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


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Source: Mammoth Energy Services, Inc.

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
[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 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


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