Q1 2024 Mammoth Energy Services Inc Earnings Call

Operator: Greetings and welcome to the Mammoth Energy Services first quarter earnings conference call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Zach Baum. Thank you, sir. You may be seated.

Greetings and welcome to the Mammoth Energy services first quarter earnings Conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Zach Baum: As a reminder, this conference is being recorded it is now my pleasure to introduce your host basketball. Thank you Sir you may begin.

Zach Baum: Thank you, operator, and good morning, everyone. We appreciate you joining us for the Mammoth Energy conference call to review the 2024 first quarter 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 www.mammothenergy.com. However, information reported on this call speaks only as of today, May 2nd, 2024. Please be advised that any time-sensitive information may no longer be accurate as of any subsequent date.

Zach Baum: Thank you operator, and good morning, everyone.

Zach Baum: 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 nature, are uncertain and outside of the company's control. However, actual results may differ materially.

Zach Baum: We appreciate you joining us for the Amendment Energy Conference call to review 2024 first quarter results.

Zach Baum: 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 Www Dot Mammoth energy Dot com.

Zach Baum: Information reported on this call speaks only as of today May <unk> 2024.

Zach Baum: Please be advised that any time sensitive information may no longer be accurate as of any subsequent date.

Zach Baum: 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 90 95.

Zach Baum: We will be making forward looking statements as part of today's call that by nature are uncertain and outside of the company's control actual results may differ materially.

Zach Baum: 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 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, Arty Straehla.

Zach Baum: Please refer to the earnings press release that was issued today for our disclosure on forward looking statements.

Zach Baum: These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission.

Arty Straehla: Management May also refer to non-GAAP measures, including adjusted EBITDA.

Arty Straehla: 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 release and in our Investor presentation, which can be found on our website.

Arty Straehla: Mammoth energy assumes no obligation to publicly update or revise any forward looking statements and now I would like to turn it over to Mammoth energy CEO Artie straight line.

Arty Straehla: Thank you, Zach, and good morning, everyone. I'll start with some general comments about our business and the quarter before discussing recent developments and updated expectations for 2024. Then I will turn the call over to Mark to cover the financials in more detail. Our first quarter results were challenged for a number of reasons. Most notably, our Well Completion Services Division experienced continued activity softness, resulting from lower energy prices in the quarter, particularly natural gas, and operators electing to defer activity to later in the year. This softness resulted in white space on our FRAC calendar for the month of March and had a direct impact on our revenue and earnings for the quarter in this segment.

Arty Straehla: Thank you Zach and good morning, everyone.

Arty Straehla: Our Infrastructure Services Division was also challenged this quarter, primarily due to experiencing less storm-related work in the quarter than we had anticipated, and that caused a slight underperformance relative to our expectations. I'll update everybody on our visibility for the remainder of the year in a moment, but we do expect these first quarter results to serve as our low water mark for 2024. Our infrastructure division experienced a sequential decline in both revenue and adjusted EBITDA for the first quarter, stemming from less storm-related activity.

Arty Straehla: I'll start with some overview comments about our business in the quarter before discussing our recent developments and updated expectations for 2024, then I will turn the call over to Mark to cover the financials in more detail.

Arty Straehla: Our first quarter results were challenged for a number of reasons, most notably our well completion services division experienced continued activity softness, resulting from lower energy prices in the quarter, particularly natural gas and operators electing to defer activity to later in the year.

Arty Straehla: This softness resulted in white space in our Frac calendar for the month of March and had a direct impact on our revenue and earnings for the quarter in this segment.

Arty Straehla: Our infrastructure services Division was also challenged this quarter, primarily due to experiencing less storm related work in the quarter than we had anticipated and that caused the slight underperformance relative to our expectations.

Arty Straehla: I'll update everybody on our visibility for the remainder of the year in a moment, but we do expect these this first quarter results to serve as our low watermark for 2024.

Arty Straehla: Our infrastructure division experienced a sequential decline in both revenue and adjusted EBITDA for the first quarter stemming from less storm related activity.

Arty Straehla: However, we are now seeing an uptick in bidding opportunities related to engineering, fiber, transmission, and distribution, all of which are areas I believe we have differentiated in specialized capabilities to capitalize on opportunities in the market. Our engineering group continues to do well, and we're building up more projects in the T&D space currently are being released. Funds are being released for infrastructure projects such as fiber and engineering as well as for transmission and distribution areas where we remain excited participants, and this continues to give us optimism for improvements throughout 2024.

Arty Straehla: However, we are now seeing an uptick in bidding opportunities related to engineering fiber transmission and distribution all of which are areas. I believe we are differentiated and specialized capabilities.

Arty Straehla: To capitalize on opportunities in the market.

Arty Straehla: Our engineering group continues to do well and we're building up more projects in the T&D space currently the infrastructure investment and job back.

Arty Straehla: Are being released funds are being released for infrastructure projects, such as fiber and engineering as well as transmission and distribution areas, where we remain excited participants and this continues to give us optimism for improvements throughout 2024.

Arty Straehla: Although the storm season in 2023 and so far in 2024 has been benign relative to historical standards, NOAA is forecasting an active storm season this year, and we will be prepared to deploy teams in the areas that may be impacted.

Arty Straehla: Although the storm season in 2023, and so far in 2024 has been benign relative to historical standards no as forecasted and active storm season. This year and we will be prepared to deploy teams in the areas that may be impacted.

Arty Straehla: We remain encouraged about the potential for continued growth in this sector and we feel strongly that Mammoth's infrastructure business is well-positioned for long-term growth. However, our well completions business experienced persistent challenges associated with lower U.S. onshore activity and sustained weakness in the natural gas basins in which we operate. This continued to result in underutilization in the first quarter, but we enter the second quarter with improved visibility and line of sight for the remainder of 2024.

Arty Straehla: We remain encouraged about the potential for continued growth in this sector sector and we feel strongly that mammoths infrastructure business is well positioned for long term growth.

Arty Straehla: Our well completions business experienced persistent challenges associated with lower U S onshore activity and sustained weakness in the natural gas basins in which we operate has continued to result in underutilization in the first quarter, but we entering the second quarter with improved visibility and line of sight for the remainder of 2020.

Arty Straehla: Sure.

Arty Straehla: We are seeing indications of increased activity levels in the back half of the year in anticipation of increased natural gas demand, and we will be strategically positioned to capitalize on this anticipated demand if and when it ramps up. As is always a component of our internal analysis and decision making, we continue to weigh opportunities to potentially move our assets to more oily basins, but we haven't had a sufficient opportunity yet that would allow us to sustain the calendar and costs associated with relocation. We remain extremely focused on our cost structure and will continue to efficiently manage our capital expenditures to align with activity levels and demand.

Arty Straehla: We are seeing indications of increased activity levels in the back half of the year in anticipation of increased natural gas demand and we will be strategically positioned to capitalize on this anticipated demand if and when it ramps up.

Arty Straehla: As is always a component of our internal analysis and decision, making we continue to weigh opportunities to potentially move our assets to more oily basins, but we haven't had a sufficient opportunity yet that would allow us to sustain the calendar and costs associated with relocation.

Arty Straehla: We remain extremely focused on our cost structure, and we'll continue to efficiently manage our capital expenditures to align with activity levels and demand.

Arty Straehla: In our sand division, we experienced increased demand resulting in sequential improvement in tonnage sold, as well as a slight uptick in pricing relative to the fourth quarter. The higher first quarter demand was primarily driven by Western Canada, and we expect to see additional improvements in demand across North America in the second half of 2024. Despite the slow start to the year, we have entered 2024 with an undrawn revolver and cash on the balance sheet, and we believe Mammoth remains poised to capitalize on near-term opportunities.

Arty Straehla: Our sand division, we experienced increased demand, resulting in sequential improvement in tonnage, so as well as slight uptick in pricing relative to the fourth quarter.

Arty Straehla: Higher first quarter demand was primarily driven by Western Canada, and we expect to see additional improvements in demand across North America in the second half of 2024.

Arty Straehla: Despite the slow start to the year, we enter 2024 with an undrawn revolver and cash on the balance sheet and we believe mammoth remains poised to capitalize on near term opportunities.

Arty Straehla: As we have demonstrated throughout our history, we have a resilient and diversified business comprised of talented and hardworking teams that will continue to find solutions that optimize our operational efficiencies with a customer and safety first focus. We believe our diverse portfolio and ability to adapt quickly to changing environments positions us well in these sectors. Turning now to PREPA. As previously announced, PREPA has paid $64 million so far in 2024 with respect to our receivable, and we are pleased with these payments. We are still owed approximately $349 million in principal and interest. PREPA has been holding $18.2 million in FEMA funding specifically related to COBRA's work since December.

Arty Straehla: As we have demonstrated throughout our history, we have a resilient and diversified business comprised of talented hard working teams that will continue to find solutions that optimize our operational efficiencies.

Arty Straehla: With a customer and safety first focus we believe our diverse portfolio and ability to adapt quickly to changing environment.

Arty Straehla: Positions us well in these segments.

Arty Straehla: Turning now to PREPA as previously announced PREPA has paid $64 million so far in 2024 with respect to our receivable.

Arty Straehla: While we are pleased with these payments.

Arty Straehla: We are still owed approximately $349 million in principal and interest.

Arty Straehla: PREPA has been holding $18 2 million in FEMA funding specifically related to <unk> work since December we continue to vigorously pursue payment of the outstanding amounts, especially the $18 2 million prep is withholding problems. We remain engaged in mediation with PREPA regarding our claim.

Arty Straehla: We continue to vigorously pursue payment of the outstanding amounts, especially the $18.2 million PREPA is withholding from us. We remain engaged in mediation with PREPA regarding our claims. If mediation is unsuccessful, we intend to litigate the disputed issues.

Arty Straehla: If mediation is unsuccessful, we intend to litigate the disputed issues.

Arty Straehla: Looking forward, we enter the second quarter with improved visibility and expect our results to take a meaningful step up as we progress through 2024. We are encouraged by customer conversations and the anticipated ramp-up in demand and associated well completions activity in the second half of this year. Our current line of sight gives us confidence that we will generate improved adjusted EBITDA results in each of the remaining quarters of 2024. We have a strengthened balance sheet, a new revolving credit facility agreement, and a new term loan agreement, and we remain well positioned for growth in 2024. Now, I will turn the call over to Mark to take you through our financial performance in greater detail.

Arty Straehla: Looking forward, we entered the second quarter with improved visibility and expect our results to take a meaningful step up as we progress through 2024, we are encouraged by customer conversations and the anticipated ramp in demand and associated well completions activity in the second half of this year. Our current line of sight gives us confidence that we.

Mark: It will generate improved adjusted EBITDA results in each of the remaining quarters of 2024, we have a strengthened balance sheet, a new revolving credit facility agreement and a new term loan agreement and we remain well positioned for growth in 2024 now.

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

Mark Layton: Thank you, Arty. 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 and several key highlights. A detailed breakdown of our results can be found in our earnings release and in our 10-Q once it is on file with the SEC. Mammoth's total revenue during the first quarter of 2024 came in at $43.2 million, compared to $52.8 million in the fourth quarter of 2023.

Mark: You already I hope everyone is doing well and we appreciate you joining us today.

Mark Layton: As I, usually do I'm going to take this time to provide additional details on some meaningful metrics in several key highlights a detailed.

Mark Layton: Breakdown of our results can be found in our earnings release and in our 10-Q once it is on file with the SEC.

Mark Layton: <unk> total revenue during the first quarter of 2024 came in at $43 2 million compared to $52 8 million in the fourth quarter of 2023.

Mark Layton: The 18% sequential decline in total revenues was primarily attributable to the continued activity softness in the natural gas heavy basins that we operate, along with an overall decline in North American energy prices in the quarter. We believe there are positive demand implications for natural gas on the horizon, and we remain optimistic about associated activity increases later this year. We view the first quarter as the low water mark for 2024 and anticipate improvements in our results moving forward. In Q1 of 2024, we pumped 380 stages with approximately 0.6 fleets utilized on average, compared to 669 stages and an average utilization of 0.9 fleets during the fourth quarter of 2023.

Mark Layton: The 18% sequential decline in total revenues was primarily attributable to the continued activity softness in the natural gas basins that we operate along with an overall decline in North American energy prices in the quarter.

Mark Layton: We believe there are positive demand implications for natural gas on the horizon and we remain optimistic for associated activity increases later this year.

Mark Layton: We view the first quarter as the low watermark for 2024 and anticipate improvements in our results moving forward.

Mark Layton: In Q1 of 2024, we pumped 380 stages with approximately six fleets utilized on average compared to 669 stages and an average utilization of 90 fleets during the fourth quarter of 2023.

Mark Layton: This decrease resulted from sustained lower natural gas prices and Commodity Price Uncertainty that continued to lead to the utilization headwinds that we experienced in the Well Completion Services Division during the first quarter. Operators continued to elect to push much of their activity to the right and were slow to reset and finalize their budget, which resulted in white space on the calendar, but we now feel that we have a better line of sight for later this year.

Mark Layton: This decrease resulted from sustained lower natural gas prices and commodity price uncertainty that continues to lead to the utilization headwinds that we experienced in the well completion services division during the first quarter.

Mark Layton: Operators continue to elect to push much of their activity to the right and were slow to reset and finalize their budgets, which resulted in white space on the calendar, but we now feel that we have a better line of sight for later this year.

Mark Layton: As many of our peers have noted on their calls, the expectation is that activity will begin to ramp up meaningfully in the second half of 2024. We will remain disciplined stewards of capital and continue to align our spending appropriately with the demand that we are seeing from our customers. Our sand division sold approximately 146,000 tons of sand in the first quarter of 2024 at an average sales price of $24.38 per ton, compared to 104,000 tons of sand at an average sales price of $23.62 during the fourth quarter of 2023, to lower sequential revenue despite an increase in both time sold and average sales price, stem from approximately $2 million in shortfall revenue that was recognized in the fourth quarter of 2023 compared to none in the first quarter.

Mark Layton: As many of our peers have noted on their calls the expectation is that activity will begin to ramp up meaningfully in the second half of 2024.

Mark Layton: We will remain disciplined stewards of capital and continue to align our spending appropriately with the demand that we're seeing from our customers.

Mark Layton: Our sand division sold approximately 146000 tons of sand in the first quarter of 2024.

Mark Layton: At an average sales price of $24 38 per ton.

Mark Layton: Impaired to 104000 tonnes of sand had an average sales price of $23 62.

Mark Layton: During the fourth quarter of 2023.

Mark Layton: The lower sequential revenue despite an increase in both tons sold and average sales price stemmed from approximately $2 million in shortfall revenue that was recognized in the fourth quarter of 2023 compared to none in the first quarter.

Mark Layton: Our Infrastructure Services Division contributed revenue of $25 million for the first quarter of 2024, which represents a sequential decrease when compared to $27.2 million for the fourth quarter. As Arty mentioned, storm work in the first quarter was much lower than in previous years, and it resulted in a slower start to 2024 than anticipated.

Mark Layton: Our infrastructure services Division contributed revenue of $25 million for the first quarter of 2024.

Mark Layton: Which represents a sequential decrease when compared to $27 2 million for the fourth quarter.

Mark Layton: As already mentioned storm work in the first quarter was much lower than in previous years and it resulted in a slower start to 2024 than anticipated.

Mark Layton: However, we are seeing an uptick in bidding activity. We continue to focus on operational execution and pursue opportunities within this sector as we strategically structure our service offerings for growth, especially around T&D and fiber projects. Our net loss for the first quarter of 2024 was $11.8 million compared to a net loss of $6 million for the fourth quarter of 2023. Suggestion EBITDA, as defined and reconciled in our earnings release, was $4.5 million for the first quarter of 2024, a decrease sequentially compared to $10.5 million in the fourth quarter of 2023.

Mark Layton: However, we are seeing an uptick in bidding activity, we continue to focus on operational execution and pursue opportunities within this sector as we strategically structured our service offerings for growth, especially around T&D and fiber projects.

Mark Layton: Our net loss for the first quarter of 2024 was $11 8 million compared to a net loss of $6 million for the fourth quarter of 2023.

Mark Layton: Adjusted EBITDA as defined and reconciled in our earnings release.

Mark Layton: It was $4 5 million for the first quarter of 2024.

Mark Layton: Decreased sequentially compared to $10 5 million in the fourth quarter of 2023.

Mark Layton: CapEx for the first quarter of 2024 was approximately $4.2 million, which was in line with our CapEx for the fourth quarter of 2023. We are revising our CapEx budget for 2024, and we now expect to spend approximately $9 million for the year, which represents a $6 million decrease from our previous guidance. This budget remains heavily weighted towards pressure pumping, but as always, we will continue to monitor customer spending activity trends in order to most effectively manage our capital to align with the demand we see in the market.

Mark Layton: Capex for the first quarter of 2024 was approximately $4 2 million, which was in line with our Capex for the fourth quarter of 2023.

Mark Layton: We continue to prudently manage our cost to more accurately reflect the activity levels of our customers.

Mark Layton: We are revising our capex budget for 2024, and we now expect to spend approximately $9 million per year, which represents a $6 million decrease from our previous guidance.

Mark Layton: This budget remains heavily weighted towards pressure pumping.

Mark Layton: As always we will continue to monitor customer spending activity trends in order to most effectively manage our capital to align with the demand we see in the market.

Mark Layton: Selling general and administrative expenses totaled approximately $8.8 million during the first quarter of 2024, up 6% compared to $8.3 million for the fourth quarter of 2023. The sequential increase in first quarter SGMA was related to a change in provision for expected credit losses in our infrastructure segment as well as audit fees. As of March 31st, 2024, we had cash on hand of $22 million. Our revolving credit facility was undrawn, and we had approximately $21 million of available borrowing capacity.

Mark Layton: Selling general and administrative expenses totaled approximately $8 8 million during the first quarter of 2024 up 6% compared to $8 3 million for the fourth quarter of 2023.

Mark Layton: The sequential increase in first quarter SG&A.

Mark Layton: It was related to a change in provision for expected credit losses in our infrastructure segment as well as audit fees.

Mark Layton: As of March 31, 2024, we had cash on hand of $22 million.

Mark Layton: Our revolving credit facility was undrawn, and we had approximately $21 million of available borrowing capacity.

Operator: Our total liquidity was approximately $43 million. The aggregate $64 million that was paid by PREPA with respect to our receivables so far this year enabled us to satisfy in full our $54.4 million obligation to SPCP Group under the previously reported financing arrangement while adding $9.6 million to our cash position. And we are pleased to have bolstered our liquidity with the credit facility refinancing that occurred in the fourth quarter. To conclude our call, we would like to thank our 735 employees throughout the company for their hard work, dedication, and commitment to maintaining safe and sustainable work sites for themselves and for their teammates.

Mark Layton: Our total liquidity was approximately $43 million.

Operator: The aggregate $64 million that was paid by PREPA with respect to our receivable. So far this year enabled us to status by in full our $54 4 million dollar obligation to SPC group under the previously reported financing arrangement, while adding $9 $6 million.

Operator: Our cash position and.

Operator: And we are pleased to have bolstered our liquidity with our credit facility refinancing that occurred in the fourth quarter.

Operator: To conclude our call we would like to thank our 735 employees throughout the company for their hard work dedication and commitment to maintaining safe and sustainable work sites for.

Operator: Themselves.

Operator: Their teammates.

Operator: Despite the soft start to 2024, we remain... We maintain our belief in our teams and the direction that we are headed. We have taken appropriate steps to align our business with demand and strategically position Mammoth for improved results as activity rebounds later this year. We will continue to prioritize disciplined operations, efficiency, and strategic capital allocation, which when coupled with our strong balance sheet, we believe will drive improvements in shareholder value. Operator, we would now like to open the call to questions.

Operator: Spike a soft start to 2024, we remain.

Operator: We maintain our belief in our team and the direction that we're headed.

Operator: We have taken appropriate steps to align our business with demand is strategically positioned mammoth for improved results as activity rebounds later this year.

Operator: We will continue to prioritize disciplined operations efficiency and strategic capital allocation, which when coupled with our strong balance sheet, we believe will drive improvements in shareholder value.

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

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is busy. You may press star 2 if you would like to remove your question from the list. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we poll for questions. Our first question comes from Blake McQueen with Daniel Energy Partners. Please proceed with your question.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press star two let's see we'd like to remove your question.

Blake McQueen: For participants using speaker equipment, it may be necessary to pick up your handset before pressing Mr. Keith.

Operator: One moment, please pull for questions.

Blake McQueen: Our first question comes from Blake Mclean, Daniel Energy Partners. Please proceed with your question.

Blake McQueen: Hey, good morning.

Blake McQueen: Mornin', boy. Thanks for taking my question here. I had a bit of a bigger picture question. I was hoping you could talk to us a little bit about the labor market and kind of how you guys are thinking about the balance between kind of maintaining staff and good staff and wages in a competitive environment.

Blake McQueen: Good morning Blake.

Blake McQueen: Thanks for taking my question here I had a bit of a bigger picture question I was hoping you could talk to us a little bit about the labor market and kind of how you guys are thinking about the balance between kind of maintaining staff in good hands and wages and a competitive environment.

Arty Straehla: Yeah, I'll take that one. We, we do, the labor market is still competitive, but we are able to find people and grow those businesses as we start to add them. And I'm talking primarily about T&D because that's where the biggest shortage is right now, with a little bit of the decrease in activity in oil and gas, the labor market is a little bit improved over it was, say, six months ago. But on the transmission distribution, where we are bringing on crews and that type thing, we have been able to attract very talented individuals and grow that business as we go.

Blake McQueen: Yes.

Speaker Change: I'll take that one.

Arty Straehla: We do.

Arty Straehla: The labor market is still competitive, but we are able to find people and two.

Arty Straehla: Grow to grow those businesses as we start to Adam.

Arty Straehla: I am talking primarily about.

Arty Straehla: T&D, because that's where the biggest shortages right now with a little bit of a decrease in activity in oil and gas.

Arty Straehla: Labor's little bit labor market is a little bit improved over it was over say six months ago.

Arty Straehla: But on the transmission distribution, where we are bringing on cruise and that type of thing we have been able to attract very talented individuals.

Arty Straehla: And grow that business as we go.

Blake McQueen: That's helpful. Thanks. I, I was also hoping maybe you could share some thoughts around kind of the shape of the activity recovery in the back half of this year and early in the next, and, you know, what you're hearing from customers and what they're looking at and how they're thinking about it. I mean, I know there's a big demand pull that they've got to feed. But any color you could provide around the kind of shape of that activity uptake.

Speaker Change: That's helpful. Thanks.

Blake McQueen: I was also hoping maybe you could share some thoughts around kind of the shape of the activity.

Blake McQueen: <unk> in the back half of this year and early 'twenty five.

Blake McQueen: What youre hearing from customers and what they are looking at and how they're thinking about it I mean I know there is.

Blake McQueen: Big demand pull.

Blake McQueen: <unk> got to feed.

Blake McQueen: Any any color you can provide around kind of the shape of that that activity uptake would be would be useful for us yes.

Arty Straehla: Yeah, and our schedule has really been pretty dynamic, especially on the FRAC side, with customers coming kind of late in the process saying, no, we're going to defer this a little bit later because of where the pricing is and because we can get better rates with water or some other reason that would lower the cost to produce. So, we've seen a fair number of those where everything has slid to the right, but they still anticipate getting the work done this year. So, I mean, we're already looking at things in the July and August timeframe that we believe will come to fruition.

Arty Straehla: Yeah, and our

Blake McQueen: Our schedule has really been pretty dynamic on the especially on the Frac side.

Arty Straehla: With customers coming in.

Arty Straehla: Kind of late in the process to say now we're going to defer this still a little bit later because of where pricing is.

Arty Straehla: Because we can get better rates with water or some other reason that would lower the cost.

Arty Straehla: To produced so we've seen a fair number of those where everything has slid to the right, but they still anticipate getting the work done this year. So I mean, we're we're already looking at things in into the.

Arty Straehla: July and August timeframe, and that we believe will come to fruition.

Speaker Change: Got it that's helpful. Thank you very much for the time this morning.

Blake McQueen: Got it. That's helpful. Thank you very much for your time this morning.

Speaker Change: Thanks Blake.

Michael Mathison: Our next question comes from Michael Mathison with Singular Research. Please proceed with your question. Good morning, you guys.

Blake McQueen: Our next question comes from Michael Matson with singular research. Please proceed with your question.

Michael Mathison: Good morning, you guys, and thanks for taking my questions. Good morning. Good morning.

Michael Mathison: Good morning, guys and thanks for taking my question.

Michael Mathison: Good morning, Mark.

Michael Mathison: Let's see, just a couple things on the revenue side first. You mentioned there was a lot of bidding activity in infrastructure. Low storm volume left you behind a little bit in this quarter, but looking at new build infrastructure, do you have any that kind of seem imminent to close that would be significant?

Michael Mathison: Let's see.

Michael Mathison: A couple of things on the revenue side first.

Michael Mathison: You mentioned theres, a lot of bidding activity and infrastructure.

Michael Mathison: Low storm volume.

Michael Mathison: Behind a little bit in this quarter, but looking at new build infrastructure.

Michael Mathison: Anthony.

Michael Mathison: Seem imminent to close that would be significant.

Arty Straehla: We've won some bids recently and continue to see a fairly robust pipeline, primarily as it relates to transmission projects, as well as substation projects.

Michael Mathison: We've won some bids recently and continue to see a fairly robust pipeline, primarily as it relates to transmission projects as well as substation projects.

Arty Straehla: Yeah, one of the emphases we wanted to do this year was to get more and better in the transmission area. And I think we've been able to do that. Our bidding is a lot more robust in that area. We currently have a couple of transmission jobs going concurrently right now. On the distribution side, and obviously, I'm not going to tell you the customer or who it is or anything on the T&D side, but we are in the midst of a 15 crew offer with a major utility that would certainly be helpful to us. But it doesn't guarantee that we're going to get it. But that doesn't mean we're going to get it.

Arty Straehla: I wanted to emphasize that we wanted to do this year is get more improved in the transmission area and I think we've been able to do that are bidding is a lot more robust in that area.

Arty Straehla: We currently have a couple of transmission jobs going concurrently right now.

Arty Straehla: On the distribution side, and just and obviously I'm not going to tell you as a customer.

Arty Straehla: Or who it is or anything on the T&D side, but we are in the midst of a 15 crew offer.

Arty Straehla: With major utilities that.

Arty Straehla: Would certainly be helpful to us.

Arty Straehla: Then guarantee that we're going to get it doesn't mean, we're going to get it but we think we're very competitive in <unk>.

Arty Straehla: But we think we're very competitive in trying to achieve that and get that bid. You know, it just brings home the area that we're in in T&D and where we think that growth will come from. We're already starting to see it in one of the precursors.

Arty Straehla: Trying to achieve that and get that bid.

Arty Straehla: It just it just brings home.

Arty Straehla: The area that we're in in T&D.

Arty Straehla: And where we think that growth will come from we're already starting to see it in one of the precursors or engineering.

Arty Straehla: Our engineering business that we started from scratch a few years ago will do $20 to $23 million in revenue. They have just been awarded a nice contract, and they continue to build that business. So that is obviously a precursor to the T&D activity, and we view that as a vertical integration opportunity as we progress. So we feel very good about that. We all hear and read articles about the demand for grid infrastructure with AI and data centers coming online.

Arty Straehla: Business that we started from scratch a few years back.

Arty Straehla: We will do.

Arty Straehla: $20 million to $23 million in revenue.

Arty Straehla: They were just awarded a nice contract and they continue to.

Arty Straehla: To build that business, so that as a precursor to obviously the T&D activity and we view that as.

Arty Straehla: Our vertical integration opportunity as we progress so we feel very good about that.

Arty Straehla: All hear and read the articles about the demand for grid infrastructure with AI and data centers coming online.

Arty Straehla: I saw a report out of Texas that they need twice the size of the grid in the next 8 to 10 years to stay up with the demand. So that bodes well for where we're at and where a lot of our functional growth will come from.

Arty Straehla: I saw report out of Texas.

Arty Straehla: Twice the size of the grid in the next eight to 10 years to stay up with the demand so that bodes well for where we're at and where a lot of our functional growth will come from.

Michael Mathison: Terrific, that's very encouraging. Just a couple of nitpicky questions about the income statement. I noticed that there was a spike in interest on financing charges relative to Q4 of last year, even though we paid down some debt using the proceeds from the PREFA payment. Can you help me reconcile that? What's going on there?

Arty Straehla: Alright terrific that screen encouraging.

Mark Layton: Sure, the largest component of that spike relates to the SPCP agreement that was entered into in December, so there was just under $3 million that impacted Q4 of 23, and round numbers about 5 million that impacted Q1 of 24, that's hitting interest expense relative to the SPCP deal.

Michael Mathison: Just a couple nitpicky questions through the income statement.

Speaker Change: I noticed that there was a spike in interest and financing charges relative to Q4 of last year, even though we paid down some debt using the proceeds from the preference payment can you help me reconcile that what's going on here.

Mark Layton: Sure the largest component of that spike relates to the PCP.

Mark Layton: <unk> that was entered into in December. So there was just under $3 million that impacted Q4 of 'twenty three in round numbers about $5 million that impacted Q1 of 'twenty four that's hitting interest expense relative to the S. PCP deal.

Michael Mathison: Terrific. But I wouldn't expect those interest levels going forward.

Speaker Change: Terrific. So I wouldn't expect those interest levels going forward.

Mark Layton: That's correct. Those are one-time charges. The five million round numbers that were included in Q1 fully extinguishes the SPCP agreement.

Michael Mathison: That's correct those are onetime charges.

Mark Layton: The 5 million round numbers that was included in Q1 fully extinguishing the PCP agreement.

Mark Layton: Excellent.

Michael Mathison: Well, thank you for the information and good luck in the coming quarters. Thank you.

Michael Mathison: Well thank you for the

Speaker Change: Thank you for the information and good luck in the coming quarters.

Speaker Change: Thank you.

Operator: This now concludes our question and answer session. I would now like to turn the floor back over to management for closing comments. Thank you, Maria.

Speaker Change: This now concludes our question and answer session I would now like to turn the floor back over to management for closing comments.

Speaker Change: Thank you Maria.

Arty Straehla: Thank you again for joining us on the call today. We continue to position Mammoth for improved results, growth, and success, and it is all made possible by our talented and skilled team members. This concludes our conference call, and we look forward to speaking to you again next quarter.

Maria: Thank you again for joining us on the call today, we continue to position <unk> for improved results growth in its success and is all made possible by our talented and skilled team members. This concludes our conference call and we look forward to speaking to you again next quarter.

Operator: You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: You may disconnect your lines at this time, thank you for your participation.

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