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Mammoth Energy Services, Inc. Announces Fourth Quarter and Full Year 2020 Operational and Financial Results


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These translations are done via Google Translate
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Source: Mammoth Energy Services, Inc.

OKLAHOMA CITY, Feb. 25, 2021 (GLOBE NEWSWIRE) — Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ: TUSK) today reported financial and operational results for the fourth quarter and full year ended December 31, 2020.

Financial Highlights for the Fourth Quarter and Full Year 2020:

Total revenue was $85.1 million for the three months ended December 31, 2020, up 21% from $70.5 million for the three months ended September 30, 2020 and up 26% from $67.6 million for the three months ended December 31, 2019. Total revenue was $313.1 million for the year ended December 31, 2020, down 50% from $625.0 million for the year ended December 31, 2019.

Net loss for the three months ended December 31, 2020 was $11.9 million, or $0.26 per fully diluted share, as compared to net income of $3.4 million, or $0.07 per fully diluted share, for the three months ended September 30, 2020 and a net loss of $60.8 million, or $1.35 per fully diluted share, for the three months ended December 31, 2019. Net loss for the year ended December 31, 2020 was $107.6 million, or $2.36 per fully diluted share, as compared to net loss of $79.0 million, or $1.76 per fully diluted share for the year ended December 31, 2019.

Adjusted EBITDA (as defined and reconciled below) was $7.5 million for the three months ended December 31, 2020, as compared to $22.1 million for the three months ended September 30, 2020 and ($10.3) million for the three months ended December 31, 2019. Adjusted EBITDA was $50.0 million for the year ended December 31, 2020, as compared to $77.3 million for the year ended December 31, 2019.

“The fourth quarter of 2020 clearly shows that Mammoth continues to execute on its transition to an industrial focused company, with approximately 66% of our revenues derived from the industrial sector during the quarter. Given the anticipated demand in the industrial sector, we are well positioned to continue to grow our industrial business rapidly over the coming years. We expect to be ready to ramp up our oilfield service offerings when oilfield demand, pricing and margins strengthen. The recent signing of an agreement by our engineering group allows for significant expansion and brings us one step closer to being a fully integrated Engineering, Procurement and Construction “EPC” company,” commented Arty Straehla, Chief Executive Officer of Mammoth.

Infrastructure Services

Mammoth’s infrastructure services division contributed revenue of $55.9 million, or approximately 66% of Mammoth’s total revenue, for the three months ended December 31, 2020, an increase of 28% from $43.6 million for the three months ended September 30, 2020 and an increase of 118% from $25.6 million for the three months ended December 31, 2019 reflecting a strong demand for our services.

The infrastructure segment contributed revenues of $155.2 million for the year ended December 31, 2020, down from $213.3 million for the year ended December 31, 2019.

Mammoth had approximately 115 crews operating in the continental United States throughout 2020.

Well Completion Services

Mammoth’s well completion services division contributed revenue (inclusive of inter-segment revenue) of $12.7 million on 291 stages for the three months ended December 31, 2020, a decrease of 20% from $15.8 million on 449 stages for the three months ended September 30, 2020 and a decrease of 49% from $24.9 million on 989 stages for the three months ended December 31, 2019. On average, 0.6 of the Company’s fleets were active for the three months ended December 31, 2020, compared to average utilization of 0.9 fleets during the three months ended September 30, 2020 and an average utilization of 1.7 fleets during the three months ended December 31, 2019.

The well completion division contributed revenues (inclusive of inter-segment revenues) of $88.3 million on 2,880 stages for the year ended December 31, 2020, down from $243.8 million on 5,378 stages for the year ended December 31, 2019. On average, 1.5 of the Company’s fleets were active for the year ended December 31, 2020 compared to 2.4 fleets for the year ended December 31, 2019.

Natural Sand Proppant Services

Mammoth’s natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $11.8 million for the three months ended December 31, 2020, an increase of 97% from $6.0 million for the three months ended September 30, 2020 and an increase of 307% from $2.9 million for the three months ended December 31, 2019. The Company sold approximately 100,000 tons of sand during the three months ended December 31, 2020, an increase of 47% from approximately 68,000 tons sold during the three months ended September 30, 2020 and an increase of 32% from approximately 76,000 tons sold during the three months ended December 31, 2019. The Company’s average sales price for the sand sold during the three months ended December 31, 2020 remained flat at $15.59 per ton, compared to the three months ended September 30, 2020 and decreased from the $19.95 per ton average sales price during the three months ended December 31, 2019.

The natural sand proppant division contributed revenues (inclusive of inter-segment revenues) of $34.4 million for the year ended December 31, 2020, as compared to $97.1 million for the year ended December 31, 2019. The Company sold 0.5 million tons of sand during the year ended December 31, 2020, a decline from 2.0 million tons of sand during the year ended December 31, 2019. The Company’s average sales price for the sand sold during the year ended December 31, 2020 was $14.58 per ton, a decline from $29.70 per ton average sales price during the year ended December 31, 2019.

Drilling Services

Mammoth’s drilling services division contributed revenue (inclusive of inter-segment revenue) of $0.6 million for the three months ended December 31, 2020, a decrease of 50% from $1.2 million for the three months ended September 30, 2020 and a decrease of 87% from $4.7 million for the three months ended December 31, 2019. The drilling services division contributed revenues of $7.8 million for the year ended December 31, 2020, as compared to $32.0 million for the year ended December 31, 2019.

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 aviation, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation, remote accommodations, equipment manufacturing and infrastructure engineering and design services, contributed revenue (inclusive of inter-segment revenue) of $4.7 million for the three months ended December 31, 2020, unchanged from the $4.7 million for the three months ended September 30, 2020 and a decrease of 54% from $10.3 million for the three months ended December 31, 2019.

The Company’s other services contributed revenues of $31.3 million for the year ended December 31, 2020, as compared to $88.6 million for the year ended December 31, 2019.

As a result of market conditions, the Company has temporarily shut down its cementing and acidizing operations as well as its flowback operations beginning in July 2019 and its coil tubing and full service transportation operations beginning in July 2020.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $30.5 million for the three months ended December 31, 2020, as compared to $12.2 million for the three months ended September 30, 2020 and $10.3 million for the three months ended December 31, 2019.

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

Three Months Ended Years Ended December 31,
December 31, September 30, December 31,
2020 2019 2020 2020 2019
Cash expenses:
Compensation and benefits $ 3,738 $ 3,203 $ 3,449 $ 14,876 $ 19,364
Professional services 4,570 4,301 5,651 19,905 17,128
Other(a) 2,256 2,010 2,163 8,828 10,300
Total cash SG&A expense 10,564 9,514 11,263 43,609 46,792
Non-cash expenses:
Bad debt provision 19,652 204 626 21,958 1,434
Stock based compensation 292 620 291 1,618 3,326
Total non-cash SG&A expense 19,944 824 917 23,576 4,760
Total SG&A expense $ 30,508 $ 10,338 $ 12,180 $ 67,185 $ 51,552

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 36% for the three months ended December 31, 2020, as compared to 17% for the three months ended September 30, 2020 and 15% for the three months ended December 31, 2019. SG&A expenses, as a percentage of total revenue, were 21% for the year ended December 31, 2020, as compared to 8% for the year ended December 31, 2019. The bad debt provision for the three months ended December 31, 2020, includes $19.4 million related to the voluntary petitions for relief filed on November 13, 2020, by Gulfport Energy Corporation and certain of its subsidiaries.

Liquidity

As of December 31, 2020, Mammoth had cash on hand of $14.8 million and outstanding borrowings under its revolving credit facility of $78.0 million. As of December 31, 2020, the Company had $38.7 million of available borrowing capacity under its revolving credit facility, after giving effect to $13.0 million of outstanding letters of credit. As of December 31, 2020, Mammoth had total liquidity of $53.5 million.

As of February 24, 2021, Mammoth had cash on hand of $21.4 million and outstanding borrowings under its revolving credit facility of $75.0 million. As of February 24, 2021, the Company had $41.7 million of available borrowing capacity under its revolving credit facility, after giving effect to $13.0 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 Years Ended December 31,
December 31, September 30, December 31,
2020 2019 2020 2020 2019
Infrastructure services(a) $ 37 $ $ 178 $ 258 $ 3,456
Well completion services(b) 606 398 698 4,358 14,703
Natural sand proppant services(c) 4 174 194 1,073 2,877
Drilling services(d) 234 84 131 432 3,156
Other(e) 7 215 324 716 11,569
Total capital expenditures $ 888 $ 871 $ 1,525 $ 6,837 $ 35,761

a.   Capital expenditures primarily for truck, tooling and other equipment for the periods presented.
b.   Capital expenditures primarily for well completion 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 with the SEC.

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.

As of December 31, 2020, the Company’s four reportable segments include infrastructure services (“Infrastructure”), well completion services (“Well Completion”), natural sand proppant services (“Sand”) and drilling services (“Drilling”). In 2019, the Company included Barracuda Logistics LLC, or Barracuda, in its Well Completion segment, Cobra Aviation Services LLC, or Cobra Aviation, Air Rescue Systems Corporation, or ARS, and Leopard Aviation LLC, or Leopard, in its Infrastructure segment and Mako Acquisitions LLC, or Mako, in its Drilling segment. Based on its assessment of FASB ASC 280, Segment Reporting, guidance at December 31, 2020, the Company changed its presentation in 2020 to move Barracuda to the Sand segment and Cobra Aviation, ARS, Leopard and Mako to the reconciling column titled “All Other”. Additionally, Mammoth changed the name of its pressure pumping segment to the well completion segment in 2020. The results for the year ended December 31, 2019 have been retroactively adjusted to reflect these changes.

Conference Call Information

Mammoth will host a conference call on Thursday, February 25, 2021 at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss its fourth quarter and full year 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 7435949. 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 construction and repair of the electric grid for private utilities, public investor-owned utilities and co-operative utilities through its energy infrastructure services and the exploration and development of North American onshore unconventional oil and natural gas reserves. Mammoth’s suite of services and products include: infrastructure services, well completion 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 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 well completion services segments; risks relating to economic conditions; the loss of or interruption in operations of one or more of Mammoth’s significant suppliers or customers; the outcome of Gulfport Energy Corporation’s chapter 11 bankruptcy filing and the treatment of Mammoth’s contracts and claims in such proceeding; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of capital resources and liquidity; weather; natural disasters; litigation; volatility in commodity markets; 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 December 31, December 31,
2020 2019
CURRENT ASSETS (in thousands)
Cash and cash equivalents $ 14,822 $ 5,872
Short-term investment 1,750
Accounts receivable, net 393,112 363,053
Receivables from related parties 28,461 7,523
Inventories 12,020 17,483
Prepaid expenses 13,825 12,354
Other current assets 758 695
Total current assets 464,748 406,980
Property, plant and equipment, net 251,262 352,772
Sand reserves 65,876 68,351
Operating lease right-of-use assets 20,179 43,446
Intangible assets, net – customer relationships 408 583
Intangible assets, net – trade names 4,366 5,205
Goodwill 12,608 67,581
Other non-current assets 5,115 7,467
Total assets $ 824,562 $ 952,385
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable $ 40,316 $ 39,220
Payables to related parties 3 526
Accrued expenses and other current liabilities 44,408 40,754
Current operating lease liability 8,618 16,432
Current portion of long-term debt 1,165
Income taxes payable 34,088 33,465
Total current liabilities 128,598 130,397
Long-term debt 81,338 80,000
Deferred income tax liabilities 24,741 36,873
Long-term operating lease liability 11,377 27,102
Asset retirement obligation 4,746 4,241
Other liabilities 10,435 5,031
Total liabilities 261,235 283,644
COMMITMENTS AND CONTINGENCIES
EQUITY
Equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 45,769,283 and 45,108,545 issued and outstanding at December 31, 2020 and 2019 458 451
Additional paid in capital 537,039 535,094
Retained earnings 28,895 136,502
Accumulated other comprehensive loss (3,065 ) (3,306 )
Total equity 563,327 668,741
Total liabilities and equity $ 824,562 $ 952,385
MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Years Ended December 31,
December 31, September 30, December 31,
2020 2019 2020 2020 2019
(in thousands, except per share amounts)
REVENUE
Services revenue $ 65,079 $ 57,950 $ 55,279 $ 234,081 $ 452,594
Services revenue – related parties 7,862 6,714 8,565 43,091 102,624
Product revenue 10,234 1,724 4,815 28,404 42,105
Product revenue – related parties 1,875 1,249 1,875 7,500 27,689
Total revenue 85,050 67,637 70,534 313,076 625,012
COST AND EXPENSES
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $19,780, $25,872, $26,416, $85,481 and $102,901, respectively, for the three months ended December 31, 2020, December 31, 2019 and September 30, 2020 and years ended December 31, 2020 and 2019) 51,260 68,599 41,445 205,657 451,206
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 December 31, 2020, December 31, 2019 and September 30, 2020 and years ended December 31, 2020 and 2019) 90 633 131 418 4,770
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,387, $2,625, $2,697, $9,758 and $14,039, respectively, for the three months ended December 31, 2020, December 31, 2019 and September 30, 2020 and years ended December 31, 2020 and 2019) 4,083 6,337 4,353 25,946 87,812
Selling, general and administrative 30,364 9,978 11,979 66,427 49,705
Selling, general and administrative – related parties 144 360 201 758 1,847
Depreciation, depletion, amortization and accretion 22,187 28,521 23,132 95,317 117,033
Impairment of goodwill 30,470 54,973 33,664
Impairment of other long-lived assets 4,010 12,897 7,358
Total cost and expenses 108,128 148,908 81,241 462,393 753,395
Operating loss (23,078 ) (81,271 ) (10,707 ) (149,317 ) (128,383 )
OTHER INCOME (EXPENSE)
Interest expense, net (1,191 ) (1,486 ) (1,098 ) (5,397 ) (4,958 )
Other, net 9,559 7,272 7,943 33,048 42,216
Other, net – related parties (341 ) 1,099 1,890
Total other income 8,027 5,786 7,944 29,541 37,258
Loss before income taxes (15,051 ) (75,485 ) (2,763 ) (119,776 ) (91,125 )
Benefit for income taxes (3,190 ) (14,706 ) (6,193 ) (12,169 ) (12,081 )
Net (loss) income $ (11,861 ) $ (60,779 ) $ 3,430 $ (107,607 ) $ (79,044 )
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net of tax of ($170), $69, ($95), ($54) and ($203), respectively, for the three months ended December 31, 2020, December 31, 2019 and September 30, 2020 and years ended December 31, 2020 and 2019 663 (213 ) 324 241 775
Comprehensive (loss) income $ (11,198 ) $ (60,992 ) $ 3,754 $ (107,366 ) $ (78,269 )
Net (loss) income per share (basic) $ (0.26 ) $ (1.35 ) $ 0.07 $ (2.36 ) $ (1.76 )
Net (loss) income per share (diluted) $ (0.26 ) $ (1.35 ) $ 0.07 $ (2.36 ) $ (1.76 )
Weighted average number of shares outstanding (basic) 45,769 45,092 45,764 45,644 45,011
Weighted average number of shares outstanding (diluted) 45,769 45,092 46,571 45,644 45,011
Dividends declared per share $ $ $ $ $ 0.25
MAMMOTH ENERGY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
December 31,
2020 2019
(in thousands)
Cash flows from operating activities:
Net loss $ (107,607 ) $ (79,044 )
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Stock based compensation 1,952 4,177
Depreciation, depletion, accretion and amortization 95,317 117,033
Amortization of coil tubing strings 359 1,641
Amortization of debt origination costs 831 326
Bad debt expense 21,958 1,434
(Gain) loss on disposal of property and equipment (1,379 ) 55
Impairment of goodwill 54,973 33,664
Impairment of other long-lived assets 12,897 7,358
Inventory obsolescence 1,349
Deferred income taxes (12,186 ) (42,639 )
Other (143 ) (986 )
Changes in assets and liabilities:
Accounts receivable, net (32,621 ) (27,006 )
Receivables from related parties (40,333 ) 3,641
Inventories 5,103 830
Prepaid expenses and other assets 1,996 (1,040 )
Accounts payable 2,526 (25,968 )
Payables to related parties (522 ) 156
Accrued expenses and other liabilities 3,198 (18,800 )
Income taxes payable 648 (71,499 )
Net cash provided by (used in) operating activities 6,967 (95,318 )
Cash flows from investing activities:
Purchases of property and equipment (6,761 ) (35,417 )
Purchases of property and equipment from related parties (76 ) (344 )
Contributions to equity investee (490 ) (680 )
Proceeds from disposal of property and equipment 6,782 3,217
Purchase of short-term investment (1,750 )
Net cash used in investing activities (2,295 ) (33,224 )
Cash flows from financing activities:
Borrowings from lines of credit 35,351 156,000
Repayments of lines of credit (32,800 ) (76,000 )
Proceeds from sale leaseback transaction 5,000
Payments on sale leaseback transaction (268 )
Dividends paid (11,219 )
Principal payments on financing leases and equipment financing notes (1,966 ) (2,079 )
Debt issuance costs (1,051 )
Net cash provided by financing activities 4,266 66,702
Effect of foreign exchange rate on cash 12 87
Net change in cash and cash equivalents 8,950 (61,753 )
Cash and cash equivalents at beginning of period 5,872 67,625
Cash and cash equivalents at end of period $ 14,822 $ 5,872
Supplemental disclosure of cash flow information:
Cash paid for interest $ 4,729 $ 4,741
Cash (recovered) paid for income taxes $ (617 ) $ 110,848
Supplemental disclosure of non-cash transactions:
Purchases of property and equipment included in accounts payable $ 1,312 $ 2,303
Right-of-use assets obtained for financing lease liabilities $ 2,431 $ 3,721
MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS
(in thousands)
Three months ended December 31, 2020 Infrastructure Well Completion Sand Drilling All Other Eliminations Total
Revenue from external customers $ 55,934 $ 12,653 $ 11,843 $ 580 $ 4,040 $ $ 85,050
Intersegment revenues 44 23 670 (737 )
Total revenue 55,934 12,697 11,843 603 4,710 (737 ) 85,050
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 41,265 5,194 4,110 1,165 3,699 55,433
Intersegment cost of revenues 127 426 184 (737 )
Total cost of revenue 41,392 5,620 4,110 1,165 3,883 (737 ) 55,433
Selling, general and administrative 7,057 17,691 4,070 373 1,317 30,508
Depreciation, depletion, amortization and accretion 6,957 7,066 2,390 2,224 3,550 22,187
Operating income (loss) 528 (17,680 ) 1,273 (3,159 ) (4,040 ) (23,078 )
Interest expense, net 685 273 95 5 133 1,191
Other (income) expense, net (8,355 ) 170 86 23 (1,142 ) (9,218 )
Income (loss) before income taxes $ 8,198 $ (18,123 ) $ 1,092 $ (3,187 ) $ (3,031 ) $ $ (15,051 )
Three months ended December 31, 2019 Infrastructure Well Completion Sand Drilling All Other Eliminations Total
Revenue from external customers $ 25,601 $ 24,515 $ 2,946 $ 4,637 $ 9,938 $ $ 67,637
Intersegment revenues 414 14 407 (835 )
Total revenue 25,601 24,929 2,946 4,651 10,345 (835 ) 67,637
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 29,925 20,354 6,162 6,927 12,201 75,569
Intersegment cost of revenues 339 206 290 (835 )
Total cost of revenue 29,925 20,693 6,162 7,133 12,491 (835 ) 75,569
Selling, general and administrative 5,097 1,428 792 1,063 1,958 10,338
Depreciation, depletion, amortization and accretion 7,662 9,985 2,628 3,361 4,885 28,521
Impairment of goodwill 23,423 2,684 4,363 30,470
Impairment of other long-lived assets 2,955 1,055 4,010
Operating loss (17,083 ) (30,600 ) (9,320 ) (9,861 ) (14,407 ) (81,271 )
Interest expense, net 660 304 48 217 257 1,486
Other (income) expense, net (7,236 ) 574 14 (624 ) (7,272 )
Loss before income taxes $ (10,507 ) $ (31,478 ) $ (9,368 ) $ (10,092 ) $ (14,040 ) $ $ (75,485 )
Three months ended September 30, 2020 Infrastructure Well Completion Sand Drilling All Other Eliminations Total
Revenue from external customers $ 43,582 $ 15,738 $ 6,031 $ 1,193 $ 3,990 $ $ 70,534
Intersegment revenues 27 11 687 (725 )
Total revenue 43,582 15,765 6,031 1,204 4,677 (725 ) 70,534
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 28,883 6,510 4,154 1,955 4,427 45,929
Intersegment cost of revenues 162 449 114 (725 )
Total cost of revenue 29,045 6,959 4,154 1,955 4,541 (725 ) 45,929
Selling, general and administrative 7,227 1,721 1,056 382 1,794 12,180
Depreciation, depletion, amortization and accretion 7,294 7,189 2,700 2,294 3,655 23,132
Operating income (loss) 16 (104 ) (1,879 ) (3,427 ) (5,313 ) (10,707 )
Interest expense, net 623 253 70 60 92 1,098
Other (income) expense, net (8,375 ) (1,156 ) 1,792 20 (1,323 ) (9,042 )
Income (loss) before income taxes $ 7,768 $ 799 $ (3,741 ) $ (3,507 ) $ (4,082 ) $ $ (2,763 )
Year ended December 31, 2020 Infrastructure Well Completion Sand Drilling All Other Eliminations Total
Revenue from external customers $ 155,241 $ 87,201 $ 34,265 $ 7,746 $ 28,623 $ $ 313,076
Intersegment revenues 1,124 95 39 2,716 (3,974 )
Total revenue 155,241 88,325 34,360 7,785 31,339 (3,974 ) 313,076
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 122,046 45,647 25,955 10,757 27,616 232,021
Intersegment cost of revenues 323 1,836 152 1,663 (3,974 )
Total cost of revenue 122,369 47,483 25,955 10,909 29,279 (3,974 ) 232,021
Selling, general and administrative 26,058 23,039 7,807 3,149 7,132 67,185
Depreciation, depletion, amortization and accretion 29,373 30,411 9,771 10,039 15,723 95,317
Impairment of goodwill 53,406 1,567 54,973
Impairment of other long-lived assets 4,203 326 8,368 12,897
Operating loss (22,559 ) (70,217 ) (9,173 ) (16,638 ) (30,730 ) (149,317 )
Interest expense, net 2,775 1,130 312 454 726 5,397
Other (income) expense, net (32,437 ) (2,274 ) 1,839 (227 ) (1,839 ) (34,938 )
Income (loss) before income taxes $ 7,103 $ (69,073 ) $ (11,324 ) $ (16,865 ) $ (29,617 ) $ $ (119,776 )
Year ended December 31, 2019 Infrastructure Well Completion Sand Drilling All Other Eliminations Total
Revenue from external customers $ 210,691 $ 241,951 $ 67,267 $ 31,728 $ 73,375 $ $ 625,012
Intersegment revenues 2,573 1,851 29,796 236 15,232 (49,688 )
Total revenue 213,264 243,802 97,063 31,964 88,607 (49,688 ) 625,012
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 160,449 174,816 87,637 35,925 84,961 543,788
Intersegment cost of revenues 12,820 31,727 15 1,028 4,158 (49,748 )
Total cost of revenue 173,269 206,543 87,652 36,953 89,119 (49,748 ) 543,788
Selling, general and administrative 23,235 10,889 5,006 4,177 8,245 51,552
Depreciation, depletion, amortization and accretion 30,349 40,159 14,050 13,143 19,332 117,033
Impairment of goodwill 23,423 2,684 7,557 33,664
Impairment of other long-lived assets 2,955 4,403 7,358
Operating loss (13,589 ) (37,212 ) (12,329 ) (25,264 ) (40,049 ) 60 (128,383 )
Interest expense, net 1,674 1,228 193 862 1,001 4,958
Other (income) expense, net (41,949 ) 580 67 (9 ) (905 ) (42,216 )
Income (loss) before income taxes $ 26,686 $ (39,020 ) $ (12,589 ) $ (26,117 ) $ (40,145 ) $ 60 $ (91,125 )

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 Years Ended December 31,
December 31, September 30, December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2020 2019 2020 2020 2019
Net (loss) income $ (11,861 ) $ (60,779 ) $ 3,430 $ (107,607 ) $ (79,044 )
Depreciation, depletion, amortization and accretion expense 22,187 28,521 23,132 95,317 117,033
Impairment of goodwill 30,470 54,973 33,664
Impairment of other long-lived assets 4,010 12,897 7,358
Inventory obsolescence charges 1,349
Acquisition related costs 45
Stock based compensation 354 811 353 1,952 4,177
Interest expense, net 1,191 1,486 1,098 5,397 4,958
Other income, net (9,218 ) (7,272 ) (9,042 ) (34,938 ) (42,216 )
Benefit for income taxes (3,190 ) (14,706 ) (6,193 ) (12,169 ) (12,081 )
Interest on trade accounts receivable 8,077 7,174 9,285 34,130 42,040
Adjusted EBITDA $ 7,540 $ (10,285 ) $ 22,063 $ 49,952 $ 77,283

Infrastructure Services

Three Months Ended Years Ended December 31,
December 31, September 30, December 31,
Reconciliation of Adjusted EBITDA to net income (loss): 2020 2019 2020 2020 2019
Net income (loss) $ 6,150 $ (13,161 ) $ 6,122 $ (30 ) $ 18,778
Depreciation and amortization expense 6,957 7,662 7,294 29,373 30,349
Acquisition related costs 12
Stock based compensation 156 175 139 580 822
Interest expense 685 660 623 2,775 1,674
Other income, net (8,355 ) (7,236 ) (8,375 ) (32,437 ) (41,949 )
Provision for income taxes 2,048 2,654 1,646 7,133 7,908
Interest on trade accounts receivable 8,418 7,174 8,170 32,214 42,040
Adjusted EBITDA $ 16,059 $ (2,072 ) $ 15,619 $ 39,608 $ 59,634

Well Completion Services

Three Months Ended Years Ended December 31,
December 31, September 30, December 31,
Reconciliation of Adjusted EBITDA to net (loss) income: 2020 2019 2020 2020 2019
Net (loss) income $ (18,123 ) $ (31,478 ) $ 799 $ (69,073 ) $ (39,020 )
Depreciation and amortization expense 7,066 9,985 7,189 30,411 40,159
Impairment of goodwill 23,423 53,406 23,423
Impairment of other long-lived assets 4,203
Acquisition related costs 18
Stock based compensation 70 296 76 527 1,693
Interest expense 273 304 253 1,130 1,228
Other expense (income), net 170 574 (1,156 ) (2,274 ) 580
Interest on trade accounts receivable (318 ) 1,073 1,888
Adjusted EBITDA $ (10,862 ) $ 3,104 $ 8,234 $ 20,218 $ 28,081

Natural Sand Proppant Services

Three Months Ended Years Ended December 31,
December 31, September 30, December 31,
Reconciliation of Adjusted EBITDA to net income (loss): 2020 2019 2020 2020 2019
Net income (loss) $ 1,092 $ (9,368 ) $ (3,741 ) $ (11,324 ) $ (12,589 )
Depreciation, depletion, amortization and accretion expense 2,390 2,628 2,700 9,771 14,050
Impairment of goodwill 2,684 2,684
Acquisition related costs 8
Stock based compensation 70 156 77 425 812
Interest expense 95 48 70 312 193
Other expense, net 86 1,792 1,839 67
Interest on trade accounts receivable (23 ) 26 3
Adjusted EBITDA $ 3,710 $ (3,852 ) $ 924 $ 1,026 $ 5,225

Drilling Services

Three Months Ended Years Ended December 31,
December 31, September 30, December 31,
Reconciliation of Adjusted EBITDA to net loss: 2020 2019 2020 2020 2019
Net loss $ (3,187 ) $ (10,092 ) $ (3,507 ) $ (16,865 ) $ (26,117 )
Depreciation expense 2,224 3,361 2,294 10,039 13,143
Impairment of other long-lived assets 2,955 326 2,955
Acquisition related costs 2
Stock based compensation 36 82 38 203 361
Interest expense 5 217 60 454 862
Other expense (income), net 23 14 20 (227 ) (9 )
Adjusted EBITDA $ (899 ) $ (3,463 ) $ (1,095 ) $ (6,070 ) $ (8,803 )

Other Services(a)

Three Months Ended Years Ended December 31,
December 31, September 30, December 31,
Reconciliation of Adjusted EBITDA to net income (loss): 2020 2019 2020 2020 2019
Net income (loss) $ 2,207 $ 3,320 $ 3,757 $ (10,315 ) $ (20,156 )
Depreciation, amortization and accretion expense 3,550 4,885 3,655 15,723 19,332
Impairment of goodwill 4,363 1,567 7,557
Impairment of other long-lived assets 1,055 8,368 4,403
Inventory obsolescence charges 1,349
Acquisition related costs 5
Stock based compensation 22 102 23 217 489
Interest expense, net 133 257 92 726 1,001
Other income, net (1,142 ) (624 ) (1,323 ) (1,839 ) (905 )
Benefit for income taxes (5,238 ) (17,360 ) (7,839 ) (19,302 ) (19,989 )
Interest on trade accounts receivable 16 25
Adjusted EBITDA $ (468 ) $ (4,002 ) $ (1,619 ) $ (4,830 ) $ (6,914 )
a. Includes results for Mammoth’s aviation, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation and remote accommodations, 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 Years Ended December 31,
December 31, September 30, December 31,
2020 2019 2020 2020 2019
(in thousands, except per share amounts)
Net (loss) income, as reported $ (11,861 ) $ (60,779 ) $ 3,430 $ (107,607 ) $ (79,044 )
Impairment of goodwill 30,470 54,973 33,664
Impairment of other long-lived assets 4,010 12,897 7,358
Adjusted net (loss) income $ (11,861 ) $ (26,299 ) $ 3,430 $ (39,737 ) $ (38,022 )
Basic (loss) earnings per share, as reported $ (0.26 ) $ (1.35 ) $ 0.07 $ (2.36 ) $ (1.76 )
Impairment of goodwill 0.68 1.20 0.75
Impairment of other long-lived assets 0.09 0.28 0.16
Adjusted basic (loss) earnings per share $ (0.26 ) $ (0.58 ) $ 0.07 $ (0.88 ) $ (0.85 )
Diluted (loss) earnings per share, as reported $ (0.26 ) $ (1.35 ) $ 0.07 $ (2.36 ) $ (1.76 )
Impairment of goodwill 0.68 1.20 0.75
Impairment of other long-lived assets 0.09 0.28 0.16
Adjusted diluted (loss) earnings per share $ (0.26 ) $ (0.58 ) $ 0.07 $ (0.88 ) $ (0.85 )

 



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