Mammoth's Q3 2025: Contradictions Emerge on Aviation Market Outlook, Sand Sales Evolution, Growth Strategy, and Free Cash Flow Path

Date of Call: October 31, 2025

Financials Results

• Revenue: $14.8 million, down from $16.4 million in Q2 and $17.1 million a year ago
• EPS: $0.25 loss per diluted share (net loss $12.1M), compared to $0.18 loss per diluted share (net loss $8.9M) in Q3 2024

Guidance:

• Expect improved cash generation and margin recovery in 2026 as transformation initiatives take hold.
• Sand segment seen as reset; management expects Sand to return to positive gross margin in 2026.
• Drilling expected to remain strong in Q4 and into 2026, focused on Permian horizontal activity.
• Full-year 2025 CapEx expected to remain within previously communicated range, weighted to aviation and maintenance.
• Pro forma liquidity exceeds $170M after restricted-cash release, supporting selective investments and M&A.

Business Commentary:

* Revenue and Segment Performance: - Mammoth Energy Services reported revenue of $14.8 million for Q3, down from $16.4 million in Q2 and $17.1 million a year ago, mainly reflecting the divestiture of the Piranha assets and continued underperformance in the Sand segment. - The Drilling segment was a standout, with revenue tripling sequentially and gross margin reaching its highest level, driven by increased horizontal drilling in the Permian Basin.

• Operational Challenges and Cost Reductions:
• The Sand segment experienced a 49% sequential decline in revenue, due to the Piranha divestiture and weather-related disruptions in Canada.

• Mammoth focused on improving execution and reducing structural drag by continuing to streamline operations and reduce Selling, General, and Administrative expenses, achieving a 40% reduction in SG&A run rate.

• Aviation and Infrastructure Investments:

• The company deployed approximately $40 million year-to-date to grow and diversify its aviation portfolio, adding meaningful scale and strengthening the recurring earnings profile of its Rental segment.

• Infrastructure segment revenue of $4.8 million declined 13% sequentially, but the company remains confident in its long-term opportunity given investments in grid modernization and broadband expansion.

• Cash Generation and Financial Strength:

• Mammoth delivered positive free cash flow from operations, supported by the monetization of underutilized assets.
• The company maintained a strong balance sheet with $110.9 million of unrestricted cash, cash equivalents, and marketable securities, and a total liquidity of approximately $153.4 million.

Sentiment Analysis:

Overall Tone: Neutral

• Management emphasized portfolio realignment and cash improvements—'positive free cash flow from operations', $110.9M unrestricted cash and a subsequent $19.8M restricted-cash release—while acknowledging near-term weakness: Q3 net loss $12.1M and adjusted EBITDA loss $4.4M; tone is cautiously optimistic about 2026 recovery.

Q&A:

• Question from Colby Sasso (Daniel Energy Partners): Can you speak on the visibility for sand volumes in 2026, ideally with some color on the basins you serve?
  Response: Expect sand volumes to increase in 2026 versus Q3; primary logistics advantage and demand into Western Canada (Montney) and the Northeast (Utica, Marcellus); sales conversations are encouraging.

• Question from Doug Garber (Westport Alpha): Your cash and marketable securities is about $123 million as of 10/31. I wanted to confirm you still have about $10 million in escrow from the recent sale and another $5M–$10M from land rigs held for sale that are not included — do I have that right and are there other collections expected?
  Response: Yes: roughly $5M held-for-sale (primarily drilling rig assets) and $10M remaining in escrow from the T&D sale expected to be released earliest April 2026; management flagged those as additional near-term inflows.

• Question from Doug Garber (Westport Alpha): On PREPA puts and takes — how much do you still have, and how should we think about the net liability between that AR and the tax liability?
  Response: PREPA receivable is $20M collectible when PREPA exits bankruptcy (timing undetermined); the majority of tax liability relates to Puerto Rico at gross amount and will be subject to negotiation/write-off adjustments.

• Question from Doug Garber (Westport Alpha): Sand is a drag on free cash flow — how much was one-time for railcar returns and what's the path to getting Sand back to free cash flow neutral in 2026 or sooner?
  Response: Q3 included ~$550k one-time railcar return costs which reduce ongoing fixed costs; management expects sales recovery in 2026 and rightsizing railcar fleet will help return Sand to positive margins next year.

• Question from Doug Garber (Westport Alpha): How much did returning railcars reduce your cost and what's your total railcar liability monthly?
  Response: Total railcar cash outlay about $120k/month; the recent returns reduced that by roughly $30k/month; next set of cars may release Feb–Mar 2026; fleet count down ~30% year-to-date.

• Question from Doug Garber (Westport Alpha): Is pricing holding — are you still in the ~$20/ton FOB range?
  Response: Pricing was slightly below $20/ton in the quarter due to specific offloads, but underlying demand and pricing remain in the ~$20 range for 40–70 ton volumes.

Contradiction Point 1

Aviation Market Outlook

It involves differing sentiments on the aviation market, which could impact strategic investment decisions and financial projections.

What's driving current conditions in the aviation market? Are niche markets driving your current excess returns? - Doug Garber(Westport Alpha)

2025Q3: The aviation market has favorable passenger travel and production delays at major manufacturers like Boeing and Airbus. This creates demand at the aircraft and engine levels. - Mark Layton(CFO)

What's driving the current aviation market dynamics? Are specific niches enabling these excess returns for your company? - Doug Garber(Westport Alpha)

2025Q2: There is good deal flow in this sector. Mammoth is focusing on the aviation sector, targeting IRRs of 25% to 35% with a 3- to 5-year hold. - Mark Layton(CFO)

Contradiction Point 2

Sand Sales Market Evolution

It involves differing expectations for sand sales and market evolution, which could impact the company's strategy and financial performance in the sand segment.

What percentage of your sand sales are domestic versus Canadian, and how do you expect both markets to evolve over the next 3 to 4 quarters? - Colby Sasso(Daniel Energy Partners)

2025Q3: The majority of sand historically has been sold into Western Canada, particularly the Montney Shale. Mammoth expects this split to continue, with sales primarily focused on the Montney Shale. - Mark Layton(CFO)

Can you provide domestic versus Canadian sand sales volumes and market evolution forecasts for the next 3-4 quarters? - Colby Sasso(Daniel Energy Partners)

2025Q2: Our primary logistic advantage is into Western Canada, into the Montney, and then into the Northeast, into the Utica, Marcellus. Looking at '26 volumes, we expect an increase compared to Q3, which was framed as a low watermark or reset. - Mark Layton(CFO)

Contradiction Point 3

Inorganic Growth Strategy

It reflects a change in the company's approach to growth, shifting from a focus on organic growth to considering acquisitions, which can impact investment decisions and strategic direction.

Can you provide visibility on 2026 sand volumes and specific basins served? - Colby Sasso(Daniel Energy Partners)

2025Q3: While we would consider acquisitions, there's plenty of organic growth opportunities at this point. - Phillip Lancaster(CEO)

What is the growth potential for the Infrastructure business (organic vs. acquisitive)? How will the new administration and DOGE impact the infrastructure sector in 2024? - Rick Black(Investor Relations)

2024Q4: We are also getting involved with more co-ops to enhance storm revenue. While we would consider acquisitions, there's plenty of organic growth opportunities at this point. - Phillip Lancaster(CEO)

Contradiction Point 4

Sand Business Free Cash Flow Path

It involves differing expectations for achieving free cash flow neutrality, which is a key financial goal for the company.

What is the path for the Sand business to return to free cash flow neutrality by 2026 or next quarter? How much of the drag was due to the one-time railcar return issue? - Doug Garber(Westport Alpha)

2025Q3: There are sales levers for improvement, and Q3 included a one-time charge of about $550,000 for railcar returns, reducing fixed costs and moving towards rightsizing the railcar fleet. - Mark Layton(CFO)

For your 2025 CapEx outlook, you mentioned $12 million allocated between pressure pumping and the rental business. Can you provide the percentage breakdown between these two areas? - Rick Black(Investor Relations)

2024Q4: Sand segment was profitable in the quarter with adjusted EBITDA of 11% and adjusted segment margin of 12%. We expect this trend to continue through 2025. - Mark Layton(CFO)