Mammoth Energy Services, Inc. Announces Fourth Quarter and Full Year 2021 Operational and Financial Results

OKLAHOMA CITY, March 4, 2022 /PRNewswire/ -- Mammoth Energy Services, Inc. ("Mammoth" or the "Company") (NASDAQ: TUSK) today reported financial and operational results for the fourth quarter and full year ended December 31, 2021.

Financial Overview for the Fourth Quarter and Full Year 2021:

Total revenue was $57.2 million for the fourth quarter of 2021, as compared to $85.1 million for the same quarter of 2020 and $57.5 million for the third quarter of 2021. Total revenue was $229.0 million for the year ended December 31, 2021 as compared to $313.1 million for the year ended December 31, 2020.

Net loss for the fourth quarter of 2021 was $13.3 million, or a $0.28 loss per share, as compared to $11.9 million, or a $0.26 loss per share, for the same quarter of 2020, and $40.9 million, or a $0.88 loss per share, for the third quarter of 2021. Net loss for the year ended December 31, 2021 was $101.4 million, or $2.18 per fully diluted share, as compared to net loss of $107.6 million, or $2.36 per fully diluted share for the year ended December 31, 2020.

Adjusted EBITDA (as defined and reconciled below) increased to $17.2 million for the fourth quarter of 2021, as compared to $7.5 million for the same quarter of 2020 and ($29.7) million for the third quarter of 2021. Adjusted EBITDA was ($11.6) million for the year ended December 31, 2021, as compared to $50.0 million for the year ended December 31, 2020. During the third quarter of 2021, Mammoth recognized expense of $32.6 million related to its settlement with Gulfport Energy Corporation. Excluding this non-recurring expense, adjusted EBITDA was $2.9 million for the third quarter of 2021 and $21.0 million for the full year 2021.

Arty Straehla, Chief Executive Officer of Mammoth commented, "We ended the year sustaining sequential quarterly momentum on top line revenues and reducing net loss. I'm proud of the progress our team is making to further enhance our efficient fixed cost model. We have implemented a cost management structure and methodical operational processes that we believe will enable significant top line growth without meaningfully changing our SG&A structure.

"As we enter 2022, we see improved macro-economic trends that we believe will drive increased demand for our two largest business segments, well completion services and infrastructure services," added Straehla. "In addition, we continue to vigorously pursue numerous avenues to collect our receivable from PREPA for work performed by our subsidiary Cobra Acquisitions LLC in Puerto Rico. We believe that published documentation to date continues to show that our team performed a difficult job in a difficult environment to save lives and aid the people of Puerto Rico in their time of need."

Infrastructure Services
Mammoth's infrastructure services division contributed revenue of $19.7 million, or approximately 34% of Mammoth's total revenue, for the fourth quarter of 2021, as compared to $56.6 million for the same quarter of 2020 and $25.1 million for the third quarter of 2021. The decrease in revenue compared to the same quarter of 2020 is primarily due to a decline in storm activity, resulting in lower storm restoration revenue.

The infrastructure segment contributed revenues of $93.4 million for the year ended December 31, 2021, down from $157.8 million for the year ended December 31, 2020. The decrease in revenue is primarily due to a decline in storm activity, resulting in lower storm restoration revenue, as well as management and crew turnover.

Well Completion Services
Mammoth's well completion services division contributed revenue (inclusive of inter-segment revenue) of $21.3 million on 891 stages for the fourth quarter of 2021, as compared to $12.7 million on 291 stages for the same quarter of 2020 and $22.7 million on 688 stages for the third quarter of 2021. On average, 1.6 of the Company's fleets were active for the fourth quarter of 2021, compared to an average utilization of 0.6 fleets during the same quarter of 2020 and 1.2 fleets during the third quarter of 2021.

The well completion division contributed revenues (inclusive of inter-segment revenues) of $84.3 million on 2,544 stages for the year ended December 31, 2021, down from $88.3 million on 2,880 stages for the year ended December 31, 2020. On average, 1.1 of the Company's fleets were active for the year ended December 31, 2021 compared to 1.5 fleets for the year ended December 31, 2020.

Natural Sand Proppant Services
Mammoth's natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $10.8 million for the fourth quarter of 2021, as compared to $11.8 million for the same quarter of 2020 and $8.4 million for the third quarter of 2021. In the fourth quarter of 2021, the Company sold approximately 270,000 tons of sand at an average sales price of $17.84 per ton, as compared to sales of approximately 100,000 tons of sand at an average sales price of $15.59 per ton during the same quarter of 2020. In the third quarter of 2021, sales were approximately 315,000 tons of sand at an average price of $16.58 per ton.

The natural sand proppant division contributed revenues (inclusive of inter-segment revenues) of $34.9 million for the year ended December 31, 2021, as compared to $34.4 million for the year ended December 31, 2020. The Company sold 1.0 million tons of sand during the year ended December 31, 2021, an increase from 0.5 million tons of sand during the year ended December 31, 2020. The Company's average sales price for the sand sold during the year ended December 31, 2021 was $16.76 per ton, an increase from $14.58 per ton average sales price during the year ended December 31, 2020.

Drilling Services
Mammoth's drilling services division contributed revenue (inclusive of inter-segment revenue) of $1.0 million for the fourth quarter of 2021, as compared to $0.6 million for the same quarter of 2020 and $1.2 million for the third quarter of 2021. The drilling services division contributed revenues of $4.3 million for the year ended December 31, 2021, as compared to $7.8 million for the year ended December 31, 2020.

The Company temporarily shut down its contract land drilling operations beginning in December 2019 and its rig hauling operations beginning in April 2020.

Other Services
Mammoth's other services, including aviation, coil tubing, pressure control, equipment rentals, crude oil hauling, full-service transportation, remote accommodations and equipment manufacturing, contributed revenue (inclusive of inter-segment revenue) of $4.9 million for the fourth quarter of 2021, as compared to $4.0 million for the same quarter of 2020 and $4.6 million for the third quarter of 2021. The Company's other services contributed revenues of $18.5 million for the year ended December 31, 2021, as compared to $28.8 million for the year ended December 31, 2020.

As a result of market conditions, the Company temporarily shut down its cementing and acidizing operations as well as its flowback operations beginning in July 2019, its coil tubing and full-service transportation operations beginning in July 2020 and its crude oil hauling operations beginning in July 2021.

Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses were $3.5 million for the fourth quarter of 2021, as compared to $30.5 million for the same quarter of 2020 and $41.9 million for the third quarter of 2021.

Following is a breakout of SG&A expense (in thousands):

SG&A expenses, as a percentage of total revenue, were 6% for the fourth quarter of 2021, as compared to 36% for the same quarter of 2020 and 73% for the third quarter of 2021. SG&A expenses, as a percentage of total revenue, were 34% for the year ended December 31, 2021, as compared to 21% for the year ended December 31, 2020.

Liquidity
As of December 31, 2021, Mammoth had cash on hand of $9.9 million, outstanding borrowings under its revolving credit facility of $83.4 million and $16.5 million of available borrowing capacity under its revolving credit facility, after giving effect to $9.0 million of outstanding letters of credit and the requirement to maintain a $10 million reserve out of the available borrowing capacity. As of December 31, 2021, Mammoth had total liquidity of $26.4 million.

On February 28, 2022, Mammoth amended its revolving credit facility to, among other things, amend certain financial covenants, provide for a conditional increase of the applicable interest margin, permit certain sale-leaseback transactions, provide for a reduction in the maximum revolving advance amount in an amount equal to 50% of the PREPA claims proceeds, subject to a floor equal to the sum of eligible billed and unbilled accounts receivables, and classify the payments pursuant to its previously disclosed settlement agreement with MasTec Renewables Puerto Rico, LLC as restricted payments, requiring $20.0 million of availability both before and after making such payments. The amendment also permanently waived compliance by us and our subsidiaries with the leverage ratio and fixed charge coverage ratio covenants in our revolving credit facility for the fiscal quarters ended September 30, 2021 and December 31, 2021, respectively, ending the prior limited covenant waiver period.

As of March 2, 2022, Mammoth had cash on hand of $7.2 million and outstanding borrowings under its revolving credit facility of $83.7 million. As of March 2, 2022, the Company had $10.6 million of available borrowing capacity under its revolving credit facility, after giving effect to $8.5 million of outstanding letters of credit and the requirement to maintain a $7.5 million reserve out of the available borrowing capacity.

Capital Expenditures
The following table summarizes Mammoth's capital expenditures by operating division for the periods indicated (in thousands):

Conference Call Information
Mammoth will host a conference call on Friday, March 4, 2022 at 8:00 a.m. Central time (9:00 a.m. Eastern time) to discuss its fourth quarter and full year 2021 financial and operational results. The telephone number to access the conference call is 216-562-0385. The conference call will also be webcast live on https://ir.mammothenergy.com/events-presentations.  

About Mammoth Energy Services, Inc.
Mammoth is an integrated, growth-oriented energy services company focused on the construction and repair of the electric grid for private utilities, public investor-owned utilities and co-operative utilities through its infrastructure services businesses. The Company also provides products and services to enable the exploration and development of North American onshore unconventional oil and natural gas reserves. Mammoth's suite of services and products include: infrastructure services, well completion services, natural sand and proppant services, drilling services and other energy services. For more information, please visit www.mammothenergy.com.

Contacts:
Mark Layton, CFO
Mammoth Energy Services, Inc.
[email protected]

Rick Black / Ken Dennard
Dennard Lascar Investor Relations
[email protected]

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 Mammoth expects, believes or anticipates 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 the Company's 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 the Company's existing operations, experience and perception of historical trends, current conditions, anticipated future developments and their effect on Mammoth, 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, the Company's forward-looking statements are subject to significant risks and uncertainties, including those described in its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings it makes with the SEC, including those relating to the Company's acquisitions and contracts, many of which are beyond the Company's control, which may cause actual results to differ materially from historical experience and 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 severity and duration of the COVID-19 pandemic, related global and national health concerns and economic repercussions and the resulting negative impact on demand for our services; the volatility of oil and natural gas prices and actions by OPEC members and other exporting nations affecting commodities prices and production levels; the impact of the current Russian/Ukrainian military conflict on the global energy and capital markets and global stability; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; the outcome of ongoing government investigations and other legal proceedings, including those relating to the contracts awarded to the Company's subsidiary Cobra Acquisitions LLC ("Cobra") by the Puerto Rico Electric Power Authority ("PREPA"); the failure to receive or delays in receiving governmental authorizations, approvals and/or payments, including payments with respect to the PREPA account receivable for prior services to PREPA performed by Cobra; the Company's inability to replace the prior levels of work in its business segments, including its infrastructure and well completion services segments; risks relating to economic conditions; whether a federal infrastructure bill is implemented and the terms thereof; the loss of or interruption in operations of one or more of Mammoth's significant suppliers or customers; the loss of management and/or crews; the outcome or settlement of our litigation matters, including the adverse impact of the recent settlements with Gulfport Energy Corporation and MasTec Renewables Puerto Rico, LLC, and the effect on our financial condition and results of operations; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of capital resources and liquidity; Mammoth's ability to continue to comply with, or if applicable, obtain a waiver of forecasted or actual noncompliance with certain financial covenants and comply with other terms and conditions under our recently amended revolving credit facility; weather; natural disasters; litigation; volatility in commodity markets; 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.
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 goodwill, impairment of other long-lived assets, 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 interest on trade accounts receivable) 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. 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):

Adjusted Net Loss and Adjusted Loss per Share

Adjusted net loss and adjusted basic and diluted loss per share are supplemental non-GAAP financial measures that are used by management to evaluate the Company's operating and financial performance. Management believes these measures provide meaningful information about the Company's performance by excluding certain non-cash charges, such as impairment of goodwill and impairment of other long-lived assets, that may not be indicative of the Company's ongoing operating results. Adjusted net loss and adjusted loss per share should not be considered in isolation or as a substitute for net loss and loss per share prepared in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The following tables provide a reconciliation of adjusted net loss and adjusted loss per share to the GAAP financial measures of net loss and loss per share for the periods specified.

SOURCE Mammoth Energy Services