Ranger Energy Services, Inc. (NYSE: RNGR) (“Ranger” or the
“Company”) announced today its results for its fiscal quarter ended
December 31, 2020.
- Overall revenues improved 20%, or $7 million vs Q3
- High Spec Rig revenues grew 50% on increased utilization and
pricing strength
- Despite 2020’s challenges, Ranger returned $26 million of
operating cash flow across the year while reducing long-term debt
by nearly 50%
Consolidated Financial Highlights
Revenues increased $6.9 million, or 20%, to $41.5 million in Q4,
from $34.6 million in Q3. Revenue increases took place in the High
Specification Rigs segment.
Net loss increased $1.0 million, from a net loss of $5.7 million
in Q3, to a net loss of $6.7 million in Q4. The increase in the net
loss was largely driven by increased cost of services.
Adjusted EBITDA1 decreased $1.2 million from $4.4 million in Q3
to $3.2 million in Q4. The current quarter’s $3.2 million of EBITDA
is inclusive of $1.3 million of make-ready expenses for 18 rigs
associated with deployments for our highest tier customers.
CEO Comments
"After two straight quarters of severely depressed activity, Q4
marked the first real signs of an industry turnaround. Commodity
prices have responded to the rollout of COVID-19 vaccines, global
energy demand is improving and a stronger commitment to capital
discipline by U.S. shale operators is emerging.
I am proud of the fact that during the 2020 downturn Ranger
remained committed to our long-term strategies of driving
efficiencies, cost management, safety and service, as we high
graded our client list. It is these efforts that allowed us to
generate significant, positive EBITDA each quarter through this
challenging year and further decrease our modest amount of
long-term debt by nearly 50%, while significantly increasing our
blue-chip customer market share.
Our fourth quarter High Specification Rig results are tangible
examples of the improving industry dynamics and Ranger’s current
premium position in this recovering market. During the quarter we
experienced a significantly higher demand for our rig services,
with current activities focused on returning wells back online or
maintaining production levels.
While we are pleased to see the health of our industry improving
and our strategic efforts continuing to pay dividends, the speed of
our activity ramp did lead to significant reactivation costs during
the quarter.
These expenditures negatively impacted fourth quarter’s margins,
but were one-time in nature as they were focused on the preparation
of rigs for long-term top-tier clients and the hiring or
reinstatement of a significant number of employees. Also, to a
lesser extent, our High Spec Rig results were also impacted by
customer consolidation and COVID-19 related interruptions. However,
in spite of these negative impacts, we are pleased with this
segment’s strong revenue and EBITDA growth.
Within our Completion & Other Services segment, our Permian
wireline business experienced year-end budget exhaustion
interruptions by a material customer in mid-November, and COVID-19
related delays on the startup of new simul-frac operations with
another customer. Again, these issues are expected to be one-time
in nature.
The current trends of the market are setting up for a much more
favorable 2021. Oil prices and U.S. land drilling activity are up
30% and 15%, respectively, since the beginning of 2021. More
operators are adopting simul-frac operations leading to greater
completion intensity, and maintenance activity has started the year
strong. But the key element for the improvement of the Oil Field
Services ('OFS') space will be the ability to recapture some level
of pricing. In order to achieve this, pricing discipline must
return to the market and further OFS consolidation needs to occur,
Ranger is committed to participating in both."
Business Segment Financial Results
High Specification Rigs
High Specification Rigs segment revenue increased by $7.2
million to $21.7 million in Q4 from $14.5 million in Q3 2020. The
increase in revenues was driven by a 43% increase in rig hours to
43,100 hours in Q4 from 30,200 hours in Q3. The hourly average rig
rate increased $23, or 5%, to $503 in Q4 from $480 in Q3 on
customer mix shift.
Operating loss increased by $0.2 million to a loss of $2.6
million in Q4 from a loss of $2.4 million in Q3. Adjusted EBITDA
increased 21%, or $0.5 million, to $2.9 million in Q4 from $2.4
million in Q3. The increase in operating losses was attributable to
an increase in cost of services, including a loss on sale of
equipment during the quarter. These increased costs were partially
offset by increased revenues. Adjusted EBITDA benefited from the
increased revenue which was only partially offset by the increased
cost of services. Note that these results include $1.3 million of
reactivation costs incurred during the quarter.
Completion and Other Services
Completion and Other Services segment revenue decreased by $0.3
million to $18.6 million in Q4 from $18.9 million in Q3 2020. The
decrease was primarily attributable to the wireline business which
saw some early year-end shut-downs on budget exhaustion along with
ongoing pricing pressure.
Operating income decreased $0.5 million to income of $1.7
million in Q4 from income of $2.2 million in Q3. Adjusted EBITDA
decreased 28%, or $1.4 million, to $3.6 million in Q4 from $5.0
million in Q3. The decrease in operating income and Adjusted EBITDA
was driven by decreased revenues and increased cost of services,
partially offset by a reduction in depreciation expense and was
attributable to our wireline business.
Processing Solutions
Processing Solutions revenue remained flat at $1.2 million in Q4
and in Q3 2020.
Operating income decreased $0.1 million to income of $0.1
million in Q4 from income of $0.2 million in Q3. Adjusted EBITDA
decreased 22%, or $0.2 million, to $0.7 million in Q4 from $0.9
million in Q3. The decrease in operating income and Adjusted EBITDA
was driven by increased cost of services, partially offset by
decreased depreciation expense.
Liquidity
We ended the quarter with $16.0 million of liquidity, consisting
of $13.2 million of capacity available on our revolving credit
facility and $2.8 million of cash. The Q4 cash ending balance of
$2.8 million compares to $3.4 million at the end of Q3 2020.
Debt
We ended Q4 with aggregate net debt of $26.0 million, an
increase of $1.6 million, as compared to $24.4 million at the end
of Q3.
We had an outstanding draw on our revolving credit facility of
$7.5 million at the end of Q4 compared to $3.0 million at the end
of Q3. During the quarter, we borrowed $8.7 million under the
credit facility, which was partially offset by aggregate payments
of $4.2 million on the principal balance.
We had an outstanding balance on our term debt of $20.2 million
at the end of Q3 and we made aggregate payments of $2.5 million
during Q4, leaving a principal balance of $17.7 million at the end
of Q4.
Conference Call
The Company will host a conference call to discuss its Q4 2020
results on February 26, 2021 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
10150359. 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
December 31, 2020
September 30, 2020
Revenues
High specification rigs
$
21.7
$
14.5
Completion and other services
18.6
18.9
Processing solutions
1.2
1.2
Total revenues
41.5
34.6
Operating expenses
Cost of services (exclusive of
depreciation and amortization):
High specification rigs
19.2
12.3
Completion and other services
14.7
14.0
Processing solutions
0.5
0.3
Total cost of services
34.4
26.6
General and administrative
4.9
4.6
Depreciation and amortization
8.2
8.4
Total operating expenses
47.5
39.6
Operating loss
(6.0
)
(5.0
)
Other expenses
Interest expense, net
0.7
0.8
Total other expenses
0.7
0.8
Loss before income tax expense
(6.7
)
(5.8
)
Tax benefit
—
(0.1
)
Net loss
(6.7
)
(5.7
)
Less: Net loss attributable to
non-controlling interests
(3.0
)
(2.5
)
Net loss attributable to Ranger Energy
Services, Inc.
$
(3.7
)
$
(3.2
)
Loss per common share
Basic
(0.43
)
(0.38
)
Diluted
(0.43
)
(0.38
)
Weighted average common shares
outstanding
Basic
8,533,336
8,506,781
Diluted
8,533,336
8,506,781
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in millions, except share and
per share amounts)
December 31, 2020
December 31, 2019
Assets
Cash and cash equivalents
$
2.8
$
6.9
Accounts receivable, net
25.9
41.5
Contract assets
1.1
1.2
Inventory
2.3
3.8
Prepaid expenses
3.6
5.3
Total current assets
35.7
58.7
Property and equipment, net
189.4
218.9
Intangible assets, net
8.5
9.3
Operating leases, right-of-use assets
5.8
6.5
Other assets
1.2
0.1
Total assets
$
240.6
$
293.5
Liabilities and Stockholders'
Equity
Accounts payable
10.5
13.8
Accrued expenses
9.3
18.4
Finance lease obligations, current
portion
2.5
5.1
Long-term debt, current portion
10.0
15.8
Other current liabilities
0.7
2.0
Total current liabilities
33.0
55.1
Operating leases, right-of-use
obligations
5.2
4.5
Finance lease obligations
1.3
3.6
Long-term debt, net
14.5
26.6
Other long-term liabilities
1.8
0.7
Total liabilities
$
55.8
$
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
December 31, 2020 and 2019
—
—
Class A Common Stock, $0.01 par value,
100,000,000 shares authorized; 9,093,743 shares issued and
8,541,915 shares outstanding as of December 31, 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 December 31, 2020 and 2019
0.1
0.1
Less: Class A Common Stock held in
treasury, at cost; 551,828 treasury shares as of December 31, 2020
and 113,937 treasury shares as of December 31, 2019
(3.8
)
(0.7
)
Accumulated deficit
(18.4
)
(8.1
)
Additional paid-in capital
123.9
121.8
Total controlling stockholders' equity
101.9
113.2
Noncontrolling interest
82.9
89.8
Total stockholders' equity
184.8
203.0
Total liabilities and stockholders'
equity
$
240.6
$
293.5
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Year Ended
December 31, 2020
Cash Flows from Operating
Activities
Net loss
$
(18.5
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
35.0
Equity based compensation
3.7
Gain on retirement of debt
(2.1
)
Other costs, net
2.6
Changes in operating assets and
liabilities
Accounts receivable
15.6
Contract assets
0.1
Inventory
0.4
Prepaid expenses
1.7
Other assets
(1.1
)
Accounts payable
(3.3
)
Accrued expenses
(9.1
)
Operating lease, right-of-use
obligation
(0.6
)
Other long-term liabilities
1.1
Net cash provided by operating
activities
25.5
Cash Flows from Investing
Activities
Purchase of property and equipment
(7.2
)
Proceeds from disposal of property and
equipment
1.8
Net cash used in investing
activities
(5.4
)
Cash Flows from Financing
Activities
Borrowings under Credit Facility
44.6
Principal payments on Credit Facility
(47.1
)
Principal payments on Encina Master
Financing Agreement
(10.0
)
Principal payments on ESCO Note
Payable
(3.6
)
Principal payments on financing lease
obligations
(4.7
)
Repurchase of Class A Common Stock
(3.1
)
Shares withheld on equity transactions
(0.3
)
Net cash used in financing
activities
(24.2
)
Decrease in Cash and Cash
equivalents
(4.1
)
Cash and Cash Equivalents, Beginning of
Year
6.9
Cash and Cash Equivalents, End of Year
$
2.8
Supplemental Cash Flows
Information
Interest paid
$
2.9
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 U.S. GAAP. 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.
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, 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 loss determined in accordance with U.S.
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 table
presents reconciliations of net income or loss, our most directly
comparable financial measure calculated and presented in accordance
with U.S. GAAP, to Adjusted EBITDA.
The following tables are a reconciliation of net income or loss
to Adjusted EBITDA for the three months ended December 31, 2020 and
September 30, 2020, in millions:
Three Months Ended December
31, 2020
High Specification
Rigs
Completion and Other
Services
Processing Solutions
Other
Total
(in millions)
Net income (loss)
$
(2.6
)
$
1.7
$
0.1
$
(5.9
)
$
(6.7
)
Interest expense, net
—
—
—
0.7
0.7
Tax expense (benefit)
—
—
—
—
—
Depreciation and amortization
5.1
2.2
0.6
0.3
8.2
EBITDA
2.5
3.9
0.7
(4.9
)
2.2
Equity based compensation
—
—
—
0.9
0.9
Severance and reorganization costs
—
—
—
—
—
(Gain) loss on disposal of property and
equipment
0.4
(0.3
)
—
—
0.1
Adjusted EBITDA
$
2.9
$
3.6
$
0.7
$
(4.0
)
$
3.2
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
)
(Gain) 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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210225006238/en/
Company Contact: J. Brandon Blossman Chief Financial
Officer (713) 935-8900 Brandon.Blossman@rangerenergy.com
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