Mammoth Energy Services, Inc. Announces Second Quarter 2020 Operational and Financial Results

OKLAHOMA CITY, July 30, 2020 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ: TUSK) today reported financial and operational results for the second quarter ended June 30, 2020.

Financial Highlights for the Second Quarter 2020:

Total revenue was $60.1 million for the three months ended June 30, 2020, down 38% from $97.4 million for the three months ended March 31, 2020 and down 67% from $181.8 million for the three months ended June 30, 2019.

Net loss for the three months ended June 30, 2020 was $15.2 million, or $0.33 per fully diluted share, as compared to net loss of $84.0 million, or $1.85 per fully diluted share, for the three months ended March 31, 2020 and net loss of $10.9 million, or $0.24 per fully diluted share, for the three months ended June 30, 2019.

Adjusted EBITDA (as defined and reconciled below) was $6.9 million for the three months ended June 30, 2020, as compared to $13.5 million for the three months ended March 31, 2020 and $8.6 million for the three months ended June 30, 2019.

Arty Straehla, Mammoth's Chief Executive Officer, stated, “The second quarter of 2020 saw the release of a very important report prepared by the Rand Corporation for the U.S. Department of Homeland Security. The report was prepared at the request of the Federal Emergency Management Agency to assess the reasonableness of our subsidiary Cobra’s Master Service Agreement with the Puerto Rico Electric Power Authority (“PREPA”) for repairs to PREPA's electrical grid following Hurricane Maria. This detailed 77-page report found, among other things, that the selection of Cobra was reasonable, that PREPA adhered to procurement statutes and policies in awarding the contract to Cobra and that Cobra’s rates were reasonable.  We believe these are important data points as we continue to pursue payment from PREPA for the quality work performed by our team.”

“In looking at our financial results, it is clear that our infrastructure services segment has turned a corner with gross margin increasing to 17% during the second quarter of 2020 and Adjusted EBITDA in this segment growing nearly 50% quarter-over-quarter for the last two consecutive quarters. The initiatives taken by our infrastructure management team have laid a solid foundation for growth.”

“While the oilfield portion of our service offerings have experienced significant challenges as of late given the current industry and macroeconomic environment, we continue to maintain our oilfield equipment and plan to be ready to ramp up our service lines once demand returns,” concluded Straehla. 

Infrastructure Services

Mammoth's infrastructure services division contributed revenue of $30.6 million for the three months ended June 30, 2020, an increase of 19% from $25.7 million for the three months ended March 31, 2020 and a decrease of 27% from $41.8 million for the three months ended June 30, 2019.

As of June 30, 2020, Mammoth had approximately 120 crews operating in the continental United States.

Pressure Pumping Services

Mammoth's pressure pumping services division contributed revenue (inclusive of inter-segment revenue) of $16.6 million on 658 stages for the three months ended June 30, 2020, a decrease of 62% from $43.6 million on 1,482 stages for the three months ended March 31, 2020 and a decrease of 80% from $84.6 million on 1,717 stages for the three months ended June 30, 2019. On average, 1.9 of the Company's fleets were active for the three months ended June 30, 2020, compared to average utilization of 2.7 fleets during the three months ended March 31, 2020 and an average utilization of 2.7 fleets during the three months ended June 30, 2019.

Natural Sand Proppant Services

Mammoth's natural sand proppant services division contributed revenue (inclusive of inter-segment revenue) of $6.2 million for the three months ended June 30, 2020, a decrease of 39% from $10.2 million for the three months ended March 31, 2020 and a decrease of 85% from $40.4 million for the three months ended June 30, 2019. The Company sold approximately 82,000 tons of sand during the three months ended June 30, 2020, a decrease of 66% from approximately 239,000 tons sold during the three months ended March 31, 2020 and a decrease of 90% from approximately 813,000 tons sold during the three months ended June 30, 2019. The Company's average sales price for the sand sold during the three months ended June 30, 2020 was $15.18 per ton, an increase from the $13.67 per ton average sales price during the three months ended March 31, 2020 and a decrease from the $30.09 per ton average sales price during the three months ended June 30, 2019.

Drilling Services

Mammoth's drilling services division contributed revenue (inclusive of inter-segment revenue) of $1.3 million for the three months ended June 30, 2020, a decrease of 73% from $4.8 million for the three months ended March 31, 2020 and a decrease of 83% from $7.7 million for the three months ended June 30, 2019. The decline is primarily due to reduced utilization. As a result of market conditions, the Company has 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 coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation, remote accommodations, oilfield equipment manufacturing and infrastructure engineering and design services, contributed revenue (inclusive of inter-segment revenue) of $6.5 million for the three months ended June 30, 2020, a decrease of 56% from $14.9 million for the three months ended March 31, 2020 and a decrease of 69% from $21.0 million for the three months ended June 30, 2019.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $13.7 million for the three months ended June 30, 2020, as compared to $10.8 million for the three months ended March 31, 2020 and $9.5 million for the three months ended June 30, 2019.

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

	Three Months Ended												Six Months Ended
	June 30,								March 31,				June 30,
	2020				2019				2020				2020				2019
Cash expenses:
Compensation and benefits	$	3,720			$	2,154			$	3,969			$	7,690			$	11,384
Professional services	6,147				2,934				3,538				9,684				6,723
Other(a)	2,100				3,381				2,309				4,409				6,626
Total cash SG&A expense	11,967				8,469				9,816				21,783				24,733
Non-cash expenses:
Bad debt provision	1,624				262				55				1,679				266
Stock based compensation	135				724				900				1,035				1,792
Total non-cash SG&A expense	1,759				986				955				2,714				2,058
Total SG&A expense	$	13,726			$	9,455			$	10,771			$	24,497			$	26,791

a.     Includes travel-related costs, information technology expenses, rent, utilities and other general and administrative-related costs.

SG&A expenses, as a percentage of total revenue, were 23% for the three months ended June 30, 2020, as compared to 11% for the three months ended March 31, 2020 and 5% for the three months ended June 30, 2019.

Liquidity

As of June 30, 2020, Mammoth had cash on hand of $18.0 million and outstanding borrowings under its revolving credit facility of $89.3 million. As of June 30, 2020, the Company had $18.5 million of available borrowing capacity under its revolving credit facility. This available borrowing capacity reflects (i) a minimum excess availability covenant of 10% of the maximum revolving advance amount and (ii) $9.0 million of outstanding letters of credit. As of June 30, 2020, Mammoth had total liquidity of $36.5 million.

As of July 29, 2020, Mammoth had cash on hand of $16.3 million and outstanding borrowings under its revolving credit facility of $88.2 million. As of July 29, 2020, the Company had $19.5 million of available borrowing capacity under its revolving credit facility. This available borrowing capacity reflects (i) a minimum excess availability covenant of 10% of the maximum revolving advance amount and (ii) $9.0 million of outstanding letters of credit.

Capital Expenditures

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

	Three Months Ended												Six Months Ended
	June 30,								March 31,				June 30,
	2020				2019				2020				2020				2019
Infrastructure services(a)	$	43			$	2,177			$	77			$	120			$	5,431
Pressure pumping services(b)	2,450				4,013				604				3,054				11,342
Natural sand proppant services(c)	354				990				521				875				1,975
Drilling services(d)	72				660				8				80				2,927
Other(e)	5				2,107				290				295				8,545
Total capital expenditures	$	2,924			$	9,947			$	1,500			$	4,424			$	30,220

a.     Capital expenditures primarily for truck, tooling and other equipment for the periods presented.
b.     Capital expenditures primarily for pressure pumping and water transfer equipment for the periods presented.
c.     Capital expenditures primarily for maintenance for the periods presented.
d.     Capital expenditures primarily for upgrades to the Company's rig fleet for the periods presented.
e.     Capital expenditures primarily for equipment for the Company's rental businesses for the periods presented.

Explanatory Note Regarding Financial Information

The financial information contained in this release should be read in conjunction with the financial information contained in Mammoth’s Annual Reports filed on Form 10-K with the Securities and Exchange Commission (“SEC”), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings.

The Company's Chief Executive Officer and Chief Financial Officer comprise the Company's Chief Operating Decision Maker function (“CODM”). Segment information is prepared on the same basis that the CODM manages the segments, evaluates the segment financial statements and makes key operating and resource utilization decisions. Segment evaluation is determined on a quantitative basis based on a function of operating income (loss) as well as a qualitative basis, such as nature of the product and service offerings and types of customers.

Conference Call Information

Mammoth will host a conference call on Thursday, July 30, 2020 at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss its second quarter 2020 financial and operational results. The telephone number to access the conference call is 844-265-1561 in the U.S. and the international dial in is 216-562-0385. The conference ID for the call is 6816807. The conference call will also be webcast live on www.mammothenergy.com in the “Investors” section.

About Mammoth Energy Services, Inc.

Mammoth is an integrated, growth-oriented energy service company serving companies engaged in the exploration and development of North American onshore unconventional oil and natural gas reserves and government-funded utilities, private utilities, public investor-owned utilities and co-operative utilities through its energy infrastructure services. Mammoth’s suite of services and products include: pressure pumping services, infrastructure services, natural sand and proppant services, drilling services and other energy services.

For additional information about Mammoth, please visit its website at www.mammothenergy.com, where Mammoth routinely posts announcements, updates, events, investor information and presentations and recent news releases.

Investor Contact:
Don Crist
Director of Investor Relations
[e-mail]
405-608-6048

Media Contact:
Peter Mirijanian
[e-mail]
[phone]

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 current significant surplus in the supply of oil and the ability of the OPEC+ countries to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently resulting from the impact of the foregoing factors, which is negatively impacting our business; 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 failure to receive or delays in receiving governmental authorizations, approvals and/or payments; 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 by the Puerto Rico Electric Power Authority; the Company's inability to replace the prior levels of work in its business segments, including its infrastructure and pressure pumping segments; risks relating to economic conditions; the loss of or interruption in operations of one or more key suppliers or customers; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of capital resources and liquidity; weather; natural disasters; litigation; 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.
CONSOLIDATED BALANCE SHEETS

ASSETS	June 30,				December 31,
	2020				2019
CURRENT ASSETS	(in thousands)
Cash and cash equivalents	$	18,025			$	5,872
Accounts receivable, net	353,912				363,053
Receivables from related parties	27,316				7,523
Inventories	12,473				17,483
Prepaid expenses	6,236				12,354
Other current assets	740				695
Total current assets	418,702				406,980
Property, plant and equipment, net	293,150				352,772
Sand reserves	68,257				68,351
Operating lease right-of-use assets	33,210				43,446
Intangible assets, net - customer relationships	496				583
Intangible assets, net - trade names	4,786				5,205
Goodwill	12,608				67,581
Other non-current assets	7,261				7,467
Total assets	$	838,470			$	952,385
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	31,866			$	39,220
Payables to related parties	14				526
Accrued expenses and other current liabilities	36,741				40,754
Current operating lease liability	13,387				16,432
Income taxes payable	29,729				33,465
Total current liabilities	111,737				130,397
Long-term debt	89,250				80,000
Deferred income tax liabilities	37,593				36,873
Long-term operating lease liability	19,802				27,102
Asset retirement obligation	4,640				4,241
Other liabilities	5,383				5,031
Total liabilities	268,405				283,644
COMMITMENTS AND CONTINGENCIES
EQUITY
Equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 45,762,200 and 45,108,545 issued and outstanding at June 30, 2020 and December 31, 2019	458				451
Additional paid in capital	536,333				535,094
Retained earnings	37,326				136,502
Accumulated other comprehensive loss	(4,052		)		(3,306		)
Total equity	570,065				668,741
Total liabilities and equity	$	838,470			$	952,385

MAMMOTH ENERGY SERVICES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

	Three Months Ended												Six Months Ended
	June 30,								March 31,				June 30,
	2020				2019				2020				2020				2019
	(in thousands, except per share amounts)
REVENUE
Services revenue	$	44,878			$	115,760			$	68,845			$	113,723			$	308,861
Services revenue - related parties	8,650				36,837				18,013				26,663				80,910
Product revenue	4,706				18,362				8,650				13,356				30,671
Product revenue - related parties	1,875				10,861				1,875				3,750				23,516
Total revenue	60,109				181,820				97,383				157,492				443,958
COST AND EXPENSES
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $21,750, $25,597, $23,554, $45,305 and $51,280, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019)	42,255				132,688				70,697				112,952				290,794
Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0, $0, $0 and $0, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019)	97				2,650				101				198				3,363
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $2,346, $4,525, $2,309, $4,654 and $7,395, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019)	6,401				32,677				11,108				17,509				62,928
Selling, general and administrative	13,528				8,796				10,556				24,084				25,698
Selling, general and administrative - related parties	198				659				215				413				1,093
Depreciation, depletion, amortization and accretion	24,116				30,145				25,882				49,998				58,721
Impairment of goodwill	—				—				54,973				54,973				—
Impairment of other long-lived assets	—				—				12,897				12,897				—
Total cost and expenses	86,595				207,615				186,429				273,024				442,597
Operating (loss) income	(26,486		)		(25,795		)		(89,046		)		(115,532		)		1,361
OTHER INCOME (EXPENSE)
Interest expense, net	(1,471		)		(1,551		)		(1,638		)		(3,109		)		(2,074		)
Other, net	8,137				4,019				7,409				15,546				28,576
Other, net - related parties	1,133				—				—				1,133				—
Total other income	7,799				2,468				5,771				13,570				26,502
(Loss) income before income taxes	(18,687		)		(23,327		)		(83,275		)		(101,962		)		27,863
(Benefit) provision for income taxes	(3,482		)		(12,438		)		696				(2,786		)		10,419
Net (loss) income	$	(15,205	)		$	(10,889	)		$	(83,971	)		$	(99,176	)		$	17,444
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustment, net of tax of ($150), $92, $361, $211 and $182, respectively, for the three months ended June 30, 2020, June 30, 2019 and March 31, 2020 and six months ended June 30, 2020 and 2019	668				350				(1,414		)		(746		)		706
Comprehensive (loss) income	$	(14,537	)		$	(10,539	)		$	(85,385	)		$	(99,922	)		$	18,150
Net (loss) income per share (basic)	$	(0.33	)		$	(0.24	)		$	(1.85	)		$	(2.18	)		$	0.39
Net (loss) income per share (diluted)	$	(0.33	)		$	(0.24	)		$	(1.85	)		$	(2.18	)		$	0.39
Weighted average number of shares outstanding (basic)	45,727				45,003				45,314				45,521				44,966
Weighted average number of shares outstanding (diluted)	45,727				45,003				45,314				45,521				45,060
Dividends declared per share	$	—			$	0.125			$	—			$	—			$	0.25

MAMMOTH ENERGY SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended
	June 30,
	2020				2019
	(in thousands)
Cash flows from operating activities:
Net (loss) income	$	(99,176	)		$	17,444
Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities:
Stock based compensation	1,246				2,233
Depreciation, depletion, accretion and amortization	49,998				58,721
Amortization of coil tubing strings	359				1,003
Amortization of debt origination costs	577				163
Bad debt expense	1,679				266
(Gain) loss on disposal of property and equipment	(1,451		)		176
Impairment of goodwill	54,973				—
Impairment of other long-lived assets	12,897				—
Deferred income taxes	931				(22,911		)
Other	623				(199		)
Changes in assets and liabilities:
Accounts receivable, net	7,782				(48,530		)
Receivables from related parties	(19,793		)		(26,236		)
Inventories	4,651				(1,815		)
Prepaid expenses and other assets	6,079				1,115
Accounts payable	(7,514		)		7,366
Payables to related parties	(512		)		650
Accrued expenses and other liabilities	(2,818		)		(17,129		)
Income taxes payable	(3,697		)		(74,172		)
Net cash provided by (used in) operating activities	6,834				(101,855		)
Cash flows from investing activities:
Purchases of property and equipment	(4,348		)		(30,085		)
Purchases of property and equipment from related parties	(76		)		(135		)
Contributions to equity investee	—				(680		)
Proceeds from disposal of property and equipment	2,544				2,465
Net cash used in investing activities	(1,880		)		(28,435		)
Cash flows from financing activities:
Borrowings from lines of credit	22,800				108,000
Repayments of lines of credit	(13,550		)		(25,964		)
Dividends paid	—				(11,219		)
Principal payments on financing leases and equipment financing notes	(914		)		(992		)
Debt issuance costs	(1,000		)		—
Net cash provided by financing activities	7,336				69,825
Effect of foreign exchange rate on cash	(137		)		85
Net change in cash and cash equivalents	12,153				(60,380		)
Cash and cash equivalents at beginning of period	5,872				67,625
Cash and cash equivalents at end of period	$	18,025			$	7,245
Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,683			$	1,830
Cash (received) paid for income taxes	$	(6	)		$	116,442
Supplemental disclosure of non-cash transactions:
Purchases of property and equipment included in accounts payable	$	2,780			$	2,339

MAMMOTH ENERGY SERVICES, INC.
SEGMENT INCOME STATEMENTS
(in thousands)

Three months ended June 30, 2020	Infrastructure			Pressure Pumping			Sand			Drilling			All Other			Eliminations			Total
Revenue from external customers	$	30,579		$	16,125		$	6,237		$	1,250		$	5,918		$	—		$	60,109
Intersegment revenues	—			446			—			25			580			(1,051		)	—
Total revenue	30,579			16,571			6,237			1,275			6,498			(1,051		)	60,109
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	25,368			8,744			6,025			2,027			6,589			—			48,753
Intersegment cost of revenues	27			333			28			21			642			(1,051		)	—
Total cost of revenue	25,395			9,077			6,053			2,048			7,231			(1,051		)	48,753
Selling, general and administrative	8,037			1,477			1,357			1,331			1,524			—			13,726
Depreciation, depletion, amortization and accretion	7,816			7,685			2,348			2,700			3,567			—			24,116
Operating loss	(10,669		)	(1,668		)	(3,521		)	(4,804		)	(5,824		)	—			(26,486		)
Interest expense, net	720			346			53			143			209			—			1,471
Other (income) expense, net	(7,809		)	(1,179		)	(2		)	(298		)	18			—			(9,270		)
Loss before income taxes	$	(3,580	)	$	(835	)	$	(3,572	)	$	(4,649	)	$	(6,051	)	$	—		$	(18,687	)

Three months ended June 30, 2019	Infrastructure			Pressure Pumping			Sand			Drilling			All Other			Eliminations			Total
Revenue from external customers	$	41,821		$	82,973		$	29,223		$	7,450		$	20,353		$	—		$	181,820
Intersegment revenues	—			1,668			11,170			207			687			(13,732		)	—
Total revenue	41,821			84,641			40,393			7,657			21,040			(13,732		)	181,820
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	44,864			59,835			32,676			9,175			21,465			—			168,015
Intersegment cost of revenues	—			11,797			1,141			229			643			(13,810		)	—
Total cost of revenue	44,864			71,632			33,817			9,404			22,108			(13,810		)	168,015
Selling, general and administrative	3,035			2,664			1,380			844			1,532			—			9,455
Depreciation, depletion, amortization and accretion	7,818			10,174			4,528			3,193			4,432			—			30,145
Operating (loss) income	(13,896		)	171			668			(5,784		)	(7,032		)	78			(25,795		)
Interest expense, net	386			452			72			332			309			—			1,551
Other (income) expense, net	(4,045		)	9			(32		)	—			49			—			(4,019		)
(Loss) income before income taxes	$	(10,237	)	$	(290	)	$	628		$	(6,116	)	$	(7,390	)	$	78		$	(23,327	)

Three months ended March 31, 2020	Infrastructure			Pressure Pumping			Sand			Drilling			All Other			Eliminations			Total
Revenue from external customers	$	25,705		$	42,686		$	10,154		$	4,723		$	14,115		$	—		$	97,383
Intersegment revenues	—			936			95			55			775			(1,861		)	—
Total revenue	25,705			43,622			10,249			4,778			14,890			(1,861		)	97,383
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	26,946			26,208			10,657			5,635			12,460			—			81,906
Intersegment cost of revenues	8			627			302			130			794			(1,861		)	—
Total cost of revenue	26,954			26,835			10,959			5,765			13,254			(1,861		)	81,906
Selling, general and administrative	4,297			2,222			1,251			1,063			1,938			—			10,771
Depreciation, depletion, amortization and accretion	7,934			8,492			2,312			2,877			4,267			—			25,882
Impairment of goodwill	—			53,406			—			—			1,567						54,973
Impairment of other long-lived assets	—			4,203			—			326			8,368			—			12,897
Operating loss	(13,480		)	(51,536		)	(4,273		)	(5,253		)	(14,504		)	—			(89,046		)
Interest expense, net	757			293			61			268			259			—			1,638
Other (income) expense, net	(7,276		)	(109		)	(37		)	27			(14		)	—			(7,409		)
Loss before income taxes	$	(6,961	)	$	(51,720	)	$	(4,297	)	$	(5,548	)	$	(14,749	)	$	—		$	(83,275	)

Six months ended June 30, 2020	Infrastructure			Pressure Pumping			Sand			Drilling			All Other			Eliminations			Total
Revenue from external customers	$	56,285		$	58,810		$	16,391		$	5,973		$	20,033		$	—		$	157,492
Intersegment revenues	—			1,382			95			81			1,354			(2,912		)	—
Total revenue	56,285			60,192			16,486			6,054			21,387			(2,912		)	157,492
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	52,314			34,952			16,682			7,662			19,049			—			130,659
Intersegment cost of revenues	35			961			329			152			1,435			(2,912		)	—
Total cost of revenue	52,349			35,913			17,011			7,814			20,484			(2,912		)	130,659
Selling, general and administrative	12,334			3,699			2,608			2,395			3,461			—			24,497
Depreciation, depletion, amortization and accretion	15,750			16,177			4,661			5,577			7,833			—			49,998
Impairment of goodwill	—			53,406			—			—			1,567			—			54,973
Impairment of other long-lived assets	—			4,203			—			326			8,368			—			12,897
Operating loss	(24,148		)	(53,206		)	(7,794		)	(10,058		)	(20,326		)	—			(115,532		)
Interest expense, net	1,477			639			113			412			468			—			3,109
Other (income) expense, net	(15,086		)	(1,288		)	(39		)	(271		)	5			—			(16,679		)
Loss before income taxes	$	(10,539	)	$	(52,557	)	$	(7,868	)	$	(10,199	)	$	(20,799	)	$	—		$	(101,962	)

Six months ended June 30, 2019	Infrastructure			Pressure Pumping			Sand			Drilling			All Other			Eliminations			Total
Revenue from external customers	$	150,542		$	173,568		$	54,187		$	21,026		$	44,635		$	—		$	443,958
Intersegment revenues	—			3,212			24,067			426			1,453			(29,158		)	—
Total revenue	150,542			176,780			78,254			21,452			46,088			(29,158		)	443,958
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	103,828			124,047			62,928			21,826			44,456			—			357,085
Intersegment cost of revenues	—			25,334			2,188			501			1,195			(29,218		)	—
Total cost of revenue	103,828			149,381			65,116			22,327			45,651			(29,218		)	357,085
Selling, general and administrative	12,553			5,876			2,899			2,208			3,255			—			26,791
Depreciation, depletion, amortization and accretion	15,537			20,068			7,401			6,770			8,945			—			58,721
Operating income (loss)	18,624			1,455			2,838			(9,853		)	(11,763		)	60			1,361
Interest expense, net	425			649			102			460			438			—			2,074
Other (income) expense, net	(28,869		)	8			(32		)	(22		)	339			—			(28,576		)
Income (loss) before income taxes	$	47,068		$	798		$	2,768		$	(10,291	)	$	(12,540	)	$	60		$	27,863

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 (loss) income before depreciation, depletion, amortization and accretion expense, impairment of goodwill, impairment of other long-lived assets, acquisition related 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 provision (benefit) for income taxes, further adjusted to add back interest on trade accounts receivable. The Company excludes the items listed above from net (loss) income 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 (loss) income 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 (loss) income on a consolidated basis and for each of the Company's segments (in thousands):

Consolidated

	Three Months Ended												Six Months Ended
	June 30,								March 31,				June 30,
Reconciliation of Adjusted EBITDA to net (loss) income:	2020				2019				2020				2020				2019
Net (loss) income	$	(15,205	)		$	(10,889	)		$	(83,971	)		$	(99,176	)		$	17,444
Depreciation, depletion, amortization and accretion expense	24,116				30,145				25,882				49,998				58,721
Impairment of goodwill	—				—				54,973				54,973				—
Impairment of other long-lived assets	—				—				12,897				12,897				—
Acquisition related costs	—				45				—				—				45
Stock based compensation	196				944				1,049				1,246				2,233
Interest expense, net	1,471				1,551				1,638				3,109				2,074
Other income, net	(9,270		)		(4,019		)		(7,409		)		(16,679		)		(28,576		)
(Benefit) provision for income taxes	(3,482		)		(12,438		)		696				(2,786		)		10,419
Interest on trade accounts receivable	9,071				3,234				7,696				16,767				28,969
Adjusted EBITDA	$	6,897			$	8,573			$	13,451			$	20,349			$	91,329

Infrastructure Services

	Three Months Ended												Six Months Ended
	June 30,								March 31,				June 30,
Reconciliation of Adjusted EBITDA to net (loss) income:	2020				2019				2020				2020				2019
Net (loss) income	$	(4,529	)		$	6,210			$	(9,452	)		$	(13,980	)		$	41,875
Depreciation and amortization expense	7,816				7,818				7,934				15,750				15,537
Acquisition related costs	—				12				—				—				12
Stock based compensation	45				9				251				297				471
Interest expense	720				386				757				1,477				425
Other income, net	(7,809		)		(4,045		)		(7,276		)		(15,086		)		(28,869		)
Provision for income taxes	949				(16,447		)		2,491				3,440				5,193
Interest on trade accounts receivable	7,929				3,234				7,696				15,625				28,969
Adjusted EBITDA	$	5,121			$	(2,823	)		$	2,401			$	7,523			$	63,613

Pressure Pumping Services

	Three Months Ended												Six Months Ended
	June 30,								March 31,				June 30,
Reconciliation of Adjusted EBITDA to net (loss) income:	2020				2019				2020				2020				2019
Net (loss) income	$	(835	)		$	(290	)		$	(51,720	)		$	(52,556	)		$	798
Depreciation and amortization expense	7,685				10,174				8,492				16,177				20,068
Impairment of goodwill	—				—				53,406				53,406				—
Impairment of other long-lived assets	—				—				4,203				4,203				—
Acquisition related costs	—				18				—				—				18
Stock based compensation	53				489				335				388				899
Interest expense	346				452				293				639				649
Other (income) expense, net	(1,179		)		9				(109		)		(1,288		)		8
Interest on trade accounts receivable	1,133				—				—				1,133				—
Adjusted EBITDA	$	7,203			$	10,852			$	14,900			$	22,102			$	22,440

Natural Sand Proppant Services

	Three Months Ended												Six Months Ended
	June 30,								March 31,				June 30,
Reconciliation of Adjusted EBITDA to net (loss) income:	2020				2019				2020				2020				2019
Net (loss) income	$	(3,572	)		$	628			$	(4,297	)		$	(7,868	)		$	2,768
Depreciation, depletion, amortization and accretion expense	2,348				4,528				2,312				4,661				7,401
Acquisition related costs	—				8				—				—				8
Stock based compensation	45				236				225				271				439
Interest expense	53				72				61				113				102
Other income, net	(2		)		(32		)		(37		)		(39		)		(32		)
Adjusted EBITDA	$	(1,128	)		$	5,440			$	(1,736	)		$	(2,862	)		$	10,686

Drilling Services

	Three Months Ended												Six Months Ended
	June 30,								March 31,				June 30,
Reconciliation of Adjusted EBITDA to net (loss) income:	2020				2019				2020				2020				2019
Net loss	$	(4,649	)		$	(6,116	)		$	(5,548	)		$	(10,199	)		$	(10,291	)
Depreciation expense	2,700				3,193				2,877				5,577				6,770
Impairment of other long-lived assets	—				—				326				326				—
Acquisition related costs	—				2				—				—				2
Stock based compensation	34				88				94				128				189
Interest expense	143				332				268				412				460
Other (income) expense, net	(298		)		—				27				(271		)		(22		)
Adjusted EBITDA	$	(2,070	)		$	(2,501	)		$	(1,956	)		$	(4,027	)		$	(2,892	)

Other Services^(a)

	Three Months Ended												Six Months Ended
	June 30,								March 31,				June 30,
Reconciliation of Adjusted EBITDA to net loss:	2020				2019				2020				2020				2019
Net loss	$	(1,620	)		$	(11,399	)		$	(12,954	)		$	(14,573	)		$	(17,766	)
Depreciation, amortization and accretion expense	3,567				4,432				4,267				7,833				8,945
Impairment of goodwill	—				—				1,567				1,567				—
Impairment of other long-lived assets	—				—				8,368				8,368				—
Acquisition related costs	—				5				—				—				5
Stock based compensation	19				122				144				162				235
Interest expense, net	209				309				259				468				438
Other expense (income), net	18				49				(14		)		5				339
(Benefit) provision for income taxes	(4,431		)		4,009				(1,795		)		(6,226		)		5,226
Interest on trade accounts receivable	9				—				—				9				—
Adjusted EBITDA	$	(2,229	)		$	(2,473	)		$	(158	)		$	(2,387	)		$	(2,578	)

a.     Includes results for Mammoth's coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation and remote accommodations, oilfield equipment manufacturing and infrastructure engineering and design services and corporate related activities. The Company's corporate related activities do not generate revenue.

Adjusted Net (Loss) Income and Adjusted (Loss) Earnings per Share

Adjusted net (loss) income and adjusted basic and diluted (loss) earnings 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) income and adjusted (loss) earnings per share should not be considered in isolation or as a substitute for net (loss) income and (loss) earnings 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) income and adjusted (loss) earnings per share to the GAAP financial measures of net (loss) income and (loss) earnings per share for the periods specified.

	Three Months Ended												Six Months Ended
	June 30,								March 31,				June 30,
	2020				2019				2020				2020				2019
	(in thousands, except per share amounts)
Net (loss) income, as reported	$	(15,205	)		$	(10,889	)		$	(83,971	)		$	(99,176	)		$	17,444
Impairment of goodwill	—				—				54,973				54,973				—
Impairment of other long-lived assets	—				—				12,897				12,897				—
Adjusted net (loss) income	$	(15,205	)		$	(10,889	)		$	(16,101	)		$	(31,306	)		$	17,444
Basic (loss) earnings per share, as reported	$	(0.33	)		$	(0.24	)		$	(1.85	)		$	(2.18	)		$	0.39
Impairment of goodwill	—				—				1.21				1.21				—
Impairment of other long-lived assets	—				—				0.28				0.28				—
Adjusted basic (loss) earnings per share	$	(0.33	)		$	(0.24	)		$	(0.36	)		$	(0.69	)		$	0.39
Diluted (loss) earnings per share, as reported	$	(0.33	)		$	(0.24	)		$	(1.85	)		$	(2.18	)		$	0.39
Impairment of goodwill	—				—				1.21				1.21				—
Impairment of other long-lived assets	—				—				0.28				0.28				—
Adjusted diluted (loss) earnings per share	$	(0.33	)		$	(0.24	)		$	(0.36	)		$	(0.69	)		$	0.39