Mammoth Energy Services, Inc.

Reminder, this conference is being recorded. It is now my pleasure to introduce your host, Zach Vaughan. Thank you, you may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Mammoth Energy Conference Call to review 2025 first quarter results. This call is also being webcast. You 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, May 7th, 2025. Please be advised that any time sensitive information may no longer be accurate as of any subsequent date. 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'll 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 press 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 EBITDA. The definition of this non-GAAP measure and its reconciliation to the most directly comparable GAAP financial measure can be found at the end of our earnings release and in our investor presentation, which can be found on our website. Mammoth Energy assumes no obligation to publicly update or revise any forward-looking statements. And now I'd like to turn it over to Mammoth Energy's CEO, Phil Lancaster.

Thank you, Zach. Good morning, everyone. Nice to speak to you all again this quarter in what will be my last earnings call as CEO of Mammoth Energy Services. Given our significant cash position, management has and will continue to evaluate potential strategic opportunities to add accretive assets while maintaining the strength of the balance sheet. As a reminder, as management evaluates the existing businesses and new opportunities to unlock value, Mammoth may be buyers or sellers, at some times both. April was a great example of this as the company completed two transactions, one as a buyer and one as a seller. As a buyer, we purchased eight small passenger aircraft in early April for approximately 11.5 million. These aircraft will add meaningful scale and further diversify Mammoth's rental services fleet. Also, each of these planes are under long-term leases with a commuter airline, so this purchase will be immediately accrued to our financial results. As a seller, we completed a transaction in April selling three infrastructure subsidiaries, five-star electric, high-power electrical, and Python equipment to peak utility services group for an aggregate sales price of 108.7 million. This was a monumental transaction for Mammoth and demonstrated the ability for us to repeatedly grow businesses organically with our enterprise. We originally purchased these businesses for less than $10 million in 2017, and over the past eight years, we've significantly grown these businesses and increased revenue. To give you a sense of the magnitude, associated revenue has exceeded 90 million in each of the last three years. This transaction was especially accrued because it was completed at over four times tangible book value and a trailing 12-month EBITDA multiple of nine. As part of the infrastructure deal, I will be transitioning out of the CEO role and will become an employee of Peak. I'll start at Peak on July 1st. Currently, our board of directors is conducting a search for a successor CEO. I've been at Mammoth since the inception of our infrastructure business in 2017, and we've had a lot of success growing these assets during that time. I feel a natural tie to that business and it makes the most sense for me to follow those assets. And while it is difficult to leave, I have full confidence in the Mammoth team to continue to drive value for shareholders. I have no doubt that this experienced management team and my successor will lead this company forward to achieve success all future endeavors. I'll now touch on a few highlights from the quarter and address some of the uncertainty that is present in today's market environment before turning the call over to Mark to elaborate on the first quarter financial performance and provide the outlet for Mammoth going forward. We are pleased with the strength of our first quarter results that generated positive adjusted EBITDA. During the quarter, we experienced incremental growth in all key financial metrics, substantially from the fourth quarter that rebounded off the lows of 2024. We benefited from the incremental pressure pumping utilization during the quarter that drove a 32% sequential increase in well completion revenue, and we continue to see strong demand throughout our various businesses, including engineering and TD services. We recognize that there is a level of uncertainty in the market currently stemming from the tariffs, the state of our economy, and geopolitical events such as OPEC plus's decision to increase production. These factors have already started to weigh on all prices as a result. We anticipate potential increased competition in the gas basins in which we operate, given the strong fundamental support for natural gas later this year and into 2026, tied to increase LNG capacity. This increased competition may squeeze margin slightly in the near term, but we largely expect this to be a short term headwind as service companies will naturally return to the oily basins once commodity prices permits. Our near term target continues to achieve utilization excess of 1.5 active fleets, which would enable us to generate free cash flow. Now let me turn the call over to Mark to take you through our first quarter financial performance highlights by segment and the company's outlook.

Thank you, Phil. I hope everyone is doing well, and we appreciate you joining us today. I'll take this time to provide commentary around our overall financial performance during the quarter, including a deeper dive into the results by segment before touching on our plans for the future. A detailed breakdown of our results can be found in our earnings release and in our 10Q once it is on file with the SEC. MAMA's total revenue during the first quarter of 2025 came in at 62.5 million, which represents a 17% sequential increase over the fourth quarter of 2024. Our first quarter results benefited from increased utilization and demand for our services in both our well completions and infrastructure services segments. We continue to believe there are positive demand implications for natural gas resulting from incremental LNG export capacity and growing electricity demand requirements, which we expect to materialize late this year and into 2026. Despite the uncertainty that is present in energy markets and the resulting demand implications, we have implemented various cost cutting measures that should further support improvements in our overall financial performance. Additionally, we will continue to evaluate strategic opportunities to deploy capital in ways that will be accretive and value enhancing. Divisionally, the well completions services segment saw further improvement in utilization during the first quarter after activity bottomed out in mid 2024. Well completions generated revenue of 20.9 million with an average of 1.3 active pressure pumping fleets compared to 15.8 million with 1.1 average active fleets in the fourth quarter of 2024. This increase in utilization helped drive the improvement in financial results. As we look at the remainder of 2025, commodity prices will likely result in a somewhat flat activity environment. We expect completions activity to be relatively steady, although should uncertainty subside, there is a potential for upside into 2026 driven by incremental demand associated with natural gas. Macroeconomic uncertainty, tariff implications and OPEC plus production increases have placed significant pressure on the energy market and more specifically commodity prices. This has widely softened expectations for activity levels throughout 2025. However, we continue to 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 segment. 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 segment sold approximately 189,000 tons of sand in the first quarter at an average sales price of $21.49 per ton, compared to 129,000 tons of sand at an average sales price of $22.54 during the fourth quarter of 2024. Sales volumes were up and pricing remained relatively stable during the first quarter, which primarily stemmed from increased utilization. We expect incremental demand to drive improved results in the sand segment in 2025. As expected, the legacy infrastructure services segment executed well and delivered strong results during the first quarter. Revenue for this segment was $30.7 million for the first quarter of 2025, which represents a 10% sequential increase compared to the fourth quarter. Following the sale of the three subsidiaries, we will play to our strengths while continuing to strategically deploy capital to pursue opportunities within this sector as we focus on the areas with the greatest potential for improved returns. On a go-forward basis after the sale of the three subsidiaries, our infrastructure services segment will be comprised of engineering and fiber. Our engineering group continues to do well, and we have secured a strong backlog of business that will drive growth in future periods. We will continue to evaluate and make strategic investments in this segment as appropriate to capitalize on the significant macro tailwinds that are supporting the demand cycle, such as data centers, AI, and nuclear developments. For the first quarter of 2025, revenue for our engineering and fiber businesses was $4 million and $0.7 million, respectively. For the full year of 2024, revenue for our engineering and fiber businesses was $17.3 million and $1.5 million, respectively. Returning to consolidated results, our net loss for the first quarter was $0.5 million or a loss of $0.01 per diluted share, compared to a net loss of .15.5 million or a loss of $0.32 per diluted share in the fourth quarter of 2024. Adjusted EBITDA, as defined and reconciled in our earnings release, was a positive $2.7 million in the first quarter compared to a negative $4.8 million for the fourth quarter of 2024. Selling, general, and administrative expenses decreased by approximately 34 percent sequentially to $6.5 million in the first quarter of 2025. After the sale of the three infrastructure subsidiaries, we expect SG&A to decline 20 to 25 percent from the Q1 amount on a go-forward basis. CAPEX for the first quarter of 2025 was $7.2 million. This was primarily related to upgrades and maintenance of our pressure pumping fleet. Our 2025 CAPEX budget, excluding acquisitions, remains at $12 million, which is primarily comprised of growth CAPEX for our equipment rentals business and maintenance CAPEX for our pressure pumping business. We will approach Tier 4 pressure pumping fleet conversions with a measured pace to be as cost-effective and efficient as possible. We will also continue to monitor the uncertainty within our markets to determine potential impacts on commodity prices and resulting activity levels. We will adjust our spending as necessary to align with the activity levels of our customers. Additionally, we see many opportunities to strategically allocate capital to grow our existing businesses that are generating the greatest returns. We've identified numerous opportunities to deploy capital, specifically around equipment rentals, which we expanded and diversified with the purchase of eight planes last month. There will continue to be various opportunities to invest back into our business in the near term to address demand, as well as to purchase and upgrade equipment with our improved cash position. As of March 31, 2025, we had unrestricted cash on hand of approximately $56.7 million. This cash balance excludes restricted cash of $21.6 million, which would bring our total cash on hand to $78.3 million. A revolving credit facility was undrawn, and we had approximately $22.7 million in available borrowing capacity. Our total liquidity was approximately $79.4 million. As of May 2, 2025, after completing the sale of three infrastructure subsidiaries and the purchase of eight aircraft, Mammoth had unrestricted cash on hand of $135.4 million, excluding $19.6 million of restricted cash, and total liquidity of $202.9 million. As of today, Mammoth remains debt-free. To conclude our call, we would like to thank our 300 employees throughout the company for their hard work, dedication, and commitment to maintaining safe and sustainable work sites for themselves and their teammates. We continue to see significant opportunities to unlock value for both Mammoth and its shareholders. We executed two value-enhancing transactions last month, and we look forward to sharing additional strategic developments with you in the coming quarters. We plan to continue managing the company opportunistically while closely monitoring the evolving energy landscape and are prepared to implement strategic cost management initiatives if necessary. We maintain a debt-free balance sheet and a significant cash position of approximately $155 million. This further expands our deployment opportunities, and we intend to utilize this dry powder to substantially invest in the company for future growth. We are open for business and are focused on building a better, more resilient company for the future. We plan to utilize the tools at our disposal to sustain our recent momentum in the coming quarters and will strategically deploy capital as attractive value-enhancing opportunities present themselves. Finally, we believe our operational expertise, efficiency, strong balance sheet, and the strategic actions we are taking every day will unlock meaningful shareholder value, which is paramount. Operator, we would now like to open the call up for questions.

Thank you. We will now conduct a -and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star 1 at this time. One moment while we pull for our first question. Our first question comes from Josh Jane with Daniel Energy Partners. Please proceed.

Thanks. Good morning. First question I had was just on the sand business. Could you talk about the uplift in volumes in Q1, maybe expand a little bit on your outlook for the rest of the year and how you ultimately see sand prices in the near to intermediate term?

Sure. For Q1, we saw strong demand into Western Canada in regards to pricing. We see a fairly stable environment right now and expect that to persist through the remainder of 25.

Okay. Thanks. And then when we think about, I think you had alluded to the one and a half active fleets that you were expecting on average over the course of the year. But in the event that there's some potential weakness in the back half of the year, there were some cost actions that you could potentially take. Could you just go into a little bit of detail of what those are and how you're thinking about maybe adjusted EBITDA over the course of the year relative to your capex spend? That'd be great.

Thanks. Yeah. Good question. So as we look at the pressure pumping business for the remainder of the year, the biggest lever that we can pull on that side in regards to utilization is on both the staffing front as well as on the repairs and maintenance side. And historically, the team has done an excellent job of managing their cost structure. So to the extent we see weakness in utilization for the remainder of 25, we'll certainly lean on that team to cut costs where they can to manage the business according to demand.

OK. Thanks very much. Thank you.

Thank you. This now concludes the Q&A session. At this time, I would like to turn it back to management for closing comments.

Thank you again for joining us on the call today. We continue to focus on positioning MAMMOTH for future growth and unlocking value. We will achieve this through operational excellence, efficiency and strategic capital deployment. This concludes our conference call, and we look forward to speaking to you all again next quarter.

Thank you. This does conclude today's teleconference. You may disconnect your lights this time. Thank you for your participation and have a great day.