Mammoth Energy Services Inc.
10/30/2026 | Press release | Distributed by Public on 10/30/2026 14:51
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes thereto presented in this Quarterly Report and the consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K. This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission, or the SEC, on March 6, 2026 and the section entitled "Cautionary Note Regarding Forward-Looking Statements" appearing elsewhere in this Quarterly Report.
Overview
We are a growth-oriented company centered on an expanding aviation leasing business. We also provide products and services to customers in the utility infrastructure and oil and natural gas industries. We operate through five reportable segments: rental services, infrastructure services, natural sand proppant services, accommodation services and drilling services. Our rental services segment comprises aviation leasing, aviation equipment sales and heavy equipment rentals for construction and oilfield activities. Our infrastructure services segment provides fiber optic services to utility customers. Our natural sand proppant services segment mines, processes and sells natural sand proppant used for hydraulic fracturing. Our accommodation services segment provides housing, kitchen and dining, and recreational service facilities for workers in remote areas away from readily available lodging. Our drilling services segment provides directional drilling services to oilfield operators. While the Company reports five reportable segments, management broadly evaluates performance across two business categories: Rentals, which includes aviation and equipment rental activities, and Services, which includes infrastructure, sand, accommodation and drilling operations. These broader categories are intended to assist investors in understanding the Company's business mix and do not represent additional reportable segments. During the first nine months of 2026, management continued executing its strategy of investing in revenue-producing rental assets and increasing deployment across the aviation portfolio. These investments expanded the Company's available leasing capacity and contributed to growth within the Rentals category. Improved profitability during the quarter was driven primarily by growth in aviation leasing activity, positive Adjusted EBITDA in the Sand segment and increased occupancy in the Accommodations segment, which contributed to higher consolidated Adjusted EBITDA and improved profitability compared with the second quarter of 2026.
We are focused on driving returns through improved execution by prioritizing asset utilization, margin expansion, and capital efficiency across the portfolio. While macroeconomic uncertainty, including tariffs and demand volatility, continues to affect parts of the market, we remain proactive in repositioning Mammoth to perform through differing business cycles.
Aviation Platform Highlights
Management believes the following aviation operating metrics are useful indicators of fleet deployment, utilization and overall aviation operating performance.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| Metric | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Aircraft Owned | 14 | 10 | 14 | 10 | |||||||||||||||||||
| Engines Owned | 14 | 3 | 14 | 3 | |||||||||||||||||||
| APUs Owned | 16 | 2 | 16 | 2 | |||||||||||||||||||
| Total Aviation Assets | 44 | 15 | 44 | 15 | |||||||||||||||||||
| Revenue-Producing Assets | 29 | 11 | 29 | 11 | |||||||||||||||||||
| Aircraft Utilization | 71 | % | 100 | % | 75 | % | 100 | % | |||||||||||||||
| Engine Utilization | 64 | % | - | % | 66 | % | - | % | |||||||||||||||
| APU Utilization | 69 | % | 50 | % | 65 | % | 50 | % | |||||||||||||||
|
Overall Deployment Rate(a)
|
66 | % | 73 | % | 66 | % | 73 | % | |||||||||||||||
(a)Overall deployment rate represents revenue-producing aviation assets divided by total aviation assets as of the applicable measurement date. Revenue-producing assets represent aviation assets generating lease revenue as of the measurement date.
Business Developments
During 2025, we completed four strategic divestitures. On April 11, 2025, we sold a portion of our infrastructure services entities, including our distribution, transmission and substation operations, for aggregate proceeds of approximately $108.7 million. On June 16, 2025, we sold all of the equipment previously used in our hydraulic fracturing services for $15.0 million. On September 15, 2025, the Company completed the sale of assets related to its natural sand proppant operations at its Piranha Proppant LLC processing plant. On December 2, 2025, we completed the sale of our engineering services business, Aquawolf for approximately $30.0 million. The results of operations, financial position and cash flows for these businesses are reported as discontinued operations for all periods presented and discussed in this report. Unless otherwise indicated, the information presented in this Management's Discussion and Analysis relates only to our continuing operations.
To reflect how management evaluates the business after these divestitures, prior period segment information in our results of operations below has been recast to conform with our segment composition as of September 30, 2026. See Note 19. Segment Information, for additional information regarding the recast segment information and Note 4. Discontinued Operations of the notes to our unaudited condensed consolidated financial statements for more information regarding the divestitures.
During the second quarter of 2026, we expanded our fiber optic services offering through the acquisitions of Mission Construction LLC and BERE Rentals LLC, both providers of fiber optic services to utility customers in the midwestern region of the United States. On June 12, 2026, we acquired all of the outstanding equity interests in Mission Construction LLC for aggregate consideration of $3.1 million and all of the outstanding equity interests in BERE Rentals LLC for aggregate consideration of $3.4 million. The acquisitions were funded with cash on hand. These acquisitions extend our presence in the fiber optic services market and broaden the range of services we provide to utility customers in the region.
Overview of Our Industries
Aircraft Industry
Demand for aviation assets remained favorable during the quarter, supporting increased lease activity and revenue in our aviation rental business. We continue to evaluate opportunities to expand our aviation fleet as market conditions warrant.
Oil and Natural Gas Industry
Customer activity improved during 2026, contributing to higher utilization across our drilling, rental and accommodation businesses, although commodity price volatility continues to create uncertainty.
Infrastructure Industry
Demand for our fiber optic services continues to be supported by communications infrastructure investment and broadband deployment initiatives.
Settlement Agreement with PREPA
See Notes 2 and 18 for discussion of the PREPA Settlement Agreement.
Third Quarter 2026 Financial Overview
Revenue increased 95%, to $21.3 million during the third quarter of 2026, driven primarily by aviation, natural sand proppant, and accommodation activities. Operating loss narrowed to $0.4 million compared to $9.4 million in the prior-year period, reflecting higher utilization. Adjusted EBITDA improved to $5.8 million from a loss of $4.8 million in the prior-year period. See "Non-GAAP Financial Measures" for a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA.
Future Results
We remain focused on increasing equipment utilization, expanding our aviation rental platform, developing our infrastructure services business and maintaining capital discipline. While uncertainty remains regarding commodity prices, tariffs and broader economic conditions, management believes recent operating results and placement of recently acquired aviation assets into service support its expectations for continued revenue growth and profitability improvement during the remainder of 2026.
Results of Operations
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
| Three Months Ended | |||||||||||
| September 30, 2026 | September 30, 2025 | ||||||||||
| (in thousands) | |||||||||||
| Revenue: | |||||||||||
| Rental services and aviation sales | $ | 9,646 | $ | 2,766 | |||||||
| Infrastructure services | 1,120 | 812 | |||||||||
| Natural sand proppant services | 5,154 | 2,728 | |||||||||
| Accommodation services | 3,390 | 2,280 | |||||||||
| Drilling services | 2,057 | 2,282 | |||||||||
| Other services | 48 | - | |||||||||
| Eliminations | (69) | (16) | |||||||||
| Total revenue | 21,346 | 10,852 | |||||||||
| Cost of revenue: | |||||||||||
|
Rental services and aviation sales (exclusive of depreciation and amortization of $4,403 and $1,009 for the three months ended September 30, 2026 and 2025, respectively)
|
2,652 | 1,691 | |||||||||
|
Infrastructure services (exclusive of depreciation and amortization of $368 and $56 for the three months ended September 30, 2026 and 2025, respectively)
|
1,735 | 1,579 | |||||||||
|
Natural sand proppant services (exclusive of depreciation, depletion and accretion of $1,388 and $1,263 for the three months ended September 30, 2026 and 2025, respectively)
|
2,980 | 4,148 | |||||||||
|
Accommodation services (exclusive of depreciation and accretion of $288 and $273 for the three months ended September 30, 2026 and 2025, respectively)
|
2,043 | 1,436 | |||||||||
|
Drilling services (exclusive of depreciation of $51 and $20 for the three months ended September 30, 2026 and 2025, respectively)
|
1,880 | 1,840 | |||||||||
|
Other services (exclusive of depreciation of $59 and $130 for the three months ended September 30, 2026 and 2025, respectively)
|
167 | 207 | |||||||||
| Eliminations | (69) | (16) | |||||||||
| Total cost of revenue | 11,388 | 10,885 | |||||||||
| Selling, general and administrative | 4,134 | 4,749 | |||||||||
| Depreciation, depletion, amortization and accretion | 6,557 | 2,751 | |||||||||
| (Gains) losses on disposal of assets, net | (312) | 1,874 | |||||||||
| Operating loss | (421) | (9,407) | |||||||||
| Interest income, net | 211 | 729 | |||||||||
| Gain on marketable securities, net | 1,173 | 73 | |||||||||
| Other expense, net | (533) | (1,903) | |||||||||
| Income (loss) before income taxes | 430 | (10,508) | |||||||||
| Provision for income taxes | 136 | 2,140 | |||||||||
| Net income (loss) from continuing operations | 294 | (12,648) | |||||||||
| Net (loss) income from discontinued operations, net of income taxes | (168) | 33 | |||||||||
| Net income (loss) | $ | 126 | $ | (12,615) | |||||||
Revenue. Revenue for the three months ended September 30, 2026 increased $10.4 million, or 95%, to $21.3 million compared to $10.9 million for the same period in 2025. The increase was primarily attributable to increases in revenue for rental, infrastructure, natural sand proppant, and accommodation services during the three months ended September 30, 2026, which was partially offset by a decrease in revenue for drilling services. Revenue by segment was as follows:
Rental Services and Aviation Sales. Rental services and aviation sales revenue increased $6.8 million, or 243%, to $9.6 million for the three months ended September 30, 2026 compared to $2.8 million for the same period in 2025. The increase was primarily attributable to $5.4 million from growth of the aviation leasing platform. Aviation fleet capacity increased from 15 in the prior-year period to 44 and revenue-producing assets increased from 11 in the prior-year period to 29. The increase also benefited from a 50% increase in the average number of pieces of equipment rented to customers to 430 for the three months ended September 30, 2026 compared to 286 for the same period in 2025.
Infrastructure Services. Infrastructure services revenue increased $0.3 million, or 38%, to $1.1 million for the three months ended September 30, 2026 compared to $0.8 million for the same period in 2025. The increase in revenue was primarily due to additional fiber optic activity from customers added through recent acquisitions.
Natural Sand Proppant Services. Natural sand proppant services revenue increased $2.5 million, or 93%, to $5.2 million for the three months ended September 30, 2026 compared to $2.7 million for the same period in 2025. The increase in our natural sand proppant services revenue was primarily due to an 86% increase in tons of sand sold to 227,676 tons for the three months ended September 30, 2026 compared to 122,161 tons for the same period in 2025, combined with a 21% increase in the average price per ton of sand sold to $22.18 per ton during the three months ended September 30, 2026 compared to $18.26 per ton for the same period in 2025. The increase in average price per ton of sand sold was primarily due to a shift of grade mix to include more fine sand.
Accommodation Services. Accommodation services revenue increased $1.1 million, or 48%, to $3.4 million for the three months ended September 30, 2026 compared to $2.3 million for the same period in 2025. The increase reflected higher occupancy levels and improved utilization driven by increased customer activity. On average, 270 rooms were utilized during the three months ended September 30, 2026 as compared to 185 for the same period in 2025 for our accommodation services.
Drilling Services. Drilling services revenue decreased $0.2 million or 9% to $2.1 million for the three months ended September 30, 2026 compared to $2.3 million for the same period in 2025. The decrease in revenue was primarily attributable to a 9% decrease in the average day rate and $0.3 million from the sale of equipment damaged or lost down-hole for the three months ended September 30, 2025 with no similar activity for the three months ended September 30, 2026. Utilization remained unchanged at 32% for both periods.
Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion). Cost of revenue, exclusive of depreciation, depletion, amortization and accretion, increased $0.5 million to $11.4 million, or 54% of total revenue, for the three months ended September 30, 2026 compared to $10.9 million, or 100% of total revenue, for the same period in 2025. Cost of revenue by segment was as follows:
Rental Services and Aviation Sales. Rental services and aviation sales cost of revenue, exclusive of depreciation and amortization, increased $1.0 million, or 59%, to $2.7 million for the three months ended September 30, 2026 compared to $1.7 million for the same period in 2025. The increase was primarily attributable to higher operating activity associated with the deployment of newly acquired aircraft and equipment. As a percentage of revenue, our rental services cost of revenue, exclusive of depreciation and amortization of $4.4 million and $1.0 million for the three months ended September 30, 2026 and 2025, was 28% and 61%, respectively. Despite the increase in operating costs, segment margins benefited from greater aviation lease activity and improved absorption of fixed operating expenses.
Infrastructure Services. Infrastructure services cost of revenue, exclusive of depreciation, increased $0.1 million, or 6%, to $1.7 million for the three months ended September 30, 2026 compared to $1.6 million for the same period in 2025. As a percentage of revenue, cost of revenue, exclusive of depreciation of $0.4 million and $0.1 million for the three months ended September 30, 2026 and 2025, was 155% and 200% for the three months ended September 30, 2026 and 2025, respectively. The decrease as a percentage of revenue is primarily due to a decrease in contract labor coupled with an increase in activity, resulting in a lower ratio of fixed costs to variable costs.
Natural Sand Proppant Services. Natural sand proppant services cost of revenue, exclusive of depreciation, depletion and accretion, decreased $1.1 million, or 27%, to $3.0 million for the three months ended September 30, 2026 compared to $4.1 million for the same period in 2025. As a percentage of revenue, cost of revenue, exclusive of depreciation, depletion and accretion of $1.4 million and $1.3 million for the three months ended September 30, 2026 and 2025, was 58% and 152% for the three months ended September 30, 2026 and 2025, respectively. The decrease in cost as a percentage of revenue is primarily due to an 86% increase in tons sold and a 21% increase in average sales price per ton.
Accommodation Services. Accommodation services cost of revenue, exclusive of depreciation and accretion, increased $0.6 million, or 43%, to $2.0 million for the three months ended September 30, 2026 compared to $1.4 million for the same period in 2025. As a percentage of revenue, cost of revenue, exclusive of depreciation and accretion of $0.3 million and $0.3 million for the three months ended September 30, 2026 and 2025, was 59% and 61% for the three months ended September 30, 2026 and 2025, respectively. The decrease in cost as a percentage of revenue is primarily due to a 46% increase in room utilization coupled with a modest increase in the average room rate.
Drilling Services. Drilling services cost of revenue, exclusive of depreciation, increased $0.1 million, or 6%, to $1.9 million for the three months ended September 30, 2026 compared to $1.8 million for the same period in 2025. As a percentage of revenue, cost of revenue, exclusive of depreciation of $0.1 million and an immaterial amount for the three months ended September 30, 2026 and 2025, was 90% and 78% for the three months ended September 30, 2026 and 2025, respectively. The increase as a percentage of revenue is primarily due to a 9% decrease in the average day rate, coupled with flat utilization period over period.
Other Services. Other services cost of revenue, exclusive of depreciation, remained flat at $0.2 million for the three months ended September 30, 2026 and 2025. The marginal decrease is primarily due to lower lease and rent expense and reduced insurance costs associated with non-operating legacy services.
Selling, General and Administrative. Selling, general and administrative expense decreased $0.6 million, or 13%, to $4.1 million for the three months ended September 30, 2026 compared to $4.7 million for the same period in 2025. The decrease was primarily attributable to lower corporate overhead and professional service costs. SG&A expense represented 19% of revenue during the three months ended September 30, 2026 compared to 43% during the prior-year period, reflecting improved operating leverage on higher revenue levels.
Depreciation, Depletion, Amortization and Accretion. Depreciation, depletion, amortization and accretion totaled $6.6 million for the three months ended September 30, 2026 compared to $2.8 million for the same period in 2025. The increase is primarily attributable to increased depreciation of property, plant and equipment resulting from aviation assets being placed into service.
(Gains) Losses on Disposal of Assets, Net. Net gains on asset disposals were $0.3 million for the three months ended September 30, 2026 compared with net losses on asset disposals of $1.9 million for the corresponding 2025 period. Net gains on asset disposals primarily related to the sale of a building and field equipment for the three months ended September 30, 2026. For the three months ended September 30, 2025, we completed the sale of assets associated with the natural sand proppant services segment. This transaction resulted in a loss of approximately $2.4 million, which was partially offset by $0.5 million in gains from the sale of assets related to our other services.
Operating Loss. We reported operating loss of $0.4 million for the three months ended September 30, 2026 compared to $9.4 million for the same period in 2025. The reduction in operating loss primarily reflected increased Rental Services and Aviation Sales activity, improved Natural Sand Proppant Services performance and higher Accommodation Services activity.
Interest Income, Net. Interest income, net was $0.2 million for the three months ended September 30, 2026 compared to $0.7 million for the same period in 2025.
Gain on Marketable Securities, Net. Net gain on marketable securities was $1.2 million for the three months ended September 30, 2026 compared to $0.1 million for the prior-year period.
Other Expense, Net. Other expense, net was $0.5 million for the three months ended September 30, 2026 compared to $1.9 million for the same period in 2025.
Provision for Income Taxes. We recorded income tax expense of $0.1 million on pre-tax income of $0.4 million for the three months ended September 30, 2026 compared to $2.1 million on pre-tax loss of $10.5 million for the same period in
2025. Our effective tax rates were 31.6% and (20.4)% for the three months ended September 30, 2026 and 2025, respectively. The increase in the effective tax rate was primarily attributable to changes in valuation allowances, interest and penalties, withholding taxes and other foreign tax items, as well as the change from a pre-tax loss for the three months ended September 30, 2025 to pre-tax income for the three months ended September 30, 2026.
Discontinued Operations. We recorded net loss from discontinued operations, net of income taxes totaling $0.2 million during the three months ended September 30, 2026 compared to net income from discontinued operations, net of income taxes of an immaterial amount for the same period in 2025. See Note 4 of the notes to our unaudited condensed consolidated financial statements for a breakout of the results of operations for our discontinued operations.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
| Nine Months Ended | |||||||||||
| September 30, 2026 | September 30, 2025 | ||||||||||
| (in thousands) | |||||||||||
| Revenue: | |||||||||||
| Rental services and aviation sales | $ | 32,834 | $ | 7,798 | |||||||
| Infrastructure services | 2,328 | 2,914 | |||||||||
| Natural sand proppant services | 16,993 | 14,843 | |||||||||
| Accommodation services | 10,134 | 6,127 | |||||||||
| Drilling services | 7,302 | 3,207 | |||||||||
| Other services | 144 | - | |||||||||
| Eliminations | (305) | (54) | |||||||||
| Total revenue | 69,430 | 34,835 | |||||||||
| Cost of revenue: | |||||||||||
|
Rental services and aviation sales (exclusive of depreciation and amortization of $10,470 and $2,104 for the nine months ended September 30, 2026 and 2025, respectively)
|
15,435 | 4,675 | |||||||||
|
Infrastructure services (exclusive of depreciation and amortization of $552 and $164 for the nine months ended September 30, 2026 and 2025, respectively)
|
3,786 | 3,807 | |||||||||
|
Natural sand proppant services (exclusive of depreciation, depletion and accretion of $2,493 and $3,552 for the nine months ended September 30, 2026 and 2025, respectively)
|
15,146 | 14,886 | |||||||||
|
Accommodation services (exclusive of depreciation and accretion of $863 and $799 for the nine months ended September 30, 2026 and 2025, respectively)
|
6,299 | 4,110 | |||||||||
|
Drilling services (exclusive of depreciation of $92 and $73 for the nine months ended September 30, 2026 and 2025, respectively)
|
6,044 | 2,994 | |||||||||
|
Other services (exclusive of depreciation of $191 and $969 for the nine months ended September 30, 2026 and 2025, respectively)
|
691 | 1,635 | |||||||||
| Eliminations | (305) | (54) | |||||||||
| Total cost of revenue | 47,096 | 32,053 | |||||||||
| Selling, general and administrative | 11,962 | 13,823 | |||||||||
| Depreciation, depletion, amortization and accretion | 14,661 | 7,661 | |||||||||
| Gains on disposal of assets, net | (5,628) | (2,675) | |||||||||
| Impairment of long-lived assets | - | 31,669 | |||||||||
| Operating income (loss) | 1,339 | (47,696) | |||||||||
| Interest (expense) income, net | (59) | 1,112 | |||||||||
| Gain on marketable securities, net | 7,161 | 73 | |||||||||
| Other expense, net | (1,214) | (2,863) | |||||||||
| Income (loss) before income taxes | 7,227 | (49,374) | |||||||||
| Provision for income taxes | 3,444 | 2,044 | |||||||||
| Net income (loss) from continuing operations | 3,783 | (51,418) | |||||||||
| Net income from discontinued operations, net of income taxes | 770 | 47,114 | |||||||||
| Net income (loss) | $ | 4,553 | $ | (4,304) | |||||||
Revenue. Revenue for the nine months ended September 30, 2026 increased $34.6 million, or 99%, to $69.4 million from $34.8 million for the same period in 2025. The increase in total revenue is primarily attributable to increases in rental, natural sand proppant, accommodation and drilling services, partially offset by a decrease in infrastructure services revenue. Revenue by segment was as follows:
Rental Services and Aviation Sales. Rental services and aviation sales revenue increased $25.0 million, or 321%, to $32.8 million for the nine months ended September 30, 2026 compared to $7.8 million for the same period in 2025. Revenue growth was driven by expansion of the Company's aviation asset base and higher aviation sales activity. Aviation rental revenue increased $21.1 million and equipment rental revenue increased $3.9 million. The increase in aviation revenue was partially driven by the sale of an auxiliary power unit and an airframe and landing gear for $8.5 million. The increase in our equipment rental revenue was driven by a 51% increase in the average number of pieces of equipment rented to customers to 409 for the nine months ended September 30, 2026 compared to 271 for the same period in 2025.
Infrastructure Services. Infrastructure services revenue decreased $0.6 million, or 21%, to $2.3 million for the nine months ended September 30, 2026 compared to $2.9 million for the same period in 2025. The decrease in revenue primarily reflected the loss of a customer and lower fiber optic activity. Infrastructure results also reflected transition-related costs and underutilization associated with customer changes and the integration of recent acquisitions. Management expects utilization and operating performance to improve as these acquisitions are further integrated and customer activity expands.
Natural Sand Proppant Services. Natural sand proppant services revenue increased $2.2 million, or 15%, to $17.0 million for the nine months ended September 30, 2026 compared to $14.8 million for the same period in 2025. The increase in our natural sand proppant services revenue was primarily due to an 11% increase in tons of sand sold to approximately 612,303 tons for the nine months ended September 30, 2026 compared to approximately 552,944 tons for the same period in 2025, combined with a 2% increase in the average sales price per ton of sand sold to $21.19 per ton during the nine months ended September 30, 2026 compared to $20.74 per ton for the same period in 2025. The increase in average price per ton primarily reflected a shift in product mix toward finer grades of sand.
Accommodation Services. Accommodation services revenue increased $4.0 million, or 66%, to $10.1 million for the nine months ended September 30, 2026, compared to $6.1 million for the same period in 2025. Revenue growth reflected increased occupancy. On average, 272 rooms were utilized during the nine months ended September 30, 2026 compared to 170 for the same period in 2025 for our accommodation services.
Drilling Services. Drilling services revenue increased $4.1 million, or 128%, to $7.3 million for the nine months ended September 30, 2026, compared to $3.2 million for the same period in 2025. The increase in our drilling services revenue was primarily attributable to higher utilization levels, which increased to 32% for the nine months ended September 30, 2026 compared to 17% for the same period in 2025. This was coupled with proceeds of $0.3 million from the sale of equipment damaged or lost down-hole and higher average day rates for our drilling services for the nine months ended September 30, 2026.
Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion). Cost of revenue, exclusive of depreciation, depletion, amortization and accretion, increased $15.0 million to $47.1 million, or 68% of total revenue, for the nine months ended September 30, 2026, compared to $32.1 million, or 92% of total revenue, for the same period in 2025. Cost of revenue by segment was as follows:
Rental Services and Aviation Sales. Rental services and aviation sales cost of revenue, exclusive of depreciation and amortization, increased $10.7 million, or 228%, to $15.4 million for the nine months ended September 30, 2026 compared to $4.7 million for the same period in 2025. The increase reflected higher operating activity associated with aircraft and equipment acquisitions and a higher percentage of assets on contract as well as the sale of an auxiliary power unit and an airframe and landing gear with an aggregate cost basis of $7.8 million. As a percentage of revenue, our rental services cost of revenue, exclusive of depreciation and amortization of $10.5 million and $2.1 million for the nine months ended September 30, 2026 and 2025, respectively, was 47% and 60% for the nine months ended September 30, 2026 and 2025, respectively. The decrease as a percentage of revenue is primarily due to an increase in utilization and a greater contribution from higher-margin aviation leasing activity.
Infrastructure Services. Infrastructure services cost of revenue, exclusive of depreciation, remained flat at $3.8 million for the nine months ended September 30, 2026 and 2025. As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization of $0.6 million and $0.2 million for the nine months ended September 30, 2026 and 2025, respectively was 165% and 131% for the nine months ended September 30, 2026 and 2025, respectively. The increase as a percentage of revenue is primarily due to an increase in compensation and benefits and fuel expense coupled with a decrease in utilization.
Natural Sand Proppant Services. Natural sand proppant services cost of revenue, exclusive of depreciation, depletion and accretion, increased $0.2 million, or 1%, to $15.1 million for the nine months ended September 30, 2026 compared to $14.9 million for the same period in 2025. As a percentage of revenue, cost of revenue, exclusive of depreciation, depletion and accretion of $2.5 million and $3.6 million for the nine months ended September 30, 2026 and 2025, respectively, was 89% and 100% for the nine months ended September 30, 2026 and 2025, respectively. The decrease in cost as a percentage of revenue is primarily due to an 11% increase in tons sold and a 2% increase in average sales price per ton.
Accommodation Services. Accommodation services cost of revenue, exclusive of depreciation and accretion, increased $2.2 million, or 54%, to $6.3 million for the nine months ended September 30, 2026 compared to $4.1 million for the same period in 2025. The increase was primarily attributable to increased contract labor and compensation and benefits to support increased occupancy levels. As a percentage of revenue, cost of revenue, exclusive of depreciation and accretion of $0.9 million and $0.8 million for the nine months ended September 30, 2026 and 2025, respectively, was 62% and 67% for the nine months ended September 30, 2026 and 2025, respectively. Cost of revenue decreased as a percentage of revenue because revenue increased at a greater rate than operating costs.
Drilling Services. Drilling services cost of revenue, exclusive of depreciation, increased $3.0 million, or 100%, to $6.0 million for the nine months ended September 30, 2026 compared to $3.0 million for the same period in 2025. The increase was primarily attributable to increased specialty equipment rentals and contract labor to support increased customer demand and utilization. As a percentage of revenue, cost of revenue, exclusive of depreciation of $0.1 million and $0.1 million for the nine months ended September 30, 2026 and 2025, was 82% and 94% for the nine months ended September 30, 2026 and 2025, respectively. The decrease in cost of revenue as a percentage of revenue was primarily due to higher utilization levels.
Other Services. Other services cost of revenue, exclusive of depreciation, decreased $0.9 million to $0.7 million for the nine months ended September 30, 2026 compared to $1.6 million for the same period in 2025. The decrease is primarily due to lower compensation and benefits expense and reduced insurance costs associated with non-operating legacy services.
Selling, General and Administrative. Selling, general and administrative expense decreased $1.8 million, or 13%, to $12.0 million for the nine months ended September 30, 2026 compared to $13.8 million for the same period in 2025. The decrease was primarily attributable to a decrease in compensation and benefits coupled with reduced corporate and professional costs. SG&A expense represented 17% of revenue during the nine months ended September 30, 2026 compared to 40% during the prior-year period, reflecting the Company's ability to leverage its fixed overhead structure as revenue increased.
Depreciation, Depletion, Amortization and Accretion. Depreciation, depletion, amortization and accretion increased $7.0 million to $14.7 million for the nine months ended September 30, 2026 from $7.7 million for the same period in 2025. The increase is primarily attributable to increased depreciation of property, plant and equipment resulting from aviation assets being placed into service during the nine months ended September 30, 2026.
Gains on Disposal of Assets, Net. Net gains on asset disposals were $5.6 million for the nine months ended September 30, 2026 compared with $2.7 million for the corresponding 2025 period. Net gains on asset disposals primarily related to the sale of drilling rigs and a building for the nine months ended September 30, 2026 and trucks and field equipment for the same period in 2025.
Impairment of Long-Lived Assets. During the nine months ended September 30, 2025, the Company's management made the decision to market assets related to its natural sand proppant operations at its Piranha Proppant LLC and Muskie Proppant LLC processing plants. As a result, the Company recognized impairment expense on these assets totaling $31.7 million during the nine months ended September 30, 2025. There was no similar activity during the nine months ended September 30, 2026.
Operating Income (Loss). We reported operating income of $1.3 million for the nine months ended September 30, 2026 compared to an operating loss of $47.7 million for the same period in 2025. The increase in operating income was primarily due to $31.7 million in impairment expense recognized during the nine months ended September 30, 2025 with no similar activity during the nine months ended September 30, 2026.
Interest (Expense) Income, Net. Interest expense, net of interest income was $0.1 million for the nine months ended September 30, 2026 compared to interest income, net of interest expense of $1.1 million for the same period in 2025. The increase in interest expense is primarily due to a one-time charge of $1.2 million of unamortized debt issuance costs during the nine months ended September 30, 2026 in relation to the new credit agreement.
Gain on Marketable Securities, Net. Net gain on marketable securities was $7.2 million for the nine months ended September 30, 2026 compared to $0.1 million for the prior-year period.
Other Expense, Net. We recognized other expense, net of $1.2 million during the nine months ended September 30, 2026 compared to $2.9 million for the same period in 2025.
Provision for Income Taxes. We recorded income tax expense of $3.4 million on pre-tax income of $7.2 million for the nine months ended September 30, 2026 compared to $2.0 million on pre-tax loss of $49.4 million for the same period in 2025. Our effective tax rates were 47.7% and (4.1)% for the nine months ended September 30, 2026 and 2025, respectively. The increase in the effective tax rate was primarily attributable to changes in valuation allowances, interest and penalties, withholding taxes and other foreign tax items, as well as the change from a pre-tax loss for the nine months ended September 30, 2025 to pre-tax income for the nine months ended September 30, 2026.
Discontinued Operations. We recorded net income from discontinued operations, net of income taxes totaling $0.8 million during the nine months ended September 30, 2026 compared to $47.1 million for the same period in 2025. See Note 4 of the notes to our unaudited condensed consolidated financial statements for a breakout of the results of operations for our discontinued operations.
Non-GAAP Financial Measures
Adjusted EBITDA from Continuing Operations
Adjusted EBITDA from continuing operations is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDA from continuing operations as net income (loss) from continuing operations before depreciation, depletion, amortization and accretion, gains on disposal of assets, net, impairment of long lived assets, equity based compensation, stock based compensation, interest expense (income), net, (loss) gain on marketable securities, net, other (income) expense, net and provision (benefit) for income taxes. We exclude the items listed above from net income (loss) from continuing operations in arriving at Adjusted EBITDA from continuing operations because these amounts can vary substantially from company to company within our industries depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA from continuing operations should not be considered as an alternative to, or more meaningful than, net income (loss) from continuing operations or cash flows from operating activities as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDA from continuing operations are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historical costs of depreciable assets, none of which are components of Adjusted EBITDA from continuing operations. Our computations of Adjusted EBITDA from continuing operations may not be comparable to other similarly titled measures of other companies. We believe that Adjusted EBITDA from continuing operations is a widely followed measure of operating performance and may also be used by investors to measure our ability to meet debt service requirements.
The following tables provide a reconciliation of Adjusted EBITDA from continuing operations to net income (loss) from continuing operations, the most directly comparable GAAP financial measure for the specified periods (in thousands):
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| Reconciliation of net income (loss) from continuing operations to Adjusted EBITDA from continuing operations: | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income (loss) from continuing operations | $ | 294 | $ | (12,648) | $ | 3,783 | $ | (51,418) | |||||||||||||||
| Depreciation, depletion, amortization and accretion | 6,557 | 2,751 | 14,661 | 7,661 | |||||||||||||||||||
| (Gains) loss on disposal of assets, net | (312) | 1,874 | (5,628) | (2,675) | |||||||||||||||||||
| Impairment of long-lived assets | - | - | - | 31,669 | |||||||||||||||||||
| Equity based compensation | - | - | 544 | - | |||||||||||||||||||
| Stock based compensation | - | - | - | 412 | |||||||||||||||||||
| Interest (income) expense, net | (211) | (729) | 59 | (1,112) | |||||||||||||||||||
| Gains on marketable securities, net | (1,173) | (73) | (7,161) | (73) | |||||||||||||||||||
| Other expense, net | 533 | 1,903 | 670 | 2,863 | |||||||||||||||||||
| Provision for income taxes | 136 | 2,140 | 3,444 | 2,044 | |||||||||||||||||||
| Adjusted EBITDA from continuing operations | $ | 5,824 | $ | (4,782) | $ | 10,372 | $ | (10,629) | |||||||||||||||
Liquidity and Capital Resources
We require capital to fund ongoing operations including maintenance expenditures on our existing fleet of equipment, organic growth initiatives, investments and acquisitions, and the litigation settlement obligations described in Note 18. Commitments and Contingencies of the notes to the unaudited condensed consolidated financial statements and under "Capital Requirements and Sources of Liquidity" below. Our primary sources of liquidity have been cash on hand, borrowings under our revolving credit facility, proceeds from the sale of assets and cash flows from operations. Our primary uses of capital have been for investing in property, plant and equipment used to provide our services and to acquire complementary assets and businesses.
Liquidity
The following table summarizes our liquidity as of the dates indicated (in thousands):
| September 30, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| Cash and cash equivalents | $ | 13,090 | $ | 101,987 | |||||||
| Revolving credit facility borrowing base | 25,000 | 50,000 | |||||||||
| Less letter of credit facilities (environmental remediation) | (2,573) | (2,573) | |||||||||
| Less letter of credit facilities (insurance programs) | (2,400) | (2,400) | |||||||||
|
Net working capital (less cash, cash equivalents and restricted cash)(a)
|
11,437 | (6,940) | |||||||||
| Total | $ | 44,554 | $ | 140,074 | |||||||
(a)Net working capital (less cash, cash equivalents and restricted cash) is calculated by subtracting total current liabilities, cash and cash equivalents and restricted cash from total current assets.
As of October 27, 2026, we had unrestricted cash on hand of $11.6 million, marketable securities of $15.9 million, no outstanding borrowings under our revolving credit facility, leaving an aggregate of $20.0 million of available borrowing capacity under this facility, after giving effect to $5.0 million of outstanding letters of credit. As of October 27, 2026, we had cash, cash equivalents and marketable securities of $27.5 million. On October 28, 2026, we entered into a senior secured term loan facility with Bank7 providing for aggregate commitments of up to $58.0 million. See Note 20 for additional information regarding the term loan facility.
Cash Flows
The following table sets forth our cash flows for the periods indicated (in thousands):
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net cash provided by (used in) operating activities from continuing operations | $ | 359 | $ | (6,404) | $ | (9,863) | $ | (14,159) | |||||||||||||||
| Net cash (used in) provided by operating activities from discontinued operations | (271) | 7,136 | (70) | 5,076 | |||||||||||||||||||
| Net cash used in investing activities from continuing operations | (37,890) | (29,436) | (82,952) | (51,828) | |||||||||||||||||||
| Net cash provided by (used in) investing activities from discontinued operations | - | (837) | 4,581 | 110,421 | |||||||||||||||||||
| Net cash used in financing activities from continuing operations | (63) | (118) | (733) | (371) | |||||||||||||||||||
| Net cash used in financing activities from discontinued operations | - | (4) | - | (3,851) | |||||||||||||||||||
| Effect of foreign exchange rate on cash | 74 | (41) | (39) | 73 | |||||||||||||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (37,791) | $ | (29,704) | $ | (89,076) | $ | 45,361 | |||||||||||||||
Operating Activities from Continuing Operations
Net cash used in operating activities from continuing operations was $9.9 million during the nine months of 2026 compared to $14.2 million for the prior-year period. The improvement in cash used was primarily driven by improved operating results, partially offset by increases in accounts receivable and inventories.
Investing Activities from Continuing Operations
Net cash used in investing activities from continuing operations was $83.0 million during the first nine months of 2026, compared to $51.8 million during the prior-year period. The increase in cash used primarily reflected purchases of aviation assets, acquisitions and purchases of marketable securities, partially offset by proceeds from asset sales.
During the first nine months of 2026, the Company invested approximately $90.7 million in aviation and other rental assets, representing the largest component of its capital deployment activities. These investments expanded the Company's portfolio of revenue-producing assets and supported the continued growth of its Rentals category. Management believes these investments position the Company for future revenue growth and improved cash generation as recently acquired aircraft, engines and auxiliary power units are placed under customer leases. While these investments reduced current cash balances, management believes they strengthen the Company's long-term earnings potential and provide opportunities to generate returns as asset utilization increases.
The following table summarizes our purchases of property, plant and equipment by segment for the periods indicated (in thousands):
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
|
Rental services(a)
|
$ | 40,079 | $ | 17,185 | $ | 90,663 | $ | 44,125 | |||||||||||||||
|
Infrastructure services(b)
|
- | 19 | 2,835 | 129 | |||||||||||||||||||
|
Natural sand proppant services(c)
|
1,154 | - | 2,390 | 93 | |||||||||||||||||||
|
Accommodation services(c)
|
135 | 95 | 494 | 170 | |||||||||||||||||||
|
Drilling services(c)
|
440 | - | 1,131 | 116 | |||||||||||||||||||
| Total purchases of property, plant and equipment | $ | 41,808 | $ | 17,299 | $ | 97,513 | $ | 44,633 | |||||||||||||||
(a) Capital expenditures primarily for expansion of our aviation rental fleet and equipment rental purchases for the periods presented.
(b) Capital expenditures primarily for equipment for our fiber optic fleets for the periods presented.
(c) Capital expenditures primarily for equipment for the periods presented.
Financing Activities from Continuing Operations
Net cash used in financing activities from continuing operations was $0.7 million during the nine months of 2026, compared to $0.4 million during the prior-year period. The increase in cash used primarily related to repurchases of common stock and payments on finance lease obligations.
Net Working Capital
Our net working capital totaled $36.5 million and $107.1 million at September 30, 2026 and December 31, 2025, respectively. Our unrestricted cash balances were $13.1 million and $102.0 million at September 30, 2026 and December 31, 2025, respectively.
Revolving Credit Facility
Refer to Note 10 of the notes to the unaudited condensed consolidated financial statements for a description of the revolving credit facility. At September 30, 2026, the facility was undrawn and provided $20.0 million of remaining borrowing capacity after letters of credit.
Repurchase Program Authorization
On August 10, 2023, our board of directors approved a stock repurchase program pursuant to which we would be
authorized to repurchase up to the lesser of $55 million or 10 million shares of our common stock, subject to the factors discussed below. Any stock repurchases under this program may be made opportunistically from time to time in open market or privately negotiated transactions in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, including any 10b5-1 plan, and will be subject to market conditions, applicable legal and contractual restrictions, liquidity requirements and other factors. The repurchase program has no time limit, does not require us to repurchase any specific number of shares and may be suspended from time to time, modified or discontinued by our board of directors at any time. Any common stock repurchased as part of such stock repurchase program will be cancelled and retired. We have repurchased and retired 230,730 shares of our common stock for approximately $0.5 million during the nine months ended September 30, 2026, leaving approximately $54.5 million available for future purchase under the stock repurchase program.
Capital Requirements and Sources of Liquidity
We expect cash on hand, marketable securities, operating cash flows and available borrowing capacity to be sufficient to fund anticipated capital expenditures, working capital requirements and other obligations. During the nine months ended September 30, 2026, capital expenditures totaled $97.5 million, including approximately $90.7 million related to the Rentals segment. For 2026, excluding aviation acquisitions, capital expenditures are currently expected to total approximately $25.4 million. We continue to evaluate acquisition opportunities and may use cash, debt, equity or a combination thereof to finance future transactions.
Mammoth Energy Services Inc. published this content on October 30, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 30, 2026 at 20:51 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]