New York and Boston Marketing January 23-24, 2019

Transcription

1 New York and Boston Marketing January 23-24, 2019

2 Forward Looking and Cautionary Statements Forward-Looking Statements The information in this investor presentation of Mammoth Energy Services, Inc. ( Mammoth or Mammoth Energy ) includes forward-looking statements. All statements, other than statements of historical facts that address activities, events or developments that Mammoth expects, believes or anticipates will or may occur in the future are forward-looking statements. The words anticipate, believe, ensure, expect, if, intend, plan, estimate, project, forecasts, predict, outlook, aim, will, could, should, potential, would, may, probable, likely and similar expressions, and the negative thereof, are intended to identify forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this investor presentation may include statements, estimates and projections regarding Mammoth s business outlook and plans, future financial position, liquidity and capital resources, operations, performance, including under utility infrastructure restoration and reconstruction contracts of its wholly owned subsidiary Cobra Acquisitions LLC in Puerto Rico, acquisitions, returns, capital expenditure budgets, costs and other guidance regarding future developments. Forwardlooking statements are not assurances of future performance. These forward-looking statements are based on management s current expectations and beliefs, forecasts for Mammoth s existing operations, experience and perception of historical trends, current conditions, anticipated future developments and their effect on Mammoth, and other factors believed to be appropriate. Although management believes that the expectations and assumptions reflected in these forward-looking statements are reasonable as and when made, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all). Moreover, these forward-looking statements are subject to significant risks and uncertainties, including those described in Mammoth s Annual Report on Form 10-K, Quarterly Reports on Form 10 Q, Current Reports on Form 8 K and other filings Mammoth makes with the Securities and Exchange Commission ( SEC ), which may cause actual results to differ materially from its historical experience and present expectations or projections which are implied or expressed by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the failure to receive or delays in receiving governmental authorizations, approvals and/or payments; risks relating to economic conditions; delays in or failure of delivery of current or future orders of specialized equipment; the loss of or interruption in operations of one or more key suppliers or customers; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of our capital resources and liquidity; weather; natural disasters; litigation; competition in the oil and natural gas and infrastructure industries; and costs and availability of resources. Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this presentation. Except as otherwise required by applicable law, we disclaim any duty to update and do not intend to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this presentation. This presentation includes financial measures that are not presented in accordance with generally accepted accounting principles ( GAAP ), including Adjusted EBITDA. While management believes such measures are useful for investors, they should not be used as a replacement for financial measures that are in accordance with GAAP. Please see the Appendix and our filings with the SEC for reconciliations of those measures to comparable GAAP measures. Industry and Market Data This presentation has been prepared by Mammoth and includes market data and other statistical information from third-party sources, including independent industry publications, government publications or other published independent sources. Although Mammoth believes these third-party sources are reliable as of their respective dates, Mammoth has not independently verified the accuracy or completeness of this information. Some data are also based on the Mammoth s good faith estimates, which are derived from its review of internal sources as well as the third-party sources described above. 1

3 Mammoth A History Mammoth has created an entrepreneurial culture where management teams of our operating subsidiaries can flourish Strong foundation in place providing a platform by which to grow through organic expansion or acquisitions Management teams compete for growth capital Dec 18 Oct 07 Nov 10 Sep 11 Energy Services Coil Tubing Jun 14 Aug 13 Dec 12 Nov 12 May 12 Mar 12 Oct 11 April 17 May 17 June 17 May 18 June 18 Energy Services and Cementing 2

4 Business Model Mammoth management has been successful at identifying growth opportunities Business lines are run independently but leverage synergies and customer relationships Management teams are the key to successful business lines Utilize cash flows to grow once management team is in place and integrated into culture Evaluated ~140 opportunities per year over the past couple of years Hold Management Accountable Use Cash Flow to Grow Identify Opportunities Integrate into Culture Purchase at Discount 3

5 Corporate Strategy ENTREPRENEURIAL CULTURE INVEST IN ATTRACTIVE OPPORTUNITIES GROWTH: QUALITY OVER QUANITITY EXECUTION IS CRITICAL 4

6 Focused on Returns Deploy capital to the highest returning projects Keep costs low Leverage corporate synergies Cross sell services through established customer relationships Search for well managed companies that are capital constrained Invest in industries that have positive outlook After Tax ROIC (TTM) 37% 28% 21% 12% Q Q Q

7 Two Primary Business Lines Infrastructure Services Oil Field Services Fully capable infrastructure construction services including the following: Bare-hand live line up to 345KV Substation and switchyard services Overhead distribution up to 34.5KV Overhead (OH) and underground residential distribution (URD) tickets Aviation services (FAA 133, 135, 137) Presence primarily in the Northeast, Midwest and Southwest portions of the U.S Contracts in place to help restore and reconstruct the electric utility infrastructure in Puerto Rico Fully integrated oil field services model incorporating the following services: Hydraulic fracturing 6 High pressure fleets ~292,000 hhp Northern white frac sand Mmtpa of sand processing capabilities with production costs of $11-$12/ton Fully integrated cementing and acidizing offerings Sand hauling trucks capable of moving conventional pneumatic trailers as well as many of the box systems in use today Crude hauling business active in several major basins Cementing and acidizing Water transfer Full suite of rental equipment Drilling rigs and directional drilling services Flowback and coil offerings 6

8 Mammoth Metamorphosis Past (pre-2017) Present Future Pure Oilfield Service Pressure pumping Natural proppant Sand transportation Drilling rigs and directional drilling Flowback and coil offerings Evaluated 135 individual deals in 2017, closed 6 Evaluated 146 individual deals in 2018, closed 3 M&A focus has shifted to industrial sectors Energy Service Infrastructure Construction Transmission construction Substation construction Distribution construction Helicopter operations Logistics Oilfield Service Pressure pumping Natural proppant Sand and crude transportation Cementing and acidizing Water transfer Drilling rigs and directional drilling Flowback and coil offerings Industrial Company Infrastructure Construction Transmission construction Substation construction Distribution construction Helicopter operations Logistics Industrial Industries Exploring full service transportation Exploring Telecommunications Exploring manufacturing Oilfield Service Pressure pumping Natural proppant Sand and crude transportation Cementing and acidizing Water transfer Drilling rigs and directional drilling Flowback and coil offerings 7

9 TUSK Well Positioned vs Peers EV / 2019 EBITDA (Consensus Estimates) (1)(2) 9.9x Compelling value opportunity versus peers Trading at discount to peer group despite superior balance sheet and service diversification 2.9x 5.3x 5.8x 6.6x 7.1x Market capitalization (1) of ~$1 billion, enterprise value of ~$1 billion, based on zero debt and ~$20 million of cash on 9/30/2018 Broad based earnings growth potential Reflected in integrated portfolio ~62% of revenue in 3Q 2018 generated from Infrastructure segment Mammoth Pressure Pumping Peers Land Driller Peers Transmission and Distribution Revenue by Segment in 3Q 2018 Proppant Peers Oil Field Services 38% Large Cap Peers Infrastructure 62% 8 Source: Factset (1) Based on 1/19/2019 closing price (2) Large Cap (SLB, HAL, BHGE, WFT); Proppant (SLCA, FMSA, HCLP, SND, EMES); Land Drillers (NBR, HP, PDS, PES, ICD); Pressure Pumping (BAS, FRAC, LBRT, FTSI, PUMP, RES, CFW TSX, TCW-TSX); Transmission and Distribution (EME, DY, MTZ, MYRG, PWR)

10 2018 Capex Budget 2018 Major Projects Organically growing the continental U.S. infrastructure business, ultimately dependent on contract coverage Upgrade of sand processing capabilities, growing total sand capacity to 4.4 Mmtpa Expand rental division into the Mid-Continent Expand crude transportation fleet Anticipate free cash flow for the balance of 2018, which may be used for further expansion opportunities, including potential acquisitions $98 Infrastructure Pressure Pumping $21 Natural Sand Other $25 $47 Capex spend of ~$150 million during the first nine months of the year, in-line with forecasts, the majority of which was related to the expansion of our infrastructure segment, rental fleet, crude transportation and sand facilities Drilling $14 ~$205 million 9

11 Infrastructure Services Fully capable infrastructure construction services including the following: Bare-hand live line up to 345KV Substation and switchyard services Overhead distribution up to 34.5KV Overhead (OH) and underground residential distribution (URD) tickets Aviation services FAA 133, 135 and 137 certifications Fleet of six light lift aircraft Presence primarily in the Northeast, Midwest and Southwest portions of the U.S Contract in place to help restore and reconstruct the electric utility infrastructure in Puerto Rico High Quality Customer Base Current backlog of $1.2 billion (1) 10 (1) Backlog as of September 30, 2018

12 Oil Field Services Fully integrated Oil Field service offering Six high pressure pumping fleets (~50,000 Hhp each) Completed 1,594 high pressure stages during 3Q 2018 Two high quality Northern White sand mines Total processing capacity of 4.4 Mmtpa Best in class cost structure ($10-$12/Ton) Full service trucking Sand Crude General Cargo Full suite of rental equipment Cementing and acidizing Water transfer 12 Drilling rigs (all in Permian) Directional drilling Five coil tubing spreads Frac stack and flowback services High Quality Customer Base 11

13 3Q 2018 Financial Performance Highlights 3Q18 revenues of ~$384 million, net income of ~$70 million and adjusted EBITDA of ~$184 million (1) 3Q18 adjusted EBITDA margins were 48% 62% of revenue from Infrastructure Segment Growth capex of ~$41 million Infrastructure backlog of $1.2 billion as of September 30, 2018 Completed 1,594 high pressure stages during 3Q18 Sold ~600,000 tons of sand during 3Q18; Average sales price of $37.88/ton $384 Revenue Adjusted EBITDA $184 $149 $28 3Q17 3Q18 Operating Margin -1% 18% +19% After-Tax ROIC (TTM) -1% 37% +38% Pre-Tax ROCE (TTM) 0% 66% +66% (1) See reconciliation of Adjusted EBITDA to comparable GAAP measure at the end of this presentation and in our filings with the SEC 12

14 Adjusted EBITDA Reconciliation Reconciliation of Adjusted EBITDA to net income (000 s) Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Net Income (Loss) $69,512 ($801) Depreciation, Depletion, Accretion and Amortization Expense $32,015 $27,224 Impairment of Long Lived Assets $4, Acquisition Related Costs $99 $264 Public Offering Costs $ Stock Based Compensation $1,415 $1,028 Interest Expense $458 $1,420 Other Expense, net $400 $320 (Benefit) Provision for Income Taxes $74,835 ($1,413) Adjusted EBITDA $183,576 $28,042 Adjusted EBITDA is a supplemental non-gaap financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDA as net income (loss) before depreciation, depletion, accretion and amortization expense, impairment of long lived assets, acquisition related costs, public offering costs, stock based compensation, interest expense, other expense, net, and (benefit) provision for income taxes. We exclude the items listed above from net income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (loss) or cash flows from operating activities as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company s financial performance, such as a company s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Our computations of Adjusted EBITDA may not be comparable to other similarly titled measure of other companies. We believe that Adjusted EBITDA is a widely followed measure of operating performance and may also be used by investors to measure our ability to meet debt service requirements. 13

15 Company Headquarters Caliber Drive, Suite 300 Oklahoma City, OK