Attached files
file | filename |
---|---|
EX-99.6 - EXHIBIT 99.6 - MAMMOTH ENERGY SERVICES, INC. | ex996recastfinancials.htm |
EX-99.4 - EXHIBIT 99.4 - MAMMOTH ENERGY SERVICES, INC. | ex994sturginterimfins.htm |
EX-99.3 - EXHIBIT 99.3 - MAMMOTH ENERGY SERVICES, INC. | ex993sturgannualfins.htm |
EX-99.2 - EXHIBIT 99.2 - MAMMOTH ENERGY SERVICES, INC. | ex992stryinterimfins.htm |
EX-99.1 - EXHIBIT 99.1 - MAMMOTH ENERGY SERVICES, INC. | ex991stryannualfins.htm |
EX-23.2 - EXHIBIT 23.2 - MAMMOTH ENERGY SERVICES, INC. | ex232pwcconsent.htm |
EX-23.1 - EXHIBIT 23.1 - MAMMOTH ENERGY SERVICES, INC. | ex231gtconsent.htm |
8-K - 8-K - MAMMOTH ENERGY SERVICES, INC. | a2017-08x028xk.htm |
EXHIBIT 99.5
MAMMOTH ENERGY SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
TABLE OF CONTENTS
MAMMOTH ENERGY SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
On June 5, 2017, the Company acquired, through its wholly owned subsidiary Mammoth Energy Partners LLC ("Mammoth Partners LLC"), all outstanding membership interests in Sturgeon Acquisitions LLC, a Delaware limited liability company ("Sturgeon"), Stingray Energy Services LLC, a Delaware limited liability company ("Stingray Energy"), and Stingray Cementing LLC, a Delaware limited liability company ("Stingray Cementing") (collectively, the “Targets”) for aggregate consideration consisting of 7,000,000 shares (the “Stock Consideration”) of the Company’s common stock, par value $0.01 per share (collectively, the “Transaction”).
The unaudited pro forma condensed consolidated financial statements have been prepared to show the effect of the acquisition of Stingray Energy and Stingray Cementing (together, “Stingray”) and Sturgeon on the Company's consolidated results of operations and financial position for the periods and as of the dates indicated.
Sturgeon and the Company are under common control and it is required under accounting principles generally accepted in the United States of America ("US GAAP") to account for this common control acquisition in a manner similar to the pooling of interest method of accounting. The acquisition of Stingray (the "Stingray Acquisition") is being accounted for by application of the acquisition method in accordance with FASB ASC 805, Business Combinations. Under the acquisition method, assets acquired and liabilities assumed in connection with the acquisition are generally recorded at their fair values as of the effective date of the acquisition.
The unaudited pro forma condensed consolidated financial statements, in the instance of Sturgeon, have been prepared as if the Transaction occurred on September 13, 2014, in the case of the unaudited pro forma condensed consolidated statements of comprehensive (loss) income for the years ended December 31, 2016, 2015 and 2014 and the three months ended March 31, 2017. The unaudited pro forma condensed consolidated financial statements, in the instance of Stingray Energy and Stingray Cementing, have been prepared as if the Transaction occurred on January 1, 2016, in the case of the unaudited pro forma condensed consolidated statements of comprehensive (loss) income for the years ended December 31, 2016 and the three months ended March 31, 2017. The unaudited pro forma condensed consolidated balance sheet has been prepared as if the Transaction occurred on March 31, 2017. The unaudited pro forma condensed consolidated financial statements have also been prepared based on certain pro forma adjustments, as described in Note 2—Pro forma adjustments and are qualified in their entirety by reference to and should be read in conjunction with: (i) Stingray's historical financial statements and notes thereto included in this Report; (ii) Sturgeon's historical financial statements and notes thereto included in this Report and (iii) the Company’s historical financial statements and notes thereto included in its reports filed with the Securities and Exchange Commission under the Securities Act of 1934, as amended.
The pro forma adjustments reflected in the pro forma condensed consolidated financial statements are based upon currently available information and certain assumptions and estimates that the Company’s management considers to be reasonable. The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and does not purport to represent what our actual results of operations or our financial position would have been had the Transactions occurred on the respective dates assumed, nor is it indicative of our future operating results or financial position.
1
MAMMOTH ENERGY SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2017
(Unaudited)
Pro Forma Adjustments | ||||||||||||||||||||||||||
ASSETS | Mammoth | Stingray | Sturgeon | Stingray | Sturgeon | Mammoth | ||||||||||||||||||||
Historical | (A) | (B) | Adjustments | Adjustments | Pro Forma | |||||||||||||||||||||
CURRENT ASSETS | ||||||||||||||||||||||||||
Cash and cash equivalents | $ | 12,278,120 | $ | 1,417,510 | $ | 649,122 | $ | (7,214,780 | ) | $ | — | a, b | $ | 7,129,972 | ||||||||||||
Accounts receivable, net | 24,973,332 | 743,062 | 639,174 | — | — | 26,355,568 | ||||||||||||||||||||
Receivables from related parties | 33,141,299 | 8,077,607 | 4,259,995 | (2,274,135 | ) | (4,967,907 | ) | c, d | 38,236,859 | |||||||||||||||||
Inventories | 4,922,627 | 310,141 | 1,174,944 | — | — | 6,407,712 | ||||||||||||||||||||
Prepaid Expenses | 3,402,022 | 123,978 | 157,409 | (15,211 | ) | — | a | 3,668,198 | ||||||||||||||||||
Other current assets | 1,182,058 | — | — | — | — | 1,182,058 | ||||||||||||||||||||
Total current assets | 79,899,458 | 10,672,298 | 6,880,644 | (9,504,126 | ) | (4,967,907 | ) | 82,980,367 | ||||||||||||||||||
Property, plant and equipment, net | 244,021,697 | 14,581,419 | 20,705,745 | 6,597,144 | — | e | 285,906,005 | |||||||||||||||||||
Sand reserves, net | — | — | 55,365,025 | — | — | 55,365,025 | ||||||||||||||||||||
Intangible assets, net - customer relationships | 13,859,772 | — | — | 1,140,000 | — | 14,999,772 | ||||||||||||||||||||
Intangible assets, net - trade names | 5,439,307 | — | — | 820,000 | — | 6,259,307 | ||||||||||||||||||||
Goodwill | 86,043,148 | — | 2,683,727 | 10,168,738 | — | e | 98,895,613 | |||||||||||||||||||
Other non-current assets | 5,239,582 | 6,995 | 252,296 | (6,995 | ) | (255,398 | ) | a | 5,236,480 | |||||||||||||||||
Total assets | $ | 434,502,964 | $ | 25,260,712 | $ | 85,887,437 | $ | 9,214,761 | $ | (5,223,305 | ) | $ | 549,642,569 | |||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||||
CURRENT LIABILITIES | ||||||||||||||||||||||||||
Accounts payable | $ | 37,237,976 | $ | 4,258,074 | $ | 3,099,594 | $ | — | $ | — | $ | 44,595,644 | ||||||||||||||
Payables to related parties | 4,921,129 | 1,866,873 | 707,912 | (2,274,135 | ) | (4,967,907 | ) | c, f, g | 253,872 | |||||||||||||||||
Accrued expenses and other current liabilities | 8,825,877 | 439,884 | 386,021 | — | — | 9,651,782 | ||||||||||||||||||||
Income taxes payable | — | — | — | — | — | h | — | |||||||||||||||||||
Current maturities of long-term debt | — | 2,878,403 | — | (2,878,403 | ) | — | b | — | ||||||||||||||||||
Total current liabilities | 50,984,982 | 9,443,234 | 4,193,527 | (5,152,538 | ) | (4,967,907 | ) | 54,501,298 | ||||||||||||||||||
Long-term debt | — | 4,336,377 | — | (4,336,377 | ) | — | b | — | ||||||||||||||||||
Deferred income taxes | 43,881,012 | — | — | 4,444,845 | 4,010,883 | h | 52,336,740 | |||||||||||||||||||
Other liabilities | 2,733,863 | — | — | — | — | 2,733,863 | ||||||||||||||||||||
Total liabilities | 97,599,857 | 13,779,611 | 4,193,527 | (5,044,070 | ) | (957,024 | ) | 109,571,901 | ||||||||||||||||||
EQUITY | ||||||||||||||||||||||||||
Equity: | ||||||||||||||||||||||||||
Common stock | 375,000 | — | — | 13,925 | 56,075 | i | 445,000 | |||||||||||||||||||
Additional paid in capital | 400,775,752 | — | — | 25,748,213 | 77,371,554 | i | 503,895,519 | |||||||||||||||||||
Member's equity | — | 11,481,101 | 81,693,910 | (11,481,101 | ) | (81,693,910 | ) | i | — | |||||||||||||||||
Accumulated Deficit | (61,259,392 | ) | — | — | (22,206 | ) | — | b, h | (61,281,598 | ) | ||||||||||||||||
Accumulated other comprehensive loss | (2,988,253 | ) | — | — | — | — | (2,988,253 | ) | ||||||||||||||||||
Total equity | 336,903,107 | 11,481,101 | 81,693,910 | 14,258,831 | (4,266,281 | ) | 440,070,668 | |||||||||||||||||||
Total liabilities and equity | $ | 434,502,964 | $ | 25,260,712 | $ | 85,887,437 | $ | 9,214,761 | $ | (5,223,305 | ) | $ | 549,642,569 |
2
MAMMOTH ENERGY SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME
THREE MONTHS ENDED MARCH 31, 2017
(Unaudited)
Pro Forma Adjustments | |||||||||||||||||||||||||
Mammoth | Stingray | Sturgeon | Stingray | Sturgeon | Mammoth | ||||||||||||||||||||
Historical | (A) | (B) | Adjustments | Adjustments | Pro Forma | ||||||||||||||||||||
REVENUE | |||||||||||||||||||||||||
Services revenue | $ | 27,091,882 | $ | 581,701 | $ | — | $ | — | $ | — | $ | 27,673,583 | |||||||||||||
Services revenue - related parties | 33,132,571 | 8,407,129 | — | (281,571 | ) | (170,914 | ) | c, d | 41,087,215 | ||||||||||||||||
Product revenue | 2,615,209 | — | 756,854 | — | — | 3,372,063 | |||||||||||||||||||
Product revenue - related parties | 11,576,151 | — | 7,618,808 | — | (7,654,540 | ) | c, d | 11,540,419 | |||||||||||||||||
Total Revenue | 74,415,813 | 8,988,830 | 8,375,662 | (281,571 | ) | (7,825,454 | ) | 83,673,280 | |||||||||||||||||
COST AND EXPENSES | |||||||||||||||||||||||||
Services cost of revenue | 45,460,804 | 7,967,874 | — | — | — | c, f, g | 53,428,678 | ||||||||||||||||||
Services cost of revenue - related parties | 494,345 | 44,206 | — | (281,571 | ) | (64,428 | ) | c, f, g | 192,552 | ||||||||||||||||
Product cost of revenue | 5,376,897 | — | 7,230,368 | — | — | c, f, g | 12,607,265 | ||||||||||||||||||
Product cost of revenue - related parties | 7,554,380 | — | 206,646 | — | (7,761,026 | ) | c, f, g | — | |||||||||||||||||
Selling, general and administrative | 5,844,093 | 133,316 | 235,811 | 251,220 | 332,640 | c, f, g | 6,797,080 | ||||||||||||||||||
Selling, general and administrative - related parties | 377,717 | 252,814 | 279,177 | (251,220 | ) | (332,640 | ) | c, f, g | 325,848 | ||||||||||||||||
Depreciation and amortization | 16,893,777 | 1,254,491 | 343,474 | 375,416 | — | e | 18,867,158 | ||||||||||||||||||
Impairment of long-lived assets | — | — | — | — | — | — | |||||||||||||||||||
Total cost and expenses | 82,002,013 | 9,652,701 | 8,295,476 | 93,845 | (7,825,454 | ) | 92,218,581 | ||||||||||||||||||
Operating (loss) income | (7,586,200 | ) | (663,871 | ) | 80,186 | (375,416 | ) | — | (8,545,301 | ) | |||||||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||||||||||||||
Interest expense | (286,338 | ) | (71,140 | ) | (110,846 | ) | 8,941 | 51,080 | b | (408,303 | ) | ||||||||||||||
Other, net | (170,041 | ) | — | (14,105 | ) | — | — | (184,146 | ) | ||||||||||||||||
Total other expense | (456,379 | ) | (71,140 | ) | (124,951 | ) | 8,941 | 51,080 | (592,449 | ) | |||||||||||||||
Loss before income taxes | (8,042,579 | ) | (735,011 | ) | (44,765 | ) | (366,475 | ) | 51,080 | (9,137,750 | ) | ||||||||||||||
Provision for income taxes | (3,106,065 | ) | — | — | (302,596 | ) | (17,636 | ) | h | (3,426,297 | ) | ||||||||||||||
Net (loss) income | $ | (4,936,514 | ) | $ | (735,011 | ) | $ | (44,765 | ) | $ | (63,879 | ) | $ | 68,716 | $ | (5,711,453 | ) | ||||||||
OTHER COMPREHENSIVE LOSS | |||||||||||||||||||||||||
Foreign currency translation adjustment | 228,110 | — | — | — | — | 228,110 | |||||||||||||||||||
Comprehensive (loss) income | $ | (4,708,404 | ) | $ | (735,011 | ) | $ | (44,765 | ) | $ | (63,879 | ) | $ | 68,716 | $ | (5,483,343 | ) | ||||||||
Net loss per share (basic and diluted) (Note 3) | $ | (0.13 | ) | ||||||||||||||||||||||
Weighted average number of shares outstanding (Note 3) | 44,500,000 | ||||||||||||||||||||||||
3
MAMMOTH ENERGY SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
YEAR ENDED DECEMBER 31, 2016
(Unaudited)
Pro Forma Adjustments | |||||||||||||||||||||||||
Mammoth | Stingray | Sturgeon | Stingray | Sturgeon | Mammoth | ||||||||||||||||||||
Historical | (A) | (B) | Adjustments | Adjustments | Pro Forma | ||||||||||||||||||||
REVENUE | |||||||||||||||||||||||||
Services revenue | $ | 89,642,899 | $ | 2,873,700 | $ | — | $ | — | $ | — | $ | 92,516,599 | |||||||||||||
Services revenue - related parties | 107,599,378 | 21,544,441 | — | (758,696 | ) | (452,378 | ) | c, d | 127,932,745 | ||||||||||||||||
Product revenue | 5,433,141 | — | 2,619,304 | — | — | 8,052,445 | |||||||||||||||||||
Product revenue - related parties | 28,323,303 | — | 24,853,721 | — | (27,393,771 | ) | c, d | 25,783,253 | |||||||||||||||||
Total Revenue | 230,998,721 | 24,418,141 | 27,473,025 | (758,696 | ) | (27,846,149 | ) | 254,285,042 | |||||||||||||||||
COST AND EXPENSES | |||||||||||||||||||||||||
Services cost of revenue | 139,807,987 | 21,920,807 | — | 473,172 | 244,853 | c, f, g | 162,446,819 | ||||||||||||||||||
Services cost of revenue - related parties | 5,575,092 | 507,895 | — | (1,231,868 | ) | (4,511,861 | ) | c, f, g | 339,258 | ||||||||||||||||
Product cost of revenue | 7,577,660 | — | 24,096,338 | — | 228,223 | c, f, g | 31,902,221 | ||||||||||||||||||
Product cost of revenue - related parties | 20,589,170 | — | 3,220,649 | — | (23,807,364 | ) | c, f, g | 2,455 | |||||||||||||||||
Selling, general and administrative | 15,836,165 | 567,074 | 781,536 | 722,105 | 672,922 | c, f, g | 18,579,802 | ||||||||||||||||||
Selling, general and administrative - related parties | 894,810 | 733,995 | 536,004 | (722,105 | ) | (672,922 | ) | c, f, g | 769,782 | ||||||||||||||||
Depreciation and amortization | 69,910,858 | 4,896,620 | 2,404,540 | 1,558,774 | — | e | 78,770,792 | ||||||||||||||||||
Impairment of long-lived assets | 1,870,885 | — | — | — | — | 1,870,885 | |||||||||||||||||||
Total cost and expenses | 262,062,627 | 28,626,391 | 31,039,067 | 800,078 | (27,846,149 | ) | 294,682,014 | ||||||||||||||||||
Operating loss | (31,063,906 | ) | (4,208,250 | ) | (3,566,042 | ) | (1,558,774 | ) | — | (40,396,972 | ) | ||||||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||||||||||||||
Interest expense | (3,711,457 | ) | (292,061 | ) | (384,725 | ) | (10,907 | ) | (306,477 | ) | b | (4,705,627 | ) | ||||||||||||
Other, net | 252,239 | (33,409 | ) | (94,066 | ) | — | — | 124,764 | |||||||||||||||||
Total other expense | (3,459,218 | ) | (325,470 | ) | (478,791 | ) | (10,907 | ) | (306,477 | ) | (4,580,863 | ) | |||||||||||||
Loss before income taxes | (34,523,124 | ) | (4,533,720 | ) | (4,044,833 | ) | (1,569,681 | ) | (306,477 | ) | (44,977,835 | ) | |||||||||||||
Provision for income taxes | 53,884,871 | — | — | 2,067,856 | 3,238,079 | h | 59,190,806 | ||||||||||||||||||
Net loss | $ | (88,407,995 | ) | $ | (4,533,720 | ) | $ | (4,044,833 | ) | $ | (3,637,537 | ) | $ | (3,544,556 | ) | $ | (104,168,641 | ) | |||||||
OTHER COMPREHENSIVE LOSS | |||||||||||||||||||||||||
Foreign currency translation adjustment | 2,710,605 | — | — | — | — | 2,710,605 | |||||||||||||||||||
Comprehensive loss | $ | (85,697,390 | ) | $ | (4,533,720 | ) | $ | (4,044,833 | ) | $ | (3,637,537 | ) | $ | (3,544,556 | ) | $ | (101,458,036 | ) | |||||||
Net loss per share (basic and diluted) (Note 3) | $ | (2.71 | ) | ||||||||||||||||||||||
Weighted average number of shares outstanding (Note 3) | 38,500,000 | ||||||||||||||||||||||||
4
MAMMOTH ENERGY SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME
YEAR ENDED DECEMBER 31, 2015
(Unaudited)
Pro Forma Adjustments | |||||||||||||||||
Mammoth | Sturgeon | Mammoth | |||||||||||||||
Historical | (B) | Adjustments | Pro Forma | ||||||||||||||
REVENUE | |||||||||||||||||
Services revenue | $ | 172,012,405 | $ | — | $ | — | $ | 172,012,405 | |||||||||
Services revenue - related parties | 132,674,989 | — | (122,131 | ) | c, d | 132,552,858 | |||||||||||
Product revenue | 16,732,077 | 8,457,482 | — | 25,189,559 | |||||||||||||
Product revenue - related parties | 38,517,222 | 23,185,931 | (23,521,183 | ) | c, d | 38,181,970 | |||||||||||
Total Revenue | 359,936,693 | 31,643,413 | (23,643,314 | ) | 367,936,792 | ||||||||||||
COST AND EXPENSES | |||||||||||||||||
Services cost of revenue | 225,820,450 | — | 123,818 | c, f, g | 225,944,268 | ||||||||||||
Services cost of revenue - related parties | 4,177,335 | — | (2,798,502 | ) | c, f, g | 1,378,833 | |||||||||||
Product cost of revenue | 25,838,555 | 21,525,593 | — | c, f, g | 47,364,148 | ||||||||||||
Product cost of revenue - related parties | 20,510,977 | 457,653 | (20,968,630 | ) | c, f, g | — | |||||||||||
Selling, general and administrative | 19,303,557 | 1,354,695 | 791,180 | c, f, g | 21,449,432 | ||||||||||||
Selling, general and administrative - related parties | 1,237,991 | 503,777 | (791,180 | ) | c, f, g | 950,588 | |||||||||||
Depreciation and amortization | 72,393,882 | 2,104,692 | — | 74,498,574 | |||||||||||||
Impairment of long-lived assets | 12,124,353 | — | — | 12,124,353 | |||||||||||||
Total cost and expenses | 381,407,100 | 25,946,410 | (23,643,314 | ) | 383,710,196 | ||||||||||||
Operating (loss) income | (21,470,407 | ) | 5,697,003 | — | (15,773,404 | ) | |||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||||||
Interest income | 98,492 | — | — | 98,492 | |||||||||||||
Interest expense | (5,290,821 | ) | (173,726 | ) | — | (5,464,547 | ) | ||||||||||
Other, net | (2,157,764 | ) | (111,294 | ) | — | (2,269,058 | ) | ||||||||||
Total other expense | (7,350,093 | ) | (285,020 | ) | — | (7,635,113 | ) | ||||||||||
(Loss) income before income taxes | (28,820,500 | ) | 5,411,983 | — | (23,408,517 | ) | |||||||||||
Benefit for income taxes | (1,589,086 | ) | — | — | (1,589,086 | ) | |||||||||||
Net (loss) income | $ | (27,231,414 | ) | $ | 5,411,983 | $ | — | $ | (21,819,431 | ) | |||||||
OTHER COMPREHENSIVE (LOSS) INCOME | |||||||||||||||||
Foreign currency translation adjustment | (4,814,819 | ) | — | — | (4,814,819 | ) | |||||||||||
Comprehensive (loss) income | $ | (32,046,233 | ) | $ | 5,411,983 | $ | — | $ | (26,634,250 | ) | |||||||
Net loss per share (basic and diluted) (Note 3) | $ | (0.59 | ) | ||||||||||||||
Weighted average number of shares outstanding (Note 3) | 37,000,000 | ||||||||||||||||
5
MAMMOTH ENERGY SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME
YEAR ENDED DECEMBER 31, 2014
(Unaudited)
September 13 to December 31, | Pro Forma Adjustments | ||||||||||||||||
Mammoth | Sturgeon | Mammoth | |||||||||||||||
Historical | (B) | Adjustments | Pro Forma | ||||||||||||||
REVENUE | |||||||||||||||||
Services revenue | $ | 182,341,309 | $ | — | $ | — | $ | 182,341,309 | |||||||||
Services revenue - related parties | 30,834,421 | — | — | 30,834,421 | |||||||||||||
Product revenue | 36,859,731 | 14,301,656 | — | 51,161,387 | |||||||||||||
Product revenue - related parties | 9,490,543 | 3,910,574 | (2,008,800 | ) | c, d | 11,392,317 | |||||||||||
Total Revenue | 259,526,004 | 18,212,230 | (2,008,800 | ) | 275,729,434 | ||||||||||||
COST AND EXPENSES | |||||||||||||||||
Services cost of revenue | 150,482,793 | — | — | $ | 150,482,793 | ||||||||||||
Services cost of revenue - related parties | 1,770,565 | — | (1,029,974 | ) | c, f | 740,591 | |||||||||||
Product cost of revenue | 35,525,596 | 9,360,221 | — | 44,885,817 | |||||||||||||
Product cost of revenue - related parties | 3,289,947 | 111,398 | (978,826 | ) | c, f | 2,422,519 | |||||||||||
Selling, general and administrative | 14,272,986 | 1,510,985 | — | 15,783,971 | |||||||||||||
Selling, general and administrative - related parties | 2,754,877 | — | — | 2,754,877 | |||||||||||||
Depreciation and amortization | 35,627,165 | 738,433 | — | 36,365,598 | |||||||||||||
Impairment of long-lived assets | — | — | — | — | |||||||||||||
Total cost and expenses | 243,723,929 | 11,721,037 | (2,008,800 | ) | 253,436,166 | ||||||||||||
Operating income | 15,802,075 | 6,491,193 | — | 22,293,268 | |||||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||||||
Interest income | 214,141 | — | — | $ | 214,141 | ||||||||||||
Interest expense | (4,603,595 | ) | — | — | (4,603,595 | ) | |||||||||||
Interest expense - related parties | (184,479 | ) | — | (184,479 | ) | ||||||||||||
Other, net | (5,724,496 | ) | (2,668 | ) | — | (5,727,164 | ) | ||||||||||
Total other expense | (10,298,429 | ) | (2,668 | ) | — | (10,301,097 | ) | ||||||||||
Income before income taxes | 5,503,646 | 6,488,525 | — | 11,992,171 | |||||||||||||
Provision for income taxes | 7,514,194 | — | — | $ | 7,514,194 | ||||||||||||
Net (loss) income | $ | (2,010,548 | ) | $ | 6,488,525 | $ | — | $ | 4,477,977 | ||||||||
OTHER COMPREHENSIVE (LOSS) INCOME | |||||||||||||||||
Foreign currency translation adjustment | 472,714 | — | — | $ | 472,714 | ||||||||||||
Comprehensive (loss) income | $ | (1,537,834 | ) | $ | 6,488,525 | $ | — | $ | 4,950,691 | ||||||||
Net earnings per share (basic and diluted) (Note 3) | $ | 0.16 | |||||||||||||||
Weighted average number of shares outstanding (Note 3) | 28,056,073 | ||||||||||||||||
6
MAMMOTH ENERGY SERVICES, INC.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of presentation
The unaudited pro forma condensed consolidated financial statements are based upon the historical consolidated financial statements of the Company and the historical financial statements of the Targets. The unaudited pro forma condensed consolidated financial statements present the impact of the Transaction, which is described in the introduction to the unaudited pro forma condensed consolidated financial statements, on the Company's results of operations, and present the impact of the Transaction on the unaudited pro forma condensed consolidated financial position.
(A) | See Exhibits 99.1 and 99.2 to this Report. |
(B) | See Exhibits 99.3 and 99.4 to this Report. |
2. Pro forma adjustments
The following adjustments to the Company's historical financial statements have been made:
a. | Reflects the use of cash on-hand to pay off the long-term debt of the Targets and the immediate recognition of deferred loan costs associated with the long-term debt that will be retired and/or the revolving credit facility extinguished. |
b. | Retirement of long-term debt (a.) would have triggered an immediate recognition of deferred loan costs associated with the long-term debt. 2017 incorporates the add-back of the amortization of loan fees that would have been written off in 2016. |
c. | Adjustment column reflects both the revenue (cost) generated (incurred) for the Target and the Company. See d, f and g for breakouts between the Targets and the Company. |
d. | Revenue and accounts receivable elimination activity incorporating the Transaction included the following: |
REVENUES | ACCOUNTS RECEIVABLE | ||||||||||||||||
Three Months Ended, | Year Ended December 31, | At March 31, | |||||||||||||||
March 31, 2017 | 2016 | 2015 | 2014 | 2017 | |||||||||||||
Sturgeon and Muskie | (i) | $ | 7,554,380 | $ | 20,586,715 | $ | 20,510,977 | $ | 867,428 | $ | 4,056,830 | ||||||
Sturgeon and Pressure Pumping | (i) | — | 4,256,830 | 2,642,693 | 1,029,974 | — | |||||||||||
Sturgeon and Barracuda | (i) | 64,428 | 10,176 | — | — | 203,165 | |||||||||||
Sturgeon and SR Logistics | (i) | — | — | 32,261 | — | — | |||||||||||
Sturgeon and Energy Services | (i) | — | — | — | — | — | |||||||||||
$ | 7,618,808 | $ | 24,853,721 | $ | 23,185,931 | $ | 1,897,402 | $ | 4,259,995 | ||||||||
Muskie and Sturgeon | (ii) | $ | 35,732 | $ | 2,540,050 | $ | 335,252 | $ | 111,398 | $ | 20,193 | ||||||
Mammoth and Sturgeon | (ii) | — | — | — | — | 629,492 | |||||||||||
Barracuda and Sturgeon | (ii) | 170,914 | 452,378 | 122,131 | — | 58,227 | |||||||||||
$ | 206,646 | $ | 2,992,428 | $ | 457,383 | $ | 111,398 | $ | 707,912 | ||||||||
Sturgeon pro forma adjustment, net | $ | 7,825,454 | $ | 27,846,149 | $ | 23,643,314 | $ | 2,008,800 | $ | 4,967,907 | |||||||
Stingray Energy and SR Logistics | (iii) | $ | — | $ | 7,246 | $ | — | ||||||||||
Stingray Energy, Cementing and Mammoth | (iii) | — | — | — | |||||||||||||
Stingray Energy and Pressure Pumping | (iii) | 222,382 | 672,431 | 400,673 | |||||||||||||
Stingray Energy and Silverback | (iii) | — | 27,178 | — | |||||||||||||
Stingray Energy and Barracuda | (iii) | 14,983 | 13,701 | 7,785 | |||||||||||||
$ | 237,365 | $ | 720,556 | $ | 408,458 | ||||||||||||
MRI and Stingray Cementing | (ii) | $ | 4,790 | $ | 820 | $ | 5,610 | ||||||||||
Coil Tubing and Stingray Energy | (ii) | 29,250 | 18,600 | 47,850 | |||||||||||||
Pressure Pumping and Stingray Cementing | (ii) | 9,970 | 7,364 | 26,593 | |||||||||||||
Silverback and Stingray Energy | (ii) | 196 | 11,356 | 69,970 | |||||||||||||
Mammoth and Stingray Energy | (ii) | — | — | 1,656,001 | |||||||||||||
Mammoth and Cementing | (ii) | — | — | 59,653 | |||||||||||||
$ | 44,206 | $ | 38,140 | $ | 1,865,677 | ||||||||||||
Stingray pro forma adjustment, net | $ | 281,571 | $ | 758,696 | $ | 2,274,135 |
(i) | See Exhibit 99.3 and 99.4 to this Report. |
(ii) | See Note 12 of Part 1 in the Company's Quarterly Report on Form 10-Q filed with the SEC on May 15, 2017. |
(iii) | See Exhibit 99.1 and 99.2 to this Report. |
7
MAMMOTH ENERGY SERVICES, INC.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
e. | The Stingray Acquisition qualifies as a business combination for accounting purposes and, as such, the Company has estimated the fair value of the acquired properties. The fair value of the consideration transferred at the closing date of the Stingray Acquisition is allocated in the following preliminary purchase price allocation: |
Total consideration transferred ($18.50 per share, 1,392,548 shares) | $ | 25,762,138 | |
Estimated Book Value at March 31, 2017: | $ | 11,481,101 | |
Fair value adjustments to: | |||
Fixed Assets | 6,597,144 | ||
Goodwill | 10,168,738 | ||
Intangibles | 1,960,000 | ||
Deferred tax liability | (4,444,845 | ) | |
Total estimated fair value | $ | 25,762,138 | |
f. | Expense and accounts payable elimination activity incorporating Sturgeon included the following: |
COST OF REVENUE | ACCOUNTS PAYABLE | ||||||||||||||||
Three Months Ended, | Year Ended December 31, | At March 31, | |||||||||||||||
March 31, 2017 | 2016 | 2015 | 2014 | 2017 | |||||||||||||
Sturgeon and Barracuda | (i) | $ | 170,914 | $ | 452,558 | $ | 122,131 | $ | — | $ | 58,227 | ||||||
Sturgeon and Mammoth | (i,ii) | — | 35,856 | — | — | 629,492 | |||||||||||
Sturgeon and Muskie | (i) | 35,732 | 2,540,050 | 335,522 | 111,398 | 20,193 | |||||||||||
Sturgeon and Pressure Pumping | (i,ii) | — | 192,035 | — | — | — | |||||||||||
Sturgeon and Stingray Energy | (i,ii) | — | 150 | — | — | — | |||||||||||
$ | 206,646 | $ | 3,220,649 | $ | 457,653 | $ | 111,398 | $ | 707,912 | ||||||||
Pressure Pumping and Sturgeon | (iii) | $ | — | $ | 4,256,832 | $ | 2,685,202 | $ | 1,029,974 | $ | — | ||||||
Muskie and Sturgeon | (iii) | 7,554,380 | 20,586,715 | 20,510,977 | 867,428 | 4,056,830 | |||||||||||
Barracuda and Sturgeon | (ii, iii) | 64,428 | 255,029 | 81,039 | — | 203,165 | |||||||||||
Stingray Entities and Sturgeon | (iii) | — | — | 32,261 | — | — | |||||||||||
$ | 7,618,808 | $ | 25,098,576 | $ | 23,309,479 | $ | 1,897,402 | $ | 4,259,995 | ||||||||
Sturgeon pro forma adjustment, net | $ | 7,825,454 | $ | 28,319,225 | $ | 23,767,132 | $ | 2,008,800 | |||||||||
SELLING, GENERAL AND ADMINSTRATIVE | |||||||||||||||||
Sturgeon and Mammoth | (i,ii) | $ | 270,090 | $ | 405,552 | $ | 401,859 | $ | — | $ | — | ||||||
Sturgeon and Muskie | (i,ii) | — | 51,483 | 19,344 | — | — | |||||||||||
Sturgeon and Pressure Pumping | (i,ii) | — | 44,901 | 82,574 | — | — | |||||||||||
Sturgeon and Energy Services | (i,ii) | — | 10,364 | — | — | — | |||||||||||
$ | 270,090 | $ | 512,300 | $ | 503,777 | $ | — | $ | — | ||||||||
Mammoth and Sturgeon | (ii, iii) | $ | 62,550 | $ | 160,622 | $ | 287,403 | $ | — | $ | — | ||||||
Sturgeon pro forma adjustment, net | $ | 332,640 | $ | 672,922 | $ | 791,180 | $ | — | $ | — | |||||||
Sturgeon pro forma adjustment, net | $ | 4,967,907 |
(i) | See Exhibit 99.3 and 99.4 to this Report.. |
(ii) | Predominantly cost reimbursement that is not reflected as revenue recognition in the offsetting party |
(iii) | See Note 12 of Part 1 in the Company's Quarterly Report on Form 10-Q filed with the SEC on May 15, 2017. |
8
MAMMOTH ENERGY SERVICES, INC.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
g. | Expense and accounts payable elimination activity incorporating Stingray included the following: |
COST OF REVENUE | ACCOUNTS PAYABLE | ||||||||||
Three Months Ended, | Year Ended | At March 31, | |||||||||
March 31, 2017 | December 31, 2016 | 2017 | |||||||||
Stingray Energy and Mammoth | (i,ii) | $ | 29,446 | $ | 367,353 | $ | — | ||||
Stingray Cementing and Mammoth | (i,ii) | 14,760 | 140,542 | — | |||||||
$ | 44,206 | $ | 507,895 | $ | — | ||||||
Barracuda and Stingray Energy | (iii) | $ | 14,983 | $ | 30,722 | $ | — | ||||
Stingray Entities and Stingray Energy | (iii) | 222,382 | 679,550 | 408,458 | |||||||
Silverback and Stingray Energy | (iii) | — | 13,701 | — | |||||||
$ | 237,365 | $ | 723,973 | $ | 408,458 | ||||||
Stingray Energy pro forma adjustment, net | $ | 281,571 | $ | 1,231,868 | |||||||
SELLING, GENERAL AND ADMINSTRATIVE | |||||||||||
Stingray Energy and Mammoth | (i,ii) | $ | 178,208 | $ | 536,805 | $ | 1,773,821 | ||||
Stingray Cementing and Mammoth | (i,ii) | 73,012 | 185,300 | 91,856 | |||||||
$ | 251,220 | $ | 722,105 | $ | 1,865,677 | ||||||
Stingray Energy pro forma adjustment, net | $ | 251,220 | $ | 722,105 | $ | 1,865,677 | |||||
Stingray Energy pro forma adjustment, net | $ | 2,274,135 |
(i) | See Exhibit 99.1 and 99.2 to this Report. |
(ii) | Predominantly cost reimbursement that is not reflected as revenue recognition in the offsetting party |
(iii) | See Note 12 of Part 1 in the Company's Quarterly Report on Form 10-Q filed with the SEC on May 15, 2017. |
h. | Prior to the Company's initial public offering ("IPO") in October 2016, its predecessor was a partnership and not subject to federal income taxes with the exception of its foreign subsidiary. In connection with the IPO, the Company became subject to federal income taxes. The statement of operations for the year ended December 31, 2016 incorporates one-time associated with incorporating the Targets as entities being subject to federal income taxes. |
i. | Issuance as consideration for the Targets of 7,000,000 shares of common stock (valued at $129.5 million based on the closing share price of $18.50 on June 5, 2017) and $6.4 million of assumed debt. Subsequent to the IPO we have assumed that the long-term debt of Stingray would be paid off and the revolving credit facility of Sturgeon would be extinguished. |
3. Pro forma net income (loss) per common share
Pro forma net income (loss) per common share is determined by dividing the pro forma net income (loss) that would have been allocated to the common stockholders by the number of shares of common stock outstanding. In the Company's audited financial statements, the reported weighted average shares outstanding for the three months ended March 31, 2017 was 37,500,000 and for the years ended December 31, 2016, 2015 and 2014 were 31,500,000, 30,000,000 and 21,056,073, respectively. For purposes of this pro forma calculation, the Company assumed that shares of common stock outstanding were 44,750,000 for the three months ended March 31, 2017 and 38,500,000, 37,000,000 and 28,056,073 for the years ended December 31, 2016, 2015 and 2014.
9