Mammoth Energy Services, Inc. — 2022 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing; the supplied text does not provide a clear standalone fourth-quarter income statement or cash-flow result. Management said demand across its three largest segments remained strong in Q4.
Business context
Mammoth provides oilfield completion, sand, drilling and related services, plus electric utility infrastructure services. Its four reportable segments are well completion, infrastructure, natural sand proppant and drilling. Several other oilfield service lines and facilities remain temporarily idled. The company reported 1,037 full-time employees at year-end.
Financial results and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $362.1 million | $229.0 million |
| Operating loss | $16.4 million | $123.0 million |
| Net loss | $0.6 million ($0.01 per diluted share) | $101.4 million ($2.18 per diluted share) |
| Adjusted EBITDA (non-GAAP) | $86.1 million | $(11.6) million |
| Cash from operating activities | $15.3 million | $(18.9) million |
| Capital expenditures | $12.7 million | $5.8 million |
| Interest expense, net | $11.5 million | $6.4 million |
Revenue increased 58%. By segment, 2022 revenue was $170.7 million for well completion, $111.5 million for infrastructure, $51.4 million for sand and $10.4 million for drilling; other services contributed $23.1 million before eliminations. The filing attributes the improvement to higher utilization across divisions, better pricing and operating efficiency. Operating loss narrowed substantially, while the company still recorded a small net loss.
Other income was $40.9 million, including $41.3 million of interest recognized on delinquent PREPA receivables. Adjusted EBITDA is a non-GAAP measure and adds back interest on trade receivables; it should not be treated as operating cash flow. The $13.6 million income tax expense on $13.0 million of pretax income produced a 104.8% effective tax rate, attributed primarily to foreign income mix, valuation-allowance changes and tax interest and penalties.
At December 31, 2022, cash was $17.3 million, revolving-credit borrowings were $83.5 million, and reported facility availability was $19.7 million after letters of credit and a required reserve. All $83.5 million of revolving debt was classified as current; the facility was scheduled to mature October 19, 2023. At February 22, 2023, borrowings were $79.7 million and availability was $22.3 million. The company reported $259.5 million of working capital, but this includes substantial PREPA receivables. Its revolving facility carried a weighted-average 11.5% rate at year-end; a 1% rate change would affect annual interest expense by approximately $0.8 million.
Material changes versus 2021
- Well completion revenue rose 102% to $170.7 million; completed stages increased 142%, and an average of 3.0 fleets operated versus 1.1 in 2021. Four fleets were active at year-end; a fifth was added after year-end.
- Infrastructure revenue rose 19% to $111.5 million as average crew count increased to 91 from 82 and efficiency improved. Lower storm-restoration work reduced revenue by $11.0 million.
- Sand revenue rose 47% to $51.4 million: average selling price increased 62% to $27.11 per ton and tons sold increased 40% to approximately 1.4 million. Shortfall revenue was $3.1 million versus $12.0 million.
- Drilling revenue rose 142% to $10.4 million, with directional-drilling utilization increasing to 44% from 21% and average day rates up 44%.
- SG&A fell to $39.6 million from $78.2 million, mainly because 2021 included $41.2 million of Gulfport-related bad-debt provision. Interest expense increased with higher rates and average borrowings.
Outlook, risks and unusual items
- Management expected oilfield pricing and utilization to remain elevated through 2023 and sand prices to remain near 2022 levels. It expected Infrastructure Investment and Jobs Act spending to support infrastructure opportunities, with additional activity anticipated from late 2023.
- 2023 capital expenditures were estimated at $64 million, subject to industry conditions and financial results. Planned pressure-pumping fleet activation and dual-fuel upgrades depend on liquidity, market conditions and equipment availability; supply-chain backlogs could delay them.
- PREPA collection exposure: PREPA owed approximately $379.0 million at year-end, comprising $227.0 million for services and $152.0 million of accrued interest. PREPA has paid nothing on the outstanding balance since 2019 and is in bankruptcy. Management recorded no allowance and believes collection is likely; the auditor identified collectability as a critical audit matter. FEMA had identified costs it considered unauthorized, including $5.6 million and $68.1 million relating to portions of the second contract. FEMA rejected Cobra’s claim directly, determining no contract existed between FEMA and Cobra; Cobra had 90 days from February 1, 2023 to appeal. The court extended the stay in PREPA-related proceedings and ordered a further status report by July 31, 2023.
- Refinancing and liquidity: The company stated it might need to extend, refinance or repay its facility by October 2023 and could face unfavorable terms or fail to secure a solution. Covenant compliance was reported at year-end, but default could accelerate debt and expose substantially all assets to lender remedies.
- Other notable items include $41.3 million of PREPA interest income recognized in 2022, a $13.6 million income tax expense despite pretax income of $13.0 million, and $17.9 million of receivables written off during 2022, substantially related to Gulfport. No goodwill or other long-lived asset impairment was recorded in 2022.
- Management cited commodity-price volatility, inflation and higher interest rates, labor and equipment shortages, customer concentration, fixed-price infrastructure contract risk, weather, regulation and the energy transition as key risks. The SEC stated it did not intend to recommend enforcement action against the company; a DOJ investigation was ongoing, and the company was cooperating. The former Cobra president and a FEMA official pleaded guilty to gratuities relating to a project Cobra did not bid on or receive, and the criminal indictment was dismissed. Other PREPA-related civil claims and Puerto Rico tax matters remained unresolved.
Investor facts to verify
- PREPA receivable balance, FEMA determinations and appeals, court proceedings, and whether the recorded receivable and accrued interest are ultimately collectible.
- How the company extends, refinances or repays the revolving credit facility, and the resulting borrowing cost, availability and covenant requirements.
- Whether 2023 capital spending and fleet upgrades can be funded and completed without constraining liquidity, and whether planned infrastructure growth converts into profitable work.
- The quality of reported earnings and Adjusted EBITDA, including the role of PREPA interest income and the distinction between recognized interest and cash collected.
- Customer concentration, including the top five customers’ 36% share of 2022 revenue, and progress replacing historical Gulfport business.