Ranger Energy Services, Inc. (NYSE: RNGR) (“Ranger” or the
“Company”) announced today its results for its fiscal quarter ended
June 30, 2020.
– Cash flow from operations of $16
million
– Net debt reduction of $15 million
– Q2 Gross profit margin exceeded Q1
performance
– Aggressive cost cutting and market share
gains helped offset the impact of declining activity
Consolidated Financial Highlights
Revenues decreased $50.3 million, or 62%, to $30.7 million in
Q2, from $81.0 million in Q1. Revenue declines took place across
all segments.
Net income decreased $11.7 million, from net income of $2.8
million in Q1, to a net loss of $8.9 million in Q2. The decrease in
net income was largely driven by lower revenues partially offset by
a reduction in cost of services.
Adjusted EBITDA1 decreased $8.2 million from $11.4 million in Q1
to $3.2 million in Q2.
CEO Comments
“Despite the speed and intensity of the recent downturn, our
management team’s extraordinary efforts allowed us to deliver Q2
results that featured both positive EBITDA and positive cash flow
alongside near stable sequential segment margins.
As discussed last quarter, when market conditions changed late
Q1, our team aggressively took the difficult, yet necessary steps
in response. We immediately downsized our organization to match the
requirements of current activity levels. Our revenue decreased 62%,
we reduced our staffing levels by 60% and total payroll expense by
70% when including the full impact of our salary and wage cuts for
all current employees.
Although our decline in activity was significant, I am very
pleased with our performance relative to the overall OFS market. As
our customers have contracted their operations, we have several
examples of being the sole service provider for their remaining
work resulting in market share percentage gains. Our Q2 results are
a reflection of our high quality operations and disciplined cost
management. We maintained positive adjusted EBITDA and cash flow
through each month of the quarter. Our two largest business lines;
High Spec Rigs and Wireline were able to hold segment level margins
at pre-downturn levels. An exceptional achievement reflecting the
success of our management team’s efforts through this downturn.
Reducing costs in real-time against the revenue decline allowed
us to reap the full benefit of a reduction in working capital. As a
result, we were able to reduce our net debt by $15.1 million over
the course of the quarter.
As we look forward, what we had already thought of as a lean,
efficient organization is now even more so. Maintaining our new
level of efficiency and increasing market share will pay dividends
as we ramp our operations back to higher activity levels.
While still too early to call a recovery underway, our High Spec
Rig and Wireline businesses did see activity move higher off of a
late May trough.
With much of the heavy lifting of internal restructuring now
complete, our attention has fully moved back externally with a
focus on both further development of new customer relationships and
ongoing consolidation efforts.
On the new customer front, we have seen incremental Wireline
deployments with a new customer, made progress on a new contractual
agreement with a High Spec Rig customer along with the potential
for a meaningfully expanded Processing solutions customer base.
As to consolidation, historically we have taken a particularly
disciplined approach to merger and acquisition opportunities and do
not expect that mindset to change. However, we do note that the
opportunity set today is a multiple of what it was at the beginning
of the year and post downturn feel that the likelihood of executing
an attractive transaction has materially increased.
While we continue to work through an extraordinarily challenging
period in our industry, our team members are up for this challenge
and we expect to consolidate our position of strength as we move
toward an industry recovery.”
Business Segment Financial Results
High Specification Rigs
High Specification Rigs segment revenue decreased by $23.5
million, to $11.4 million in Q2 from $34.9 million in Q1 2020. The
decrease in revenues was driven by a 61% decline in rig hours to
24,600 hours in Q2 from 62,400 hours in Q1. Hourly average rig rate
declined $95, or 17%, to $463 in Q2 from $558 in Q1 on customer mix
shift.
Operating loss increased by $3.6 million to a loss of $3.9
million in Q2 from a loss of $0.3 million in Q1. Adjusted EBITDA
decreased 66%, or $3.3 million, to $1.7 million in Q2 from $5.0
million in Q1. The decrease in operating loss and Adjusted EBITDA
was attributable to reduction in revenues, partially offset by a
reduction in cost of services.
Completion and Other Services
Completion and Other Services segment revenue decreased 59%, or
$25.6 million, to $17.7 million in Q2 from $43.3 million in Q1
2020. The decrease in revenue for the quarter is attributable to
all service lines within the segment, however $20.9 million, or
82%, of the segment decline was related to our Wireline
services.
Operating income decreased $7.1 million to $1.8 million in Q2
from $8.9 million in Q1. Adjusted EBITDA decreased 60%, or $7.0
million, to $4.6 million in Q2 from $11.6 million in Q1. The
decrease in operating income and Adjusted EBITDA was driven by
decreased revenues, partially offset by reductions in the cost of
services related to our Wireline services.
Processing Solutions
Processing Solutions revenue decreased 43% or $1.2 million, to
$1.6 million in Q2 from $2.8 million in Q1 2019. The decrease was
driven primarily by a reduction in service revenue along with
reduced MRU utilization, within the segment.
Operating income decreased $0.8 million to a loss of $0.1
million in Q2 from income of $0.7 million in Q1. Adjusted EBITDA
decreased 8%, or $0.1 million, to $1.2 million in Q2 from $1.3
million in Q1. The decrease in operating income is attributable to
a catch up in depreciation expense in Q2.
Liquidity
We ended the quarter with $11.1 million of liquidity, consisting
of $5.1 million of capacity available on our revolving credit
facility and $6.0 million of cash. The Q2 cash ending balance of
$6.0 million compares to $11.4 million at the end of Q1 2020.
Currently, our liquidity approximated $11.1 million.
Debt
We ended Q2 with aggregate net debt of $28.0 million, a
reduction of $15.1 million as compared to $43.1 million at the end
of Q1.
We had an outstanding draw on our revolving credit facility of
$5.0 million at the end of Q2 compared to $21.3 million at the end
of Q1. During the quarter, we made aggregate payments of $32.0
million on the principal credit facility balance, partially offset
by borrowings of $15.7 million.
We had an outstanding balance on our Encina Financing Agreement
of $25.2 million at the end of Q1 and we made aggregate payments of
$2.5 million during Q2, leaving a principal balance of $22.7
million at the end of Q2.
During Q1, we paid an aggregate $3.6 million to settle the Esco
Note Payable balance of $5.8 million and recognized a gain on the
retirement of debt of $2.1 million.
Capital Expenditures
Total capital expenditures recorded during the quarter were $0.7
million. Completion and Other Services segment incurred $0.5
million related to previously ordered Wireline trucks and other
equipment while Processing Solutions segment incurred $0.2 million.
Maintenance capital expense across all segments was $0.2 million
for the quarter.
Also, across all segments, $0.1 million of leased vehicles and
$0.3 million of other leased equipment were added during the
quarter.
Conference Call
The Company will host a conference call to discuss its Q2 2020
results on July 24, 2020 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. It can be accessed by dialing
1-877-344-7529 within the United States or 1-412-317-0088 outside
of the United States. The conference call replay access code is
10145814. 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 an independent provider of well service rigs and
associated services in the United States, with a focus on
unconventional horizontal well completion and production
operations. Ranger also provides services necessary to bring and
maintain a well on production. The Processing Solutions segment
engages in the rental, installation, commissioning, start-up,
operation and maintenance of MRUs, Natural Gas Liquid stabilizer
and storage units and related equipment.
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
June 30, 2020
March 31, 2020
Revenues
High specification rigs
$
11.4
$
34.9
Completion and other services
17.7
43.3
Processing solutions
1.6
2.8
Total revenues
30.7
81.0
Operating expenses
Cost of services (exclusive of
depreciation and amortization):
High specification rigs
10.1
29.9
Completion and other services
13.3
31.7
Processing solutions
0.4
1.5
Total cost of services
23.8
63.1
General and administrative
5.5
5.0
Depreciation and amortization
9.5
8.9
Total operating expenses
38.8
77.0
Operating income (loss)
(8.1
)
4.0
Other expenses
Interest expense, net
0.8
1.1
Total other expenses
0.8
1.1
Income before income tax expense
(8.9
)
2.9
Tax expense
—
0.1
Net income (loss)
(8.9
)
2.8
Less: Net income (loss) attributable to
non-controlling interests
(4.0
)
1.3
Net income (loss) attributable to Ranger
Energy Services, Inc.
$
(4.9
)
$
1.5
Income (loss) per common share
Basic
$
(0.58
)
$
0.17
Diluted
$
(0.58
)
$
0.15
Weighted average common shares
outstanding
Basic
8,474,077
8,617,781
Diluted
8,474,077
15,549,684
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in millions, except share and
per share amounts)
June 30, 2020
December 31, 2019
Assets
Cash and cash equivalents
$
6.0
$
6.9
Accounts receivable, net
16.0
41.5
Contract assets
1.1
1.2
Inventory
2.0
3.8
Prepaid expenses
1.8
5.3
Total current assets
26.9
58.7
Property and equipment, net
206.6
218.9
Intangible assets, net
8.9
9.3
Operating leases, right-of-use assets
5.3
6.5
Other assets
0.4
0.1
Total assets
$
248.1
$
293.5
Liabilities and Stockholders'
Equity
Accounts payable
5.1
13.8
Accrued expenses
8.0
18.4
Finance lease obligations, current
portion
4.0
5.1
Long-term debt, current portion
10.0
15.8
Other current liabilities
1.2
2.0
Total current liabilities
28.3
55.1
Operating leases, right-of-use
obligations
4.2
4.5
Finance lease obligations
2.3
3.6
Long-term debt, net
16.8
26.6
Other long-term liabilities
1.3
0.7
Total liabilities
$
52.9
$
90.5
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.01 per share;
50,000,000 shares authorized; no shares issued or outstanding as of
June 30, 2020 and December 31, 2019
—
—
Class A Common Stock, $0.01 par value,
100,000,000 shares authorized; 9,031,495 shares issued and
8,479,668 shares outstanding as of June 30, 2020 and 8,839,788
shares issued and 8,725,851 shares outstanding as of December 31,
2019
0.1
0.1
Class B Common Stock, $0.01 par value,
100,000,000 shares authorized; 6,866,154 shares issued and
outstanding as of June 30, 2020 and December 31, 2019
0.1
0.1
Less: Class A Common Stock held in
treasury, at cost (551,827 shares as of June 30, 2020 and 113,937
shares as of December 31, 2019)
(3.8
)
(0.7
)
Accumulated deficit
(11.5
)
(8.1
)
Additional paid-in capital
121.0
121.8
Total controlling stockholders' equity
105.9
113.2
Non-controlling interest
89.3
89.8
Total stockholders' equity
195.2
203.0
Total liabilities and stockholders'
equity
$
248.1
$
293.5
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Six Months Ended
June 30, 2020
Cash Flows from Operating
Activities
Net loss
$
(6.1
)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
18.4
Equity based compensation
1.7
Gain on retirement of debt
(2.1
)
Other costs, net
1.8
Changes in operating assets and
liabilities
Accounts receivable
25.4
Contract assets
0.1
Inventory
1.4
Prepaid expenses
3.5
Other assets
(0.2
)
Accounts payable
(8.7
)
Accrued expenses
(10.4
)
Operating lease, right-of-use
obligation
(1.1
)
Other long-term liabilities
0.5
Net cash provided by operating
activities
24.2
Cash Flows from Investing
Activities
Purchase of property and equipment
(5.8
)
Proceeds from disposal of property and
equipment
0.3
Net cash used in investing
activities
(5.5
)
Cash Flows from Financing
Activities
Borrowings under Credit Facility
32.6
Principal payments on Credit Facility
(37.6
)
Principal payments on Encina Master
Financing Agreement
(5.0
)
Principal payments on ESCO Note
Payable
(3.6
)
Principal payments on financing lease
obligations
(2.6
)
Repurchase of Class A Common Stock
(3.1
)
Shares withheld on equity transactions
(0.3
)
Net cash used in financing
activities
(19.6
)
Decrease in Cash and Cash
equivalents
(0.9
)
Cash and Cash Equivalents, Beginning of
Period
6.9
Cash and Cash Equivalents, End of
Period
$
6.0
Supplemental Cash Flows
Information
Interest paid
$
1.7
Supplemental Disclosure of Non-cash
Investing and Financing Activity
Capital expenditures
$
0.1
Additions to fixed assets through
financing leases
$
(1.0
)
Early termination of financing leases
$
0.7
RANGER ENERGY SERVICES, INC. SUPPLEMENTAL
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
Adjusted EBITDA is not a financial measure determined in
accordance with GAAP. We define Adjusted EBITDA as net income
(loss) before net interest expense, income tax provision (benefit),
depreciation and amortization, equity-based compensation,
acquisition-related and severance costs, impairment of goodwill,
gain or loss on sale of assets and certain other items that we do
not view as indicative of our ongoing performance.
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
above from net income or loss in arriving at Adjusted EBITDA
because these amounts can vary substantially within our industry
depending upon accounting methods and book values of assets,
capital structures and the method by which the assets were
acquired. Adjusted EBITDA should not be considered as an
alternative to, or more meaningful than, net income or loss
determined in accordance with GAAP. 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.
Our presentation of Adjusted EBITDA should not be construed as an
indication that our results will be unaffected by the items
excluded from Adjusted EBITDA. Our computations of Adjusted EBITDA
may not be identical to other similarly titled measures of other
companies. The following tables present reconciliations of net
income (loss) to Adjusted EBITDA, our most directly comparable
financial measure calculated and presented in accordance with
GAAP.
The following tables are a reconciliation of net income to
Adjusted EBITDA for the three months ended June 30, 2020 and March
31, 2020, in millions:
Three Months Ended June 30,
2020
High Specification
Rigs
Completion and Other
Services
Processing Solutions
Other
Total
(in millions)
Net income (loss)
$
(3.9
)
$
1.8
$
(0.1
)
$
(6.7
)
$
(8.9
)
Interest expense
—
—
—
0.8
0.8
Tax expense
—
—
—
—
—
Depreciation and amortization
5.2
2.6
1.3
0.4
9.5
EBITDA
1.3
4.4
1.2
(5.5
)
1.4
Equity based compensation
—
—
—
0.9
0.9
Severance and restructuring costs
0.4
0.2
—
0.4
1.0
Gain on retirement of debt
—
—
—
—
—
Gain on disposal of property and
equipment
—
—
—
(0.1
)
(0.1
)
Adjusted EBITDA
$
1.7
$
4.6
$
1.2
$
(4.3
)
$
3.2
Three Months Ended March 31,
2020
High Specification
Rigs
Completion and Other
Services
Processing Solutions
Other
Total
(in millions)
Net income (loss)
$
(0.3
)
$
8.9
$
0.7
$
(6.5
)
$
2.8
Interest expense
—
—
—
1.1
1.1
Tax expense
—
—
—
0.1
0.1
Depreciation and amortization
5.3
2.7
0.6
0.3
8.9
EBITDA
5.0
11.6
1.3
(5.0
)
12.9
Equity based compensation
—
—
—
0.8
0.8
Gain on retirement of debt
—
—
—
(2.1
)
(2.1
)
Gain on disposal of property and
equipment
—
—
—
(0.2
)
(0.2
)
Adjusted EBITDA
$
5.0
$
11.6
$
1.3
$
(6.5
)
$
11.4
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200723005940/en/
J. Brandon Blossman Chief Financial Officer (713) 935-8900
Brandon.Blossman@rangerenergy.com
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