Mammoth Energy Services(TUSK) - 2024 Q1 - Quarterly Results

Executive Summary & Outlook Mammoth Energy Services reported a significant Q1 2024 decline in revenue and net loss, with the CEO anticipating improvement in H2, and a partial PREPA receivable payment received Financial Highlights for Q1 2024 Mammoth Energy Services, Inc. reported a significant Q1 2024 decline in revenue and a net loss, with Adjusted EBITDA also substantially lower | Metric | Q1 2024 ($ millions) | Q1 2023 ($ millions) | Q4 2023 ($ millions) | | :------------------- | :-------- | :-------- | :-------- | | Total Revenue | $43.2 | $116.3 | $52.8 | | Net (Loss) Income | $(11.8) | $8.4 | $(6.0) | | Diluted EPS ($) | $0.25 | $0.17 | $0.12 | | Adjusted EBITDA | $4.5 | $30.7 | $10.5 | CEO Commentary & Business Outlook CEO commentary highlights Q1 2024 challenges from activity softness and weather, with reduced capex and anticipated H2 improvement - Q1 2024 results were challenged by activity softness in natural gas basins due to lower energy prices, impacting Well Completion Services and other oilfield services[5] - Milder weather in Q1 2024 resulted in less storm-related work for the Infrastructure Services business[5] - Mammoth is proactively lowering its 2024 capex guidance to $9 million, a $6 million decrease from prior guidance, and expects Q1 results to be the low-water mark for the year, with increased activity anticipated in the second half[5][6] PREPA Receivable Update Mammoth received $64 million from PREPA, retaining $9.6 million and paying $54.4 million to SPCP Group, while $349 million remains outstanding | Item | Amount ($ millions) | | :-------------------------------- | :---------------- | | Total PREPA Payment Received | $64.0 | | Amount Retained by Mammoth | $9.6 | | Amount Paid to SPCP Group | $54.4 | - Mammoth, through Cobra, is still owed approximately $349 million in principal and associated interest for work completed over five years ago[7] Segmental Performance Mammoth's Q1 2024 segmental performance shows significant revenue declines in Well Completion and Natural Sand Proppant Services, while Infrastructure and Other Services saw modest changes Well Completion Services The Well Completion Services division experienced a significant decline in revenue and stages completed in Q1 2024 compared to prior periods, primarily due to reduced demand from lower energy prices | Metric | Q1 2024 ($ millions) | Q1 2023 ($ millions) | Q4 2023 ($ millions) | | :---------------- | :------ | :------ | :------ | | Revenue | $8.3 | $67.3 | $16.1 | | Stages Completed | 380 | 2,018 | 669 | | Average Fleets Active | 0.6 | 3.6 | 0.9 | Infrastructure Services Infrastructure Services revenue saw a modest decrease in Q1 2024 compared to Q1 2023 and Q4 2023, accompanied by a slight reduction in average crew count | Metric | Q1 2024 ($ millions) | Q1 2023 ($ millions) | Q4 2023 ($ millions) | | :---------------- | :------ | :------ | :------ | | Revenue | $25.0 | $28.3 | $27.2 | | Average Crew Count | 75 | 88 | 78 | Natural Sand Proppant Services The Natural Sand Proppant Services division experienced a substantial drop in revenue, tons sold, and average sales price in Q1 2024 compared to Q1 2023, though revenue was stable compared to Q4 2023 | Metric | Q1 2024 ($ millions) | Q1 2023 ($ millions) | Q4 2023 ($ millions) | | :---------------- | :------ | :------ | :------ | | Revenue | $4.3 | $12.5 | $4.5 | | Tons Sold | 146,000 | 391,000 | 104,000 | | Avg. Sales Price/Ton ($) | $24.38 | $31.02 | $23.62 | - The Company recognized approximately $2.0 million in shortfall revenue during Q4 2023[11] Drilling Services Drilling Services revenue decreased in Q1 2024 compared to both Q1 2023 and Q4 2023, primarily due to lower utilization in the directional drilling business | Metric | Q1 2024 ($ millions) | Q1 2023 ($ millions) | Q4 2023 ($ millions) | | :------ | :------ | :------ | :------ | | Revenue | $0.5 | $1.4 | $0.6 | - The decrease in drilling services revenue is primarily attributable to decreased utilization for the directional drilling business[12] Other Services Revenue from other services, including aviation, equipment rentals, remote accommodations, and equipment manufacturing, saw a slight decrease in Q1 2024 compared to Q1 2023 but an increase compared to Q4 2023 | Metric | Q1 2024 ($ millions) | Q1 2023 ($ millions) | Q4 2023 ($ millions) | | :------ | :------ | :------ | :------ | | Revenue | $6.2 | $7.5 | $4.9 | Financial Review Mammoth's Q1 2024 financial review highlights increased SG&A as a percentage of revenue, higher interest expenses due to financing charges, and a decrease in total liquidity Selling, General and Administrative Expenses (SG&A) SG&A expenses increased slightly in Q1 2024 compared to prior periods, and significantly increased as a percentage of total revenue due to lower overall revenue | SG&A Component | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Q4 2023 (in thousands) | | :--------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Compensation and benefits | $4,104 | $4,277 | $3,898 | | Professional services | $2,457 | $1,929 | $2,559 | | Other cash expenses | $1,773 | $1,911 | $1,808 | | Total cash SG&A expense | $8,334 | $8,117 | $8,265 | | Change in provision for expected credit losses | $229 | $(381) | $(177) | | Stock based compensation | $219 | $647 | $219 | | Total non-cash SG&A expense | $448 | $266 | $42 | | Total SG&A expense | $8,782 | $8,383 | $8,307 | - SG&A expenses as a percentage of total revenue were 20% for Q1 2024, up from 7% in Q1 2023 and 16% in Q4 2023[17] Interest Expense and Financing Charges, net Net interest expense and financing charges increased significantly in Q1 2024, primarily due to a $5.5 million financing charge related to the termination of an agreement with SPCP Group LLC | Metric | Q1 2024 ($ millions) | Q1 2023 ($ millions) | Q4 2023 ($ millions) | | :-------------------------------- | :------ | :------ | :------ | | Interest expense and financing charges, net | $8.1 | $3.3 | $6.8 | - The Company recognized a financing charge totaling $5.5 million during Q1 2024 related to the termination of the Assignment Agreement with SPCP Group LLC[18] Liquidity and Capital Resources Mammoth maintained a healthy liquidity position with cash on hand and an undrawn revolving credit facility as of March 31, 2024, though total liquidity decreased by April 30, 2024 | Metric | As of March 31, 2024 ($ millions) | As of April 30, 2024 ($ millions) | | :-------------------------------- | :------------------- | :------------------- | | Cash on Hand | $22.0 | $15.5 | | Revolving Credit Facility Status | Undrawn | No outstanding borrowings | | Borrowing Base | $27.3 | $19.9 | | Available Borrowing Capacity | $21.0 | $13.6 | | Total Liquidity | $43.0 | $29.1 | Capital Expenditures Total capital expenditures for Q1 2024 were $4.15 million, primarily directed towards well completion services, with a notable decrease compared to Q1 2023 | Operating Division | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Q4 2023 (in thousands) | | :------------------------- | :--------------------- | :--------------------- | :--------------------- | | Well completion services | $2,663 | $5,772 | $3,170 | | Infrastructure services | $683 | $203 | $373 | | Natural sand proppant services | — | — | $223 | | Drilling services | — | — | $13 | | Other | $146 | — | $229 | | Eliminations | $659 | $61 | $124 | | Total capital expenditures | $4,151 | $6,036 | $4,132 | Company Information This section provides details on Mammoth's Q1 2024 conference call, its business overview, and important forward-looking statements and cautionary disclosures Conference Call Details Mammoth Energy Services, Inc. hosted a conference call on May 2, 2024, to discuss its first quarter financial and operational results, with access provided via telephone and webcast - A conference call was held on Thursday, May 2, 2024, at 9:00 a.m. Central time (10:00 a.m. Eastern time)[23] - Access to the conference call was available via telephone at 1-201-389-0872 and webcast live on **https://ir.mammothenergy.com/events-presentations**[23](index=23&type=chunk) About Mammoth Energy Services, Inc. Mammoth is an integrated energy services company providing products and services for North American onshore unconventional oil and natural gas reserves, as well as electric grid construction and repair through its infrastructure services - Mammoth is an integrated, growth-oriented energy services company focused on providing products and services for the exploration and development of North American onshore unconventional oil and natural gas reserves[24] - The company also specializes in the construction and repair of the electric grid for private, public investor-owned, and co-operative utilities through its infrastructure services businesses[24] - Mammoth's suite of services includes well completion, infrastructure, natural sand and proppant, drilling, and other energy services[24] Forward-Looking Statements and Cautionary Statements This section serves as a disclaimer, highlighting that the release contains forward-looking statements based on management's current expectations, which are subject to significant risks and uncertainties that could cause actual results to differ materially - The news release contains forward-looking statements regarding the Company's business outlook, future financial position, liquidity, operations, and other future developments[25] - These statements are based on management's current expectations and beliefs but are subject to significant risks and uncertainties, including demand for services, volatility of oil and natural gas prices, performance of contracts, inflationary pressures, and the outcome of legal proceedings[25][26] - Investors are cautioned not to place undue reliance on forward-looking statements, and the Company undertakes no obligation to update them except as required by law[27] Consolidated Financial Statements The consolidated financial statements for Q1 2024 reflect a decrease in total assets and equity, a net loss, and increased cash from operating activities Consolidated Balance Sheets The consolidated balance sheets show a decrease in total assets and total liabilities from December 31, 2023, to March 31, 2024, with a corresponding reduction in total equity | Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------- | :---------------------------- | :----------------------------- | | Total current assets | $433,898 | $496,925 | | Total assets | $628,070 | $698,479 | | Total current liabilities | $123,317 | $182,553 | | Total liabilities | $179,806 | $238,379 | | Total equity | $448,264 | $460,100 | Consolidated Statements of Comprehensive (Loss) Income The consolidated statements of comprehensive income reflect a significant decline in total revenue and a shift from net income to a net loss in Q1 2024 compared to Q1 2023, with increased interest expense contributing to the loss | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Q4 2023 (in thousands) | | :--------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Total revenue | $43,189 | $116,320 | $52,782 | | Total cost and expenses | $55,221 | $109,971 | $59,599 | | Operating (loss) income | $(12,032) | $6,349 | $(6,817) | | Interest expense and financing charges, net | $(8,137) | $(3,289) | $(6,811) | | Net (loss) income | $(11,811) | $8,351 | $(5,955) | | Net (loss) income per share (diluted) ($) | $0.25 | $0.17 | $0.12 | Consolidated Statements of Cash Flows Cash flows from operating activities significantly increased in Q1 2024, primarily driven by a large change in accounts receivable, while cash used in financing activities increased due to payments on a financing transaction | Cash Flow Activity | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | | Net cash provided by operating activities | $47,349 | $3,240 | | Net cash used in investing activities | $(1,102) | $(5,706) | | Net cash used in financing activities | $(48,489) | $(3,083) | | Net change in cash, cash equivalents and restricted cash | $(2,277) | $(5,555) | | Cash, cash equivalents and restricted cash at end of period | $22,021 | $11,727 | - Payments on financing transaction amounted to $46,837 thousand in Q1 2024, contributing to the increase in cash used in financing activities[35] Segment Income Statements Q1 2024 segment income statements reveal operating losses across most divisions, with Infrastructure Services showing positive income before taxes due to other income Segment Income Statements Overview The segment income statements for Q1 2024 show operating losses across most divisions, with Infrastructure Services being the only segment to report a positive income before income taxes, largely due to other income | Segment | Q1 2024 Operating (Loss) Income (in thousands) | Q1 2023 Operating Income (Loss) (in thousands) | | :------------------------- | :------------------------------------- | :------------------------------------- | | Well Completion Services | $(4,870) | $7,476 | | Infrastructure Services | $(2,372) | $(1,665) | | Natural Sand Proppant Services | $(3,710) | $2,933 | | Drilling Services | $(1,629) | $(1,500) | | All Other | $549 | $(895) | | Total | $(12,032) | $6,349 | - Infrastructure Services reported income before income taxes of $787 thousand in Q1 2024, despite an operating loss, primarily due to $10,258 thousand in other income, net[37] Non-GAAP Financial Measures Reconciliation This section defines Adjusted EBITDA as a non-GAAP measure and provides its consolidated and segmental reconciliations for Q1 2024 Adjusted EBITDA Definition Adjusted EBITDA is a non-GAAP financial measure used by management and external users to assess operating performance and debt service ability, defined as net (loss) income adjusted for various non-operating and non-cash items - Adjusted EBITDA is defined as net (loss) income before depreciation, depletion, amortization and accretion expense, gains on disposal of assets, net, stock based compensation, interest expense and financing charges, net, other (income) expense, net, and provision (benefit) for income taxes, further adjusted to add back interest on trade accounts receivable[39] - This non-GAAP measure is used by management and external users to compare operating performance across companies with varying accounting methods, capital structures, and asset acquisition methods[39] Consolidated Adjusted EBITDA Consolidated Adjusted EBITDA for Q1 2024 was $4.5 million, a significant decrease from $30.7 million in Q1 2023 and $10.5 million in Q4 2023, reflecting the overall challenging financial quarter | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Q4 2023 (in thousands) | | :--------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Net (loss) income | $(11,811) | $8,351 | $(5,955) | | Depreciation, depletion, amortization and accretion expense | $7,021 | $12,956 | $8,271 | | Gains on disposal of assets, net | $(1,166) | $(361) | $(2,757) | | Stock based compensation | $219 | $647 | $219 | | Interest expense and financing charges, net | $8,137 | $3,289 | $6,811 | | Other income, net | $(10,143) | $(8,624) | $(10,964) | | Provision for income taxes | $1,785 | $3,333 | $3,291 | | Interest on trade accounts receivable | $10,485 | $11,112 | $11,543 | | Adjusted EBITDA | $4,527 | $30,703 | $10,459 | Segment Adjusted EBITDA Segment Adjusted EBITDA figures show varied performance across divisions, with Well Completion Services and Natural Sand Proppant Services reporting negative Adjusted EBITDA in Q1 2024, while Infrastructure Services remained positive Well Completion Services Adjusted EBITDA Well Completion Services reported a negative Adjusted EBITDA in Q1 2024, a significant decline from Q1 2023 | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Q4 2023 (in thousands) | | :--------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Net (loss) income | $(5,439) | $6,547 | $(5,158) | | Adjusted EBITDA | $(1,312) | $12,584 | $306 | Infrastructure Services Adjusted EBITDA Infrastructure Services maintained a positive Adjusted EBITDA in Q1 2024, though lower than prior periods | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Q4 2023 (in thousands) | | :--------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Net (loss) income | $(405) | $2,452 | $1,844 | | Adjusted EBITDA | $8,465 | $12,925 | $11,101 | Natural Sand Proppant Services Adjusted EBITDA Natural Sand Proppant Services reported a negative Adjusted EBITDA in Q1 2024, a decline from positive figures in Q1 2023 | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Q4 2023 (in thousands) | | :--------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Net (loss) income | $(3,851) | $2,779 | $(2,384) | | Adjusted EBITDA | $(2,526) | $4,181 | $(890) | Drilling Services Adjusted EBITDA Drilling Services continued to report negative Adjusted EBITDA in Q1 2024, consistent with prior periods | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Q4 2023 (in thousands) | | :--------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Net loss | $(1,757) | $(1,626) | $(147) | | Adjusted EBITDA | $(748) | $(263) | $(622) | Other Services Adjusted EBITDA Other Services maintained a positive Adjusted EBITDA in Q1 2024, showing resilience despite overall challenges | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Q4 2023 (in thousands) | | :--------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Net loss | $(359) | $(1,801) | $(110) | | Adjusted EBITDA | $648 | $1,276 | $564 |