Mammoth Energy Services, Inc. Announces Third Quarter 2021 Operational and Financial Results
OKLAHOMA CITY, Nov. 5, 2021 /PRNewswire/ -- Mammoth Energy Services, Inc. ("Mammoth" or the "Company") (NASDAQ: TUSK) today reported financial and operational results for the third quarter ended September 30, 2021.
Financial Overview for the Third Quarter 2021:
Total revenue was $57.5 million for the third quarter of 2021, as compared to $70.5 million for the same quarter last year and $47.4 million for the second quarter of 2021.
Net loss for the third quarter of 2021 was $40.9 million, or a $0.88 loss per share, as compared to net income of $3.4 million, or a $0.07 income per share, for the same quarter last year, and a net loss of $34.8 million, or a $0.75 loss per share, for the second quarter of 2021.
Adjusted EBITDA (as defined and reconciled below) was ($29.7) million for the third quarter of 2021, as compared to $22.1 million for the same quarter last year and ($5.5) million for the second quarter of 2021. During the third quarter of 2021, Mammoth recognized expense of $32.6 million related to its settlement with Gulfport Energy Corporation. Excluding this non-recurring expense, adjusted EBITDA was $2.9 million for the third quarter of 2021.
Arty Straehla, Chief Executive Officer of Mammoth commented, "We are pleased with the positive trajectory throughout our business segments during the third quarter compared to the second quarter, which led to higher revenue and an improved bottom line. We are also encouraged by the positive trends in our infrastructure business in the third quarter, including increased storm work relative to the second quarter, a new fiber maintenance and installation contract and increased bidding activity, as well as internal personnel changes that are gaining traction in this segment. Funding for projects in the infrastructure space remains strong with the added opportunity of a new federal infrastructure bill, which we are optimistic will be passed in the near future. While this is a sector impacted by near-term seasonality, we remain focused on improving results as we continue migrating the Company further into the infrastructure space to enhance long-term growth and sustainability.
"In our oilfield businesses, improved commodities pricing continues to contribute to positive industry movement and increased equipment utilization as we ramped up a second hydraulic fracturing fleet during the quarter. In our sand business, we continue to see increased market activity."
Straehla continued, "Lastly, as documented in several recent press releases, we are continuing to pursue numerous avenues in our efforts to collect our receivable from PREPA for work performed by our subsidiary Cobra Acquisitions LLC in Puerto Rico. We believe that published documentation to date continues to show that our team performed a difficult job in a difficult environment to save lives and aid the people of Puerto Rico in their time of need."
Infrastructure ServicesMammoth's infrastructure services division contributed revenue of $23.5 million, or approximately 41% of Mammoth's total revenue, for the third quarter of 2021, as compared to $43.6 million for the same quarter last year and $17.2 million for the second quarter of 2021. The decrease in revenue compared to the same quarter of 2020 is primarily due to a decline in storm activity, resulting in lower storm restoration revenue, as well as management and crew turnover.
Well Completion ServicesMammoth's well completion services division contributed revenue (inclusive of inter-segment revenue) of $22.7 million on 688 stages for the third quarter of 2021, as compared to $15.8 million on 449 stages for the same quarter last year and $17.4 million on 520 stages for the second quarter of 2021. On average, 1.2 of the Company's fleets were active for the third quarter, compared to an average utilization of 0.9 fleets during the same quarter last year and during the second quarter of 2021.
Natural Sand Proppant ServicesMammoth's natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $8.4 million for the third quarter of 2021, as compared to $6.0 million for the same quarter last year and $6.9 million for the second quarter of 2021. In the third quarter of 2021, the Company sold approximately 315,000 tons of sand at an average sales price of $16.58 per ton, as compared to sales of approximately 68,000 tons of sand at an average sales price of $15.59 per ton during the same quarter last year. In the second quarter of 2021, sales were approximately 255,000 tons of sand at an average price of $15.80 per ton.
Drilling ServicesMammoth's drilling services division contributed revenue (inclusive of inter-segment revenue) of $1.2 million for the third quarter of 2021, as compared to $1.2 million for the same quarter last year and $1.1 million for the second quarter of 2021.
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 ServicesMammoth's other services, including aviation, coil tubing, pressure control, 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 $6.2 million for the third quarter of 2021, as compared to $4.7 million for the same quarter last year and $5.5 million for the second quarter of 2021.
As a result of market conditions, the Company temporarily shut down its cementing and acidizing operations as well as its flowback operations beginning in July 2019, its coil tubing and full-service transportation operations beginning in July 2020 and its crude oil hauling operations beginning in July 2021.
Selling, General and Administrative Expenses Selling, general and administrative ("SG&A") expenses were $41.9 million for the third quarter of 2021, as compared to $12.2 million for the same quarter last year and $12.0 million for the second quarter of 2021.
Following is a breakout of SG&A expense (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
2021 | 2020 | 2021 | 2021 | 2020 | |||||||||||||||
Cash expenses: | |||||||||||||||||||
Compensation and benefits | $ | 3,353 | $ | 3,449 | $ | 3,333 | $ | 11,379 | $ | 11,138 | |||||||||
Professional services | 4,571 | 5,651 | 5,806 | 13,783 | 15,335 | ||||||||||||||
Other(a) | 2,252 | 2,163 | 2,464 | 7,058 | 6,572 | ||||||||||||||
Total cash SG&A expense | 10,176 | 11,263 | 11,603 | 32,220 | 33,045 | ||||||||||||||
Non-cash expenses: | |||||||||||||||||||
Bad debt provision(b) | 31,449 | 626 | 76 | 41,650 | 2,306 | ||||||||||||||
Stock based compensation | 241 | 291 | 304 | 827 | 1,326 | ||||||||||||||
Total non-cash SG&A expense | 31,690 | 917 | 380 | 42,477 | 3,632 | ||||||||||||||
Total SG&A expense | $ | 41,866 | $ | 12,180 | $ | 11,983 | $ | 74,697 | $ | 36,677 | |||||||||
a. | Includes travel-related costs, information technology expenses, rent, utilities and other general and administrative-related costs. |
b. | The bad debt provision for the three and nine months ended September 30, 2021, includes $31.2 million and $41.2 million, respectively, for settlement of our accounts with Gulfport Energy Corporation and its subsidiaries. |
SG&A expenses, as a percentage of total revenue, were 73% for the third quarter of 2021, as compared to 17% for the same quarter last year and 25% for the second quarter of 2021.
LiquidityAs of September 30, 2021, Mammoth had cash on hand of $8.0 million, outstanding borrowings under its revolving credit facility of $77.0 million and $43.2 million of available borrowing capacity under its revolving credit facility, after giving effect to $9.0 million of outstanding letters of credit. As of September 30, 2021, Mammoth had total liquidity of $51.2 million.
On November 3, 2021, Mammoth entered into a third amendment to its revolving credit facility, providing, among other things, for a limited waiver and suspension of the leverage ratio and fixed charges coverage ratio covenants for the quarters ending September 30, 2021 and December 31, 2021 and permanently reducing the maximum revolving advance amount under its revolving credit facility from $130 million to $120 million. As of November 3, 2021, Mammoth had cash on hand of $6.5 million, outstanding borrowings under its revolving credit facility of $76.1 million and $24.1 million of available borrowing capacity under its revolving credit facility, after giving effect to $9.0 million of outstanding letters of credit, the $10 million reduction in the borrowing base and the requirement to maintain a $10 million reserve out of the available borrowing capacity during the limited waiver period, which will end on May 15, 2022, but may terminate earlier upon the occurrence of certain events.
Capital ExpendituresThe following table summarizes Mammoth's capital expenditures by operating division for the periods indicated (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
2021 | 2020 | 2021 | 2021 | 2020 | |||||||||||||||
Infrastructure services(a) | $ | 181 | $ | 178 | $ | 104 | $ | 474 | $ | 221 | |||||||||
Well completion services(b) | 2,392 | 698 | 388 | 3,192 | 3,752 | ||||||||||||||
Natural sand proppant services(c) | 16 | 194 | 5 | 429 | 1,069 | ||||||||||||||
Drilling services(d) | 4 | 132 | 1 | 42 | 199 | ||||||||||||||
Other(e) | 172 | 323 | 63 | 337 | 708 | ||||||||||||||
Total capital expenditures | $ | 2,765 | $ | 1,525 | $ | 561 | $ | 4,474 | $ | 5,949 | |||||||||
a. | Capital expenditures primarily for tooling and other equipment for the periods presented. |
b. | Capital expenditures primarily for upgrades to our pressure pumping fleet to reduce greenhouse gas emissions and water transfer equipment for the periods presented. |
c. | Capital expenditures primarily for maintenance for the periods presented. |
d. | Capital expenditures primarily for maintenance for the periods presented. |
e. | Capital expenditures primarily for equipment for the Company's rental businesses for the periods presented. |
Conference Call InformationMammoth will host a conference call on Friday, November 5, 2021 at 8:00 a.m. Central time (9:00 a.m. Eastern time) to discuss its third quarter 2021 financial and operational results. The telephone number to access the conference call is 216-562-0385. The conference call will also be webcast live on https://ir.mammothenergy.com/events-presentations.
About Mammoth Energy Services, Inc.Mammoth is an integrated, growth-oriented energy services company focused on the construction and repair of the electric grid for private utilities, public investor-owned utilities and co-operative utilities through its infrastructure services businesses. The Company also provides products and services to enable 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 more information, please visit www.mammothenergy.com.
Contacts:Mark Layton, CFOMammoth Energy Services, Inc[email protected]
Rick Black / Ken DennardDennard Lascar Investor Relations[email protected]
Forward-Looking Statements and Cautionary StatementsThis 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 volatility of oil and natural gas prices and actions by OPEC members and other exporting nations affecting commodities prices and production levels; 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 well completion services segments; risks relating to economic conditions; whether a federal infrastructure bill is implemented and the terms thereof; the loss of or interruption in operations of one or more of Mammoth's significant suppliers or customers; the loss of management and/or crews; the outcome or settlement of our litigation matters, including the adverse impact of the recent settlements with Gulfport Energy Corporation and MasTec Renewables Puerto Rico, LLC, and the effect on our financial condition and results of operations ; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of capital resources and liquidity; Mammoth's ability to regain compliance with certain financial covenants and comply with other terms and conditions under our recently amended revolving credit facility; 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 | September 30, | December 31, | ||||||
2021 | 2020 | |||||||
CURRENT ASSETS | (in thousands) | |||||||
Cash and cash equivalents | $ | 7,953 | $ | 14,822 | ||||
Short-term investment | 1,760 | 1,750 | ||||||
Accounts receivable, net | 402,035 | 393,112 | ||||||
Receivables from related parties, net | 238 | 28,461 | ||||||
Inventories | 9,438 | 12,020 | ||||||
Prepaid expenses | 3,859 | 13,825 | ||||||
Other current assets | 754 | 758 | ||||||
Total current assets | 426,037 | 464,748 | ||||||
Property, plant and equipment, net | 194,478 | 251,262 | ||||||
Sand reserves | 64,806 | 65,876 | ||||||
Operating lease right-of-use assets | 14,766 | 20,179 | ||||||
Intangible assets, net - customer relationships | 277 | 408 | ||||||
Intangible assets, net - trade names | 3,194 | 4,366 | ||||||
Goodwill | 12,608 | 12,608 | ||||||
Deferred income tax asset | 8,094 | — | ||||||
Other non-current assets | 4,247 | 5,115 | ||||||
Total assets | $ | 728,507 | $ | 824,562 | ||||
LIABILITIES AND EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 43,628 | $ | 40,316 | ||||
Payables to related parties | 5 | 3 | ||||||
Accrued expenses and other current liabilities | 54,724 | 44,408 | ||||||
Current operating lease liability | 6,996 | 8,618 | ||||||
Current portion of long-term debt | 1,449 | 1,165 | ||||||
Income taxes payable | 39,283 | 34,088 | ||||||
Total current liabilities | 146,085 | 128,598 | ||||||
Long-term debt, net of current portion | 79,195 | 81,338 | ||||||
Deferred income tax liabilities | 687 | 24,741 | ||||||
Long-term operating lease liability | 7,591 | 11,377 | ||||||
Asset retirement obligation | 3,682 | 4,746 | ||||||
Other liabilities | 15,003 | 10,435 | ||||||
Total liabilities | 252,243 | 261,235 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
EQUITY | ||||||||
Equity: | ||||||||
Common stock, $0.01 par value, 200,000,000 shares authorized, 46,684,065 and 45,769,283 issued and outstanding at September 30, 2021 and December 31, 2020 | 467 | 458 | ||||||
Additional paid in capital | 537,980 | 537,039 | ||||||
Retained earnings | (59,236) | 28,895 | ||||||
Accumulated other comprehensive loss | (2,947) | (3,065) | ||||||
Total equity | 476,264 | 563,327 | ||||||
Total liabilities and equity | $ | 728,507 | $ | 824,562 | ||||
MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
2021 | 2020 | 2021 | 2021 | 2020 | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
REVENUE | |||||||||||||||||||
Services revenue | $ | 52,417 | $ | 55,279 | $ | 40,867 | $ | 135,975 | $ | 169,002 | |||||||||
Services revenue - related parties | 601 | 8,565 | 90 | 15,678 | 35,228 | ||||||||||||||
Product revenue | 4,467 | 4,815 | 6,483 | 17,932 | 18,171 | ||||||||||||||
Product revenue - related parties | — | 1,875 | — | 2,145 | 5,625 | ||||||||||||||
Total revenue | 57,485 | 70,534 | 47,440 | 171,730 | 228,026 | ||||||||||||||
COST AND EXPENSES | |||||||||||||||||||
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $35,857, $20,424, $17,861, $53,448 and $65,728, respectively, for the three months ended September 30, 2021, September 30, 2020 and June 30, 2021 and nine months ended September 30, 2021 and 2020) | 43,538 | 41,445 | 43,103 | 128,703 | 154,397 | ||||||||||||||
Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0, $0, $0 and $0, respectively, for the three months ended September 30, 2021, September 30, 2020 and June 30, 2021 and nine months ended September 30, 2021 and 2020) | 181 | 131 | 107 | 397 | 329 | ||||||||||||||
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $4,667, $2,689, $2,384, $7,051 and $7,344, respectively, for the three months ended September 30, 2021, September 30, 2020 and June 30, 2021 and nine months ended September 30, 2021 and 2020) | 9,865 | 4,353 | 7,165 | 22,939 | 21,862 | ||||||||||||||
Selling, general and administrative | 41,866 | 11,979 | 11,791 | 74,312 | 36,063 | ||||||||||||||
Selling, general and administrative - related parties | — | 201 | 192 | 385 | 614 | ||||||||||||||
Depreciation, depletion, amortization and accretion | 19,148 | 23,132 | 20,265 | 60,559 | 73,130 | ||||||||||||||
Impairment of goodwill | — | — | — | — | 54,973 | ||||||||||||||
Impairment of other long-lived assets | 547 | — | — | 547 | 12,897 | ||||||||||||||
Total cost and expenses | 115,145 | 81,241 | 82,623 | 287,842 | 354,265 | ||||||||||||||
Operating loss | (57,660) | (10,707) | (35,183) | (116,112) | (126,239) | ||||||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||||||
Interest expense, net | (1,484) | (1,098) | (1,169) | (3,878) | (4,207) | ||||||||||||||
Other income (expense), net | 11,056 | 7,943 | (14,998) | 6,004 | 23,489 | ||||||||||||||
Other income (expense), net - related parties | — | 1,099 | — | (515) | 2,232 | ||||||||||||||
Total other income (expense) | 9,572 | 7,944 | (16,167) | 1,611 | 21,514 | ||||||||||||||
Loss before income taxes | (48,088) | (2,763) | (51,350) | (114,501) | (104,725) | ||||||||||||||
Benefit for income taxes | (7,187) | (6,193) | (16,560) | (26,370) | (8,979) | ||||||||||||||
Net (loss) income | $ | (40,901) | $ | 3,430 | $ | (34,790) | $ | (88,131) | $ | (95,746) | |||||||||
OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||
Foreign currency translation adjustment, net of tax of ($69), ($95), $63, $36 and $116, respectively, for the three months ended September 30, 2021, September 30, 2020 and June 30, 2021 and nine months ended September 30, 2021 and 2020 | (289) | 324 | 239 | 118 | (422) | ||||||||||||||
Comprehensive (loss) income | $ | (41,190) | $ | 3,754 | $ | (34,551) | $ | (88,013) | $ | (96,168) | |||||||||
Net (loss) income per share (basic) | $ | (0.88) | $ | 0.07 | $ | (0.75) | $ | (1.90) | $ | (2.10) | |||||||||
Net (loss) income per share (diluted) | $ | (0.88) | $ | 0.07 | $ | (0.75) | $ | (1.90) | $ | (2.10) | |||||||||
Weighted average number of shares outstanding (basic) | 46,683 | 45,764 | 46,402 | 46,342 | 45,603 | ||||||||||||||
Weighted average number of shares outstanding (diluted) | 46,683 | 46,571 | 46,402 | 46,342 | 45,603 | ||||||||||||||
MAMMOTH ENERGY SERVICES, INC.CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||
Nine Months Ended | |||||||
September 30, | |||||||
2021 | 2020 | ||||||
(in thousands) | |||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (88,131) | $ | (95,746) | |||
Adjustments to reconcile net loss to cash (used in) provided by operating activities: | |||||||
Stock based compensation | 950 | 1,598 | |||||
Depreciation, depletion, accretion and amortization | 60,559 | 73,130 | |||||
Amortization of coil tubing strings | — | 359 | |||||
Amortization of debt origination costs | 469 | 703 | |||||
Bad debt expense | 41,650 | 2,306 | |||||
Gain on disposal of property and equipment | (4,632) | (927) | |||||
Impairment of goodwill | — | 54,973 | |||||
Impairment of other long-lived assets | 547 | 12,897 | |||||
Deferred income taxes | (32,183) | (7,334) | |||||
Other | 502 | 581 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable, net | (50,666) | (11,707) | |||||
Receivables from related parties | 28,224 | (31,152) | |||||
Inventories | 2,582 | 3,827 | |||||
Prepaid expenses and other assets | 9,947 | 8,803 | |||||
Accounts payable | 2,597 | (5,211) | |||||
Payables to related parties | 2 | (508) | |||||
Accrued expenses and other liabilities | 6,627 | (3,166) | |||||
Income taxes payable | 5,192 | (1,644) | |||||
Net cash (used in) provided by operating activities | (15,764) | 1,782 | |||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (4,474) | (5,873) | |||||
Purchases of property and equipment from related parties | — | (76) | |||||
Proceeds from disposal of property and equipment | 9,581 | 4,859 | |||||
Net cash provided by (used in) investing activities | 5,107 | (1,090) | |||||
Cash flows from financing activities: | |||||||
Borrowings on long-term debt | 31,700 | 30,800 | |||||
Repayments of long-term debt | (33,571) | (21,000) | |||||
Proceeds from sale leaseback transaction | 9,473 | — | |||||
Payments on sale leaseback transaction | (2,106) | — | |||||
Principal payments on financing leases and equipment financing notes | (1,716) | (1,423) | |||||
Debt issuance costs | — | (1,000) | |||||
Net cash provided by financing activities | 3,780 | 7,377 | |||||
Effect of foreign exchange rate on cash | 8 | (57) | |||||
Net change in cash and cash equivalents | (6,869) | 8,012 | |||||
Cash and cash equivalents at beginning of period | 14,822 | 5,872 | |||||
Cash and cash equivalents at end of period | $ | 7,953 | $ | 13,884 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest | $ | 3,236 | $ | 3,637 | |||
Cash paid for income taxes, net of refunds received | $ | 978 | $ | 13 | |||
Supplemental disclosure of non-cash transactions: | |||||||
Purchases of property and equipment included in accounts payable | $ | 2,028 | $ | 2,032 | |||
MAMMOTH ENERGY SERVICES, INC.SEGMENT INCOME STATEMENTS(in thousands) | |||||||||||||||||||||
Three months ended September 30, 2021 | Infrastructure | WellCompletion(a) | Sand | Drilling | All Other | Eliminations | Total | ||||||||||||||
Revenue from external customers | $ | 23,489 | $ | 22,702 | $ | 4,439 | $ | 1,184 | $ | 5,671 | $ | — | $ | 57,485 | |||||||
Intersegment revenues | — | 30 | 3,980 | 23 | 482 | (4,515) | — | ||||||||||||||
Total revenue | 23,489 | 22,732 | 8,419 | 1,207 | 6,153 | (4,515) | 57,485 | ||||||||||||||
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 20,541 | 18,125 | 9,368 | 1,566 | 4,917 | — | 54,517 | ||||||||||||||
Intersegment cost of revenues | 54 | 3,204 | — | — | 324 | (4,515) | (933) | ||||||||||||||
Total cost of revenue | 20,595 | 21,329 | 9,368 | 1,566 | 5,241 | (4,515) | 53,584 | ||||||||||||||
Selling, general and administrative | 4,586 | 34,606 | 1,068 | 288 | 1,318 | — | 41,866 | ||||||||||||||
Depreciation, depletion, amortization and accretion | 4,933 | 6,538 | 2,533 | 1,942 | 3,202 | — | 19,148 | ||||||||||||||
Impairment of other long-lived assets | — | — | — | — | 547 | — | 547 | ||||||||||||||
Operating loss | (6,625) | (39,741) | (4,550) | (2,589) | (4,155) | — | (57,660) | ||||||||||||||
Interest expense, net | 971 | 215 | 107 | 56 | 135 | — | 1,484 | ||||||||||||||
Other (income) expense, net | (9,256) | 755 | (46) | (66) | (2,443) | — | (11,056) | ||||||||||||||
Income (loss) before income taxes | $ | 1,660 | $ | (40,711) | $ | (4,611) | $ | (2,579) | $ | (1,847) | $ | — | $ | (48,088) | |||||||
Three months ended September 30, 2020 | Infrastructure | WellCompletion(a) | 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) | |||||||
Three months ended June 30, 2021 | Infrastructure | WellCompletion(a) | Sand | Drilling | All Other | Eliminations | Total | ||||||||||||||
Revenue from external customers | $ | 17,220 | $ | 17,337 | $ | 6,886 | $ | 1,130 | $ | 4,867 | $ | — | $ | 47,440 | |||||||
Intersegment revenues | — | 36 | — | 17 | 682 | (735) | — | ||||||||||||||
Total revenue | 17,220 | 17,373 | 6,886 | 1,147 | 5,549 | (735) | 47,440 | ||||||||||||||
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 19,881 | 16,396 | 7,400 | 1,568 | 5,130 | — | 50,375 | ||||||||||||||
Intersegment cost of revenues | 50 | 666 | — | — | 19 | (735) | — | ||||||||||||||
Total cost of revenue | 19,931 | 17,062 | 7,400 | 1,568 | 5,149 | (735) | 50,375 | ||||||||||||||
Selling, general and administrative | 7,383 | 1,893 | 991 | 395 | 1,321 | — | 11,983 | ||||||||||||||
Depreciation, depletion, amortization and accretion | 5,899 | 6,447 | 2,387 | 2,079 | 3,453 | — | 20,265 | ||||||||||||||
Operating loss | (15,993) | (8,029) | (3,892) | (2,895) | (4,374) | — | (35,183) | ||||||||||||||
Interest expense, net | 656 | 219 | 90 | 58 | 146 | — | 1,169 | ||||||||||||||
Other expense (income), net | 15,904 | 1 | (53) | (127) | (727) | — | 14,998 | ||||||||||||||
Loss before income taxes | $ | (32,553) | $ | (8,249) | $ | (3,929) | $ | (2,826) | $ | (3,793) | $ | — | $ | (51,350) | |||||||
Nine months ended September 30, 2021 | Infrastructure | WellCompletion(a) | Sand | Drilling | All Other | Eliminations | Total | ||||||||||||||
Revenue from external customers | $ | 69,965 | $ | 62,939 | $ | 20,031 | $ | 3,234 | $ | 15,561 | $ | — | $ | 171,730 | |||||||
Intersegment revenues | — | 120 | 3,980 | 54 | 1,804 | (5,958) | — | ||||||||||||||
Total revenue | 69,965 | 63,059 | 24,011 | 3,288 | 17,365 | (5,958) | 171,730 | ||||||||||||||
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 66,864 | 42,339 | 22,631 | 4,739 | 15,466 | — | 152,039 | ||||||||||||||
Intersegment cost of revenues | 165 | 5,449 | — | — | 344 | (5,958) | — | ||||||||||||||
Total cost of revenue | 67,029 | 47,788 | 22,631 | 4,739 | 15,810 | (5,958) | 152,039 | ||||||||||||||
Selling, general and administrative | 18,222 | 47,111 | 4,108 | 1,105 | 4,151 | — | 74,697 | ||||||||||||||
Depreciation, depletion, amortization and accretion | 17,499 | 19,668 | 7,059 | 6,185 | 10,148 | — | 60,559 | ||||||||||||||
Impairment of other long-lived assets | — | — | — | — | 547 | — | 547 | ||||||||||||||
Operating loss | (32,785) | (51,508) | (9,787) | (8,741) | (13,291) | — | (116,112) | ||||||||||||||
Interest expense, net | 2,287 | 688 | 291 | 177 | 435 | — | 3,878 | ||||||||||||||
Other (income) expense, net | (2,663) | 1,196 | (892) | (201) | (2,929) | — | (5,489) | ||||||||||||||
Loss before income taxes | $ | (32,409) | $ | (53,392) | $ | (9,186) | $ | (8,717) | $ | (10,797) | $ | — | $ | (114,501) | |||||||
Nine months ended September 30, 2020 | Infrastructure | WellCompletion(a) | Sand | Drilling | All Other | Eliminations | Total | ||||||||||||||
Revenue from external customers | $ | 99,307 | $ | 74,549 | $ | 22,421 | $ | 7,166 | $ | 24,583 | $ | — | $ | 228,026 | |||||||
Intersegment revenues | — | 1,080 | 95 | 16 | 2,046 | (3,237) | — | ||||||||||||||
Total revenue | 99,307 | 75,629 | 22,516 | 7,182 | 26,629 | (3,237) | 228,026 | ||||||||||||||
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 80,780 | 40,454 | 21,845 | 9,592 | 23,917 | — | 176,588 | ||||||||||||||
Intersegment cost of revenues | 197 | 1,410 | — | 151 | 1,479 | (3,237) | — | ||||||||||||||
Total cost of revenue | 80,977 | 41,864 | 21,845 | 9,743 | 25,396 | (3,237) | 176,588 | ||||||||||||||
Selling, general and administrative | 19,001 | 5,347 | 3,737 | 2,776 | 5,816 | — | 36,677 | ||||||||||||||
Depreciation, depletion, amortization and accretion | 22,416 | 23,346 | 7,380 | 7,814 | 12,174 | — | 73,130 | ||||||||||||||
Impairment of goodwill | — | 53,406 | — | — | 1,567 | — | 54,973 | ||||||||||||||
Impairment of other long-lived assets | — | 4,203 | — | 326 | 8,368 | — | 12,897 | ||||||||||||||
Operating loss | (23,087) | (52,537) | (10,446) | (13,477) | (26,692) | — | (126,239) | ||||||||||||||
Interest expense, net | 2,091 | 857 | 217 | 450 | 592 | — | 4,207 | ||||||||||||||
Other (income) expense, net | (24,082) | (2,444) | 1,753 | (251) | (697) | — | (25,721) | ||||||||||||||
Loss before income taxes | $ | (1,096) | $ | (50,950) | $ | (12,416) | $ | (13,676) | $ | (26,587) | $ | — | $ | (104,725) | |||||||
a. | Mammoth changed the name of its pressure pumping segment to the well completion segment during the fourth quarter of 2020. |
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, public offering costs, stock based compensation, interest expense, net, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets and interest on trade accounts receivable) and provision (benefit) for income taxes, further adjusted to add back interest on trade accounts receivable. The Company excludes the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within the energy service industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (loss) or cash flows from operating activities as determined in accordance with GAAP or as an indicator of Mammoth's operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets. Mammoth's computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company believes that Adjusted EBITDA is a widely followed measure of operating performance and may also be used by investors to measure its ability to meet debt service requirements. | |||||||||||||||||||
The following tables provide a reconciliation of Adjusted EBITDA to the GAAP financial measure of net income (loss) on a consolidated basis and for each of the Company's segments (in thousands): | |||||||||||||||||||
Consolidated | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
Reconciliation of Adjusted EBITDA to net (loss) income: | 2021 | 2020 | 2021 | 2021 | 2020 | ||||||||||||||
Net (loss) income | $ | (40,901) | $ | 3,430 | $ | (34,790) | $ | (88,131) | $ | (95,746) | |||||||||
Depreciation, depletion, amortization and accretion expense | 19,148 | 23,132 | 20,265 | 60,559 | 73,130 | ||||||||||||||
Impairment of goodwill | — | — | — | — | 54,973 | ||||||||||||||
Impairment of other long-lived assets | 547 | — | — | 547 | 12,897 | ||||||||||||||
Public offering costs | 13 | — | 77 | 91 | — | ||||||||||||||
Stock based compensation | 252 | 353 | 354 | 950 | 1,598 | ||||||||||||||
Interest expense, net | 1,484 | 1,098 | 1,169 | 3,878 | 4,207 | ||||||||||||||
Other (income) expense, net | (11,056) | (9,042) | 14,998 | (5,489) | (25,721) | ||||||||||||||
Benefit for income taxes | (7,187) | (6,193) | (16,560) | (26,370) | (8,979) | ||||||||||||||
Interest on trade accounts receivable | 7,963 | 9,285 | 9,017 | 25,138 | 26,052 | ||||||||||||||
Adjusted EBITDA | $ | (29,737) | $ | 22,063 | $ | (5,470) | $ | (28,827) | $ | 42,411 | |||||||||
Infrastructure Services | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
Reconciliation of Adjusted EBITDA to net (loss) income: | 2021 | 2020 | 2021 | 2021 | 2020 | ||||||||||||||
Net (loss) income | $ | (2,288) | $ | 6,123 | $ | (23,715) | $ | (29,946) | $ | (6,182) | |||||||||
Depreciation and amortization expense | 4,933 | 7,294 | 5,899 | 17,499 | 22,416 | ||||||||||||||
Public offering costs | (7) | — | 43 | 37 | — | ||||||||||||||
Stock based compensation | 96 | 139 | 158 | 388 | 424 | ||||||||||||||
Interest expense | 971 | 623 | 656 | 2,287 | 2,091 | ||||||||||||||
Other (income) expense, net | (9,256) | (8,375) | 15,904 | (2,663) | (24,082) | ||||||||||||||
Provision (benefit) for income taxes | 3,947 | 1,645 | (8,838) | (2,463) | 5,085 | ||||||||||||||
Interest on trade accounts receivable | 9,290 | 8,170 | 9,017 | 26,980 | 23,796 | ||||||||||||||
Adjusted EBITDA | $ | 7,686 | $ | 15,619 | $ | (876) | $ | 12,119 | $ | 23,548 | |||||||||
Well Completion Services | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
Reconciliation of Adjusted EBITDA to net (loss) income: | 2021 | 2020 | 2021 | 2021 | 2020 | ||||||||||||||
Net (loss) income | $ | (40,711) | $ | 799 | $ | (8,249) | $ | (53,391) | $ | (50,951) | |||||||||
Depreciation and amortization expense | 6,538 | 7,189 | 6,447 | 19,668 | 23,346 | ||||||||||||||
Impairment of goodwill | — | — | — | — | 53,406 | ||||||||||||||
Impairment of other long-lived assets | — | — | — | — | 4,203 | ||||||||||||||
Public offering costs | 19 | — | 12 | 31 | — | ||||||||||||||
Stock based compensation | 95 | 76 | 75 | 253 | 458 | ||||||||||||||
Interest expense | 215 | 253 | 219 | 688 | 857 | ||||||||||||||
Other expense (income), net | 755 | (1,156) | 1 | 1,196 | (2,444) | ||||||||||||||
Interest on trade accounts receivable | (1,327) | 1,073 | — | (1,841) | 2,206 | ||||||||||||||
Adjusted EBITDA | $ | (34,416) | $ | 8,234 | $ | (1,495) | $ | (33,396) | $ | 31,081 | |||||||||
Natural Sand Proppant Services | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
Reconciliation of Adjusted EBITDA to net loss: | 2021 | 2020 | 2021 | 2021 | 2020 | ||||||||||||||
Net loss | $ | (4,611) | $ | (3,741) | $ | (3,929) | $ | (9,186) | $ | (12,415) | |||||||||
Depreciation, depletion, amortization and accretion expense | 2,533 | 2,700 | 2,387 | 7,059 | 7,380 | ||||||||||||||
Public offering costs | — | — | 12 | 12 | — | ||||||||||||||
Stock based compensation | 32 | 77 | 65 | 163 | 354 | ||||||||||||||
Interest expense | 107 | 70 | 90 | 291 | 217 | ||||||||||||||
Other income (expense), net | (46) | 1,792 | (53) | (892) | 1,753 | ||||||||||||||
Interest on trade accounts receivable | — | 26 | — | (1) | 26 | ||||||||||||||
Adjusted EBITDA | $ | (1,985) | $ | 924 | $ | (1,428) | $ | (2,554) | $ | (2,685) | |||||||||
Drilling Services | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
Reconciliation of Adjusted EBITDA to net loss: | 2021 | 2020 | 2021 | 2021 | 2020 | ||||||||||||||
Net loss | $ | (2,579) | $ | (3,508) | $ | (2,826) | $ | (8,717) | $ | (13,676) | |||||||||
Depreciation expense | 1,942 | 2,294 | 2,079 | 6,185 | 7,814 | ||||||||||||||
Impairment of other long-lived assets | — | — | — | — | 326 | ||||||||||||||
Acquisition related costs | — | — | — | — | — | ||||||||||||||
Public offering costs | — | — | 2 | 2 | — | ||||||||||||||
Stock based compensation | 6 | 38 | 28 | 71 | 166 | ||||||||||||||
Interest expense | 56 | 60 | 58 | 177 | 449.501 | ||||||||||||||
Other (income) expense, net | (66) | 20 | (127) | (201) | (251) | ||||||||||||||
Adjusted EBITDA | $ | (641) | $ | (1,096) | $ | (786) | $ | (2,483) | $ | (5,171) | |||||||||
Other Services(a) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
Reconciliation of Adjusted EBITDA to net income (loss): | 2021 | 2020 | 2021 | 2021 | 2020 | ||||||||||||||
Net income (loss) | $ | 9,288 | $ | 3,756 | $ | 3,929 | $ | 13,109 | $ | (12,522) | |||||||||
Depreciation, amortization and accretion expense | 3,202 | 3,655 | 3,453 | 10,148 | 12,174 | ||||||||||||||
Impairment of goodwill | — | — | — | — | 1,567 | ||||||||||||||
Impairment of other long-lived assets | 547 | — | — | 547 | 8,368 | ||||||||||||||
Public offering costs | 1 | — | 8 | 9 | — | ||||||||||||||
Stock based compensation | 23 | 23 | 28 | 75 | 196 | ||||||||||||||
Interest expense, net | 135 | 92 | 146 | 435 | 592 | ||||||||||||||
Other (income) expense, net | (2,443) | (1,323) | (727) | (2,929) | (697) | ||||||||||||||
Benefit for income taxes | (11,134) | (7,838) | (7,722) | (23,907) | (14,064) | ||||||||||||||
Interest on trade accounts receivable | — | 16 | — | — | 25 | ||||||||||||||
Adjusted EBITDA | $ | (381) | $ | (1,619) | $ | (885) | $ | (2,513) | $ | (4,361) | |||||||||
a. | Includes results for Mammoth's aviation, coil tubing, pressure control, 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) Income per Share
Adjusted net (loss) income and adjusted basic and diluted (loss) income 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 and adjusted loss per share should not be considered in isolation or as a substitute for net loss and loss per share prepared in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The following tables provide a reconciliation of adjusted net loss and adjusted loss per share to the GAAP financial measures of net loss and loss per share for the periods specified.
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
2021 | 2020 | 2021 | 2021 | 2020 | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
Net (loss) income, as reported | $ | (40,901) | $ | 3,430 | $ | (34,790) | $ | (88,131) | $ | (95,746) | |||||||||
Impairment of goodwill | — | — | — | — | 54,973 | ||||||||||||||
Impairment of other long-lived assets | 547 | — | — | 547 | 12,897 | ||||||||||||||
Adjusted net (loss) income | $ | (40,354) | $ | 3,430 | $ | (34,790) | $ | (87,584) | $ | (27,876) | |||||||||
Basic (loss) income per share, as reported | $ | (0.88) | $ | 0.07 | $ | (0.75) | $ | (1.90) | $ | (2.10) | |||||||||
Impairment of goodwill | — | — | — | — | 1.21 | ||||||||||||||
Impairment of other long-lived assets | 0.01 | — | — | 0.01 | 0.28 | ||||||||||||||
Adjusted basic (loss) income per share | $ | (0.87) | $ | 0.07 | $ | (0.75) | $ | (1.89) | $ | (0.61) | |||||||||
Diluted (loss) income per share, as reported | $ | (0.88) | $ | 0.07 | $ | (0.75) | $ | (1.90) | $ | (2.10) | |||||||||
Impairment of goodwill | — | — | — | — | 1.21 | ||||||||||||||
Impairment of other long-lived assets | 0.01 | — | — | 0.01 | 0.28 | ||||||||||||||
Adjusted diluted (loss) income per share | $ | (0.87) | $ | 0.07 | $ | (0.75) | $ | (1.89) | $ | (0.61) | |||||||||
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SOURCE Mammoth Energy Services, Inc.