Ranger Energy Services, Inc. (NYSE: RNGR) (“Ranger” or the
“Company”) announced today its results for its fiscal quarter ended
September 30, 2020.
– Net loss and Adjusted EBITDA1 improved 36% vs Q2
– Net debt reduction of $4 million along with an increase in
liquidity
– Momentum grew across Q3 with monthly sequential revenue and
EBITDA increases
Consolidated Financial Highlights
Revenues increased $3.9 million, or 13%, to $34.6 million in Q3,
from $30.7 million in Q2. Revenue increases took place in the High
Specification Rigs and Completion and Other Services segments.
Net loss decreased $3.2 million, from a net loss of $8.9 million
in Q2, to a net loss of $5.7 million in Q3. The decrease in the net
loss was largely driven by increased revenues and a reduction in
depreciation and general and administrative expenses, partially
offset by an increase in cost of services.
Adjusted EBITDA1 increased $1.2 million from $3.2 million in Q2
to $4.4 million in Q3.
1
“Adjusted EBITDA” is not presented in
accordance with generally accepted accounting principles in the
United States (“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.
CEO Comments
“This has proven to be a successful quarter for Ranger. Q3
appears to have marked the bottom of this most recent downturn with
US land drilling rig and frac spread counts down 15% and 10%,
respectively, as compared to Q2. However, we performed counter to
these data points delivering sequential increases in revenue,
EBITDA and margin.
I am very proud of the job that our team continues to deliver.
Their efforts in providing excellent services to our outstanding
customer base, while demonstrating disciplined cost control, again
led to top performing results in a very challenging market.
While the current market conditions continue to challenge the
sustainability of many OFS companies, Ranger's performance shows
that we are clearly on a different path; every month of Q3 yielded
improving consolidated results, our balance sheet remains strong
with a modest $20 million of term debt, and our liquidity position
is up approximately 40% from the late Q2 low point. This desirable
set of metrics allows us to focus on our customers, our performance
and our strategic options further fueling Ranger's growth and
success.
It is definitely too early to point to a broad market recovery,
however within our segments and select basins we are experiencing
significant positive trends. These improvements include month over
month increases in High Specification Rig hours and rates, an
increase in active wireline units, and additional contract
opportunities from customers scheduled to add frac crews in late Q4
or early 2021. Also, our Processing Solutions group has been
growing a significant backlog of bid opportunities. While we still
have a long road ahead of us, we are optimistic about the future
and have now moved into the fourth quarter with great momentum.
In regards to our strategic initiatives, our efficient operating
model continues to prove successful as demonstrated through our
consistent margin performance across 2020. Our focus on top-tier
clients is yielding a growing high-quality revenue stream with
additional contract opportunities ahead of us. Finally, while the
acquisition and merger environment remains opportunity rich, we
continue to maintain a disciplined approach; focusing on delivering
clear value to our shareholders while minimizing any risk to our
strong balance sheet.”
Business Segment Financial Results
High Specification Rigs
High Specification Rigs segment revenue increased by $3.1
million to $14.5 million in Q3 from $11.4 million in Q2 2020. The
increase in revenues was driven by a 23% increase in rig hours to
30,200 hours in Q3 from 24,600 hours in Q2. The hourly average rig
rate increased $17, or 4%, to $480 in Q3 from $463 in Q2 on
customer mix shift.
Operating loss decreased by $1.5 million to a loss of $2.4
million in Q3 from a loss of $3.9 million in Q2. Adjusted EBITDA
increased 41%, or $0.7 million, to $2.4 million in Q3 from $1.7
million in Q2. The decrease in operating loss and increase in
Adjusted EBITDA was primarily attributable to an increase in
revenues, partially offset by increased cost of services. The
operating loss was further impacted by a reduction of depreciation
expense.
Completion and Other Services
Completion and Other Services segment revenue increased by $1.2
million to $18.9 million in Q3 from $17.7 million in Q2 2020. The
increase in revenue for the quarter is attributable to the wireline
business.
Operating income increased $0.4 million to $2.2 million in Q3
from $1.8 million in Q2. Adjusted EBITDA increased 9%, or $0.4
million, to $5.0 million in Q3 from $4.6 million in Q2. The
increase in operating income and Adjusted EBITDA was driven by
increased revenues, partially offset by increased cost of services
related to wireline services.
Processing Solutions
Processing Solutions revenue decreased $0.4 million to $1.2
million in Q3 from $1.6 million in Q2 2020. The decrease was driven
primarily by a reduction in service revenue along with reduced MRU
utilization, within the segment.
Operating income increased $0.3 million to income of $0.2
million in Q3 from a loss of $0.1 million in Q2. Adjusted EBITDA
decreased 25%, or $0.3 million, to $0.9 million in Q3 from $1.2
million in Q2. The increase in operating income was driven by
reductions in depreciation expense.
Liquidity
We ended the quarter with $13.8 million of liquidity, consisting
of $10.4 million of capacity available on our revolving credit
facility and $3.4 million of cash. The Q3 cash ending balance of
$3.4 million compares to $6.0 million at the end of Q2 2020.
Currently, our liquidity approximated $14.0 million.
Debt
We ended Q3 with aggregate net debt of $24.4 million, a
reduction of $3.6 million as compared to $28.0 million at the end
of Q2.
We had an outstanding draw on our revolving credit facility of
$3.0 million at the end of Q3 compared to $5.0 million at the end
of Q2. During the quarter, we made aggregate payments of $5.3
million on the principal credit facility balance, partially offset
by borrowings of $3.3 million.
We had an outstanding balance on our Encina Financing Agreement
of $22.7 million at the end of Q2 and we made aggregate payments of
$2.5 million during Q3, leaving a principal balance of $20.2
million at the end of Q3.
Capital Expenditures
Total capital expenditures recorded during the quarter were $0.6
million. High Specification Rigs segment incurred $0.2 million in
capital expenditures related to miscellaneous equipment, while
Completion and Other Services and Processing Solutions segments
both incurred $0.1 million each. Maintenance capital expense across
all segments was $0.2 million for the quarter.
Conference Call
The Company will host a conference call to discuss its Q3 2020
results on October 23rd, 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
10147911. 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
September 30, 2020
June 30, 2020
Revenues
High specification rigs
$
14.5
$
11.4
Completion and other services
18.9
17.7
Processing solutions
1.2
1.6
Total revenues
34.6
30.7
Operating expenses
Cost of services (exclusive of
depreciation and amortization):
High specification rigs
12.3
10.1
Completion and other services
14.0
13.3
Processing solutions
0.3
0.4
Total cost of services
26.6
23.8
General and administrative
4.6
5.5
Depreciation and amortization
8.4
9.5
Total operating expenses
39.6
38.8
Operating loss
(5.0
)
(8.1
)
Other expenses
Interest expense, net
0.8
0.8
Total other expenses
0.8
0.8
Loss before income tax expense
(5.8
)
(8.9
)
Tax benefit
(0.1
)
—
Net loss
(5.7
)
(8.9
)
Less: Net loss attributable to
non-controlling interests
(2.5
)
(4.0
)
Net loss attributable to Ranger Energy
Services, Inc.
$
(3.2
)
$
(4.9
)
Loss per common share
Basic
(0.38
)
(0.58
)
Diluted
(0.38
)
(0.58
)
Weighted average common shares
outstanding
Basic
8,506,781
8,474,077
Diluted
8,506,781
8,474,077
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in millions, except share and
per share amounts)
September 30, 2020
December 31, 2019
Assets
Cash and cash equivalents
$
3.4
$
6.9
Accounts receivable, net
21.0
41.5
Contract assets
0.9
1.2
Inventory
1.7
3.8
Prepaid expenses
1.9
5.3
Total current assets
28.9
58.7
Property and equipment, net
197.9
218.9
Intangible assets, net
8.7
9.3
Operating leases, right-of-use assets
5.2
6.5
Other assets
0.7
0.1
Total assets
$
241.4
$
293.5
Liabilities and Stockholders'
Equity
Accounts payable
8.2
13.8
Accrued expenses
8.5
18.4
Finance lease obligations, current
portion
3.0
5.1
Long-term debt, current portion
10.0
15.8
Other current liabilities
1.0
2.0
Total current liabilities
30.7
55.1
Operating leases, right-of-use
obligations
4.2
4.5
Finance lease obligations
1.7
3.6
Long-term debt, net
12.4
26.6
Other long-term liabilities
1.8
0.7
Total liabilities
$
50.8
$
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
September 30, 2020 and December 31, 2019
—
—
Class A Common Stock, $0.01 par value,
100,000,000 shares authorized; 9,080,589 shares issued and
8,528,762 shares outstanding as of September 30, 2020; 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 September 30, 2020 and December 31, 2019
0.1
0.1
Less: Class A Common Stock held in
treasury, at cost; 551,827 treasury shares as of September 30, 2020
and 113,937 treasury shares as of December 31, 2019
(3.8
)
(0.7
)
Accumulated deficit
(14.7
)
(8.1
)
Additional paid-in capital
122.0
121.8
Total controlling stockholders' equity
103.7
113.2
Noncontrolling interest
86.9
89.8
Total stockholders' equity
190.6
203.0
Total liabilities and stockholders'
equity
$
241.4
$
293.5
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Nine Months Ended
September 30, 2020
Cash Flows from Operating
Activities
Net loss
$
(11.8
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
26.8
Equity based compensation
2.8
Gain on retirement of debt
(2.1
)
Other costs, net
3.0
Changes in operating assets and
liabilities
Accounts receivable
20.4
Contract assets
0.3
Inventory
0.9
Prepaid expenses
3.4
Other assets
(0.6
)
Accounts payable
(5.6
)
Accrued expenses
(9.9
)
Operating lease, right-of-use
obligation
(1.4
)
Other long-term liabilities
1.1
Net cash provided by operating
activities
27.3
Cash Flows from Investing
Activities
Purchase of property and equipment
(6.4
)
Proceeds from disposal of property and
equipment
0.8
Net cash used in investing
activities
(5.6
)
Cash Flows from Financing
Activities
Borrowings under Credit Facility
35.9
Principal payments on Credit Facility
(42.9
)
Principal payments on Encina Master
Financing Agreement
(7.5
)
Principal payments on ESCO Note
Payable
(3.6
)
Principal payments on financing lease
obligations
(3.7
)
Repurchase of Class A Common Stock
(3.1
)
Shares withheld on equity transactions
(0.3
)
Net cash used in financing
activities
(25.2
)
Decrease in Cash and Cash
equivalents
(3.5
)
Cash and Cash Equivalents, Beginning of
Period
6.9
Cash and Cash Equivalents, End of
Period
$
3.4
Supplemental Cash Flows
Information
Interest paid
$
2.3
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
$
1.3
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 or loss
to Adjusted EBITDA for the three months ended September 30, 2020
and June 30, 2020, in millions:
Three Months Ended September
30, 2020
High Specification
Rigs
Completion and Other
Services
Processing Solutions
Other
Total
(in millions)
Net income (loss)
$
(2.4
)
$
2.2
$
0.2
$
(5.7
)
$
(5.7
)
Interest expense, net
—
—
—
0.8
0.8
Tax expense (benefit)
—
—
—
(0.1
)
(0.1
)
Depreciation and amortization
4.6
2.7
0.7
0.4
8.4
EBITDA
2.2
4.9
0.9
(4.6
)
3.4
Equity based compensation
—
—
—
1.1
1.1
Severance and reorganization costs
—
—
—
(0.4
)
(0.4
)
Loss on disposal of property and
equipment
0.2
0.1
—
—
0.3
Adjusted EBITDA
$
2.4
$
5.0
$
0.9
$
(3.9
)
$
4.4
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, net
—
—
—
0.8
0.8
Tax expense (benefit)
—
—
—
—
—
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 reorganization costs
0.4
0.2
—
0.4
1.0
Loss on disposal of property and
equipment
—
—
—
(0.1
)
(0.1
)
Adjusted EBITDA
$
1.7
$
4.6
$
1.2
$
(4.3
)
$
3.2
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201022006139/en/
J. Brandon Blossman Chief Financial Officer (713) 935-8900
Brandon.Blossman@rangerenergy.com
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