Mammoth Energy Services, Inc. Announces Second Quarter 2019 Operational and Financial Results
Second Quarter net loss of $11 million, or $0.24 per diluted share
Second Quarter Adjusted EBITDA of $9 million
Suspended dividend due to oilfield service market conditions
2019 capital budget decreased 49% from $80 million to $41 million
OKLAHOMA CITY, Aug. 01, 2019 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. ("Mammoth" or the "Company") (NASDAQ: TUSK) today reported financial and operational results for the quarter ended June 30, 2019.
Financial Highlights for the Second Quarter of 2019:
Total revenue was $181.8 million for the three months ended June 30, 2019, down from $262.1 million for the three months ended March 31, 2019 and down from $533.6 million for the three months ended June 30, 2018.
Net loss for the three months ended June 30, 2019 was $10.9 million, or $0.24 per fully diluted share, as compared to net income of $28.3 million, or $0.63 per fully diluted share, for the three months ended March 31, 2019 and net income of $42.7 million, or $0.95 per fully diluted share, for the three months ended June 30, 2018.
Adjusted EBITDA (as defined and reconciled below) was $8.6 million for the three months ended June 30, 2019, down from $82.8 million for the three months ended March 31, 2019 and down from $148.6 million for the three months ended June 30, 2018.
Arty Straehla, Mammoth's Chief Executive Officer, stated, “The second quarter of 2019 was a challenging environment as further capital restraint by our oilfield customers continued to apply downward pressure on pricing and resulted in several completions being delayed or canceled with short notice. In addition, we worked through the challenges of demobilizing our equipment from Puerto Rico. As a result of current market conditions, we have begun to right size our operations and we expect this process to be completed in the coming months. Demand for infrastructure services remains high with the competencies and experience of our crews allowing for unique bidding opportunities in both the US and overseas. While our work in Puerto Rico has ended, we have continued to receive payments from PREPA, with $42 million received in the second quarter of 2019. For the remainder of 2019, we are taking a disciplined approach to our spending and we have reduced our 2019 capital expenditure budget from $80 million to $41 million. As a result of oilfield market conditions, our board of directors has suspended the quarterly cash dividend.”
Infrastructure Services
Mammoth's infrastructure services segment contributed revenues of $41.8 million for the three months ended June 30, 2019, a decrease from $108.7 million for the three months ended March 31, 2019 and a decline from $360.3 million for the three months ended June 30, 2018.
During the second quarter of 2019, Mammoth demobilized approximately 1,000 pieces of equipment from Puerto Rico back to the Lower 48.
Pressure Pumping Services
Mammoth's pressure pumping division contributed revenues (inclusive of inter-segment revenues) of $84.6 million for the three months ended June 30, 2019, a decrease from $92.1 million for the three months ended March 31, 2019 and a decrease from $101.4 million for the three months ended June 30, 2018.
Mammoth's pressure pumping division completed a total of 1,717 stages for the three months ended June 30, 2019, as compared to 1,889 stages for the three months ended March 31, 2019 and 1,815 stages for the three months ended June 30, 2018. An average of 2.7 of our 6 fleets were active for the three months ended June 30, 2019, compared to average utilization of 4.4 fleets during the three months ended March 31, 2019 and an average utilization of 4.3 fleets during the three months ended June 30, 2018.
Natural Sand Proppant Services
Mammoth's natural sand proppant division contributed revenues (inclusive of inter-segment revenues) of $40.4 million for the three months ended June 30, 2019, an increase from $37.9 million for the three months ended March 31, 2019 and a decrease from $52.8 million for the three months ended June 30, 2018.
The Company sold 812,611 tons of sand during the three months ended June 30, 2019, a 22% increase from the 665,806 tons sold during the three months ended March 31, 2019 and a 4% increase from the 777,850 tons sold during the three months ended June 30, 2018. The Company's average sales price for the sand sold during the second quarter of 2019 was $30.09 per ton, a 7% decrease from the $32.20 per ton average sales price during the first quarter of 2019 and a 30% decrease from the $43.09 per ton average sales price during the second quarter of 2018.
Blended second quarter production costs came in at approximately $12 per ton during the second quarter of 2019, unchanged from the first quarter of 2019 production costs and a 24% decrease from production costs of approximately $15.70 per ton during the second quarter of 2018.
Other Services
Mammoth's other services, including contract land and directional drilling, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling and remote accommodations, contributed revenues (inclusive of inter-segment revenues) of $28.4 million for the three months ended June 30, 2019, a decrease from $38.5 million for the three months ended March 31, 2019 and a decrease from $37.3 million for the three months ended June 30, 2018.
An average of 601 pieces of equipment were rented during the three months ended June 30, 2019, down 3% from the average 621 pieces of equipment rented during the three months ended March 31, 2019 and a 77% increase from an average of 339 pieces of equipment rented for the three months ended June 30, 2018. As a result of market conditions, the Company has temporarily shut down its cementing and acidizing operations as well as its flowback operations subsequent to June 30, 2019.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses were $9.5 million for the three months ended June 30, 2019, as compared to $17.3 million for the three months ended March 31, 2019 and $65.1 million for the three months ended June 30, 2018.
Following is a breakout of SG&A expense (in thousands):
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2019
2018
2019
2019
2018
Cash expenses:
Compensation and benefits
$
2,154
$
10,978
$
9,230
$
11,384
$
18,677
Professional services
2,934
2,981
3,789
6,723
5,568
Other(a)
3,381
3,935
3,244
6,626
5,542
Total cash SG&A expense
8,469
17,894
16,263
24,733
29,787
Non-cash expenses:
Bad debt provision(b)
262
28,263
4
266
53,790
Equity based compensation(c)
—
17,487
—
—
17,487
Stock based compensation
724
1,483
1,069
1,792
2,574
Total non-cash SG&A expense
986
47,233
1,073
2,058
73,851
Total SG&A expense
$
9,455
$
65,127
$
17,336
$
26,791
$
103,638
a. Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs. b. $28.3 million and $53.6 million of the bad debt expense recognized during the three and six months ended June 30, 2018 was subsequently reversed during the third quarter of 2018. c. Represents compensation expense for non-employee awards, which were issued and are payable by certain affiliates of Wexford (the sponsor level).
SG&A expenses, as a percentage of total revenue, were 5% for the three months ended June 30, 2019 as compared to 7% for the three months ended March 31, 2019 and 12% for the three months ended June 30, 2018.
Liquidity
As of June 30, 2019, Mammoth had cash on hand totaling $7.2 million and outstanding borrowings under its revolving credit facility of $82.0 million. As of June 30, 2019, the Company had $93.5 million of available borrowing capacity under its revolving credit facility, after giving effect to $8.7 million of outstanding letters of credit, resulting in total liquidity of approximately $100.7 million. As of July 31, 2019, the Company had cash on hand totaling $11.6 million and outstanding borrowings under its revolving credit facility of $85.5 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,
2019
2018
2019
2019
2018
Infrastructure services(a)
$
2,177
$
40,778
$
3,254
$
5,431
$
56,556
Pressure pumping services(b)
4,013
8,233
7,329
11,342
16,099
Natural sand proppant services(c)
990
6,958
985
1,975
12,658
Other(d)
2,767
17,042
8,705
11,472
23,472
Total capital expenditures
$
9,947
$
73,011
$
20,273
$
30,220
$
108,785
a. Capital expenditures primarily for truck, tooling and other equipment for the periods presented. b. Capital expenditures primarily for pressure pumping and water transfer equipment for the for the periods presented. c. Capital expenditures primarily for maintenance for the 2019 periods presented and plant upgrades for the 2018 periods presented. d. Capital expenditures primarily for equipment for the Company's rental business and upgrades to its rig fleet for the periods presented.
Explanatory Note Regarding Financial Information
The financial information contained in this release should be read in conjunction with the financial information contained in Mammoth’s Annual Report to be filed on Form 10-K with the Securities and Exchange Commission ("SEC"), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings.
The Company's Chief Executive Officer and Chief Financial Officer comprise the Company's Chief Operating Decision Maker function ("CODM"). Segment information is prepared on the same basis that the CODM manages the segments, evaluates the segment financial statements and makes key operating and resource utilization decisions. Segment evaluation is determined on a quantitative basis based on a function of operating income (loss) as well as a qualitative basis, such as nature of the product and service offerings and types of customers.
Conference Call Information
Mammoth will host a conference call on Friday, August 2, 2019 at 10:00 a.m. CDT (11:00 am EDT) to discuss its second quarter 2019 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 6178026. The conference call will also be webcast live on www.mammothenergy.com in the “Investors” section.
About Mammoth Energy Services, Inc.
Mammoth is an integrated, growth-oriented energy service company serving companies engaged in the exploration and development of North American onshore unconventional oil and natural gas reserves and government-funded utilities, private utilities, public investor-owned utilities and co-operative utilities through its energy infrastructure services. Mammoth’s suite of services and products include: pressure pumping services, infrastructure services, natural sand and proppant services and other energy services.
For additional information about Mammoth, please visit its website at www.mammothenergy.com, where Mammoth routinely posts announcements, updates, events, investor information and presentations and recent news releases.
Investor Contact: Don Crist Director of Investor Relations dcrist@mammothenergy.com 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: the failure to receive or delays in receiving governmental authorizations, approvals and/or payments; the outcome of an ongoing government investigation relating to the contracts awarded to our subsidiary Cobra Acquisitions LLC by the Puerto Rico Electric Power Authority; our inability to replace the prior levels of work in our infrastructure segment; risks relating to economic conditions; the loss of or interruption in operations of one or more key suppliers or customers; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of capital resources and liquidity; weather; natural disasters; litigation; competition in the oil and natural gas and infrastructure industries; and costs and availability of resources.
Investors are cautioned not to place undue reliance on any forward-looking statement which speaks only as of the date on which such statement is made. We undertake no obligation to correct, revise or update any forward-looking statement after the date such statement is made, whether as a result of new information, future events or otherwise, except as required by applicable law.
MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED BALANCE SHEETS
ASSETS
June 30,
December 31,
2019
2018
CURRENT ASSETS
(in thousands)
Cash and cash equivalents
$
7,245
$
67,625
Accounts receivable, net
385,626
337,460
Receivables from related parties
37,400
11,164
Inventories
22,114
21,302
Prepaid expenses
10,196
11,317
Other current assets
699
688
Total current assets
463,280
449,556
Property, plant and equipment, net
408,408
436,699
Sand reserves
69,762
71,708
Operating lease right-of-use assets
52,184
—
Intangible assets, net - customer relationships
1,563
1,711
Intangible assets, net - trade names
5,625
6,045
Goodwill
101,245
101,245
Other non-current assets
6,843
6,127
Total assets
$
1,108,910
$
1,073,091
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable
$
72,671
$
68,843
Payables to related parties
1,020
370
Accrued expenses and other current liabilities
42,658
59,652
Current operating lease liability
17,338
—
Income taxes payable
30,780
104,958
Total current liabilities
164,467
233,823
Long-term debt
82,036
—
Deferred income tax liabilities
56,580
79,309
Long-term operating lease liability
34,807
—
Asset retirement obligation
3,534
3,164
Other liabilities
4,270
2,743
Total liabilities
345,694
319,039
COMMITMENTS AND CONTINGENCIES
EQUITY
Equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 45,004,795 and 44,876,649 issued and outstanding at June 30, 2019 and December 31, 2018
450
449
Additional paid in capital
533,151
530,919
Retained earnings
232,990
226,765
Accumulated other comprehensive loss
(3,375
)
(4,081
)
Total equity
763,216
754,052
Total liabilities and equity
$
1,108,910
$
1,073,091
MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2019
2018
2019
2019
2018
(in thousands, except per share amounts)
REVENUE
Services revenue
$
115,760
$
455,545
$
193,101
$
308,861
$
864,204
Services revenue - related parties
36,837
40,611
44,073
80,910
89,699
Product revenue
18,362
27,708
12,309
30,671
52,748
Product revenue - related parties
10,861
9,730
12,655
23,516
21,192
Total revenue
181,820
533,594
262,138
443,958
1,027,843
COST AND EXPENSES
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $25,597, $26,898, $25,682, $51,280 and $51,473, respectively, for the three months ended June 30, 2019, June 30, 2018 and March 31, 2019 and six months ended June 30, 2019 and 2018)
132,688
302,283
158,106
290,794
593,262
Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0, $0, $0 and $0, respectively, for the three months ended June 30, 2019, June 30, 2018 and March 31, 2019 and six months ended June 30, 2019 and 2018)
2,650
2,428
713
3,363
4,220
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $4,525, $3,879, $2,871, $7,395 and $6,193, respectively, for the three months ended June 30, 2019, June 30, 2018 and March 31, 2019 and six months ended June 30, 2019 and 2018)
32,677
35,117
30,251
62,928
68,447
Selling, general and administrative
8,796
64,595
16,902
25,698
102,677
Selling, general and administrative - related parties
659
532
434
1,093
961
Depreciation, depletion, amortization and accretion
30,145
30,795
28,576
58,721
57,703
Impairment of long-lived assets
—
187
—
—
187
Total cost and expenses
207,615
435,937
234,982
442,597
827,457
Operating (loss) income
(25,795
)
97,657
27,156
1,361
200,386
OTHER INCOME (EXPENSE)
Interest expense, net
(1,551
)
(959
)
(523
)
(2,074
)
(2,196
)
Other, net
4,019
(486
)
24,557
28,576
(514
)
Total other income (expense)
2,468
(1,445
)
24,034
26,502
(2,710
)
(Loss) income before income taxes
(23,327
)
96,212
51,190
27,863
197,676
(Benefit) provision for income taxes
(12,438
)
53,512
22,857
10,419
99,430
Net (loss) income
$
(10,889
)
$
42,700
$
28,333
$
17,444
$
98,246
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net of tax of $92, $86, ($90), $182 and $272, respectively, for the three months ended June 30, 2019, June 30, 2018 and March 31, 2019 and six months ended June 30, 2019 and 2018
350
(325
)
356
706
(786
)
Comprehensive (loss) income
$
(10,539
)
$
42,375
$
28,689
$
18,150
$
97,460
Net (loss) income per share (basic)
$
(0.24
)
$
0.95
$
0.63
$
0.39
$
2.20
Net (loss) income per share (diluted)
$
(0.24
)
$
0.95
$
0.63
$
0.39
$
2.18
Weighted average number of shares outstanding (basic)
45,003
44,737
44,929
44,966
44,700
Weighted average number of shares outstanding (diluted)
45,003
45,059
45,063
45,060
44,977
Dividends declared per share
$
0.125
—
$
0.125
$
0.25
—
MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
2019
2018
(in thousands)
Cash flows from operating activities:
Net income
$
17,444
$
98,246
Adjustments to reconcile net income to cash provided by operating activities:
Equity based compensation
—
17,487
Stock based compensation
2,233
2,916
Depreciation, depletion, accretion and amortization
58,721
57,703
Amortization of coil tubing strings
1,003
1,120
Amortization of debt origination costs
163
199
Bad debt expense
266
53,790
Loss (gain) on disposal of property and equipment
176
(128
)
Impairment of long-lived assets
—
187
Deferred income taxes
(22,911
)
(27,906
)
Other
(199
)
—
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net
(48,530
)
(122,908
)
Receivables from related parties
(26,236
)
3,114
Inventories
(1,815
)
4,156
Prepaid expenses and other assets
1,115
(1,195
)
Accounts payable
7,366
34,186
Payables to related parties
650
538
Accrued expenses and other liabilities
(17,129
)
10,193
Income taxes payable
(74,172
)
94,753
Net cash (used in) provided by operating activities
(101,855
)
226,451
Cash flows from investing activities:
Purchases of property and equipment
(30,085
)
(105,349
)
Purchases of property and equipment from related parties
(135
)
(3,436
)
Business acquisitions
—
(13,356
)
Contributions to equity investee
(680
)
—
Proceeds from disposal of property and equipment
2,465
898
Net cash used in investing activities
(28,435
)
(121,243
)
Cash flows from financing activities:
Borrowings from lines of credit
108,000
52,000
Repayments of lines of credit
(25,964
)
(151,900
)
Dividends paid
(11,219
)
—
Principal payments on financing leases and equipment financing notes
(992
)
(145
)
Net cash provided by (used in) financing activities
69,825
(100,045
)
Effect of foreign exchange rate on cash
85
(98
)
Net change in cash and cash equivalents
(60,380
)
5,065
Cash and cash equivalents at beginning of period
67,625
5,637
Cash and cash equivalents at end of period
$
7,245
$
10,702
Supplemental disclosure of cash flow information:
Cash paid for interest
$
1,830
$
2,543
Cash paid for income taxes
$
116,442
$
32,584
Supplemental disclosure of non-cash transactions:
Purchases of property and equipment included in accounts payable
$
2,339
$
20,897
MAMMOTH ENERGY SERVICES, INC. SEGMENT INCOME STATEMENTS (in thousands)
Three months ended June 30, 2019
Infrastructure
Pressure Pumping
Sand
All Other
Eliminations
Total
Revenue from external customers
$
41,821
$
82,973
$
29,223
$
27,803
$
—
$
181,820
Intersegment revenues
—
1,668
11,170
584
(13,422
)
—
Total revenue
41,821
84,641
40,393
28,387
(13,422
)
181,820
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
44,864
59,835
32,676
30,640
—
168,015
Intersegment cost of revenues
—
11,797
1,141
562
(13,500
)
—
Total cost of revenue
44,864
71,632
33,817
31,202
(13,500
)
168,015
Selling, general and administrative
3,035
2,664
1,380
2,376
—
9,455
Depreciation, depletion, amortization and accretion
7,818
10,174
4,528
7,625
—
30,145
Operating (loss) income
(13,896
)
171
668
(12,816
)
78
(25,795
)
Interest expense, net
386
452
72
641
—
1,551
Other (income) expense, net
(4,045
)
9
(32
)
49
—
(4,019
)
(Loss) income before income taxes
$
(10,237
)
$
(290
)
$
628
$
(13,506
)
$
78
$
(23,327
)
Three months ended June 30, 2018
Infrastructure
Pressure Pumping
Sand
All Other
Eliminations
Total
Revenue from external customers
$
360,250
$
100,333
$
37,439
$
35,572
$
—
$
533,594
Intersegment revenues
—
1,073
15,406
1,776
(18,255
)
—
Total revenue
360,250
101,406
52,845
37,348
(18,255
)
533,594
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
210,189
61,593
35,117
32,929
—
339,828
Intersegment cost of revenues
754
16,174
1,019
60
(18,007
)
—
Total cost of revenue
210,943
77,767
36,136
32,989
(18,007
)
339,828
Selling, general and administrative
39,786
20,822
1,787
2,732
—
65,127
Depreciation, depletion, amortization and accretion
4,094
13,829
3,881
8,991
—
30,795
Impairment of long-lived assets
—
—
—
187
—
187
Operating income (loss)
105,427
(11,012
)
11,041
(7,551
)
(248
)
97,657
Interest expense, net
106
341
76
436
—
959
Other expense, net
330
80
36
40
—
486
Income (loss) before income taxes
$
104,991
$
(11,433
)
$
10,929
$
(8,027
)
$
(248
)
$
96,212
Three months ended March 31, 2019
Infrastructure
Pressure Pumping
Sand
All Other
Eliminations
Total
Revenue from external customers
$
108,721
$
90,595
$
24,964
$
37,858
$
—
$
262,138
Intersegment revenues
—
1,544
12,897
658
(15,099
)
—
Total revenue
108,721
92,139
37,861
38,516
(15,099
)
262,138
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
58,965
64,211
30,252
35,642
—
189,070
Intersegment cost of revenues
—
13,537
1,047
497
(15,081
)
—
Total cost of revenue
58,965
77,748
31,299
36,139
(15,081
)
189,070
Selling, general and administrative
9,517
3,213
1,519
3,087
—
17,336
Depreciation, depletion, amortization and accretion
7,719
9,893
2,873
8,091
—
28,576
Operating income (loss)
32,520
1,285
2,170
(8,801
)
(18
)
27,156
Interest expense, net
39
198
30
256
—
523
Other expense, net
(24,824
)
(1
)
—
268
—
(24,557
)
Income (loss) before income taxes
$
57,305
$
1,088
$
2,140
$
(9,325
)
$
(18
)
$
51,190
Six months ended June 30, 2019
Infrastructure
Pressure Pumping
Sand
All Other
Eliminations
Total
Revenue from external customers
$
150,542
$
173,568
$
54,187
$
65,661
$
—
$
443,958
Intersegment revenues
—
3,212
24,067
1,243
(28,522
)
—
Total revenue
150,542
176,780
78,254
66,904
(28,522
)
443,958
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
103,828
124,047
62,928
66,282
—
357,085
Intersegment cost of revenues
—
25,334
2,188
1,060
(28,582
)
—
Total cost of revenue
103,828
149,381
65,116
67,342
(28,582
)
357,085
Selling, general and administrative
12,553
5,876
2,899
5,463
—
26,791
Depreciation, depletion, amortization and accretion
15,537
20,068
7,401
15,715
—
58,721
Operating income (loss)
18,624
1,455
2,838
(21,616
)
60
1,361
Interest expense, net
425
649
102
898
—
2,074
Other (income) expense, net
(28,869
)
8
(32
)
317
—
(28,576
)
Income (loss) before income taxes
$
47,068
$
798
$
2,768
$
(22,831
)
$
60
$
27,863
Six months ended June 30, 2018
Infrastructure
Pressure Pumping
Sand
All Other
Eliminations
Total
Revenue from external customers
$
685,709
$
196,912
$
73,942
$
71,280
$
—
$
1,027,843
Intersegment revenues
—
5,632
29,918
4,193
(39,743
)
—
Total revenue
685,709
202,544
103,860
75,473
(39,743
)
1,027,843
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
404,265
128,205
68,447
65,012
—
665,929
Intersegment cost of revenues
2,545
31,576
5,305
327
(39,753
)
—
Total cost of revenue
406,810
159,781
73,752
65,339
(39,753
)
665,929
Selling, general and administrative
71,637
23,485
3,431
5,085
—
103,638
Depreciation, depletion, amortization and accretion
6,501
27,815
6,197
17,190
—
57,703
Impairment of long-lived assets
—
—
—
187
—
187
Operating income (loss)
200,761
(8,537
)
20,480
(12,328
)
10
200,386
Interest expense, net
182
845
156
1,013
—
2,196
Other expense (income), net
332
92
23
67
—
514
Income (loss) before income taxes
$
200,247
$
(9,474
)
$
20,301
$
(13,408
)
$
10
$
197,676
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, interest expense, net, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets) and provision (benefit) for income taxes, further adjusted to add back interest on trade accounts receivable. The Company excludes the items listed above from net 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):
2019
2018
2019
2019
2018
Net (loss) income
$
(10,889
)
$
42,700
$
28,333
$
17,444
$
98,246
Depreciation, depletion, accretion and amortization expense
30,145
30,795
28,576
58,721
57,703
Impairment of long-lived assets
—
187
—
—
187
Acquisition related costs
45
77
—
45
31
Public offering costs
—
731
—
—
731
Equity based compensation
—
17,487
—
—
17,487
Stock based compensation
944
1,660
1,289
2,233
2,916
Interest expense, net
1,551
959
523
2,074
2,196
Other (income) expense, net
(4,019
)
486
(24,557
)
(28,576
)
514
Interest on trade accounts receivable
3,234
—
25,735
28,969
—
(Benefit) provision for income taxes
(12,438
)
53,512
22,857
10,419
99,430
Adjusted EBITDA
$
8,573
$
148,594
$
82,756
$
91,329
$
279,441
Infrastructure Services
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
Reconciliation of Adjusted EBITDA to net income:
2019
2018
2019
2019
2018
Net income
$
6,210
$
52,359
$
35,665
$
41,875
$
99,658
Depreciation and amortization expense
7,818
4,094
7,719
15,537
6,501
Acquisition related costs
12
4
—
12
(4
)
Public offering costs
—
360
—
—
360
Stock based compensation
9
606
462
471
1,063
Interest expense
386
106
39
425
182
Other (income) expense, net
(4,045
)
330
(24,824
)
(28,869
)
332
Interest on trade accounts receivable
3,234
—
25,735
28,969
—
(Benefit) provision for income taxes
(16,447
)
52,632
21,639
5,193
100,589
Adjusted EBITDA
$
(2,823
)
$
110,491
$
66,435
$
63,613
$
208,681
Pressure Pumping Services
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
Reconciliation of Adjusted EBITDA to net income (loss):
2019
2018
2019
2019
2018
Net income (loss)
$
(290
)
$
(11,433
)
$
1,088
$
798
$
(9,474
)
Depreciation and amortization expense
10,174
13,829
9,893
20,068
27,815
Acquisition related costs
18
33
—
18
33
Public offering costs
—
202
—
—
202
Equity based compensation
—
17,487
—
—
17,487
Stock based compensation
489
453
410
899
871
Interest expense
452
341
198
649
845
Other expense (income), net
9
80
(1
)
8
92
Adjusted EBITDA
$
10,852
$
20,992
$
11,588
$
22,440
$
37,871
Natural Sand Proppant Services
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
Reconciliation of Adjusted EBITDA to net income (loss):
2019
2018
2019
2019
2018
Net income
$
628
$
10,929
$
2,140
$
2,768
$
20,301
Depreciation, depletion, accretion and amortization expense
4,528
3,881
2,873
7,401
6,197
Acquisition related costs
8
—
—
8
(38
)
Public offering costs
—
95
—
—
95
Stock based compensation
236
205
203
439
391
Interest expense
72
76
30
102
156
Other (income) expense, net
(32
)
36
—
(32
)
23
Adjusted EBITDA
$
5,440
$
15,222
$
5,246
$
10,686
$
27,125
Other Services(a)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
Reconciliation of Adjusted EBITDA to net income (loss):
2019
2018
2019
2019
2018
Net (loss) income
$
(17,515
)
$
(8,907
)
$
(10,542
)
$
(28,057
)
$
(12,250
)
Depreciation and amortization expense
7,625
8,991
8,091
15,715
17,190
Impairment of long-lived assets
—
187
—
—
187
Acquisition related costs
7
40
—
7
40
Public offering costs
—
74
—
—
74
Stock based compensation
210
396
214
424
592
Interest expense, net
641
436
256
898
1,013
Other expense, net
49
40
268
317
67
Provision (benefit) for income taxes
4,009
880
1,217
5,226
(1,158
)
Adjusted EBITDA
$
(4,974
)
$
2,137
$
(496
)
$
(5,470
)
$
5,755
a. Includes results for Mammoth's contract land and directional drilling, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling and remote accommodations services and corporate related activities. The Company's corporate related activities do not generate revenue.
After Tax Return on Invested Capital
After tax return on invested capital is a supplemental non-GAAP measure that is used by management to evaluate the Company's performance. Mammoth defines after tax return on invested capital as net income divided by total capital employed, which is the average of ending debt and equity for the last two years. Management believes after tax return on invested capital is a useful measure of how effectively the Company uses capital to generate profits and it provides additional insight for analysts and investors in evaluating the Company's financial and operating performance. After tax return on invested capital should not be considered in isolation or as a substitute for financial measures reported in accordance with GAAP. The following table provides the calculation of after tax return on invested capital using the GAAP financial measures of net income, total debt and total equity.
Twelve Months Ended
June 30,
2019
2018
2017
(in thousands)
Net income
$
155,163
$
163,360
Capital Employed
Total debt
$
82,036
$
—
$
65,000
Total equity
763,216
625,669
440,410
Total capital employed
$
845,252
$
625,669
$
505,410
Average capital employed(a)
$
735,461
$
565,540
Trailing twelve month after tax return on invested capital(b)
21
%
29
%
a. Average capital employed is the average of total capital employed as of end of the period and end of the prior period. b. After tax return on invested capital is the ratio of net income for the period to average capital employed.