Mammoth Energy Services(TUSK) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $40 million, down 22$51.5 million in Q2 2024, primarily due to activity softness in natural gas basins [24][25] - Net loss for Q3 2024 was $23.4 million, equating to a loss of$0.50 per share, with adjusted EBITDA at negative $6.4 million [34] - Capital expenditures (CapEx) for Q3 2024 were approximately$1.9 million, down from $4.9 million in Q2 2024, but the CapEx budget for 2024 was adjusted to$23 million from a previous guidance of $12 million [35][36] Business Line Data and Key Metrics Changes - The Well Completion Services Division generated$2.2 million in revenue during Q3 2024, facing challenges due to lower natural gas prices and activity softness [26][27] - The Infrastructure Services Division contributed $26 million in revenue for Q3 2024, down from$31.4 million in Q2 2024, impacted by storm-related work [31] - The Sand Division sold approximately 163,000 tons of sand at an average price of $22.89 per ton, compared to 141,000 tons at$22.73 per ton in Q2 2024, indicating a slight improvement [30] Market Data and Key Metrics Changes - The company noted a rebound in well completion activity expected in Q4 2024, despite challenges anticipated in the first half of 2025 [14][15] - There is an optimistic outlook for the Infrastructure Services Division, supported by the release of Infrastructure Investment and Jobs Act funds, which is expected to enhance bidding opportunities [19][20] Company Strategy and Development Direction - The company plans to focus on growing its infrastructure business through investments in transmission and distribution (T&D) and engineering, as well as modernizing pressure pumping assets [12][20] - Strategic investments will be made to enhance capabilities and scale, particularly in T&D and fiber projects, to capitalize on market opportunities [18][20] - The company is open to potential strategic acquisitions to add scale and high-quality assets while maintaining a strong balance sheet [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged industry softness impacting operations but expressed optimism for demand recovery in natural gas production later in 2025 [15][25] - The company emphasized the importance of efficient capital management and strategic investments to prepare for anticipated demand increases [21][22] - Management highlighted the favorable cash position and debt-free status as enabling factors for future growth and investment opportunities [40][41] Other Important Information - The company received $168.4 million from the Puerto Rico Electric Power Authority (PREPA) settlement, which has been used to pay off its term credit facility, resulting in a debt-free status [9][10][39] - As of September 30, 2024, the company had cash on hand of$4.2 million, with total liquidity of approximately $17.9 million [38] Q&A Session Summary Question: On the pressure pumping side, what are the lead times for equipment upgrades and outlook for the capital appointment market? - Management indicated that the availability of engines for Tier 4 dual fuel pumps is good, with plans to modernize the fleet over the next eight to ten months [44][45] Question: Regarding cash balance and M&A opportunities, what is the strategy for scaling the business? - Management is considering both internal growth in T&D and potential strategic acquisitions to enhance capabilities and customer reach [46][48] - There is a noted organic demand increase of 25% to 30% in the T&D business [49]