Miami, Florida – Mammoth Energy Services, a company listed on the NASDAQ under the ticker symbol TUSK, is facing tough business conditions in the near term. Their latest financial report for the first quarter of 2024 revealed a negative $6 million in adjusted EBITDA, excluding interest from their accounts receivable with the Puerto Rico Electric Power Authority (PREPA).

Analysts had anticipated a challenging year for Mammoth, with a full-year adjusted EBITDA projected at around $5 million. However, the latest results suggest that the company might end up with significantly negative adjusted EBITDA for 2024.

Despite the challenging circumstances, Mammoth’s liquidity seems to be holding up for now. The company has taken steps to reduce its 2024 capital expenditure budget by $6 million to manage cash flow effectively and safeguard its liquidity. Securing additional funds from PREPA could provide much-needed support during this period of decreased business demand.

The sale of $63 million in PREPA accounts receivable to SPCP Group earlier on helped bolster Mammoth’s financial position. By the start of March 2024, PREPA had made significant payments, including an additional $9.6 million, which further strengthened Mammoth’s financial standing.

Looking at the broader financial picture, Mammoth’s Q1 2024 results showed $4.5 million in adjusted EBITDA, supported by $10.5 million in interest from their PREPA accounts receivable. However, excluding this interest, the company would have reported a negative $6 million in adjusted EBITDA for the quarter.

The tough market conditions had a noticeable impact on Mammoth’s business divisions. The well completion services division experienced an 88% revenue decrease compared to the previous year, citing low natural gas prices and decreased demand for their services. Similarly, the infrastructure services division saw a 12% decline in revenue due to milder weather conditions affecting storm restoration activities.

To navigate the challenging environment, Mammoth has revised its full-year capital expenditure guidance down to $9 million, down from the initial $15 million budget. The company’s financial outlook for the remainder of 2024 includes managing around $14 million in projected cash burn and exploring options, such as paying interest on their Wexford Term Credit Facility in kind, to support their liquidity needs.

Despite the hurdles faced in the first quarter of 2024, Mammoth remains focused on preserving liquidity and weathering the current downturn. The company’s value has been reevaluated at around $4.00 to $4.50 per share, considering the projected cash burn for the year and potential equity offerings to boost liquidity if needed.