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Mammoth Energy Services, Inc. Announces PREPA’s Payment of $50.6 Million and Reports Fourth Quarter and Full Year 2023 Operational and Financial Results
OKLAHOMA CITY - March 1,
2024 - Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ: TUSK) today announced payment of $50.6 million from the Puerto Rico Electric Power Authority (“PREPA”) for a portion of the work its wholly-owned subsidiary Cobra Acquisitions LLC (“Cobra”) completed in the aftermath of Hurricane Maria. This is in addition to $13.4 million paid by PREPA in January 2024. As previously announced, on December 1, 2023, Cobra entered into an agreement to transfer approximately $54.4 million of its outstanding receivable with PREPA to SPCP Group, LLC (“SPCP Group”). The aggregate payments from PREPA in 2024 totaling $64.0 million fully satisfied the obligations to SPCP Group and resulted in Cobra receiving approximately $9.6 million in cash.
Mark Layton, Chief Financial Officer of Mammoth commented, “We’re pleased to
have received these payments from PREPA, which has allowed us to extinguish the liability owed to SPCP Group and collect nearly $10 million in cash. We continue to pursue payment of the outstanding amounts owed to Cobra, including the associated interest, as these payments represent only a portion of the amounts still owed to us.”
In addition, today Mammoth reported financial and operational results for the fourth quarter and full year ended December 31, 2023.
Financial Overview for the Fourth Quarter and Full Year 2023:
Total revenue was $52.8 million for the fourth quarter of 2023 compared to $102.9 million for the same quarter of 2022 and $65.0 million for the third quarter of 2023. Total revenue for the full year of 2023 was $309.5
million, a decrease of 15% compared to $362.1 million in 2022.
Net loss for the fourth quarter of 2023 was $6.0 million, or $0.12 loss per diluted share, compared to net income of $4.8 million, or $0.10 per diluted share, for the same quarter of 2022 and net loss of $1.1 million, or $0.02 loss per diluted share, for the third quarter of 2023. Net loss for the full year of 2023 was $3.2 million, or $0.07 per fully diluted share, compared to net loss of $0.6 million, or $0.01 per fully diluted share for 2022.
Adjusted EBITDA (as defined and reconciled below) was $10.5 million for the fourth quarter of 2023, compared to $24.1 million for the same quarter of 2022 and $13.4 million for the third quarter of 2023. Adjusted EBITDA was $71.0 million for the full year of 2023 compared to $86.1 million for 2022.
Arty
Straehla, Chief Executive Officer of Mammoth commented, “The fourth quarter proved to be challenging, largely due to additional deferred activity by exploration and production companies, commodity price fluctuations, and customer budget exhaustion. Despite the operational softness we experienced this year, 2023 marked several accomplishments for Mammoth as we completed a significant debt refinancing transaction, began receiving payments from PREPA on our outstanding receivable and entered into an agreement to monetize a portion of our outstanding PREPA receivable.”
“In 2023, we entered into a new revolving credit facility agreement and a new term loan agreement, which refinanced, in full, Mammoth’s indebtedness outstanding under our previous revolving credit facility. We believe
these
new agreements provide Mammoth with a solid liquidity base for years to come. During 2023, we also received our first payments from PREPA in more than four years totaling $22.2 million. In addition, we entered into an agreement to monetize a portion of our outstanding receivable with PREPA, which allowed us to increase liquidity and invest in our business. We used a portion of the proceeds to repay in full our outstanding borrowings under the new revolving credit facility, which currently remains undrawn. We plan to use the remainder of the proceeds to invest back into our business, which may include upgrading an additional hydraulic fracturing fleet with dual fuel capabilities. This incremental dual fuel fleet would result in three of our six fleets having dual fuel capabilities.”
Commenting further, Straehla said, “We exited 2023 with a strong balance sheet and a secure financing structure that positions
Mammoth for future growth. We have entered 2024 with an improving line of sight, particularly in our infrastructure and sand divisions, and we will be opportunistic in our well completions business as commodity prices improve and activity increases. I am proud of the hard work and perseverance that our teams have demonstrated across our organization. Our continued commitment to safety and high-quality standards propels our organization forward.”
Well Completion Services
Mammoth’s well completion services division contributed revenue (inclusive of inter-segment revenue) of $16.1 million on 669 stages for the fourth quarter of 2023, compared to $51.4 million on 1,837 stages for the same quarter of 2022 and $20.3 million on 577 stages for the third quarter of 2023. On average, 0.9 of the Company’s
fleets were active for the fourth quarter of 2023 compared to an average utilization of 3.4 fleets during the same quarter of 2022 and 1.2 fleets during the third quarter of 2023.
The well completion services division contributed revenues (inclusive of inter-segment revenues) of $131.3 million on 4,220 stages for the full year of 2023, down from $170.7 million on 6,149 stages for 2022. On average, 1.8 of the Company’s fleets were active in 2023 compared to 3.0 fleets in 2022.
Infrastructure Services
Mammoth’s infrastructure services division contributed revenue of $27.2 million for the fourth quarter of 2023 compared to $29.6 million for the same quarter of 2022 and $26.7 million for the third quarter of 2023. Average crew count
was 78 crews during the fourth quarter of 2023 compared to 93 crews during the same quarter of 2022 and 81 crews during the third quarter of 2023.
The infrastructure services division contributed revenues of $110.5 million for the full year of 2023 compared to $111.5 million for 2022. Average crew count declined to 83 crews for 2023 compared to 91 crews for 2022.
Natural Sand Proppant Services
Mammoth’s natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $4.5 million for the fourth quarter of 2023 compared to $13.8 million for the same quarter of 2022 and $10.6 million for the third quarter of 2023. In the fourth quarter of 2023, the Company sold approximately 104,000 tons of sand at
an average sales price of $23.62 per ton compared to sales of approximately 366,000 tons of sand at an average sales price of $29.80 per ton during the same quarter of 2022. In the third quarter of 2023, sales were approximately 352,000 tons of sand at an average price of $30.18 per ton.
The natural sand proppant division contributed revenues (inclusive of inter-segment revenues) of $39.1 million for the full year of 2023 compared to $51.4 million for 2022. The Company sold 1.2 million tons of sand during 2023, a decrease from 1.4 million tons of sand during 2022. The Company’s average sales price for the sand sold during 2023 was $29.86 per ton, an increase from $27.11 per ton average sales price during 2022.
2
Drilling
Services
Mammoth’s drilling services division contributed revenue (inclusive of inter-segment revenue) of $0.6 million for the fourth quarter of 2023 compared to $1.9 million for the same quarter of 2022 and $2.3 million for the third quarter of 2023. The drilling services division contributed revenues of $7.1 million for the full year of 2023, compared to $8.4 million for 2022. The decrease in drilling services revenue is primarily attributable to decreased utilization for our directional drilling business.
Other Services
Mammoth’s other services, including aviation, equipment rentals, remote accommodations and equipment manufacturing, contributed revenue (inclusive of inter-segment revenue) of $4.9 million for the fourth quarter of 2023 compared to $6.9 million for the same quarter of 2022 and $6.0 million for the third quarter of 2023. The
Company’s other services contributed revenues of $24.1 million for the full year of 2023, compared to $25.2 million for 2022.
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses were $8.3 million for the fourth quarter of 2023 compared to $13.0 million for the same quarter of 2022 and $10.4 million for the third quarter of 2023. SG&A expenses were $37.5 million for the full year of 2023 compared to $39.6 million for 2022.
Following is a breakout of SG&A expense (in thousands):
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 16% for the fourth quarter of 2023 compared to 13% for the same quarter of 2022 and 16% for the third quarter of 2023. SG&A expenses, as a percentage of total revenue, were 12% for the full year of 2023 compared to 11% for 2022.
Interest Expense and Financing Charges, net
Interest expense and financing charges, net were $6.8 million for the fourth quarter of 2023 compared to $3.2 million for the same quarter of 2022 and $2.9 million for the third quarter of 2023. Interest expense and financing charges, net were $16.2 million for the full year of 2023 compared to $11.5 million
for 2022.
On December 1, 2023, Cobra entered into an agreement to transfer approximately $54.4 million of its outstanding receivable with PREPA to SPCP Group in exchange for net proceeds of $46.1 million. During the fourth quarter of 2023, the Company incurred financing charges totaling $2.8 million in relation to this transaction. Mammoth expects to recognize a financing charge totaling approximately $5.5 million during the first quarter of 2024 related to the termination of the Assignment Agreement.
3
Liquidity
As of December 31,
2023, Mammoth had cash on hand of $16.6 million. As of December 31, 2023, the Company’s revolving credit facility was undrawn, the borrowing base was $27.0 million and there was $20.7 million of available borrowing capacity under the revolving credit facility, after giving effect to $6.3 million of outstanding letters of credit. As of December 31, 2023, Mammoth had total liquidity of $37.3 million.
As of February 28, 2024, Mammoth had cash on hand of $10.5 million, no outstanding borrowings under its revolving credit facility, and a borrowing base of $23.3 million. As of February 28, 2024, the
Company had $17.0 million of available borrowing capacity under its revolving credit facility and total liquidity of $27.5 million. These amounts do not include $9.6 million in cash received on February 29, 2024.
Capital Expenditures
The following table summarizes Mammoth’s capital expenditures by operating division for the periods indicated (in thousands):
a. Capital expenditures primarily for upgrades and maintenance to our pressure pumping fleet for the periods presented.
b. Capital expenditures primarily for truck,
tooling and equipment purchases for the periods presented.
c. Capital expenditures primarily for maintenance for the periods presented.
d. Capital expenditures primarily for equipment for the Company’s rental businesses for the periods presented.
Mammoth’s full year 2024 capital expenditure budget is approximately $15 million.
Conference Call Information
Mammoth will host a conference call on Friday, March 1, 2024 at 9:00 a.m. Central time (10:00 a.m. Eastern time) to discuss its fourth quarter and full year financial and operational results. The telephone number to access the conference
call is 1-201-389-0872. The conference call will also be webcast live on https://ir.mammothenergy.com/events-presentations. Please submit any questions for management prior to the call via email to TUSK@dennardlascar.com.
About Mammoth Energy Services, Inc.
Mammoth is an integrated, growth-oriented energy services company focused on the providing products and services to enable the exploration and development of North American onshore unconventional oil and natural gas reserves
as well as the construction and repair of the electric grid for private utilities, public investor-owned utilities and co-operative utilities through its infrastructure services businesses. Mammoth’s suite of services and products include: well completion services, infrastructure services, natural sand and proppant services, drilling services and other energy services. For more information, please visit www.mammothenergy.com.
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, plans for stock repurchases under its stock repurchase program, 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: 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; the impact of the war in Ukraine and the Israel-Hamas war on the global energy and capital markets and global stability; performance of contracts and supply chain disruptions; inflationary pressures; high interest rates and their impact on the cost of capital; instability in the banking and financial services sectors; the outcome of ongoing government investigations and other legal proceedings, including those relating to the contracts awarded to the
Company’s subsidiary Cobra by PREPA; the failure to receive or delays in receiving governmental authorizations, approvals and/or payments, including payments with respect to the PREPA account receivable for prior services to PREPA performed by Cobra; 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, including concerns over a potential economic slowdown or recession; impacts of the recent federal infrastructure bill on the infrastructure industry and our infrastructure services business; 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 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 comply with the applicable financial covenants and other terms and conditions under Mammoth's revolving credit facility and term loan; 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.
Cost
of revenue, exclusive of depreciation, depletion, amortization and accretion
124,848
91,577
36,783
7,514
17,865
—
278,587
Intersegment cost of revenues
3,894
72
—
85
923
(4,974)
—
Total
cost of revenue
128,742
91,649
36,783
7,599
18,788
(4,974)
278,587
Selling, general and administrative
8,642
19,147
7,171
606
3,988
—
39,554
Depreciation,
depletion, amortization and accretion
22,103
16,171
8,732
5,811
11,454
—
64,271
Gains on disposal of assets, net
(615)
(795)
(89)
—
(2,409)
—
(3,908)
Operating
income (loss)
11,791
(14,720)
(1,206)
(5,636)
(6,647)
—
(16,418)
Interest expense and financing charges, net
1,940
7,390
753
435
988
—
11,506
Other
income, net
(343)
(40,470)
(14)
—
(85)
—
(40,912)
Income (loss) before income taxes
$
10,194
$
18,360
$
(1,945)
$
(6,071)
$
(7,550)
$
—
$
12,988
10
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, gains on disposal of assets, net, impairment of goodwill, stock based compensation, interest expense and financing charges, net, other (income) expense, net (which is comprised of interest on trade accounts receivable and certain legal expenses) 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
Years Ended
December 31,
September 30,
December 31,
Reconciliation of net (loss) income to Adjusted EBITDA:
2023
2022
2023
2023
2022
Net (loss) income
$
(5,955)
$
4,772
$
(1,088)
$
(3,163)
$
(619)
Depreciation,
depletion, amortization and accretion expense
8,271
13,786
11,233
45,110
64,271
Gains on disposal of assets, net
(2,757)
(170)
(2,450)
(6,041)
(3,908)
Impairment
of goodwill
—
—
1,810
1,810
—
Stock
based compensation
219
241
219
1,345
923
Interest expense and financing charges, net
6,811
3,237
2,876
16,196
11,506
Other
income, net
(10,964)
(10,737)
(14,088)
(42,015)
(40,912)
Provision for income taxes
3,291
2,165
3,438
12,297
13,607
Interest
on trade accounts receivable
11,543
10,785
11,443
45,440
41,276
Adjusted EBITDA
$
10,459
$
24,079
$
13,393
$
70,979
$
86,144
11
MAMMOTH
ENERGY SERVICES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Well Completion Services
Three Months Ended
Years
Ended
December 31,
September 30,
December 31,
Reconciliation of net (loss) income to Adjusted EBITDA:
2023
2022
2023
2023
2022
Net (loss) income
$
(5,158)
$
7,838
$
(1,834)
$
(3,782)
$
10,194
Depreciation
and amortization expense
3,506
4,140
3,971
16,794
22,103
Gains on disposal of assets, net
(75)
(68)
(2,016)
(2,091)
(615)
Stock
based compensation
57
106
64
508
380
Interest expense and financing charges, net
1,975
617
774
4,502
1,940
Other
expense (income), net
1
1
—
2
(343)
Adjusted EBITDA
$
306
$
12,634
$
959
$
15,933
$
33,659
Infrastructure
Services
Three Months Ended
Years Ended
December 31,
September
30,
December 31,
Reconciliation of net income to Adjusted EBITDA:
2023
2022
2023
2023
2022
Net income
$
1,844
$
1,609
$
3,239
$
8,237
$
4,933
Depreciation
and amortization expense
1,023
3,675
1,557
8,390
16,171
Gains on disposal of assets, net
(71)
—
(311)
(510)
(795)
Stock
based compensation
103
88
99
538
349
Interest expense and financing charges, net
4,394
2,046
1,647
9,753
7,390
Other
income, net
(10,539)
(10,522)
(11,348)
(39,252)
(40,470)
Provision for income taxes
2,804
3,250
3,381
11,214
13,427
Interest
on trade accounts receivable
11,543
10,785
11,443
45,440
41,276
Adjusted EBITDA
$
11,101
$
10,931
$
9,707
$
43,810
$
42,281
Natural
Sand Proppant Services
Three Months Ended
Years Ended
December 31,
September
30,
December 31,
Reconciliation of net (loss) income to Adjusted EBITDA:
2023
2022
2023
2023
2022
Net (loss) income
$
(2,384)
$
(2,849)
$
(515)
$
906
$
(1,945)
Depreciation,
depletion, amortization and accretion expense
1,339
2,015
2,836
7,737
8,732
Losses (gains) on disposal of assets, net
3
1
—
(13)
(89)
Stock
based compensation
38
29
37
187
119
Interest expense and financing charges, net
119
201
117
540
753
Other
income, net
(5)
(4)
(6)
(18)
(14)
Adjusted EBITDA
$
(890)
$
(607)
$
2,469
$
9,339
$
7,556
12
MAMMOTH
ENERGY SERVICES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Drilling Services
Three Months Ended
Years
Ended
December 31,
September 30,
December 31,
Reconciliation of net loss to Adjusted EBITDA:
2023
2022
2023
2023
2022
Net loss
$
(147)
$
(1,577)
$
(1,304)
$
(4,134)
$
(6,071)
Depreciation
expense
1,017
1,390
1,114
4,514
5,811
Gains on disposal of assets, net
(1,577)
—
—
(1,577)
—
Stock
based compensation
5
3
5
23
11
Interest expense and financing charges, net
113
134
117
489
435
Other
income, net
(33)
—
—
(33)
—
Adjusted EBITDA
$
(622)
$
(50)
$
(68)
$
(718)
$
186
Other
Services(a)
Three Months Ended
Years Ended
December 31,
September
30,
December 31,
Reconciliation of net loss to Adjusted EBITDA:
2023
2022
2023
2023
2022
Net loss
$
(110)
$
(249)
$
(674)
$
(4,390)
$
(7,730)
Depreciation,
amortization and accretion expense
1,386
2,566
1,755
7,675
11,454
Gains on disposal of assets, net
(1,037)
(103)
(123)
(1,850)
(2,409)
Impairment
of goodwill
—
—
1,810
1,810
—
Stock
based compensation
16
15
14
89
64
Interest expense and financing charges, net
210
239
221
912
988
Other
income, net
(388)
(212)
(2,734)
(2,714)
(85)
Provision (benefit) for income taxes
487
(1,085)
57
1,083
180
Adjusted
EBITDA
$
564
$
1,171
$
326
$
2,615
$
2,462
a. Includes results for Mammoth’s aviation, equipment rentals, remote accommodations and equipment manufacturing and corporate related activities. The
Company’s corporate related activities do not generate revenue.
13
MAMMOTH ENERGY SERVICES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
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. Mammoth defines adjusted net (loss) income as net (loss) income before impairment of goodwill. Mammoth defines adjusted basic and diluted (loss) earnings per share as (loss) earnings per share before the effects of impairment of goodwill and impairment of other long-lived assets. 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.