Mammoth Energy Services, Inc. Price & Performance (TUSK)

We appreciate you joining us for the Mammoth Energy conference call to review twenty twenty four fourth quarter and full year results.

This call is also being webcast and can be accessed through the audio link on the Events and Presentations page of the Investor Relations section of Mammothenergy.com. Information reported on this call speaks only as of today, March 7, 2025. Please be advised that any time sensitive information may no longer be accurate as of the date of any subsequent transcript reading or listening. I would also like to remind you that the statements made in today's that are not historical facts including statements of expectations or future events, or future financial performance are forward looking statements made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. We will be making forward looking statements as part of today's call that by their nature are uncertain and outside of the company's control. Actual results may differ materially. Please refer to today's earnings press release for our disclosure on forward looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission.

Management will also refer to non GAAP measures, including adjusted EBITDA, The definition of this non GAAP measure and its reconciliation to the most directly comparable GAAP measure can be found at the end of our earnings press release and in our investor presentation which can be found on the company's website. [indiscernible] Mammoth Energy assumes no obligation to publicly update or revise any forward looking statements. And with that out of the way, I would now like to turn the call over to Mammoth Energy's CEO, Phil Lancaster. Phil?

You, Rick, and good morning, everyone.

Pleasure to speak with you in this forum for the first time in my new role as CEO. [indiscernible] I'd like to first take a moment to acknowledge and thank our former CEO, Artie Strayler, After nine years of leadership and unwavering dedication at Mammoth, Adi retired at the end of twenty twenty four. Adi was a pivotable and growing mammoth in navigating the difficult prepper resolutions in the recent years.

I'll start today's call with a few highlights from the quarter, and then I'll introduce some key areas of focus for Mammoth in the year ahead and provide a high level of commentary on our results.

I'll then turn the call over to Mark to cover the financials in more detail. There was signs of improvement in our results for the fourth fourth quarter and we're carrying this positive momentum into 2025. Despite typical seasonality and budget exhaustion at year end, we benefited from improved pressure pumping utilization during the quarter. And we continue to see strong demand throughout our various businesses. Including engineering, fiber and T and D services. We remain well positioned to deliver improved results in 2025 and the incremental natural gas and LNG related demand may augment our performance and utilization our pressure pumping business.

Our focus going forward will be unlocking value our shareholders We believe it is imperative to maintain a strong balance sheet. Given our significant cash position, we are evaluating potential strategic opportunities that would allow us to add a assets.

As we evaluate our existing businesses and new opportunities to unlock value, we may be buyers or sellers and at sometimes both. I'm excited to explore these opportunities to improve results for all stakeholders. We see many opportunities to strategically allocate capital to grow our existing businesses that are generating the greatest returns. As an example, in the last ninety days, we've added roughly 20 crews or an increase of 25% of our crew count to our infrastructure services division to address growing utility demand requirements. We also identified other opportunities to deploy capital specifically around equipment rentals. There will continue to be various opportunities to invest back in our business in the near term to address demand. As well as purchase and upgrade equipment with our improved cash position. Now turning to results to our results Our Infrastructure Services business continues to There are significant bidding opportunities in the market related to engineering, fiber, transmission and distribution. These are all areas that I believe we have differentiated in specialized capability that can be harnessed to capitalize on opportunities in the market. Our engineering group continues to do well and we have secured a strong backlog of business to enable continued growth.

Given our favorable outlook for the Infrastructure Services division, and the macro tailwinds that are supporting the demand cycles such as data centers, AI, nuclear developments, we are making strategic investments to add equipment and crews. These efforts are expected to further improve our positioning when the within the current market.

Currently have over 100 crews operating in the field. Well completion services saw a rebound in utilization during the fourth quarter after activity bottomed out in the third quarter. Exited December with two active pressure pumping fleets which helped drive improved financial results. We expect 2025 completions activity to be relatively steady with the potential for upside compared to '24. Driven by incremental demand associated with natural gas. Hargreting tailwind may come from the LNG export capacity coming online and general electricity and power demand enhancements. While these tailwinds may not largely materialize until later in the year, we are seeing elevated activity from our customers that we expect will lead to further utilization improvements in Q1. Utilization across our portfolio has improved and is expected to remain steady throughout 2025. But we are focused on efficient and effective cost management to align with the activity levels of our customers. With our debt free balance sheet our significant cash position, we now have new opportunities that are available to us and we intend to to strengthen Mammoth for the future and unlock the value for our shareholders.

Now let me turn the call over to Mark to take you through our financial performance in greater detail.

Thank you, Phil. I hope everyone is doing well and we appreciate you joining us today. As I usually do, I'm going to take this time to provide additional details on some meaningful metrics A detailed breakdown of our results can be found in our earnings release and in our 10 ks once it is on file with the SEC. Mammoth's total revenue during the fourth quarter of twenty twenty four came in at $53,200,000 which represents a 33% sequential increase when compared to $40,000,000 in the third quarter of twenty twenty four. Total revenue for the full year 2024 was $187,900,000 compared to three zero in 2023. This year over year decline was primarily attributable to decreased utilization across our Well Completion Services division as a result of lower activity by our customers in the natural gas basins in which we operate. We continue to believe there are positive demand implications for natural gas on the horizon driven by incremental LNG export capacity and growing electricity demand requirements. We remain optimistic that associated activity increases will occur in 2025 and when coupled with various cost cutting measures that we implemented prior to year end, this should further support improvements in our overall financial performance.

Additionally, we will continue to evaluate strategic opportunities to deploy capital ways that will be accretive and value enhancing. Our Infrastructure Services division contributed revenue of $27,900,000 for the fourth quarter of twenty twenty four, which represents a slight sequential increase when compared to $26,000,000 for the third quarter. For the full year 2024, infrastructure services revenue was $110,400,000 which was flat compared to 110,500,000.0 for 2023. As Phil mentioned, we've added roughly 20 to address the growing demand surrounding distribution work. This division has a healthy bidding environment and we are aligning our operational capabilities to meet this demand. We will continue to strategically deploy capital to pursue opportunities within this sector as we focus on the areas with the greatest potential for improved returns. As we've highlighted in the past, we also have a great engineering team and are seeing significant traction with our service offerings.

The Well Completion Services division generated $15,800,000 during the fourth quarter with approximately 1.1 fleets utilized on average. As we mentioned on our last call, we activated a second fleet before year end and this contributed to our favorable step up in utilization to round out 2024 despite seasonality and industry wide budget exhaustion. Although general industry expectations are for relatively flat activity levels throughout 2025, we believe there are demand implications for natural gas directed activity that may shift market dynamics later in the year in a way that benefits our Well Completion Services division.

We will remain disciplined stewards of capital and continue to align our spending appropriately with the demand that we see from our customers. Our sand division sold in the fourth quarter of twenty twenty four at an average sales price of $22.54 per ton. Compared to 163,000 tons of sand at an average sales price of $22.89 during the third quarter of twenty twenty four. On a full year basis, we sold 578,000 tons of sand at an average price of $23.15 compared to 1,200,000 tons of sand at an average price of $29.86 during 2023, [indiscernible] Although volumes sales and pricing were negatively impact Pricing appears to have somewhat stabilized toward the end of the year.

We expect incremental demand to drive improved results in the sand division in 2025. Our net loss for the fourth quarter of twenty twenty four was $15,500,000 or a loss of $0.32 per diluted share.

Net loss for the full year of 2024 was $207,300,000 or a loss of $4.31 per diluted share. Full year 2024 net loss was impacted by the non cash pre tax charge of $170,700,000 that was recorded during the second quarter related to the settlement agreement with PREPA. Adjusted EBITDA as defined and reconciled in our earnings release was a negative $4,800,000 for the fourth quarter of twenty twenty four compared to a negative $6,400,000 for the third quarter of twenty twenty four. [indiscernible] Adjusted EBITDA for the full year of 2024 was a negative 167,500,000.0 compared to $71,000,000 for 2023. [indiscernible] CapEx for the fourth quarter of twenty twenty four was approximately $6,100,000 Sequential increase in CapEx was most notably related to upgrades and maintenance of our pressure pumping fleet and truck, tooling and equipment purchases in our infrastructure services during the quarter.

CapEx for the full year of 2024 was $17,100,000 compared to $19,400,000 for 2023. Now looking ahead at 2025, our CapEx budget for the year is $12,000,000 for our existing businesses. Which is primarily comprised of growth CapEx for our equipment rentals business and maintenance CapEx for our pressure pumping business. Additional growth in our Infrastructure business is expected to be primarily financed through leasing arrangements. As previously mentioned, we continue to evaluate strategic opportunities to deploy capital in ways that will be accretive and value enhancing to our business. We may deploy additional CapEx related to these opportunities. Selling, general and administrative expenses were totaled approximately $9,900,000 or during the fourth quarter of twenty twenty four. [indiscernible] Professional fees related to Puerto Rico totaled $1,600,000 for the fourth quarter of twenty twenty four and $5,600,000 for the full year. [indiscernible] We continue to expect these fees to decline in future periods a result of the settlement agreement with PREPA.

In addition, the fourth quarter of twenty twenty four included approximately $900,000 in one time compensation related costs.

As of 12/31/2024, we had unrestricted cash on hand of $61,000,000 This cash balance excludes restricted cash of approximately $21,000,000 dollars which would bring our total cash on hand to approximately $82,000,000 Our revolving credit facility was undrawn and we had approximately $17,700,000 in available borrowing Our total liquidity was approximately $78,700,000 As of today, Mammoth remains debt free. To conclude our call, would like to thank our seven fifty employees throughout the company for their hard work, dedication commitment to maintaining safe and sustainable worksites for themselves and their teammates. We are seeing significant opportunities to unlock value Mammoth and its shareholders. And we look forward to sharing these developments with you in coming quarters. We currently have a robust cash position which we intend to utilize to substantially invest in the company for future growth.

We believe Mammoth is well positioned today and we expect to capitalize on this to drive improved returns. We are focused on building a better, more resilient business for the future. We will continue to prioritize disciplined operations efficiency and strategic capital allocation which when coupled with our strong balance sheet we believe will unlock meaningful shareholder value.

Operator, we would now like to open the call up for questions.

Thank you. We will now be conducting a question and answer session. Are no questions at this time. At At this point, I'd like to turn the call over to Rick Black for e mail questions.

Thank you, operator. Starting with the first question that we received, where is the best growth potential for the infrastructure business? Is that organic or acquisitive? And now that there is a new administration in Doge is out there, how should we be thinking about these two things impacting the infrastructure space in the coming year? Yes. Thank you. So I think most of our growth currently is through organic growth. As I'd stated, we picked up twenty twenty crews, but we have even more demand and a little bit of that is because the larger IOUs have bought on realized that they have to expand. And so right across The U. S. We're noticing a lot more demand from the larger IOUs. So we feel like the organic growth is there We have also started getting involved with more co ops which we think will help our storms. Storm revenue and we would look at acquisitions maybe, but at this particular point, we feel like there's plenty of organic growth.

Excellent.

Mark, in the rental business, you just provide a little bit of color around the customers and the demand cycle that are in business? And what would be a driver of growth and demand perspective in the coming year?

Our current customer base is primarily comprised of E and P companies along with other service companies. This is an area that we're seeing strong demand in see opportunities to grow our customer base, in particular, we see some discrete opportunities as it relates to the construction market. And some of the rental equipment that we have inside of the portfolio. And I'd just remind you that we see the rental business as a fairly broad portfolio of assets that for us includes helicopters. So we've always viewed that business broadly and believe this is an area where we can acquire high quality assets attractive prices.

And then turning to the sand business, a similar type question. Can you just give us a little bit of color on what characterizes that environment? And are there opportunities to deploy more capital there or to make acquisitions? How does that business grow? And what do you see that environment looking like in 2025?

For 2025, we're seeing some stabilized demand As always, the key drivers for our sand business are commodity pricing. For us, we're operating well underneath our maximum capacity. So we've got the ability to expand capacity and capitalize as we see demand.

Excellent.

And then on just on your CapEx outlook, for 2025, I believe you said 12,000,000 some of that would be spent on pressure pumping and some on the rental business. Can you just give us a percentage break of kind of how you see that playing out over the year?

Yes. Just to give some detail on that, approximately half of our CapEx budget is allocated to growing our rental business. We have about 5,000,000 related to pressure pumping upgrades that will be dependent on customer demand.

Excellent. And then finally, Phil, now that you've been in this position for a few months and the company has capital again and that the negative overhang of PREPA is done, curious what your perspective is on the primary focus as you sit at the company today?

Yes, I think primarily is getting my feet wet, but the three focuses for me at this particular time First one is to get the company right sized and profitable.

Second is evaluating our existing businesses for future. And then now we because of our position, with cash for the first time in six or seven years, we now have the door open to look for potential. Acquisitions to either help our existing businesses or new opportunities.

Excellent. That's all the questions I have. So I'll turn the call over to you, Phil. As we wrap up this quarterly call.

Thank you again for joining us on the call today. We continue to focus on positioning Mammoth for future growth. Improving operating results and unlocking value This concludes our conference call and we look forward to speaking to you all again next quarter.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day.