Ranger Energy Services, Inc. (NYSE: RNGR) (“Ranger” or the
“Company”) announced today its results for its fiscal quarter ended
September 30, 2019.
– Cash flows from operations of $22 million
generated during Q3 2019
– Net debt reduced $17 million
– Wireline utilization return to peak,
historic levels
Consolidated Q3 2019 Financial Highlights
Revenues decreased slightly to $84.1 million, from $84.3 million
in Q2. Sequential growth in Wireline and Processing Solutions
revenue was offset by Other Service declines.
Net income decreased $2.7 million, to a loss of $0.9 million
from income of $1.8 million in Q2. The decline in net income was
impacted by the combination of cost of service and depreciation
expense increases, several non-recurring expenses and a non-cash
income tax provision.
Adjusted EBITDA1 decreased 6% to $12.2 million, from $13.0
million in Q2. The Adjusted EBITDA decrease was driven by increased
cost of services.
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
“Our 2019 focus on cash flow generation, and debt pay down,
significantly materialized this quarter. With our balance sheet
already lightly levered, this quarter's deleveraging efforts
further solidifies our position of strength amidst a challenged
oilfield services market.
On the operational front, as expected, Q3 saw our Wireline
business return to full utilization continuing its track record of
strong performance. Our High Spec Rig segment experienced a modest
increase in utilization, though offset by a pricing decrease.
Overall results for High Spec Rigs were negatively impacted by
one-time costs associated with a second global integrated customer
rig contract award. This new award resulted in rig preparation and
deployment expenditures at the end of Q3, expenses we expect to pay
dividends in the coming quarters.
Select smaller service line results within our Other Services
segment did not meet our expectation. Here, we were negatively
impacted by one specific underperforming service line which was
fully restructured during the quarter.
And finally, our Processing Solutions segment delivered a solid
performance, producing their best quarter of 2019. Here, increased
revenue and EBITDA on incremental gas cooler deployments, higher
Mechanical Refrigeration Units (“MRU”) pricing and increased
mobilization/demobilization revenue were partially offset by lower
MRU utilization.
In spite of a challenging market, we remain optimistic about the
near-term opportunities to improve our current businesses. For
example, we continue to be pleased with our ongoing customer
high-grading efforts in High Spec Rigs. We are now seeing signs of
market share gains as customers actively switch from incumbent
service providers in order to align with Ranger's newer,
better-funded rig fleet.
Our new High Spec Rig contract award similar to our announcement
earlier this year, is another multi-year, multi-rig contractual
relationship with a best-in-class global integrated customer. We
expect our growing market share with this and our previously
announced integrated E&P client to be fully reflected in our
results as we finish out 2019 and move into the next year. We
believe the investment we are making to enhance our systems and
processes, allowing us to service an increasingly high-graded
customer base, will pay material dividends going forward.
With the return of our Wireline business back to peak Q1 2019
stage count levels, we remain well-positioned in the Permian
completions market. While rates in this segment are seeing some
ongoing downward pressure, lower labor and material costs continue
to offset the rate pressure.
Our remaining smaller service lines within our Completion and
Other Services segment will benefit from the structural changes
made during Q3, while retaining the opportunity to integrate
certain assets with our High Spec Rigs on select contract
opportunities. While our Processing Solutions segment delivered
solid Q3 results, we have the opportunity to deploy additional MRUs
to complement our current high gas cooler utilization.
In regards to capital spending, our Q3 asset additions were
largely related to smaller, additional assets to be paired with our
new integrated customer contracts. As demonstrated in the third
quarter, we continue to plan for minimal capital spend over the
near-term.
On the strategic front, Ranger has positioned itself to
participate in consolidation efforts. Our young purpose-built
fleet, efficient operations, low leverage and strong cash flow
place us in a unique position amongst our peers. Regardless of the
outcome of a number of potential strategic options, we continue to
believe our performance, market position and strategic direction
will benefit our shareholders.”
Business Segment Financial Results
High Specification Rigs
High Specification Rigs segment revenue decreased 2%, or $0.6
million, to $32.5 million in Q3 from $33.1 million in Q2 2019. The
decrease was driven by a reduction in hourly rig rates, which
decreased by 2%, or $11, to $519 from $530 in Q2. Total rig hours
increased slightly to approximately 62,400 hours in Q3 from 62,200
in Q2.
Operating loss increased by $1.7 million to a loss of $2.1
million in Q3 from a loss of $0.4 million in Q2. Adjusted EBITDA
decreased 25%, or $1.1 million, to $3.3 million in Q3 from $4.4
million in Q2. The reduction in Adjusted EBITDA was attributable to
the decrease in revenue along with an increase in cost of services
while the operating loss decline was further impacted by an
increased depreciation expense.
Completion and Other Services
Completion and Other Services segment revenue decreased 2%, or
$1.0 million, to $45.3 million in Q3 from $46.3 million in Q2 2019.
The reduction in revenue for the quarter was the net impact of an
increase in our Wireline revenue which was more than offset by
declines in other, non-Wireline services within the segment.
Operating income decreased $0.6 million to $7.8 million in Q3
from $8.4 million in Q2. Adjusted EBITDA decreased 5%, or $0.6
million, to $10.7 million in Q3 from $11.3 million in Q2. The
decrease in operating income and Adjusted EBITDA was driven by the
segment's overall revenue decline.
Processing Solutions
Processing Solutions revenue increased 29% or $1.4 million, to
$6.3 million in Q3 from $4.9 million in Q2 2019.
Operating income increased $0.4 million to $2.9 million in Q3
from $2.5 million in Q2. Adjusted EBITDA increased 17%, or $0.5
million, to $3.5 million in Q3 from $3.0 million in Q2. The
increase in operating income and Adjusted EBITDA is attributable to
an increase in mobilization/demobilization and gas cooler revenue,
partially offset by an increase in cost of services.
Liquidity
We ended the quarter with $25.2 million of liquidity, consisting
of $17.2 million of capacity available on our revolving credit
facility and $8.0 million of cash.
The Q3 cash ending balance of $8.0 million compares to $1.7
million at the end of Q2 2019. We had an outstanding draw on our
revolving credit facility of $18.0 million, leaving $17.2 million
of capacity on a quarter end borrowing base of $35.2 million.
Working Capital
Our use of working capital has returned to year end 2018 levels.
This is in contrast to Q2 2019 quarter ending year to date increase
of $11.5 million which reflected two isolated receivable issues and
an elevated level of Wireline inventory. These issues have now been
largely addressed.
Capital Expenditures
Capital expenditures recorded during the quarter were $3.7
million. High Specification Rigs segment incurred $2.3 million of
capital expenditures on ancillary equipment related to our new and
existing integrated customer contracts. Processing Solutions
segment incurred $1.2 million of capital expenditures for the
completion of 15 contracted gas coolers. Maintenance capital
expense for the quarter was $0.2 million.
Also, across all segments, $1.2 million of leased vehicles were
added during the quarter.
Conference Call
The Company will host a conference call to discuss its Q3 2019
results on October 25, 2019 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
10135191. The replay will also be available in the Investor
Relations 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 Completion and Other Services,
which 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, 2019
June 30, 2019
Revenues
High specification rigs
$
32.5
$
33.1
Completion and other services
45.3
46.3
Processing solutions
6.3
4.9
Total revenues
84.1
84.3
Operating expenses
Cost of services (exclusive of
depreciation and amortization):
High specification rigs
29.3
28.7
Completion and other services
34.6
35.0
Processing solutions
2.8
1.9
Total cost of services
66.7
65.6
General and administrative
6.7
6.3
Depreciation and amortization
9.1
8.4
Total operating expenses
82.5
80.3
Operating income
1.6
4.0
Other expenses
Interest expense, net
1.4
1.9
Total other expenses
1.4
1.9
Income before income tax expense
0.2
2.1
Tax expense
1.1
0.3
Net income (loss)
(0.9
)
1.8
Less: Net income (loss) attributable to
non-controlling interests
(0.4
)
0.8
Net income (loss) attributable to Ranger
Energy Services, Inc.
$
(0.5
)
$
1.0
Earnings (loss) per common share
Basic
$
(0.06
)
$
0.12
Diluted
$
(0.06
)
$
0.11
Weighted average common shares
outstanding
Basic
8,769,389
8,514,495
Diluted
8,769,389
9,491,684
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in millions, except share and
per share amounts)
September 30, 2019
December 31, 2018
Assets
Cash and cash equivalents
$
8.0
$
2.6
Accounts receivable, net
48.9
45.4
Contract assets
4.2
3.1
Inventory
2.5
4.9
Prepaid expenses
4.9
5.1
Total current assets
68.5
61.1
Property and equipment, net
222.8
229.8
Intangible assets, net
9.5
10.0
Operating lease right-of-use assets
6.9
—
Other assets
0.7
1.6
Total assets
$
308.4
$
302.5
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable
9.5
17.2
Accrued expenses
25.8
18.5
Finance lease obligations, current
portion
5.1
4.4
Long-term debt, current portion
15.8
15.8
Other current liabilities
2.7
3.0
Total current liabilities
58.9
58.9
Operating lease right-of-use
obligations
4.8
—
Finance lease obligations
4.5
6.6
Long-term debt, net
37.0
44.7
Other long-term liabilities
0.7
0.3
Total liabilities
$
105.9
$
110.5
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, 2019 and December 31, 2018
$
—
$
—
Class A Common Stock, $0.01 par value,
100,000,000 shares authorized; 8,781,528 shares outstanding and
8,829,002 shares issued as of September 30, 2019; and 8,448,527
shares issued and outstanding as of December 31, 2018
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, 2019 and December 31, 2018
0.1
0.1
Less: Class A Common Stock held in
treasury, at cost (47,474 shares)
(0.3
)
—
Accumulated deficit
(7.4
)
(9.9
)
Additional paid-in capital
121.5
111.6
Total stockholders' equity
114.0
101.9
Non-controlling interest
88.5
90.1
Total stockholders' equity
202.5
192.0
Total liabilities and stockholders'
equity
$
308.4
$
302.5
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Nine Months Ended
September 30, 2019
Cash Flows from Operating
Activities
Net income
$
4.5
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
25.9
Equity based compensation
2.4
Other costs, net
1.8
Changes in operating assets and
liabilities, net of effect of acquisitions
Accounts receivable
(3.5
)
Contract assets
(1.1
)
Inventory
2.4
Prepaid expenses
0.2
Other assets
0.9
Accounts payable
(6.0
)
Accrued expenses
8.0
Other long-term liabilities
0.8
Net cash provided by operating
activities
36.3
Cash Flows from Investing
Activities
Purchase of property and equipment
(19.6
)
Proceeds from disposal of property and
equipment
0.6
Net cash used in investing
activities
(19.0
)
Cash Flows from Financing
Activities
Borrowings under line of credit
facility
25.5
Principal payments on line of credit
facility
(26.0
)
Principal payments on Encina Master
Financing Agreement
(7.3
)
Principal payments on financing lease
obligations
(3.5
)
Repurchase of Class A Common Stock
(0.3
)
Shares withheld on equity transactions
(0.3
)
Net cash used in financing
activities
(11.9
)
Increase in Cash and Cash
equivalents
5.4
Cash and Cash Equivalents, Beginning of
Period
2.6
Cash and Cash Equivalents, End of
Period
$
8.0
Supplemental Cash Flows
Information
Interest paid
$
3.5
Supplemental Disclosure of Non-cash
Investing and Financing Activity
Non-cash capital expenditures
$
(2.3
)
Non-cash additions to fixed assets through
financing leases
$
(2.0
)
Initial non-cash operating lease right of
use assets additions
$
(8.3
)
Issuance of Class A Common Stock to
related party
$
3.0
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 interest expense, net, 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 table presents reconciliations of net
income (loss) to Adjusted EBITDA, our most directly comparable
financial measure calculated and presented in accordance with
GAAP.
The following table is a reconciliation of net income to
Adjusted EBITDA for the three months ended September 30, 2019 and
June 30, 2019, in millions:
Three Months Ended September
30, 2019
High Specification
Rigs
Completion and Other
Services
Processing Solutions
Other
Total
(in millions)
Net income (loss)
$
(2.1
)
$
7.8
$
2.9
$
(9.5
)
$
(0.9
)
Interest expense
—
—
—
1.4
1.4
Tax expense
—
—
—
1.1
1.1
Depreciation and amortization
5.3
2.9
0.6
0.3
9.1
EBITDA
3.2
10.7
3.5
(6.7
)
10.7
Equity based compensation
—
—
—
0.9
0.9
IPO, acquisition and severance costs
0.1
—
—
—
0.1
(Gain) loss on disposal of property and
equipment
—
—
—
0.5
0.5
Adjusted EBITDA
$
3.3
$
10.7
$
3.5
$
(5.3
)
$
12.2
Three Months Ended June 30,
2019
High Specification
Rigs
Completion and Other
Services
Processing Solutions
Other
Total
(in millions)
Net income (loss)
$
(0.4
)
$
8.4
$
2.5
$
(8.7
)
$
1.8
Interest expense
—
—
—
1.7
1.7
Tax expense
—
—
—
0.3
0.3
Depreciation and amortization
4.8
2.9
0.5
0.2
8.4
EBITDA
4.4
11.3
3.0
(6.5
)
12.2
Equity based compensation
—
—
—
0.9
0.9
IPO, acquisition, and severance costs
—
—
—
—
—
(Gain) loss on disposal of property and
equipment
—
—
—
(0.1
)
(0.1
)
Adjusted EBITDA
$
4.4
$
11.3
$
3.0
$
(5.7
)
$
13.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191024005974/en/
J. Brandon Blossman Chief Financial Officer (713) 935-8900
Brandon.Blossman@rangerenergy.com
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