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


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Source: Mammoth Energy Services, Inc.

OKLAHOMA CITY, May 11, 2020 (GLOBE NEWSWIRE) — Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ: TUSK) today reported financial and operational results for the first quarter ended March 31, 2020.

Financial Highlights for the First Quarter 2020:

Total revenue was $97.4 million for the three months ended March 31, 2020, up from $67.6 million for the three months ended December 31, 2019 and down from $262.1 million for the three months ended March 31, 2019.

Net loss for the three months ended March 31, 2020 was $84.0 million, or $1.85 per fully diluted share, as compared to net loss of $60.8 million, or $1.35 per fully diluted share, for the three months ended December 31, 2019 and net income of $28.3 million, or $0.63 per fully diluted share, for the three months ended March 31, 2019.

Adjusted net loss (as defined and reconciled below) for the three months ended March 31, 2020 was $16.1 million, or $0.36 per fully diluted share, as compared to adjusted net loss of $26.3 million, or $0.58 per fully diluted share, for the three months ended December 31, 2019 and adjusted net income of $28.3 million, or $0.63 per fully diluted share, for the three months ended March 31, 2019.

Adjusted EBITDA (as defined and reconciled below) was $13.5 million for the three months ended March 31, 2020, as compared to a loss of $10.3 million for the three months ended December 31, 2019 and a positive $82.8 million for the three months ended March 31, 2019.

Arty Straehla, Mammoth’s Chief Executive Officer, stated, “The diversification strategy we implemented nearly three years ago is allowing us to focus on our infrastructure business. Infrastructure results are improving and we are encouraged by our new bidding opportunities. Working with our new infrastructure management team, we are cutting costs, streamlining operations and improving our operating margins. Conversely, our oilfield business remains under fundamental pressure from the volatility in oil prices. The unprecedented volatility in oil prices has been exacerbated by the outbreak of the COVID-19 pandemic, which has resulted in global oil demand destruction and economic decline. Our oilfield activity has been, and will likely continue to be, challenged by significantly reduced levels of capital expenditures by our customers. As a result, we have temporarily idled several of our oilfield services businesses and expect lower pricing and utilization in those that remain in operation.”

Infrastructure Services

Mammoth’s infrastructure services division contributed revenue of $25.7 million for the three months ended March 31, 2020, a decrease from $26.6 million for the three months ended December 31, 2019 and from $108.7 million for the three months ended March 31, 2019.

As of March 31, 2020, Mammoth had a total of approximately 130 transmission and distribution crews operating in the continental United States.

Pressure Pumping Services

Mammoth’s pressure pumping services division contributed revenue (inclusive of inter-segment revenue) of $43.6 million on 1,482 stages for the three months ended March 31, 2020, an increase from $25.0 million on 989 stages for the three months ended December 31, 2019 and a decrease from $92.1 million on 1,889 stages for the three months ended March 31, 2019. On average, 2.7 of the Company’s fleets were active for the three months ended March 31, 2020, compared to average utilization of 1.7 fleets during the three months ended December 31, 2019 and an average utilization of 4.4 fleets during the three months ended March 31, 2019.

The conversion of our pressure pumping fleets to dynamic gas blending capabilities is progressing, with nine units converted, all of which are operating today.

Natural Sand Proppant Services

Mammoth’s natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $10.2 million for the three months ended March 31, 2020, an increase from $3.0 million for the three months ended December 31, 2019 and a decrease from $37.9 million for the three months ended March 31, 2019. The Company sold approximately 239,000 tons of sand during the three months ended March 31, 2020, an increase from approximately 76,000 tons sold during the three months ended December 31, 2019 and a decrease from approximately 666,000 tons sold during the three months ended March 31, 2019. The Company’s average sales price for the sand sold during the three months ended March 31, 2020 was $13.67 per ton, a decrease from the $19.95 per ton average sales price during the three months ended December 31, 2019 and the $32.30 per ton average sales price during the three months ended March 31, 2019.

Drilling Services

Mammoth’s drilling services division contributed revenue (inclusive of inter-segment revenue) of $4.8 million for the three months ended March 31, 2020, a slight increase from $4.7 million for the three months ended December 31, 2019 and a decrease from $13.8 million for the three months ended March 31, 2019. The decline is primarily due to reduced utilization. As a result of market conditions, the Company temporarily shut down its contract land drilling operations beginning in December 2019.

Other Services

Mammoth’s other services, including coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation, remote accommodations, oilfield equipment manufacturing and infrastructure engineering and design services, contributed revenue (inclusive of inter-segment revenue) of $14.9 million for the three months ended March 31, 2020, an increase from $9.3 million for the three months ended December 31, 2019 and a decrease from $25.0 million for the three months ended March 31, 2019. An average of 490 pieces of equipment were rented to customers during the three months ended March 31, 2020, up 5% from an average of 467 pieces of equipment rented to customers during the three months ended December 31, 2019 and down 21% from an average of 621 pieces of equipment rented to customers for the three months ended March 31, 2019.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $10.8 million for the three months ended March 31, 2020, as compared to $10.3 million for the three months ended December 31, 2019 and $17.3 million for the three months ended March 31, 2019.

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

Three Months Ended
March 31, December 31,
2020 2019 2019
Cash expenses:
Compensation and benefits $ 3,969 $ 9,230 $ 3,203
Professional services 3,538 3,789 4,301
Other(a) 2,309 3,244 2,010
Total cash SG&A expense 9,816 16,263 9,514
Non-cash expenses:
Bad debt provision 55 4 204
Stock based compensation 900 1,069 620
Total non-cash SG&A expense 955 1,073 824
  Total SG&A expense $ 10,771 $ 17,336 $ 10,338

a.     Includes travel-related costs, information technology expenses, rent, utilities and other general and administrative-related costs.

SG&A expenses, as a percentage of total revenue, were 11% for the three months ended March 31, 2020, as compared to 15% for the three months ended December 31, 2019 and 7% for the three months ended March 31, 2019.

Impairment Expenses

As a result of the significant decline in oil prices as a result of geopolitical events coupled with effects of COVID-19, Mammoth recognized impairment of goodwill totaling $55.0 million during the three months ended March 31, 2020, primarily related to its pressure pumping services division. Additionally, the Company recognized impairment of other long-lived assets totaling $12.9 million, primarily related to water transfer, crude oil hauling, coil tubing and rental equipment during the three months ended March 31, 2020.

During the three months ended December 31, 2019, the Company recognized impairment of goodwill totaling $30.5 million, primarily related to its pressure pumping services division. Additionally, the Company recognized impairment of other long-lived assets totaling $4.0 million, primarily related to drilling rigs and related equipment during the three months ended December 31, 2019.

Liquidity

As of March 31, 2020, Mammoth had cash on hand of $13.2 million and outstanding borrowings under its revolving credit facility of $88.4 million. As of March 31, 2020, the Company had $19.4 million of available borrowing capacity under its revolving credit facility. This available borrowing capacity reflects (i) a minimum excess availability covenant of 10% of the maximum revolving advance amount and (ii) $9.0 million of outstanding letters of credit. As of March 31, 2020, Mammoth had total liquidity of $32.6 million.

As of May 6, 2020, Mammoth had cash on hand of $16.8 million and outstanding borrowings under its revolving credit facility of $94.0 million. As of May 6, 2020, the Company had $13.8 million of available borrowing capacity under its revolving credit facility. This available borrowing capacity reflects (i) a minimum excess availability covenant of 10% of the maximum revolving advance amount and (ii) $9.0 million of outstanding letters of credit.

Capital Expenditures

The following table summarizes Mammoth’s capital expenditures by operating division for the periods indicated (in thousands):

Three Months Ended
March 31, December 31,
2020 2019 2019
Infrastructure services(a) $ 77 $ 3,254 $ 90
Pressure pumping services(b) 604 7,329 398
Natural sand proppant services(c) 521 985 174
Drilling services(d) 8 2,267 84
Other(e) 290 6,438 125
Total capital expenditures $ 1,500 $ 20,273 $ 871

a.     Capital expenditures primarily for truck, tooling and other equipment for the periods presented.
b.     Capital expenditures primarily for pressure pumping and water transfer equipment for the periods presented.
c.     Capital expenditures primarily for maintenance for the periods presented.
d.     Capital expenditures primarily for upgrades to the Company’s rig fleet for the periods presented.
e.     Capital expenditures primarily for equipment for the Company’s rental businesses for the periods presented.

Explanatory Note Regarding Financial Information

The financial information contained in this release should be read in conjunction with the financial information contained in Mammoth’s Annual Reports filed on Form 10-K with the Securities and Exchange Commission (“SEC”), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings.

The Company’s Chief Executive Officer and Chief Financial Officer comprise the Company’s Chief Operating Decision Maker function (“CODM”). Segment information is prepared on the same basis that the CODM manages the segments, evaluates the segment financial statements and makes key operating and resource utilization decisions. Segment evaluation is determined on a quantitative basis based on a function of operating income (loss) as well as a qualitative basis, such as nature of the product and service offerings and types of customers.

Conference Call Information

Mammoth will host a conference call on Monday, May 11, 2020 at 3:00 p.m. CDT (4:00 p.m. EDT) to discuss its first quarter 2020 financial and operational results. The telephone number to access the conference call is 844-265-1561 in the U.S. and the international dial in is 216-562-0385. The conference ID for the call is 9880304. The conference call will also be webcast live on www.mammothenergy.com in the “Investors” section.

About Mammoth Energy Services, Inc.

Mammoth is an integrated, growth-oriented energy service company serving companies engaged in the exploration and development of North American onshore unconventional oil and natural gas reserves and government-funded utilities, private utilities, public investor-owned utilities and co-operative utilities through its energy infrastructure services. Mammoth’s suite of services and products include: pressure pumping services, infrastructure services, natural sand and proppant services, drilling services and other energy services.

For additional information about Mammoth, please visit its website at www.mammothenergy.com, where Mammoth routinely posts announcements, updates, events, investor information and presentations and recent news releases.

Investor Contact:
Don Crist
Director of Investor Relations
[email protected]
405-608-6048

Media Contact:
Peter Mirijanian
[email protected]
(202) 464-8803

Forward-Looking Statements and Cautionary Statements

This news release (and any oral statements made regarding the subjects of this release, including on the conference call announced herein) contains certain statements and information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts that address activities, events or developments that Mammoth expects, believes or anticipates will or may occur in the future are forward-looking statements. The words “anticipate,” “believe,” “ensure,” “expect,” “if,” “intend,” “plan,” “estimate,” “project,” “forecasts,” “predict,” “outlook,” “aim,” “will,” “could,” “should,” “potential,” “would,” “may,” “probable,” “likely” and similar expressions, and the negative thereof, are intended to identify forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include statements, estimates and projections regarding the Company’s business outlook and plans, future financial position, liquidity and capital resources, operations, performance, acquisitions, returns, capital expenditure budgets, costs and other guidance regarding future developments. Forward-looking statements are not assurances of future performance. These forward-looking statements are based on management’s current expectations and beliefs, forecasts for the Company’s existing operations, experience and perception of historical trends, current conditions, anticipated future developments and their effect on Mammoth, and other factors believed to be appropriate. Although management believes that the expectations and assumptions reflected in these forward-looking statements are reasonable as and when made, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all). Moreover, the Company’s forward-looking statements are subject to significant risks and uncertainties, including those described in its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings it makes with the SEC, including those relating to the Company’s acquisitions and contracts, many of which are beyond the Company’s control, which may cause actual results to differ materially from historical experience and present expectations or projections which are implied or expressed by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the severity and duration of the COVID-19 pandemic, related economic repercussions and the resulting negative impact on demand for oil and gas; the current significant surplus in the supply of oil and the ability of the OPEC+ countries to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently resulting from the impact of the foregoing factors, which is negatively impacting our business; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; the failure to receive or delays in receiving governmental authorizations, approvals and/or payments; the outcome of ongoing government investigations and other legal proceedings, including those relating to the contracts awarded to the Company’s subsidiary Cobra Acquisitions LLC by the Puerto Rico Electric Power Authority; the Company’s inability to replace the prior levels of work in its business segments, including its infrastructure and pressure pumping segments; risks relating to economic conditions; the loss of or interruption in operations of one or more key suppliers or customers; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of capital resources and liquidity; weather; natural disasters; global or national health concerns, including the outbreak of pandemic or contagious disease, such as the coronavirus; litigation; competition in the oil and natural gas and infrastructure industries; and costs and availability of resources.

Investors are cautioned not to place undue reliance on any forward-looking statement which speaks only as of the date on which such statement is made. We undertake no obligation to correct, revise or update any forward-looking statement after the date such statement is made, whether as a result of new information, future events or otherwise, except as required by applicable law.

ASSETS March 31, December 31,
2020 2019
CURRENT ASSETS (in thousands)
Cash and cash equivalents $ 13,180 $ 5,872
Accounts receivable, net 371,755 363,053
Receivables from related parties 17,790 7,523
Inventories 13,193 17,483
Prepaid expenses 8,250 12,354
Other current assets 866 695
Total current assets 425,034 406,980
Property, plant and equipment, net 316,068 352,772
Sand reserves 68,351 68,351
Operating lease right-of-use assets 38,838 43,446
Intangible assets, net – customer relationships 540 583
Intangible assets, net – trade names 4,996 5,205
Goodwill 12,608 67,581
Other non-current assets 7,576 7,467
Total assets $ 874,011 $ 952,385
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable $ 42,993 $ 39,220
Payables to related parties 82 526
Accrued expenses and other current liabilities 39,727 40,754
Current operating lease liability 15,484 16,432
Income taxes payable 28,699 33,465
Total current liabilities 126,985 130,397
Long-term debt 88,350 80,000
Deferred income tax liabilities 41,873 36,873
Long-term operating lease liability 23,236 27,102
Asset retirement obligation 4,586 4,241
Other liabilities 4,573 5,031
Total liabilities 289,603 283,644
COMMITMENTS AND CONTINGENCIES
EQUITY
Equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 45,713,563 and 45,108,545 issued and outstanding at March 31, 2020 and December 31, 2019 457 451
Additional paid in capital 536,140 535,094
Retained earnings 52,531 136,502
Accumulated other comprehensive loss (4,720 ) (3,306 )
Total equity 584,408 668,741
Total liabilities and equity $ 874,011 $ 952,385
Three Months Ended
March 31, December 31,
2020 2019 2019
(in thousands, except per share amounts)
REVENUE
Services revenue $ 68,845 $ 193,101 $ 57,950
Services revenue – related parties 18,013 44,073 6,714
Product revenue 8,650 12,309 1,724
Product revenue – related parties 1,875 12,655 1,249
Total revenue 97,383 262,138 67,637
COST AND EXPENSES
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $23,554, $25,682 and $25,872, respectively, for the three months ended March 31, 2020, March 31, 2019 and December 31, 2019) 70,697 158,106 68,599
Services cost of revenue – related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0 and $0, respectively, for the three months ended March 31, 2020, March 31, 2019 and December 31, 2019) 101 713 633
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,309, $2,871 and $2,626, respectively, for the three months ended March 31, 2020, March 31, 2019 and December 31, 2019) 11,108 30,251 6,337
Selling, general and administrative 10,556 16,902 9,978
Selling, general and administrative – related parties 215 434 360
Depreciation, depletion, amortization and accretion 25,882 28,576 28,521
Impairment of goodwill 54,973 30,470
Impairment of other long-lived assets 12,897 4,010
Total cost and expenses 186,429 234,982 148,908
Operating (loss) income (89,046 ) 27,156 (81,271 )
OTHER INCOME (EXPENSE)
Interest expense, net (1,638 ) (523 ) (1,486 )
Other, net 7,409 24,557 7,272
Total other income (expense) 5,771 24,034 5,786
(Loss) income before income taxes (83,275 ) 51,190 (75,485 )
Provision (benefit) for income taxes 696 22,857 (14,706 )
Net (loss) income $ (83,971 ) $ 28,333 $ (60,779 )
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustment, net of tax of $361, ($90) and $69, respectively, for the three months ended March 31, 2020, March 31, 2019 and December 31, 2019 (1,414 ) 356 282
Comprehensive (loss) income $ (85,385 ) $ 28,689 $ (60,497 )
Net (loss) income per share (basic) $ (1.85 ) $ 0.63 $ (1.35 )
Net (loss) income per share (diluted) $ (1.85 ) $ 0.63 $ (1.35 )
Weighted average number of shares outstanding (basic) 45,314 44,929 45,092
Weighted average number of shares outstanding (diluted) 45,314 45,063 45,092
Dividends declared per share $ 0.125 $
Three Months Ended
March 31,
2020 2019
(in thousands)
Cash flows from operating activities:
Net (loss) income $ (83,971 ) $ 28,333
Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities:
Stock based compensation 1,049 1,289
Depreciation, depletion, accretion and amortization 25,882 28,576
Amortization of coil tubing strings 237 535
Amortization of debt origination costs 452 82
Bad debt expense 55 4
(Gain) loss on disposal of property and equipment (673 ) 94
Impairment of goodwill 54,973
Impairment of other long-lived assets 12,897
Deferred income taxes 5,361 (15,476 )
Other 432 41
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net (8,569 ) (67,093 )
Receivables from related parties (10,267 ) (33,868 )
Inventories 4,053 1,854
Prepaid expenses and other assets 3,929 2,389
Accounts payable 2,078 (353 )
Payables to related parties (444 ) 239
Accrued expenses and other liabilities (1,220 ) (4,956 )
Income taxes payable (4,713 ) (44,684 )
Net cash provided by (used in) operating activities 1,541 (102,994 )
Cash flows from investing activities:
Purchases of property and equipment (1,424 ) (20,273 )
Purchases of property and equipment from related parties (76 )
Contributions to equity investee (480 )
Proceeds from disposal of property and equipment 558 1,500
Net cash used in investing activities (942 ) (19,253 )
Cash flows from financing activities:
Borrowings from lines of credit 17,300 82,000
Repayments of lines of credit (8,950 )
Dividends paid (5,610 )
Principal payments on financing leases and equipment financing notes (452 ) (457 )
Debt issuance costs (1,000 )
Net cash provided by financing activities 6,898 75,933
Effect of foreign exchange rate on cash (189 ) 32
Net change in cash and cash equivalents 7,308 (46,282 )
Cash and cash equivalents at beginning of period 5,872 67,625
Cash and cash equivalents at end of period $ 13,180 $ 21,343
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,285 $ 294
Cash paid for income taxes $ 62 $ 91,955
Supplemental disclosure of non-cash transactions:
Purchases of property and equipment included in accounts payable $ 4,347 $ 5,016
Three months ended March 31, 2020 Infrastructure Pressure Pumping Sand Drilling All Other Eliminations Total
Revenue from external customers $ 25,705 $ 42,686 $ 10,154 $ 4,723 $ 14,115 $ $ 97,383
Intersegment revenues 936 95 55 775 (1,861 )
Total revenue 25,705 43,622 10,249 4,778 14,890 (1,861 ) 97,383
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 26,946 26,208 10,657 5,635 12,460 81,906
Intersegment cost of revenues 8 627 302 130 794 (1,861 )
Total cost of revenue 26,954 26,835 10,959 5,765 13,254 (1,861 ) 81,906
Selling, general and administrative 4,297 2,222 1,251 1,063 1,938 10,771
Depreciation, depletion, amortization and accretion 7,934 8,492 2,312 2,877 4,267 25,882
Impairment of goodwill 53,406 1,567 54,973
Impairment of other long-lived assets 4,203 326 8,368 12,897
Operating loss (13,480 ) (51,536 ) (4,273 ) (5,253 ) (14,504 ) (89,046 )
Interest expense, net 757 293 61 268 259 1,638
Other (income) expense, net (7,276 ) (109 ) (37 ) 27 (14 ) (7,409 )
Loss before income taxes $ (6,961 ) $ (51,720 ) $ (4,297 ) $ (5,548 ) $ (14,749 ) $ $ (83,275 )
Three months ended March 31, 2019 Infrastructure Pressure Pumping Sand Drilling All Other Eliminations Total
Revenue from external customers $ 108,721 $ 90,595 $ 24,964 $ 13,576 $ 24,282 $ $ 262,138
Intersegment revenues 1,544 12,897 219 766 (15,426 )
Total revenue 108,721 92,139 37,861 13,795 25,048 (15,426 ) 262,138
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 58,965 64,211 30,252 12,652 22,990 189,070
Intersegment cost of revenues 13,537 1,047 272 552 (15,408 )
Total cost of revenue 58,965 77,748 31,299 12,924 23,542 (15,408 ) 189,070
Selling, general and administrative 9,517 3,213 1,519 1,363 1,724 17,336
Depreciation, depletion, amortization and accretion 7,719 9,893 2,873 3,578 4,513 28,576
Operating income (loss) 32,520 1,285 2,170 (4,070 ) (4,731 ) (18 ) 27,156
Interest expense, net 39 198 30 127 129 523
Other (income) expense, net (24,824 ) (1 ) (22 ) 290 (24,557 )
Income (loss) before income taxes $ 57,305 $ 1,088 $ 2,140 $ (4,175 ) $ (5,150 ) $ (18 ) $ 51,190
Three months ended December 31, 2019 Infrastructure Pressure Pumping Sand Drilling All Other Eliminations Total
Revenue from external customers $ 26,618 $ 24,515 $ 2,974 $ 4,637 $ 8,893 $ $ 67,637
Intersegment revenues 442 14 362 (818 )
Total revenue 26,618 24,957 2,974 4,651 9,255 (818 ) 67,637
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 30,988 20,891 6,162 6,934 10,594 75,569
Intersegment cost of revenues 339 28 160 291 (818 )
Total cost of revenue 30,988 21,230 6,190 7,094 10,885 (818 ) 75,569
Selling, general and administrative 5,516 1,449 792 1,042 1,539 10,338
Depreciation, depletion, amortization and accretion 7,961 9,996 2,627 3,389 4,548 28,521
Impairment of goodwill 434 23,423 2,684 3,929 30,470
Impairment of other long-lived assets 2,955 1,055 4,010
Operating loss (18,281 ) (31,141 ) (9,319 ) (9,829 ) (12,701 ) (81,271 )
Interest expense, net 665 318 48 227 228 1,486
Other (income) expense, net (7,679 ) 574 14 (181 ) (7,272 )
Loss before income taxes $ (11,267 ) $ (32,033 ) $ (9,367 ) $ (10,070 ) $ (12,748 ) $ $ (75,485 )

Adjusted EBITDA

Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of the Company’s financial statements, such as industry analysts, investors, lenders and rating agencies. Mammoth defines Adjusted EBITDA as net (loss) income before depreciation, depletion, amortization and accretion expense, impairment of goodwill, impairment of other long-lived assets, stock based compensation, interest expense, net, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets) and provision (benefit) for income taxes, further adjusted to add back interest on trade accounts receivable. The Company excludes the items listed above from net (loss) income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within the energy service industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net (loss) income or cash flows from operating activities as determined in accordance with GAAP or as an indicator of Mammoth’s operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets. Mammoth’s computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company believes that Adjusted EBITDA is a widely followed measure of operating performance and may also be used by investors to measure its ability to meet debt service requirements.

The following tables provide a reconciliation of Adjusted EBITDA to the GAAP financial measure of net (loss) income on a consolidated basis and for each of the Company’s segments (in thousands):

Consolidated

Three Months Ended
March 31, December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2020 2019 2019
Net (loss) income $ (83,971 ) $ 28,333 $ (60,779 )
Depreciation, depletion, amortization and accretion expense 25,882 28,576 28,521
Impairment of goodwill 54,973 30,470
Impairment of other long-lived assets 12,897 4,010
Stock based compensation 1,049 1,289 811
Interest expense, net 1,638 523 1,486
Other (income) expense, net (7,409 ) (24,557 ) (7,272 )
Provision (benefit) for income taxes 696 22,857 (14,706 )
Interest on trade accounts receivable 7,696 25,735 7,174
Adjusted EBITDA $ 13,451 $ 82,756 $ (10,285 )

Infrastructure Services

Three Months Ended
March 31, December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2020 2019 2019
Net (loss) income $ (9,452 ) $ 35,665 $ (14,005 )
Depreciation and amortization expense 7,934 7,719 7,961
Impairment of goodwill 434
Stock based compensation 251 462 183
Interest expense 757 39 665
Other (income) expense, net (7,276 ) (24,824 ) (7,679 )
Provision for income taxes 2,491 21,639 2,738
Interest on trade accounts receivable 7,696 25,735 7,174
Adjusted EBITDA $ 2,401 $ 66,435 $ (2,529 )

Pressure Pumping Services

Three Months Ended
March 31, December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2020 2019 2019
Net (loss) income $ (51,720 ) $ 1,088 $ (32,033 )
Depreciation and amortization expense 8,492 9,893 9,996
Impairment of goodwill 53,406 23,423
Impairment of other long-lived assets 4,203
Stock based compensation 335 410 297
Interest expense 293 198 318
Other (income) expense, net (109 ) (1 ) 574
Adjusted EBITDA $ 14,900 $ 11,588 $ 2,575

Natural Sand Proppant Services

Three Months Ended
March 31, December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2020 2019 2019
Net (loss) income $ (4,297 ) $ 2,140 $ (9,367 )
Depreciation, depletion, amortization and accretion expense 2,312 2,873 2,627
Impairment of goodwill 2,684
Stock based compensation 225 203 156
Interest expense 61 30 48
Other expense (income), net (37 )
Adjusted EBITDA $ (1,736 ) $ 5,246 $ (3,852 )

Drilling Services

Three Months Ended
March 31, December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2020 2019 2019
Net loss $ (5,548 ) $ (4,175 ) $ (10,070 )
Depreciation expense 2,877 3,578 3,389
Impairment of other long-lived assets 326 2,955
Stock based compensation 94 100 82
Interest expense 268 127 227
Other expense (income), net 27 (22 ) 14
Adjusted EBITDA $ (1,956 ) $ (392 ) $ (3,403 )

Other Services(a)

Three Months Ended
March 31, December 31,
Reconciliation of Adjusted EBITDA to net loss: 2020 2019 2019
Net (loss) income $ (12,954 ) $ (6,367 ) $ 4,695
Depreciation, amortization and accretion expense 4,267 4,513 4,548
Impairment of goodwill 1,567 3,929
Impairment of other long-lived assets 8,368 1,055
Stock based compensation 144 114 93
Interest expense, net 259 129 228
Other (income) expense, net (14 ) 290 (181 )
(Benefit) provision for income taxes (1,795 ) 1,217 (17,443 )
Adjusted EBITDA $ (158 ) $ (104 ) $ (3,076 )

a.     Includes results for Mammoth’s coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation and remote accommodations, oilfield equipment manufacturing and infrastructure engineering and design services and corporate related activities. The Company’s corporate related activities do not generate revenue.

Adjusted Net (Loss) Income and Adjusted (Loss) Earnings per Share

Adjusted net (loss) income and adjusted basic and diluted (loss) earnings per share are supplemental non-GAAP financial measures that are used by management to evaluate the Company’s operating and financial performance. Management believes these measures provide meaningful information about the Company’s performance by excluding certain non-cash charges, such as impairment of goodwill and impairment of other long-lived assets, that may not be indicative of the Company’s ongoing operating results. Adjusted net (loss) income and adjusted (loss) earnings per share should not be considered in isolation or as a substitute for net (loss) income and (loss) earnings per share prepared in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The following tables provide a reconciliation of adjusted net (loss) income and adjusted (loss) earnings per share to the GAAP financial measures of net (loss) income and (loss) earnings per share for the periods specified.

Three Months Ended
March 31, December 31,
2020 2019 2019
(in thousands, except per share amounts)
Net (loss) income, as reported $ (83,971 ) $ 28,333 $ (60,779 )
Impairment of goodwill 54,973 30,470
Impairment of other long-lived assets 12,897 4,010
Adjusted net (loss) income $ (16,101 ) $ 28,333 $ (26,299 )
Basic (loss) earnings per share, as reported $ (1.85 ) $ 0.63 $ (1.35 )
Impairment of goodwill 1.21 0.68
Impairment of other long-lived assets 0.28 0.09
Adjusted basic (loss) earnings per share $ (0.36 ) $ 0.63 $ (0.58 )
Diluted (loss) earnings per share, as reported $ (1.85 ) $ 0.63 $ (1.35 )
Impairment of goodwill 1.21 0.68
Impairment of other long-lived assets 0.28 0.09
Adjusted diluted (loss) earnings per share $ (0.36 ) $ 0.63 $ (0.58 )

 



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