Mammoth Energy Services, Inc. Announces Second Quarter 2018 Operational and Financial Results
Record revenues of $534 million, up 443% Y/Y
Fully repaid credit facility, resulting in zero long term debt outstanding
Initiated regular quarterly dividend
Signed a new one-year $900 million contract with the Puerto Rico Electric Power Authority ("PREPA")
Extended pressure pumping and sand contracts with Gulfport Energy through 2021
Closed two acquisitions
OKLAHOMA CITY, Aug. 06, 2018 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. ("Mammoth" or the "Company") (NASDAQ: TUSK) today reported financial and operational results for the three and six months ended June 30, 2018.
Financial Highlights for the Second Quarter 2018:
Total revenue was $533.6 million for the three months ended June 30, 2018, up 8% sequentially from $494.2 million for the three months ended March 31, 2018 and up 443% from $98.3 million for the three months ended June 30, 2017.
Net income for the three months ended June 30, 2018 was $42.7 million or $0.95 on a per share basis, a $12.8 million decrease from $55.5 million for the three months ended March 31, 2018 and an improvement of $43.9 million from a net loss of $1.2 million for the three months ended June 30, 2017.
Adjusted net income (as defined and reconciled below) for the three months ended June 30, 2018 was $60.2 million, or $1.34 on an adjusted diluted per share basis.
Adjusted EBITDA (as defined and reconciled below) was $148.6 million for the three months ended June 30, 2018, up 14% sequentially from $130.8 million for the three months ended March 31, 2018 and up 878% from $15.2 million for the three months ended June 30, 2017.
CEO Comment
Arty Straehla, Mammoth's Chief Executive Officer, stated, "The second quarter marked a milestone for Mammoth as we were able to completely repay our debt, further expand our services through two acquisitions and organically grow our current businesses all with internally generated cash flows. Most importantly, we initiated a regular quarterly dividend to return some cash to our stockholders. As we look to the future, we see significant growth potential in various areas of the industrial space to bring additional balance to our asset base and revenue stream."
Pressure Pumping Services
Mammoth's pressure pumping division contributed revenues (inclusive of inter-segment revenues) of $101.4 million on 1,815 stages for the three months ended June 30, 2018, a slight increase from $101.1 million on 1,672 stages for the three months ended March 31, 2018 and a 102% increase from $50.2 million on 1,287 stages for the three months ended June 30, 2017.
Infrastructure Services
Mammoth's infrastructure services segment contributed revenues of $360.3 million for the three months ended June 30, 2018, an 11% increase from $325.5 million for the three months ended March 31, 2018 and a $358.6 million increase from $1.7 million the three months ended June 30, 2017.
On May 26, 2018, Mammoth’s wholly owned subsidiary Cobra Acquisitions LLC (“Cobra”), signed a one-year $900 million contract with PREPA to complete the restoration of the critical electrical transmission and distribution system components damaged as a result of Hurricane Maria as well as to support the initial phase of reconstruction of the electrical power system in Puerto Rico.
Natural Sand Proppant Services
Mammoth's natural sand proppant division contributed revenues (inclusive of inter-segment revenues) of $52.8 million for the three months ended June 30, 2018, up 4% from $51.0 million for the three months ended March 31, 2018 and up 113% from $24.8 million for the three months ended June 30, 2017. The Company sold 777,850 tons of sand for the three months ended June 30, 2018, a 6% increase from 735,584 for the three months ended March 31, 2018 and a 117% increase from 359,053 for the three months ended June 30, 2017.
The Company is currently upgrading certain equipment at its Piranha facility, which is expected to increase Mammoth's total sand processing capacity to approximately 4.4 million tons per year.
Contract Land and Directional Drilling Services
Mammoth's contract land and directional drilling services division contributed revenues (inclusive of inter-segment revenues) of $17.2 million for the three months ended June 30, 2018, a 13% increase from $15.2 million for the three months ended March 31, 2018 and a 38% increase from $12.5 million for the three months ended June 30, 2017. The average drilling day rate was $17,229, $16,541 and $14,100, respectively, for the three months ended June 30, 2018, March 31, 2018 and June 30, 2017.
Mammoth anticipates that it will operate, on average, five to six rigs throughout 2018.
Other Services
Mammoth's other services, including coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling and remote accommodations, contributed revenues (inclusive of inter-segment revenues) of $20.2 million for the three months ended June 30, 2018, a 12% decrease from $22.9 million for the three months ended March 31, 2018 and a 98% increase from $10.2 million for the three months ended June 30, 2017.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses increased to $65.1 million for the three months ended June 30, 2018 from $38.5 million for the three months ended March 31, 2018 and $7.7 million for the three months ended June 30, 2017. The increase from the second quarter of 2017 to the second quarter of 2018 is primarily attributable to $28.3 million in bad debt expense and $17.5 million in non-employee non-cash equity compensation expense. The increase from the first quarter of 2018 to the second quarter of 2018 is primarily attributable to $17.5 million in non-employee non-cash equity compensation expense and a $2.7 million increase in bad debt expense.
SG&A expenses, as a percentage of total revenue, were 12% for the three months ended June 30, 2018 compared to 8% for the three months ended March 31, 2018 and 8% for the three months ended June 30, 2017. Excluding bad debt and non-employee non-cash equity compensation expenses, SG&A expenses as a percentage of total revenue were 3.6% for the three months ended June 30 2018, compared to 2.6% for the three months ended March 31, 2018 and 7.8% for the three months ended June 30, 2017.
Acquisitions
During the second quarter of 2018, Mammoth acquired WTL Oil LLC ("WTL"), a company engaged in the hauling of crude oil in Oklahoma. Immediately following the closing of the transaction, WTL embarked on an expansion program to grow its fleet to 49 crude hauling trucks (from 20 at the time of acquisition) and entered the west Texas market.
Additionally, during the second quarter of 2018, Mammoth acquired RTS Energy Services LLC ("RTS"), a company engaged in the cementing and acidizing of oil and gas wells in west Texas. Through the RTS transaction, Mammoth expanded its service offerings into the Permian Basin with top quality operators.
Initiation of Quarterly Cash Dividend
On July 16, 2018, Mammoth announced that its Board of Directors initiated a quarterly dividend policy and declared its first quarterly cash dividend of $0.125 per share of common stock, to be paid on August 14, 2018 to stockholders of record as of the close of business on August 7, 2018.
Strong financial results and a favorable outlook support some balanced return of capital to Mammoth's stockholders. The regular quarterly cash dividend provides benefit to Mammoth’s existing stockholders as well as broadening Mammoth’s exposure to additional income oriented investors.
Liquidity
As of June 30, 2018, Mammoth had cash on hand totaling $10.7 million and no borrowings outstanding under its revolving credit facility. As of June 30, 2018, the Company had approximately $162.7 million of available borrowing capacity under its revolving credit facility, after giving effect to $6.5 million of outstanding letters of credit, resulting in total liquidity of approximately $173.4 million.
Capital Expenditures
The following table summarizes Mammoth's capital expenditures by operating division for the periods indicated (in thousands):
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2018
2017
2018
2018
2017
Pressure pumping services(a)
$
8,233
$
24,737
$
7,866
$
16,099
$
53,402
Infrastructure services(b)
40,778
3,958
15,778
56,556
3,958
Natural sand proppant services(c)
6,958
2,795
5,700
12,658
2,970
Contract and directional drilling services(d)
7,083
3,632
3,618
10,701
5,901
Other(e)
9,959
344
2,812
12,771
344
Total capital expenditures
$
73,011
$
35,466
$
35,774
$
108,785
$
66,575
a. Capital expenditures primarily for pressure pumping equipment for the periods presented. b. Capital expenditures primarily for trucks and other equipment for the periods presented. c. Capital expenditures primarily for plant upgrades for the periods presented. d. Capital expenditures primarily for upgrades to our rig fleet and real estate purchases for the periods presented. e. Capital expenditures primarily for equipment for our rental and crude oil hauling businesses for 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 Report filed on Form 10-K with the Securities and Exchange Commission ("SEC") on February 28, 2018, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings.
The Company's Chief Executive Officer and Chief Financial Officer comprise the Company's Chief Operating Decision Maker function ("CODM"). Segment information is prepared on the same basis that the CODM manages the segments, evaluates the segment financial statements and makes key operating and resource utilization decisions. Segment evaluation is determined on a quantitative basis based on a function of operating income (loss) as well as a qualitative basis, such as nature of the product and service offerings and types of customers.
On June 5, 2017, the Company completed the acquisition of (1) Sturgeon Acquisitions, LLC and its wholly owned subsidiaries Taylor Frac LLC, Taylor RE, LLC and South River, LLC (collectively, "Sturgeon"), (2) Stingray Energy Services and (3) Stingray Cementing (together with Stingray Energy Services, the “Stingray Acquisition”) in exchange for the issuance by Mammoth of an aggregate of 7,000,000 shares of its common stock.
Prior to the acquisition, the Company and Sturgeon were under common control and it is required under accounting principles generally accepted in the Unites States of America ("GAAP") to account for this common control acquisition in a manner similar to the pooling of interest method of accounting. Therefore, the Company's historical financial information has been recast to combine Sturgeon with the Company as if the acquisition had been completed at commencement of Sturgeon's operations on September 13, 2014.
Conference Call Information
Mammoth will host a conference call on Tuesday, August 7, 2018 at 10:00 a.m. CDT (11:00 am EDT) to discuss its second quarter 2018 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 9885197. 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 company serving both the oil and gas and the electric utility industries in North America and US territories. Mammoth's subsidiaries provide a diversified set of drilling and completion services to the exploration and production industry including pressure pumping, coil tubing, natural sand and proppant services as well as trucking, drilling, cementing, water transfer among others. In addition, its infrastructure division provides transmission, distribution and logistics services to various public and private owned utilities throughout the US and Puerto Rico.
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
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 we expect, believe or anticipate 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 our 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 our existing operations, experience and perception of historical trends, current conditions, anticipated future developments and their effect on us, 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, our forward-looking statements are subject to significant risks and uncertainties, including those described in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings we make with the SEC, including those relating to our acquisitions and our contracts, many of which are beyond our control, which may cause actual results to differ materially from our historical experience and our 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: risks relating to economic conditions; volatility of crude oil and natural gas commodity prices; delays in or failure of delivery of current or future orders of specialized equipment; the loss of or interruption in operations of one or more key suppliers or customers; solvency of counterparties to our contracts and their ability to timely pay for our services; oil and gas market conditions; the effects of government regulation, permitting and other legal requirements, including new legislation or regulation of hydraulic fracturing; operating risks; the adequacy of our capital resources and liquidity; weather; litigation; competition in the oil and natural gas and infrastructure industries; and costs and availability of resources.
Investors are cautioned not to place undue reliance on any forward-looking statement which speaks only as of the date on which such statement is made. We undertake no obligation to correct, revise or update any forward-looking statement after the date such statement is made, whether as a result of new information, future events or otherwise, except as required by applicable law.
MAMMOTH ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
ASSETS
June 30,
December 31,
2018
2017
CURRENT ASSETS
(in thousands)
Cash and cash equivalents
$
10,702
$
5,637
Accounts receivable, net
312,850
243,746
Receivables from related parties
30,674
33,788
Inventories
12,717
17,814
Prepaid expenses
13,811
12,552
Other current assets
816
886
Total current assets
381,570
314,423
Property, plant and equipment, net
423,315
351,017
Sand reserves
73,759
74,769
Intangible assets, net - customer relationships
6,204
9,623
Intangible assets, net - trade names
6,726
6,516
Goodwill
101,511
99,811
Deferred income tax asset
31,892
6,739
Other non-current assets
4,146
4,345
Total assets
$
1,029,123
$
867,243
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable
$
177,353
$
141,306
Payables to related parties
1,916
1,378
Accrued expenses and other current liabilities
54,701
40,895
Income taxes payable
131,210
36,409
Total current liabilities
365,180
219,988
Long-term debt
—
99,900
Deferred income tax liabilities
31,036
34,147
Asset retirement obligation
3,138
2,123
Other liabilities
4,100
3,289
Total liabilities
403,454
359,447
COMMITMENTS AND CONTINGENCIES
EQUITY
Equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 44,752,765 and 44,589,306 issued and outstanding at June 30, 2018 and December 31, 2017, respectively
448
446
Additional paid in capital
528,421
508,010
Retained earnings
100,247
2,001
Accumulated other comprehensive loss
(3,447
)
(2,661
)
Total equity
625,669
507,796
Total liabilities and equity
$
1,029,123
$
867,243
MAMMOTH ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2018
2017
2018
2018
2017
(in thousands, except per share amounts)
REVENUE
Services revenue
$
455,545
$
29,659
$
408,659
$
864,204
$
56,751
Services revenue - related parties
40,611
44,603
49,088
89,699
77,565
Product revenue
27,708
10,395
25,040
52,748
13,767
Product revenue - related parties
9,730
13,605
11,462
21,192
25,145
Total revenue
533,594
98,262
494,249
1,027,843
173,228
COST AND EXPENSES
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $26,898, $51,473, $24,575, $17,651 and $33,489, respectively, for the three and six months ended June 30, 2018, three month ended March 31, 2018 and three and six months ended June 30, 2017)
302,283
57,104
290,979
593,262
102,565
Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0, $0, $0 and $0, respectively, for the three and six months ended June 30, 2018, three months ended March 31, 2018 and three and six months ended June 30, 2017)
2,428
262
1,792
4,220
692
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $3,879, $6,193, $2,314, $2,204 and $3,566, respectively, for the three and six months ended June 30, 2018, three months ended March 31, 2018 and three and six months ended June 30, 2017)
35,117
19,974
33,330
68,447
32,581
Selling, general and administrative
64,595
7,393
38,082
102,677
13,806
Selling, general and administrative - related parties
532
307
429
961
631
Depreciation, depletion, amortization and accretion
30,795
19,893
26,908
57,703
37,130
Impairment of long-lived assets
187
—
—
187
—
Total cost and expenses
435,937
104,933
391,520
827,457
187,405
Operating income (loss)
97,657
(6,671
)
102,729
200,386
(14,177
)
OTHER (EXPENSE) INCOME
Interest expense, net
(959
)
(1,112
)
(1,237
)
(2,196
)
(1,509
)
Bargain purchase gain, net of tax
—
4,012
—
—
4,012
Other, net
(486
)
(203
)
(28
)
(514
)
(387
)
Total other (expense) income
(1,445
)
2,697
(1,265
)
(2,710
)
2,116
Income (loss) before income taxes
96,212
(3,974
)
101,464
197,676
(12,061
)
Provision (benefit) for income taxes
53,512
(2,804
)
45,918
99,430
(5,910
)
Net income (loss)
$
42,700
$
(1,170
)
$
55,546
$
98,246
$
(6,151
)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net of tax of $86, $272, $186, $434 and $454, respectively, for the three and six months ended June 30, 2018, three months ended March 31, 2018 and three and six months ended June 30, 2017
(325
)
181
(461
)
(786
)
409
Comprehensive income (loss)
$
42,375
$
(989
)
$
55,085
$
97,460
$
(5,742
)
Net income (loss) per share (basic)
$
0.95
$
(0.03
)
$
1.24
$
2.20
$
(0.16
)
Net income (loss) per share (diluted)
$
0.95
$
(0.03
)
$
1.24
$
2.18
$
(0.16
)
Weighted average number of shares outstanding (basic)
44,737
39,500
44,650
44,700
38,506
Weighted average number of shares outstanding (diluted)
45,059
39,500
44,884
44,977
38,506
MAMMOTH ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended
June 30,
2018
2017
(in thousands)
Cash flows from operating activities:
Net income (loss)
$
98,246
$
(6,151
)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Equity based compensation
17,487
—
Stock based compensation
2,916
1,620
Depreciation, depletion, accretion and amortization
57,703
37,130
Amortization of coil tubing strings
1,120
1,046
Amortization of debt origination costs
199
199
Bad debt expense
53,790
19
(Gain) loss on disposal of property and equipment
(128
)
127
Gain on bargain purchase
—
(4,012
)
Impairment of long-lived assets
187
—
Deferred income taxes
(27,906
)
(6,529
)
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net
(122,908
)
(4,793
)
Receivables from related parties
3,114
(12,995
)
Inventories
4,156
(4,932
)
Prepaid expenses and other assets
(1,195
)
1,528
Accounts payable
34,186
20,557
Payables to related parties
538
(83
)
Accrued expenses and other liabilities
10,193
1,301
Income taxes payable
94,753
(28
)
Net cash provided by operating activities
226,451
24,004
Cash flows from investing activities:
Purchases of property and equipment
(105,349
)
(66,575
)
Purchases of property and equipment from related parties
(3,436
)
—
Business acquisitions
(13,356
)
(39,570
)
Proceeds from disposal of property and equipment
898
781
Business combination cash acquired
—
2,671
Net cash used in investing activities
(121,243
)
(102,693
)
Cash flows from financing activities:
Borrowings from lines of credit
52,000
79,150
Repayments of lines of credit
(151,900
)
(14,150
)
Repayments of equipment financing note
(145
)
—
Repayment of Stingray acquisition long-term debt
—
(7,074
)
Net cash (used in) provided by financing activities
(100,045
)
57,926
Effect of foreign exchange rate on cash
(98
)
73
Net change in cash and cash equivalents
5,065
(20,690
)
Cash and cash equivalents at beginning of period
5,637
29,239
Cash and cash equivalents at end of period
$
10,702
$
8,549
Supplemental disclosure of cash flow information:
Cash paid for interest
$
2,543
$
1,086
Cash paid for income taxes
$
32,584
$
912
Supplemental disclosure of non-cash transactions:
Purchases of property and equipment included in accounts payable and accrued expenses
$
20,897
$
7,836
Acquisition of Sturgeon, Stingray Cementing LLC and Stingray Energy Services LLC
$
—
$
23,091
MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS (unaudited) (in thousands)
Three months ended June 30, 2018
Pressure Pumping
Infrastructure
Sand
Drilling
All Other
Eliminations
Total
Revenue from external customers
$
100,333
$
360,250
$
37,439
$
17,126
$
18,446
$
—
$
533,594
Intersegment revenues
1,073
—
15,406
84
1,721
(18,284
)
—
Total revenue
101,406
360,250
52,845
17,210
20,167
(18,284
)
533,594
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
61,593
210,189
35,117
15,280
17,649
—
339,828
Intersegment cost of revenues
16,174
754
1,019
(40
)
129
(18,036
)
—
Total cost of revenue
77,767
210,943
36,136
15,240
17,778
(18,036
)
339,828
Selling, general and administrative
20,822
39,786
1,787
1,591
1,141
—
65,127
Depreciation, depletion, amortization and accretion
13,829
4,094
3,881
5,349
3,642
—
30,795
Impairment of long-lived assets
—
—
—
187
—
—
187
Operating income (loss)
(11,012
)
105,427
11,041
(5,157
)
(2,394
)
(248
)
97,657
Interest expense, net
341
106
76
265
171
—
959
Other expense
80
330
36
32
8
—
486
Income (loss) before income taxes
$
(11,433
)
$
104,991
$
10,929
$
(5,454
)
$
(2,573
)
$
(248
)
$
96,212
Three months ended June 30, 2017
Pressure Pumping
Infrastructure
Sand
Drilling
All Other
Eliminations
Total
Revenue from external customers
$
49,924
$
1,709
$
24,000
$
12,472
$
10,157
$
—
$
98,262
Intersegment revenues
272
—
762
—
85
(1,119
)
—
Total revenue
50,196
1,709
24,762
12,472
10,242
(1,119
)
98,262
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
35,826
1,626
19,974
12,033
7,881
—
77,340
Intersegment cost of revenues
847
—
267
—
5
(1,119
)
—
Total cost of revenue
36,673
1,626
20,241
12,033
7,886
(1,119
)
77,340
Selling, general and administrative
2,403
307
2,416
1,435
1,139
—
7,700
Depreciation, depletion, amortization and accretion
9,626
340
2,206
4,974
2,747
—
19,893
Operating income (loss)
1,494
(564
)
(101
)
(5,970
)
(1,530
)
—
(6,671
)
Interest expense, net
303
4
353
440
12
—
1,112
Bargain purchase gain
—
—
(4,012
)
—
—
—
(4,012
)
Other expense
4
—
140
60
(1
)
—
203
Income (loss) before income taxes
$
1,187
$
(568
)
$
3,418
$
(6,470
)
$
(1,541
)
$
—
$
(3,974
)
Three months ended March 31, 2018
Pressure Pumping
Infrastructure
Sand
Drilling
All Other
Eliminations
Total
Revenue from external customers
$
96,579
$
325,459
$
36,503
$
15,228
$
20,480
$
—
$
494,249
Intersegment revenues
4,559
—
14,512
2
2,415
(21,488
)
—
Total revenue
101,138
325,459
51,015
15,230
22,895
(21,488
)
494,249
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
66,612
194,076
33,330
14,475
17,608
—
326,101
Intersegment cost of revenues
15,402
1,791
4,286
162
105
(21,746
)
—
Total cost of revenue
82,014
195,867
37,616
14,637
17,713
(21,746
)
326,101
Selling, general and administrative
2,663
31,851
1,644
1,253
1,100
—
38,511
Depreciation, depletion, amortization and accretion
13,986
2,407
2,316
4,355
3,844
—
26,908
Operating income (loss)
2,475
95,334
9,439
(5,015
)
238
258
102,729
Interest expense, net
504
76
80
395
182
—
1,237
Other expense
12
2
(13
)
40
(13
)
—
28
Income (loss) before income taxes
$
1,959
$
95,256
$
9,372
$
(5,450
)
$
69
$
258
$
101,464
Six months ended June 30, 2018
Pressure Pumping
Infrastructure
Sand
Drilling
All Other
Eliminations
Total
Revenue from external customers
$
196,912
$
685,709
$
73,942
$
32,354
$
38,926
$
—
$
1,027,843
Intersegment revenues
5,632
—
29,918
86
4,136
(39,772
)
—
Total revenue
202,544
685,709
103,860
32,440
43,062
(39,772
)
1,027,843
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
128,205
404,265
68,447
29,755
35,257
—
665,929
Intersegment cost of revenues
31,576
2,545
5,305
122
234
(39,782
)
—
Total cost of revenue
159,781
406,810
73,752
29,877
35,491
(39,782
)
665,929
Selling, general and administrative
23,485
71,637
3,431
2,844
2,241
—
103,638
Depreciation, depletion, amortization and accretion
27,815
6,501
6,197
9,704
7,486
—
57,703
Impairment of long-lived assets
—
—
—
187
—
—
187
Operating income (loss)
(8,537
)
200,761
20,480
(10,172
)
(2,156
)
10
200,386
Interest expense, net
845
182
156
660
353
—
2,196
Other expense
92
332
23
72
(5
)
—
514
Income (loss) before income taxes
$
(9,474
)
$
200,247
$
20,301
$
(10,904
)
$
(2,504
)
$
10
$
197,676
Six months ended June 30, 2017
Pressure Pumping
Infrastructure
Sand
Drilling
All Other
Eliminations
Total
Revenue from external customers
$
90,377
$
1,709
$
38,912
$
23,223
$
19,007
$
—
$
173,228
Intersegment revenues
459
—
1,447
—
85
(1,991
)
—
Total revenue
90,836
1,709
40,359
23,223
19,092
(1,991
)
173,228
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
64,533
1,712
32,582
22,986
14,025
—
135,838
Intersegment cost of revenues
1,532
—
454
—
5
(1,991
)
—
Total cost of revenue
66,065
1,712
33,036
22,986
14,030
(1,991
)
135,838
Selling, general and administrative
4,180
355
4,474
2,728
2,700
—
14,437
Depreciation, depletion, amortization and accretion
18,784
340
3,569
9,942
4,495
—
37,130
Operating income (loss)
1,807
(698
)
(720
)
(12,433
)
(2,133
)
—
(14,177
)
Interest expense, net
431
4
486
657
(69
)
—
1,509
Bargain purchase gain
—
—
(4,012
)
—
—
—
(4,012
)
Other expense
7
—
154
224
2
—
387
Income (loss) before income taxes
$
1,369
$
(702
)
$
2,652
$
(13,314
)
$
(2,066
)
$
—
$
(12,061
)
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 long-lived assets, acquisition related costs, public offering costs, equity based compensation, stock based compensation, bargain purchase gain, interest expense, net, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets) and provision (benefit) for income taxes. 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, none of which are components of Adjusted EBITDA. 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
Six Months Ended
June 30,
March 31,
June 30,
Reconciliation of Adjusted EBITDA to net income (loss):
2018
2017
2018
2018
2017
Net income (loss)
$
42,700
$
(1,170
)
$
55,546
$
98,246
$
(6,151
)
Depreciation, depletion, accretion and amortization expense
30,795
19,893
26,908
57,703
37,130
Impairment of long-lived assets
187
—
—
187
—
Acquisition related costs
77
961
(46
)
31
2,208
Public offering costs
731
—
—
731
—
Equity based compensation
17,487
—
—
17,487
—
Stock based compensation
1,660
1,050
1,256
2,916
1,620
Bargain purchase gain
—
(4,012
)
—
—
(4,012
)
Interest expense, net
959
1,112
1,237
2,196
1,509
Other expense, net
486
203
28
514
387
Provision (benefit) for income taxes
53,512
(2,804
)
45,918
99,430
(5,910
)
Adjusted EBITDA
$
148,594
$
15,233
$
130,847
$
279,441
$
26,781
Pressure Pumping Services
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
Reconciliation of Adjusted EBITDA to net income (loss):
2018
2017
2018
2018
2017
Net income
$
(11,433
)
$
1,187
$
1,959
$
(9,474
)
$
1,369
Depreciation and amortization expense
13,829
9,626
13,986
27,815
18,784
Acquisition related costs
33
—
—
33
—
Public offering costs
202
—
—
202
—
Equity based compensation
17,487
—
—
17,487
—
Stock based compensation
453
503
418
871
774
Interest expense
341
303
504
845
431
Other expense, net
80
4
12
92
7
Adjusted EBITDA
$
20,992
$
11,623
$
16,879
$
37,871
$
21,365
Infrastructure Services
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
Reconciliation of Adjusted EBITDA to net income (loss):
2018
2017
2018
2018
2017
Net income (loss)
$
52,359
$
(568
)
$
47,299
$
99,658
$
(702
)
Depreciation and amortization expense
4,094
340
2,407
6,501
340
Acquisition related costs
4
42
(8
)
(4
)
42
Public offering costs
360
—
—
360
—
Stock based compensation
606
—
457
1,063
—
Interest expense
106
4
76
182
4
Other expense, net
330
—
2
332
—
Provision for income taxes
52,632
—
47,957
100,569
—
Adjusted EBITDA
$
110,491
$
(182
)
$
98,190
$
208,681
$
(316
)
Natural Sand Proppant Services
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
Reconciliation of Adjusted EBITDA to net income (loss):
2018
2017
2018
2018
2017
Net income
$
10,929
$
3,409
$
9,372
$
20,301
$
2,643
Depreciation, depletion, accretion and amortization expense
3,881
2,206
2,316
6,197
3,569
Acquisition related costs
—
916
(38
)
(38
)
1,954
Public offering costs
95
—
—
95
—
Stock based compensation
205
182
186
391
252
Bargain purchase gain
—
(4,012
)
—
—
(4,012
)
Interest expense
76
353
80
156
486
Other expense, net
36
140
(13
)
23
154
Provision for income taxes
—
9
—
—
9
Adjusted EBITDA
$
15,222
$
3,203
$
11,903
$
27,125
$
5,055
Contract Land and Directional Drilling Services
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
Reconciliation of Adjusted EBITDA to net income (loss):
2018
2017
2018
2018
2017
Net loss
$
(5,454
)
$
(6,470
)
$
(5,450
)
$
(10,904
)
$
(13,314
)
Depreciation and amortization expense
5,349
4,974
4,355
9,704
9,942
Impairment of long-lived assets
187
—
—
187
—
Acquisition related costs
—
3
—
—
25
Public offering costs
34
—
—
34
—
Stock based compensation
301
180
107
408
292
Interest expense, net
265
440
395
660
657
Other expense, net
32
60
40
72
224
Adjusted EBITDA
$
714
$
(813
)
$
(553
)
$
161
$
(2,174
)
Other Services(a)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
Reconciliation of Adjusted EBITDA to net income (loss):
2018
2017
2018
2018
2017
Net (loss) income
$
(3,453
)
$
1,272
$
2,107
$
(1,346
)
$
3,853
Depreciation and amortization expense
3,642
2,747
3,844
7,486
4,495
Acquisition related costs
40
—
—
40
187
Public offering costs
40
—
—
40
—
Stock based compensation
94
184
89
183
301
Interest expense, net
171
12
182
353
(69
)
Other expense, net
8
(1
)
(13
)
(5
)
2
Provision (benefit) for income taxes
880
(2,813
)
(2,038
)
(1,158
)
(5,919
)
Adjusted EBITDA
$
1,422
$
1,401
$
4,171
$
5,593
$
2,850
(a) Includes results for our coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling and remote accommodations services and corporate related activities. Our corporate related activities do not generate revenue.
Adjusted Net Income and Adjusted Earnings per Share
Adjusted net income and adjusted 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 that may not be indicative of the Company's ongoing operating results. Adjusted net income and adjusted earnings per share should not be considered in isolation or as a substitute for net income and 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 income and adjusted earnings per share to the GAAP financial measures of net income and earnings per share for the periods specified.
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