Q1 2025 Mammoth Energy Services Inc Earnings Call

Speaker Change: Greetings, and welcome to the Mammoth Energy Services First Quarter Earnings Conference Call. At this time, our participants are on e-listen only mode. A question at the session will follow the formal presentation. If anyone to require operator assistance during a conference, please press star zero on your telephone keypad.

Speaker Change: As a reminder, this cost has been recorded. It is now my pleasure to introduce your host, Sackphone. 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.

Speaker Change: This call was also being webcast. You can be accessed through the audio link on the events and presentations page of the Investor Relations section of www.MammothEnergy.com

Speaker Change: Information reported on this call speaks only as of today, May 7th, 2025.

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

Speaker Change: 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, our four looking statements may pursue it to the safe harbor provision of the Private Security's litigation reform act of 1995.

Speaker Change: We will be making forward-looking statements as part of today's call that by their nature are uncertain and outside of the company's control.

Actual Result made different materially.

Speaker Change: Please refer to the earnings press release that was issued today for our disclosure on four-looking statements.

Speaker Change: These factors and other risks and uncertainties are described in detail in the company's fileings with the Securities and Exchange Commission.

Measement may also refer to non-GAAP measures , including adjusted EBITDA.

Speaker Change: 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.

Speaker Change: Mammoth Energy assumes no obligation to publicly update or revise any four-looking statements.

Speaker Change: And now I'd like to turn it over to Mammoth Energy CEO Phil Lancaster.

Phil Lancaster: Thank you, Zach. Good morning, everyone. Nice to speak to you all again this quarter and what will be my last earnings call the CEO of Mammoth Energy Services.

Phil Lancaster: 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.

Phil Lancaster: As a reminder, as management evaluates the existing businesses and new opportunities to unlock value, Mammoth may be buyers or sellers at sometimes both.

Phil Lancaster: April was a great example of this as the company completed two transactions, one is a bar and one is a seller.

Phil Lancaster: As a buyer, we purchased 8 small passenger aircraft in early April for approximately 11.5 million.

Phil Lancaster: These aircraft will have meaningful scale and further diverse by Mammoth Rental Services Fleet.

Phil Lancaster: 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.

Phil Lancaster: This was a monumental transaction for Mammoth and demonstrated the ability for us to repeatedly grow businesses organically.

with our Enterprise.

Phil Lancaster: 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.

Phil Lancaster: To give you a sense of the magnitude, associated revenue has exceeded 90 million in each of the last three years.

Phil Lancaster: This transaction was especially accrued, accrued because it was completed at over four times tangible book value and a trailing 12 month EBIDAR multiple of nine.

Phil Lancaster: It's 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.

Phil Lancaster: Currently, our Board of Directors is conducting a search for a successor CEO .

Phil Lancaster: 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 [inaudible]

Phil Lancaster: I feel a knackle tied to that business and it makes the most sense for me to follow those assets.

Phil Lancaster: I have no doubt that this experience management team and my success that will lead this company forward to achieve success all future endeavors.

Phil Lancaster: 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.

Mark: We are pleased with the strength of our first quarter result, the Generated Positive Adjusted

Mark: During the quarter, we experienced incremental growth in all financial key financial metrics to squintially from the fourth quarter that rebounded off the lows of 2024.

Mark: We've benefited from the incremental pressure pumping utilization during the quarter of a drove a 32% sequential increase in well-completions revenue and we continue to see strong demands throughout our various businesses, including engineering and TD services.

Mark: 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.

Mark: These factors have already started to weigh on all prices as a result. We anticipate potential increase competition in the gas stations in which we operate, given the strong fundamental support for natural gas later this year and into 2026.

Ty Do Increase LNG Capacity

Mark: This increased competition may squeeze margins slightly in the near term, but we largely expect this to be a short-term headwind. A service companies will naturally return to the early basins once commodity prices permits.

Mark: Our near-term target continues to achieve utilization excess of 1.5 active fleets, which will enable us to generate free cash flow.

Mark: 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 [inaudible]

Mark: 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. Thank you.

Mark: Mammoth's total revenue during the first quarter of 2025 came in at 62.5 million, which represents a 17 percent sequential increase over the fourth quarter of 2024.

Mark: We continue to believe there are positive demand implications for natural gas, resulting from incremental LNG export capacity, and growing electricity demand requirements.

Mark: 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.

Mark: Additionally, we will continue to evaluate strategic opportunities to deploy capital in ways that will be accretive and value-enhancing.

Divisionally

Mark: The well-completion services segment saw further improvement in utilization during the first quarter after activity bottomed out in mid 2024.

Mark: Welcompletions, Generated Revenue of 20.9 million with an average of 1.3 active pressure pumping fleets.

Mark: compared to 15.8 million with 1.1 average active fleets in the fourth quarter of 2024.

Mark: 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

Mark: macroeconomic uncertainty, tariff implications, and OPEC loss 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.

Mark: 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.

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

Mark: Our sand segment sold approximately 189,000 tons of sand in the first quarter at an average sales price of $21.49 per ton.

Mark: Compared to 129,000 tons of sand at an average sales price of $22.54 during the fourth quarter of 2024.

Mark: Sales volumes were up and pricing remained relatively stable during the first quarter which primarily stemmed from increased utilization.

Mark: We expect incremental demand to drive improved results in the sand segment in 2025.

Mark: As expected, the Legacy Infrastructure Services segment executed well and delivered strong results during the first quarter.

Mark: 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.

Mark: 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.

Mark: On a go-forward basis after the sale of the three subsidiaries, our Infrastructure Services Segment will be comprised of Engineering and Fiber.

Mark: Our engineering group continues to do well and we have secured a strong backlog of business that will drive growth in future periods.

Mark: 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.

Mark: For the first quarter of 2025, revenue for our engineering and fiber businesses [inaudible]

Returning to Consolidated Results [inaudible]

Mark: 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 2004.

Mark: Selling, General, and Administrative Expenses decreased by approximately 34% sequentially to 6.5 million in the first quarter of 2025.

Mark: After the sale of the three infrastructure subsidiaries, we expect SGNA to decline 20-25% from the

CapEx for the first quarter of 2025 was $7.2 million.

Our 2025 CAPX Budget, Excluding Acquisitions [inaudible]

Mark: Remains at 12 million, which is primarily comprised of growth capex for equipment rentals business.

Mark: We will approach Tier 4 pressure pumping fleet conversions with a measured pace to be as cost-effective and efficient as possible.

Mark: We will also continue to monitor the uncertainty within our markets to determine potential impacts on commodity prices and resulting activity levels.

Mark: We will adjust our spending as necessary to align with the activity levels of our customers.

Mark: Additionally, we see many opportunities to strategically allocate capital to grow or existing businesses.

that are generating the greatest returns.

Mark: specifically around equipment rentals which we expanded and diversified with the purchase of eight

Mark: 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 enough rate equipment with our improved cash

Mark: This cash balance excludes restricted cash of 21.6 million, which would bring our total cash on hand to 78.3 million.

Mark: 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 2nd, 2025.

and the purchase of eight aircraft.

Mammoth had unrestricted cash on hand of 135.4 million.

Mark: excluding $19.6 million of restricted cash and total liquidity of $202.9 million.

As of today, Mammoth remains debt-free [inaudible]

Mark: 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.

Mark: We continue to see significant opportunities to unlock value for both Mammoth and its shareholders.

Mark: We executed two value enhancing transactions last month, and we look forward to sharing additional strategic developments with you in the coming quarters.

Mark: 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 [inaudible]

Mark: and are focused on building a better, more resilient company for the future.

We plan to utilize the tools at our disposal.

Mark: to sustain our recent momentum in the coming quarters and will strategically deploy capital as attractive value-enhancing opportunities present themselves.

Mark: 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.

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

Speaker Change: Thank you. We will now conduct a question and answer session. If you would like to ask a question please press start one on your telephone keypad. A confirmation tone will indicate your mind is in a question cue.

Mark: You may first start, too, if you would like to remove your question from the queue. For participants using Speak Equipment, it may be necessary to pick up your handset before present to star keys.

Speaker Change: Once again, that's star one at this time. One moment while we pull for our first question.

Josh Jane: A first question comes from Josh Jane with Daniel Energy Partners, please proceed.

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

Josh Jane: 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.

Josh Jane: Okay, thanks. And then when we think about, I think you alluded to, you know, 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...

Josh Jane: and historically the team has done an excellent job of managing their cost structure. So to the extent we see weakness and utilization for the remainder of 25 will certainly lean on that team to cut costs where they can to manage the business according to demand.

Okay, thanks very much.

Thank you.

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

Speaker Change: Unknown Attendee, Ken Dennard, Rick Black, Unknown Attendee, Mark Layton, Arty Straehla

Speaker Change: Thank you again for joining us on the call today. We continue to focus on positioning Mammoth for future growth and unlocking value.

Speaker Change: 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.

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