Mammoth Energy Services, Inc.

Good day, ladies and gentlemen, and welcome to the Mammoth Energy Services fourth quarter and full year 2020 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference is being recorded and will be available for replay on Mammoth Energy Services' website. I would now like to introduce our host for today's conference, Mr. Don Crisp. Mammoth Energy Services Director of Investor Relations. Sir, you may begin.

Thank you, Jillian. Good afternoon, and welcome to Mammoth Energy Services' fourth quarter and full year 2020 earnings conference call. Joining me on today's call are Art Estrella, Chief Executive Officer, and Mark Layton, Chief Financial Officer. Before I turn the call over to them, I'd like to read our safe harbor statement. Some of the comments today may include forward-looking statements reflecting Mammoth Energy Services' views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements. These risks are discussed in Mammoth Energy Services Form 10-K, Forms 10-Q, current reports on Form 8-K, and other Securities and Exchange Commission filings. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Our comments today may also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures are included in our fourth quarter and full-year 2020 press release, which can be found on our website, along with an updated presentation. Now I'll turn the call over to Arti.

Thank you, Don, and good afternoon, everyone. 2020 was a very active year for our team as they adapted to the ongoing COVID-19 pandemic and the effects it is having on business today. Since the outbreak of the pandemic, nearly every aspect of our daily lives has been impacted. But our first priority is and has always been the safety and health of our team. And we continue to take steps to protect our team members from the virus. Now that the vaccine is being administered, infection rates appear to be trending down. The turnaround in our infrastructure business throughout 2020 was significant as the management team, which was hired in November of 2019, evaluated the businesses, eliminated costs, streamlined operations, and began the transition of our job mix. The actions taken throughout 2020 can be seen in our financials as the U.S. business reversed losses and turned positive throughout the year. Demand for our infrastructure business increased throughout the back half of the year. In addition to our normal operations, our teams continued to work on the Gulf Coast to restore damage caused by multiple hurricanes. A majority of this work was completed during the fourth quarter with some storm cleanup continuing into the first quarter of 2021. Our diversification strategy into infrastructure is working. The gross margin of the infrastructure division came in at 26% during the fourth quarter of 2020, with EBITDA growing marginally quarter over quarter when excluding interest on the PREPO receivable. The infrastructure management team is leveraging current operations to introduce our capabilities to potential customers. We believe industry demand and bidding opportunities will remain robust in years to come as a shift towards more renewable energy sources is realized. Our management team has an impressive resume of renewables and we believe that their background combined with our vertically integrated service offering positions us well to compete and win renewable projects. With the work our team has done on the cost structure and a core base of operations, we have built a solid foundation and believe we are positioned to grow both our customer base and geographic footprint over the coming years. Our infrastructure operating subsidiaries, Higher Power and Five Star, are well respected by the utilities they work for and are expanding their customer base. These businesses have grown significantly since we acquired them and are currently comprised of approximately 500 experienced field personnel spread across 115 crews. AquaWolf, our engineering business, is expected to expand both the number of engineers and breadth of work performed following the recent signing of a multi-year contract with a major utility. While we're limited in what we can disclose about the agreement, this three-year contract is expected to generate up to $40 million in revenue over the contract term. This is a significant award and brings us one step closer to being an engineering procurement and construction, or EPC, company. In addition, the integration of our manufacturing operation into our infrastructure offering is progressing through the manufacturing and refurbishment of equipment and products used by our infrastructure teams. We are encouraged by what our infrastructure engineering manufacturing teams have accomplished and what the future holds. Turning to the oil field, while oil prices have rebounded from recent lows, activity levels remain depressed industry-wide as a result of capital discipline amongst E&Ps. We currently expect an increase in activity as we progress through 2021, but we believe E&Ps will generally keep production flat with year-end 2020 levels. During the fourth quarter of 2020, we pumped 291 stages with approximately 0.6 fleets utilized throughout the quarter on average. We have continued to upgrade additional pumps to dynamic gas blending, or DGB, to meet current anticipated and anticipated industry demands. Our sand division sold approximately 100,000 tons of sand during the fourth quarter of 2020. The average sales price for the sand sold during the fourth quarter of 2020 was approximately $15.59 per ton. While northern white sand pricing remains challenged, we believe a significant reduction in supply has positioned our mines well to benefit from an increase in completion activity levels. While the events of the past year have caused significant impacts to both our daily and professional lives, Mammoth has adapted quickly to the changing environment. Our diverse portfolio of companies across several industries has performed as expected. The infrastructure business has a solid foundation from which to grow as it looks to ways to further integrate into our other businesses and continue to lower costs. Let me now turn the call over to Mark. to take you through the financial performance during the fourth quarter and full year of 2020, after which we will take questions.