MAMMOTH ENERGY SERVICES, INC. Q3 FY2026 earnings call

• Strategic Transformation & Aviation Growth: Mammoth completed a portfolio reset in 2025, divesting four businesses for over $150 million and reinvesting proceeds into aviation leasing. The aviation fleet grew from 15 assets a year ago to 44 assets by Q3 2026 end, making it the largest driver of earnings.
• Operational Efficiency in Sand: The sand division delivered improved performance through a better mix of produced vs. brokered sand and efficiency gains. A new screener project is being installed to increase plant volume capacity by an estimated 10-15% without increasing shift hours.
• Capital Discipline: Every business unit now competes for capital based on risk-adjusted returns. The company maintains a lean operating model and has taken costs out of the organization to improve overall portfolio margins.
• Integration Progress: Infrastructure operations are in the early stages of integration. While equipment and crew utilization averaged just below 50%, project awards and customer onboarding accelerated in the back half of the quarter, with expectations for meaningful activity growth in Q4.
• Balance Sheet Strength: The company ended the quarter with no funded debt, holding $13.1 million in cash and $24.5 million in marketable securities, totaling $37.6 million in liquidity. The aviation fleet remained unencumbered until the announcement of new financing.

The company reported total revenue of $21.3 million, a significant sequential increase in profitability driven by a shift toward higher-margin aviation leasing. Key segment results are as follows:

• Rental (Aviation Focus): Revenue was $9.6 million, more than tripling year-over-year. Sequentially, revenue declined 6% because the prior quarter included one-time asset sales; excluding those sales, revenue grew 17%. Segment Adjusted EBITDA increased to $5 million from $3.7 million in Q2, with margins exceeding 50%, demonstrating strong operating leverage.
• Sand: Revenue was $5.2 million, down from $8 million in Q2, primarily due to lower freight revenue. Despite the revenue decline, segment Adjusted EBITDA improved significantly to $1.5 million from a loss of $0.4 million in Q2, driven by better sales mix and operational efficiency.
• Accommodations: Revenue was $3.4 million, up 6% sequentially and 48% year-over-year. Segment Adjusted EBITDA margin expanded to 32% from 25% in Q2, reflecting improved occupancy and execution.
• Drilling: Revenue was $2.1 million, down from $3.8 million in Q2 due to eased activity and seasonal patterns. The segment was approximately break-even at the Adjusted EBITDA level.
• Infrastructure: Revenue was $1.1 million, up 38% year-over-year following the integration of Mission Construction and Beery Rentals. However, the segment recorded an Adjusted EBITDA loss of $0.9 million, consistent with Q2, as utilization remains below target while onboarding accelerates.

• Full-Year 2026 Adjusted EBITDA Margin: Management raised guidance again, now expecting full-year adjusted EBITDA margins in the mid-teens. This puts the company roughly one year ahead of the plan laid out in March 2026, which had targeted positive EBITDA for 2026 and mid-teens margins for 2027.
• Full-Year 2026 Revenue: Reaffirmed outlook for full-year revenue growth of greater than 90%.
• 2027 Adjusted EBITDA: Announced expectation that 2027 adjusted EBITDA will increase by more than 40% compared to full-year 2026 adjusted EBITDA.
• Seasonal Outlook: Guidance incorporates a seasonally softer fourth quarter for sand, drilling, and accommodations. Any further aviation asset sales would be additive to the current guidance, which assumes no additional sales.

• Commodity Price Volatility: Oil and gas customer activity remains sensitive to volatile commodity prices, although natural gas demand continues to support activity in gas-weighted markets.
• Budget Cycles and Seasonality: Customer spending pace is affected by budget cycles and seasonality. Activity is expected to remain soft through year-end in drilling and sand as operators exhaust annual budgets.
• Execution Risk in New Ventures: The infrastructure segment is still integrating recent acquisitions, with utilization currently low. There is operational risk regarding the speed at which these units can ramp up to profitable utilization levels.
• Forward-Looking Statement Uncertainty: Actual results may differ materially from expectations due to various risks and uncertainties, including macroeconomic conditions and regulatory factors, as detailed in SEC filings.

Q: Analyst John Daniel asked for details on 2027 sand market inquiries, specifically comparing basins like Bakken and Marcellus, and sought color on growth prospects.

A: CFO Mark Layton stated that 2027 discussions are encouraging, with supply arrangements helping firm up production capacity. He highlighted a new screener project expected to boost production capability by 10-15% per shift hour, directly improving margins. Regarding basins, he noted demand is split but largely focused on Western Canada (Montney) and Utica/Marcellus, with specific phoning demand emerging from the Montney basin for 2027.

Q: (Implicit/No direct follow-up question received other than confirmation) A: The analyst thanked management for the insights on sand and acknowledged the impressive aviation growth trajectory before closing his line.