MAMMOTH ENERGY SERVICES, INC. Q4 FY2024 earnings call

• Bill Lancaster acknowledged the retirement of former CEO Arty Straehla and highlighted signs of improvement in Q4 results, carrying positive momentum into 2025.
• Focus on unlocking value for shareholders, maintaining a strong balance sheet, and evaluating strategic opportunities.
• Added roughly twenty crews to the infrastructure services division in the last ninety days to address growing utility demand.
• Infrastructure services business executing well with significant bidding opportunities in engineering, fiber, transmission, and distribution.
• Completion services saw utilization rebound in Q4 after third quarter bottoming out, with expected steady activity in 2025 and potential upside from natural gas and LNG demand.
• Debt-free balance sheet and $61 million unrestricted cash on hand as of December 31, 2024.

Mammoth Energy Services' segment performance:

• Infrastructure Services: Fourth quarter 2024 revenue was $27.9 million, a slight sequential increase from $26 million in the third quarter. Full year 2024 infrastructure services revenue was $110.4 million, flat compared to $110.5 million in 2023.
• Well Completion Services: Fourth quarter 2024 revenue was $15.8 million. Full year 2024 results were impacted by lower utilization in the well completion services division due to reduced customer activity in natural gas basins.
• Sand Division: Fourth quarter 2024 sold 129,000 tons of sand at an average sales price of $22.54 per ton. Full year 2024 sold 578,000 tons at an average price of $23.15 per ton. Volume sales and pricing were negatively impacted in 2024 but expected to improve in 2025.

• 2025 CapEx budget is $12 million for existing businesses, primarily growth CapEx for equipment rentals and maintenance CapEx for pressure pumping.
• Focus on strategically deploying capital to be accretive and value-enhancing.
• Expected improvement in the sand division due to incremental demand.
• Potential upside in completion services activity in 2025 driven by natural gas and LNG-related demand.

• Statements made are forward-looking and actual results may differ materially from expectations.
• Factors and other risks and uncertainties described in detail in the company's filings with the Securities and Exchange Commission.

Q: Where is the best growth potential for the infrastructure business? Is that organic or acquisitive? And now that there is a new administration and changes out there, how should we be thinking about these two things impacting the infrastructure space in the coming year?

A: Yeah. Thank you, Rick. So I think most of our growth currently is through organic growth. As I stated, we picked up twenty crews, but we have even more demand. And a little bit of that is because the larger IOUs have realized that they have to expand. And so right across the US, we're noticing a lot more demand from the larger IOUs. So we feel like the organic growth is there. We have also started getting involved with more co-ops which we think will help our storm revenue, and we would look at acquisitions maybe, but at this particular point, we feel like there's plenty of organic growth.

Q: In the rental business, can you just provide a little bit of color around the customers and the demand cycle that are in that business and what would be a driver of growth and demand perspective in the coming year?

A: Our current customer base is primarily comprised of E&P companies along with other service companies. The opportunities to grow our customer base, in particular, we see some discrete opportunities as it relates to the construction market. And some of the rental equipment that we have inside of the portfolio. And I just remind you that we see the rental business as a fairly broad portfolio of assets that for us includes helicopters. So we've always viewed that business broadly and believe this is an area where we can acquire high-quality assets at attractive prices.

Q: On the sand business, what characterizes that environment? And, you know, are there opportunities to deploy more capital there? Or to make acquisitions? How does that business grow? And what do you see that environment looking like in 2025?

A: For 2025, we're seeing some stabilized demand. As always, the key drivers for our sand business are commodity pricing. For us, we're operating well underneath our maximum capacity, so we've got the ability to expand capacity and capitalize as we see demand.

Q: On your CapEx outlook for 2025, can you give a percentage break of how you see that playing out over the year?

A: Yeah. Just to give some detail on that, approximately half of our CapEx budget is allocated to growing our rental business. We have about $5 million inside of that $12 million budget related to pressure pumping upgrades. That will be dependent on customer demand.

Q: Now that you've been in this position for a few months and the company has capital again and that the negative overhang of PREPA is gone, what's your perspective on the primary focus as you sit at the company today?

A: Yeah. I think primarily is getting my feet wet, but the three focuses for me at this particular time. First one is to get the company rightsized and profitable. Second is evaluating our existing businesses for the future. And then now we have our position, with cash for the first time in six or seven years, we now have the door open to look for potential acquisitions to either help our existing businesses or new opportunities.