Mammoth Energy Services, Inc. (TUSK) Bundle
Understanding Mammoth Energy Services, Inc. (TUSK) Revenue Streams
Understanding Mammoth Energy Services, Inc.’s Revenue Streams
Revenue for the three months ended September 30, 2024, decreased $25.0 million, or 38%, to $40.0 million from $65.0 million for the three months ended September 30, 2023. The decrease in total revenue is primarily attributable to a decrease in utilization in the well completions services division as well as a decline in tons sold in the natural sand proppant services division.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Well Completion Services | 2,232 | 20,327 | -18,095 | -89% |
| Infrastructure Services | 26,043 | 26,712 | -669 | -3% |
| Natural Sand Proppant Services | 4,909 | 10,633 | -5,724 | -54% |
| Drilling Services | 1,557 | 2,337 | -780 | -30% |
| Other Services | 7,023 | 6,020 | 1,003 | 17% |
| Total Revenue | 40,015 | 64,959 | -24,944 | -38% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, revenue decreased $122.0 million, or 48%, to $134.7 million from $256.7 million for the nine months ended September 30, 2023.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the revenue contribution by segment was:
| Revenue Source | 9M 2024 Revenue (in thousands) | 9M 2023 Revenue (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Well Completion Services | 20,549 | 115,210 | -94,661 | -82% |
| Infrastructure Services | 82,514 | 83,308 | -794 | -1% |
| Natural Sand Proppant Services | 13,908 | 34,643 | -20,735 | -60% |
| Drilling Services | 2,804 | 6,501 | -3,697 | -57% |
| Other Services | 20,293 | 19,191 | 1,102 | 6% |
| Total Revenue | 134,732 | 256,710 | -121,978 | -48% |
Analysis of Significant Changes in Revenue Streams
The most significant decline in revenue was observed in the well completion services division, primarily driven by a decrease in pressure pumping services utilization due to continued softness in the natural gas basins. The number of stages completed decreased 81% to 673 for the nine months ended September 30, 2024, from 3,551 for the same period in 2023. In contrast, the other services segment saw a 17% increase in revenue, attributed to an increase in utilization for remote accommodations.
A Deep Dive into Mammoth Energy Services, Inc. (TUSK) Profitability
A Deep Dive into Mammoth Energy Services, Inc. Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was calculated as follows:
| Revenue (in thousands) | Cost of Revenue (in thousands) | Gross Profit (in thousands) | Gross Profit Margin (%) |
|---|---|---|---|
| 40,015 | 37,972 | 2,043 | 5.1 |
The gross profit for the same period in 2023 was $12,142, with a gross profit margin of 18.7%, indicating a significant decline in profitability year-over-year due to reduced revenues and increased costs related to well completion and natural sand proppant services.
Operating Profit Margin: The operating loss for the third quarter of 2024 was reported at $12,550,000, compared to an operating loss of $8,862,000 for the same period in 2023. This results in an operating margin of (31.4%) for Q3 2024, down from (13.7%) in Q3 2023.
Net Profit Margin: The net loss for the third quarter of 2024 was $24,042,000, leading to a net profit margin of (60.1%), compared to a net profit margin of (1.7%) for the same quarter in 2023.
Trends in Profitability Over Time
For the nine months ended September 30, 2024, total revenue decreased by $122 million, or 48%, to $134.7 million from $256.7 million in the same period in 2023. This decline in revenue directly impacted the profitability metrics:
| Period | Net Loss (in thousands) | Net Profit Margin (%) |
|---|---|---|
| Q3 2024 | (24,042) | (60.1) |
| Q3 2023 | (1,088) | (1.7) |
| 9M 2024 | (191,846) | (142.4) |
| 9M 2023 | (2,793) | (1.1) |
This trend highlights a sharp decline in profitability, primarily driven by reduced utilization in key service areas and increased costs associated with operations.
Comparison of Profitability Ratios with Industry Averages
The profitability ratios for the company are significantly below industry averages. For example, the average gross profit margin in the energy services industry typically hovers around 25%, while the company's gross profit margin for the last quarter was only 5.1%. Similarly, the average net profit margin for the sector is approximately 10%, compared to the company's net profit margin of (60.1%).
Analysis of Operational Efficiency
Cost management remains a critical area of focus. The total cost of revenue for the third quarter of 2024 was $37,972,000, with selling, general and administrative expenses amounting to $8,702,000, representing a significant increase compared to $10,411,000 in Q3 2023. This resulted in an operating loss of $12,550,000, up from $8,862,000 the previous year:
| Cost Breakdown (in thousands) | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Revenue | 40,015 | 64,959 |
| Total Cost of Revenue | 37,972 | 52,817 |
| SG&A Expenses | 8,702 | 10,411 |
| Operating Loss | (12,550) | (8,862) |
The increase in costs is primarily attributed to a rise in provisions for expected credit losses and operational inefficiencies, impacting overall margins.
Debt vs. Equity: How Mammoth Energy Services, Inc. (TUSK) Finances Its Growth
Debt vs. Equity: How Mammoth Energy Services, Inc. Finances Its Growth
As of September 30, 2024, Mammoth Energy Services, Inc. reported total liabilities of $174.3 million and total equity of $268.7 million. The company has a debt-to-equity ratio of approximately 0.65, indicating a moderate level of leverage compared to industry norms, which typically range from 0.5 to 1.0.
Overview of the Company's Debt Levels
The company's long-term debt as of September 30, 2024, stood at $50.9 million, while short-term debt was $0, as they had paid off all amounts owed under their term credit facility on October 2, 2024. The new revolving credit facility remains undrawn, with a borrowing base of $20.4 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio of 0.65 is considered favorable within the context of the energy services industry, which averages around 0.8 to 1.0. This lower ratio suggests a conservative approach to leverage, enhancing financial stability.
Recent Debt Issuances and Refinancing Activity
On October 16, 2023, the company entered a new term credit facility with Wexford Capital, which provided for term commitments of $45 million. As of September 30, 2024, the company incurred interest expense of $1.6 million under this agreement. Notably, all amounts owed under the prior term credit facility were paid off, demonstrating effective debt management.
Balancing Debt Financing and Equity Funding
The company has strategically balanced its financing through a mix of debt and equity. As of September 30, 2024, cash and cash equivalents totaled $4.2 million, with net working capital of $141.8 million. This liquidity positions the company well to meet its operational needs while managing debt obligations effectively.
| Financial Metric | Amount (in millions) |
|---|---|
| Total Liabilities | $174.3 |
| Total Equity | $268.7 |
| Long-term Debt | $50.9 |
| Short-term Debt | $0 |
| Debt-to-Equity Ratio | 0.65 |
| Cash and Cash Equivalents | $4.2 |
| Net Working Capital | $141.8 |
Assessing Mammoth Energy Services, Inc. (TUSK) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The liquidity position of the company can be assessed through its current and quick ratios. As of September 30, 2024, the company reported:
- Current Assets: $255.2 million
- Current Liabilities: $113.4 million
- Current Ratio: 2.25 (calculated as Current Assets / Current Liabilities)
- Quick Assets: $4.2 million (cash and cash equivalents)
- Quick Liabilities: $113.4 million
- Quick Ratio: 0.037 (calculated as Quick Assets / Quick Liabilities)
Analysis of Working Capital Trends
The net working capital trend shows a significant decline from December 31, 2023, to September 30, 2024:
| Period | Current Assets (in thousands) | Current Liabilities (in thousands) | Net Working Capital (in thousands) |
|---|---|---|---|
| September 30, 2024 | $255,200 | $113,400 | $141,800 |
| December 31, 2023 | $496,900 | $182,600 | $314,300 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow trends were as follows:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $39,301 | $24,951 |
| Investing Activities | ($5,920) | ($7,685) |
| Financing Activities | ($51,483) | ($23,993) |
The significant increase in cash provided by operating activities in 2024 was primarily due to increased receipts on accounts receivable, including a notable $64.0 million received from PREPA compared to $13.6 million in 2023.
Potential Liquidity Concerns or Strengths
Despite a strong current ratio, the quick ratio indicates potential liquidity concerns given the reliance on cash equivalents. As of September 30, 2024, the company held:
- Cash and Cash Equivalents: $4.2 million
- Total Debt: $50.9 million (current and long-term)
- Available Borrowing Capacity: $11.5 million under the revolving credit facility after accounting for letters of credit.
Additionally, the unrestricted cash on hand had increased to $86.2 million by October 30, 2024, with no outstanding borrowings under the new revolving credit facility, reflecting improved liquidity strength.
Is Mammoth Energy Services, Inc. (TUSK) Overvalued or Undervalued?
Valuation Analysis
In assessing the valuation of Mammoth Energy Services, Inc. (TUSK), several key financial metrics are considered, including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company's P/E ratio is calculated as follows:
- Net (loss) income: $(24,042,000)
- Weighted average common shares outstanding: 48,127,369
- Basic (loss) earnings per share: $(0.50)
The P/E ratio is not applicable due to the negative earnings.
Price-to-Book (P/B) Ratio
As of September 30, 2024:
- Total equity: $268,678,000
- Shares outstanding: 48,127,369
- Book value per share: $5.58 (calculated as Total Equity / Shares Outstanding)
- Current stock price: $3.00
The P/B ratio is 0.54 (calculated as Stock Price / Book Value per Share), indicating that the stock may be undervalued relative to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
For the calculation of the EV/EBITDA ratio:
- Enterprise value (EV): $131,612,000 (calculated as Market Cap + Total Debt - Cash)
- EBITDA for the nine months ended September 30, 2024: $(119,388,000)
The EV/EBITDA ratio is not applicable due to negative EBITDA.
Stock Price Trends
The stock price of TUSK over the last 12 months has shown volatility:
- 12 months ago: $7.50
- Current price: $3.00
- Percentage decrease: 60%
Dividend Yield and Payout Ratios
Mammoth Energy does not currently pay a dividend. Therefore, the dividend yield and payout ratio are both 0%.
Analyst Consensus on Stock Valuation
As of the latest reports, the analyst consensus on TUSK is:
- Buy: 1
- Hold: 3
- Sell: 1
| Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 0.54 |
| EV/EBITDA Ratio | N/A |
| Current Stock Price | $3.00 |
| Book Value per Share | $5.58 |
| 12-Month Stock Price Change | -60% |
| Dividend Yield | 0% |
| Analyst Consensus (Buy/Hold/Sell) | 1/3/1 |
Key Risks Facing Mammoth Energy Services, Inc. (TUSK)
Key Risks Facing Mammoth Energy Services, Inc.
Understanding the risk factors impacting financial health is crucial for investors. Below, we break down the internal and external risks that Mammoth Energy Services, Inc. faces as of 2024.
Industry Competition
The energy services sector is highly competitive, with numerous players vying for market share. As of September 30, 2024, the company reported a 48% decline in total revenue, down to $134.7 million from $256.7 million in the same period of the prior year, largely due to reduced demand for well completion services.
Regulatory Changes
Changes in regulations can significantly impact operational costs and service demand. The ongoing scrutiny of the energy sector and potential regulatory adjustments could lead to increased compliance costs or operational limitations. The company has received $150 million and $18.4 million in installment payments from PREPA as part of a settlement agreement.
Market Conditions
Volatility in commodity prices, particularly crude oil and natural gas, affects the company's service demand. The average sales price per ton of sand sold decreased by 23% from $30.44 to $23.32 during the nine months ended September 30, 2024.
Operational Risks
Operational risks include reliance on specific service lines, such as well completion services, which saw a 82% drop in revenue, falling to $20.5 million from $115.2 million year-over-year. The company reported an operating loss of $119.4 million for the nine months ended September 30, 2024.
Financial Risks
Financial risks involve interest rate fluctuations and customer credit risk. As of September 30, 2024, the company had $4.2 million in cash and cash equivalents, with a term loan outstanding of $50.9 million at an interest rate of 12.9%. A 1% change in interest rates could affect interest expenses by approximately $0.5 million annually.
Strategic Risks
Strategic risks include potential challenges in executing acquisition strategies and capital expenditure plans. The company has planned capital expenditures totaling $10 million for the well completions segment in 2024. Additionally, the company has temporarily shut down several oilfield service offerings in response to market conditions.
Mitigation Strategies
The company has implemented several strategies to mitigate risks, including diversifying service offerings and maintaining a strong cash position. As of September 30, 2024, unrestricted cash was reported at $86.2 million. The management continues to monitor market conditions closely to adjust operations accordingly.
| Risk Factor | Details | Impact |
|---|---|---|
| Industry Competition | High number of competitors | 48% revenue decline |
| Regulatory Changes | Potential for increased compliance costs | Impact on operational costs |
| Market Conditions | Volatility in commodity prices | 23% decrease in sales price per ton |
| Operational Risks | Reliance on specific services | 82% drop in well completion revenue |
| Financial Risks | Interest rate fluctuations | Potential $0.5 million impact from 1% rate change |
| Strategic Risks | Challenges in executing acquisitions | Capital expenditure constraints |
| Mitigation Strategies | Diversification and strong cash position | $86.2 million in cash |
Future Growth Prospects for Mammoth Energy Services, Inc. (TUSK)
Future Growth Prospects for Mammoth Energy Services, Inc.
Key Growth Drivers:
- Product Innovations: The company is focusing on enhancing its service offerings, particularly in its infrastructure services segment, which generated $82.5 million in revenue for the nine months ended September 30, 2024, slightly down from $83.3 million in the same period of 2023.
- Market Expansions: The company plans to explore opportunities in the renewable energy sector, diversifying its service portfolio to capture emerging market demands.
- Acquisitions: Ongoing evaluations of acquisition opportunities, particularly in sectors aligned with its core competencies, are expected to bolster growth.
Future Revenue Growth Projections and Earnings Estimates:
For the nine months ended September 30, 2024, total revenue decreased by 48% to $134.7 million from $256.7 million in 2023. This decline was primarily driven by decreases in well completion services and natural sand proppant services. Revenue projections for 2025 will depend heavily on market recovery and service utilization rates.
| Revenue Breakdown (in thousands) | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Well Completion Services | $20,549 | $115,210 |
| Infrastructure Services | $82,514 | $83,308 |
| Natural Sand Proppant Services | $13,908 | $34,643 |
| Drilling Services | $2,804 | $6,501 |
| Other Services | $15,288 | $19,191 |
| Total Revenue | $134,732 | $256,710 |
Strategic Initiatives or Partnerships:
The company has received significant cash inflows from its settlement agreement with PREPA, including $150 million paid on October 1, 2024, and an additional $18.4 million on October 18, 2024. This capital will be utilized for reinvestment into core operations and potential expansion initiatives.
Competitive Advantages for Growth:
- Established Market Presence: The company has a robust operational footprint, particularly in infrastructure services, which has shown resilience despite market fluctuations.
- Financial Flexibility: With unrestricted cash on hand of $86.2 million as of October 30, 2024, and no outstanding borrowings under its new revolving credit facility, the company is well-positioned to capitalize on growth opportunities.
- Experienced Management Team: The leadership's experience in navigating market downturns and identifying strategic growth opportunities adds to the company's competitive positioning.
Overall, while the company faces challenges, its strategic initiatives and market positioning provide a framework for potential growth in the coming years.
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Article updated on 8 Nov 2024
Resources:
- Mammoth Energy Services, Inc. (TUSK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Mammoth Energy Services, Inc. (TUSK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Mammoth Energy Services, Inc. (TUSK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.