Q1 2024 Summary
Published Feb 18, 2025, 5:24 PM UTC- Mammoth Energy has won recent bids and maintains a robust pipeline in transmission and distribution (T&D) projects, expecting significant revenue growth in their infrastructure division. They are currently working on a couple of transmission jobs and are competitive in securing a 15-crew offer with a major utility. Additionally, their engineering business, started from scratch a few years ago, is projected to generate $20 million to $23 million in revenue, which serves as a precursor to increased T&D activity.
- The company anticipates a meaningful uptick in activity in the second half of 2024, particularly in their well completions business. Customers have deferred projects but still plan to complete them within the year, with activities expected to come to fruition in July and August. This suggests improved financial performance moving forward.
- One-time interest expenses related to the SPCP agreement impacted Q1 2024 results, totaling around $5 million, but this agreement has been fully extinguished. Therefore, interest expense levels are expected to decrease in future quarters, potentially improving net income.
- Dependence on Winning New Contracts with No Guarantees: The company's anticipated growth in the infrastructure services division relies on securing new bids, such as a 15-crew offer with a major utility, but there is no guarantee these contracts will be awarded to them, potentially impacting expected revenue growth.
- Customer Activity Delays Leading to Revenue Uncertainty: The company is experiencing delays in customer activity, with projects being deferred to later in the year due to pricing and other factors. This results in a dynamic and uncertain schedule, which may lead to underutilization of assets and affect revenue timing.
- Challenges in Competitive Labor Market: Despite some improvement, the labor market remains competitive, especially in the transmission and distribution (T&D) sector. This could present challenges in attracting and retaining skilled staff, potentially impacting operational efficiency and margins.
-
Infrastructure Project Pipeline
Q: Any significant imminent new build infrastructure projects?
A: We've won some bids recently and see a robust pipeline, primarily in transmission and substation projects. We're currently working on a couple of transmission jobs and are in the midst of a 15-crew offer with a major utility, which would be helpful if secured. Our engineering business, started from scratch a few years ago, will generate $20 million to $23 million in revenue and was just awarded a nice contract. This bodes well for growth in T&D, especially with increasing demand for grid infrastructure due to AI and data centers coming online. -
Interest Expense Spike Explanation
Q: Why did interest expenses spike despite debt paydown?
A: The largest component of the spike relates to the SPCP agreement entered into in December. About $5 million impacted Q1 '24, hitting interest expense relative to the SPCP deal. These are one-time charges, and the $5 million included in Q1 fully extinguishes the SPCP agreement, so we wouldn't expect these interest levels going forward. -
Activity Recovery Outlook
Q: Shape of activity recovery in late '24 and early '25?
A: Our schedule has been dynamic, especially on the frac side, with customers deferring work due to pricing and cost considerations. Projects have slid to the right, but customers still anticipate getting the work done this year. We're already looking at activities into the July and August timeframe that we believe will come to fruition. -
Labor Market Conditions
Q: How are you managing staffing in a competitive labor market?
A: The labor market is still competitive, but we're able to find people and grow businesses, particularly in T&D where the biggest shortage is. A decrease in oil and gas activity has improved the labor market over the past six months. In transmission and distribution, we're attracting talented individuals and expanding as we add crews.