Mammoth Energy Services(TUSK) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for the second quarter of 2025 was $16.4 million, compared to $16 million in the same period a year ago, reflecting a modest increase [19] - The net loss for the quarter was $35.7 million, which included a non-cash impairment charge of $31.7 million, compared to a net loss of $155.6 million in the same quarter of 2024 [5][24] - Adjusted EBITDA from continuing operations was a loss of $2.8 million, an improvement from a loss of $164.6 million in the previous year [25] Business Line Data and Key Metrics Changes - Rental Services segment revenue increased by 72% to $3.1 million, driven by expanded aviation rental offerings [22] - Infrastructure Services segment revenue was $5.4 million, a 20% increase compared to the same quarter in 2024 [20] - Natural Sand Proppant Services generated $5.4 million in revenue, a 15% increase, although sales volumes rose while pricing declined by 6% [21] - Remote Accommodation segment revenue decreased to $1.8 million from $2.7 million in the same quarter last year [23] - Drilling segment revenue slightly increased to $743,000 from $736,000 year-over-year [24] Market Data and Key Metrics Changes - The company noted strong demand in the infrastructure space driven by macro tailwinds around data centers, AI, and nuclear developments [15] - The rental services segment saw a 33% increase in the number of equipment rented compared to the same period last year [14] Company Strategy and Development Direction - The company is focused on driving returns through improved internal execution, prioritizing asset utilization, margin expansion, and capital efficiency [6] - Strategic divestitures and acquisitions are part of the transformation strategy to enhance resilience and growth potential [7][11] - The company aims to remain active in M&A, evaluating opportunities that can unlock value while preserving balance sheet strength [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current market, viewing it as primed with opportunities despite macroeconomic uncertainties [7] - The company plans to continue investing in quality assets or companies at attractive valuations to generate positive returns [11] - Future growth is expected to be supported by ongoing investments in the aviation sector and other rental services [35][50] Other Important Information - As of June 30, 2025, the company had unrestricted cash of approximately $127.3 million, with total liquidity around $194.8 million [27] - The company remains debt-free and plans to utilize its cash position for future growth investments [29] Q&A Session Summary Question: Growth potential in rental and accommodation services - Management highlighted that the majority of capital has been invested in the aviation sector, targeting IRRs of 25% to 35% [35] Question: Domestic versus Canadian sand sales and market evolution - The majority of sand sales have historically been to Western Canada, particularly the Montney region, with expectations for continued demand [37] Question: Context on aviation market supply-demand imbalances - Management noted favorable passenger travel and production delays at major manufacturers, creating demand in the aviation sector [41] Question: Thoughts on stock buybacks - The board approved a buyback, but execution has been limited due to blackout periods related to ongoing transactions [42] Question: Path to free cash flow - Management indicated that as litigation costs decrease, the current asset mix should help achieve free cash flow neutrality [46]