Mammoth Energy Services(US:TUSK)2021-04-30 21:50PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) The company reported a net loss of $12.4 million in Q1 2021, a significant improvement from $84.0 million in Q1 2020, largely due to the absence of prior-year impairment charges Condensed Consolidated Balance Sheets Total assets decreased to $780.4 million as of March 31, 2021, from $824.6 million, while total liabilities also decreased, resulting in a slight reduction in total equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total current assets | $443,710 | $464,748 | | Total assets | $780,444 | $824,562 | | Total current liabilities | $119,607 | $128,598 | | Total liabilities | $229,045 | $261,235 | | Total equity | $551,399 | $563,327 | Condensed Consolidated Statements of Comprehensive Loss Total revenue decreased to $66.8 million in Q1 2021, while the net loss significantly improved to $12.4 million due to the absence of prior-year impairment charges Q1 Financial Performance (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Total revenue | $66,804 | $97,383 | | Operating loss | $(23,270) | $(89,046) | | Impairment of goodwill | $0 | $54,973 | | Impairment of other long-lived assets | $0 | $12,897 | | Net loss | $(12,440) | $(83,971) | | Net loss per share (basic & diluted) | $(0.27) | $(1.85) | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities significantly increased to $14.2 million in Q1 2021, while financing activities used $15.0 million primarily for debt repayment Summary of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,234 | $1,541 | | Net cash provided by (used in) investing activities | $309 | $(942) | | Net cash (used in) provided by financing activities | $(15,024) | $6,898 | | Net change in cash and cash equivalents | $(456) | $7,308 | Notes to Unaudited Condensed Consolidated Financial Statements Notes highlight significant credit risks from PREPA ($227.0 million) and Gulfport ($33.0 million) receivables due to bankruptcy, along with prior-year impairment charges and ongoing legal proceedings - The company faces substantial credit risk with PREPA, which owed approximately $227.0 million for services and $82.9 million in interest as of March 31, 2021. PREPA is in bankruptcy, and collection is dependent on funding from FEMA39137 - Due to Gulfport Energy Corporation's Chapter 11 bankruptcy filing, the company recorded significant reserves against its receivables. In Q1 2021, this resulted in a bad debt expense of $10.0 million and a $27.1 million reduction to revenue for unliquidated damages3688138 - In Q1 2020, the company recorded impairment charges totaling $67.9 million, consisting of $55.0 million for goodwill and $12.9 million for other long-lived assets, primarily in its oilfield services segments, due to a significant decline in oil prices and market conditions6368 - The company is subject to multiple legal proceedings, including securities class action lawsuits, shareholder derivative suits, and government investigations related to its Puerto Rico contracts130132133 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the impact of the oil and gas downturn on Q1 2021 results, showing a 31% revenue decline but a significantly narrowed net loss due to prior-year impairment charges, with liquidity impacted by major bankrupt customer receivables - The company is undergoing a transformation towards a broader industrial focus, expanding into infrastructure engineering and equipment manufacturing to reduce reliance on the volatile oil and gas sector154 - Due to adverse market conditions, the company has temporarily shut down multiple oilfield service lines, including contract drilling, rig hauling, coil tubing, and full service transportation168 Q1 2021 Financial Highlights | Metric | Q1 2021 | Change from Q1 2020 | | :--- | :--- | :--- | | Net Loss | $12 million | Improved from $84 million loss | | Adjusted EBITDA | $6 million | Decreased from $13.5 million | | Operating Cash Flow | $14 million | Increased from $1.5 million | | Infrastructure Revenue | $29 million | +16% | - The company's liquidity is under pressure from significant uncollected receivables from PREPA (approx. $227 million plus interest) and Gulfport (net $33 million), both of which are in bankruptcy proceedings161169210 Results of Operations Total revenue decreased 31% to $66.8 million in Q1 2021, driven by declines in oilfield services, while operating loss improved due to the absence of prior-year impairment charges Revenue by Segment (in thousands) | Segment | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Infrastructure services | $29,257 | $25,475 | 16% | | Well completion services | $22,955 | $43,320 | -47% | | Natural sand proppant services | $8,705 | $10,249 | -15% | | Drilling services | $933 | $4,727 | -80% | | Other services | $5,662 | $15,120 | -63% | | Total Revenue | $66,804 | $97,383 | -31% | - Well completion services revenue decreased by $20 million (47%) due to a 70% decline in stages completed and a reduction in active fleets from 2.7 to 0.9 on average177178 - Selling, general and administrative (SG&A) expenses increased to $20.8 million from $10.8 million, primarily due to a $10.1 million bad debt provision related to the Gulfport bankruptcy189190191 Non-GAAP Financial Measures Adjusted EBITDA decreased to $6.4 million in Q1 2021, reflecting lower operational profitability, while Adjusted Net Loss improved to $12.4 million after excluding prior-year impairment charges Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net loss | $(12,440) | $(83,971) | | Depreciation, depletion, amortization and accretion | 21,146 | 25,882 | | Impairment of goodwill & long-lived assets | 0 | 67,870 | | Other adjustments | (1,825) | (3,870) | | Adjusted EBITDA | $6,378 | $13,451 | Adjusted Net Loss (in thousands) | Line Item | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net loss, as reported | $(12,440) | $(83,971) | | Impairment of goodwill | — | 54,973 | | Impairment of other long-lived assets | — | 12,897 | | Adjusted net loss | $(12,440) | $(16,101) | Liquidity and Capital Resources Liquidity is supported by $14.4 million cash and $48.7 million available credit, with 2021 capital expenditures estimated at $9 million, though collection of bankrupt customer receivables remains uncertain - As of March 31, 2021, the company had $14.4 million in cash and $48.7 million of available borrowing capacity under its revolving credit facility21081 - The company estimates total capital expenditures for 2021 will be approximately $9 million, primarily for the infrastructure and well completion segments225 - The company believes existing cash, operating cash flow, and credit facility borrowings will be sufficient for the next twelve months, but this is subject to variables including the collection of receivables from PREPA and Gulfport226 Quantitative and Qualitative Disclosures About Market Risk The company faces significant market risks from oil and gas industry volatility, interest rate fluctuations, foreign currency exposure, and substantial customer credit risk, especially from bankrupt receivables - The business is highly dependent on the volatile conditions of the U.S. oil and natural gas industry, with demand and pricing for services influenced by commodity prices and E&P spending levels231 - The company has interest rate risk on its revolving credit facility. A 1% change in interest rates would impact annual interest expense by approximately $0.6 million based on the $64.0 million balance at March 31, 2021235 - The company is subject to significant customer credit risk, which is heightened by the ongoing COVID-19 pandemic and depressed commodity price environment, as evidenced by the situations with PREPA and Gulfport237 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report (March 31, 2021)240 - No changes in internal control over financial reporting occurred during the first quarter of 2021 that have materially affected, or are reasonably likely to materially affect, these controls241 PART II. OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings, including disputes with bankrupt entities PREPA and Gulfport, securities class actions, and government investigations related to Puerto Rico contracts - The company is involved in numerous legal proceedings, the most significant of which are detailed in Note 18 of the financial statements243 Risk Factors The company's risk factors remain consistent with its 2020 Form 10-K, though their negative impact may be exacerbated by the ongoing COVID-19 pandemic and its economic consequences - The company's risk factors are consistent with its 2020 Form 10-K, but the impact of these risks may be exacerbated by the COVID-19 pandemic244 Mine Safety Disclosures The company's mining operations are subject to the Federal Mine Safety and Health Act, with required disclosures provided in Exhibit 95.1 of this report - The company's operations are subject to the Federal Mine Safety and Health Act, and related disclosures are included in Exhibit 95.1246 Exhibits This section lists all exhibits filed with the quarterly report, including CEO/CFO certifications and XBRL data files - A list of all exhibits filed with the Form 10-Q is provided, including CEO/CFO certifications and XBRL data249