Mammoth Energy Services, Inc.

Good day and thank you for standing by. Welcome to the third quarter 2021 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Rick Black, Investor Relations. Please go ahead, sir.

Thank you, Operator, and good morning, everyone. We appreciate you joining us for the Mammoth Energy Conference call to review third quarter 2021 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 recorded on this call speaks only as of today, November 5th, 2021, so please be advised that any time-sensitive information may no longer be accurate as of the date of any replay, listening, or transcript reading. I would also like to remind you that the statements made in today's discussion 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 the earnings release that was issued today 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 may also refer to non-GAAP measures, including adjusted net income loss and adjusted EBITDA. Reconciliation scenarios GAAP measures can be found at the end of the earnings release. Mammoth Energy assumes no obligation to publicly update or revise any forward-looking statements. And now, I would like to turn the call over to Mammoth Energy's CEO, Arti Strehl.

Arti? Thank you, Rick, and good morning, everyone. I'll begin with an overview of the third quarter and provide an update on our efforts to recover the PREPA receivable owed to the company before turning the call over to Mark to walk you through our financials. We are pleased with the positive trajectory throughout our business segments during the quarter that led to higher revenue and an improved bottom line compared to last quarter. Based on the directional improvement we experienced in September, we are encouraged by the positive trends in our infrastructure business due to increased storm work, a new fiber maintenance and installation contract, and increased bidding activity, as well as internal personnel changes that are gaining traction in this segment. Funding for projects in the infrastructure space remains strong with the added opportunity of a new federal infrastructure bill, which we are optimistic will be passed in the near future. While we recognize that this is a sector impacted by near-term seasonality, we believe that migrating the company further into the infrastructure space will allow us to enhance long-term growth and sustainability. In our oilfield businesses, improved commodity prices continue to contribute to a positive industry environment and increased equipment utilization as we ramped up the second hydraulic fracturing fleet during the third quarter. In our sand business, we continue to see increased market activity. I will now provide a bit more color on each of our primary segments. During the third quarter, we pumped 688 stages with approximately 1.2 fleets utilized on average. This compared to an average utilization of 0.9 fleets during the same quarter last year and during the second quarter. Our sand division sold approximately 315,000 tons of sand during the third quarter, and the average sales price for the sand sold was approximately $16.58 per ton. both metrics represented an increase sequentially from the second quarter. As these sectors continue to rebound from the significant economic impacts over the past year, we are beginning to see more positives in terms of activity, pricing, scheduling, and new inquiries, particularly focused in 2022. We believe our diverse portfolio and ability to adapt quickly to changing environments positions us well in these segments. As I mentioned earlier, Our infrastructure business improves sequentially. While the business contains seasonality and some inherent lumpiness, we continue to establish ourselves in new markets. Our fiber business, which we organically started only a few months ago, is gaining traction. We will kick off our first fiber project in coming weeks and recently won a second project that we expect will begin before the end of the year. We firmly believe that the migration into the infrastructure space will lead to more sustainable operating performance going forward. It is important to note that the infrastructure space contains improving macro trends related to increased project demand and opportunities in a sustainable macro environment with strong and growing funding capabilities. We continue to pursue other opportunities within this sector as we strategically structure our service offerings for growth in both the geographic footprint and the depth of projects. This type of work is very much needed in our country to improve infrastructure. Repairs, hardening, and modernization of the electrical grid, along with shift towards renewables, continue to grow nationwide. Bidding levels continue to be robust. In addition, we will We still believe that the federal government will pass an infrastructure bill in the near future. MAMIS vertical integration of service offerings through engineering procurement and construction as well as our manufacturing equipment refurbishing facility continues to differentiate our offerings to infrastructure project needs. We believe these capabilities will provide a competitive advantage going forward. In addition, having vertically integrated services and equipment manufacturing capabilities will be a key component to scaling operation and controlling costs. We continue to believe that the future of our company will reside primarily in the infrastructure space, which we believe has tremendous growth potential. I'd like to close my prepared remarks with an update regarding the efforts to collect a receivable from PREPA. As many of you are aware, PREPA continues to breach its contractual obligations by refusing to make payments for services that are subsidiary of COBRA provided. To date, PREPA has contended that they are withholding payment primarily because of the September 2019 indictment of COBRA's former president along with two FEMA officials. This position is at odds with several reviews that have taken place, including the determination memorandum from FEMA dated May 26, 2021. To date, FEMA, the grantor, has not raised the issue of the indictments in any report, and simply put, PREPA has chosen not to comply with its contractual obligations based on a position that not even the grantor recognizes. Sadly, PREPA has a long history of not paying contractors. As PREPA's bankruptcy filings demonstrate, PREPA has not paid other contractors who, just like COBRA, responded in a time of critical need and restored power in Puerto Rico following Hurricane Maria. As referenced in the October 6, 2021, U.S. House of Representatives Natural Resources Committee, the federal government has provided another 9.2 $9.5 billion in funding to Puerto Rico to rebuild its grid. To date, those federal funds, just like the funds for the work we perform, are stuck in PREPA's own gridlock. Even when significant amounts of federal funds are available, PREPA has repeatedly demonstrated an unwillingness to pay its contractors. In Mammoth's experience, this gridlock and inability to pay contractors is unique to PREPA. Our teams have responded to several other disaster declarations since we responded to PREPA in its time of need, including disasters caused by hurricanes Michael, Sally, Laura, and Ida, numerous ice storms, the direct go in 2020 that hit the Midwest. In each of these responses, we were paid for our work. In addition, PREPA owes COBRA approximately $69 million for services performed under the first contract as amended. Of this amount, approximately $62 million relates to what is commonly referred to as the tax gross-up provision of the contract. Despite the existence of two FEMA determination memorandums, a comprehensive review performed by the highly respected Rand Corporation, a review by the U.S. Army Corps of Engineers, and an internal conclusion by FEMA that the tax gross-up costs are eligible, PREPA continues to withhold payments of the amounts owed under the first contract and to knowingly breach their contractual obligations. While we have been extremely patient and have tried to work with PREPA, it has become apparent to us that the only way to change PREPA's behavior is to hold them accountable. We urge our stakeholders to visit our website and to contact their representatives. Congress has the power to right this wrong through the seven-person Puerto Rico Control Board, which was created in 2016 as a part of the bipartisan Puerto Rico Oversight Management and Economic Stability Act, which is commonly referred to as PROMESA. PROMESA's intent was to address Puerto Rico's financial crisis without a bailout by American taxpayers. We now need Congress to push the control board to hold PREPA accountable to meet its contractual obligations and to pay its debt. The alternative is that companies like ours, which responded in a time of crisis, pay the price. Again, please visit our website to review the documents that support the compliance of our contract and the quality of our work that our team performs. Additionally, our website contains information on how you can contact your representatives to help us get paid for the work we performed in Puerto Rico. Let me turn the call over to Mark to take you through the financial performance during the quarter before we open the call to questions.