Ranger Energy Services, Inc. (NYSE: RNGR) (“Ranger” or the
“Company”) announced today its results for the first quarter ended
March 31, 2023.
First Quarter 2023 Highlights
–Revenue of $157.5 million, a 27% increase
from $123.6 million in first quarter 2022
– Net income of $6.2 million, or $0.25 per
fully diluted share, up from a net loss of $5.7 million, or $0.31
loss per share in first quarter of 2022
– Adjusted EBITDA1 of $20.1 million, a 109%
increase from $9.6 million in first quarter 2022 driven by
increases in activity and pricing across segments
– Ended the quarter with $15.6 million of
Debt and Adjusted Net Debt of $9.3 million, which represented a 58%
decrease from $22.4 million of Adjusted Net Debt in the fourth
quarter of 2022
– Share repurchase program initiated during
the quarter as part of announced capital return program
CEO Comments
“I am pleased to report that our results for the first quarter
of 2023 demonstrate strong year-over-year growth across all
segments of our business,” stated Stuart Bodden, Chief Executive
Officer of Ranger Energy Services.
“Operating activity across all of our service lines remained
consistent with our fourth quarter, and with the winter months
behind us, we expect activity levels to increase through the second
and third quarters,” said Bodden. “Despite sector-wide pressures
from declining natural gas prices, the operating teams in our well
services group did an outstanding job managing affected assets to
deliver consistent utilization redeploying assets from the
Haynesville without losing ground on pricing.
“Our major customers are increasingly seeking out meaningful
partnerships with a limited number of vendors that demonstrate
strong service quality, a trend that plays to Ranger’s strengths
and reinforces our outlook for the second half of the year,” Mr.
Bodden continued. “In our Wireline group, while our Northern region
has continued to perform well, we have seen margin pressure in the
completions space in the Permian Basin, brought about by relocated
assets and pricing concessions offered by other providers. We
remain committed to pursuing work with efficient operators at
attractive pricing and improving margins in this segment. Overall,
as we look at the full year, we continue to expect achieving
meaningful growth year-over-year and meet our previously stated
guidance.
“Finally, our strong free cash flow conversion profile resulted
in another quarter of debt reduction putting us closer to our net
debt zero goal,” said Mr. Bodden. “Considering this progress and
our previously announced capital return program, we initiated a
share repurchase program late in the first quarter. As previously
communicated, we will continually evaluate capital return and
deployment options that provide shareholders with the highest
return opportunity.
“Overall, our first quarter results reflect the hard work and
dedication of our employees, the strength of our business model,
and our commitment to delivering sustainable value to our
stakeholders,” concluded Mr. Bodden.
___________________
1
“Adjusted EBITDA,” “Adjusted Net Debt” and
“Free Cash Flow” are not presented in accordance with generally
accepted accounting principles in the United States (“U.S. GAAP”).
A Non-GAAP supporting schedule is included with the statements and
schedules attached to this press release and can also be found on
the Company's website at: www.rangerenergy.com.
STRATEGIC UPDATE
Ranger continues to execute on its value creation priorities,
which include improving cash flow potential, strengthening its
balance sheet, growing through acquisition, and returning
meaningful capital to shareholders. We continued to progress in
each of these areas during the first quarter of 2023.
- Improving Cash Flow Potential: The Company remains
focused on cash flow generation underpinned by a capital efficient
business model with strong operating leverage. We have a series of
initiatives underway during 2023 to improve market penetration and
operating efficiency, including initiatives to drive more
consistent cash flow through the seasonal months.
- Building Balance Sheet Strength: During the first
quarter, the Company reduced Adjusted Net Debt by $13.1 million and
ended the quarter with $9.3 million of Adjusted Net Debt bringing
the Company closer to its goal of being net debt zero.
- Exploring Growth Through Acquisition: Ranger has
demonstrated a successful track record of consolidating and
integrating businesses and, during the quarter, the Company
evaluated potential acquisitions looking for companies with similar
strategic advantages, including low capital intensity, demonstrated
cash flow generation, in-basin scale and heavier production cycle
focus. Ranger’s disciplined acquisition strategy is rooted in
maximizing long-term value through accretive valuation when
evaluating acquisition opportunities.
- Initiating Capital Return Framework: The Company
previously announced a share repurchase and dividend framework that
it believes provides the best overall value creation potential for
investors with a commitment to return at least 25% of annual cash
flows going forward. The share repurchase portion of this
commitment was initiated during first quarter.
PERFORMANCE SUMMARY
For the first quarter of 2023, revenue was $157.5 million, an
increase of 27% from $123.6 million in the prior year period. The
increase in revenue compared to the prior year primarily reflects
improvements in both the High Specification Rigs and Processing
Solutions and Ancillary Services businesses.
Cost of services for the first quarter of 2023 was $130.9
million, or 83% of revenue, compared to $108.0 million, or 87% of
revenue in the prior year period. The decrease in cost of services
as a percentage of revenue was primarily attributable to operating
leverage from incremental revenue, improved operating efficiency as
well as pricing improvement.
General and administrative expenses were $8.4 million for the
first quarter of 2023 compared to $10.2 million in the prior year
period. The decrease in general and administrative expenses was due
to decreased acquisition and integration costs, partially offset by
increased employee costs.
Net income totaled $6.2 million for the first quarter of 2023
compared to a loss of $5.7 million for the first quarter of 2022.
The increase in net income relative to the prior year period is
primarily due to the increase in profit margins across all segments
of our business.
Fully diluted earnings per share was $0.25 for the first quarter
of 2023 compared to a loss per share of $0.31 in the prior year
period.
Adjusted EBITDA of $20.1 million for the first quarter of 2023
increased $10.5 million when compared to the first quarter of 2022.
The increase in Adjusted EBITDA was primarily the result of
increased operating activity in certain service lines as well as
improved pricing and operating efficiency.
BUSINESS SEGMENT FINANCIAL RESULTS
High Specification Rigs
High Specification Rigs segment revenue was $77.5 million in the
first quarter, an increase of $12.6 million, or 19% relative to the
first quarter of 2022. Hourly rig rates were $689 per hour in the
first quarter as compared to $577 per hour in the first quarter of
2022 reflecting an increase in pricing as well as reduced downtime
and heightened efficiency from better rig scheduling and logistics
management. Rig hours were flat comparatively at 112,500 in both
the first quarter of 2022 and 2023.
Operating income was $11.9 million in the first quarter, an
increase of $4.2 million, or 55% relative to $7.7 million in the
first quarter of 2022. Adjusted EBITDA was $17.4 million in the
first quarter, up from $14.1 million in the first quarter of 2022.
The increase in operating income and Adjusted EBITDA was largely
the result of the increased revenues and the efficiency of that
revenue compared to the prior year.
Wireline Services
Wireline Services segment revenue was $49.9 million, up $11.3
million, or 29% in the first quarter, from $38.6 million in the
first quarter of 2022. The increase in revenue reflects an increase
in operating activity in certain operating geographies as well as
improved pricing on a year over year basis.
Operating income was $1.8 million, up $6.3 million, or 140% in
the first quarter, up from an operating loss of $4.5 million in the
first quarter of 2022. Adjusted EBITDA was $4.2 million in the
first quarter, up from a loss of $1.8 million in the prior year
period.
Processing Solutions and Ancillary Services
Processing Solutions and Ancillary Services segment revenue was
$30.1 million in the first quarter, up $10.0 million, or 50% from
$20.1 million in the first quarter of 2022. The increase in revenue
was attributable to the increase in operational activity across all
lines of business including coil tubing, processing solutions,
rentals and fishing, and plug and abandonment services.
Operating income was $3.4 million in the first quarter, up from
$1.3 million in the prior year period. Adjusted EBITDA was $5.0
million in the first quarter, compared to $3.3 million in the first
quarter of 2021.
BALANCE SHEET, CASH FLOW AND LIQUIDITY
As of March 31, 2023, the Company had $68.4 million of
liquidity, consisting of $54.0 million of capacity on its revolving
credit facility and $14.4 million of cash on hand. This compares
favorably to the prior year period end of March 31, 2022 when the
Company had $10.2 million of liquidity, consisting of $6.4 million
of capacity on its revolving credit facility and $3.8 million of
cash on hand. The Company had total debt of $15.6 million as
compared to total debt of $18.4 million at December 31, 2022, a
reduction of 15%.
During the first quarter, the Company generated positive free
cash flow(1) of $12.0 million, compared to negative free cash
flow(1) of $13.7 million in the first quarter of 2022 which had
been primarily attributable to a one-time working capital build
required to support the Basic asset acquisition.
FINANCIAL GUIDANCE
The Company’s full-year 2023 financial guidance is unchanged and
continues to reflect revenue growth and improved Adjusted EBITDA
margins resulting from efforts to improve asset utilization and
operating efficiency. The Company continues to expect full-year
2023 free cash flow conversion to be approximately 60%. Capital
expenditures and leases being utilized to reactivate idle assets,
refresh fleet assets and complete ongoing rig maintenance. A
summary of Company guidance follows and is current as of the time
provided and subject to change.
($ in Millions)
FY 2022 Actual
FY 2023 Forecast
Revenue
$608.5
$685 - $715
Adjusted EBITDA
$79.5
$95 - $105
Free Cash Flow
$30.7
$55 - $70
Capital Expenditures and Leases
$19.1
$25 - $35
Conference Call
The Company will host a conference call to discuss its results
from the first quarter of 2023 on Tuesday, May 2, 2023 at 9:00 a.m.
Central Time (10:00 a.m. Eastern Time). To join the conference call
from within the United States, participants may dial
1-833-255-2829. To join the conference call from outside of the
United States, participants may dial 1-412-902-6710. When
instructed, please ask the operator to join the Ranger Energy
Services, Inc. call. Participants are encouraged to login to the
webcast or dial in to the conference call approximately ten minutes
prior to the start time. To listen via live webcast, please visit
the Investor Relations section of the Company’s website,
http://www.rangerenergy.com.
An audio replay of the conference call will be available shortly
after the conclusion of the call and will remain available for
approximately seven days. The replay will also be available in the
Investor Resources section of the Company’s website shortly after
the conclusion of the call and will remain available for
approximately seven days.
About Ranger Energy Services, Inc.
Ranger is one of the largest providers of high specification
mobile rig well services, cased hole wireline services, and
ancillary services in the U.S. oil and gas industry. Our services
facilitate operations throughout the lifecycle of a well, including
the completion, production, maintenance, intervention, workover and
abandonment phases.
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements contained in this press release constitute
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements represent
Ranger’s expectations or beliefs concerning future events, and it
is possible that the results described in this press release will
not be achieved. These forward-looking statements are subject to
risks, uncertainties and other factors, many of which are outside
of Ranger’s control that could cause actual results to differ
materially from the results discussed in the forward-looking
statements.
Any forward-looking statement speaks only as of the date on
which it is made, and, except as required by law, Ranger does not
undertake any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise. New factors emerge from time to time, and it is not
possible for Ranger to predict all such factors. When considering
these forward-looking statements, you should keep in mind the risk
factors and other cautionary statements in our filings with the
Securities and Exchange Commission. The risk factors and other
factors noted in Ranger’s filings with the SEC could cause its
actual results to differ materially from those contained in any
forward-looking statement.
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except share and
per share amounts)
Three Months Ended
March 31, 2023
March 31, 2022
Revenue
High specification rigs
$
77.5
$
64.9
Wireline services
49.9
38.6
Processing solutions and ancillary
services
30.1
20.1
Total revenue
157.5
123.6
Operating expenses
Cost of services (exclusive of
depreciation and amortization):
High specification rigs
60.1
50.8
Wireline services
45.7
40.4
Processing solutions and ancillary
services
25.1
16.8
Total cost of services
130.9
108.0
General and administrative
8.4
10.2
Depreciation and amortization
10.0
11.6
Gain on sale of assets
(1.0
)
(1.0
)
Total operating expenses
148.3
128.8
Operating income (loss)
9.2
(5.2
)
Other expenses
Interest expense, net
1.2
2.1
Total other expenses, net
1.2
2.1
Income (loss) before income tax expense
(benefit)
8.0
(7.3
)
Tax expense (benefit)
1.8
(1.6
)
Net income (loss)
6.2
(5.7
)
Income (loss) per common share:
Basic
$
0.25
$
(0.31
)
Diluted
$
0.25
$
(0.31
)
Weighted average common shares
outstanding
Basic
24,940,335
18,472,909
Diluted
25,209,980
18,472,909
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in millions, except share and
per share amounts)
March 31, 2023
December 31, 2022
Assets
Cash and cash equivalents
$
14.4
$
3.7
Accounts receivable, net
78.5
91.2
Contract assets
32.2
26.9
Inventory
6.5
5.9
Prepaid expenses
7.7
9.2
Assets held for sale
1.0
3.2
Total current assets
140.3
140.1
Property and equipment, net
217.6
221.6
Intangible assets, net
6.9
7.1
Operating leases, right-of-use assets
10.6
11.2
Other assets
0.1
1.6
Total assets
$
375.5
$
381.6
Liabilities and Stockholders'
Equity
Accounts payable
27.6
24.3
Accrued expenses
23.8
36.1
Other financing liability, current
portion
0.7
0.7
Long-term debt, current portion
8.5
6.8
Other current liabilities
6.6
6.6
Total current liabilities
67.2
74.5
Operating leases, right-of-use
obligations
9.0
9.6
Other financing liability
11.4
11.6
Long-term debt, net
7.1
11.6
Other long-term liabilities
8.6
8.1
Total liabilities
$
103.3
$
115.4
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.01 per share;
50,000,000 shares authorized; no shares issued and outstanding as
of March 31, 2023 and December 31, 2022
—
—
Class A Common Stock, $0.01 par value,
100,000,000 shares authorized; 25,677,673 shares issued and
25,086,445 shares outstanding as of March 31, 2023; 25,446,292
shares issued and 24,894,464 shares outstanding as of December 31,
2022
0.3
0.3
Class B Common Stock, $0.01 par value,
100,000,000 shares authorized; no shares issued or outstanding as
of March 31, 2023 and December 31, 2022
—
—
Less: Class A Common Stock held in
treasury at cost; 591,228 treasury shares as of March 31, 2023 and
551,828 treasury shares as of December 31, 2022
(4.2
)
(3.8
)
Retained earnings
13.4
7.1
Additional paid-in capital
262.7
262.6
Total controlling stockholders' equity
272.2
266.2
Total liabilities and stockholders'
equity
$
375.5
$
381.6
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Three Months Ended March
31,
2023
2022
Cash Flows from Operating
Activities
Net income (loss)
$
6.2
$
(5.7
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
10.0
11.6
Equity based compensation
1.1
0.8
Gain on disposal of property and
equipment
(1.0
)
(1.0
)
Deferred income tax expense (benefit)
1.9
(1.6
)
Other expense, net
1.1
0.2
Changes in operating assets and
liabilities
Accounts receivable
12.3
(7.8
)
Contract assets
(5.3
)
(7.3
)
Inventory
(0.8
)
(1.4
)
Prepaid expenses and other current
assets
1.5
4.2
Other assets
0.3
0.9
Accounts payable
3.3
2.4
Accrued expenses
(12.3
)
(5.9
)
Other current liabilities
0.2
(0.2
)
Other long-term liabilities
(1.1
)
(1.3
)
Net cash provided by (used in)
operating activities
17.4
(12.1
)
Cash Flows from Investing
Activities
Purchase of property and equipment
(5.4
)
(1.6
)
Proceeds from disposal of property and
equipment
4.3
6.6
Net cash provided by (used in)
investing activities
(1.1
)
5.0
Cash Flows from Financing
Activities
Borrowings under Credit Facility
167.7
137.9
Principal payments on Credit Facility
(169.1
)
(120.0
)
Principal payments on Eclipse M&E Term
Loan
(0.6
)
(0.2
)
Principal payments under Eclipse Term Loan
B
—
(1.4
)
Principal payments on Secured Promissory
Note
(0.6
)
(2.1
)
Principal payments on financing lease
obligations
(1.3
)
(1.2
)
Principal payments on other financing
liabilities
(0.2
)
(1.5
)
Shares withheld on equity transactions
(1.0
)
(1.1
)
Payments on Installment Purchases
(0.1
)
(0.1
)
Repurchase of Class A Common Stock
(0.4
)
—
Net cash provided by (used in)
financing activities
(5.6
)
10.3
Increase in cash and cash
equivalents
10.7
3.2
Cash and cash equivalents, Beginning of
Period
3.7
0.6
Cash and cash equivalents, End of
Period
$
14.4
$
3.8
Supplemental Cash Flow
Information
Interest paid
$
0.3
$
0.3
Supplemental Disclosure of Non-cash
Investing and Financing Activities
Additions to fixed assets through
installment purchases and financing leases
$
(1.5
)
$
(0.8
)
RANGER ENERGY SERVICES, INC.
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Note Regarding Non‑GAAP Financial Measure
The Company utilizes certain non-GAAP financial measures that
management believes to be insightful in understanding the Company’s
financial results. These financial measures, which include Adjusted
EBITDA, Adjusted Net Debt, and Free Cash Flow, should not be
construed as being more important than, or as an alternative for,
comparable U.S. GAAP financial measures. Detailed reconciliations
of these Non-GAAP financial measures to comparable U.S. GAAP
financial measures have been included below and are available in
the Investor Relations sections of our website at
www.rangerenergy.com. Our presentation of Adjusted EBITDA, Adjusted
Net Debt, and Free Cash Flow should not be construed as an
indication that our results will be unaffected by the items
excluded from the reconciliations. Our computations of these
Non-GAAP financial measures may not be identical to other similarly
titled measures of other companies.
Adjusted EBITDA
We believe Adjusted EBITDA is a useful performance measure
because it allows for an effective evaluation of our operating
performance when compared to our peers, without regard to our
financing methods or capital structure. We exclude the items listed
below from net income or loss in arriving at Adjusted EBITDA
because these amounts can vary substantially within our industry
depending upon accounting methods, book values of assets, capital
structures and the method by which the assets were acquired.
Certain items excluded from Adjusted EBITDA are significant
components in understanding and assessing a company’s financial
performance, such as a company’s cost of capital and tax structure,
as well as the historic costs of depreciable assets, none of which
are reflected in Adjusted EBITDA.
We define Adjusted EBITDA as net income or loss before net
interest expense, income tax provision or benefit, depreciation and
amortization, equity‑based compensation, acquisition-related,
severance and reorganization costs, gain or loss on disposal of
assets, and certain other non-cash and certain items that we do not
view as indicative of our ongoing performance.
The following tables are a reconciliation of net income or loss
to Adjusted EBITDA for the respective periods:
Three Months Ended March 31,
2023
High Specification
Rigs
Wireline Services
Processing Solutions and
Ancillary Services
Other
Total
(in millions)
Net income (loss)
$
11.9
$
1.8
$
3.4
$
(10.9
)
$
6.2
Interest expense, net
—
—
—
1.2
1.2
Income tax expense
—
—
—
1.8
1.8
Depreciation and amortization
5.5
2.4
1.6
0.5
10.0
EBITDA
17.4
4.2
5.0
(7.4
)
19.2
Equity based compensation
—
—
—
1.1
1.1
Gain on disposal of property and
equipment
—
—
—
(1.0
)
(1.0
)
Severance and reorganization costs
—
—
—
0.2
0.2
Legal fees and settlements
—
—
—
0.6
0.6
Adjusted EBITDA
$
17.4
$
4.2
$
5.0
$
(6.5
)
$
20.1
Three Months Ended March 31,
2022
High Specification
Rigs
Wireline Services
Processing Solutions and
Ancillary Services
Other
Total
(in millions)
Net income (loss)
$
7.7
$
(4.5
)
$
1.3
$
(10.2
)
$
(5.7
)
Interest expense, net
—
—
—
2.1
2.1
Income tax benefit
—
—
—
(1.6
)
(1.6
)
Depreciation and amortization
6.4
2.7
2.0
0.5
11.6
EBITDA
14.1
(1.8
)
3.3
(9.2
)
6.4
Equity based compensation
—
—
—
0.8
0.8
Gain on disposal of property and
equipment
—
—
—
(1.0
)
(1.0
)
Acquisition related costs
—
—
—
3.2
3.2
Legal fees and settlements
—
—
—
0.2
0.2
Adjusted EBITDA
$
14.1
$
(1.8
)
$
3.3
$
(6.0
)
$
9.6
Adjusted Net Debt
We believe Net Debt and Adjusted Net Debt are useful performance
measures of liquidity, financial health and provides an indication
of our leverage. We define Net Debt as current and long-term debt,
finance leases, other financing obligations, offset by cash and
cash equivalents. We define Adjusted Net Debt as Net Debt, less a
facility financing lease, to be analogous to the calculation of
certain financial covenants. All debt and other obligations present
the principal balances outstanding as of the respective
periods.
The following table is a reconciliation of consolidated debt and
cash and cash equivalents to Net Debt and Adjusted Net Debt as of
March 31, 2023 and 2022, in millions:
March 31, 2023
March 31, 2022
Change
(in millions)
Debt and Other Obligations
Credit facility
$
—
$
44.8
$
(44.8
)
Eclipse Term Loan A
9.8
12.0
(2.2
)
Eclipse Term Loan B
—
10.7
(10.7
)
Secured Promissory Note
5.6
8.3
(2.7
)
Installment purchases
0.4
0.9
(0.5
)
Other financing liabilities
12.1
12.6
(0.5
)
Finance lease obligations
7.8
7.0
0.8
Less: Cash and cash equivalents
14.4
3.8
10.6
Net Debt
21.3
92.5
(71.2
)
Less: Facility financing lease
12.0
12.6
(0.6
)
Adjusted Net Debt
$
9.3
$
79.9
$
(70.6
)
Free Cash Flow
We believe free cash flow is an important financial measure for
use in evaluating the Company’s financial performance, as it
measures our ability to generate additional cash from our business
operations. Free cash flow should be considered in addition to,
rather than as a substitute for, net income as a measure of our
performance or net cash provided by operating activities as a
measure of our liquidity. Additionally, our definition of free cash
flow is limited and does not represent residual cash flows
available for discretionary expenditures due to the fact that the
measure does not deduct the payments required for debt service and
other obligations or payments made for business acquisitions.
Therefore, we believe it is important to view free cash flow as
supplemental to our entire statement of cash flows.
The following table is a reconciliation of consolidated
operating cash flows to Free Cash Flow for the three months ended
March 31, 2023 and 2022, in millions:
Three Months Ended
March 31, 2023
March 31, 2022
Net cash provided by (used in) operating
activities
$
17.4
$
(12.1
)
Purchase of property and equipment
(5.4
)
(1.6
)
Free cash Flow
$
12.0
$
(13.7
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230502005445/en/
Melissa Cougle Chief Financial Officer (713) 935-8900
InvestorRelations@rangerenergy.com
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