Mammoth Energy Services, Inc. Aktie

Greetings, and welcome to the Mammoth Energy Services First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Mohammed Topiwala with Vizara Investor Relations. Thank you. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for Mammoth's First Quarter 2026 Earnings Conference Call. Joining us on the call today are Mark Layton, Chief Financial Officer; and Bernie Lancaster, Chief Operating Officer. We will start today with our prepared remarks and then open it up for questions. I want to remind everyone that some of today's comments include forward-looking statements. These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein.

Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward-looking statements. Our comments today also include non-GAAP financial measures. The underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our first quarter earnings press release, which can be found on our website. As a reminder, today's call is being webcast, and a recorded version will be available on the Investor Relations section of Mammoth's website following the conclusion of this call. With that, I'll turn the call over to Mark.

Thank you, Mohammed, and good morning, everyone. I'll cover first quarter results and the key themes driving the quarter's performance, then turn it over to Bernie Lancaster, our Chief Operating Officer, to walk through operational performance by segment. I'll then come back to cover the financials, capital allocation and our updated outlook for 2026, after which we'll open the line for questions. The first quarter of 2026 represents a clear inflection point for Mammoth. When we last spoke in March, we were direct about where the fourth quarter fell short.

The demand was there, but our execution and cost control did not meet our expectations, and we owned that. We took targeted action and the first quarter is early proof that those actions are working. Revenue was $22 million, up 90% year-over-year and 133% sequentially. Adjusted EBITDA was positive $1.9 million, our first positive EBITDA quarter in 8 quarters. The momentum we are seeing across the platform is strong enough that we are now raising our 2026 guidance on both revenue and EBITDA. I'll walk through the specifics later in the call.

During the first quarter and for the first time since our share repurchase program was authorized in August 2023, we began returning capital directly to shareholders, a reflection of our confidence in where this business is headed. Stepping back, the pivot we've spent the last several quarters executing, simplifying the portfolio, redeploying capital into higher return businesses and rebuilding the cost structure to match the size and shape of the company we are today is now showing up in the numbers. There is more work ahead, and I'll be specific about where later in the call.

As reflected in the first quarter results, we are seeing early measurable proof points across multiple parts of the business that the strategy is working. Starting with revenue. Growth was led by our Rental segment, particularly aviation, where we benefited from a full quarter of utilization on assets deployed throughout 2025. In addition to the improved utilization, during the quarter, we sold an aviation APU that we had purchased only 2 quarters earlier in the third quarter of 2025, generating a gross IRR of approximately 20%. We then redeployed the proceeds into another aviation asset where we see a strong return profile.

As we said on our last call, there are assets on our balance sheet that carry value not reflected in where the stock trades. This transaction is a real-time data point on exactly that, and it reinforces the capital allocation philosophy we've articulated since we entered this business. Beyond rentals, we saw improvement across several other segments. Drilling revenue increased over 180% sequentially. Sand revenue increased over 129% sequentially and Accommodations delivered another strong quarter with revenue up 25% sequentially.

The improvement in profitability was driven by a combination of higher revenue fall-through, particularly in rentals and accommodations, along with continued discipline on the cost structure with SG&A of $3.6 million, a 38% (sic) [ 37% ] decrease sequentially. Putting SG&A into longer perspective, we have taken our SG&A run rate from approximately $25 million in 2024 to $20 million in 2025, and we now have line of sight to an annual run rate of approximately $11 million to $12 million as the work on structural cost continues to take hold.

Cost trajectory is the result of deliberate work, sharing services more efficiently across the platform and maintaining strict discipline on spend. In accommodations specifically, we generated gross margins of approximately 40%, the highest level in the past 5 quarters, reflecting both improved utilization and the operating leverage that comes with it. While we are encouraged by the progress, there are still areas where we see meaningful opportunities for improvement. In drilling, revenue improved significantly versus the fourth quarter. However, margins were pressured by higher operating costs, with a portion of these being front-loaded in nature, particularly on the maintenance side.

As context, drilling delivered the highest gross margin in the segment's history in the third quarter of 2025 before timing-related items affected the fourth. First quarter saw activity rebound on that base. With utilization building, costs normalizing and planned capital deployment improving our operating efficiency, we expect margins to expand through the year and the segment to reach EBITDA positive in 2026. In Sand, while volumes and revenue improved meaningfully, margins remained below our expectations. This business is leveraged to activity in the Montney, and we expect performance to track with that market.

Our internal focus continues to be on operational efficiency and pricing capture as activity increases. In infrastructure, demand, particularly for fiber remains intact. The new leadership team we put in place is making progress. And as the operational changes take hold, we expect financial performance to improve. This is our smallest segment today, but one where we see meaningful long-term potential. What we are starting to see now are real proof points that the transformation strategy is working, a more focused portfolio, improving utilization, better capital allocation and a cost structure aligned with the current scale of the business. With that, I'll turn it over to Bernie to walk through the operational performance in more detail.

Thanks, Mark, and good morning, everyone. When we spoke in March, I told you Q4 was a mixed quarter, pockets of real strength, but execution and cost control that did not meet our standard. We own that, and we laid out the specific actions underway, top-down management changes in the fiber business, tightened project oversight and a more strategic approach to customer and fleet mix in non-aviation rentals.

The first quarter results provide early evidence that those actions are working across most of the platform. We have seen clear improvement in our operational trajectory and the demand backdrop we outlined last quarter has held up. Let me walk through it segment by segment. Starting with rentals. This segment continues to be the primary driver of growth for the company. In equipment rentals, we had an average of 389 pieces of equipment on rent during the quarter compared to 328 in the fourth quarter of '25 and 231 in the first quarter of 2025.

The customer and fleet mix work we discussed on the Q4 call is starting to flow through and the demand across our gas-weighted basins remains strong. In Aviation, we ended the quarter with 27 assets in the fleet, of which 21 were generating revenue. Utilization continues to trend positively, and we expect further improvement as we place additional assets on lease over the coming quarters, subject to maintenance schedules and customer delivery timing. I would again like to reiterate that there is still meaningful runway here. In accommodations, we saw another strong quarter. Nights on rent in Q1 were 24,778 compared to 21,384 in Q4 and 16,108 in Q1 of 2025.

That reflects continued strength in customer activity and improved occupancy, which combined with operating leverage drove the 40% margin. As Mark referenced earlier, this was the strongest result this segment has delivered in 5 quarters. This team has consistently performed at an exceptional level quarter after quarter, and they deserve significant recognition for their unwavering execution. In drilling, activity increased meaningfully compared to Q4 and Q1 of 2025. This represents a significant advancement in the right direction, maintaining momentum as we anticipate ongoing growth in activity throughout the year.

Sand showed significant top line improvement with revenue up 129% sequentially from Q4 2025. We sold approximately 156,000 tons at an average price of $19.49 per ton. Volumes are clearly recovering off the Q4 low, and we are also making progress on the railcar lease optimization we flagged on the Q4 call. As Mark said, pricing remains competitive and margin improvement is paramount. But operationally, we are headed in the right direction. Sand is leveraged to activity in the Montney. And while the market has shown improvement, we have more work to do on our margin conversion. That remains a priority.

Finally, in infrastructure, activity levels remain modest with a revenue of approximately $0.3 million in the quarter. The new leadership team in fiber is making the changes we said they would, tighter project oversight, better cost discipline and a more selective approach to the projects we take on. The operational foundation is continuing to improve and with the capital investment we made during the first quarter into our fiber optic fleet, we expect to be better positioned to pursue and execute on the work that is in front of us as meaningful demand continues to build. Overall, we are seeing improving activity levels across multiple segments and the operational issues we flagged on the Q4 call are tracking in the right direction with the first quarter starting to show the impact of the changes we have been making. With that, I'll turn it back over to Mark.

Thanks, Bernie. Let me walk through our segment results for the first quarter of 2026, and then I'll cover the consolidated results, balance sheet, capital allocation and our outlook. Rental segment revenue was $13 million, up approximately 294% sequentially and up 584% year-over-year, mainly driven by a full quarter of contribution from the aviation assets we deployed throughout 2025, the $6.5 million sale of an aviation APU that was not on lease, along with continued strength in non-aviation rentals.

Segment profitability improved meaningfully on the back of higher revenue fall-through and the customer and fleet mix actions Bernie referenced. Accommodations segment revenue was $3.5 million, up approximately 25% sequentially and up 67% year-over-year, reflecting higher occupancy and continued cost discipline. Gross margins of approximately 40% were the highest in 5 quarters, driven by both utilization and operating leverage. Drilling segment revenue was $1.4 million, up 180% sequentially and 600% year-over-year as utilization stepped up 20% from low single digits in the fourth quarter and first quarter of 2025.

Margins were pressured by higher operating costs in the quarter, but with activity continuing to build, we continue to expect drilling to move toward positive EBITDA during 2026. Sand segment revenue was $3.9 million, up 129% sequentially, reflecting a meaningful step-up in volumes off the Q4 low watermark, partially offset by a year-over-year decline in average sales price as a result of an increased proportion of coarse grade sand. Segment margins remain below our expectations and operational efficiency and railcar fleet rationalization remain the focus areas.

Infrastructure segment revenue was $0.3 million, reflecting the operational reset underway in our fiber business. We expect an EBITDA overhang throughout the first half of 2026, consistent with what we communicated last quarter. Importantly, during the quarter, we made our first meaningful capital investment in this segment as we invested $1.9 million into our fiber optic fleet. Demand backdrop for fiber is compelling, and this investment is about ensuring we have the capacity and equipment to execute on that opportunity as it develops in the back half of the year and into 2027.

Turning to our consolidated results. The first quarter of 2026 total revenue was $22 million compared to $9.5 million in the fourth quarter of 2025 and $11.6 million in the first quarter of 2025, an increase of 133% sequentially and 90% year-over-year. Net income from continuing operations was $4.7 million or $0.10 per diluted share compared to a net loss of $12.3 million or $0.26 per diluted share in the fourth quarter of 2025 and a net loss of $2.2 million or $0.05 per diluted share in the first quarter of 2025, significant improvement from prior periods.

Adjusted EBITDA from continuing operations was $1.9 million compared to a loss of $6.8 million in the fourth quarter of 2025 and a loss of $2.3 million in the first quarter of 2025. As I mentioned at the outset, this is the first positive EBITDA quarter since Q1 of 2024, 2 years ago and prior to the strategic transactions that took place during 2025. The first quarter results were driven by the fall-through from higher rental and accommodations revenues, disciplined cost management and favorable insurance adjustments of $1.6 million. SG&A expense was $3.6 million in the first quarter of 2026 compared to $5.7 million in the fourth quarter of 2025 and $4.1 million in the first quarter of 2025. We continue to target an annual SG&A run rate of approximately $11 million to $12 million as the work on structural cost takes hold.

Turning to balance sheet and liquidity. Mammoth remains debt-free with a strong balance sheet position. We ended the quarter with unrestricted cash, cash equivalents and marketable securities of $125.1 million. Capital expenditures in the first quarter were $11.7 million with $9.3 million of that going into rentals. The majority of the rentals CapEx went into aviation assets as we acquired 2 APUs during the quarter for $6.6 million. In addition, $1.9 million went into the infrastructure services segment for our fiber optic fleet and $0.4 million of maintenance CapEx in our Sand and Accommodation segments.

Subsequent to quarter end, we have deployed an additional $25.7 million for aviation assets to acquire 6 engines. We expect 4 of the 6 to go on lease during the second quarter. With these additions, we now have just over $90 million deployed in our aviation portfolio. As I mentioned earlier, we also monetized an aviation APU at a 20% gross IRR after a roughly 2-quarter hold and recycled that capital into another aviation asset where we see a stronger return profile. This is the philosophy we've articulated surrounding our portfolio of businesses and assets. Every asset has to earn its place in the portfolio, and we will be a buyer or seller depending on where the returns are.

During the quarter, we also began deploying capital under our share repurchase program for the first time since the Board authorized it in August of 2023. We repurchased approximately 187,000 shares for $400,000 at an average price of $2.14 per share. The dollar amount is modest relative to our liquidity, and that is intentional, but the signal is not. To frame what we see, we ended the quarter with $125 million in cash and marketable securities and a debt-free balance sheet. We delivered our first positive adjusted EBITDA quarter in 2 years. We are raising guidance as I'll cover in a moment.

In our view, the equity is currently trading at levels that ascribe little to no value to our cash position or to the underlying quality of the asset base behind it. We have meaningful capacity remaining under the repurchase authorization, which permits repurchases of up to the lesser of $55 million or 10 million shares. We will continue to be opportunistic with that capacity, particularly at levels where, in our view, the market is not reflecting the underlying value of the business.

Turning to our outlook for 2026. Based on the operational performance we delivered in the first quarter and the momentum building across the platform, we are updating our 2026 guidance on 2 dimensions. First, and most importantly, we now expect Mammoth to be adjusted EBITDA positive for the full year of 2026. This is a full year ahead of the time line we previously communicated. The pull forward is being driven by stronger-than-expected performance in rentals, particularly aviation, combined with continued discipline on the cost structure and the early benefit of the operational fixes we put in motion last quarter.

Second, we now expect full year revenue growth of greater than 60%, up from our prior expectation of approximately 50% Again, primary driver is rentals, where utilization continues to build as we place additional assets on lease, supplemented by sequentially improving performance in drilling, sand and accommodations. To close, the first quarter of 2026 marks a clear inflection point for Mammoth. We delivered our first positive adjusted EBITDA quarter in 8 quarters. We accelerated our path to full year profitability by a full year. We began deploying capital under our share repurchase program for the first time since it was authorized, and we did all that with a debt-free balance sheet.

That said, there is more work ahead, particularly on margin improvement in sand and drilling and on scaling infrastructure, and we remain focused on executing against those objectives. Transformation strategy is working, and we are well positioned to build on this momentum through the balance of 2026. The job is to execute. We look forward to updating you next quarter. On behalf of the entire Mammoth team, thank you to our employees for their continued commitment and to our shareholders for their support. With that, operator, we'll open the line for questions.

[Operator Instructions] Ladies and gentlemen, there are no questions at this time. So I'll turn the floor to Mark Layton for closing remarks. Thank you.

Thank you again for joining us today. The first quarter of 2026 was the quarter where the strategy began to show up clearly in the numbers. positive EBITDA, strong revenue growth, disciplined capital allocation and continued progress cutting costs. We look forward to updating you next quarter.

Thank you. And that concludes today's call. All parties may disconnect. Have a good day.

Greetings, and welcome to the Mammoth Energy Services Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Mohammed Topiwala with Vasara Advisors Investor Relations. Thank you. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for Mammoth fourth quarter and full Year 2025 Earnings Conference Call. Joining us on the call today are Mark Layton, Chief Financial Officer; and Bernard Lancaster, Chief Operating Officer. We will start today with our prepared remarks and then open it up for questions. I want to remind everyone that some of today's comments include forward-looking statements.

These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein. Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward-looking statements. Our comments today also include non-GAAP financial measures. The underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our fourth quarter earnings press release. which can be found on our website. As a reminder, today's call is being webcast, and a recorded version will be available on the Investor Relations section of Mammoth's website following the conclusion of this call.

With that, I'll turn the call over to Mark.

Thank you, Mohammed, and good morning, everyone. I'll start with a brief review of 2025 as a whole, cover fourth quarter results and then turn it over to Bernie Lancaster, our Chief Operating Officer, to walk through operational performance by segment. I'll then come back to cover the financials and our outlook for 2026 and after which we'll open the line for questions.

With that, let me start with 2025. Over the course of the year, we executed 4 major transactions that meaningfully reshape the company. Collectively, these transactions generated approximately $150 million of proceeds, and they reflect 2 things: first, the value embedded in assets we've built and operated well and second, our willingness to monetize businesses that no longer fit our long-term return objectives.

We sold our transmission and distribution and our engineering businesses at valuations we believe were attractive. Those were good businesses and the prices we achieved reflect that. We think those outcomes are a direct signal of the value that exists inside this company, value that, in our view, is not reflected in where the stock currently grades. We also exited 2 businesses that were not meeting our return standards. First, we sold our pressure pumping equipment, which lacked scale, was capital intensive and increasingly challenged from a cycle and return standpoint.

Second, we divested the sand mine that had become a drag on performance and didn't warrant continued investment based on logistical challenges with that particular mine and processing plant. Those were the right exits. And we are a leaner, more focused company because of them. At the same time, 2025 was the year we initiated a meaningful expansion of our platform in aviation rentals. We deployed more than $65 million of capital with the goal of creating a more stable recurring revenue stream with strong cash flow characteristics.

Aviation started the year with limited scale and it ended the year with real operating scale and a clear path to becoming a core earnings contributor as utilization ramps. But simply, 2025 was a deliberate pivot exit assets without a clear path to sustainable returns and redeploy capital into areas where we see a better return profile.

Now turning to the fourth quarter. Revenue was $9.5 million compared to $10.9 million in the third quarter of 2025 and $10 million in the fourth quarter of 2024, a year-over-year decline of approximately 6%. For the full year, revenue was $44.3 million versus $45.6 million in 2024, down approximately 3%, which we view as a reasonable outcome given the amount of portfolio change we executed throughout the year.

Within the quarter, there were areas that performed well. Rentals, infrastructure and accommodations all came in ahead of our internal revenue expectations. Aviation revenue continued its upward trajectory relative to continued deployment of aviation assets on lease. Infrastructure showed solid demand across grid and broadband-related project work. Accommodations continue to improve on both occupancy and cost efficiency. I want to be direct about where we fell short. EBITDA in Q4 was below our expectations and below our standard. This was not a demand problem. It was an execution and cost control issue and we own it. We've already started taking action. In infrastructure, we made additional management changes within the fiber business to address the performance issues that surfaced during the quarter. Across the rest of the portfolio, we are making targeted investments to address cost structure and improve the conversion of revenue to EBITDA. Bernie will walk through the specifics by segment.

With that, I'll turn the call over to Bernie Lancaster.

Thanks, Mark. Q4 was a mixed quarter operationally with some pockets of real strength, which we will build upon in 2026. In our Rental segment, we continue to build on our aviation business with another full quarter of revenue contribution. We exited third quarter with approximately 15 aviation assets and added another 11 assets during the fourth quarter. A total of 16 of the 26 aviation assets were on lease at quarter end, and we expect the remaining assets to go on lease during the first half of 2026, subject to maintenance schedules and customer delivery timing.

There is still meaningful runway here. Non-aviation rentals showed good top line momentum. Assets on rent increased 15% sequentially to approximately 328 pieces. Profitability was pressured by higher equipment rental costs and insurance premiums. Our non-aviation rentals have lost some of the advantages previously realized from economies of scale. As a result, we have identified additional opportunities to be more strategic with our customer and fleet mix in an effort to reduce overall coverage requirements and expect to work through this process as we move into 2026.

Investing in the non-aviation rental business is a priority in 2026 as we see strong demand and a tightening equipment market. Turning to infrastructure. Revenue came in ahead of our expectations, which speaks to the demand environment across network [indiscernible] broadband expansion and data center-related work. EBITDA, however, was not acceptable. Execution challenges in our fiber operations drove significant cost overruns and margin compression. We've already active and made top-down management changes within the fiber business and tightened project oversight to improve accountability, schedule discipline and cost control.

These are meaningful changes, and our focus is on restoring consistent execution, so the business can convert demand into profitable growth in 2026. Accommodations revenue was up, driven by a 25% increase in occupancy. This segment has been improving quarter after quarter and the team deserves considerable credit for their consistent execution and excellent safety record. Sand and drilling were challenged in the quarter. In sand, pricing and volume pressure continue to significantly constrain the team's results. We are focused on positioning ourselves to obtain more consistent volumes while also reducing the lease expense burden from potable railcar fleet that are no longer needed.

In drilling, fourth quarter 2025 stepped down from a very strong third quarter performance as customer timing worked against our team. One of our priorities in 2026 is to invest back into our drilling business and improve performance through high-grading the asset base, where we see a clear path to better utilization and profitability. We believe that adding motor and MWD capacity to reduce rental expense and upgrading our power sections to improve customer marketability during the first half of the year will lead to material improvement in 2026.

Overall, revenue performance in the fourth quarter showed that demand is there in several parts of our portfolio, but our execution and cost management didn't meet our expectations. We're not making excuses we're making changes. And I'm confident the actions underway will drive a better trajectory in 2026. Thank you to our employees for their hard work through a demanding quarter.

With that, I'll hand it back to Mike.

Thanks, Bernie. Let me walk through our segment results for the fourth quarter of 2025, and then I'll cover consolidated results, balance sheet and our outlook. Rental segment revenue was $3.3 million, up 19% sequentially and 179% year-over-year mainly driven by the 23% sequential increase in aviation rentals in line with our commercial expectations.

Non-aviation rental revenue increased 18% during the quarter reflecting improved asset utilization. Our Rental segment based cost overruns driven by insurance costs and equipment rental expense due to equipment needed to support our operations and customer demand. Although stronger equipment utilization and favorable aviation rental mix helped offset some of these pressures, the sequential rise in operating costs reduced overall segment profitability.

Infrastructure segment revenue was $1.2 million, up 44% sequentially and 231% year-over-year. Profitability was impacted by fiber execution issues, as Bernie described. Management and oversight changes we have made are focused on ensuring revenue performance flows through to the bottom line going forward. While we expect that there will be an EBITDA overhang on this business through the first half of 2026, we are encouraged by the early steps taken by the new leadership team.

Accommodations revenue was $2.8 million, up 24% sequentially and up 19% year-over-year, reflecting higher occupancy. Sand segment revenue was $1.7 million, down 37% sequentially and down 67% year-over-year. Drilling segment revenue was $0.5 million, down 80% sequentially and down 38% year-over-year.

Turning to consolidated results. For the fourth quarter of 2025 total revenue was $9.5 million, down 13% sequentially and 6% year-over-year. For the full year 2025, total revenue was $44.3 million, compared to $45.6 million in 2024, a year-over-year decline of 3%. Net loss from continuing operations for the fourth quarter was $12.3 million or $0.26 per diluted share compared to $0.20 in the fourth quarter of 2024.

Adjusted EBITDA from continuing operations was a loss of $6.8 million in the fourth quarter of 2025 compared to a loss of $6 million in the prior year period. The underperformance relative to our plan was operationally driven and we are taking targeted actions across each segment to address it. In our sand and drilling segments, cost of services decreased at a significantly lower rate than activity levels resulting in margin compression driven by reduced utilization and lower fixed cost absorption during the winter slowdown typical in the oil and gas industry.

In the other segments, fully idled operations led to no revenue and only partial cost reductions, creating an unavoidable drag on profitability. SG&A expense during the quarter was $5.7 million, down from $6.9 million in fourth quarter of 2024, a reduction of approximately 17% year-over-year. On a fully normalized basis, excluding the bad debt expense related to PREPA in the second quarter of 2024, SG&A declined approximately 22%. We have more work to do on the cost structure as we continue to rightsize the company for the portfolio we have today, and that remains a priority heading into 2026.

Capital expenditures during the quarter were $25.9 million, nearly all directed toward aviation, 8 APUs, 2 engines and 1 small aircraft were acquired during the quarter to bolster capacity and support future contracted deployment. For the full year, Aviation accounted for the vast majority of our approximately $70 million in total 2025 CapEx, reflecting our conviction in the return profile and scalability of that platform, -- very little capital was allocated to drilling sand, accommodations or infrastructure during the year, and we expect that to change meaningfully in 2026 as we high-grade assets pursue equipment acquisitions that reduce costs and invest in the operational improvements needed to drive profitability across those segments.

At quarter end, we had $121.6 million of unrestricted cash, cash equivalents and marketable securities and total liquidity of approximately $158.3 million including our undrawn credit facility. Mammoth remains debt free. This gives us the flexibility to invest across the portfolio, pursue accretive opportunities and absorb near-term volatility without any balance sheet pressure. Subsequent to quarter end, we closed the sale of a property in Ohio that previously supported our pressure pumping operations, generating net proceeds of $4.6 million. The asset was no longer in use following our exit from that business and converting it to cash was the logical next step.

We flagged this because we think it is representative of a broader dynamic. There are assets on our balance sheet, some obvious and some less so that carry value not reflected in where the stock trades. We will continue to identify and monetize positions where we are not generating an adequate return, and we expect to surface additional value through that process over time. Entering 2026, we are constructive on the path ahead, being a path to greater than 50% revenue growth in 2026 versus 2025, primarily driven by 2 main things: full year of aviation contribution at higher utilization and improved asset utilization across our oil and gas exposed businesses.

To add some detail regarding our aviation portfolio. We nearly doubled the monthly revenue out of the portfolio from $0.6 million in December to $1 million in January. Once fully utilized, -- we believe this portfolio can generate monthly revenue of approximately $1.6 million per month. On capital allocation, -- we expect non-aviation CapEx of approximately $11 million in 2026, a mix of maintenance and targeted growth investments across our oil and gas and infrastructure segments. To be direct, we have underinvested in these businesses for several years, and that has been one of the contributors to the cost and performance issues. .

The investments are going into an existing asset base to address specific inefficiencies with identifiable paybacks. We expect the returns to be meaningful and relatively quick to materialize. On Aviation, CapEx will remain opportunistic. As we have demonstrated, we are disciplined on entry point, and we will continue to deploy capital there only where the economics are compelling. Taking all of this together, we expect 2026 to be a year of inflection for Mammoth. Revenue growth accelerating and positive EBITDA back within reach. We want to be clear on that last point. The current asset base operated better and supported by the right level of investment is capable of delivering positive EBITDA. From that foundation, our sites are set on mid-teens EBITDA margins and positive free cash flow as we move into 2027.

The path is clear, the work is to execute against it. The macro backdrop in both areas is favorable. Oil and gas demand fundamentals are solid, activity in our core basins is steady, and we see specific investment opportunities we are actively evaluating. In aviation, leasing demand in the regional market is holding up, and we have capacity coming available as the fleet continues to ramp. Revenue growth is only part of the equation. The priority in 2026 is ensuring that growth converts into EBITDA and cash flow, and we are working to improve operational execution, along with the deploying additional capital to help improve returns.

On behalf of the entire Mammoth team, thank you to our employees for their continued commitment and to our shareholders for their support. That concludes our prepared remarks. Operator, please open the line for questions.

[Operator Instructions] And ladies and gentlemen, there are no questions at this time. So I will now hand the floor to Mark Layton for closing remarks.

Thank you again for joining us on the call today. 2025 was a year of real change for this company, in the portfolio, in the asset base and in how we are positioned going forward. Q4 was a reminder that the work is not finished, and we take that seriously. Setup heading into 2026 is straightforward. The demand is there, aviation is ramping and the balance sheet gives us room to invest. The job is to execute. We look forward to updating you next quarter.

Thank you. And with that, we conclude today's call. All parties may disconnect. Have a good day.

Greetings, and welcome to the Mammoth Energy Services Third Quarter Earnings Conference Call.

[Operator Instructions]

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mohammed Topiwala, Investor Relations at Vizara Advisors. Thank you. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for Mammoth's Third Quarter 2025 Earnings Conference Call. Joining us on the call today are Mark Layton, Chief Financial Officer; and Bernie Lancaster, Chief Operating Officer. We will start today with our prepared remarks and then open it up for questions.

I want to remind everyone that some of today's comments include forward-looking statements. These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein. Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward-looking statements.

Our comments today also include non-GAAP financial measures. The underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our third quarter earnings press release, which can be found on our website. As a reminder, today's call is being webcast, and a recorded version will be available on the Investor Relations section of Mammoth's website following the conclusion of this call.

With that, I'll turn the call over to Mark.

Thank you, Mohammed, and good morning, everyone. Mammoth delivered another quarter of steady execution as we advance our transformation plan, simplifying the company and realigning the portfolio toward higher return businesses.

Our Drilling segment was a standout this quarter with revenue more than tripling sequentially and gross margin reaching the highest level in the segment's history. Activity was driven by increased horizontal drilling in the Permian Basin, which continues to demonstrate the value of concentrating capital in our strongest markets. This performance underscores the early benefits of our strategic realignment and highlights the opportunity for further growth as market condition stabilize.

For the third quarter, revenue was $14.8 million, down from the $16.4 million in the second quarter and $17.1 million a year ago, largely reflecting the divestiture of the Piranha assets and continued underperformance in the Sand segment. Net loss from continuing operations was $12.1 million or $0.25 per diluted share. While these results are not where we want them to be, they reinforce why we're taking decisive actions to fix structural issues, strengthen the portfolio and build a healthier business.

Importantly, the quarter also marked a step forward in cash generation. We delivered positive free cash flow from operations, which is inclusive of both continued and discontinued operations, supported by the monetization of underutilized assets. These results highlight the growing financial resilience of our reshaped portfolio and our focus on self-funding the transformation.

We remain committed to optimizing the portfolio, reducing structural drag and redeploying capital toward businesses capable of generating consistent, high-return performance through cycles. We continued repositioning the company this quarter with the sale of our Piranha assets in the Sand segment, transaction that pruned the portfolio by removing an underperforming business. At the same time, we invested selectively in new aviation assets within rentals, where we continue to see compelling returns.

Together, these actions reflect our broader effort to shift capital toward businesses that generate consistent cash flow and lower cyclicality. Taking a step back, over the past several quarters, we have executed a series of transactions that collectively unlock value and reposition the Mammoth for the next phase of growth. We monetized our mature infrastructure business at an attractive valuation, divested our hydraulic fracturing assets, redeployed capital into our aviation platform and streamlined corporate overhead.

Historically, Mammoth has been acquisitive. And while we continue to evaluate M&A opportunities, our approach is very selective with a sharp focus on entry economics, return on capital and strategic fit. Every decision is guided by our goal of building a company centered on sustainable returns rather than scale for its own sake.

Capital deployment during the quarter reflected that same discipline. We continue to invest prudently in our aviation fleet, building on the platform we established earlier this year. During the quarter, we purchased one additional aircraft engine and one auxiliary power unit for APU, expanding our aviation asset base and reinforcing our commitment to this high-return segment.

In total, 3 engines and 1 APU are currently staged for deployment as we finalize the right long-term contracts, ones that support better margins and strong conversion to free cash flow. Additionally, 2 of our 8 aircraft are currently off lease and undergoing minor upgrades. We expect both to be redeployed next quarter at higher lease rates, reflecting favorable market conditions and disciplined asset management. Market fundamentals across our end markets remain mixed but constructive.

In Energy Services, activity levels are steady and pricing has held firm in most basins. Infrastructure demand continues to benefit from grid hardening, broadband expansion and data center investment, while our aviation platform is positioned to capture sustained leasing demand in the regional passenger market. Together, these trends, combined with our leaner portfolio provide a solid backdrop for improvement in 2026.

Our approach remains deliberate. Every investment decision is return-based and every asset must earn its place in the portfolio. We will continue to deploy capital prudently, guided by where we see the highest risk-adjusted returns while maintaining the flexibility to capitalize on new opportunities as they arise.

In total, we have now deployed approximately $40 million year-to-date to grow and diversify our aviation portfolio. These investments have added meaningful scale, strengthened the recurring earnings profile of our Rental segment and are generating positive EBITDA from day 1. Aviation continues to compete effectively for capital within our portfolio and remains a core growth platform as we execute on our broader transformation.

Overall, we're making steady progress as we reposition Mammoth for sustainable returns. It won't be an overnight process, but the actions we're taking today, asset sales and disciplined reinvestment to portfolio optimization and improved cash generation are essential to building a stronger, more resilient Mammoth that can deliver sustainable value creation over the long term.

Before I hand it over, I want to thank our teams for their continued execution during a period of significant change. Their discipline, adaptability and commitment are what enable this transformation to take hold.

With that, I'll turn the call over to Bernie Lancaster.

Thanks, Mark. Operationally, our teams executed well across our businesses in what was a challenging quarter. While we were disappointed with the results in the Sand and Infrastructure segments, we have already taken actions to address structural inefficiencies and improve execution. Let me take a moment to review our operating performance by segment and highlight where we're seeing momentum build.

In Rentals, aviation delivered a full quarter of operations with strong customer demand and improving fleet availability as we continue to tighten operating efficiency to offset start-up issues. We're prioritizing long-term contracts and profitable deployment over volume for volume's sake. Non-aviation rentals remained somewhat steady with good equipment returns and minimal downtime.

In Infrastructure, our teams managed through schedule shifts and customer delays that impacted margin, but we executed safely and continue to work to secure several new engineering and fiber projects. This business remains a strategic part of Mammoth given its alignment with long-term grid, AI data center and broadband investment themes.

Our Sand operations faced another difficult quarter, driven by the divestiture of Piranha assets, nonrecurring costs associated with railcar returns and continued weather-related headwinds in Canada. The environment remains challenging, but we believe our remaining assets are in a more advantageous position to return capital over the medium to long term. We believe that focusing on internal cost efficiency, maintenance reliability and disciplined contract management will restore margins over time.

Our Accommodations segment had a very good quarter. Higher occupancy and improved cost efficiency led to margin expansion and solid EBITDA growth. Customer feedback remains strong, and our team continues to deliver excellent service and safety performance.

Finally, drilling was the standout performer this quarter. Our decision to focus on the Permian Basin and horizontal drilling activity is paying off. The team delivered record gross margins and continued to gain share in our target markets. We expect to build on this momentum in Q4 and into 2026 as activity and customer engagement remains strong in the areas where we operate. Taken together, these results demonstrate the resilience of our diversified portfolio with strength in drilling and accommodations helping offset weakness in Sand and Infrastructure during the third quarter.

Across the company, I want to thank our employees for their commitment and execution. We are steadily building a more efficient and resilient organization. With that, I'll hand it back to Mark for closing remarks.

Thanks, Bernie. While Q3 results highlight areas where we must improve, they also demonstrate the progress we're making to rebuild Mammoth on a stronger foundation. Our Drilling and Accommodation segments show that what disciplined execution can deliver even in a challenging market, and we're applying those lessons across the organization. These segment results reflect both the progress we've made and the work still ahead. Our continued discipline around the cost and capital remains central to restoring profitability.

Now turning to our financial performance by segment. I'll walk through key highlights for the quarter, beginning with rentals. Segment revenue was $2.8 million, down 11% sequentially, but up 24% year-over-year. Aviation performed well with a full quarter of revenue and solid customer demand. On average, during the third quarter of 2025, we had approximately 286 pieces of equipment rented out to customers compared to 296 pieces in the second quarter. The sequential decline primarily reflected timing of project completions in the Northeast.

We continue to be encouraged by the potential in this segment as more than 80% of our current rental activity is tied to gas-weighted basins. These markets stand to benefit from secular demand growth in natural gas-fired power generation, particularly as the AI-driven expansion of data center capacity increases electricity requirements across the grid. Utilization levels remain healthy, and we're focused on operational levers and pricing to further enhance margins.

In addition, seasonal weather trends could provide a tailwind for heating-related rental assets as we move through the winter months. The quarter also represented the first full quarter of revenue contribution from our aviation assets, which continue to perform well and generate stable returns.

Overall, we remain excited about the opportunity set within our rentals business as we enter 2026. Infrastructure segment revenue of $4.8 million declined 13% sequentially, primarily reflecting operational execution challenges on a few fiber projects that impacted both timing and margins. We've already taken corrective action, including management changes and tighter project oversight to ensure greater accountability and consistency going forward.

While the quarter was softer than we would have liked, we remain encouraged by the long-term opportunity in this business. The segment is well positioned to benefit from secular investment in grid modernization, broadband expansion and the build-out of AI-related data centers, all of which are driving sustained demand for electrical and fiber infrastructure capabilities. With changes to our structure and leadership, we're confident this segment will return to a stronger performance trajectory in 2026.

Our Sand segment revenue of $2.7 million was down 49% from Q2 and 44% year-over-year, reflecting the Piranha divestiture and weather-related disruptions in Canada. In addition, we incurred approximately $0.6 million in expenses during the quarter related to the return of railcars. We view Q3 as a reset point. With Piranha sold and improvements underway at Taylor Frac, we expect Sand to return to positive gross margin in 2026.

Accommodations revenue was $2.3 million and up 29% sequentially, while down 20% year-over-year. EBITDA rose to $0.5 million from $0.2 million in Q2 as strong operational execution and cost discipline are driving better performance from this segment. Drilling revenue of $2.3 million represented a 207% sequential increase and a 47% increase year-over-year, driven by improved utilization and higher activity.

Gross margin rose to 19%, the highest in this segment's history and EBITDA improved to $0.2 million from a loss in Q2. Importantly, the segment also generated positive free cash flow as a result of the positive EBITDA and no CapEx for the segment during the quarter. These results reflect improved operational efficiency. In the near term, we expect drilling to continue performing well as activity levels remain stable, and we execute on additional initiatives to further enhance profitability and cash conversion, including pricing. This performance validates our focus on the Permian and reinforces the value of concentrating capital in our core markets.

Turning to our consolidated results. Net loss from continuing operations for the third quarter was $12.1 million or a loss of $0.25 per diluted share compared to a loss of $8.9 million or $0.18 per diluted share for the third quarter of 2024. The net loss in the third quarter of 2025 included a noncash charge of $2.4 million related to Piranha.

Adjusted EBITDA from continuing operations, as defined and reconciled in our earnings release, was a loss of $4.4 million in the third quarter compared to a loss of $2.9 million in the prior year period. While headline profitability remains under pressure, we continue to take meaningful steps to improve the bottom line through a relentless focus on cost structure and efficiency.

Selling, general and administrative expenses were $5.2 million in the third quarter of 2025, reflecting a significant reduction from last year as we have streamlined operations and simplified the organization. Excluding bad debt expense, we have meaningfully lowered our SG&A run rate from approximately $35 million in 2024 to around $21 million exiting the third quarter, a reduction of roughly 40%.

Importantly, when adjusting for $1 million of Puerto Rico-related legal expenses incurred this quarter, our normalized SG&A run rate is effectively cut in half compared to last year. These results reflect the progress we've made to create a leaner, more efficient organization. We are executing against a detailed cost road map that focuses on consolidating support functions, improved shared service efficiency and maintaining strict discipline on discretionary spending. This structural reset is not just about reducing expenses. It's about building a stronger foundation for sustainable profitability and margin expansion as our portfolio continues to evolve.

At quarter end, we maintained a strong balance sheet with $110.9 million of unrestricted cash, cash equivalents and marketable securities and total liquidity of approximately $153.4 million, including our undrawn credit facility. Mammoth remains debt-free, providing the flexibility to fund operations and invest in opportunities that offer attractive returns.

Subsequent to quarter end, approximately $19.8 million of the $29.5 million in restricted cash related to the letter of credit for PREPA was released back to the company, meaningfully improving our effective liquidity position. This equates to roughly $0.41 per diluted share of incremental value, and we believe it's important to underscore that this cash is now available and no longer encumbered.

The market has historically discounted this balance, but with the release of these funds, our liquidity profile is even stronger than reflected at quarter end. Restricted cash stood at $29.5 million as of September 30. And with this subsequent release, we've effectively unlocked a significant portion of that value. Together, these actions highlight the underlying strength and flexibility of our balance sheet.

With over $170 million in total liquidity pro forma for the release, we are well positioned to fund our ongoing transformation, support organic investments and pursue strategic opportunities that align with our return and risk framework. Capital expenditures for the quarter totaled $17.3 million, primarily related to aviation and maintenance projects. We continue to expect full year 2025 CapEx to remain within our previously communicated range, weighted toward initiatives with clear payback and margin improvement potential.

Our disciplined approach to capital allocation, combined with a conservative balance sheet positions us well to navigate market volatility and pursue strategic growth as opportunities arise. Every business within Mammoth competes for capital, and we continue to evaluate opportunities that fit our return and risk criteria. Our priorities remain clear: enhance margins, improve asset returns and preserve balance sheet strength. We have the right assets, the right team and the financial flexibility to execute our plan.

Looking ahead, while Q4 will reflect continued portfolio transition, we expect improved cash generation and margin recovery in 2026 as our transformation initiatives take hold. The organization today is leaner, more focused and better aligned with the opportunities ahead of us.

On behalf of the leadership team, I want to thank our employees for their dedication and our shareholders for their continued support. We believe Mammoth is on the right path, and we're confident the steps we're taking today will translate into sustainable value creation in the years ahead. That concludes our prepared remarks.

Operator, please open the line for questions.

[Operator Instructions]

Our first questions come from the line of Colby Sasso with Daniel Energy Partners.

I just wanted to ask, can you speak on the visibility for sand volumes in 2026, ideally with some color on the basins you serve?

Sure. As we look at '26, our primary logistic advantage is into Western Canada, into the Montney and then into the Northeast, so into the Utica, Marcellus. As we look at '26 volumes, we certainly expect an increase compared to what we saw in Q3 that we framed as a low watermark or a reset. But the conversations that our sales team is having are encouraging as it relates to 2026.

That's all for me. I will turn it back.

Our next question come from the line of Doug Garber with Westport Alpha.

Hey Mark, how is that going?

Good, how are you Doug?

Wanted to just start on the balance sheet. Your cash and marketable securities is about $123 million as of 10/31. And I wanted to just confirm that does not include -- you still have, what, $10 million from escrow from the recent sale and another, call it, $5 million to $10 million from land rigs held for sale that are not included in that number that should be a cash inflow. Do I have that right? And are there other big other things that you're expecting to collect?

Yes. High level, there's about $5 million in held for sale that primarily relates to the drilling rig assets. And then you identified the $10 million that remains in escrow relative to the T&D transaction that occurred in April of this year that we expect to be released in April of '26 at the earliest.

And can you just remind us on the PREPA puts and takes, how much you still have, I think, a $20 million left in AR to collect and then you also have a tax liability. And if I have that in the $20-ish million net liability range between those 2 items, is that a fair way to think about it?

Yes. So as you look at the PREPA receivable, you're correct, that's $20 million that's due when PREPA exits bankruptcy. I think that date is undetermined at this particular point in time. And then the majority of the tax liability that sits on the balance sheet relates to Puerto Rico activities. And as you look at that, that's at the gross amount to reduce that to reflect the write-off, we'll take some negotiations with the tax department in Puerto Rico. So what you're seeing on the balance sheet is the gross tax amount nonreflective of the write-off that we took last year.

Okay. And I also wanted to dig into the Sand business. It's a decent drag on free cash flow here. Can you help me understand the path? How much of it was onetime for rail rental car returns of a drag? And what is your path to getting that business back to free cash flow neutral in '26 or even next quarter?

There are several levers. First, it comes down to sales and the sales dialogue is encouraging as it relates to '26. But as you pointed out, Q3 included some onetime charges associated with returning railcars of about $550,000. So while we incurred that cost during the quarter, it reduces our fixed cost profile on a go-forward basis and moves us a step closer towards rightsizing our railcar fleet.

How much did it reduce your cost? And what's your total railcar liability monthly?

Yes. So as we look at the total railcar monthly right now, it's about $120,000 a month. We reduced it by about $30,000 per month by returning this set of cars. I think the next set of cars that becomes available releases in February or March time frame of '26, and we'll continue to evaluate that fleet based on demand.

We've reduced our -- sorry, this is Bernie. We've reduced our fleet count this year about 30% trying to rightsize where we're at.

And is it a volume? Or where is the pricing on that stand? Are you still in the $20 per ton kind of FOB range?

We were a little below $20 during the quarter. Some of that related to offloading some 30-50 that allowed us to reposition some of the railcars that we were returning, but we continue to see demand and pricing in that $20 range for 40-70.

Thank you. This now concludes our question-and-answer session. I would now like to turn the floor back over to Mark Layton for any closing comments.

Thank you again for joining us on the call today. We continue to focus on positioning Mammoth for future growth and unlocking value. We will achieve this through operational excellence, efficiency and strategic capital deployment. This concludes our conference call, and we look forward to speaking to you all again next quarter.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may now disconnect your lines. Enjoy the rest of your day.

Greetings, and welcome to the Mammoth Energy Services Second Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Ken Dennard. Please go ahead.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Mammoth Energy Conference Call to review 2025 second quarter results. This call is also being webcast and can be accessed through the audio link on the Events & Presentations page of the Investor Relations section at mammothenergy.com. Information reported on this call speaks only as of today, August 8, 2025.

Please be advised that any time-sensitive information may no longer be accurate as of any subsequent date. I would also like to remind you that statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial performance are forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995.

We will be making forward-looking statements as part of today's call that, by their nature, are uncertain and outside the company's control. Actual results may differ materially. Please refer to the earnings press release that was issued today for our disclosure on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission.

Management may also refer to non-GAAP measures, including adjusted EBITDA. The definition of this non-GAAP measure and its reconciliation to the most directly comparable GAAP financial measures can be found at the end of our earnings release. Mammoth Energy assumes no obligation to publicly update or revise any forward-looking statements.

And now with that behind me, I'd like to turn the call over to Mammoth Energy's CFO, Mark Layton. Mark?

Thank you, Ken, and good morning, everyone. We appreciate you taking the time to join us on the call this morning. I'll start by providing an update on our business, the current market environment and our ongoing transformation before turning the call over to our Chief Operating Officer, Bernie Lancaster, to discuss our operations in greater detail. Then I'll return and provide our second quarter financial results and touch on our outlook before opening the call up for questions.

The second quarter marked the beginning of a new chapter for Mammoth. I'll go into more detail later, but revenue was $16.4 million in the second quarter, and the net loss for the quarter was $35.7 million. The net loss included a noncash impairment charge of $31.7 million. We executed several transactions during the quarter that meaningfully changed our portfolio of services and positioned us favorably for the future.

As we've mentioned in the past, we take great pride in our track record of successfully growing businesses organically within our enterprise and transacting at attractive multiples at great returns, which help us generate significant value for our shareholders. This quarter was no different. We had the opportunity to complete transactions that would unlock value, make the company more resilient and establish a launch pad for future growth, and we delivered. It's safe to say that our transformation is well underway. As part of this transformation, we are focused on driving returns through improved internal execution by prioritizing asset utilization, margin expansion and capital efficiency across the portfolio.

While macroeconomic uncertainty, including tariffs and demand volatility continue to affect parts of the market, we remain proactive in repositioning Mammoth to perform through cycles. In the second quarter, this included strategic divestitures that sharpened our portfolio focus alongside the accretive acquisition of leased aircraft assets that strengthened and diversified our rental services segment. We will continue to evaluate strategic opportunities both within our existing platform and in adjacent markets that can unlock value while preserving balance sheet strength.

Mammoth may act as a buyer or seller or both depending on market dynamics and where we see the most attractive returns. Second quarter was a great example of this as we completed 3 transactions, 1 as a buyer and 2 as a seller. As a buyer, we purchased 8 small passenger aircraft in early April for approximately $11.5 million. These aircraft added meaningful scale and further diversified Mammoth's rental services fleet. Also, each of these planes are under leases with a commuter airline. So this purchase was immediately accretive to our financial results.

In addition, we purchased 2 aircraft engines and 1 auxiliary power unit, or APU, during the second quarter. The APU is currently on lease, and we expect the 2 engines to be on lease beginning in the third quarter. A second APU was purchased at the beginning of the third quarter. In total, we have invested $25 million year-to-date to grow our aircraft portfolio. Our aviation investments this year have generated positive EBITDA from day 1, and we believe this is an area that will continue to compete for capital inside our portfolio.

As a seller, our first transaction in April consisted of selling 3 infrastructure subsidiaries, 5 Star Electric, Higher Power Electrical and Python Equipment to Peak Utility Services Group for an aggregate sales price of $108.7 million. I know we touched on this transaction on our last call, but this was a monumental transaction for Mammoth and demonstrated the ability for us to repeatedly grow businesses organically within our enterprise. As a reminder, we originally purchased these businesses for less than $10 million in 2017. And over the past 8 years, we significantly grew this business and increased revenue.

Our second transaction as a seller occurred in June. Two of Mammoth subsidiaries, Stingray Pressure Pumping and Mammoth Equipment Leasing, entered an agreement to sell all of the equipment used in our hydraulic fracturing business to MGB Manufacturing for proceeds of $15 million. Formerly, this equipment was included in Mammoth's well completion services segment. We view this transaction as a natural next step as we look to reposition our portfolio of services and emphasize a demand-driven approach to our operations.

We are focused on building a better, more resilient company for the future, and each of these transactions were completed with this goal in mind. We view the current market as being primed with opportunity, and we intend to remain active M&A participants. To provide some context, we have evaluated and continue to evaluate several opportunities. Some of these M&A deals are verticals to businesses in our portfolio, some would expand our portfolio of services and some would expand the footprint of existing operations. We remain focused on investing in quality assets or companies at the right valuations to generate positive returns. I look forward to sharing additional positive developments with you in coming quarters.

Now let me turn the call over to Bernie Lancaster, our Chief Operating Officer, to take you through our new business segments and the current state of Mammoth's operations.

Thanks, Mark, and thank you all for joining us this morning. It's a pleasure to speak with you for the first time in my role as COO. There is plenty to be excited about here at Mammoth, and I look forward to helping pave the way forward.

As Mark mentioned, our operating segments have changed quite a bit of late with the recent transactions pertaining to our legacy infrastructure, well completions and rental services divisions. Today, our suite of services consist of 5 segments: rental services, infrastructure services, natural sand proppant services, accommodation services and drilling services. I'd like to spend a few moments discussing our new reporting segments and those that have recently experienced the greatest change.

Rental services is a segment that has significantly grown through strategic investment in recent months, and we've meaningfully expanded our capabilities through the acquisition of aviation assets that Mark mentioned. Put our growth here in perspective, we grew the number of pieces of equipment rented to customers by 33% when compared to the same period a year ago. In addition to aviation, this segment also provides rental equipment used in oilfield and construction activities. We are seeing increased demand for equipment lists such as cranes for construction purposes and we expect our equipment to be utilized for its first construction work in the third quarter, which will further diversify our customer base. We see plenty of opportunities to invest in the rental services segment in the near term to both expand our current capabilities and add new attractive services that carry a robust demand profile.

Turning to infrastructure services. After the sale of our transmission and distribution business in April, this segment is now comprised of 2 primary businesses: engineering and fiber. Engineering group continues to perform well, and our fiber group is picking up additional work, which is positive. We continue to see strong demand in each of these areas, driven by the significant macro tailwinds around data centers, AI and nuclear developments. In the second quarter, these businesses contributed approximately 1/3 of Mammoth's total revenue. We also maintain a robust backlog and remain excited about the prospects within the infrastructure space.

Finally, I wanted to touch on our accommodation services. While our presentation of this segment and our financials is new, the services and facilities we provide have been steadily performing well behind the scenes. This segment has quietly generated favorable returns and consistently churned out positive adjusted EBITDA.

Our accommodation services are primarily comprised of remote housing, kitchen and dining and recreational service facilities for workers located away from readily available lodging in Northern Alberta, Canada. We do see notable demand in this area and may deploy additional growth capital in the future. To echo Mark's comments, we take great pride in the transactions we've completed and the changes we've made to the business. We're excited about the company's future and confident in the direction we're taking.

Our operations have evolved dramatically in recent months, but we are pleased with the significant value that we've unlocked and the earnings potential of the company we are building. This transformation will make Mammoth more efficient, resilient and positioned for growth. We will continue to steer the company towards the areas with the greatest demand and utilization with a prudent focus on strategic capital management.

I'll now turn the call back over to Mark to discuss the financials and our outlook in more detail before we open the call up for questions.

Thank you, Bernie. As a reminder, the financial results I'll be discussing today reflect the sale of our distribution, transmission and substation operations as well as the sale of our hydraulic fracturing business, both of which occurred during the second quarter. To demonstrate how we evaluate the business after these divestitures, we have reclassified these operations as discontinued operations and all financials, including prior period segment information, has been recast to conform with our segment composition as of June 30, 2025. A detailed breakdown of our results can be found in our earnings release and in our 10-Q once it is on file with the SEC.

Mammoth's total revenue from continuing operations during the second quarter of 2025 came in at $16.4 million compared to $16 million in the same period a year ago. The increase in total revenue is primarily attributable to an increase in rental services, infrastructure services and natural sand proppant services revenue. In response to the uncertainty that is present in the market and the potential demand implications, we have proactively implemented various cost-cutting measures that should further support improvements in our overall financial performance in the coming quarters. Additionally, we will continue to evaluate strategic opportunities to deploy capital in ways that will be accretive and value enhancing.

Additionally, our infrastructure services segment, which is now solely comprised of engineering and fiber, executed well and delivered strong results during the second quarter. Revenue for this segment was $5.4 million for the second quarter of 2025, which represents a 20% increase compared to the second quarter of 2024. We will continue to play to our strengths while continuing to strategically pursue opportunities within this sector as we focus on the areas with the greatest potential for improved returns.

Our sand segment generated revenue of $5.4 million, which represents a 15% increase compared to the same quarter a year ago. Sales volumes were up in the second quarter, driven by increased utilization. However, this was partially offset by a 6% decline in pricing when compared to the second quarter of 2024. We sold approximately 242,000 tons of sand in the second quarter of 2025 at an average sales price of $21.41 per ton compared to 141,000 tons of sand at an average sales price of $22.73 per ton during the second quarter of 2024. We continue to expect incremental demand to drive improved results in the sand segment in 2025.

Rental services segment generated revenue of $3.1 million, which represents a 72% increase when compared to $1.8 million in the same quarter a year ago. This increase was largely driven by the incremental revenue contribution associated with our expanded aviation rental offerings. On average, during the second quarter of 2025, we had 296 pieces of equipment rented out to customers, representing a 33% increase when compared to 223 pieces of equipment rented out to customers in the same quarter a year ago.

Our remote accommodation segment generated revenue of approximately $1.8 million compared to $2.7 million in the same quarter a year ago.

Finally, our drilling segment generated revenue of $743,000 compared to $736,000 in the same quarter a year ago.

Returning to consolidated results. Our net loss from continuing operations for the second quarter was $35.7 million or a loss of $0.74 per diluted share compared to a net loss of $155.6 million or a loss of $3.24 per diluted share for the second quarter of 2024. The net loss in the second quarter of 2025 included a noncash charge of $31.7 million related to our Northern White Sand mine on the Union Pacific Railroad.

As a reminder, second quarter of 2024 included charges totaling $170.7 million in relation to the settlement agreement with PREPA.

Adjusted EBITDA from continuing operations, as defined and reconciled in our earnings release, was a loss of $2.8 million in the second quarter compared to a loss of $164.6 million for the second quarter of 2024.

Selling, general and administrative expenses were $5.3 million in the second quarter of 2025. Looking to the back half of the year, we expect to generate an adjusted EBITDA loss from continuing operations ranging from $3 million to $4 million based on the current portfolio of assets.

Further, we expect our cash burn related to discontinued operations to range from $4 million to $5 million. We plan to largely fund this from proceeds from the sale of underutilized assets.

CapEx for the second quarter of 2025 was $26.9 million. This was primarily related to our targeted growth and expansion efforts within the rental services segment. Regards to our 2025 CapEx budget, we are now allocating $42 million for continuing operations, excluding acquisitions. This is primarily comprised of growth CapEx for our aviation and other equipment rental services. We will continue to monitor the uncertainty within our markets to determine potential impacts on our business and we'll adjust our spending accordingly.

Additionally, we see many opportunities to strategically allocate capital to grow our existing businesses that are generating the greatest returns. As Bernie mentioned, we've identified numerous opportunities to deploy capital, specifically around equipment rentals and accommodations. We took the first step toward expanding these segments with the aviation purchases during the second quarter. There will continue to be various opportunities to invest back into our business in the near term to address demand as well as to purchase and upgrade equipment with our improved cash position.

As of June 30, 2025, we had unrestricted cash on hand of approximately $127.3 million. This cash balance excludes restricted cash of $30.1 million, which would bring our total cash on hand to $157.3 million.

Our revolving credit facility had a borrowing base of $75 million and we had approximately $67.5 million in available borrowing capacity after giving effect to $7.5 million of outstanding letters of credit. As of quarter end, the revolving credit facility was undrawn. Subsequent to June 30, 2025, the company entered into a letter agreement in relation to its revolving credit facility whereby the borrowing base was reduced from $75 million to $50 million.

Our total liquidity as of June 30 was approximately $194.8 million. And as of today, Mammoth remains debt-free.

To conclude our call, we would like to thank our employees throughout the company for their hard work, dedication and commitment to maintaining safe and sustainable work sites for themselves and their teammates. Without you, this transformation wouldn't be possible. Going forward, our priority is to further unlock value for our shareholders. We intend to accomplish this through consistent operational performance, improved efficiency and strategic and opportunistic transactions, all of which will strengthen Mammoth for the future.

Over the last 3 months, we've executed multiple value-enhancing transactions that have repositioned the business, insulated our operations from volatile demand trends and made our financial results more resilient. We look forward to sharing additional developments with you in the coming quarters. We maintain a debt-free balance sheet and a significant total cash position of approximately $157 million. This further expands our deployment opportunities and we intend to utilize this dry powder to substantially invest in the company for future growth. We plan to utilize the tools at our disposal to strategically deploy capital as attractive value-enhancing opportunities present themselves. Finally, we believe our operational expertise, efficiency, strong balance sheet and ongoing actions will position Mammoth for success and propel the company into a better future.

Operator, we would now like to open the call up for questions.

[Operator Instructions] Our first question is from Colby Sasso with Daniel Energy Partners.

You highlighted earlier that Mammoth had the 3 transactions in the second quarter, 2 of which were exiting the older business segments. And the third was aimed at diversifying the rental services segment, and this left you with a really strong cash position. And you had mentioned some opportunities within the rental services segment and then your accommodation services. Where do you see the growth potential for Mammoth in the next 3 to 5 years with all this dry powder?

Yes. So near term, we've invested the majority of our capital in the aviation sector. And as we evaluate those opportunities, you really have to get into our mindset as to how we allocate capital. What we're targeting in the aviation sector is IRRs of 25% to 35%. And if you look at a 3- to 5-year hold at that IRR, you're looking at a 2 to 3x multiple on invested capital. So that's how we're evaluating opportunities, and we're seeing a pretty good deal flow in that particular sector right now.

That makes sense. And as a quick follow-up, can you give us a sense of how much your sand is sold domestically versus Canada? And how you see both of those markets evolving in the next 3 to 4 quarters?

As we look at the split right now, we've not disclosed the split publicly, but the majority of what we've sold historically has been into Western Canada, into the Montney. And as we look forward, given what we believe is the availability of Tier 1 acreage in the Montney, we think that split will continue on a go-forward basis to be more weighted to the Montney Shale.

Our next question is from Doug Garber with Westport Alpha.

I wanted to follow up on what you're seeing in the aviation market. Can you give us a little context on what's going on in that market to supply-demand imbalances? Are these niches that is allowing this kind of excess return window to be apparent for you guys?

There are some -- certainly some tailwinds in that particular sector. Passenger travel has been favorable. You've seen some production delays at the big manufacturers, Boeing and Airbus. So what we're seeing is demand in that sector, both at the aircraft level, which we executed on, but we also touched in the prepared remarks about the acquisition of some engines and auxiliary power units.

When I look at the stock and your cash balance or the market cap, it's below the cash balance. What are your thoughts on buybacks right now?

Yes. So as you recall, the Board approved a buyback some time ago. And as you point out, we're trading below cash value and below book value. If you look at the deals we executed inside of Q2, the reality is, is that we spent the majority of that quarter in the year so far in a blackout period. So the buyback is still available to the Board. We've not been able to execute on that for one reason because of the blackout period that we've been in relative to those deals and reporting periods.

Can you update us a little bit more about -- are you still in a blackout period? When does that end after earnings? And when you're around when -- when you're consistently looking at deals, are you always going to be in a blackout period?

That's a good question. So to the extent we've got actionable deals, either under LOI or under consideration, then more times than not, we'll be in a blackout period. Absent some transaction like that, the blackout period generally lifts 2 full trading days after we report earnings.

Got it. And last one for me. Your path to free cash flow, getting to free cash flow positive. There's a lot of moving parts here with all these transactions. Obviously, you bought more assets. I assume those will have some positive contributions. And just what's your path to get into free cash flow neutral?

That's a good question. As we highlighted in the prepared remarks, the aviation deals that we've executed on have been positive contributors from day 1 on those transactions. As we look to the back half of the year, as we flagged previously, we've still got some SG&A overhang relative to some ongoing litigation from the exit of Puerto Rico. While those fees are coming down some, they will continue to exist over the coming quarters. But to kind of give you an idea of what that looks like, we're forecasting about $2 million to $2.5 million in overall SG&A legal fees relative to the run out of some of that Puerto Rico litigation in the back half of the year. So as that runs out, that's our near-term path with this particular group of assets to free cash flow. And certainly, organic growth as well as utilization will help that out as well.

So if I'm understanding it when the litigation kind of dissipates, that will get you -- with the current mix, that will get you to free cash flow neutral?

That's correct.

Thank you for that update, and looking forward to continuing to follow the story. And you'd also talked about rentals. Is there the return opportunity there? Is that -- where does that rank compared to aviation? Can you do both? Is that -- how do you look at that market?

Yes. So that -- Yes, on the construction equipment side and oil and gas-related rentals, we're seeing some opportunities to deploy capital there, and you see that year-to-date. And we flagged that, that as well as the accommodations business can also compete for capital on a go-forward basis that is near to the returns that we're seeing in the aviation space.

Got it. And typically, those assets have some leverage. Are you going to do them unlevered? Or are you going to put a little bit of debt on it as you go?

As we evaluate that, right now, we've got a debt-free balance sheet. We're focused on maintaining a strong balance sheet. I think as you look on a go-forward basis, it's dependent on the assets. So some assets will be better suited for leverage, and we'll continue to evaluate that structure as we deploy capital.

Well, congrats on pivoting the company and looking forward to following it in the future.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Mark Layton for any closing comments.

Thank you again for joining us on the call today. We continue to focus on positioning Mammoth for future growth and unlocking value. We will achieve this through operational excellence, efficiency and strategic capital deployment. This concludes our conference call, and we look forward to speaking to you all again next quarter.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Hello, and welcome to Pitch The PM. My name is Doug Garber, and I'm here with Mark Layton, the CFO of Mammoth Energy Services. Ticker: TUSK. This is a small cap company. And before we begin, I do want to disclose to everyone that I do own shares in TUSK and everyone should do their own research, and this is not investment advice. You should talk to your financial advisers, especially before investing in smaller cap companies. I've known Mark since the company's IPO over a decade ago. Mammoth Energy Services is both an oilfield service company, but also has industrial assets and now has a lot of cash to deploy.

With that, I'll turn it over to the current CFO, Mark Layton, and he can give you a quick background of the company and then where it's headed in the future. With that, Mark?

Thanks, Doug. Appreciate the opportunity today. I think in regards to a quick background on Mammoth, we went public in '16 as a pure-play oilfield services company, largely centered in the Utica and Marcellus. Since the IPO, we expanded into the transmission and distribution business in 2017. We have done a couple of other acquisitions throughout our time to expand our asset base.

As we sit here today, we've got about $150 million in cash. We've recently sold the T&D business for about $110 million. So asset-wise, we're largely oilfield services again, but we began to deploy capital into the infrastructure side of the business again and into rentals. So we're excited about the future as we look forward.

That's great. And I was actually surprised that you sold the T&D business. Can you talk to us a little bit about why you sold it and the history of that investment and how you grew it over time?

Yes. So that investment was early on to diversify the asset base and seek more stable earning power for the business. Oilfield services has always been cyclical. So immediately after the IPO, we wanted to stabilize our earnings potential, acquired 2 small entities for about $6.4 million, deployed about $20 million of capital to grow those businesses. And as many of you probably recall, 2017 was the year of the hurricane. So we caught lightning in a bottle. We're able to respond to hurricanes in Houston through Harvey, through Florida, where Irma hit Florida.

And then ultimately, Irma and Maria hit Puerto Rico. So we landed 2 contracts in Puerto Rico, did a tremendous amount of work there. Unfortunately, spent several years trying to collect for much of that work. But all in, as you look at it, we generated about $310 million in free cash flow on that investment, not including the sale of about $110 million.

So it's over $400 million of free cash on investment of, call it, $26 million in 8 years. Is that right?

We had $26 million invested in 2017, and then we invested another $100 million in '18 as we expanded the work in Puerto Rico. So about $130 million, $135 million round numbers that was invested and then generated a little over $400 million in free cash flow on that investment.

Why exit it? Why not continue to grow? You've seen companies like Quanta, MasTec, Primoris, they've all done really well growing. There's a lot of -- it's a steady business with the utilities. Investors love the theme of electrical infrastructure. So why get rid of it? What are you going to do with the cash?

As we looked at it, we sold the company for about 4x tangible book, about 9x trailing EBITDA. So we thought it was an accretive transaction, allow us to monetize our investment in those assets. And then we'll pivot that cash into areas that we think will have attractive returns. In particular, we currently like the rental business, which is fairly broad. We've had oilfield equipment rental businesses in the portfolio for quite some time. It's flown under the radar a little bit, but we've had helicopters inside of our rental portfolio for some time.

And then in April, following the transaction with the sale of the infrastructure entities, the T&D business unit, we bought 8 airplanes to add to that overall rental portfolio. That's an interesting space where we're seeing quite a bit of deal flow through our relationship with Wexford Capital at attractive returns. We're seeing IRRs of 25% to 35% on discrete investments.

Those IRRs, those are unlevered or levered IRRs?

Those are unlevered.

So the current investment you guys made in April of about, I think it was like $11 million, $11.5 million for 8 planes, you're saying that your target is kind of the mid-20s to 30% IRR unlevered?

Correct.

Great. And how much contract coverage did that investment come with that you made there?

Yes. So that's a good question. So those aircraft came with underlying leases that range from about 6 months up to 1.5 years to 2 years. So as we look at that, we've got an opportunity, we think, based on entry point to increase the returns that we've currently forecast on those planes.

Okay. So there's some residual value in market there. And I've seen some other large investments come across kind of my LinkedIn profile of other people making big jumps into the commercial airline space. So thank you for that color. I think I'm actually having that vision there. Talk to me more about the pipeline there. You're talking about how deep is it, how many deals? What else are you looking at besides kind of airplanes?

It's a fairly broad space. So if you look at Wexford's history, they've been in the airline sector for decades. They have a fairly robust deal flow. So what we see is deal flow on both aircraft as well as heavy aircraft engines and ancillary equipment. So I think that just speaks to the quality of the relationship with Wexford and the deal flow we get from them relative to that relationship.

It's an interesting place in the capital markets. It's kind of a private equity company in a public shell. And since it's in this kind of void, you kind of get it without the fees attached is kind of how I described it to some other people when I talk about it at least. But I'm not sure everyone has this view of how diverse this industrial pipeline is from deal sourcing to incubation to growth to exit that you've kind of done here in T&D over the last few years.

Can we talk about the energy assets? When you went public, you're mostly an oil service company. And last year was, I think, the focus in the Northeast supporting Gulfport, right? And last year was one of the worst years ever for natural gas, 221 Henry Hub and even worse in the Northeast, right, probably $50, $70 diffs up there. And how do you view the energy market now and your place in it and let's talk about your main service lines, the sand market and the pressure pumping market. Actually, let's just do the pressure pumping market because sand is a whole another macro.

Yes. On the pressure pumping side, we've always had a historical presence in the Utica and Marcellus. As you touched on, a large part of that came through the relationship with Gulfport. Gulfport was founded by Wexford many years ago. As Gulfport entered the Utica, Wexford and Gulfport co-invested to form our frac company. And our frac company kind of propped itself up based on that relationship with Gulfport. Since that time, expanded that customer base, have had a decent presence in the Northeast. I think as you look at our equipment, we've got 6 spreads in total, the majority of which are in the Northeast. Over the last couple of years, the majority of the equipment that has worked has been in the Northeast.

So long term, I think you look at our asset base and conclude that we lack overall scale. The larger frac companies have 20 spreads or thereabout. So it's up to us to maintain utilization. We can generate free cash flow at about 1.5 spreads of utilization if we can keep 1.5 spreads busy. Obviously, last year, as you touched on, was difficult. Utilization was less than 1 spread for most of the year. As we've always done historically, what you have to do is aggressively cut cost when utilization falls. So we did that last year, and we'll continue to do that in future cycles.

And you guys have disclosed, I think, a second spread going to work in March on your last conference call. Do I have that right?

That's correct. We discussed in the last call ramping up to 2 spreads.

You guys have also invested to upgrade your engines to dual fuel to get to lower the cost for the operators, use some field gas. Can you remind me how much you invested and why did -- you invested essentially countercyclically, why put money into new engines at this point?

Yes. So we did invest countercyclically to upgrade one of the fleets to Tier 4 dual-fuel. We've got about 2 fleets of Tier 2 dual-fuel. But we invested countercyclically to begin upgrading a third fleet to Tier 4 dual-fuel. Those cost about $1 million, round numbers, per pump by the time you put in a new engine. Some need new transmissions or power ends. But I think we converted right at 8 or 9 last year, so you're at $8 million to $9 million in relation to conversion to Tier 4 pumps for that fleet.

And you were able to make that investment even when you were paying your interest paid in kind to Wexford. So they kind of propped you up there, helped you out before you got the Puerto Rico money and gave you kind of that ability to do that. Is that how I should think about that? Because I was surprised that you were making the investment in such a tight period for yourselves.

Yes. So we wanted to be prepared to the extent that natural gas recover. I think as you look at natural gas, it's obviously priced stronger today. I think as most people look at the commodity, I think they're pretty bullish going into '26. So some of that optimism has been pushed to the right a little bit in regards to natural gas. But I think the mandate is clear from the larger E&P companies that it's clearly much cheaper for them to burn field gas and better from an emission standpoint. So to keep the equipment competitive at the time, we felt that it was a good countercyclical move to invest in the upgrade of one of the fleets.

Kind of like you invest $10 million, $12 million to stay relevant. Otherwise, you kind of have to shut down and you lose the people and everything. And if you invest that $10 million, $12 million, you get back to work and you have the option value of generating $20 million, $30 million of EBITDA again one day and get in a 2, 3, 4 multiple on that. So it is the math, hey, I'm going to invest $10 million and now I have the option of potentially exiting at $60 million. Is that too simplistic for someone who runs a business? Or is that a fair way to think about it?

It's a fair way to think about it at a high level. I think as you look at it, it's an investment in the business to maintain relevancy. And to the extent that results in a higher multiple on a potential trade at some point, perhaps the OFS business has always been highly cyclical. So as you're aware, on the buy side, it's tough in OFS to make any long-term forecast.

We saw EOG, one, their activity was growing by -- in the Utica by themselves, was up 50% to 2 rigs. They were talking about that earlier in the year. And then they just made an even bigger investment with Encino in the Utica, really saying, hey, this is -- this could be a big play here. This is their third stool essentially, right? Third leg of the stool, not third stool. But what are your thoughts around EOG and that transaction and what it means for the Utica, for TUSK?

For EOG, I think it's a great deal for them. For TUSK, that's a company we've worked for historically. So certainly, any time that one of our customers makes an acquisition of that size, that's exciting for us.

EOG was a customer historically. What about Encino?

Encino, we've done, I think, just a little bit of work historically. But EOG, we've worked for historically with our frac company.

And if I remember correctly, EOG is usually -- they just want the horsepower. They provide every -- they kind of do everything else themselves. So they're kind of just, they want the bid from a -- spring the horsepower, right? They don't necessarily need all the extras that the big boys provide, if I remember correctly.

Yes. That's been our experience that it's been people and horsepower, and they're not alone in that. There are a lot of the E&P companies that buy services a la carte and source materials on their own.

And then there's also this kind of in the Northeast in the gas market; obviously, there's a lot of talk that the U.S. is at, call it, 106 Bcf per day or so, maybe 108 and that could go to 125, 130 when you add in LNG demand, when you add in reshoring, when you add in AI capacity, but -- AI demand. But things are trapped in the Northeast. You need the pipelines, they take years. What's the opportunity in the Northeast for, I mean, maybe data centers or just for the demand growth in the Northeast, specifically not the global U.S. It has to be somewhat regional, I think.

Yes. From our perspective, it looks like there's some potential for data centers in the Northeast to utilize some of that trapped gas. So we hear a number of those conversations. I think the takeaway from our perspective is that you're seeing some consolidation inside of the Utica. And it looks like there's a runway for demand for gas, need some help more than likely with data centers and other ancillary uses to use that trapped gas. But I think we're pretty constructive on the commodity, particularly in '26.

It's amazing that the whole gas bullishness, everyone was all bullish over the winter, and now it's pushed into '26 already We're here in June, storage is filling up, I guess. What about wet gas? I know there's different windows in the Utica and in the Marcellus. How important is wet gas in this dynamic for the demand for your services?

No, it's a good question. We're not seeing a ton of impact right now. Most of the operators in the Northeast, we've seen have fairly consistent programs for this year, it would appear as a number of them have decent hedge positions for '25. So not seeing a big impact associated with wet gas in the Northeast.

The sand business. You guys -- you and everyone, a lot of other people got into the sand business, the Northern White Sand and most of that sand has been replaced by local, regional cheaper sands in most of the plays. Not necessarily in Canada, they still import, I think, 2/3 of their gas from the Northern White into the Western basins there. And the Marcellus still imports, but most of the White Sand obviously, has been backed out and shut down. Some people still use it. Can you talk about the outlook or what are your plans for your sand mines at this point?

Yes, absolutely. So if you look at our sand mines, we have one on the CN that is logistically advantaged into Western Canada and into the Utica and Marcellus. And then one on the UP that gets into the DJ and Permian. So to your point in regards to local sand, the UP mine is challenged right now. Many of the operators in the DJ are 90% to 100% local sand. So that's a tough market on the UP.

Western Canada, however, I think there's a lot of optimism across the sand space. So it creates some unique opportunities for us. We've sold quite a bit of sand in Western Canada for the last several years. Investment opportunities kind of center around transloads that there may be some unique opportunities on that aspect. But the Northern White business for sand is it's a tough business right now, given the presence of local sands in most of the U.S.

How do the transloads potential investments, how do those compete for capital from your perspective versus things like the rental airplane business where you're talking about 25%, 30% unlevered IRRs. I mean...

Yes. That's where the difficulty becomes for them to compete for capital. We very much view capital allocation like a private equity shop. They -- each of the entities has to compete for capital. So on a sand investment, it's pretty tough for them to compete today at 25% to 30% IRRs for some of the other businesses. That being said, it makes the teams compete for that capital and identify the best opportunities. So from our perspective, that competition for capital becomes a good thing. We run a number of different businesses and each of them are fully aware that they've got to compete for capital.

Talking to one of the other players in the sand business going to Canada, they were saying that business has kind of grown 20% historically as these new LNG terminals have come online. And I'm curious, what is your share in that business? And have you seen growth in that business?

We've seen steady to slight growth. So for us, since we've not invested in a transload, we're more inclined on the spot market to sell sand into Western Canada. That is one thing that may help them compete for capital is if you pair a transload investment with a longer-term contract, you may get to a ZIP code that's competitive with some of our other businesses. But we've seen fairly steady demand out of Western Canada for the last several years.

And how do I think about that business? Is it $15 a ton production cost, 2025 sales price? Or what's the current market?

Yes, good question. So right now you're kind of, say, 23-ish for 40/70. Some of the other grades are obviously going to be less. It's a manufacturing business. So as you look at it, the more we can sell, the more we can drive our cost per ton down, which has obviously historically benefited the business when we've had some longer-term contracts to really get the efficiency out of that business. Both of the mines are fairly low on the cost curve in regards to Northern White mines.

So it's really taking advantage of opportunities for us to get what we can get out of those businesses, try to maintain a railcar fleet that in a sand business can become a fixed cost, to keep the railcars moving out of storage and then drive as much as we can through the plants to drive the cost per ton down.

Do you currently have excess railcars that are sitting idle that you're paying that roll off, like extra leases that you're paying?

Yes. I don't think we're any different than a number of our peers as demand for sand has come down a little. That's resulted in some excess railcars, which you see in the fleets and in railcar pricing right now, the price for railcars is down compared to what we saw a few years ago.

So I guess from a financial impact, is there more to roll off that you could return that would help your financials? Or is it just not material at this point to really help that business?

It certainly all makes a difference. So as railcars roll off, then we'll likely return those cars unless we see strengthening demand. And that's a call that we'll have to make as those cars roll off as to whether or not we extend those leases at lower rates for short periods of time.

How much of your business sells into Canada versus what's left in the U.S. to sell into the Northeast, the DJ or...

I'd say right now, we're heavily concentrated towards Canada sales.

Directional drilling, can we -- can you talk a little bit about that business, I did read in your 10-K that you're still doing a little bit of work for, I think, some of the Wexford E&Ps that's lumped in your other segment. How big is that segment? And how do you compete there?

Yes, so that's a business that's largely relationship-driven. They've got the capability of running 3 to 4 jobs at one time. So for us, it gives us the ability for relatively low ongoing investment to keep that business going. It's not a business that we have scale in, but it's also a business where tools are fairly easy to rent and to obtain. We're fortunate that we've got some pretty good motor shop personnel that have been with us for a number of years.

But that's a business that has struggled, I'd say, the last several quarters, seen some bright spots, but we're hopeful that they can increase their utilization and generate positive cash flow out of that business. But in the grand scheme of things, that's a fairly small investment that we've got inside of the portfolio.

And the accommodations business, how big is that? Is that material at all? And what's the update there? I know some of the peers have had tough times over in Canada.

Yes, it's interesting. So you go back to shortly after the IPO, the accommodations business was actually its own segment, so split out and had a little more visibility than what it's got today. That's a business that's done well. That business was formed by Wexford in about 2006, 2007. So it's actually the oldest investment inside of our portfolio of companies today. But they've done well. We're seeing renewed interest in the oil sands, which has helped out their utilization.

We're looking at some investments there that will increase the room rates that I think will be encouraging for that business. And we've got a good leader there. So to the extent that he finds investment opportunities for us to deploy capital. I think he's certainly shown that he's a good leader and done a very consistent job at generating free cash flow for us.

Is that business currently free cash flow positive?

Yes, that business is currently free cash flow positive. I think quite candidly, we'll see how some of the segments shake out with the sale of the T&D company, but the accommodations business may be one of them as we look on a go-forward basis that could end up being split out again as a segment, which would obviously provide a little bit better visibility on that particular investment. But that's been a good investment for us.

And is that business exclusively in Canada? I know Black Diamond, I believe, they sort of pivoted their strategy to do more than just the remote accommodations, but using that as kind of get more in the mobile mini remote operations.

Yes. I think there's some opportunities to expand outside of Canada. It flies a little bit under the radar, but our President that leads -- that entity led the housing effort for the linemen in Puerto Rico. So he chartered a couple of barges that we housed the linemen on during Puerto Rico in, say, October of '17 through about May of '18. So he certainly got the ability to pivot to other geographies. And there are some investments in the U.S. that could be a potential for him and his group.

And I want to circle back to the infrastructure segment. I know there's more in there in terms of the rentals, the traditional kind of telehandler crane business. I know you have now aircrafts lumped in there, too. Can you talk about the outlook you're seeing there and for the rental business, you've talked about growing it.

Yes. So we've seen strong demand on the rental side of the business, which today is largely oilfield. I think there's an opportunity for that team to explore expansion into construction. Much of that equipment, cranes, telehandlers, man lifts is the same in construction as it is in OFS. So I think there's an opportunity there for them to continue to expand their customer base. But even on the OFS side of the business, they're seeing fairly strong demand so far this year. Most of their assets are in the Utica and Marcellus, but they do have a location in some assets in West Texas as well.

When you look to deploy capital in that segment, what kind of returns are you looking at there?

It's a good question. So as we look at those investments, they're mid- to high teen in regards to IRR on an unlevered basis.

And does that vary whether you're buying a small piece of equipment or a big piece of equipment? I know with the rental companies, that was always -- always had higher utilization with the smaller pieces. They want to switch from the big dozers to the little pieces to kind of get a better return.

It does vary a little bit. So we try to look at it on a type of equipment by type of equipment basis because you make a good point. It does vary. Some of the larger pieces of equipment, cranes, we're seeing fairly high demand on. So that's a unique situation where you've got a larger piece of equipment, but you're seeing fairly consistent demand.

And then you also have a fiber business, I believe, that didn't go with the T&D and also an engineering kind of professional services business. Can you talk about how you got into those businesses and what the outlook is for those two?

Absolutely. So both of those businesses were started organically. So we identified the leaders of each of those businesses, brought them on board and then built businesses around them. On the engineering side of the business, they've got about 75 professionals today. So growing that into a nice sized business. That's a business that's human capital as opposed to assets, but they've built a nice business. And that's a business that as we look at incubating should trade for low to mid-double digits in regards to EBITDA multiple.

The fiber business took a little bit longer to ramp up than what we had envisioned. And much of that was due to some of the delay of the government funds hitting the states and then the states apportioning that out. But we're starting to see that hit the market. As with most of the businesses relative to infrastructure, it's a business about building the backlog and executing, but that's a business that we feel like has a runway of success to grow that business and potentially do some acquisitions. It's a fair -- the fiber business is fairly fragmented. So that's a business that we're interested in.

When I think about your portfolio, now that it's obviously mostly cash, but your operating businesses, it seems like you have on the industrial side, the professional services business, the engineering, the fiber, you just -- the rental airplane side and helicopter, kind of the rental crane and telehandler OFS side, accommodations business in Canada, and then you have some legacy oilfield businesses in the pumping, the sand, directional drilling. Are those the major buckets? Did I miss any major operating line?

No, those are the major operating lines. We've certainly got some underutilized assets that we've got. Coiled tubing drilling rigs that are out there that we could put back to work. I think as we continue to evaluate those businesses, we'll see what the demand and appetite is relative to those that we've had parked for a few years.

And I noticed in the March 31 balance sheet, you had about $5 million, $6 million of assets that are now held for sale. What are those? And what made you put them on in that part of the balance sheet?

Yes. So that's a strategic decision to exit the drilling rig business. So that's what you see on Held For Sale. Those are assets that we are net sellers of. So we'll continue to market those rigs and seek an exit. But that's the value of those rigs from a book basis that we've determined at a Management and Board level to exit.

Okay. So that's on the book basis. You also did an appraisal last year, you put in your presentation, I think it was $190 million. You had a third-party appraisal company come in. And then I think you revised that somewhere to $145 million after the sale of the T&D business. Is that right?

That's correct. That's an appraisal we had done to just take a snapshot look at the valuation of the assets. We had that done by Range, which is a group that does a lot of the OFS-related appraisals for a number of the lenders.

Did you just send them a sheet and an inventory? Or did they go out and like look in the yards and look at everything?

No. I think historically, Range has been very, very professional about going out to the field and looking at the equipment. And that's what they did for us is they went out and looked at probably 90% to 95% of the equipment as part of that process.

And they provide an appraisal based on -- so a lender would lend against it? Or do they also provide kind of monetization services sort of like a Ritchie Bros. or anything like that?

They don't necessarily provide monetization services regularly. I think that's within their wheelhouse. But what most companies or lenders would look for Range to do would be to put a fair market value or orderly liquidation value on the portfolio. And then I think most of the asset-backed lenders in regards to PP&E are lending somewhere in the ZIP code of 50% to kind of 60%, depending on the lender of what that valuation looks like.

You guys have a lot of cash. Help me understand why you would hire them to do this? What inspired you guys to do this?

One, to get an updated snapshot of the asset base that we've got. But also, as we look at where we're at, we're trading at a slight discount to cash with little to no value placed on the ongoing businesses we've got or the PP&E that we've got inside of the portfolio.

Within that PP&E, how much is for the sand -- for like the sand business? Are they giving you credit for like reserves? Or is this just literally the dryers?

That would literally just be the dryers in the wash plant. So relatively, I'd say, low valuation relative to sand. There's no reserve value placed in that particular valuation at $145 million.

Okay. So early liquidation kind of steel value. That's helpful way to think about it. And how much could you -- how many assets do you have? What's the value of the assets you have like drilling rigs, coil that are not operating? What's the value of that if you had a buyer if it was a liquid market, how much could you free up? How much cash could you generate from steel with grass grown around it?

There's a fair amount of value inside of the portfolio for assets that are underutilized right now. So we've shown in the past that we can put assets back to work. But certainly, like the drilling rigs, we carve them out as held for sale. That's something that you can place a pretty easy bogey out there at $5 million or thereabouts probably a floor of sorts on the value of those drilling rigs with some potential upside.

How liquid is that market if you want to monetize them? Is that something you could do kind of monthly, quarterly?

If you look at those auctions, they're usually quarterly or thereabouts, can be done quickly, usually has an impact on price. But most of those larger auctions like that are on a quarterly basis.

So when I take a step back and I think about what could TUSK look like? Or where are you trying to grow the business? How are you trying to deploy capital? And where are you trying to grow the business in which areas?

Based on what we're seeing today, we're trying to grow the rentals business. We'll continue to evaluate and might grow the remote accommodations business. If we can firm up the fiber business, that's another one that has potential. But near term, I'd say, material deployment of capital. We've shown and you're seeing that, that's largely in the rental business broadly, whether that's OFS or in the aircraft space.

And what is the company's capital allocation process? How do you build the pipeline? And how is Wexford involved?

Wexford has been involved through a consulting agreement that's been in place. We're not paying right now for that agreement, so we get the deal flow through the relationship with Wexford. We discuss those opportunities at the Board and Management levels and then deploy capital where we see the best fit for the organization. But certainly, the relationship with Wexford and access, particularly to the aviation deals, has been very good. As I mentioned earlier, they've got decades of experience in aviation. So being able to tap into that expertise and deal flow, I think, is beneficial for us.

How deep is that market for aviation? How much capital could you deploy there?

We could deploy a tremendous amount of capital in that space. And you're talking about deals that range from $1 million to, say, $10 million to $12 million. But if you pick up the cadence with those deals, you can deploy a fair amount of capital fairly quickly.

It sounds like that seems to be the -- what you did in April seems to be the most attractive way and the way you're talking about, that seems to be the primary returns.

Yes, that along with some of the other businesses. But near term, those are where we're seeing the most attractive returns for investment.

So you mentioned there is a $500,000 kind of consultant fee from Mammoth to Wexford. You're saying you're not paying that now. They kind of said, don't worry about it right now.

Yes. So that's what the contract has, but Wexford has waived that for the last several years. So obviously, at right around 47% of the outstanding shares, they have a vested interest, and they're providing us access to that deal flow without the associated $500,000 fee.

What are the other places like Wexford, they can put the money in Mammoth and buy it through Mammoth? Do they have other vehicles that they -- I know they've got a lot of hedge funds and private equity. How do you compete for capital within Wexford?

Yes. They've got a lot of other deals. But certainly, they have a vested interest in Mammoth. They've -- as I mentioned, the oldest entity was formed in 2007. So they've been invested for quite some time. They're not on a fund horizon or fund mandate.

So they've clearly been very patient with their investment, which is what they've shown in the past with both Gulfport as well as Diamondback and others. They've always shown to be very thoughtful, patient investors. And I think that's what we're seeing with TUSK is, they've been patient and they're very involved in helping us with the deal flow, which, as I said, is very important.

I also think there's a share repurchase in place?

That's correct. The Board had approved that a couple of years ago and is part of one of the credit facility amendment that was executed earlier this year concurrent with the T&D sale. There's the ability to repurchase up to 10 million shares or $50 million, whichever is lesser.

Any activity like a 10b5-1 or any comments you can make about the practicality of -- I mean, obviously, the stock is below cash. You have all the $145 million of appraised value on top of that, but not a lot of float as well. So how do you weigh that as the CFO?

Yes. So it's -- certainly, we're restricted to the extent that we wanted to repurchase shares by the volume. So there's a restriction in place there on what we could buy. Certainly, a consideration as you look at the stock, it's below cash value. But given that stock is somewhat thinly traded, that's also a consideration for myself as well as the Board as to whether or not it's prudent to repurchase shares when you've got limited float.

How does the management team and the Board think about rebranding and just communication around the strategy, given where the energy business is, given the big cash pile?

As we look at it, we realize that we've got to identify where we have some sectors that we think we will invest this money. We've shown a little bit of that with the April investment in the 8 planes.

Mark, I want to say thank you for your time. I've enjoyed speaking with you, catching up on the story the last couple of years and speaking with you over the last 10-plus years. I've always appreciated the candor and kind of being a straight shooter and telling me what markets are good and what -- not really spinning things, but just tell me how it is. So I think that just goes a long way in building a relationship over time and something I appreciate. So thank you.

Likewise, I always appreciate the opportunity to catch up.

All right. Well, thank you, and we'll be in touch over the next quarter or so.

Sounds good. Thanks, Doug.

Thanks, Mark.