Mammoth Energy Services (TUSK) Q3 2026 earnings review
Mammoth's aircraft leases lift margins, but fleet buying drains cash
Mammoth Energy Services, an aircraft lessor and oilfield services provider, grew its cash profit even as quarterly sales dipped. Revenue nearly doubled from a year ago to $21 million, while cash profit before one-offs more than doubled from last quarter to $6 million as six more aircraft went on lease and sand mining turned profitable. Finance chief Mark Layton raised the full-year margin target to the mid-teens and forecast 40% cash profit growth for next year.
| Revenue | $21.3M +97% from a year ago |
|---|---|
| Adjusted EBITDA margin | 27.3% 10.0% last quarter |
| Aviation assets on lease | 29 of 44 23 of 38 last quarter |
| Full-year margin outlook | Raised to mid-teens from >10% |
⚖️ Verdict: 🟢 Bullish
The story got better because the shift toward aircraft leasing and higher-grade sand lifted margins without relying on equipment sales. Beating what the prior plan implied for the second half in a single quarter triggered a third outlook upgrade. The bad news: buying aircraft cut cash and securities from $77 million in June to $28 million by late October, forcing the debt-free company to sign a $58 million loan facility.
The question now is whether lease payments from the 44-asset aviation fleet can cover both rising depreciation and new interest costs without draining more cash. Either the 15 unplaced aircraft and engines go on lease quickly and make the fleet self-funding, or heavy capital spending and borrowing eat into the returns. Fourth-quarter loan draws and lease placements will tell.
🐂 Bull Case
Aviation Leasing Lifted Rentals Cash Profit 33%
Mammoth's rental services division leases aircraft, engines and heavy construction gear. Finance chief Mark Layton said aviation leasing remains the priority because it builds recurring revenue while requiring "comparatively modest incremental operating personnel as additional assets are deployed". In the third quarter, the company expanded its aviation fleet to 44 pieces and put six more on lease, lifting revenue-generating units to 29.
- Rentals Adjusted EBITDA: $5.0 million, up 33.3% from last quarter
- Rentals revenue: $9.6 million, up 248.7% from a year ago
- Aviation equipment on lease: 29 of 44 units, up from 23 of 38 in the second quarter
- Heavy equipment rented: 430 pieces on average, up from 407 last quarter
This matters because the division grew its cash profit even as segment sales dipped 5.6% from the second quarter, which had included a $2.0 million airframe and landing-gear sale. High-margin lease payments replaced low-margin equipment sales, so segment cost of revenue dropped by 20.1 percentage points of sales. Fifteen aircraft, engines and power units still sit unplaced, offering built-in growth as they enter service.
What to watch: the number of revenue-producing aviation assets next quarter. Placing the remaining 15 idle units without buying more would prove the existing fleet can fund itself.
Sand Turned a Cash Profit After Six Losing Quarters
The natural sand proppant division mines and sells sand used in hydraulic fracturing for oil and gas wells. After losing money on an Adjusted EBITDA basis in every quarter of the past year and a half, the unit generated $1.5 million in cash profit this quarter, reversing a $0.4 million loss in the second quarter.
Segment revenue fell 35.4% from last quarter to $5.2 million because pass-through freight sales dropped by $3.0 million. Removing that zero-margin shipping revenue, along with an 82-cent rise in sand prices to $22.18 per ton "primarily due to a shift in grade mix", cut product cost of revenue from 97.4% of segment sales in the second quarter to 57.8%.
What to watch: fourth-quarter sand tonnage and Adjusted EBITDA. Holding a positive cash profit during winter slowdowns would flip this standing concern into a resolved issue.
Third Margin Raise Points to 40% Profit Growth
Stronger leasing and sand margins pushed company-wide Adjusted EBITDA (profit before interest, taxes, depreciation and one-offs) to $5.8 million, or 27.3% of revenue. By our math, that single quarter beat the entire $3.9 million second-half floor implied by the previous outlook. Layton raised the full-year margin target from above 10% to the mid-teens, which he said is "roughly a year ahead of the plan we laid out in March".
Management also issued its first outlook for 2027, forecasting Adjusted EBITDA to grow by more than 40% over 2026 levels. Crucially, the company said this plan "does not assume material aviation asset sales", meaning recurring lease contracts and existing business lines must carry the increase.
What to watch: fourth-quarter Adjusted EBITDA margin against the 15.3% rate implied by our math at the revenue floor. Beating that level without equipment sales would validate the 2027 baseline.
🐻 Bear Case
Aircraft Buying Drained Cash and Brought Back Debt
Since selling its electric utility and pressure-pumping units in 2025, Mammoth has highlighted its debt-free balance sheet and large cash pile. Buying aircraft and engines has now consumed most of that cushion. The company spent $41.8 million on capital expenditures in the third quarter—nearly double its total revenue—with $40.1 million going into the rental and aviation fleet.
- Cash and marketable securities at March 31: $125.2 million
- Cash and marketable securities at June 30: $77.0 million
- Cash and marketable securities at September 30: $37.6 million
- Cash and marketable securities at October 27: $27.5 million
- New Bank7 senior secured term loan facility: up to $58.0 million
While operating cash flow from continuing operations turned slightly positive at $0.4 million in the third quarter by our math, free cash flow was negative $41.4 million. Another $10.1 million left the bank in the first four weeks of October, prompting Mammoth to sign a $58.0 million term loan with Bank7 on October 28. Future aviation returns must now cover interest costs.
What to watch: borrowings drawn under the Bank7 loan and fourth-quarter capital spending. Drawing heavily on the credit line before idle aircraft go on lease would strain cash flow.
Core Operations Still Lost Money Before Security Gains
"This was an outstanding quarter for Mammoth and a clear demonstration of our focus on driving returns," finance chief Mark Layton said, pointing to $0.3 million in net income from continuing operations. Yet the income statement shows that day-to-day operations did not earn a profit once equipment wear and tear is counted.
As the aviation fleet grew, depreciation and amortization expense jumped 41.5% from the second quarter to $6.6 million, or 30.7% of revenue. That pushed GAAP operating income to a loss of $0.4 million. Mammoth only reported positive net income because of a $1.2 million gain on its marketable securities portfolio and $0.3 million from selling assets. Excluding those two items, the company lost $1.2 million by our math.
What to watch: GAAP operating income in the fourth quarter. Until lease revenue covers the rising depreciation of the aircraft fleet, bottom-line profit remains dependent on investment gains.
Infrastructure and Drilling Slipped Back Into Losses
Outside of aviation, sand and remote lodging, Mammoth runs fiber-optic utility crews and directional drilling rigs. Last quarter, directional drilling turned an Adjusted EBITDA profit of $0.6 million, and the company spent $5.7 million buying two small firms to rebuild its fiber infrastructure business.
Both units lost money in the third quarter. Drilling revenue dropped 46.2% from the second quarter to $2.1 million, which the release said was "largely reflecting normal seasonal trends", flipping segment Adjusted EBITDA back to a $28,000 loss. Infrastructure revenue edged up to $1.1 million after the June acquisitions, but its Adjusted EBITDA loss widened to $0.9 million because cost of revenue reached 154.9% of segment sales.
What to watch: Infrastructure Adjusted EBITDA over the next two quarters. Persistent losses after buying two fiber businesses would show that the segment lacks the scale to cover its crew costs.
Risks This Quarter Didn't Answer
Four standing governance, disclosure and balance-sheet risks received no update in the third-quarter earnings release.
- Vacant chief executive seat: Mammoth has operated without a chief executive since July 2025, with the finance, operating and business chiefs sharing the role; the release gave no search update.
- Standalone aviation economics: management merges aviation into the broader rental services segment and does not disclose standalone aviation EBITDA or lease yields on the more than $100 million invested.
- Related-party aircraft leases: the release did not detail revenue or terms from aircraft leased to companies controlled by majority shareholder Wexford Capital, though total related-party services revenue rose to $0.7 million; the quarterly 10-Q filing will carry the footnote.
- Puerto Rico receivables and tax disputes: the release did not update the collection timing for the $20.0 million owed by the Puerto Rico Electric Power Authority or the status of local municipal tax lawsuits.
💲 Other KPIs
Inventories — parts and aviation equipment held for preparation or sale — rose 33.7% from the second quarter and more than tripled from $4.1 million at year-end. Combined with an $8.6 million rise in customer receivables over the first nine months, working capital tied up $19.2 million of cash this year.
Overhead costs fell 2.3% from the second quarter and 12.9% from a year ago. As revenue nearly doubled, overhead dropped from 43.8% of sales a year ago to 19.4% this quarter. Still, the $4.1 million quarterly spend equals a $16.5 million annual pace, above the company's $11–12 million exit target.
Workforce lodging cash profit rose 34.3% from the second quarter and nearly tripled from $0.4 million a year ago. Remote-site customers rented an average of 270 rooms during the quarter, up from 259 in the second quarter and 185 a year earlier, lifting segment revenue 48.7% from last year to $3.4 million.
🔮 Guidance
Unchanged. The plan still calls for full-year sales to grow by more than 90% over 2025's $44.3 million base, to at least $84.2 million. With $69.4 million booked in the first nine months, that floor leaves just $14.7 million for the fourth quarter by our math—up 55.7% from a year ago, but 31% below the third-quarter level.
Raised. Mammoth lifted its full-year cash profit margin target for the third time this year, following earlier upgrades from positive to above 10%. Because the margin already sits at 15.0% through the first nine months, hitting the middle of the new target requires about 15.3% in the fourth quarter at the revenue floor by our math, down from 27.3% in the third quarter.
New. Management expects 2027 cash profit to rise by more than 40% over full-year 2026 levels. At the 2026 floor of $12.6 million implied by our math, that points to at least $17.7 million in 2027, driven by putting idle aircraft on lease without relying on equipment sales.
❓ Key Questions
What are standalone aviation lease revenues and cash margins?
Mammoth has invested over $100 million into aircraft and engines, yet combines their results with construction equipment rentals. Investors cannot verify the return on that capital without standalone lease revenue and EBITDA.
What is the interest rate on the new Bank7 loan?
Cash and securities dropped to $27.5 million by late October, and Mammoth signed a $58.0 million term loan. The interest rate and covenants will determine how much lease cash flow goes to debt service.
When will the board name a permanent chief executive?
The company has operated without a chief executive since July 2025 while shifting its entire business model from oilfield services to aircraft leasing. A permanent leader is overdue.
Why did overhead stay at $4.1 million despite the target?
Management previously targeted an $11–12 million annual exit rate for selling, general and administrative costs, but third-quarter spending ran at a $16.5 million annual pace and the release dropped any mention of the target.