Ranger Energy Services, Inc. Announces Q1 2019 Results

Ranger Energy Services, Inc. Announces Q1 2019 Results

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HOUSTON–(BUSINESS WIRE)–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

High
Specification
Rigs

 

Completion
and Other
Services

 

Processing
Solutions

  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

High
Specification
Rigs

Completion
and Other
Services

Processing
Solutions

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

Contacts

J. Brandon Blossman
Chief Financial Officer
(713) 935-8900
[email protected]

Angela Fuller

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