MAMMOTH ENERGY SERVICES, INC.TUSK
MAMMOTH ENERGY SERVICES, INC. Income Taxes Disclosure
Income Taxes
Loss from continuing operations before incomes taxes for the United States and non-U.S. jurisdictions for the years ended December 31, 2025 and 2024 are as follows (in thousands):
| Years Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Loss from continuing operations before income taxes: | ||||||||||||||
| United States | (52,893) | (26,638) | ||||||||||||
| Non-U.S. | (6,776) | (167,780) | ||||||||||||
| Total | $ | (59,669) | $ | (194,418) | ||||||||||
The components of income tax (benefit) provision applicable to federal, state and foreign income taxes for the years ended December 31, 2025 and 2024 are as follows (in thousands):
| Years Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Federal income tax expense (benefit): | ||||||||||||||
| Current | 251 | 295 | ||||||||||||
| Deferred | (358) | 2,500 | ||||||||||||
| Total | $ | (107) | $ | 2,795 | ||||||||||
| State income tax expense (benefit): | ||||||||||||||
| Current | (65) | 75 | ||||||||||||
| Deferred | — | — | ||||||||||||
| Total | $ | (65) | $ | 75 | ||||||||||
| Foreign income tax expense (benefit): | ||||||||||||||
| Current | 4,491 | (15,913) | ||||||||||||
| Deferred | (232) | 1,737 | ||||||||||||
| Total | $ | 4,259 | $ | (14,176) | ||||||||||
| Total income tax expense (benefit): | ||||||||||||||
| Current | 4,677 | (15,543) | ||||||||||||
| Deferred | (590) | 4,237 | ||||||||||||
| Total | $ | 4,087 | $ | (11,306) | ||||||||||
Effective January 1, 2025, we adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance has been applied retrospectively. Accordingly, the enhanced disaggregation of income tax rate reconciliation items is presented for the years ended December 31, 2025 and 2024 are as follows (in thousands):
The differences between the statutory U.S. federal income tax rate and the effective income tax rate for the years ended December 31, 2025 and 2024 are as follows (in thousands):
| Years Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | |||||||||||||||||||||||
| U.S. federal statutory tax rate | $ | (12,531) | 21.0 | % | $ | (40,828) | 21.0 | % | ||||||||||||||||||
State and local income taxes, net of federal income tax effect (a) | 26 | — | 60 | — | ||||||||||||||||||||||
| Foreign tax effects | ||||||||||||||||||||||||||
| Canada | ||||||||||||||||||||||||||
| Statutory tax rate difference between Canada and United States | 14 | — | 61 | — | ||||||||||||||||||||||
| Withholding taxes | 376 | (0.6) | — | — | ||||||||||||||||||||||
| Puerto Rico | ||||||||||||||||||||||||||
| Statutory tax rate difference between Puerto Rico and United States | (1,230) | 2.1 | (28,352) | 14.6 | ||||||||||||||||||||||
| Changes in valuation allowances | 2,748 | (4.7) | 65,638 | (33.8) | ||||||||||||||||||||||
| Interest and penalties | 3,722 | (6.3) | 3,201 | (1.7) | ||||||||||||||||||||||
| Withholding taxes | — | — | (19,899) | 10.2 | ||||||||||||||||||||||
| Effect of changes in tax laws or rates enacted in the current period | ||||||||||||||||||||||||||
| Effect of cross-border tax laws | ||||||||||||||||||||||||||
| Foreign branch inclusions | (1,885) | 3.2 | (35,996) | 18.5 | ||||||||||||||||||||||
| Tax credits | ||||||||||||||||||||||||||
| Foreign tax credits | — | — | (166) | 0.1 | ||||||||||||||||||||||
| Changes in valuation allowances | 12,484 | (20.9) | 43,703 | (22.5) | ||||||||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||
| Other | 113 | (0.2) | 981 | (0.5) | ||||||||||||||||||||||
| Other adjustments | 250 | (0.4) | 291 | (0.1) | ||||||||||||||||||||||
| Effective tax rate | $ | 4,087 | (6.8) | % | $ | (11,306) | 5.8 | % | ||||||||||||||||||
(a) State taxes in Kentucky and West Virginia made up the majority (greater than 50 percent) of the tax effect in this category.
The Company’s effective tax rate was (6.8)% for the year ended December 31, 2025 compared to 5.8% for the year ended December 31, 2024.
The effective tax rate for the years ended December 31, 2025 and 2024 differed from the statutory rate of 21% primarily due to the mix of earnings between the United States and Puerto Rico, changes in the valuation allowance and Canadian withholding tax. Additionally, as a result of the Settlement Agreement with PREPA, during the year ended December 31, 2024, the Company reversed $19.9 million in withholding tax accruals related to undistributed earnings from Puerto Rico.
The Company recorded interest and penalties expense of $3.7 million and $3.2 million during the years ended December 31, 2025 and 2024, respectively, related to tax year returns from 2019 to 2023 in Puerto Rico. Additionally, the Company recorded interest expense of $0.3 million and $0.3 million during the years ended December 31, 2025 and 2024, respectively related to the 2020 tax year return in the United States.
The tax effect of temporary differences and tax attributes representing deferred tax assets and liabilities at December 31, 2025 and 2024 attributable to the Company consisted of the following (in thousands):
| Year Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Deferred tax assets: | ||||||||||||||
| Allowance for doubtful accounts | $ | 94 | $ | 167 | ||||||||||
| Section 163(j) interest limitation | 1,075 | 5,090 | ||||||||||||
| Lease asset | 626 | 3,660 | ||||||||||||
| Intangible assets | 810 | 1,050 | ||||||||||||
| Accrued liabilities | 2,211 | 3,605 | ||||||||||||
| Net operating loss carryover | 120,277 | 114,506 | ||||||||||||
| Foreign tax credits | 76,570 | 76,570 | ||||||||||||
| Accumulated other comprehensive income | 970 | 1,068 | ||||||||||||
| Other | 296 | 207 | ||||||||||||
| Valuation allowance | (188,361) | (187,087) | ||||||||||||
| Deferred tax assets | 14,568 | 18,836 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Property, plant and equipment | $ | (14,571) | $ | (14,140) | ||||||||||
| Lease liability | (830) | (3,583) | ||||||||||||
| Other | (1,597) | (4,134) | ||||||||||||
| Deferred tax liabilities | (16,998) | (21,857) | ||||||||||||
| Net deferred tax (liability) asset | $ | (2,430) | $ | (3,021) | ||||||||||
| Reflected in accompanying balance sheet as: | ||||||||||||||
| Deferred income tax asset | $ | — | $ | — | ||||||||||
| Deferred income tax liability | (2,430) | (3,021) | ||||||||||||
| Total | $ | (2,430) | $ | (3,021) | ||||||||||
During the years ended December 31, 2025 and 2024, the Company recorded changes in its valuation allowance of $1.3 million and $120.5 million, respectively, related to deferred tax assets that are not expected to be utilized. The Company has foreign tax credit carryforwards of $76.6 million as of December 31, 2025. These credits have a 10-year carryforward period and begin to expire in 2028. As of December 31, 2025, the Company has federal net operating loss and 163(j) interest limitation carryforwards of $199.0 million and $5.1 million, respectively, that have an indefinite life carryforward. The Company has state net operating loss carryforwards of $14.3 million which expire between 2040 and 2045. The Company has net operating loss carryforwards in Puerto Rico of $179.2 million that have a 10-year carryforward period and expire in 2035.
The Company maintains a full valuation allowance related to U.S. foreign tax credit carryforwards, as it cannot objectively assert that these deferred tax assets are more likely than not to be realized. The Company has a full valuation allowance on U.S. tax attribute carryforwards to the extent not supported by existing deferred tax liabilities. As result of the annual limitations for net operating loss carryforwards to offset only 80 percent of taxable income, the Company reflects the net deferred tax liability as of December 31, 2025. The Company recorded the full valuation allowance with respect to the Puerto Rico net operating loss carryforwards as they are not more likely than not to be realized. All available positive and negative evidence was weighed to determine whether a valuation allowance was necessary. The most significant evidential matter relates to recent cumulative loss position in the U.S. and no projected benefit related to losses generated in Puerto Rico as of December 31, 2025.
The income taxes paid, net of refunds received, disaggregated by jurisdiction for the years ended December 31, 2025 and 2024 are as follows (in thousands):
| Years Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| U.S. federal | $ | — | $ | — | ||||||||||
| U.S. state and local | ||||||||||||||
| Texas | — | 58 | ||||||||||||
| Other jurisdictions | 32 | 43 | ||||||||||||
| Foreign | ||||||||||||||
| Canada | 785 | 1,001 | ||||||||||||
| Income taxes paid | $ | 817 | $ | 1,102 | ||||||||||
At December 31, 2025, Mammoth has a foreign subsidiary in Canada with undistributed earnings. These earnings may be distributed in the future. Although the Company would not be subject to U.S. income tax upon distribution, such amounts could be subject to Canadian withholding tax. Accordingly, the Company recognized a current income tax payable of $0.5 million. The Company continues to evaluate any remaining amounts for which the related tax effects cannot be reasonably estimated.
The Company has recorded interest and penalties payable of $12.5 million and $8.5 million at December 31, 2025 and 2024, respectively, related to the tax year returns from 2019 to 2023 in Puerto Rico and the 2020 tax year return in the United States. It is the Company’s policy to recognize interest and applicable penalties in income tax expense.
The Company did not have any uncertain tax positions for the years ended December 31, 2025 and 2024.
The Company’s U.S. federal tax returns for tax years 2020 through 2024 remain subject to examination by the tax authorities. The Company’s state and local income tax returns for tax years 2019 through 2024 remain subject to examination, with few exceptions, by the respective tax authorities. Puerto Rico tax returns for tax years 2019 through 2024 and Canada tax returns for the tax years 2018 through 2024 remain open to examination by the respective tax authorities.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 6, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
| 2023 | Mar 1, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Mar 4, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 24, 2017 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.