Mammoth Energy Services, Inc. Announces First Quarter 2019 Operational and Financial Results
- 23
- First Quarter net income of $28 million, or $0.63 per diluted share
- First Quarter Adjusted EBITDA of $83 million
- Trailing twelve months after tax return on invested capital (ROIC) of 29%
- Declared $0.125 dividend for the first quarter of 2019
OKLAHOMA CITY, May 01, 2019 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. ("Mammoth" or the "Company") (NASDAQ: TUSK) today reported financial and operational results for the quarter ended March 31, 2019.
Financial Highlights for the First Quarter of 2019:
Total revenue was $262.1 million for the three months ended March 31, 2019, down 6% sequentially from $278.2 million for the three months ended December 31, 2018 and down 47% from $494.2 million for the three months ended March 31, 2018.
Net income for the three months ended March 31, 2019 was $28.3 million, or $0.63 per fully diluted share, a 58% decrease from $68.2 million, or $1.51 per fully diluted share, for the three months ended December 31, 2018 and a 49% decrease from $55.5 million, or $1.24 per fully diluted share, for the three months ended March 31, 2018.
Adjusted EBITDA (as defined and reconciled below) was $82.8 million for the three months ended March 31, 2019, a slight decrease from $84.3 million for the three months ended December 31, 2018 and a 37% decline from $130.8 million for the three months ended March 31, 2018.
Arty Straehla, Mammoth's Chief Executive Officer, stated, "The first quarter of 2019 saw improved utilization of our oilfield completions focused businesses as E&P budgets were reset and oil prices experienced a steady increase throughout the quarter. While pressure pumping pricing remains challenged, conversations with customers suggest the possibility for tighter industry conditions for the back half of the year. Demand for Northern White sand is strengthening, with our average pricing up approximately 90% from the lows experienced in fourth quarter of 2018. The movement of our infrastructure equipment from Puerto Rico back to the continental U.S. is progressing and beginning to displace equipment currently being rented, allowing us to deploy additional crews for our Continental U. S. customers."
Infrastructure Services
Mammoth's infrastructure services segment contributed revenues of $108.7 million for the three months ended March 31, 2019, a 32% decrease from $159.6 million for the three months ended December 31, 2018 and a 67% decrease from $325.5 million for the three months ended March 31, 2018. During the first quarter of 2019, our crew staffing levels in Puerto Rico reached a high of approximately 500 in January. As of March 31, 2019, a small contingent of non-billable personnel remained on the island to facilitate the demobilization of our remaining equipment.
Pressure Pumping Services
Mammoth's pressure pumping division contributed revenues (inclusive of inter-segment revenues) of $92.1 million for the three months ended March 31, 2019, a 27% increase from $72.8 million for the three months ended December 31, 2018 and a 9% decrease from $101.1 million for the three months ended March 31, 2018.
Mammoth's pressure pumping division completed a total of 1,889 stages for the three months ended March 31, 2019, a 62% increase from 1,164 stages for the three months ended December 31, 2018 and a 13% increase from 1,672 stages for the three months ended March 31, 2018. An average of 4.4 of our 6 fleets remained active throughout the first quarter of 2019.
Natural Sand Proppant Services
Mammoth's natural sand proppant division contributed revenues (inclusive of inter-segment revenues) of $37.9 million for the three months ended March 31, 2019, a 38% increase from $27.4 million for the three months ended December 31, 2018 and a 26% decrease from $51.0 million for the three months ended March 31, 2018.
The Company sold 665,806 tons of sand during the three months ended March 31, 2019, a 17% increase from the 569,195 tons sold during the three months ended December 31, 2018 and a 9% decrease from the 735,584 tons sold during the three months ended March 31, 2018. The Company's average production costs were approximately $12 per ton during the first quarter of 2019.
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 $38.5 million for the three months ended March 31, 2019, a slight decrease from $38.8 million for the three months ended December 31, 2018 and a slight increase from $38.1 million for the three months ended March 31, 2018. The Company’s rental division drove a majority of the increase from the prior periods with the average amount of equipment on rent increasing from 357 for the three months ended March 31, 2018 to 500 for the three months ended December 31, 2018. An average of 621 pieces of equipment were rented during the three months ended March 31, 2019.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses were $17.3 million for the three months ended March 31, 2019, compared to $14.8 million for the three months ended December 31, 2018 and $38.5 million for the three months ended March 31, 2018.
Following is a breakout of SG&A expense (in thousands):
| Three Months Ended | |||||||||||
| March 31, | December 31, | ||||||||||
| 2019 | 2018 | 2018 | |||||||||
| Cash expenses: | |||||||||||
| Compensation and benefits | $ | 9,230 | $ | 7,699 | $ | 9,409 | |||||
| Professional services | 3,789 | 2,587 | 3,018 | ||||||||
| Other(a) | 3,244 | 1,607 | 1,475 | ||||||||
| Total cash SG&A expense | 16,263 | 11,893 | 13,902 | ||||||||
| Non-cash expenses: | |||||||||||
| Bad debt provision(b) | 4 | 25,527 | (34 | ) | |||||||
| Stock based compensation | 1,069 | 1,091 | 915 | ||||||||
| Total non-cash SG&A expense | 1,073 | 26,618 | 881 | ||||||||
| Total SG&A expense | $ | 17,336 | $ | 38,511 | $ | 14,783 | |||||
| a. | Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs. |
| b. | $25.4 million of the bad debt expense recognized during the three months ended March 31, 2018 was subsequently reversed during the third quarter of 2018. |
SG&A expenses, as a percentage of total revenue, were 7% for the three months ended March 31, 2019 compared to 5% for the three months ended December 31, 2018 and 8% for the three months ended March 31, 2018.
Liquidity
As of March 31, 2019, Mammoth had cash on hand totaling $21.3 million and outstanding borrowings under its revolving credit facility of $82.0 million. As of March 31, 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 $114.8 million. As of April 30, 2019, the Company had cash on hand totaling $32.5 million and outstanding borrowings under its revolving credit facility of $108.6 million.
Capital Expenditures
The following table summarizes Mammoth's capital expenditures by operating division for the periods indicated (in thousands):
| Three Months Ended | |||||||||||
| March 31, | December 31, | ||||||||||
| 2019 | 2018 | 2018 | |||||||||
| Infrastructure services(a) | $ | 3,254 | $ | 15,778 | $ | 22,409 | |||||
| Pressure pumping services(b) | 7,329 | 7,866 | 9,632 | ||||||||
| Natural sand proppant services(c) | 985 | 5,700 | 2,132 | ||||||||
| Other(d) | 8,705 | 6,430 | 8,240 | ||||||||
| Total capital expenditures | $ | 20,273 | $ | 35,774 | $ | 42,413 | |||||
| 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 three months ended March 31, 2019 and December 31, 2018 and plant upgrades for the three months ended March 31, 2018. |
| 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 Thursday, May 2, 2019 at 10:00 a.m. CDT (11:00 am EDT) to discuss its first 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 9185999. 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
[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: the failure to receive or delays in receiving governmental authorizations, approvals and/or payments; risks relating to economic conditions; 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; 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 | March 31, | December 31, | ||||||
| 2019 | 2018 | |||||||
| CURRENT ASSETS | (in thousands) | |||||||
| Cash and cash equivalents | $ | 21,343 | $ | 67,625 | ||||
| Accounts receivable, net | 404,389 | 337,460 | ||||||
| Receivables from related parties | 45,032 | 11,164 | ||||||
| Inventories | 18,913 | 21,302 | ||||||
| Prepaid expenses | 8,913 | 11,317 | ||||||
| Other current assets | 706 | 688 | ||||||
| Total current assets | 499,296 | 449,556 | ||||||
| Property, plant and equipment, net | 428,280 | 436,699 | ||||||
| Sand reserves | 71,496 | 71,708 | ||||||
| Operating lease right-of-use assets | 56,234 | — | ||||||
| Intangible assets, net - customer relationships | 1,637 | 1,711 | ||||||
| Intangible assets, net - trade names | 5,835 | 6,045 | ||||||
| Goodwill | 101,245 | 101,245 | ||||||
| Other non-current assets | 6,484 | 6,127 | ||||||
| Total assets | $ | 1,170,507 | $ | 1,073,091 | ||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 67,542 | $ | 68,843 | ||||
| Payables to related parties | 609 | 370 | ||||||
| Accrued expenses and other current liabilities | 55,258 | 59,652 | ||||||
| Current operating lease liability | 17,533 | — | ||||||
| Income taxes payable | 60,272 | 104,958 | ||||||
| Total current liabilities | 201,214 | 233,823 | ||||||
| Long-term debt | 82,037 | — | ||||||
| Deferred income tax liabilities | 63,923 | 79,309 | ||||||
| Long-term operating lease liability | 38,572 | — | ||||||
| Asset retirement obligation | 3,056 | 3,164 | ||||||
| Other liabilities | 3,285 | 2,743 | ||||||
| Total liabilities | 392,087 | 319,039 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY | ||||||||
| Equity: | ||||||||
| Common stock, $0.01 par value, 200,000,000 shares authorized, 44,876,649 issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 449 | 449 | ||||||
| Additional paid in capital | 532,208 | 530,919 | ||||||
| Retained earnings | 249,488 | 226,765 | ||||||
| Accumulated other comprehensive loss | (3,725 | ) | (4,081 | ) | ||||
| Total equity | 778,420 | 754,052 | ||||||
| Total liabilities and equity | $ | 1,170,507 | $ | 1,073,091 | ||||
| MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | December 31, | ||||||||||
| 2019 | 2018 | 2018 | |||||||||
| (in thousands, except per share amounts) | |||||||||||
| REVENUE | |||||||||||
| Services revenue | $ | 193,101 | $ | 408,659 | $ | 260,513 | |||||
| Services revenue - related parties | 44,073 | 49,088 | 9,551 | ||||||||
| Product revenue | 12,309 | 25,040 | 8,063 | ||||||||
| Product revenue - related parties | 12,655 | 11,462 | 71 | ||||||||
| Total revenue | 262,138 | 494,249 | 278,198 | ||||||||
| COST AND EXPENSES | |||||||||||
| Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $25,682, $24,575 and $26,999, respectively, for the three months ended March 31, 2019, March 31, 2018 and December 31, 2018) | 158,106 | 290,979 | 151,273 | ||||||||
| Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0 and $0, respectively, for the three months ended March 31, 2019, March 31, 2018 and December 31, 2018) | 713 | 1,792 | 240 | ||||||||
| Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,871, $2,314 and $3,136, respectively, for the three months ended March 31, 2019, March 31, 2018 and December 31, 2018) | 30,251 | 33,330 | 28,797 | ||||||||
| Selling, general and administrative | 16,902 | 38,082 | 14,283 | ||||||||
| Selling, general and administrative - related parties | 434 | 429 | 500 | ||||||||
| Depreciation, depletion, amortization and accretion | 28,576 | 26,908 | 30,159 | ||||||||
| Impairment of long-lived assets | — | — | 4,086 | ||||||||
| Total cost and expenses | 234,982 | 391,520 | 229,338 | ||||||||
| Operating income | 27,156 | 102,729 | 48,860 | ||||||||
| OTHER INCOME (EXPENSE) | |||||||||||
| Interest expense, net | (523 | ) | (1,237 | ) | (533 | ) | |||||
| Other, net | 24,557 | (28 | ) | (1,122 | ) | ||||||
| Total other income (expense) | 24,034 | (1,265 | ) | (1,655 | ) | ||||||
| Income before income taxes | 51,190 | 101,464 | 47,205 | ||||||||
| Provision (benefit) for income taxes | 22,857 | 45,918 | (21,002 | ) | |||||||
| Net income | $ | 28,333 | $ | 55,546 | $ | 68,207 | |||||
| OTHER COMPREHENSIVE INCOME | |||||||||||
| Foreign currency translation adjustment, net of tax of ($90), $186 and $212, respectively, for the three months ended March 31, 2019, March 31, 2018 and December 31, 2018 | 356 | (461 | ) | (961 | ) | ||||||
| Comprehensive income | $ | 28,689 | $ | 55,085 | $ | 67,246 | |||||
| Net income per share (basic) | $ | 0.63 | $ | 1.24 | $ | 1.52 | |||||
| Net income per share (diluted) | $ | 0.63 | $ | 1.24 | $ | 1.51 | |||||
| Weighted average number of shares outstanding (basic) | 44,929 | 44,650 | 44,845 | ||||||||
| Weighted average number of shares outstanding (diluted) | 45,063 | 44,884 | 45,048 | ||||||||
| Dividends declared per share | $ | 0.125 | — | $ | 0.125 | ||||||
| MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2019 | 2018 | ||||||
| (in thousands) | |||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 28,333 | $ | 55,546 | |||
| Adjustments to reconcile net income to cash provided by operating activities: | |||||||
| Stock based compensation | 1,289 | 1,256 | |||||
| Depreciation, depletion, accretion and amortization | 28,576 | 26,908 | |||||
| Amortization of coil tubing strings | 535 | 565 | |||||
| Amortization of debt origination costs | 82 | 100 | |||||
| Bad debt expense | 4 | 25,527 | |||||
| Loss (gain) on disposal of property and equipment | 94 | (184 | ) | ||||
| Deferred income taxes | (15,476 | ) | (12,117 | ) | |||
| Other | 41 | — | |||||
| Changes in assets and liabilities, net of acquisitions of businesses: | |||||||
| Accounts receivable, net | (67,093 | ) | (25,722 | ) | |||
| Receivables from related parties | (33,868 | ) | (12,550 | ) | |||
| Inventories | 1,854 | 5,060 | |||||
| Prepaid expenses and other assets | 2,389 | 294 | |||||
| Accounts payable | (353 | ) | 8,302 | ||||
| Payables to related parties | 239 | 851 | |||||
| Accrued expenses and other liabilities | (4,956 | ) | 1,636 | ||||
| Income taxes payable | (44,684 | ) | 25,851 | ||||
| Net cash (used in) provided by operating activities | (102,994 | ) | 101,323 | ||||
| Cash flows from investing activities: | |||||||
| Purchases of property and equipment | (20,273 | ) | (35,176 | ) | |||
| Purchases of property and equipment from related parties | — | (598 | ) | ||||
| Contributions to equity investee | (480 | ) | — | ||||
| Proceeds from disposal of property and equipment | 1,500 | 286 | |||||
| Net cash used in investing activities | (19,253 | ) | (35,488 | ) | |||
| Cash flows from financing activities: | |||||||
| Borrowings from lines of credit | 82,000 | 31,000 | |||||
| Repayments of lines of credit | — | (91,900 | ) | ||||
| Dividends paid | (5,610 | ) | — | ||||
| Principal payments on financing leases and equipment financing notes | (457 | ) | (72 | ) | |||
| Net cash provided by (used in) financing activities | 75,933 | (60,972 | ) | ||||
| Effect of foreign exchange rate on cash | 32 | (53 | ) | ||||
| Net change in cash and cash equivalents | (46,282 | ) | 4,810 | ||||
| Cash and cash equivalents at beginning of period | 67,625 | 5,637 | |||||
| Cash and cash equivalents at end of period | $ | 21,343 | $ | 10,447 | |||
| Supplemental disclosure of cash flow information: | |||||||
| Cash paid for interest | $ | 294 | $ | 1,442 | |||
| Cash paid for income taxes | $ | 91,955 | $ | 32,184 | |||
| Supplemental disclosure of non-cash transactions: | |||||||
| Purchases of property and equipment included in accounts payable | $ | 5,016 | $ | 16,558 | |||
| MAMMOTH ENERGY SERVICES, INC. SEGMENT INCOME STATEMENTS (in thousands) | ||||||||||||||||||
| 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 (income) expense, net | (24,824 | ) | (1 | ) | — | 268 | — | (24,557 | ) | |||||||||
| Income (loss) before income taxes | $ | 57,305 | $ | 1,088 | $ | 2,140 | $ | (9,325 | ) | $ | (18 | ) | $ | 51,190 | ||||
| Three months ended March 31, 2018 | Infrastructure | Pressure Pumping | Sand | All Other | Eliminations | Total | ||||||||||||
| Revenue from external customers | $ | 325,459 | $ | 96,579 | $ | 36,503 | $ | 35,708 | $ | — | $ | 494,249 | ||||||
| Intersegment revenues | — | 4,559 | 14,512 | 2,417 | (21,488 | ) | — | |||||||||||
| Total revenue | 325,459 | 101,138 | 51,015 | 38,125 | (21,488 | ) | 494,249 | |||||||||||
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 194,076 | 66,612 | 33,330 | 32,083 | — | 326,101 | ||||||||||||
| Intersegment cost of revenues | 1,791 | 15,402 | 4,286 | 267 | (21,746 | ) | — | |||||||||||
| Total cost of revenue | 195,867 | 82,014 | 37,616 | 32,350 | (21,746 | ) | 326,101 | |||||||||||
| Selling, general and administrative | 31,851 | 2,663 | 1,644 | 2,353 | — | 38,511 | ||||||||||||
| Depreciation, depletion, amortization and accretion | 2,407 | 13,986 | 2,316 | 8,199 | — | 26,908 | ||||||||||||
| Operating income (loss) | 95,334 | 2,475 | 9,439 | (4,777 | ) | 258 | 102,729 | |||||||||||
| Interest expense, net | 76 | 504 | 80 | 577 | — | 1,237 | ||||||||||||
| Other expense (income), net | 2 | 12 | (13 | ) | 27 | — | 28 | |||||||||||
| Income (loss) before income taxes | $ | 95,256 | $ | 1,959 | $ | 9,372 | $ | (5,381 | ) | $ | 258 | $ | 101,464 | |||||
| Three months ended December 31, 2018 | Infrastructure | Pressure Pumping | Sand | All Other | Eliminations | Total | ||||||||||||
| Revenue from external customers | $ | 159,610 | $ | 72,219 | $ | 8,133 | $ | 38,236 | $ | — | $ | 278,198 | ||||||
| Intersegment revenues | — | 560 | 19,273 | 542 | (20,375 | ) | — | |||||||||||
| Total revenue | 159,610 | 72,779 | 27,406 | 38,778 | (20,375 | ) | 278,198 | |||||||||||
| Cost of revenue, exclusive of depreciation, depletion, amortization and accretion | 75,486 | 39,601 | 28,796 | 36,427 | — | 180,310 | ||||||||||||
| Intersegment cost of revenues | — | 19,787 | 253 | 308 | (20,348 | ) | — | |||||||||||
| Total cost of revenue | 75,486 | 59,388 | 29,049 | 36,735 | (20,348 | ) | 180,310 | |||||||||||
| Selling, general and administrative | 9,689 | 1,768 | 1,170 | 2,156 | — | 14,783 | ||||||||||||
| Depreciation, depletion, amortization and accretion | 7,425 | 10,952 | 3,138 | 8,644 | — | 30,159 | ||||||||||||
| Impairment of long-lived assets | 308 | — | — | 3,778 | — | 4,086 | ||||||||||||
| Operating income (loss) | 66,702 | 671 | (5,951 | ) | (12,535 | ) | (27 | ) | 48,860 | |||||||||
| Interest expense, net | 82 | 177 | 40 | 234 | — | 533 | ||||||||||||
| Other expense, net | 60 | 340 | 304 | 418 | — | 1,122 | ||||||||||||
| Income (loss) before income taxes | $ | 66,560 | $ | 154 | $ | (6,295 | ) | $ | (13,187 | ) | $ | (27 | ) | $ | 47,205 | |||
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, 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 | |||||||||||
| March 31, | December 31, | ||||||||||
| Reconciliation of Adjusted EBITDA to net income: | 2019 | 2018 | 2018 | ||||||||
| Net income | $ | 28,333 | $ | 55,546 | $ | 68,207 | |||||
| Depreciation, depletion, accretion and amortization expense | 28,576 | 26,908 | 30,159 | ||||||||
| Impairment of long-lived assets | — | — | 4,086 | ||||||||
| Acquisition related costs | — | (46 | ) | 61 | |||||||
| Public offering costs | — | — | (10 | ) | |||||||
| Stock based compensation | 1,289 | 1,256 | 1,094 | ||||||||
| Interest expense, net | 523 | 1,237 | 533 | ||||||||
| Other (income) expense, net | (24,557 | ) | 28 | 1,122 | |||||||
| Interest on trade accounts receivable | 25,735 | — | — | ||||||||
| Provision (benefit) for income taxes | 22,857 | 45,918 | (21,002 | ) | |||||||
| Adjusted EBITDA | $ | 82,756 | $ | 130,847 | $ | 84,250 | |||||
Infrastructure Services
| Three Months Ended | |||||||||||
| March 31, | December 31, | ||||||||||
| Reconciliation of Adjusted EBITDA to net income: | 2019 | 2018 | 2018 | ||||||||
| Net income | $ | 35,665 | $ | 47,299 | $ | 141,875 | |||||
| Depreciation and amortization expense | 7,719 | 2,407 | 7,425 | ||||||||
| Impairment of long-lived assets | — | — | 308 | ||||||||
| Acquisition related costs | — | (8 | ) | 61 | |||||||
| Public offering costs | — | — | (10 | ) | |||||||
| Stock based compensation | 462 | 457 | 470 | ||||||||
| Interest expense | 39 | 76 | 82 | ||||||||
| Other (income) expense, net | (24,824 | ) | 2 | 60 | |||||||
| Interest on trade accounts receivable | 25,735 | — | — | ||||||||
| Provision (benefit) for income taxes | 21,639 | 47,957 | (75,315 | ) | |||||||
| Adjusted EBITDA | $ | 66,435 | $ | 98,190 | $ | 74,956 | |||||
Pressure Pumping Services
| Three Months Ended | |||||||||||
| March 31, | December 31, | ||||||||||
| Reconciliation of Adjusted EBITDA to net income: | 2019 | 2018 | 2018 | ||||||||
| Net income | $ | 1,088 | $ | 1,959 | $ | 154 | |||||
| Depreciation and amortization expense | 9,893 | 13,986 | 10,952 | ||||||||
| Stock based compensation | 410 | 418 | 318 | ||||||||
| Interest expense | 198 | 504 | 177 | ||||||||
| Other (income) expense, net | (1 | ) | 12 | 340 | |||||||
| Adjusted EBITDA | $ | 11,588 | $ | 16,879 | $ | 11,941 | |||||
Natural Sand Proppant Services
| Three Months Ended | |||||||||||
| March 31, | December 31, | ||||||||||
| Reconciliation of Adjusted EBITDA to net income (loss): | 2019 | 2018 | 2018 | ||||||||
| Net income (loss) | $ | 2,140 | $ | 9,372 | $ | (6,295 | ) | ||||
| Depreciation, depletion, accretion and amortization expense | 2,873 | 2,316 | 3,138 | ||||||||
| Acquisition related costs | — | (38 | ) | — | |||||||
| Stock based compensation | 203 | 186 | 181 | ||||||||
| Interest expense | 30 | 80 | 40 | ||||||||
| Other (income) expense, net | — | (13 | ) | 304 | |||||||
| Adjusted EBITDA | $ | 5,246 | $ | 11,903 | $ | (2,632 | ) | ||||
Other Services(a)
| Three Months Ended | |||||||||||
| March 31, | December 31, | ||||||||||
| Reconciliation of Adjusted EBITDA to net income (loss): | 2019 | 2018 | 2018 | ||||||||
| Net (loss) income | $ | (10,542 | ) | $ | (3,342 | ) | $ | (67,500 | ) | ||
| Depreciation and amortization expense | 8,091 | 8,199 | 8,644 | ||||||||
| Impairment of long-lived assets | — | — | 3,778 | ||||||||
| Stock based compensation | 214 | 195 | 125 | ||||||||
| Interest expense, net | 256 | 577 | 234 | ||||||||
| Other expense, net | 268 | 27 | 418 | ||||||||
| Provision (benefit) for income taxes | 1,217 | (2,039 | ) | 54,313 | |||||||
| Adjusted EBITDA | $ | (496 | ) | $ | 3,617 | $ | 12 | ||||
| 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 | |||||||||||
| March 31, | |||||||||||
| 2019 | 2018 | 2017 | |||||||||
| (in thousands) | |||||||||||
| Net income | $ | 208,752 | $ | 119,491 | |||||||
| Capital Employed | |||||||||||
| Total debt | $ | 82,037 | $ | 39,000 | $ | — | |||||
| Total equity | 778,420 | 564,137 | 418,597 | ||||||||
| Total capital employed | $ | 860,457 | $ | 603,137 | $ | 418,597 | |||||
| Average capital employed(a) | $ | 731,797 | $ | 510,867 | |||||||
| Trailing twelve month after tax return on invested capital(b) | 29 | % | 23 | % | |||||||
| 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. |
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