Q2 2024 Mammoth Energy Services Inc Earnings Call
Speaker Change: Greetings and welcome to the Mammoth Energy Services second quarter 2024 earnings conference call. At this time all participants are in a listen-only mode.
Operator: for the Earnings Conference Call. At this time, all participants are in a listen-only mode. The 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, Ken Dennard. Thank you, sir. You may begin.
Speaker Change: The 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.
Speaker Change: It is now my pleasure to introduce your host, Ken Dennard. Thank you, sir. You may begin.
Ken Dennard: Thank you, Maria. Good morning, everyone.
Ken Dennard: We appreciate you joining us for the Mammoth Energy Conference call to review 2024 second 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 mammothenergy.com. Also note that information reported on this call speaks only as of today, August 9, 2024. Please be advised that any time-sensitive information may no longer be accurate as of any subsequent date.
Ken Dennard: Thank you, Maria, and good morning, everyone. We appreciate you joining us for the Mammoth Energy Conference Call to Review 2024 second quarter results.
Speaker Change: 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.
Speaker Change: Also note that information reported on this call speaks only as of today, August 9, 2024.
Speaker Change: Please be advised that any time-sensitive information may no longer be accurate as
Ken Dennard: I would also like to remind you that statements made in today's discussions 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 today as part of today's call that, by nature, are uncertain and outside the company's control. Actual results may materially differ.
Speaker Change: as of any subsequent date. I would also like to remind you that statements made in today's discussions that are not historical facts
Speaker Change: including statements of expectations or future events or future financial performance.
Speaker Change: 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 today as part of today's call that by nature are uncertain and outside the company's control.
Ken Dennard: Please refer to the earnings press release that was issued this morning for our disclosure of forward-looking statements. These factors and other factors and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Management Aid may also refer to non-GAAP measures, including adjusted EBITDA, in today's call. The definition of this non-GAAP measure and its reconciliation to the most directly comparable GAAP measures can be found at the end of the earnings release and in the investor presentation, which can also be found on the website.
Speaker Change: Actual results may materially differ.
Speaker Change: Please refer to the earnings press release that was issued this morning for our disclosure on forward-looking statements.
Speaker Change: These factors and other factors and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission.
Speaker Change: Management Aid may also refer to non- GAAP measures , including adjusted EBITDA, in today's call.
Speaker Change: The definition of this non-GAAP measure and its reconciliation to the most directly comparable GAAP measures can be found at the end of the earnings release and in the investor presentation, which can also be found on the website.
Ken Dennard: Mammoth Energy assumes no obligation to publicly update or revise any forward-looking statements. And now, without behind me, I'd like to turn the call over to Mammoth Energy CEO, Arty Straehla. Arty. Thank you, Ken.
Arty Straehla: Mammoth Energy assumes no obligation to publicly update or revise any forward-looking statements. And now, without behind me, I'd like to turn the call over to Mammoth Energy CEO , Arty Straehla. Arty.
Arty Straehla: Thank you, Ken, and good morning, everyone. I'll start with some commentary on several highlights and recent developments for Mammoth before discussing our second quarter results. I'll then provide commentary about our expectations going forward before turning the call over to Mark to cover the financials in more detail. Our subsidiary, Cobra Acquisitions, entered into a settlement agreement with PREPA to settle all outstanding matters between Cobra and the Puerto Rico Public Electric Power Authority, or PREPA.
Arty Straehla: Thank you, Ken, and good morning, everyone. I'll start with some commentary around several highlights and recent developments for Mammoth before discussing our second quarter results. I'll then provide commentary about our expectations going forward before turning the call over to Mark to cover the financials in more detail.
Arty Straehla: The settlement agreement remains subject to approval by the Title III Court, which is expected to hear the motion related to the settlement agreement at the next omnibus hearing to be held on September 18, 2024. We are pleased to have reached this agreement with PREPA and look forward to receiving the money for work we concluded over five years ago. We plan to use a portion of the $188.4 million in settlement proceeds to pay off our term credit facility, which had a balance of approximately $49.3 million as of June 30, 2024.
Speaker Change: I'd like to kick off today's call by discussing the PREPA Settlement Agreement that we announced last month on July 22nd.
Speaker Change: Our subsidiary, Cobra Acquisitions, entered into a settlement agreement with PREPA to settle all outstanding matters between Cobra and the Puerto Rico Public Electric Power Authority.
Speaker Change: or PREPA.
Speaker Change: The settlement agreement remains subject to approval by the Title III Court, which is expected to hear the motion related to the settlement agreement at the next omnibus hearing to be held on September 18, 2024.
Speaker Change: We are pleased to have reached this agreement with PREPA and look forward to receiving the money for work we concluded over five years ago.
Speaker Change: We plan to use a portion of the $188.4 million in settlement proceeds to pay off our term credit facility, which had a balance of approximately $49.3 million as of June 30, 2024.
Arty Straehla: The remaining amount of approximately $139.1 million will be cash on our balance sheet to be used to invest back into our businesses and for general corporate purposes. This is a significant development for us and may enable us to meaningfully enhance our standing within the markets that we operate in and ultimately drive additional value creation for our shareholders. Turning now to our results, our second quarter results demonstrate sequential improvement compared to the first quarter despite continued challenges that persist due to industry activity softness. This softness particularly impacts the natural gas basins where we operate, which has especially constrained our well completion services division and other oilfield services.
Speaker Change: The remaining amount of approximately $139.1 million will be cash on our balance sheet to be used to invest back into our businesses and for general corporate purposes.
Speaker Change: This is a significant development for us and may enable us to meaningfully enhance our standing within the market so that we operate and ultimately drive additional value creation for our shareholders.
Speaker Change: Turning now to our results. Our second quarter results demonstrate sequential improvement compared to the first quarter despite continued challenges.
Speaker Change: that persists due to industry activity softness. This softness particularly impacts the natural gas basins where we operate, which has especially constrained our Well Completion Services Division and other oilfield services.
Arty Straehla: This demand softness in the first half of the year results in underutilization of our assets. Current indications are that activity levels are expected to remain relatively flat in the back half of the year, with potential for a ramp-up in 2025. We will be strategically positioned to capitalize on this anticipated demand if and when it ramps up. In this business segment, we remain very focused on our cost structure and will continue to efficiently manage our capital expenditures to align with expected activity levels and demand.
Speaker Change: This demand softness in the first half of the year resulted in underutilization of our assets. Current indications are that activity levels are expected to remain relatively flat.
Speaker Change: in the back half of the year with potential for a ramp up in 2025. We will be strategically positioned to capitalize on this anticipated demand if and when it ramps up.
Speaker Change: In this business segment, we remain very focused on our cost structure and will continue to efficiently manage our capital expenditures to align with expected activity levels and demand.
Arty Straehla: Our infrastructure services business continues to perform well and in Q2 demonstrated growth both sequentially and year-over-year. We are seeing an uptick in bidding opportunities relating to engineering, fiber, and transmission and distribution, all of which are areas that I believe we have differential and specialized capabilities to capitalize on the opportunities in the market. Our engineering group continues to do well, and we expect that business will continue to grow in terms of both revenue and EBITDA.
Speaker Change: Our infrastructure services business continues to perform well and in Q2 demonstrated growth both sequentially and year-over-year.
Speaker Change: We are seeing an uptick in bidding opportunities relating to engineering, fiber, and transmission and distribution, all of which are areas that I believe we have differential and specialized capabilities to capitalize on the opportunities in the market.
Speaker Change: Our engineering group continues to do well, and we expect that business will continue to grow in terms of both revenue and EBITDA.
Arty Straehla: The Infrastructure Investment and Job Act funds are slowly being released for infrastructure projects such as fiber and engineering, as well as the transmission and distribution areas where we remain excited participants, and this continues to give us optimism for improvements throughout 2024. In addition, on the storm-related side of this business, NOAA is forecasting an active storm season this year, which we've already seen commence with several named storms beginning in June, and we will be opportunistically prepared to deploy teams in the areas that may be impacted.
Speaker Change: The Infrastructure Investment and Job Act funds are slowly being released for infrastructure projects such as fiber and engineering, as well as the transmission and distribution areas where we remain excited participants.
Speaker Change: and this continues to give us optimism for improvements throughout 2024.
Speaker Change: In addition, on the storm-related side of this business, NOAA is forecasting an active storm season this year, which we've already seen commence with several named storms beginning in June , and we will be opportunistically 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. As we enter the second half of the year, our teams across the organization remain focused on efficient and effective cost management to align with the activity levels of our customers. Currently, we have an undrawn revolver and cash on the balance sheet, as well as a recently announced resolution with Prop. Moving forward, we believe Mammoth is well positioned for the second half of 2024 and beyond.
Speaker Change: 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.
Speaker Change: As we enter the second half of the year, our teams across the organization remain focused on efficient and effective cost management to align with the activity levels of our customers.
Speaker Change: Currently, we have an undrawn revolver and cash on the balance sheet, as well as a recently announced resolution with PREPA.
Speaker Change: Moving forward, we believe Mammoth is well-positioned for the second half of 2024 and beyond.
Mark Layton: We have improved our financial position with a strong balance sheet and cash position. We also have better visibility and opportunities across our business segments than we did at the beginning of the year. And having reached our settlement agreement with PREPA, we can finally put that chapter of our history in the rearview mirror, pay off our term loan facility, and focus on opportunities to invest in our current business segments, explore new opportunities, and return to more meaningfully enhancing the value of our organization for all shareholders. Now, let me turn the call over to Mark to take you through our financial performance in greater detail. Thank you, Arty.
Speaker Change: We have improved our financial position with a strong balance sheet and cash position. We also have better visibility and opportunities across our business segments.
Speaker Change: And we had at the beginning of the year. And having reached our settlement agreement with PREVA, we can finally put that chapter of our history in the rearview mirror, pay off our term loan facility and focus on opportunities to invest in our current business segments.
Speaker Change: Explore new opportunities and return to more meaningful, enhancing...
Speaker Change: meaningfully enhancing the value of our organization for all shareholders.
Speaker Change: Now let me turn the call over to Mark to take you through our financial performance in greater detail.
Mark Layton: 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. To begin, I'd like to point out that our second quarter results were impacted by the recognition of a $170.7 million non-cash and non-recurring expense related to the settlement between Mammoth Subsidiary, Cobra Acquisitions, LLC, and PREPA. Of this amount, $89.2 million was charged to credit loss expense, which is included in SG&A, and $81.5 million was charged to interest on delinquent accounts receivable, which is included in other income.
Speaker Change: 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.
Mark: 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.
Mark: To begin, I'd like to point out that our second quarter results were impacted by the recognition of a $170.7 million non-cash and non-recurring expense related to the settlement between Mammoth Subsidiary, Cobra Acquisitions, LLC, and PREPA.
Mark: Of this amount, $89.2 million was charged to credit loss expense, which is included in SG&A, and $81.5 million was charged to interest on delinquent accounts receivable, which is included in other income.
Mark Layton: Mammoth's total revenue during the second quarter of 2024 came in at $51.5 million, compared to $43.2 million in the first quarter of 2024. The 19% sequential increase in total revenues was primarily attributable to the increased infrastructure and storm-related work during the second quarter after a mild Q1. This improvement demonstrates the benefits and resilience of our differentiated service offerings, despite the continued softness in activity within the natural gas heavy basins that we operate.
Mark: Mammoth's total revenue during the second quarter of 2024 came in at $51.5 million compared to $43.2 million in the first quarter of 2024.
Mark: The 19% sequential increase in total revenues was primarily attributable to the increased infrastructure and storm-related work during the second quarter after a mild Q1.
Mark: This improvement demonstrates the benefits and resilience of our differentiated service offerings, despite the continued softness in activity within the natural gas heavy basins that we operate.
Mark Layton: We generated improved revenue in the face of a seven percent sequential decline in total rate count, which is a true testament to the diversified nature of our business. We continue to believe that there are positive demand implications for natural gas on the horizon, and we remain optimistic about associated activity increases in 2025 that will support further financial improvement. In Q2 of 2024, we pumped 292 stages with approximately 0.3 fleets utilized on average, compared to 380 stages and an average utilization of 0.6 fleets during the first quarter of 2024.
Mark: We generated improved revenue in the face of a 7% sequential decline in total rate count, which is a true testament to the diversified nature of our business.
Mark: We continue to believe that there are positive demand implications for natural gas on the horizon, and we remain optimistic for associated activity increases in 2025 that will support further financial improvement.
Mark: In Q2 of 2024, we pumped 292 stages, with approximately 0.3 fleets utilized on average, compared to 380 stages and an average utilization of 0.6 fleets during the first quarter of 2024.
Mark Layton: This decrease resulted from the continued activity softness felt across the industry, as well as sustained lower natural gas prices and commodity price uncertainty that impacted utilization across our well completion services division in the second quarter. Operators continued to push much of their activity to the right, and this resulted in persistent white space on the calendar.
Mark: This decrease resulted from the continued activity softness felt across the industry as well as sustained lower natural gas prices and commodity price uncertainty that impacted utilization across our Well Completion Services Division in the second quarter.
Mark: Operators continued to push much of their activity to the right, and this resulted in persistent white space on the calendar. We now expect these trends to linger throughout the second half of the year, resulting in relatively flat activity levels.
Mark Layton: We now expect these trends to linger throughout the second half of the year, resulting in relatively flat activity levels. Looking forward, our current visibility points to improvements in 2025. 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 141,000 tons of sand in the second quarter of 2024 at an average sales price of $22.73 per ton, compared to 146,000 tons of sand at an average sales price of $24.38 per ton during the first quarter of 2024.
Mark: Looking forward, our current visibility points to improvements in 2025.
Mark: We will remain disciplined stewards of capital and continue to align our spending appropriately with the demand that we are seeing from our customers.
Mark: Our sand division sold approximately 141,000 tons of sand in the second quarter of 2024 at an average sales price of $22.73 per ton.
Mark: compared to 146,000 tons of sand at an average sales price of $24.38 per ton during the first quarter of 2024.
Mark Layton: Although sand volume sales and pricing declined slightly, we are encouraged by discussions with our customers and expect improvements in the coming quarters. Our Infrastructure Services Division contributed revenue of $31.4 million for the second quarter of 2024, which represents a sequential increase when compared to $25 million for the first quarter. During the quarter, we had a greater amount of storm-related work than last quarter after an unusually slow start to 2024.
Mark: Although sand volume sales and pricing declined slightly, we are encouraged by discussions with our customers and expect improvements in the coming quarters.
Mark: Our Infrastructure Services Division contributed revenue of $31.4 million for the second quarter of 2024, which represents a sequential increase when compared to $25 million for the first quarter.
Mark: During the quarter, we had a greater amount of storm-related work than last quarter after an unusually slow start to 2024.
Mark Layton: We are seeing an uptick in bidding activity and are focused on operational execution. We will continue to pursue opportunities within this sector as we strategically structure our service offerings for growth, especially around T&D and fiber projects.
Mark: We are seeing an uptick in bidding activity and are focused on operational execution.
Mark: We will continue to pursue opportunities within this sector as we strategically structure our service offerings for growth, especially around T&D and fiber projects.
Mark Layton: Our net loss for the second quarter of 2024 was $156 million, or a loss of $3.25 per diluted share. This net loss was primarily attributable to the PREPA settlement agreement that was recorded during the second quarter, impacting our bottom line. Adjusted EBITDA, as defined and reconciled in our earnings release, was a negative $160.7 million for the second quarter of 2024, again primarily related to the settlement agreement charges we recorded during the quarter.
Mark: Our net loss for the second quarter of 2024 was $156 million, or a loss of $3.25 per diluted share.
Mark: This net loss was primarily attributable to the PREPA settlement agreement that was recorded during the second quarter, impacting our bottom line.
Mark: Adjusted EBITDA, as defined and reconciled in our earnings release, was a negative $160.7 million for the second quarter of 2024, again, primarily related to the settlement agreement charges we recorded during the quarter.
Mark Layton: Excluding this non-recurring expense and a portion of the interest income previously accrued on the receivable with PREPA, Adjusted EBITDA would have been negative $0.3 million for the second quarter of 2024, an improvement compared to the negative $6 million for the first quarter of 2024.
Mark: Excluding this non-recurring expense and a portion of the interest income previously accrued on the receivable with PREPA.
Mark: Adjusted EBITDA would have been negative 0.3 million for the second quarter of 2024, an improvement compared to the negative six million for the first quarter of 2024.
Mark Layton: CapEx for the second quarter of 2024 was approximately 4.9 million, which was up slightly sequentially compared to our CapEx for the first quarter. We did make investments in our well completion division during the quarter related to several Tier 4 BGB upgrades. We remain focused on aligning our capital spending with activity levels. As Arty mentioned, and as we've demonstrated, we continue to prudently manage our costs and more accurately reflect the activity levels of our customers.
Mark: CapEx for the second quarter of 2024 was approximately $4.9 million, which was up slightly sequentially compared to our CapEx for the first quarter.
Mark: While we did make investments in our Well Completion Division during the quarter related to several Tier 4 BGB upgrades, we remain focused on aligning our capital spending with activity levels.
Mark: As Arty mentioned, and as we've demonstrated, we continue to prudently manage our costs and more accurately reflect the activity levels of our customers.
Mark Layton: Our current CAPEX budget for 2024 is 12 million and has been increased from the previously announced CAPEX guidance of 9 million. Our CapEx budget for 2024 remains heavily weighted towards pressure pumping, but as always, we will continue to monitor customer spending and activity trends in order to most effectively manage our capital to align with the demand we see in the market. Selling general and administrative expenses totaled approximately $97.5 million during the second quarter of 2024.
Arty Straehla: Our current CapEx budget for 2024 is $12 million, an increase from the previously announced CapEx guidance of $9 million.
Speaker Change: Our CapEx budget for 2024 remains heavily weighted towards pressure pumping, but as always, we will continue to monitor customer spending and activity trends in order to most effectively manage our capital to align with the demand we see in the market.
Speaker Change: Selling general and administrative expenses totaled approximately $97.5 million during the second quarter of 2024.
Mark Layton: As I mentioned, the significant sequential increase in SG&A was related to the recording of the charges in connection with the settlement agreement with PREPA. As of June 30, 2024, we had cash on hand of $10.3 million. Our revolving credit facility was undrawn, and we had approximately $14.3 million in available borrowing capacity. Our total liquidity was approximately $24.6 million until Mammoth receives the $188.4 million due from PREPA.
Mark: As I mentioned, the significant sequential increase in SG&A was related to the recording of the charges in connection with the settlement agreement with PREPA.
Mark: As of June 30, 2024, we had cash on hand of $10.3 million.
Mark: Our revolving credit facility was undrawn and we had approximately $14.3 million in available borrowing capacity.
Mark: Our total liquidity was approximately $24.6 million.
Mark Layton: The company intends to eliminate its outstanding debt obligations under the term loan facility and will have a significantly enhanced liquidity position to invest in the business for the future. To conclude our call, we would like to thank our 690 employees throughout the company for their hard work, dedication, and commitment to maintaining sustainable work sites for themselves and their teammates. Thank you.
Speaker Change: If Mammoth receives the $188.4 million due from PREPA, the company intends to eliminate its outstanding debt obligations under the term loan facility and will have a significantly enhanced liquidity position to invest in the business for the future.
Mark: To conclude our call, we would like to thank our 690 employees throughout the company for their hard work, dedication and commitment to maintaining safe and sustainable work sites for themselves and their teammates.
Arty Straehla: As Arty mentioned, we are pleased to have reached an agreement with PREPA and to be approaching an acceptable conclusion after pursuing the outstanding receivables for several years. The cash we expect to receive would enable us to substantially invest in and grow the company. We continue to position the business for the future, and the boosted liquidity will allow us to opportunistically advance our standing within the market while remaining focused on improved returns in 2025, as demand and activity improve.
Speaker Change: As already mentioned, we are pleased to have reached an agreement with PREPA and to be approaching an acceptable conclusion after pursuing the outstanding receivables for several years.
Speaker Change: The cash we expect to receive would enable us to substantially invest in and grow the company.
Mark: We continue to position the business for the future, and the boosted liquidity will allow us to opportunistically advance our standing within the market, while remaining focused on improved returns in 2025 as demand and activity improve.
Arty Straehla: We will continue to prioritize disciplined operations, efficiency, and strategic capital allocation, which when coupled with our strong balance sheet, we believe will drive meaningful improvement in shareholder value. Operator, we would now like to open the call up for questions.
Speaker Change: We will continue to prioritize discipline operations, efficiency, and strategic capital allocation, which when coupled with our strong balance sheet, we believe will drive meaningful improvement 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 in the question queue. You may press star 2 if you would like to remove your question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. One moment, please, while we pull for questions. Our first question comes from John Daniel with Daniel Energy Partners. Please proceed with your question.
Speaker Change: [inaudible]
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 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please, while we poll for questions.
Speaker Change: Our first question comes from John Daniel with Daniel Energy Partners. Please proceed with your question.
John Daniel: Hey guys, thanks for having me. Arty, I'm going to ask a question about the infrastructure business. Having just gone through Hurricane Beryl and lost power for eight days, you know, subsequent to that, you see all of the different companies come in to try to remedy the situation. Can you remind me how you get that to work? Because when are you put on notice to get projects such as that or other, you know, natural?
John Daniel: Hey guys, thanks for having me.
Speaker Change: Arty, I'm going to ask a question on the infrastructure business. Having just gone through Hurricane Beryl and lost power for eight days,
Speaker Change: Subsequent to that, you see all of the different companies come in to try to remedy the situation. Can you remind me how you get that work? Because when are you put on notice to get projects such as that or other natural disasters?
Arty Straehla: Hey John, good talking with you, and sorry about the power loss for that length of time. Certainly, it is very harmful; it makes you appreciate electricity all that much more. It depends on the intensity of the storm; for example, as Debbie started going, we actually had mobilized some of our crews; we get contacted early on when they see the clarity of the path of the storms begins to become evident and the infrastructure that is there.
Speaker Change: Hey John , good talking with you, and sorry about the power loss for that length of time. Certainly, it's...
Speaker Change: It is... it is... it is...
Speaker Change: Very harmful. It makes you appreciate electricity all that much more. We, it depends on the intensity of the storm. For example, as Debbie started going, we actually had mobilized some of our crews.
Speaker Change: We get contacted early on when they see, start the clarity of the path of...
Speaker Change: Attendee, Ken Dennard, Arty Straehla
Arty Straehla: So, we had deployed quite a few crews to Beryl, and we deployed crews as well to take care of Hurricane Debbie. And as you well know, NOAA has forecast, I think they lowered their forecast for the first time from 25 named storms to 24 named storms this year, and so far, we're in the D's, which connotes that it's the fourth storm of the season. So it's expected to be inactive with the heat of the oceans, and it's expected to be an active season. So, and we tried to get through it. For most of them, we position our crews right outside the path, where they can then go in as soon as the hurricane has passed that particular area.
Speaker Change: The infrastructure that is there. So we had deployed quite a few crews to Beryl and we deployed crews as well to take care of Hurricane Debbie.
Speaker Change: And as you well know, NOAA has forecast, I think they lowered their forecast for the first time from 25 named storms to 24 named storms this year. And so far we're in the D's, which connotates that it's the fourth storm of the season.
Speaker Change: So, it's expected to be inactive with the heat of the oceans and it's expected to be an active season. So, and we try to check fruits.
Speaker Change: We actually, for most of them, we position our crews right outside the path where they can then go in as soon as the hurricane has passed that particular area.
Arty Straehla: Okay, so it sounds like you have like a pre-arranged deal with FEMA and others, or like ahead of us is like, "How's the con, who's the contract with?"
Speaker Change: Okay, so it sounds like you have like a pre-arranged deal with FEMA and others or like...
Speaker Change: Uh, I had this or I had it. How's the contract with?
Arty Straehla: Well, a lot of times it differs. It's not with FEMA; it's with the investor-owned utility. And it will be where they bring in the equipment either under mutual assistance that they have with other utilities or with independent groups like ourselves where they just call and say, hey, I need eight crews over in this particular area at this particular point in time.
Speaker Change: Well, a lot of times it differs. It's not with FEMA, it's with the investor-owned utility.
Speaker Change: and it will be where they bring it in, either under mutual assistance.
Speaker Change: that they have with other utilities or with independent groups like ourselves where they just call and say, hey, I need eight crews over in this particular area at this particular point in time.
Arty Straehla: Got it. And then the last one for me is we hear more and more about EMPs building out their own sort of micro grids. Are you guys dabbling with that much? Is there an opportunity for you there?
Speaker Change: Got it. And then the last one for me is we hear more and more about EMPs building out their own sort of micro grids. Are you guys dabbling with that much? Is there an opportunity for you there?
Arty Straehla: You know, we have done some of that work for, but mostly for the utility that is in that particular area. So, yeah, we've done a little bit, but it usually goes through the utility that is in control of the area where the E&P is.
Speaker Change: You know, we have done some of that work for, but mostly for the utility that is in that particular area.
John Daniel: Okay, that's all I got. Sorry for the basic questions.
Speaker Change: So, yeah, we've done a little bit, but it usually goes through the utility that is in control of the area where the E&P is.
Arty Straehla: Just wanted to get a reminder. Thanks, John. Take care.
Speaker Change: Okay, that's all I got. Sorry for the basic questions. Just wanted to get a reminder.
Speaker Change: Thanks, John . Take care.
David March: Our next question comes from David March with Singular Research. Please proceed with your question.
Speaker Change: Our next question comes from David March with Singular Research. Please proceed with your question.
David March: Hey, good morning, guys. Thank you very much for taking my question. Let me start by saying, I may have missed it or misunderstood it in the release, but do you guys have a sense of the timing of the payment that you'll receive from PREPA at this point?
David March: Hey, good morning guys. Thank you very much for taking my questions.
David March: Let me start with, good morning, let me just start, I may have missed it or misunderstood it in the release, but do you guys have a sense of the timing of the payment that you'll receive from PREPA at this point?
Arty Straehla: Well, first of all, it's got to go through Title III, through the Title III court, which right now the omnibus hearing is scheduled for September 18th. And once it does that, it'll be up to the judge to release it. And then, within our agreement, there's a certain amount of days after the approval of the court that PREPA has to pay.
Speaker Change: Well, first of all, it's got to go through Title III, through the Title III court, which right now the omnibus hearing is scheduled for September 18th.
Speaker Change: and once it does that it'll be up to the judge to release and then within our agreement there's a certain amount of days after after the approval of the court that PREPA has to pay.
Arty Straehla: So currently, that's contemplated to be 10 business days following an order issued by the Title III court.
Speaker Change: So, currently, that's contemplated to be 10 business days following an order issued by the Title III Court.
David March: So if I'm reading the tea leaves right, it sounds like it's You're likely to get the money in the fourth quarter. Is that safe?
Speaker Change: So, if I'm reading the tea leaves right, it sounds like it's...
Speaker Change: You're likely to get the money in the fourth quarter. Is that a safe?
Arty Straehla: It'll be the tail end of Q3, or the first part of Q4, depending on the timing of the issuance of an order by the Title III court.
Speaker Change: Assessment.
Speaker Change: It'll be tail end of Q3, first part of Q4, depending on the timing of the issuance of an order by the Title III Court.
David March: Sure, sure. Perfect. Thank you very much for clarifying that. That's very helpful. And then my next question is, obviously, you're paid on the term loan. I think that's great.
Speaker Change: Sure, sure. Perfect. Thank you very much for clarifying that. That's very helpful. And then my next question is Obviously you're paid on the term loan. I think that's great Can you just talk about the priority uses of cash once you get past that?
David March: Can you just talk about the priority uses of cash once you get past that? You know, are there some potential acquisitions that are available, given the disruption in the market, that might be interesting to you? And if so, could you talk about specific verticals in which you might pursue acquisitions? Sure.
Speaker Change: You know, are there some potential acquisitions that are available given the disruption in the market that might be interesting to you? And if so, could you talk about specific verticals in which you might pursue acquisitions?
Arty Straehla: Sure. We certainly think it'll be good to be out of debt, have cash on the balance sheet, and to be moving forward. You know, so what we will do is invest in our T&D group, including our engineering and transmission and distribution service business, to grow it out and to fill it. We'll allocate some capital to modernize our FRAC fleet. And then we'll invest money in our portfolio companies that would have the best return of invested capital.
Speaker Change: Sure, certainly it'll be good to be out of debt.
Speaker Change: Have cash on the balance sheet.
Speaker Change: and to be moving forward.
Speaker Change: You know it.
Speaker Change: So what we will do is invest in our T&D group, including our engineering and transmission and distribution service business.
Speaker Change: To grow it out and to fill it, we'll attribute some capital to modernizing our frack fleet.
Speaker Change: And then we'll invest monies in our portfolio companies that would have the best return of invested capital.
Arty Straehla: And then we'll be looking for other investments for growth. What we have proven over time is that we're effective stewards of capital and have the ability to go out and grow this business when opportunity arises, as a debt-free, very sound ballot sheet indicates.
Speaker Change: And then we'll be looking for other investments for growth. What we have proven over time is that we're effective stewards of capital and have the ability to go out and grow this business when opportunity arises.
Speaker Change: As a debt-free, very sound ballot sheet indicates for us.
David March: I really appreciate that, Culler. Thank you very much, guys. Congratulations on the recent settlements. Great news.
Speaker Change: Really appreciate that, Culler. Thank you very much, guys. Congrats on the recent settlements. Great news.
Culler: Thank you.
Operator: This concludes our question and answer session. I would now like to turn the floor back over to management for closing comments.
Speaker Change: This concludes our question and answer session. I would now like to turn the floor back over to management for closing comments.
Arty Straehla: Thank you, Maria. Very much appreciate that. And thanks to everybody 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. We look forward to speaking to you again next quarter. Thank you. You may disconnect your lines at this time.
Speaker Change: Thank you, Maria. Very much appreciate that. And thanks everybody 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. We look forward to speaking to you again next quarter.
Operator: Thank you; you may disconnect your lines at this time.
Speaker Change: Thank you. You may disconnect your lines at this time.
Speaker Change: ?? ?? ?? ??
Speaker Change: Till then, goodbye!
Speaker Change: [inaudible]
Speaker Change: [music]
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