Ranger Energy Services, Inc. (NYSE: RNGR) (“Ranger” or the
“Company”) announced today its results for its fiscal quarter ended
December 31, 2019.
– Cash flows from operations of $16 million
generated during Q4 and $52 million for full year 2019
– Net debt reduced $11 million in Q4 and $27
million for full year 2019
– High Specification Rigs posted highest rig
hours of the year
– Wireline bettered previous peak stage
count
Consolidated Financial Highlights
Revenues decreased 4.6% to $80.2 million in Q4, from $84.1
million in Q3. Our Completion and Other Services segment saw
declines, as well as Processing Solutions, however this was
partially offset by increased revenues attributable to our High
Specification Rigs segment.
Net loss decreased $0.8 million, from a loss of $0.9 million in
Q3, to a loss of $0.1 million in Q4. The decrease in net loss was
impacted by the combination of lower cost of services and
depreciation expense, a non-cash income tax provision and lower
interest expense.
Adjusted EBITDA1 decreased 7% to $11.4 million, from $12.2
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
“As we close out 2019, I would like to reflect on the strategic
focus Ranger laid out early last year. Our primary focus entering
2019 was cash flow generation and using that cash to further pay
down the modest level of debt carried on our balance sheet.
Operationally, we were seeking to drive efficiencies from the
wellhead to our back-office systems and process. At the same time,
driving to broaden our customer base by increasing our exposure to
existing and new top-tier customers. I'm very proud of our team as
they delivered on each of these initiatives throughout the year,
which resulted in strong, stable performance in spite of market
conditions.
Fourth quarter results continued to reflect 2019’s successes. We
saw another quarter of solid cash flow, debt pay down and
operational performance.
For the quarter, we produced $16 million of cash flow from
operations and reduced net debt by nearly $11 million.
High-grading our High Spec Rig customer base continued. During
the quarter, we deployed six additional rigs to satisfy contract
wins and other new rig demand opportunities. These rig additions
and associated rig hours more than offset the normal seasonal rig
hour declines, resulting in our highest quarterly rig hours of the
year.
Our Wireline business continues to gain market share. Stage
count saw a slight increase against an industry-wide completions
activity drop of more than 20%. However, continued pricing pressure
more than offset the stage count increase netting to an 8% drop in
revenue. The impact to margins was offset, again this quarter, by
continued vigilance on labor and input costs and our ongoing highly
efficient operations.
Last quarter, our Completion and Other Services segment saw some
under-performance in a specific line of business. We noted last
call that, during Q3, we completed a full restructuring of this
service offering to better align our cost structure with the
near-term expected revenue stream. This effort had a positive
impact to the segment's results.
While our Processing Solutions segment has historically seen
limited performance volatility, this quarter was an exception.
MRU’s coming off contract during the quarter were not quickly
rolled-over or redeployed. For Q4, revenue was down 32%
sequentially. While this under-performance is likely to impact Q1
as well, we are expecting this trend to reverse itself and look
forward to a return to historic performance levels later in the
first half of 2020.
We expect to continue to generate significant cash flow
throughout the year, likely necessitating some capital allocation
decisions. Given limited growth capex and a modest current debt
level, there is likely to be material excess cash to deploy. We’re
planning a balanced capital allocation program but have yet to
finalize the specifics with our Board.”
Business Segment Financial Results
High Specification Rigs
High Specification Rigs segment revenue increased 7%, or $2.3
million, to $34.8 million in Q4 from $32.5 million in Q3. The
increase was driven by an increase in hourly rig rates, which
increased by 3%, or $15, to $534 from $519 in Q3. Additionally,
total rig hours increased 3% to approximately 64,400 hours in Q4
from 62,400 in Q3.
Operating loss decreased by $2.3 million to income of $0.2
million in Q4 from a loss of $2.1 million in Q3. Adjusted EBITDA
increased 64%, or $2.1 million, to $5.4 million in Q4 from $3.3
million in Q3. The increase in Adjusted EBITDA was attributable to
the increase in revenue partially offset by an increase in cost of
services, while the operating loss decline was further enhanced by
a decrease in depreciation expense.
Completion and Other Services
Completion and Other Services segment revenue decreased 9%, or
$4.2 million, to $41.1 million in Q4 from $45.3 million in Q3 2019.
The reduction in revenue for the quarter reflected seasonally lower
activity in our non-wireline business lines and ongoing pricing
pressure in the Wireline business.
Operating income decreased $1.0 million to $6.8 million in Q4
from $7.8 million in Q3. Adjusted EBITDA decreased 10%, or $1.1
million, to $9.6 million in Q4 from $10.7 million in Q3. The
decrease in operating income and Adjusted EBITDA was driven by the
segment's overall revenue decline, partially offset by reductions
in cost of sales.
Processing Solutions
Processing Solutions revenue decreased 32% or $2.0 million, to
$4.3 million in Q4 from $6.3 million in Q3 2019.
Operating income decreased $1.5 million to $1.4 million in Q4
from $2.9 million in Q3. Adjusted EBITDA decreased 43%, or $1.5
million, to $2.0 million in Q4 from $3.5 million in Q3. The
decrease in operating income and Adjusted EBITDA is attributable to
a decrease in MRU revenue, partially offset by a decrease in cost
of services.
Liquidity
We ended the quarter with $27.4 million of liquidity, consisting
of $20.5 million of capacity available on our revolving credit
facility and $6.9 million of cash. The Q4 cash ending balance of
$6.9 million compares to $8.0 million at the end of Q3 2019.
Debt
We ended Q4 with aggregate debt of $43.5 million, compared to
$54.0 million at the end of Q3.
We had an outstanding draw on our revolving credit facility of
$10.0 million at the end of Q4, compared to $18.0 million at the
end of Q3. During the quarter, we made payments of $11.7 million on
the principal credit facility balance, partially offset by $1.2
million of borrowings.
We had an outstanding balance on our Encina Financing Agreement
of $30.2 million at the end of Q3 and we made aggregate payments of
$2.5 million during Q4, leaving a principal balance of $27.7
million at the end of Q4.
Working Capital
Our Q4 2019 working capital decreased $6 million to $3.6 million
from $9.6 million at the end of Q3 2019.
Capital Expenditures
Capital expenditures recorded during the quarter were $3.6
million. High Specification Rigs segment incurred $1.9 million of
capital expenditures on ancillary equipment related to our new and
existing integrated customer contracts. Maintenance capital expense
for the quarter was $1.6 million.
Also, across all segments, $0.4 million of leased vehicles were
added during the quarter.
Conference Call
The Company will host a conference call to discuss its Q4 2019
results on February 28, 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
10137238. 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 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
December 31, 2019
September 30, 2019
Revenues
High specification rigs
$
34.8
$
32.5
Completion and other services
41.1
45.3
Processing solutions
4.3
6.3
Total revenues
80.2
84.1
Operating expenses
Cost of services (exclusive of
depreciation and amortization):
High specification rigs
29.4
29.3
Completion and other services
31.5
34.6
Processing solutions
2.3
2.8
Total cost of services
63.2
66.7
General and administrative
6.5
6.7
Depreciation and amortization
8.9
9.1
Total operating expenses
78.6
82.5
Operating income
1.6
1.6
Other expenses
Interest expense, net
1.2
1.4
Total other expenses
1.2
1.4
Income before income tax expense
0.4
0.2
Tax expense
0.5
1.1
Net loss
(0.1
)
(0.9
)
Less: Net loss attributable to
non-controlling interests
—
(0.4
)
Net loss attributable to Ranger Energy
Services, Inc.
$
(0.1
)
$
(0.5
)
Loss per common share
Basic
$
(0.01
)
$
(0.06
)
Diluted
$
(0.01
)
$
(0.06
)
Weighted average common shares
outstanding
Basic
8,761,291
8,769,389
Diluted
8,761,291
8,769,389
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in millions, except share and
per share amounts)
December 31, 2019
December 31, 2018
Assets
Cash and cash equivalents
$
6.9
$
2.6
Accounts receivable, net
41.5
45.4
Contract assets
1.2
3.1
Inventory
3.8
4.9
Prepaid expenses
5.3
5.1
Total current assets
58.7
61.1
Property and equipment, net
218.9
229.8
Intangible assets, net
9.3
10.0
Operating lease right-of-use assets
6.5
—
Other assets
0.1
1.6
Total assets
$
293.5
$
302.5
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable
13.8
17.2
Accrued expenses
18.4
18.5
Finance lease obligations, current
portion
5.1
4.4
Long-term debt, current portion
15.8
15.8
Other current liabilities
2.0
3.0
Total current liabilities
55.1
58.9
Operating lease right-of-use
obligations
4.5
—
Finance lease obligations
3.6
6.6
Long-term debt, net
26.6
44.7
Other long-term liabilities
0.7
0.3
Total liabilities
$
90.5
$
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
December 31, 2019 and 2018
—
—
Class A Common Stock, $0.01 par value,
100,000,000 shares authorized; 8,839,788 shares issued and
8,725,851 shares outstanding as of December 31, 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 December 31, 2019 and 2018
0.1
0.1
Less: Class A Common Stock held in
treasury, at cost (113,937 shares)
(0.7
)
—
Accumulated deficit
(8.1
)
(9.9
)
Additional paid-in capital
121.8
111.6
Total controlling interest stockholders'
equity
113.2
101.9
Non-controlling interest
89.8
90.1
Total stockholders' equity
203.0
192.0
Total liabilities and stockholders'
equity
$
293.5
$
302.5
RANGER ENERGY SERVICES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Year Ended
December 31, 2019
Cash Flows from Operating
Activities
Net income
$
4.4
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
34.8
Equity based compensation
3.3
Other costs, net
0.9
Changes in operating assets and
liabilities, net of the acquisition
Accounts receivable
5.2
Contract assets
1.9
Inventory
1.1
Prepaid expenses
(0.2
)
Other assets
0.8
Accounts payable
(1.1
)
Accrued expenses
0.5
Other long-term liabilities
0.3
Net cash provided by operating
activities
51.9
Cash Flows from Investing
Activities
Purchase of property and equipment
(24.2
)
Proceeds from disposal of property and
equipment
0.8
Net cash used in investing
activities
(23.4
)
Cash Flows from Financing
Activities
Borrowings under line of credit
facility
26.7
Principal payments on line of credit
facility
(35.2
)
Principal payments on Encina Master
Financing Agreement
(9.8
)
Principal payments on financing lease
obligations
(4.8
)
Repurchase of Class A Common Stock
(0.7
)
Shares withheld on equity transactions
(0.4
)
Net cash used in financing
activities
(24.2
)
Increase in Cash and Cash
equivalents
4.3
Cash and Cash Equivalents, Beginning of
Year
2.6
Cash and Cash Equivalents, End of Year
$
6.9
Supplemental Cash Flows
Information
Interest paid
$
4.5
Supplemental Disclosure of Non-cash
Investing and Financing Activity
Capital expenditures
$
(2.9
)
Fixed asset additions through financing
leases
$
2.4
Initial 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 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 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 December 31, 2019 and
September 30, 2019, in millions:
Three Months Ended December
31, 2019
High Specification
Rigs
Completion and Other
Services
Processing Solutions
Other
Total
(in millions)
Net income (loss)
$
0.2
$
6.8
$
1.4
$
(8.5
)
$
(0.1
)
Interest expense
—
—
—
1.2
1.2
Tax expense
—
—
—
0.5
0.5
Depreciation and amortization
5.2
2.8
0.6
0.3
8.9
EBITDA
5.4
9.6
2.0
(6.5
)
10.5
Equity based compensation
—
—
—
0.9
0.9
Severance costs
—
—
—
—
—
Loss on disposal of property and
equipment
—
—
—
—
—
Adjusted EBITDA
$
5.4
$
9.6
$
2.0
$
(5.6
)
$
11.4
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
Severance costs
0.1
—
—
—
0.1
Loss on disposal of property and
equipment
—
—
—
0.5
0.5
Adjusted EBITDA
$
3.3
$
10.7
$
3.5
$
(5.3
)
$
12.2
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200227006018/en/
J. Brandon Blossman Chief Financial Officer (713) 935-8900
Brandon.Blossman@rangerenergy.com
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