Ranger Energy Services, Inc. (NYSE: RNGR) (“Ranger” or the
“Company”) announced today its results for its fiscal quarter ended
March 31, 2019.
- Sixth consecutive quarter of revenue
and Adjusted EBITDA growth in spite of both seasonal headwinds and
a challenging commodity tape
- Sequential net income more than doubled
with revenue and Adjusted EBITDA each showing a 4% gain
- 2019 capex spend largely complete in
Q1, free cash flow generation balance of 2019 primary focus
Consolidated Q1 2019 Financial Highlights
Revenues saw a sequential increase of 4% to $88.3 million, from
$85.3 million in Q4.
Net income increased $1.9 million to $3.6 million from $1.7
million in Q4. The increase in net income was driven by increased
revenue and a reduction in depreciation and amortization expenses.
This was partially offset by an increase in cost of sales.
Adjusted EBITDA1 increased 4% to $14.2 million, from $13.7
million in Q4. The Adjusted EBITDA increase was driven by a revenue
increase partially offset by an increase in cost of services.
________________________________
1 “Adjusted EBITDA” is not presented in accordance with
generally accepted accounting principles in the United States
(“GAAP”). Please see “Ranger Energy Services, Inc. Supplemental
Non-GAAP Financial Measures (Unaudited)” at the end of this press
release for a reconciliation of the non-GAAP financial measure of
Adjusted EBITDA to the most directly comparable GAAP financial
measure.
CEO Comments
“Ranger posted another quarter of improving performance in the
face of both ongoing seasonal headwinds and a challenging commodity
tape. We are proud of the fact that we have grown both revenue and
Adjusted EBITDA every quarter since our Q3 2017 IPO. Financial
performance again reached a high water mark in Q1 with a 4%
sequential increase in both revenue and Adjusted EBITDA. While we
did see the 4th quarter crude price downturn and inclement northern
weather impact the start of 2019, these declines were more than
offset by our Permian wireline business which saw its first full
quarter of operations with the entire complement of assets from our
2018 growth capital program.
Our High Specification Rigs business experienced a modest
decrease in pricing and a drop in utilization primarily driven by
the impact of lower oil prices and severe weather on our Permian
and Bakken 24-hour completion rig activity. Our Permian wireline
completions business continued operations on a 100% dedicated basis
with an average unit count of 13 during the quarter, up from 11 in
Q4. Market share gains and solid pricing also contributed to the
success of this business. Our Processing Solutions business results
saw a pull-back vs Q4 on the expected return of installation
revenue back down to historic run rates.
As we move beyond the first quarter of 2019, we continue to
sharpen our focus on near-term cash flow generation and driving
efficiencies across our operations while increasing our exposure to
existing and new top-tier customers.
On the new customer front, we are pleased to announce a new,
multi-year Permian Basin contract with a global, integrated
customer. Moving forward, we expect to ramp our High Specification
rigs' activity along with select Completion and Other Services
offerings as we mobilize assets to service this contract. This
relationship marks a milestone for Ranger as we reap the benefits
of our significant work in putting systems and processes in place
that allow us to service an increasingly high-graded customer
base.
On the cash-flow front, Q1 saw us take delivery of the majority
of our expected 2019 growth capital items. For the balance of the
year, we continue to plan for minimal capital spend, significant
cash flow generation and targeted debt reductions.”
Business Segment Financial Results
High Specification Rigs
High Specification Rigs segment revenue decreased 10%, or
$3.6 million, to $31.7 million in Q1 from $35.3 million in Q4 2018.
The decrease was driven by reduced rig utilization, as measured by
average monthly hours per rig, to 142 from 154. Total rig hours
decreased 7% to approximately 60,100 hours in Q1 from 64,900 in Q4.
Average hourly rig rates decreased 3%, or $16, to $522 from $538 in
Q4.
Operating loss was reduced by $0.5 million to a loss of $0.5
million in Q1 from a loss of $1.0 million in Q4. Adjusted EBITDA
decreased 16%, or $0.8 million, to $4.3 million in Q1 from $5.1
million in Q4. The reduction in operating loss was attributable to
a decrease in depreciation and amortization expense. The Adjusted
EBITDA decline was primarily due to the decrease in revenues, as
described above.
Completion and Other Services
Completion and Other Services segment revenue increased 18%, or
$7.9 million, to $51.6 million in Q1 from $43.7 million in Q4 2018.
The increase is primarily related to wireline activity, with an
additional wireline truck deployed in Q1, increasing the total
wireline truck count to 13.
Operating income increased $1.8 million to $10.9 million in Q1
from $9.1 million in Q4. Adjusted EBITDA increased 18%, or $2.1
million, to $13.7 million in Q1 from $11.6 million in Q4. The
increase in operating income and Adjusted EBITDA was driven by
increased revenue, which was partially offset by a sequential
increase in cost of services.
Processing Solutions
Processing Solutions revenue decreased 21%, or $1.3 million, to
$5.0 million in Q1 from $6.3 million in Q4 2018. This reduction in
revenue is attributable to lower installation and operating and
maintenance revenues. Equipment rental revenue remained relatively
flat to Q4 2018.
Operating income decreased $0.7 million to $2.3 million in Q1
from $3.0 million in Q4. Adjusted EBITDA decreased 18%, or $0.6
million, to $2.8 million in Q1 from $3.4 million in Q4. The
decrease in operating income and Adjusted EBITDA is attributable to
decreased revenues, as described above.
Liquidity
We ended the quarter with $23.4 million of liquidity, consisting
of $17.7 million of capacity available on our revolving credit
facility and $5.7 million of cash.
The Q1 cash ending balance of $5.7 million compares to $2.6
million at the end of Q4 2018. We had an outstanding draw on our
revolving credit facility of $25.6 million, leaving $17.7 million
of capacity on a quarter end borrowing base of $43.3 million.
Capital Expenditures
Total capital expenditures recorded during the quarter were $9.2
million. Of that amount, $1.8 million was related to our Completion
and Other Services business including four sets of pressure control
equipment and associated ancillary equipment. The total amount
included $2.8 million related to High Specification Rigs ancillary
equipment. Also included was $4.1 million associated with the
addition of two processing units and six gas coolers in our
Processing Solutions segment. Maintenance capital expense for the
quarter was $0.7 million.
Additions of new leased vehicles to support current growth and
replacement of vehicles amount to $0.5 million.
Conference Call
The Company will host a conference call to discuss its Q1 2019
results on May 1, 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 log in 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
10129915. 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.
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 “SEC”). 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 March 31, 2019
December 31, 2018 Revenues High specification rigs
$
31.7
$ 35.3 Completion and other services 51.6 43.7 Processing solutions
5.0 6.3 Total revenues 88.3 85.3
Operating expenses Cost of services (exclusive of depreciation and
amortization): High specification rigs 27.4 30.4 Completion and
other services 37.9 32.0 Processing solutions 2.2 2.9
Total cost of services 67.5 65.3 General and administrative
7.2 7.0 Depreciation and amortization 8.4 9.7
Total operating expenses 83.1 82.0 Operating income 5.2 3.3
Other expenses Interest expense, net (1.3 ) (1.9 )
Total other expenses (1.3 ) (1.9 ) Income before income tax
expense 3.9 1.4 Tax expense (benefit) 0.3 (0.3 ) Net
income 3.6 1.7 Less: Net income attributable to non-controlling
interests 1.6 0.7 Net income attributable to
Ranger Energy Services, Inc. $ 2.0 $ 1.0
Earnings per common share Basic $ 0.24 $ 0.12 Diluted $ 0.21 $ 0.11
Weighted average common shares outstanding Basic 8,448,719
8,444,680 Diluted 9,730,710 16,056,212
5
RANGER ENERGY SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
(in millions, except share and per
share amounts)
March 31,2019
December 31,2018
Assets Cash and cash equivalents $ 5.7 $ 2.6 Accounts
receivable, net 51.8 45.4 Contract assets 7.6 3.1 Inventory 5.9 4.9
Prepaid expenses 3.7 5.1 Total current
assets 74.7 61.1 Property and
equipment, net 230.7 229.8 Intangible assets, net 9.9 10.0
Operating lease right-of-use assets 7.6 — Other assets 0.7
1.6 Total assets 323.6
302.5
Liabilities and Stockholders' Equity
Accounts payable 18.7 17.2 Accrued expenses 21.7 18.5 Finance lease
obligations, current portion 4.6 4.4 Long-term debt, current
portion 15.8 15.8 Other current liabilities 5.6
3.0 Total current liabilities 66.4 58.9
Operating lease right-of-use obligation 5.2 — Finance lease
obligations 5.8 6.6 Long-term debt, net 49.4 44.7 Other long-term
liabilities 0.6 0.3 Total liabilities
127.4 110.5 Commitments and contingencies
Stockholders' equity Preferred stock, $0.01 per share; 50,000,000
shares authorized; no shares issued or outstanding as of March 31,
2019 and December 31, 2018 — — Class A Common Stock, $0.01 par
value, 100,000,000 shares authorized; 8,454,273 and 8,448,527
shares issued and outstanding as of March 31, 2019 and December 31,
2018, respectively 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 March 31, 2019 and December 31, 2018 0.1 0.1
Accumulated deficit (7.9 ) (9.9 ) Additional paid-in capital
112.2 111.6 Total stockholders' equity 104.5
101.9 Non-controlling interest 91.7 90.1
Total stockholders' equity 196.2 192.0
Total liabilities and stockholders' equity
$
323.6
$
302.5
6
RANGER ENERGY SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
(in millions)
Three Months Ended March 31, 2019 Cash
Flows from Operating Activities Net income $ 3.6 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 8.4 Equity based compensation 0.6
Gain on sale of property, plant and equipment (0.2 ) Other costs,
net 0.1 Changes in operating assets and liabilities Accounts
receivable (6.4 ) Contract assets (4.5 ) Inventory (1.0 ) Prepaid
expenses 1.4 Other assets 0.9 Accounts payable 2.9 Accrued expenses
3.8 Other long-term liabilities 0.3 Net cash provided by
operating activities 9.9
Cash Flows from Investing
Activities Purchase of property, plant and equipment (10.8 )
Proceeds from sale of property, plant and equipment 0.3 Net
cash used in investing activities (10.5 )
Cash Flows from
Financing Activities Borrowings under line of credit facility
12.3 Principal payments on line of credit facility (5.2 ) Principal
payments on Encina Master Financing Agreement (2.3 ) Principal
payments on financing lease obligations (1.1 ) Net cash provided by
financing activities 3.7 Increase in Cash and Cash
equivalents 3.1 Cash and Cash Equivalents, Beginning of Period 2.6
Cash and Cash Equivalents, End of Period $ 5.7
Supplemental Cash Flows Information Interest paid $ 1.4
Supplemental Disclosure of Non-cash Investing and Financing
Activity Non-cash capital expenditures $ (2.0 ) Non-cash additions
to fixed assets through financing leases $ (0.5 ) Initial non-cash
operating lease right-of-use asset addition $ (8.3 )
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 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 March 31, 2019 and
December 31, 2018, in millions:
Three Months Ended March 31, 2019
HighSpecificationRigs
Completionand
OtherServices
ProcessingSolutions
Other Total (in millions) Net
income (loss) $ (0.5 ) $ 10.9 $ 2.3 $ (9.1 ) $ 3.6 Interest expense
— — — 1.5 1.5 Tax expense (benefit) — — — 0.3 0.3 Depreciation and
amortization 4.8 2.8 0.5 0.3 8.4
EBITDA 4.3 13.7 2.8 (7.0 ) 13.8 Equity based
compensation — — — 0.6 0.6 IPO, Acquisition, and severance costs —
— — — — Gain on property, plant and equipment — — —
(0.2 ) (0.2 )
Adjusted EBITDA $ 4.3 $ 13.7
$ 2.8 $ (6.6 ) $ 14.2
8
Three Months Ended December 31, 2018
HighSpecificationRigs
Completionand
OtherServices
ProcessingSolutions
Other Total (in millions) Net income (loss) $
(1.0 ) $ 9.1 $ 3.0 $ (9.4 ) $ 1.7 Interest expense — — — 1.9 1.9
Tax expense (benefit) — — — (0.3 ) (0.3 ) Depreciation and
amortization 5.9 2.5 0.4 0.9 9.7
EBITDA 4.9 11.6 3.4 (6.9 ) 13.0 Equity based
compensation — — — 0.5 0.5 IPO, Acquisition, and severance costs
0.2 — — — 0.2 Gain on property, plant and equipment — —
— — —
Adjusted EBITDA $ 5.1
$ 11.6 $ 3.4 $ (6.4 ) $ 13.7
9
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version on businesswire.com: https://www.businesswire.com/news/home/20190430006222/en/
J. Brandon BlossmanChief Financial Officer(713)
935-8900Brandon.Blossman@rangerenergy.com
Ranger Energy Services (NYSE:RNGR)
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