Mammoth Energy Services, Inc. Stock

Greetings. Welcome to the Mammoth Energy second quarter 2026 earnings conference call. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll turn the conference over to Mohammed Topiwala with Vizara Advisors Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. We appreciate you joining us for Mammoth's second quarter 2026 earnings conference call. Joining us on the call today are Mark Layton, Chief Financial Officer, and Bernie Lancaster, Chief Operating Officer. We will start today with our prepared remarks and then open it up for questions.

I want to remind everyone that some of today's comments include forward-looking statements. These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein. Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward-looking statements. Comments today also include non-GAAP financial measures.

The underlying detail and a reconciliation of GAAP to non-GAAP financial measures are included in our second quarter earnings press release, which can be found on our website. As a reminder, today's call is being webcast, and a recorded version will be available on the Investor Relations section of Mammoth's website following the conclusion of this call. With that, I'll turn the call over to Mark.

Thank you, Mohammed, and good morning, everyone. I'll start with our second quarter results, driving the quarter's performance, capital allocation, and our updated outlook for 2026. I'll then turn it over to Bernie Lancaster, our Chief Operating Officer, to walk through operational performance by segment. I'll then come back to cover the financials, balance sheet, and our repurchase activity, after which we'll open the line for questions.

We delivered another strong quarter, revenue growth, a second consecutive quarter of positive Adjusted EBITDA, and Adjusted EBITDA margins of 10%, well ahead of plan. Importantly, the growth this quarter was driven by sand, drilling, infrastructure, along with the recurring rental revenue continuing to grow as aviation, leasing, and equipment rental activity expanded. I'll cover the drivers thematically here, and the segment-level detail will come in my financial review later in the call.

Total revenue for the second quarter was $26.1 million, up 19% sequentially, and up 110% year-over-year. Adjusted EBITDA was $2.6 million, up 37% sequentially, compared to a loss of $3.5 million in the second quarter of last year. In our rentals segment, lease revenue grew well ahead of the 19% headline rate. Utilization and continued asset deployment drove meaningful sequential revenue growth across both our aviation leasing and equipment rental businesses.

Overall, rentals revenue declined, and that decline is entirely attributable to the swing in aviation asset sale revenue. In regards to aviation asset sale revenue, I want to be straightforward about how we think about it. We are focused on returns. If we can sell an asset for a better return than we might earn by continuing to lease it, we will sell it. That means asset sale revenue will not always be linear quarter-to-quarter, but our decision-making will remain guided by returns.

Our sand and drilling segments both outperformed this quarter, underpinned by improving activity in the basins where they work, and more importantly, we saw the drilling segment turn Adjusted EBITDA positive, and in sand, gross margin turned positive.

Turning to capital allocation, we invested $44 million in the quarter, our most active quarter of capital deployment since we began building the aviation platform. A good example of how we approached these opportunities, during the quarter we acquired a Boeing 747 package that included the airframe, 2 installed engines, a spare engine, and spare parts inventory. We placed the engines on lease with a blue-chip customer and subsequently sold the airframe and landing gear for $2 million, covering a portion of our cost basis while retaining the highest returning components of the package. That is the discipline we intend to apply to every dollar we put to work in this business.

We also completed our first acquisitions of operating businesses in 8 years. On June 12, we acquired Mission Construction and BERE Rentals for combined consideration of $6.5 million, funded entirely with cash on hand. Both are providers of fiber optic services to utility customers in the Midwestern U.S., and both sit within our infrastructure segment, where we are seeing a growing opportunity set. These acquisitions extend our presence in the fiber optic services market, broaden our fleet of fiber equipment, and add experienced fiber crews.

We are pleased to welcome both teams to the Mammoth family. In total, including these acquisitions, we deployed approximately $50 million of capital during the quarter.

Turning to the macro backdrop across our end markets. On the natural gas side, LNG-driven demand continues to support activity in the Montney, where gas demand and production are both running at record levels heading into the back half of the year, a constructive setup for our sand business. In aviation, industry-wide demand for leased aircraft, engines, and auxiliary power units remains strong, with OEM production and maintenance capacity still constrained, a dynamic that favors the leasing model we've built our platform around.

And in the Permian, drilling activity firmed through the second quarter after a choppier start to the year, consistent with the utilization improvement Bernie will walk through in drilling. As we look to the balance of the year, it's worth reflecting on how much the business has progressed over the last 5 months. We set our initial 2026 guidance in March. We guided to revenue growth of greater than 50% for 2026 and said positive Adjusted EBITDA was back within reach. At that time, we viewed mid-teens Adjusted EBITDA margins as a 2027 objective.

Following a strong first quarter, we raised our outlook in May to greater than 60% revenue growth and committed to being Adjusted EBITDA positive for the full year. Today, after another quarter of broad-based execution and the contribution from the assets acquired during the second quarter, we're raising our outlook again. We now expect full-year 2026 revenue growth of greater than 90% and Adjusted EBITDA margins in excess of 10%.

Achieving double-digit margins this year puts us roughly a year ahead of where we expected to be at the start of 2026, marking our second upward revision in just 5 months on both revenue and profitability. That progress reflects what we're seeing across the business. Our aviation fleet continues to scale on plan. Activity has improved across our sand and drilling segments. Our cost structure is materially lower than it was a year ago. Put simply, our strategy is working, first in aviation and now increasingly across the rest of the portfolio.

One final point on the revenue outlook. First half results included approximately $8.5 million of aviation asset sales. Because we do not forecast asset sales, our second half outlook is based entirely on recurring operating revenue. In other words, our guidance reflects the underlying earnings power of the business as it stands today, and any future asset sales would represent upside to the outlook we've provided.

With that, I'll turn it over to Bernie to walk through the operational performance in more detail.

Thanks, Mark, and good morning, everyone. Let me walk through the operational performance by segment. Starting with rentals, in our equipment rental business, our average pieces of equipment on rent increased to 407 from 389 in the first quarter, continuing the build we've seen over recent quarters. Demand across our gas-weighted basins remains strong, and the customer and fleet mix work we began earlier this year continues to gain traction. It is showing up in both utilization and in the quality of the revenue we are capturing.

In aviation, we ended the quarter with 38 assets in the fleet, up from 27 at the end of the first quarter, with 23 generating revenue on lease compared to 21 last quarter. As we've noted before, there is a natural lag between acquiring an asset and placing it on lease. This quarter's fleet growth outpaced lease placement, which we expected given our pace of acquisition. We look for the on-lease count to continue building as the 11 recently acquired assets, a mix of aircraft, engines, and APUs, are placed on lease.

In accommodations, facility occupancy softened modestly quarter-over-quarter in Q2, consistent with the seasonal trends we historically experience during this period. More importantly, occupancy grew more than 79% year-over-year versus Q2 of 2025, underscoring the continued strength of underlying demand.

In drilling, we saw a meaningful step-up in activity as utilization more than doubled quarter-over-quarter. We believe that the underlying demand from our customer base is there for us to build on a fantastic quarter from the team.

In sand, we sold approximately 229,000 tons in the quarter, up from roughly 156,000 tons in the first quarter. Average price per ton was $21.36 compared to $19.49 in the first quarter, as we saw improved pricing during the quarter alongside increased activity levels. We saw a meaningful quarter-over-quarter improvement in results, and we will continue to build on that progress. We are expecting a much stronger second half of 2026 from sand.

Finally, in infrastructure, the operational focus this quarter was on the 2 fiber optic services businesses we acquired. Integration is underway and progressing well. We are aligning safety programs, project management systems, and fleet maintenance practices with ours, and the crews and customer relationships that came with these businesses are already broadening the work we can pursue. These acquisitions meaningfully strengthen the organization we have been rebuilding in fiber, and our focus now is on monetizing that expanded capability as we see meaningful growth opportunities ahead. With that, I'll turn it back to Mark to cover the financials.

Thanks, Bernie. Let me now go through the second quarter results by segment, and then I'll cover consolidated profitability, the balance sheet, capital expenditures, and our repurchase activity.

Rental segment revenue was $10.2 million, down 22% sequentially, but up 229% year-over-year. The more useful number is segment Adjusted EBITDA, which was $3.7 million, up 3% sequentially at a 36% margin versus 28% in the first quarter. Revenue and earnings moved in opposite directions because aviation asset sales during the quarter were close to their cost basis. The auxiliary power unit sale in the first quarter resulted in $6.5 million of revenue against the $5.8 million cost basis. Compared to the first quarter, there was a $4.5 million decline in that revenue stream to $2 million this quarter. It took revenue down materially and earnings very little. Our aviation and equipment platforms continue to gain momentum during the quarter with higher utilization and ongoing asset deployment driving strong sequential revenue growth.

Accommodation segment revenue was $3.2 million, down 9% sequentially and up 78% year-over-year. Nights on rent decreased sequentially, as Bernie noted. The sequential revenue decline reflects the normal seasonality in this business, while underlying utilization remains strong.

Drilling segment revenue was $3.8 million, up 171% sequentially and up 443% year-over-year. The segment generated positive Adjusted EBITDA of $0.6 million, ahead of the timeline we laid out on our last call.

Sand segment revenue was $8.0 million, up 105% sequentially and up 48% year-over-year, driven by the volume increases Bernie just described, along with freight revenue. Segment gross margin turned positive this quarter, and while Adjusted EBITDA remains negative, the loss narrowed by roughly 71% sequentially.

Infrastructure segment revenue was $0.9 million, sequentially off the reset low, though still down year-over-year as the operational reset in that business continues. It is worth noting that the 2 acquisitions closed on June 12, so this quarter reflects just under 3 weeks of contribution from them. With both businesses now in the fold and integration underway, we expect this segment's contribution to build through the second half of the year and into 2027.

Turning to consolidated profitability, we recorded a net loss from continuing operations of $1.2 million, or $0.02 per diluted share, compared to net income of $4.7 million, or $0.10 per diluted share, in the first quarter, and a net loss of $36.5 million, or $0.76 per diluted share, in the second quarter of 2025, which included a $31.7 million non-cash impairment. The sequential change is driven almost entirely by several items which are below the operating line.

SG&A expense was $4.2 million in the second quarter, compared to $3.6 million in the first quarter, driven in part by a $0.3 million increase in transaction costs associated with the aviation fleet growth. We remain on track toward our targeted exit run rate of $11 to $12 million.

Turning to the balance sheet, we remained completely debt-free. We ended the quarter with cash and cash equivalents of $50.9 million and marketable securities of $26.1 million for a combined $77.0 million. Capital expenditures were $44 million in the quarter compared to $11.7 million in the first quarter. Of that, approximately $41.2 million went into rentals, almost entirely into aviation assets, consistent with the fleet growth Bernie described. With these additions, we now have over $100 million deployed in our aviation portfolio. The remainder of our CapEx was spread across sand, infrastructure, drilling, and accommodations.

During the quarter, we repurchased approximately 43,000 shares at an average price of $2.99 per share. Our approach here is unchanged from what we described last quarter. We weigh repurchases against the returns available from deploying capital into the businesses, and we will be opportunistic on both sides of that comparison. This quarter, the opportunities in front of us, particularly in aviation, were the priority for our capital, and the pace of repurchases reflects that discipline rather than a change in our view of the value of the equity.

To close, the second quarter reinforced what we said in the first. This is a business that is growing, generating positive Adjusted EBITDA for a second consecutive quarter, and doing so with a debt-free balance sheet. Looking ahead, we'll be watching lease placement progress on the aviation assets we added this quarter, continued margin improvement in sand and drilling, and the pace of growth in infrastructure as the acquired businesses are integrated.

Thank you to our employees for their work this quarter and to our shareholders for their continued support. With that, Operator, we'll open the line for questions.

[Operator Instructions]

The first question is from the line of Joshua Jayne with Daniel Energy Partners. Please proceed with your questions.

First one, I wanted to touch on the sand business, just given the sequential uptick there, and you also talked about an improving market in the second half of '26. Could you just go into a little bit more detail on what you're seeing on the volume and price side heading into the back half of '26, and maybe if you're having conversations on '27 at all?

Yes, as we look at the sand business, we're seeing increasing demand in terms of volume. There's been a little bit of a shift inside of late Q2 relative to coarse grade sands, but as we look at that business, we see firming volumes throughout Q3 and into the remainder of the year. And we're also having some encouraging conversations with customers for the back half of '26 and into '27 relative to supply agreements.

I think as we look at that business, I'd also add that we're focused on margin improvement, as Bernie alluded to, and we're deploying some CapEx we think will help us on the fixed cost side relative to that business on a go-forward basis and benefit gross margin.

And then as a follow-up just on that business, how close are you today? I know your capacity is above 2 million tons, but just so I think that there's some runway with what you're generating today from a volume standpoint. How close are you to, I guess, effective capacity today? Like, how close are you with what you're staffed for today and the volumes that you're putting out?

Staffing today, we're nearing capacity. That being said, we've got the capability to add shifts as well as personnel that will meaningfully influence capacity on a go-forward basis.

Switching gears a little bit, the equipment rental business, we've heard of some tightness emerging out of a number of different pockets here. Could you just talk to what you're seeing in that business and is anything changing with respect to customer conversations, term of rent?

Yes, no, there is definitely some tightening, kind of delays in being able to find and purchase and things of that nature. It is starting to impact pricing positively. And that's kind of what we're seeing. And so I think that's probably going to continue. I don't have any reason to believe in the short term that that will change.

And then as my final one, you just alluded to it a little bit with some delays in people receiving equipment and supply chain disruptions. Have you seen any supply chain disruptions in any of your business lines? And if so, what are you guys doing to mitigate them, and when do you think that they might be resolved?

Internally, it's been, you know, we haven't seen a lot. We hear a lot about them, but we're trying to get ahead of them and try to purchase while we can when they're available. Thankfully, it has not impacted us that much.

Yes, I'd just add that one of the benefits of the clean balance sheet and the liquidity that we've got available is we've got the opportunity to move quickly and deploy that capital. So we're trying to use that position to get front in line to acquire equipment that we think has desirable returns.

Understood. Thanks. I'll turn it back.

The next question is from the line of Doug Garber with West Point Alpha. Please proceed with your questions.

I wanted to ask, you said the share repurchases are a tradeoff between CapEx and investments, and not a reflection of the share price, but you also have north of $50 million of cash, good balance sheet. Help me understand how you gauge where your attractive price points are for more color on how the Board thinks about tangible book value, replacement value, free cash yields, anything to give us more color on how you're thinking about when and how much you pull the trigger.

Yes, that's a good question. I think the Board views the current share price as trading below where we see the value. If you look at it at tangible book value or just a mere value of cash, marketable securities, and just the aviation portfolio we've built, we're trading below those metrics.

But it's more opportunistic. We deployed a lot of capital inside of Q2 relative to aviation. I'd also point out that we're limited based on trading windows and volume in terms of what we can repurchase. So that's a factor as well that the Board has to consider.

Is there a governor or a limit, like 5%, 10% of volume that you could be?

Yes, there are limitations on trailing volume that we're unable to purchase above those trailing windows. And then we're also limited based on trading windows. So anytime there's a material non-public event, we're limited on when we can repurchase.

And going forward with your capital allocation, how are you thinking about where to put it? More aviation? You obviously sold some aviation as well. Help us think about what are the top 1 or 2 places that you're seeing in your current pipeline for investments?

Yes, I'd say near term, we've got about $15 million in capital to deploy across the operating businesses, excluding aviation, where we see discrete opportunities. We touched on it a little bit relative to supply chain and some of the equipment rental assets that we've acquired. We're also seeing a robust deal flow relative to aviation. So current pipeline on that is, we've got $40+ million in actionable deals on aviation that we think have very attractive return profiles.

And when you put all of this together, what's the path to free cash flow being positive? I think we're close. You know, we continue to scale the aviation portfolio, and that's where we've deployed most of the capital over the last year. But as you look at that business broadly, that's a revenue and cash flow stream that's well suited towards leverage.

So we think there's further scale available in that particular business. And then we're seeing encouraging factors on the equipment rental business. The accommodations business has been a steady contributor for a number of years. Drilling has stepped it up. We've got some work to do at gross margin on sand and have deployed some capital to help them out. So I think across the board, we're seeing a number of encouraging factors, and we're nearing that point to be cash flow positive overall.

Thanks, Mark. I'll turn it back.

Thank you. At this time, we've reached the end of our question-and-answer session, and I'll turn the floor back to management for closing comments.

Thank you again for joining us today. We look forward to updating you next quarter.

This concludes today's conference. Thank you for participating. You may now disconnect.

Greetings. Welcome to the Mammoth Energy second quarter 2026 earnings conference call. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll turn the conference over to Mohammed Topiwala with Vizara Advisors Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. We appreciate you joining us for Mammoth's second quarter 2026 earnings conference call. Joining us on the call today are Mark Layton, Chief Financial Officer, and Bernie Lancaster, Chief Operating Officer. We will start today with our prepared remarks and then open it up for questions.

I want to remind everyone that some of today's comments include forward-looking statements. These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein. Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward-looking statements. Comments today also include non-GAAP financial measures.

The underlying detail and a reconciliation of GAAP to non-GAAP financial measures are included in our second quarter earnings press release, which can be found on our website. As a reminder, today's call is being webcast, and a recorded version will be available on the Investor Relations section of Mammoth's website following the conclusion of this call. With that, I'll turn the call over to Mark.

Thank you, Mohammed, and good morning, everyone. I'll start with our second quarter results, driving the quarter's performance, capital allocation, and our updated outlook for 2026. I'll then turn it over to Bernie Lancaster, our Chief Operating Officer, to walk through operational performance by segment. I'll then come back to cover the financials, balance sheet, and our repurchase activity, after which we'll open the line for questions.

We delivered another strong quarter, revenue growth, a second consecutive quarter of positive Adjusted EBITDA, and Adjusted EBITDA margins of 10%, well ahead of plan. Importantly, the growth this quarter was driven by sand, drilling, infrastructure, along with the recurring rental revenue continuing to grow as aviation, leasing, and equipment rental activity expanded. I'll cover the drivers thematically here, and the segment-level detail will come in my financial review later in the call.

Total revenue for the second quarter was $26.1 million, up 19% sequentially, and up 110% year-over-year. Adjusted EBITDA was $2.6 million, up 37% sequentially, compared to a loss of $3.5 million in the second quarter of last year. In our rentals segment, lease revenue grew well ahead of the 19% headline rate. Utilization and continued asset deployment drove meaningful sequential revenue growth across both our aviation leasing and equipment rental businesses.

Overall, rentals revenue declined, and that decline is entirely attributable to the swing in aviation asset sale revenue. In regards to aviation asset sale revenue, I want to be straightforward about how we think about it. We are focused on returns. If we can sell an asset for a better return than we might earn by continuing to lease it, we will sell it. That means asset sale revenue will not always be linear quarter-to-quarter, but our decision-making will remain guided by returns.

Our sand and drilling segments both outperformed this quarter, underpinned by improving activity in the basins where they work, and more importantly, we saw the drilling segment turn Adjusted EBITDA positive, and in sand, gross margin turned positive.

Turning to capital allocation, we invested $44 million in the quarter, our most active quarter of capital deployment since we began building the aviation platform. A good example of how we approached these opportunities, during the quarter we acquired a Boeing 747 package that included the airframe, 2 installed engines, a spare engine, and spare parts inventory. We placed the engines on lease with a blue-chip customer and subsequently sold the airframe and landing gear for $2 million, covering a portion of our cost basis while retaining the highest returning components of the package. That is the discipline we intend to apply to every dollar we put to work in this business.

We also completed our first acquisitions of operating businesses in 8 years. On June 12, we acquired Mission Construction and BERE Rentals for combined consideration of $6.5 million, funded entirely with cash on hand. Both are providers of fiber optic services to utility customers in the Midwestern U.S., and both sit within our infrastructure segment, where we are seeing a growing opportunity set. These acquisitions extend our presence in the fiber optic services market, broaden our fleet of fiber equipment, and add experienced fiber crews.

We are pleased to welcome both teams to the Mammoth family. In total, including these acquisitions, we deployed approximately $50 million of capital during the quarter.

Turning to the macro backdrop across our end markets. On the natural gas side, LNG-driven demand continues to support activity in the Montney, where gas demand and production are both running at record levels heading into the back half of the year, a constructive setup for our sand business. In aviation, industry-wide demand for leased aircraft, engines, and auxiliary power units remains strong, with OEM production and maintenance capacity still constrained, a dynamic that favors the leasing model we've built our platform around.

And in the Permian, drilling activity firmed through the second quarter after a choppier start to the year, consistent with the utilization improvement Bernie will walk through in drilling. As we look to the balance of the year, it's worth reflecting on how much the business has progressed over the last 5 months. We set our initial 2026 guidance in March. We guided to revenue growth of greater than 50% for 2026 and said positive Adjusted EBITDA was back within reach. At that time, we viewed mid-teens Adjusted EBITDA margins as a 2027 objective.

Following a strong first quarter, we raised our outlook in May to greater than 60% revenue growth and committed to being Adjusted EBITDA positive for the full year. Today, after another quarter of broad-based execution and the contribution from the assets acquired during the second quarter, we're raising our outlook again. We now expect full-year 2026 revenue growth of greater than 90% and Adjusted EBITDA margins in excess of 10%.

Achieving double-digit margins this year puts us roughly a year ahead of where we expected to be at the start of 2026, marking our second upward revision in just 5 months on both revenue and profitability. That progress reflects what we're seeing across the business. Our aviation fleet continues to scale on plan. Activity has improved across our sand and drilling segments. Our cost structure is materially lower than it was a year ago. Put simply, our strategy is working, first in aviation and now increasingly across the rest of the portfolio.

One final point on the revenue outlook. First half results included approximately $8.5 million of aviation asset sales. Because we do not forecast asset sales, our second half outlook is based entirely on recurring operating revenue. In other words, our guidance reflects the underlying earnings power of the business as it stands today, and any future asset sales would represent upside to the outlook we've provided.

With that, I'll turn it over to Bernie to walk through the operational performance in more detail.

Thanks, Mark, and good morning, everyone. Let me walk through the operational performance by segment. Starting with rentals, in our equipment rental business, our average pieces of equipment on rent increased to 407 from 389 in the first quarter, continuing the build we've seen over recent quarters. Demand across our gas-weighted basins remains strong, and the customer and fleet mix work we began earlier this year continues to gain traction. It is showing up in both utilization and in the quality of the revenue we are capturing.

In aviation, we ended the quarter with 38 assets in the fleet, up from 27 at the end of the first quarter, with 23 generating revenue on lease compared to 21 last quarter. As we've noted before, there is a natural lag between acquiring an asset and placing it on lease. This quarter's fleet growth outpaced lease placement, which we expected given our pace of acquisition. We look for the on-lease count to continue building as the 11 recently acquired assets, a mix of aircraft, engines, and APUs, are placed on lease.

In accommodations, facility occupancy softened modestly quarter-over-quarter in Q2, consistent with the seasonal trends we historically experience during this period. More importantly, occupancy grew more than 79% year-over-year versus Q2 of 2025, underscoring the continued strength of underlying demand.

In drilling, we saw a meaningful step-up in activity as utilization more than doubled quarter-over-quarter. We believe that the underlying demand from our customer base is there for us to build on a fantastic quarter from the team.

In sand, we sold approximately 229,000 tons in the quarter, up from roughly 156,000 tons in the first quarter. Average price per ton was $21.36 compared to $19.49 in the first quarter, as we saw improved pricing during the quarter alongside increased activity levels. We saw a meaningful quarter-over-quarter improvement in results, and we will continue to build on that progress. We are expecting a much stronger second half of 2026 from sand.

Finally, in infrastructure, the operational focus this quarter was on the 2 fiber optic services businesses we acquired. Integration is underway and progressing well. We are aligning safety programs, project management systems, and fleet maintenance practices with ours, and the crews and customer relationships that came with these businesses are already broadening the work we can pursue. These acquisitions meaningfully strengthen the organization we have been rebuilding in fiber, and our focus now is on monetizing that expanded capability as we see meaningful growth opportunities ahead. With that, I'll turn it back to Mark to cover the financials.

Thanks, Bernie. Let me now go through the second quarter results by segment, and then I'll cover consolidated profitability, the balance sheet, capital expenditures, and our repurchase activity.

Rental segment revenue was $10.2 million, down 22% sequentially, but up 229% year-over-year. The more useful number is segment Adjusted EBITDA, which was $3.7 million, up 3% sequentially at a 36% margin versus 28% in the first quarter. Revenue and earnings moved in opposite directions because aviation asset sales during the quarter were close to their cost basis. The auxiliary power unit sale in the first quarter resulted in $6.5 million of revenue against the $5.8 million cost basis. Compared to the first quarter, there was a $4.5 million decline in that revenue stream to $2 million this quarter. It took revenue down materially and earnings very little. Our aviation and equipment platforms continue to gain momentum during the quarter with higher utilization and ongoing asset deployment driving strong sequential revenue growth.

Accommodation segment revenue was $3.2 million, down 9% sequentially and up 78% year-over-year. Nights on rent decreased sequentially, as Bernie noted. The sequential revenue decline reflects the normal seasonality in this business, while underlying utilization remains strong.

Drilling segment revenue was $3.8 million, up 171% sequentially and up 443% year-over-year. The segment generated positive Adjusted EBITDA of $0.6 million, ahead of the timeline we laid out on our last call.

Sand segment revenue was $8.0 million, up 105% sequentially and up 48% year-over-year, driven by the volume increases Bernie just described, along with freight revenue. Segment gross margin turned positive this quarter, and while Adjusted EBITDA remains negative, the loss narrowed by roughly 71% sequentially.

Infrastructure segment revenue was $0.9 million, sequentially off the reset low, though still down year-over-year as the operational reset in that business continues. It is worth noting that the 2 acquisitions closed on June 12, so this quarter reflects just under 3 weeks of contribution from them. With both businesses now in the fold and integration underway, we expect this segment's contribution to build through the second half of the year and into 2027.

Turning to consolidated profitability, we recorded a net loss from continuing operations of $1.2 million, or $0.02 per diluted share, compared to net income of $4.7 million, or $0.10 per diluted share, in the first quarter, and a net loss of $36.5 million, or $0.76 per diluted share, in the second quarter of 2025, which included a $31.7 million non-cash impairment. The sequential change is driven almost entirely by several items which are below the operating line.

SG&A expense was $4.2 million in the second quarter, compared to $3.6 million in the first quarter, driven in part by a $0.3 million increase in transaction costs associated with the aviation fleet growth. We remain on track toward our targeted exit run rate of $11 to $12 million.

Turning to the balance sheet, we remained completely debt-free. We ended the quarter with cash and cash equivalents of $50.9 million and marketable securities of $26.1 million for a combined $77.0 million. Capital expenditures were $44 million in the quarter compared to $11.7 million in the first quarter. Of that, approximately $41.2 million went into rentals, almost entirely into aviation assets, consistent with the fleet growth Bernie described. With these additions, we now have over $100 million deployed in our aviation portfolio. The remainder of our CapEx was spread across sand, infrastructure, drilling, and accommodations.

During the quarter, we repurchased approximately 43,000 shares at an average price of $2.99 per share. Our approach here is unchanged from what we described last quarter. We weigh repurchases against the returns available from deploying capital into the businesses, and we will be opportunistic on both sides of that comparison. This quarter, the opportunities in front of us, particularly in aviation, were the priority for our capital, and the pace of repurchases reflects that discipline rather than a change in our view of the value of the equity.

To close, the second quarter reinforced what we said in the first. This is a business that is growing, generating positive Adjusted EBITDA for a second consecutive quarter, and doing so with a debt-free balance sheet. Looking ahead, we'll be watching lease placement progress on the aviation assets we added this quarter, continued margin improvement in sand and drilling, and the pace of growth in infrastructure as the acquired businesses are integrated. Thank you to our employees for their work this quarter and to our shareholders for their continued support. With that, Operator, we'll open the line for questions.

[Operator Instructions] The first question is from the line of Joshua Jayne with Daniel Energy Partners. Please proceed with your questions.

First one, I wanted to touch on the sand business, just given the sequential uptick there, and you also talked about an improving market in the second half of '26. Could you just go into a little bit more detail on what you're seeing on the volume and price side heading into the back half of '26, and maybe if you're having conversations on '27 at all?

Yes, as we look at the sand business, we're seeing increasing demand in terms of volume. There's been a little bit of a shift inside of late Q2 relative to coarse grade sands, but as we look at that business, we see firming volumes throughout Q3 and into the remainder of the year. And we're also having some encouraging conversations with customers for the back half of '26 and into '27 relative to supply agreements.

I think as we look at that business, I'd also add that we're focused on margin improvement, as Bernie alluded to, and we're deploying some CapEx we think will help us on the fixed cost side relative to that business on a go-forward basis and benefit gross margin.

And then as a follow-up just on that business, how close are you today? I know your capacity is above 2 million tons, but just so I think that there's some runway with what you're generating today from a volume standpoint. How close are you to, I guess, effective capacity today? Like, how close are you with what you're staffed for today and the volumes that you're putting out?

Staffing today, we're nearing capacity. That being said, we've got the capability to add shifts as well as personnel that will meaningfully influence capacity on a go-forward basis.

Switching gears a little bit, the equipment rental business, we've heard of some tightness emerging out of a number of different pockets here. Could you just talk to what you're seeing in that business and is anything changing with respect to customer conversations, term of rent?

Yes, no, there is definitely some tightening, kind of delays in being able to find and purchase and things of that nature. It is starting to impact pricing positively. And that's kind of what we're seeing. And so I think that's probably going to continue. I don't have any reason to believe in the short term that that will change.

And then as my final one, you just alluded to it a little bit with some delays in people receiving equipment and supply chain disruptions. Have you seen any supply chain disruptions in any of your business lines? And if so, what are you guys doing to mitigate them, and when do you think that they might be resolved?

Internally, it's been, you know, we haven't seen a lot. We hear a lot about them, but we're trying to get ahead of them and try to purchase while we can when they're available. Thankfully, it has not impacted us that much.

Yes, I'd just add that one of the benefits of the clean balance sheet and the liquidity that we've got available is we've got the opportunity to move quickly and deploy that capital. So we're trying to use that position to get front in line to acquire equipment that we think has desirable returns.

Understood. Thanks. I'll turn it back.

The next question is from the line of Doug Garber with West Point Alpha. Please proceed with your questions.

I wanted to ask, you said the share repurchases are a tradeoff between CapEx and investments, and not a reflection of the share price, but you also have north of $50 million of cash, good balance sheet. Help me understand how you gauge where your attractive price points are for more color on how the Board thinks about tangible book value, replacement value, free cash yields, anything to give us more color on how you're thinking about when and how much you pull the trigger.

Yes, that's a good question. I think the Board views the current share price as trading below where we see the value. If you look at it at tangible book value or just a mere value of cash, marketable securities, and just the aviation portfolio we've built, we're trading below those metrics.

But it's more opportunistic. We deployed a lot of capital inside of Q2 relative to aviation. I'd also point out that we're limited based on trading windows and volume in terms of what we can repurchase. So that's a factor as well that the Board has to consider.

Is there a governor or a limit, like 5%, 10% of volume that you could be?

Yes, there are limitations on trailing volume that we're unable to purchase above those trailing windows. And then we're also limited based on trading windows. So anytime there's a material non-public event, we're limited on when we can repurchase.

And going forward with your capital allocation, how are you thinking about where to put it? More aviation? You obviously sold some aviation as well. Help us think about what are the top 1 or 2 places that you're seeing in your current pipeline for investments?

Yes, I'd say near term, we've got about $15 million in capital to deploy across the operating businesses, excluding aviation, where we see discrete opportunities. We touched on it a little bit relative to supply chain and some of the equipment rental assets that we've acquired. We're also seeing a robust deal flow relative to aviation. So current pipeline on that is, we've got $40+ million in actionable deals on aviation that we think have very attractive return profiles.

And when you put all of this together, what's the path to free cash flow being positive? I think we're close. You know, we continue to scale the aviation portfolio, and that's where we've deployed most of the capital over the last year. But as you look at that business broadly, that's a revenue and cash flow stream that's well suited towards leverage.

So we think there's further scale available in that particular business. And then we're seeing encouraging factors on the equipment rental business. The accommodations business has been a steady contributor for a number of years. Drilling has stepped it up. We've got some work to do at gross margin on sand and have deployed some capital to help them out. So I think across the board, we're seeing a number of encouraging factors, and we're nearing that point to be cash flow positive overall.

Thanks, Mark. I'll turn it back.

Thank you. At this time, we've reached the end of our question-and-answer session, and I'll turn the floor back to management for closing comments.

Thank you again for joining us today. We look forward to updating you next quarter.

This concludes today's conference. Thank you for participating. You may now disconnect.

Greetings, and welcome to the Mammoth Energy Services First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Mohammed Topiwala with Vizara Investor Relations. Thank you. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for Mammoth's First Quarter 2026 Earnings Conference Call. Joining us on the call today are Mark Layton, Chief Financial Officer; and Bernie Lancaster, Chief Operating Officer. We will start today with our prepared remarks and then open it up for questions. I want to remind everyone that some of today's comments include forward-looking statements. These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein.

Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward-looking statements. Our comments today also include non-GAAP financial measures. The underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our first quarter earnings press release, which can be found on our website. As a reminder, today's call is being webcast, and a recorded version will be available on the Investor Relations section of Mammoth's website following the conclusion of this call. With that, I'll turn the call over to Mark.

Thank you, Mohammed, and good morning, everyone. I'll cover first quarter results and the key themes driving the quarter's performance, then turn it over to Bernie Lancaster, our Chief Operating Officer, to walk through operational performance by segment. I'll then come back to cover the financials, capital allocation and our updated outlook for 2026, after which we'll open the line for questions. The first quarter of 2026 represents a clear inflection point for Mammoth. When we last spoke in March, we were direct about where the fourth quarter fell short.

The demand was there, but our execution and cost control did not meet our expectations, and we owned that. We took targeted action and the first quarter is early proof that those actions are working. Revenue was $22 million, up 90% year-over-year and 133% sequentially. Adjusted EBITDA was positive $1.9 million, our first positive EBITDA quarter in 8 quarters. The momentum we are seeing across the platform is strong enough that we are now raising our 2026 guidance on both revenue and EBITDA. I'll walk through the specifics later in the call.

During the first quarter and for the first time since our share repurchase program was authorized in August 2023, we began returning capital directly to shareholders, a reflection of our confidence in where this business is headed. Stepping back, the pivot we've spent the last several quarters executing, simplifying the portfolio, redeploying capital into higher return businesses and rebuilding the cost structure to match the size and shape of the company we are today is now showing up in the numbers. There is more work ahead, and I'll be specific about where later in the call.

As reflected in the first quarter results, we are seeing early measurable proof points across multiple parts of the business that the strategy is working. Starting with revenue. Growth was led by our Rental segment, particularly aviation, where we benefited from a full quarter of utilization on assets deployed throughout 2025. In addition to the improved utilization, during the quarter, we sold an aviation APU that we had purchased only 2 quarters earlier in the third quarter of 2025, generating a gross IRR of approximately 20%. We then redeployed the proceeds into another aviation asset where we see a strong return profile.

As we said on our last call, there are assets on our balance sheet that carry value not reflected in where the stock trades. This transaction is a real-time data point on exactly that, and it reinforces the capital allocation philosophy we've articulated since we entered this business. Beyond rentals, we saw improvement across several other segments. Drilling revenue increased over 180% sequentially. Sand revenue increased over 129% sequentially and Accommodations delivered another strong quarter with revenue up 25% sequentially.

The improvement in profitability was driven by a combination of higher revenue fall-through, particularly in rentals and accommodations, along with continued discipline on the cost structure with SG&A of $3.6 million, a 38% (sic) [ 37% ] decrease sequentially. Putting SG&A into longer perspective, we have taken our SG&A run rate from approximately $25 million in 2024 to $20 million in 2025, and we now have line of sight to an annual run rate of approximately $11 million to $12 million as the work on structural cost continues to take hold.

Cost trajectory is the result of deliberate work, sharing services more efficiently across the platform and maintaining strict discipline on spend. In accommodations specifically, we generated gross margins of approximately 40%, the highest level in the past 5 quarters, reflecting both improved utilization and the operating leverage that comes with it. While we are encouraged by the progress, there are still areas where we see meaningful opportunities for improvement. In drilling, revenue improved significantly versus the fourth quarter. However, margins were pressured by higher operating costs, with a portion of these being front-loaded in nature, particularly on the maintenance side.

As context, drilling delivered the highest gross margin in the segment's history in the third quarter of 2025 before timing-related items affected the fourth. First quarter saw activity rebound on that base. With utilization building, costs normalizing and planned capital deployment improving our operating efficiency, we expect margins to expand through the year and the segment to reach EBITDA positive in 2026. In Sand, while volumes and revenue improved meaningfully, margins remained below our expectations. This business is leveraged to activity in the Montney, and we expect performance to track with that market.

Our internal focus continues to be on operational efficiency and pricing capture as activity increases. In infrastructure, demand, particularly for fiber remains intact. The new leadership team we put in place is making progress. And as the operational changes take hold, we expect financial performance to improve. This is our smallest segment today, but one where we see meaningful long-term potential. What we are starting to see now are real proof points that the transformation strategy is working, a more focused portfolio, improving utilization, better capital allocation and a cost structure aligned with the current scale of the business. With that, I'll turn it over to Bernie to walk through the operational performance in more detail.

Thanks, Mark, and good morning, everyone. When we spoke in March, I told you Q4 was a mixed quarter, pockets of real strength, but execution and cost control that did not meet our standard. We own that, and we laid out the specific actions underway, top-down management changes in the fiber business, tightened project oversight and a more strategic approach to customer and fleet mix in non-aviation rentals.

The first quarter results provide early evidence that those actions are working across most of the platform. We have seen clear improvement in our operational trajectory and the demand backdrop we outlined last quarter has held up. Let me walk through it segment by segment. Starting with rentals. This segment continues to be the primary driver of growth for the company. In equipment rentals, we had an average of 389 pieces of equipment on rent during the quarter compared to 328 in the fourth quarter of '25 and 231 in the first quarter of 2025.

The customer and fleet mix work we discussed on the Q4 call is starting to flow through and the demand across our gas-weighted basins remains strong. In Aviation, we ended the quarter with 27 assets in the fleet, of which 21 were generating revenue. Utilization continues to trend positively, and we expect further improvement as we place additional assets on lease over the coming quarters, subject to maintenance schedules and customer delivery timing. I would again like to reiterate that there is still meaningful runway here. In accommodations, we saw another strong quarter. Nights on rent in Q1 were 24,778 compared to 21,384 in Q4 and 16,108 in Q1 of 2025.

That reflects continued strength in customer activity and improved occupancy, which combined with operating leverage drove the 40% margin. As Mark referenced earlier, this was the strongest result this segment has delivered in 5 quarters. This team has consistently performed at an exceptional level quarter after quarter, and they deserve significant recognition for their unwavering execution. In drilling, activity increased meaningfully compared to Q4 and Q1 of 2025. This represents a significant advancement in the right direction, maintaining momentum as we anticipate ongoing growth in activity throughout the year.

Sand showed significant top line improvement with revenue up 129% sequentially from Q4 2025. We sold approximately 156,000 tons at an average price of $19.49 per ton. Volumes are clearly recovering off the Q4 low, and we are also making progress on the railcar lease optimization we flagged on the Q4 call. As Mark said, pricing remains competitive and margin improvement is paramount. But operationally, we are headed in the right direction. Sand is leveraged to activity in the Montney. And while the market has shown improvement, we have more work to do on our margin conversion. That remains a priority.

Finally, in infrastructure, activity levels remain modest with a revenue of approximately $0.3 million in the quarter. The new leadership team in fiber is making the changes we said they would, tighter project oversight, better cost discipline and a more selective approach to the projects we take on. The operational foundation is continuing to improve and with the capital investment we made during the first quarter into our fiber optic fleet, we expect to be better positioned to pursue and execute on the work that is in front of us as meaningful demand continues to build. Overall, we are seeing improving activity levels across multiple segments and the operational issues we flagged on the Q4 call are tracking in the right direction with the first quarter starting to show the impact of the changes we have been making. With that, I'll turn it back over to Mark.

Thanks, Bernie. Let me walk through our segment results for the first quarter of 2026, and then I'll cover the consolidated results, balance sheet, capital allocation and our outlook. Rental segment revenue was $13 million, up approximately 294% sequentially and up 584% year-over-year, mainly driven by a full quarter of contribution from the aviation assets we deployed throughout 2025, the $6.5 million sale of an aviation APU that was not on lease, along with continued strength in non-aviation rentals.

Segment profitability improved meaningfully on the back of higher revenue fall-through and the customer and fleet mix actions Bernie referenced. Accommodations segment revenue was $3.5 million, up approximately 25% sequentially and up 67% year-over-year, reflecting higher occupancy and continued cost discipline. Gross margins of approximately 40% were the highest in 5 quarters, driven by both utilization and operating leverage. Drilling segment revenue was $1.4 million, up 180% sequentially and 600% year-over-year as utilization stepped up 20% from low single digits in the fourth quarter and first quarter of 2025.

Margins were pressured by higher operating costs in the quarter, but with activity continuing to build, we continue to expect drilling to move toward positive EBITDA during 2026. Sand segment revenue was $3.9 million, up 129% sequentially, reflecting a meaningful step-up in volumes off the Q4 low watermark, partially offset by a year-over-year decline in average sales price as a result of an increased proportion of coarse grade sand. Segment margins remain below our expectations and operational efficiency and railcar fleet rationalization remain the focus areas.

Infrastructure segment revenue was $0.3 million, reflecting the operational reset underway in our fiber business. We expect an EBITDA overhang throughout the first half of 2026, consistent with what we communicated last quarter. Importantly, during the quarter, we made our first meaningful capital investment in this segment as we invested $1.9 million into our fiber optic fleet. Demand backdrop for fiber is compelling, and this investment is about ensuring we have the capacity and equipment to execute on that opportunity as it develops in the back half of the year and into 2027.

Turning to our consolidated results. The first quarter of 2026 total revenue was $22 million compared to $9.5 million in the fourth quarter of 2025 and $11.6 million in the first quarter of 2025, an increase of 133% sequentially and 90% year-over-year. Net income from continuing operations was $4.7 million or $0.10 per diluted share compared to a net loss of $12.3 million or $0.26 per diluted share in the fourth quarter of 2025 and a net loss of $2.2 million or $0.05 per diluted share in the first quarter of 2025, significant improvement from prior periods.

Adjusted EBITDA from continuing operations was $1.9 million compared to a loss of $6.8 million in the fourth quarter of 2025 and a loss of $2.3 million in the first quarter of 2025. As I mentioned at the outset, this is the first positive EBITDA quarter since Q1 of 2024, 2 years ago and prior to the strategic transactions that took place during 2025. The first quarter results were driven by the fall-through from higher rental and accommodations revenues, disciplined cost management and favorable insurance adjustments of $1.6 million. SG&A expense was $3.6 million in the first quarter of 2026 compared to $5.7 million in the fourth quarter of 2025 and $4.1 million in the first quarter of 2025. We continue to target an annual SG&A run rate of approximately $11 million to $12 million as the work on structural cost takes hold.

Turning to balance sheet and liquidity. Mammoth remains debt-free with a strong balance sheet position. We ended the quarter with unrestricted cash, cash equivalents and marketable securities of $125.1 million. Capital expenditures in the first quarter were $11.7 million with $9.3 million of that going into rentals. The majority of the rentals CapEx went into aviation assets as we acquired 2 APUs during the quarter for $6.6 million. In addition, $1.9 million went into the infrastructure services segment for our fiber optic fleet and $0.4 million of maintenance CapEx in our Sand and Accommodation segments.

Subsequent to quarter end, we have deployed an additional $25.7 million for aviation assets to acquire 6 engines. We expect 4 of the 6 to go on lease during the second quarter. With these additions, we now have just over $90 million deployed in our aviation portfolio. As I mentioned earlier, we also monetized an aviation APU at a 20% gross IRR after a roughly 2-quarter hold and recycled that capital into another aviation asset where we see a stronger return profile. This is the philosophy we've articulated surrounding our portfolio of businesses and assets. Every asset has to earn its place in the portfolio, and we will be a buyer or seller depending on where the returns are.

During the quarter, we also began deploying capital under our share repurchase program for the first time since the Board authorized it in August of 2023. We repurchased approximately 187,000 shares for $400,000 at an average price of $2.14 per share. The dollar amount is modest relative to our liquidity, and that is intentional, but the signal is not. To frame what we see, we ended the quarter with $125 million in cash and marketable securities and a debt-free balance sheet. We delivered our first positive adjusted EBITDA quarter in 2 years. We are raising guidance as I'll cover in a moment.

In our view, the equity is currently trading at levels that ascribe little to no value to our cash position or to the underlying quality of the asset base behind it. We have meaningful capacity remaining under the repurchase authorization, which permits repurchases of up to the lesser of $55 million or 10 million shares. We will continue to be opportunistic with that capacity, particularly at levels where, in our view, the market is not reflecting the underlying value of the business.

Turning to our outlook for 2026. Based on the operational performance we delivered in the first quarter and the momentum building across the platform, we are updating our 2026 guidance on 2 dimensions. First, and most importantly, we now expect Mammoth to be adjusted EBITDA positive for the full year of 2026. This is a full year ahead of the time line we previously communicated. The pull forward is being driven by stronger-than-expected performance in rentals, particularly aviation, combined with continued discipline on the cost structure and the early benefit of the operational fixes we put in motion last quarter.

Second, we now expect full year revenue growth of greater than 60%, up from our prior expectation of approximately 50% Again, primary driver is rentals, where utilization continues to build as we place additional assets on lease, supplemented by sequentially improving performance in drilling, sand and accommodations. To close, the first quarter of 2026 marks a clear inflection point for Mammoth. We delivered our first positive adjusted EBITDA quarter in 8 quarters. We accelerated our path to full year profitability by a full year. We began deploying capital under our share repurchase program for the first time since it was authorized, and we did all that with a debt-free balance sheet.

That said, there is more work ahead, particularly on margin improvement in sand and drilling and on scaling infrastructure, and we remain focused on executing against those objectives. Transformation strategy is working, and we are well positioned to build on this momentum through the balance of 2026. The job is to execute. We look forward to updating you next quarter. On behalf of the entire Mammoth team, thank you to our employees for their continued commitment and to our shareholders for their support. With that, operator, we'll open the line for questions.

[Operator Instructions] Ladies and gentlemen, there are no questions at this time. So I'll turn the floor to Mark Layton for closing remarks. Thank you.

Thank you again for joining us today. The first quarter of 2026 was the quarter where the strategy began to show up clearly in the numbers. positive EBITDA, strong revenue growth, disciplined capital allocation and continued progress cutting costs. We look forward to updating you next quarter.

Thank you. And that concludes today's call. All parties may disconnect. Have a good day.

Greetings, and welcome to the Mammoth Energy Services Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Mohammed Topiwala with Vasara Advisors Investor Relations. Thank you. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for Mammoth fourth quarter and full Year 2025 Earnings Conference Call. Joining us on the call today are Mark Layton, Chief Financial Officer; and Bernard Lancaster, Chief Operating Officer. We will start today with our prepared remarks and then open it up for questions. I want to remind everyone that some of today's comments include forward-looking statements.

These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein. Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward-looking statements. Our comments today also include non-GAAP financial measures. The underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our fourth quarter earnings press release. which can be found on our website. As a reminder, today's call is being webcast, and a recorded version will be available on the Investor Relations section of Mammoth's website following the conclusion of this call.

With that, I'll turn the call over to Mark.

Thank you, Mohammed, and good morning, everyone. I'll start with a brief review of 2025 as a whole, cover fourth quarter results and then turn it over to Bernie Lancaster, our Chief Operating Officer, to walk through operational performance by segment. I'll then come back to cover the financials and our outlook for 2026 and after which we'll open the line for questions.

With that, let me start with 2025. Over the course of the year, we executed 4 major transactions that meaningfully reshape the company. Collectively, these transactions generated approximately $150 million of proceeds, and they reflect 2 things: first, the value embedded in assets we've built and operated well and second, our willingness to monetize businesses that no longer fit our long-term return objectives.

We sold our transmission and distribution and our engineering businesses at valuations we believe were attractive. Those were good businesses and the prices we achieved reflect that. We think those outcomes are a direct signal of the value that exists inside this company, value that, in our view, is not reflected in where the stock currently grades. We also exited 2 businesses that were not meeting our return standards. First, we sold our pressure pumping equipment, which lacked scale, was capital intensive and increasingly challenged from a cycle and return standpoint.

Second, we divested the sand mine that had become a drag on performance and didn't warrant continued investment based on logistical challenges with that particular mine and processing plant. Those were the right exits. And we are a leaner, more focused company because of them. At the same time, 2025 was the year we initiated a meaningful expansion of our platform in aviation rentals. We deployed more than $65 million of capital with the goal of creating a more stable recurring revenue stream with strong cash flow characteristics.

Aviation started the year with limited scale and it ended the year with real operating scale and a clear path to becoming a core earnings contributor as utilization ramps. But simply, 2025 was a deliberate pivot exit assets without a clear path to sustainable returns and redeploy capital into areas where we see a better return profile.

Now turning to the fourth quarter. Revenue was $9.5 million compared to $10.9 million in the third quarter of 2025 and $10 million in the fourth quarter of 2024, a year-over-year decline of approximately 6%. For the full year, revenue was $44.3 million versus $45.6 million in 2024, down approximately 3%, which we view as a reasonable outcome given the amount of portfolio change we executed throughout the year.

Within the quarter, there were areas that performed well. Rentals, infrastructure and accommodations all came in ahead of our internal revenue expectations. Aviation revenue continued its upward trajectory relative to continued deployment of aviation assets on lease. Infrastructure showed solid demand across grid and broadband-related project work. Accommodations continue to improve on both occupancy and cost efficiency. I want to be direct about where we fell short. EBITDA in Q4 was below our expectations and below our standard. This was not a demand problem. It was an execution and cost control issue and we own it. We've already started taking action. In infrastructure, we made additional management changes within the fiber business to address the performance issues that surfaced during the quarter. Across the rest of the portfolio, we are making targeted investments to address cost structure and improve the conversion of revenue to EBITDA. Bernie will walk through the specifics by segment.

With that, I'll turn the call over to Bernie Lancaster.

Thanks, Mark. Q4 was a mixed quarter operationally with some pockets of real strength, which we will build upon in 2026. In our Rental segment, we continue to build on our aviation business with another full quarter of revenue contribution. We exited third quarter with approximately 15 aviation assets and added another 11 assets during the fourth quarter. A total of 16 of the 26 aviation assets were on lease at quarter end, and we expect the remaining assets to go on lease during the first half of 2026, subject to maintenance schedules and customer delivery timing.

There is still meaningful runway here. Non-aviation rentals showed good top line momentum. Assets on rent increased 15% sequentially to approximately 328 pieces. Profitability was pressured by higher equipment rental costs and insurance premiums. Our non-aviation rentals have lost some of the advantages previously realized from economies of scale. As a result, we have identified additional opportunities to be more strategic with our customer and fleet mix in an effort to reduce overall coverage requirements and expect to work through this process as we move into 2026.

Investing in the non-aviation rental business is a priority in 2026 as we see strong demand and a tightening equipment market. Turning to infrastructure. Revenue came in ahead of our expectations, which speaks to the demand environment across network [indiscernible] broadband expansion and data center-related work. EBITDA, however, was not acceptable. Execution challenges in our fiber operations drove significant cost overruns and margin compression. We've already active and made top-down management changes within the fiber business and tightened project oversight to improve accountability, schedule discipline and cost control.

These are meaningful changes, and our focus is on restoring consistent execution, so the business can convert demand into profitable growth in 2026. Accommodations revenue was up, driven by a 25% increase in occupancy. This segment has been improving quarter after quarter and the team deserves considerable credit for their consistent execution and excellent safety record. Sand and drilling were challenged in the quarter. In sand, pricing and volume pressure continue to significantly constrain the team's results. We are focused on positioning ourselves to obtain more consistent volumes while also reducing the lease expense burden from potable railcar fleet that are no longer needed.

In drilling, fourth quarter 2025 stepped down from a very strong third quarter performance as customer timing worked against our team. One of our priorities in 2026 is to invest back into our drilling business and improve performance through high-grading the asset base, where we see a clear path to better utilization and profitability. We believe that adding motor and MWD capacity to reduce rental expense and upgrading our power sections to improve customer marketability during the first half of the year will lead to material improvement in 2026.

Overall, revenue performance in the fourth quarter showed that demand is there in several parts of our portfolio, but our execution and cost management didn't meet our expectations. We're not making excuses we're making changes. And I'm confident the actions underway will drive a better trajectory in 2026. Thank you to our employees for their hard work through a demanding quarter.

With that, I'll hand it back to Mike.

Thanks, Bernie. Let me walk through our segment results for the fourth quarter of 2025, and then I'll cover consolidated results, balance sheet and our outlook. Rental segment revenue was $3.3 million, up 19% sequentially and 179% year-over-year mainly driven by the 23% sequential increase in aviation rentals in line with our commercial expectations.

Non-aviation rental revenue increased 18% during the quarter reflecting improved asset utilization. Our Rental segment based cost overruns driven by insurance costs and equipment rental expense due to equipment needed to support our operations and customer demand. Although stronger equipment utilization and favorable aviation rental mix helped offset some of these pressures, the sequential rise in operating costs reduced overall segment profitability.

Infrastructure segment revenue was $1.2 million, up 44% sequentially and 231% year-over-year. Profitability was impacted by fiber execution issues, as Bernie described. Management and oversight changes we have made are focused on ensuring revenue performance flows through to the bottom line going forward. While we expect that there will be an EBITDA overhang on this business through the first half of 2026, we are encouraged by the early steps taken by the new leadership team.

Accommodations revenue was $2.8 million, up 24% sequentially and up 19% year-over-year, reflecting higher occupancy. Sand segment revenue was $1.7 million, down 37% sequentially and down 67% year-over-year. Drilling segment revenue was $0.5 million, down 80% sequentially and down 38% year-over-year.

Turning to consolidated results. For the fourth quarter of 2025 total revenue was $9.5 million, down 13% sequentially and 6% year-over-year. For the full year 2025, total revenue was $44.3 million, compared to $45.6 million in 2024, a year-over-year decline of 3%. Net loss from continuing operations for the fourth quarter was $12.3 million or $0.26 per diluted share compared to $0.20 in the fourth quarter of 2024.

Adjusted EBITDA from continuing operations was a loss of $6.8 million in the fourth quarter of 2025 compared to a loss of $6 million in the prior year period. The underperformance relative to our plan was operationally driven and we are taking targeted actions across each segment to address it. In our sand and drilling segments, cost of services decreased at a significantly lower rate than activity levels resulting in margin compression driven by reduced utilization and lower fixed cost absorption during the winter slowdown typical in the oil and gas industry.

In the other segments, fully idled operations led to no revenue and only partial cost reductions, creating an unavoidable drag on profitability. SG&A expense during the quarter was $5.7 million, down from $6.9 million in fourth quarter of 2024, a reduction of approximately 17% year-over-year. On a fully normalized basis, excluding the bad debt expense related to PREPA in the second quarter of 2024, SG&A declined approximately 22%. We have more work to do on the cost structure as we continue to rightsize the company for the portfolio we have today, and that remains a priority heading into 2026.

Capital expenditures during the quarter were $25.9 million, nearly all directed toward aviation, 8 APUs, 2 engines and 1 small aircraft were acquired during the quarter to bolster capacity and support future contracted deployment. For the full year, Aviation accounted for the vast majority of our approximately $70 million in total 2025 CapEx, reflecting our conviction in the return profile and scalability of that platform, -- very little capital was allocated to drilling sand, accommodations or infrastructure during the year, and we expect that to change meaningfully in 2026 as we high-grade assets pursue equipment acquisitions that reduce costs and invest in the operational improvements needed to drive profitability across those segments.

At quarter end, we had $121.6 million of unrestricted cash, cash equivalents and marketable securities and total liquidity of approximately $158.3 million including our undrawn credit facility. Mammoth remains debt free. This gives us the flexibility to invest across the portfolio, pursue accretive opportunities and absorb near-term volatility without any balance sheet pressure. Subsequent to quarter end, we closed the sale of a property in Ohio that previously supported our pressure pumping operations, generating net proceeds of $4.6 million. The asset was no longer in use following our exit from that business and converting it to cash was the logical next step.

We flagged this because we think it is representative of a broader dynamic. There are assets on our balance sheet, some obvious and some less so that carry value not reflected in where the stock trades. We will continue to identify and monetize positions where we are not generating an adequate return, and we expect to surface additional value through that process over time. Entering 2026, we are constructive on the path ahead, being a path to greater than 50% revenue growth in 2026 versus 2025, primarily driven by 2 main things: full year of aviation contribution at higher utilization and improved asset utilization across our oil and gas exposed businesses.

To add some detail regarding our aviation portfolio. We nearly doubled the monthly revenue out of the portfolio from $0.6 million in December to $1 million in January. Once fully utilized, -- we believe this portfolio can generate monthly revenue of approximately $1.6 million per month. On capital allocation, -- we expect non-aviation CapEx of approximately $11 million in 2026, a mix of maintenance and targeted growth investments across our oil and gas and infrastructure segments. To be direct, we have underinvested in these businesses for several years, and that has been one of the contributors to the cost and performance issues. .

The investments are going into an existing asset base to address specific inefficiencies with identifiable paybacks. We expect the returns to be meaningful and relatively quick to materialize. On Aviation, CapEx will remain opportunistic. As we have demonstrated, we are disciplined on entry point, and we will continue to deploy capital there only where the economics are compelling. Taking all of this together, we expect 2026 to be a year of inflection for Mammoth. Revenue growth accelerating and positive EBITDA back within reach. We want to be clear on that last point. The current asset base operated better and supported by the right level of investment is capable of delivering positive EBITDA. From that foundation, our sites are set on mid-teens EBITDA margins and positive free cash flow as we move into 2027.

The path is clear, the work is to execute against it. The macro backdrop in both areas is favorable. Oil and gas demand fundamentals are solid, activity in our core basins is steady, and we see specific investment opportunities we are actively evaluating. In aviation, leasing demand in the regional market is holding up, and we have capacity coming available as the fleet continues to ramp. Revenue growth is only part of the equation. The priority in 2026 is ensuring that growth converts into EBITDA and cash flow, and we are working to improve operational execution, along with the deploying additional capital to help improve returns.

On behalf of the entire Mammoth team, thank you to our employees for their continued commitment and to our shareholders for their support. That concludes our prepared remarks. Operator, please open the line for questions.

[Operator Instructions] And ladies and gentlemen, there are no questions at this time. So I will now hand the floor to Mark Layton for closing remarks.

Thank you again for joining us on the call today. 2025 was a year of real change for this company, in the portfolio, in the asset base and in how we are positioned going forward. Q4 was a reminder that the work is not finished, and we take that seriously. Setup heading into 2026 is straightforward. The demand is there, aviation is ramping and the balance sheet gives us room to invest. The job is to execute. We look forward to updating you next quarter.

Thank you. And with that, we conclude today's call. All parties may disconnect. Have a good day.

Greetings, and welcome to the Mammoth Energy Services Third Quarter Earnings Conference Call.

[Operator Instructions]

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mohammed Topiwala, Investor Relations at Vizara Advisors. Thank you. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for Mammoth's Third Quarter 2025 Earnings Conference Call. Joining us on the call today are Mark Layton, Chief Financial Officer; and Bernie Lancaster, Chief Operating Officer. We will start today with our prepared remarks and then open it up for questions.

I want to remind everyone that some of today's comments include forward-looking statements. These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein. Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward-looking statements.

Our comments today also include non-GAAP financial measures. The underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our third quarter earnings press release, which can be found on our website. As a reminder, today's call is being webcast, and a recorded version will be available on the Investor Relations section of Mammoth's website following the conclusion of this call.

With that, I'll turn the call over to Mark.

Thank you, Mohammed, and good morning, everyone. Mammoth delivered another quarter of steady execution as we advance our transformation plan, simplifying the company and realigning the portfolio toward higher return businesses.

Our Drilling segment was a standout this quarter with revenue more than tripling sequentially and gross margin reaching the highest level in the segment's history. Activity was driven by increased horizontal drilling in the Permian Basin, which continues to demonstrate the value of concentrating capital in our strongest markets. This performance underscores the early benefits of our strategic realignment and highlights the opportunity for further growth as market condition stabilize.

For the third quarter, revenue was $14.8 million, down from the $16.4 million in the second quarter and $17.1 million a year ago, largely reflecting the divestiture of the Piranha assets and continued underperformance in the Sand segment. Net loss from continuing operations was $12.1 million or $0.25 per diluted share. While these results are not where we want them to be, they reinforce why we're taking decisive actions to fix structural issues, strengthen the portfolio and build a healthier business.

Importantly, the quarter also marked a step forward in cash generation. We delivered positive free cash flow from operations, which is inclusive of both continued and discontinued operations, supported by the monetization of underutilized assets. These results highlight the growing financial resilience of our reshaped portfolio and our focus on self-funding the transformation.

We remain committed to optimizing the portfolio, reducing structural drag and redeploying capital toward businesses capable of generating consistent, high-return performance through cycles. We continued repositioning the company this quarter with the sale of our Piranha assets in the Sand segment, transaction that pruned the portfolio by removing an underperforming business. At the same time, we invested selectively in new aviation assets within rentals, where we continue to see compelling returns.

Together, these actions reflect our broader effort to shift capital toward businesses that generate consistent cash flow and lower cyclicality. Taking a step back, over the past several quarters, we have executed a series of transactions that collectively unlock value and reposition the Mammoth for the next phase of growth. We monetized our mature infrastructure business at an attractive valuation, divested our hydraulic fracturing assets, redeployed capital into our aviation platform and streamlined corporate overhead.

Historically, Mammoth has been acquisitive. And while we continue to evaluate M&A opportunities, our approach is very selective with a sharp focus on entry economics, return on capital and strategic fit. Every decision is guided by our goal of building a company centered on sustainable returns rather than scale for its own sake.

Capital deployment during the quarter reflected that same discipline. We continue to invest prudently in our aviation fleet, building on the platform we established earlier this year. During the quarter, we purchased one additional aircraft engine and one auxiliary power unit for APU, expanding our aviation asset base and reinforcing our commitment to this high-return segment.

In total, 3 engines and 1 APU are currently staged for deployment as we finalize the right long-term contracts, ones that support better margins and strong conversion to free cash flow. Additionally, 2 of our 8 aircraft are currently off lease and undergoing minor upgrades. We expect both to be redeployed next quarter at higher lease rates, reflecting favorable market conditions and disciplined asset management. Market fundamentals across our end markets remain mixed but constructive.

In Energy Services, activity levels are steady and pricing has held firm in most basins. Infrastructure demand continues to benefit from grid hardening, broadband expansion and data center investment, while our aviation platform is positioned to capture sustained leasing demand in the regional passenger market. Together, these trends, combined with our leaner portfolio provide a solid backdrop for improvement in 2026.

Our approach remains deliberate. Every investment decision is return-based and every asset must earn its place in the portfolio. We will continue to deploy capital prudently, guided by where we see the highest risk-adjusted returns while maintaining the flexibility to capitalize on new opportunities as they arise.

In total, we have now deployed approximately $40 million year-to-date to grow and diversify our aviation portfolio. These investments have added meaningful scale, strengthened the recurring earnings profile of our Rental segment and are generating positive EBITDA from day 1. Aviation continues to compete effectively for capital within our portfolio and remains a core growth platform as we execute on our broader transformation.

Overall, we're making steady progress as we reposition Mammoth for sustainable returns. It won't be an overnight process, but the actions we're taking today, asset sales and disciplined reinvestment to portfolio optimization and improved cash generation are essential to building a stronger, more resilient Mammoth that can deliver sustainable value creation over the long term.

Before I hand it over, I want to thank our teams for their continued execution during a period of significant change. Their discipline, adaptability and commitment are what enable this transformation to take hold.

With that, I'll turn the call over to Bernie Lancaster.

Thanks, Mark. Operationally, our teams executed well across our businesses in what was a challenging quarter. While we were disappointed with the results in the Sand and Infrastructure segments, we have already taken actions to address structural inefficiencies and improve execution. Let me take a moment to review our operating performance by segment and highlight where we're seeing momentum build.

In Rentals, aviation delivered a full quarter of operations with strong customer demand and improving fleet availability as we continue to tighten operating efficiency to offset start-up issues. We're prioritizing long-term contracts and profitable deployment over volume for volume's sake. Non-aviation rentals remained somewhat steady with good equipment returns and minimal downtime.

In Infrastructure, our teams managed through schedule shifts and customer delays that impacted margin, but we executed safely and continue to work to secure several new engineering and fiber projects. This business remains a strategic part of Mammoth given its alignment with long-term grid, AI data center and broadband investment themes.

Our Sand operations faced another difficult quarter, driven by the divestiture of Piranha assets, nonrecurring costs associated with railcar returns and continued weather-related headwinds in Canada. The environment remains challenging, but we believe our remaining assets are in a more advantageous position to return capital over the medium to long term. We believe that focusing on internal cost efficiency, maintenance reliability and disciplined contract management will restore margins over time.

Our Accommodations segment had a very good quarter. Higher occupancy and improved cost efficiency led to margin expansion and solid EBITDA growth. Customer feedback remains strong, and our team continues to deliver excellent service and safety performance.

Finally, drilling was the standout performer this quarter. Our decision to focus on the Permian Basin and horizontal drilling activity is paying off. The team delivered record gross margins and continued to gain share in our target markets. We expect to build on this momentum in Q4 and into 2026 as activity and customer engagement remains strong in the areas where we operate. Taken together, these results demonstrate the resilience of our diversified portfolio with strength in drilling and accommodations helping offset weakness in Sand and Infrastructure during the third quarter.

Across the company, I want to thank our employees for their commitment and execution. We are steadily building a more efficient and resilient organization. With that, I'll hand it back to Mark for closing remarks.

Thanks, Bernie. While Q3 results highlight areas where we must improve, they also demonstrate the progress we're making to rebuild Mammoth on a stronger foundation. Our Drilling and Accommodation segments show that what disciplined execution can deliver even in a challenging market, and we're applying those lessons across the organization. These segment results reflect both the progress we've made and the work still ahead. Our continued discipline around the cost and capital remains central to restoring profitability.

Now turning to our financial performance by segment. I'll walk through key highlights for the quarter, beginning with rentals. Segment revenue was $2.8 million, down 11% sequentially, but up 24% year-over-year. Aviation performed well with a full quarter of revenue and solid customer demand. On average, during the third quarter of 2025, we had approximately 286 pieces of equipment rented out to customers compared to 296 pieces in the second quarter. The sequential decline primarily reflected timing of project completions in the Northeast.

We continue to be encouraged by the potential in this segment as more than 80% of our current rental activity is tied to gas-weighted basins. These markets stand to benefit from secular demand growth in natural gas-fired power generation, particularly as the AI-driven expansion of data center capacity increases electricity requirements across the grid. Utilization levels remain healthy, and we're focused on operational levers and pricing to further enhance margins.

In addition, seasonal weather trends could provide a tailwind for heating-related rental assets as we move through the winter months. The quarter also represented the first full quarter of revenue contribution from our aviation assets, which continue to perform well and generate stable returns.

Overall, we remain excited about the opportunity set within our rentals business as we enter 2026. Infrastructure segment revenue of $4.8 million declined 13% sequentially, primarily reflecting operational execution challenges on a few fiber projects that impacted both timing and margins. We've already taken corrective action, including management changes and tighter project oversight to ensure greater accountability and consistency going forward.

While the quarter was softer than we would have liked, we remain encouraged by the long-term opportunity in this business. The segment is well positioned to benefit from secular investment in grid modernization, broadband expansion and the build-out of AI-related data centers, all of which are driving sustained demand for electrical and fiber infrastructure capabilities. With changes to our structure and leadership, we're confident this segment will return to a stronger performance trajectory in 2026.

Our Sand segment revenue of $2.7 million was down 49% from Q2 and 44% year-over-year, reflecting the Piranha divestiture and weather-related disruptions in Canada. In addition, we incurred approximately $0.6 million in expenses during the quarter related to the return of railcars. We view Q3 as a reset point. With Piranha sold and improvements underway at Taylor Frac, we expect Sand to return to positive gross margin in 2026.

Accommodations revenue was $2.3 million and up 29% sequentially, while down 20% year-over-year. EBITDA rose to $0.5 million from $0.2 million in Q2 as strong operational execution and cost discipline are driving better performance from this segment. Drilling revenue of $2.3 million represented a 207% sequential increase and a 47% increase year-over-year, driven by improved utilization and higher activity.

Gross margin rose to 19%, the highest in this segment's history and EBITDA improved to $0.2 million from a loss in Q2. Importantly, the segment also generated positive free cash flow as a result of the positive EBITDA and no CapEx for the segment during the quarter. These results reflect improved operational efficiency. In the near term, we expect drilling to continue performing well as activity levels remain stable, and we execute on additional initiatives to further enhance profitability and cash conversion, including pricing. This performance validates our focus on the Permian and reinforces the value of concentrating capital in our core markets.

Turning to our consolidated results. Net loss from continuing operations for the third quarter was $12.1 million or a loss of $0.25 per diluted share compared to a loss of $8.9 million or $0.18 per diluted share for the third quarter of 2024. The net loss in the third quarter of 2025 included a noncash charge of $2.4 million related to Piranha.

Adjusted EBITDA from continuing operations, as defined and reconciled in our earnings release, was a loss of $4.4 million in the third quarter compared to a loss of $2.9 million in the prior year period. While headline profitability remains under pressure, we continue to take meaningful steps to improve the bottom line through a relentless focus on cost structure and efficiency.

Selling, general and administrative expenses were $5.2 million in the third quarter of 2025, reflecting a significant reduction from last year as we have streamlined operations and simplified the organization. Excluding bad debt expense, we have meaningfully lowered our SG&A run rate from approximately $35 million in 2024 to around $21 million exiting the third quarter, a reduction of roughly 40%.

Importantly, when adjusting for $1 million of Puerto Rico-related legal expenses incurred this quarter, our normalized SG&A run rate is effectively cut in half compared to last year. These results reflect the progress we've made to create a leaner, more efficient organization. We are executing against a detailed cost road map that focuses on consolidating support functions, improved shared service efficiency and maintaining strict discipline on discretionary spending. This structural reset is not just about reducing expenses. It's about building a stronger foundation for sustainable profitability and margin expansion as our portfolio continues to evolve.

At quarter end, we maintained a strong balance sheet with $110.9 million of unrestricted cash, cash equivalents and marketable securities and total liquidity of approximately $153.4 million, including our undrawn credit facility. Mammoth remains debt-free, providing the flexibility to fund operations and invest in opportunities that offer attractive returns.

Subsequent to quarter end, approximately $19.8 million of the $29.5 million in restricted cash related to the letter of credit for PREPA was released back to the company, meaningfully improving our effective liquidity position. This equates to roughly $0.41 per diluted share of incremental value, and we believe it's important to underscore that this cash is now available and no longer encumbered.

The market has historically discounted this balance, but with the release of these funds, our liquidity profile is even stronger than reflected at quarter end. Restricted cash stood at $29.5 million as of September 30. And with this subsequent release, we've effectively unlocked a significant portion of that value. Together, these actions highlight the underlying strength and flexibility of our balance sheet.

With over $170 million in total liquidity pro forma for the release, we are well positioned to fund our ongoing transformation, support organic investments and pursue strategic opportunities that align with our return and risk framework. Capital expenditures for the quarter totaled $17.3 million, primarily related to aviation and maintenance projects. We continue to expect full year 2025 CapEx to remain within our previously communicated range, weighted toward initiatives with clear payback and margin improvement potential.

Our disciplined approach to capital allocation, combined with a conservative balance sheet positions us well to navigate market volatility and pursue strategic growth as opportunities arise. Every business within Mammoth competes for capital, and we continue to evaluate opportunities that fit our return and risk criteria. Our priorities remain clear: enhance margins, improve asset returns and preserve balance sheet strength. We have the right assets, the right team and the financial flexibility to execute our plan.

Looking ahead, while Q4 will reflect continued portfolio transition, we expect improved cash generation and margin recovery in 2026 as our transformation initiatives take hold. The organization today is leaner, more focused and better aligned with the opportunities ahead of us.

On behalf of the leadership team, I want to thank our employees for their dedication and our shareholders for their continued support. We believe Mammoth is on the right path, and we're confident the steps we're taking today will translate into sustainable value creation in the years ahead. That concludes our prepared remarks.

Operator, please open the line for questions.

[Operator Instructions]

Our first questions come from the line of Colby Sasso with Daniel Energy Partners.

I just wanted to ask, can you speak on the visibility for sand volumes in 2026, ideally with some color on the basins you serve?

Sure. As we look at '26, our primary logistic advantage is into Western Canada, into the Montney and then into the Northeast, so into the Utica, Marcellus. As we look at '26 volumes, we certainly expect an increase compared to what we saw in Q3 that we framed as a low watermark or a reset. But the conversations that our sales team is having are encouraging as it relates to 2026.

That's all for me. I will turn it back.

Our next question come from the line of Doug Garber with Westport Alpha.

Hey Mark, how is that going?

Good, how are you Doug?

Wanted to just start on the balance sheet. Your cash and marketable securities is about $123 million as of 10/31. And I wanted to just confirm that does not include -- you still have, what, $10 million from escrow from the recent sale and another, call it, $5 million to $10 million from land rigs held for sale that are not included in that number that should be a cash inflow. Do I have that right? And are there other big other things that you're expecting to collect?

Yes. High level, there's about $5 million in held for sale that primarily relates to the drilling rig assets. And then you identified the $10 million that remains in escrow relative to the T&D transaction that occurred in April of this year that we expect to be released in April of '26 at the earliest.

And can you just remind us on the PREPA puts and takes, how much you still have, I think, a $20 million left in AR to collect and then you also have a tax liability. And if I have that in the $20-ish million net liability range between those 2 items, is that a fair way to think about it?

Yes. So as you look at the PREPA receivable, you're correct, that's $20 million that's due when PREPA exits bankruptcy. I think that date is undetermined at this particular point in time. And then the majority of the tax liability that sits on the balance sheet relates to Puerto Rico activities. And as you look at that, that's at the gross amount to reduce that to reflect the write-off, we'll take some negotiations with the tax department in Puerto Rico. So what you're seeing on the balance sheet is the gross tax amount nonreflective of the write-off that we took last year.

Okay. And I also wanted to dig into the Sand business. It's a decent drag on free cash flow here. Can you help me understand the path? How much of it was onetime for rail rental car returns of a drag? And what is your path to getting that business back to free cash flow neutral in '26 or even next quarter?

There are several levers. First, it comes down to sales and the sales dialogue is encouraging as it relates to '26. But as you pointed out, Q3 included some onetime charges associated with returning railcars of about $550,000. So while we incurred that cost during the quarter, it reduces our fixed cost profile on a go-forward basis and moves us a step closer towards rightsizing our railcar fleet.

How much did it reduce your cost? And what's your total railcar liability monthly?

Yes. So as we look at the total railcar monthly right now, it's about $120,000 a month. We reduced it by about $30,000 per month by returning this set of cars. I think the next set of cars that becomes available releases in February or March time frame of '26, and we'll continue to evaluate that fleet based on demand.

We've reduced our -- sorry, this is Bernie. We've reduced our fleet count this year about 30% trying to rightsize where we're at.

And is it a volume? Or where is the pricing on that stand? Are you still in the $20 per ton kind of FOB range?

We were a little below $20 during the quarter. Some of that related to offloading some 30-50 that allowed us to reposition some of the railcars that we were returning, but we continue to see demand and pricing in that $20 range for 40-70.

Thank you. This now concludes our question-and-answer session. I would now like to turn the floor back over to Mark Layton for any closing comments.

Thank you again for joining us on the call today. We continue to focus on positioning Mammoth for future growth and unlocking value. We will achieve this through operational excellence, efficiency and strategic capital deployment. This concludes our conference call, and we look forward to speaking to you all again next quarter.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may now disconnect your lines. Enjoy the rest of your day.