MAMMOTH ENERGY SERVICES, INC. Q3 FY2024 earnings call

• COBRA and PREPA Settlement: Received two installments totaling $168.4 million from the settlement with PREPA, with the final $20 million to be received upon PREPA's plan of adjustment. Used settlement proceeds to pay off term credit facility, making Mammoth debt-free. - Capital Allocation: Focus on growing infrastructure business through investments in T&D and engineering, and upgrading pressure pumping assets with Tier 4 dual fuel pump upgrades. - Well Completion Services: Saw rebound in Q4 activity, expects ramp in back half of 2025 despite activity challenges in first half of 2025. - Infrastructure Services: Impacted by storms but seeing uptick in bidding activity, allocating capital for T&D investments and supporting engineering team with additional investments.

Well completion services: In the third quarter of 2024, the well completion services division had 1 pump down crew active, contributing $2.2 million in revenue. The division was challenged by industry softness in natural gas basins. Sand division: Sold approximately 163,000 tons of sand in Q3 2024 at an average sales price of $22.89 per ton, compared to 141,000 tons at $22.73 per ton in the second quarter. Infrastructure services: Contributed $26 million in revenue for the third quarter of 2024, a sequential decline from $31.4 million in the second quarter, impacted by storm-related work but seeing bidding activity.

• Well Completion Services: Anticipates relatively flat activity levels in first half of 2025, but expects ramp in back half with demand improvements. - Infrastructure Services: Allocated capital for T&D investments in 2024 and 2025, plans to grow through strategic investments. - Debt-free Status: Remaining cash allows for strategic investments and potential M&A opportunities to enhance positioning in markets.

• Industry Softness: Continued softness in natural gas basins impacting well completion services division. - Commodity Price Uncertainty: Sustained lower natural gas prices and price uncertainty affecting utilization. - Execution Risks: Risks related to operational execution in infrastructure projects.

Q: Just on the pressure pumping side, when we think about upgrading equipment and demand increasing into the second half of next year, could you talk about lead times for equipment that you are currently seeing if you are having discussions? And I am just curious about your outlook there for the capital equipment market.

A: Oh, we are making, as I think you know, Josh, we are making moves to move to Tier 4 dual fuel, which are the more efficient pumps. And the availability of engines right now is extremely good. In fact, we have got them, and we are doing it. I mean, changing them out at our own manufacturing facility, and we have no issue getting those engines.

Q: And then the second question for me, you highlighted just where the cash balance stands today. Sounds like opportunities for M&A. Could you just speak to when you think about scale, are you looking to break out into sort of verticals that you are not involved in today, or would it be in the business lines that you are already involved in today? I am just curious how you are thinking about M&A going forward and how to position the company over the next couple of years.

A: Well, we think about it both ways that you talked about there. Some of it is internal, and we really are focused on the T&D business right now. We have seen a change in customer behavior where they are requesting more crews as we go out into the future. And we feel very good about it. We have also always had our eyes on the ability to acquire, integrate, and grow strategic acquisitions that we like in that space that may bring us a different regional customer or may bring us a different management group and that type of thing. So very excited about that business and where it is pointing to. But I think one of the things that you know about us since inception is that we try to be entrepreneurial. And we try to see investments in all areas. We are not necessarily confined just to the oilfield services or just to the T&D. And then we have a history of starting businesses. We started the engineering group with one engineer, and we have grown her to sixty-four. And it is giving and adding significant cash flow to us. We did the same thing with our fiber group. And we are starting to see some traction there because you are starting to see the release of monies that are coming from the previous acts. We are starting to see those release, and our bidding activity is going up significantly. So we see it both ways.