC.
Mammoth's total revenue during the third quarter of 2023 came in at $65 million compared to $107.2 million during the same quarter last year. In Q3 of 2023, we pumped 577 stages, with approximately 1.2 fleets utilized on average compared to 1,897 stages and an average utilization of 3.5 fleets during the same quarter last year. The year-over-year decrease in revenue is primarily attributable to the softness in utilization that we're experiencing in the well completion services division. We alluded to the activity headwinds on our last call, and many of our peers, in particular, those operating in natural gas basins, have experienced similar challenges. We will remain disciplined stewards of capital, and as our actions to cut our capital expenditure forecast demonstrated, we will align our spending appropriately with the demand that we're seeing from our customers.
Our sand division sold approximately 352,000 tons of sand during the third quarter of 2023 compared to 341,000 tons of sand during the same quarter last year. The average price per sand sold during the third quarter of 2023 was approximately $30.18 per ton compared to $29.95 per ton during the same quarter last year.
Our infrastructure services division contributed revenue of $26.7 million for the third quarter of 2023 compared to $33.3 million for the same quarter last year. We continue to focus on operational execution and pursue opportunities within this sector as we strategically structure our service offerings for growth, especially in fiber projects.
Our net loss for the third quarter of 2023 was $1.1 million compared to net income of $7.7 million for the same quarter of last year. Adjusted EBITDA, as defined and reconciled in our earnings release, was $13.4 million for the third quarter of 2023, a decrease compared to the $29.8 million from the same quarter of 2022. CapEx for the third quarter of 2023 was approximately $4.7 million. We have continued to prudently manage our costs to more accurately reflect the activity levels of our customers, and as of today, we expect to operate within our reduced CapEx budget of $18 million for 2023.
Selling, general and administrative expenses totaled $10.4 million during the third quarter of 2023 compared to $9.7 million for the same quarter of last year. This increase is primarily the result of certain legal fees associated with the work we performed in Puerto Rico. We expect that we will begin to see a reduction in these Puerto Rico-related legal fees in the fourth quarter of this year.
As of September 30, 2023, we had cash on hand of $10.5 million and debt of approximately $69 million. Our total liquidity was approximately $21.5 million. As Arty mentioned, we successfully completed the refinancing of our credit facility last month. We are pleased with the outcome of this refinancing transaction and look forward to building a long-term relationship with Fifth Third. In addition, we appreciate Wexford and their ongoing commitment to the company. These facilities are expected to secure Mammoth's liquidity for the next 5 years.
To conclude our call, we would like to thank our 800 employees throughout the company for their hard work, dedication and commitment to maintaining safe and sustainable work sites for themselves and their teammates. Our employees are the company's most important asset. And while this has been a challenging year across our segments, primarily due to macroeconomic factors, we believe our talented and skilled teams will be the catalyst for our performance improvement heading into 2024 and beyond.
Operator, we would now like to open the call up for questions.
Question and Answer Session
Operator
(Operator Instructions) Today's first question is coming from Michael Mathison of Singular Research.
Michael Mathison
My question relates to the new loan agreements and congratulations on getting those done. Are you able to release any information about the formula for calculating the interest rate on the 2 loans?
Mark Layton
Absolutely. On the revolver, that's priced at SOFR plus 2.25%, and then separately, on the term loan, that's priced at SOFR plus 7.50%.
Operator
The next question is coming from Carter Dunlap of Dunlap Equity Management.
Carter W. Dunlap
Could you talk about your expectations of bringing back the crews that I assume got furloughed or severed altogether? And I recall when you were bringing back up your spreads, that was a bit of a challenge a year, 1.5 years ago. How do you think it's going to be this time?
Arty Straehla
We think that the ability to flex up when the time comes, we think with either former employees or other folks that are out there that we've proven in the past that we can do that and bring in experienced crews. We think that we will be ramping up somewhat in Q1, and we are already preparing for that and know where we will go to secure the people to -- the experienced people to fill those teams.
Operator
At this time, I'd like to turn the floor back over to Mr. Straehla for closing comments.
Arty Straehla
Thank you again for joining us on the call today. We maintain our belief that Mammoth is well positioned for growth and supported by experienced team members that are among the best in the business. This concludes our conference call, and we look forward to speaking to you all again next quarter. Thank you.
Operator
Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines and have a wonderful day.
