Mammoth Energy Services posts annual loss after internal issues
While Mammoth Energy Services Inc. and the oil and gas industry it services had a down year in 2019, its top executive says the company stabilized its electric grid-building operations.
Arty Straehla, Mammoth’s CEO, stated Thursday the company’s hiring of a new president for its infrastructure division in November stabilized the unit’s operations.
“The new president has been able to fill several key management positions with highly qualified people from other large infrastructure focused companies, and the performance of the business is improving,” he told analysts in a call after Mammoth’s earnings were released on Thursday.
“As the new management team gets to work, demand remains strong throughout the industry, especially in the transmission and renewables, construction areas. New bidding opportunities are being pursued.
“The backlog for our infrastructure division currently stands at $490 million.”
As for earnings, the company posted a net loss for 2019 of about $79 million, or $1.76 a share, on total revenue of about $625 million, the release showed.
In 2018, it had posted a profit of about $236 million, or $5.24 a share, on total revenue of about $1.7 billion.
Mammoth’s 2019 adjusted earnings before interest, taxes, depreciation and amortization was $77.3 million. Its 2018 adjusted EBITDA earnings was $547.3 million.
The company was hurt across all its oil- and gas-related operating segments during the year by dramatically slower work being carried out by its customers.
But its bottom line numbers for 2019 were hurt most by fallout that resulted after its efforts to work with the power authority in Puerto Rico to repair and then strengthen that island’s grid in the wake of Hurricane Maria in 2017 ended.
A Mammoth subsidiary, Cobra Acquisitions, had bid for and obtained $1.8 billion in contracts to undertake those efforts.
However, it shut down operations on the island at the close of 2018 after the power authority encountered funding problems.
Before that, a federal grand jury meeting in Puerto Rico indicted a former top executive at Cobra, accusing him of illegally influencing a federal official to gain business there. A Federal Emergency Management Agency official also was indicted as part of the alleged scheme.
The case continues, while the executive no longer works for Mammoth.
“As you can imagine, we are limited in what we can say about pending litigation as it progresses through the courts,” Straehla said Thursday.
But he noted that Mammoth continues to seek owed money for work it did on the island from its power authority as it moves through its own bankruptcy process. Straehla also stated that rebuilt electrical infrastructure work Mammoth had completed there had stood up well to recent earthquakes striking the territory.
Meanwhile, revenues contributed to Mammoth’s operations in 2019 by its infrastructure services division only amounted to about 20% of what it had contributed in 2018 — $214.4 million, compared to $1.1 billion.
As for Mammoth’s other units servicing the oil and gas industry, their performances also were down, year-over-year.
The company’s pressure pumping services unit contributed revenues of $246.3 million in 2019, compared to $369.5 million in 2018.
Its sand proppant services unit contributed revenues of $99.6 million in 2019, compared to $168.3 million in 2018.
Its drilling services unit contributed revenues of $32.2 million in 2019, compared to $66.7 million the previous year. It temporarily shut its contract land drilling operations in December because of a lack of demand for that service.
And its other services units contributed revenues of $69.3 million in 2019, compared to $83.7 million in 2018.
The company reported it cut its selling, general and administrative expenses by about $22 million, year-over-year.
On Thursday, Straehla also touched on progress that two new subsidiaries Mammoth created last year involving both manufacturing and engineering services are making, noting both are growing.
“Anaconda, our manufacturing operation in Oklahoma, is currently building and refurbishing equipment for both our drilling equipment and water transfer companies,” he said.
“Aquawolf, our engineering business, is working on projects for several customers and growing its customer base. Both … have the potential to grow over the coming years.
“Given the current oil-field market conditions, we are working hard to control costs and transition Mammoth into a more industrial-focused company,” he said.