HOUSTON – (BUSINESS WIRE) – Ranger Energy Services, Inc. (NYSE: RNGR) (“Ranger” or the “Company”) today announced results for the quarter ended June 30, 2022.
– Second quarter 2022 revenue of $153.6 million, up $30 million or 24% from the previous quarter’s $123.6 million and $103.6 million US, or 207%, compared to the second quarter of 2021, due to increased activity in all submarkets and pricing.
– Net loss for the second quarter was $0.4 million, down $5.3 million from the net loss of $5.7 million recorded in the first quarter of this year.
– Adjusted EBITDA(1) was $18.0 million, up 88% or $8.4 million from the $9.6 million reported in the first quarter. The increase was driven by higher activity across all segments and increased margins in the Wireline Services and Data Processing Solutions and Additional Services segments.
– Net debt decreased by $21.8 million, or 24%, in the second quarter thanks to a significant sale of assets and an increase in working capital, which helped improve liquidity and operating cash flow by $19.9 million in the second quarter.
– Operating income from cable television services increased by 133% from an operating loss of $4.5 million in the first quarter to $1.5 million in the second quarter. Segment Adjusted EBITDA also increased by $6.1 million during the reporting period, driven by higher prices and the success of internal initiatives.
Chief Executive Officer Stuart Bodden said, “Ranger’s financial performance improved significantly during the quarter as we saw the impact of improved market context and strong market presence across all product lines. During the year, the market environment was positive, with increased customer activity. , creating ideal conditions for the company to use its assets and people. Our recent acquisitions allow the company to capitalize on the current cycle and generate strong cash flow over the coming quarters and years. We believe that given our commitment to repair the impact of wells and production barrels, our services will support demand in virtually any commodity price environment, which is typically the cheapest additional barrel of any producer and the fastest going online in the market. who has shown resilience.
Bodden continued: “In the second quarter, consolidated revenue increased 24% and our flagship high-performance rig business grew 17%. COVID-19 levels were 17% higher, a record for Ranger. Our wireline services business showed some deterioration early in the year, growing more than 25% in the first quarter, surpassing fourth quarter revenue, and achieving positive margins. in the quarter Our rates in this segment increased by 10% quarter-on-quarter and activity levels increased by 5% over the same period We are focusing our attention and resources on the continued expansion of the market and the future growth of the cable network On a larger scale Selected ancillary product lines , acquired through the acquisition of underlying assets in the fall, also performed well this quarter, with total segment revenue up 40%. efforts.”
“In the nine months since the acquisition closed, we have been able to integrate these businesses and put them on a solid footing to improve performance, as well as monetize surplus assets and repay our debt. The company is currently less than double our current adjusted leverage. EBITDA We will continue to make incremental improvements that we believe will enable us to continue to increase profits going forward The strong cash flow generated by our business will allow us to return capital to shareholders in the future and strategically when looking for opportunities for growth and integration. In short, the future of the Ranger is bright and full of opportunity and these accomplishments would not have been possible without our dedicated and hardworking people whose efforts are worthy of recognition.”
The company’s revenue rose to $153.6 million in the second quarter of 2022, up from $123.6 million in the first quarter and $50 million in the second quarter last year. Both the use of assets and the increase in prices helped increase the revenues of all divisions.
Operating expenses in the second quarter were $155.8 million compared to $128.8 million in the previous quarter. The increase in operating expenses was mainly due to an increase in operating activities during the quarter. In addition, post-major acquisition costs associated with increased insurance risk in Q1 2022 and Q4 2021 are approximately $2 million.
The company reported a net loss of $0.4 million in the second quarter, down $5.3 million from $5.7 million in the first quarter of this year. The decline was driven by higher operating income in the Wireline Services and Data Solutions and Ancillary Services reportable segments.
General and administrative expenses in the second quarter were $12.2 million, up $3 million from $9.2 million in the first quarter. Compared to the previous quarter, the increase was mainly due to integration, severance pay and legal costs, which are expected to decrease in the next quarter.
The adjustment to consolidated EBITDA for the quarter was impacted by several non-cash items, including gain on bargain purchases, the impact of asset disposals and the impairment of assets held for sale.
Going forward, we expect revenue this year to be higher than previously expected, in the range of $580 million to $600 million, and we remain confident that the company’s adjusted EBITDA margin will be in the range of 11% to 13% per year. whole year. . Our main financial activity over the next few quarters will be to improve operating efficiency to deliver additional margin growth and improve cash flow to be used to service debt. As we continue to pay down debt, management will look for opportunities to create and recover shareholder value, including dividends, buyouts, strategic opportunities, and combinations of these options.
In 2021, the company made a number of acquisitions to expand its range of high-tech drilling rigs and wireline services. These acquisitions expanded our presence in the market and contributed to the growth of revenue and profit.
Regarding the acquisition of legacy Basic drilling rigs and related assets in the fourth quarter of 2021, the company has invested a total of $46 million to date, excluding asset disposals. The investment includes total consideration paid out of $41.8 million plus transaction and integration costs incurred to date and funding costs. These assets generated over $130 million in revenue and over $20 million in EBITDA over the same period, achieving the required return on investment of over 40% in the first nine months of operation.
Company CEO Stuart Bodden said: “The acquisition, completed in 2021, puts Ranger in a strong position as market fundamentals continue to improve. We have increased market share in our core business and demonstrated that we are a strong integrated partner in a fragmented space. Opportunities our financial expectations for these assets exceeded our expectations and we believe these transactions represent a significant return opportunity for creating shareholder value.”
In terms of acquisition-related expenses, since the second quarter of 2021, the company has spent $14.9 million on the areas listed in the table below. The most significant of these was associated with a transaction fee of $7.1 million. Costs of $3.8 million were associated with transitional facilities, licensing, and asset sales. After all, transition staffing costs and the costs associated with bringing operating assets and staff up to Ranger standards have totaled $4 million to date. The company expects to incur additional integration costs of between $3 million and $4 million in the coming quarters, primarily for decommissioning and asset disposal costs. Acquisition related costs are as follows (in millions):
High-tech rig revenue increased $11.1 million from $64.9 million in the first quarter to $76 million in the second quarter. Drilling hours increased from 112,500 hours in the first quarter of this year to 119,900 hours in the second quarter. The increase in rig hours, combined with an increase in the average rig hourly rate from $577 in the first quarter to $632 in the second quarter, an increase of $55 or 10%, resulted in a 17% overall increase in revenue.
The costs and associated profits for the high performance rig segment absorb the largest portion of the aforementioned insurance costs. These expenses are for the first quarter of 2022 and the fourth quarter of 2021 and are primarily attributable to an increase in acquisition risk that impacted this segment of the business by $1.3 million for the quarter.
Operating income for the second quarter was down $1.6 million to $6.1 million from $7.7 million in the first quarter. Adjusted EBITDA increased by 1%, or $0.1 million, from $14.1 million in the first quarter to $14.2 million in the second quarter. The decrease in operating income and the increase in adjusted EBITDA were mainly due to the continued increase in drilling hourly rates offset by the aforementioned insurance adjustment costs.
Cable services revenue increased $10.9 million to $49.5 million in the second quarter from $38.6 million in the first quarter. The increase in revenue was primarily due to increased activity, as evidenced by the increase in the number of completed 600 stages from 7,400 in the first quarter to 8,000 in the second quarter.
Operating profit in the second quarter increased by $6 million to $1.5 million, compared with a loss of $4.5 million in the first quarter. Adjusted EBITDA in the second quarter increased by $6.1 million to $4.3 million, compared with a loss of $1.8 million in the first quarter. The increase in operating profit and the increase in adjusted EBITDA was driven by increased activity across all wireline services and higher margins, which was driven by the improvement in earnings described above.
During the quarter, we made a number of efforts in this area, and as a result, we saw an improvement in operating and financial performance. We believe that our work and focus on this area will lead to further growth before the end of the year.
Revenue in the Processing Solutions and Ancillary Services segment increased $8 million to $28.1 million in the second quarter from $20.1 million in the first quarter. The increase in revenue was driven by the Coils business, which posted strong growth in the quarter, and the contribution of the Other Services business.
Operating profit for the second quarter increased by $3.8 million to $5.1 million from $1.3 million in the first quarter of this year. Adjusted EBITDA increased 55%, or $1.8 million, to $5.1 million in the second quarter from $3.3 million in the first quarter of this year. The increase in operating profit and adjusted EBITDA was driven by higher margins due to increased revenue.
We ended the second quarter with $28.3 million in liquidity, including a $23.2 million revolving credit facility and $5.1 million in cash.
Our total net debt at the end of the second quarter was $70.7 million, down $21.8 million from the $92.5 million at the end of the first quarter. The decrease was due to additional repayments under our revolving credit line, as well as the repayment of term debt from proceeds from the sale of assets.
Our net debt includes certain funding arrangements, which we adjust for comparability. In terms of adjusted total net debt (1), we ended the second quarter at $58.3 million, down $21.6 million from $79.9 million at the end of the first quarter. Of our total debt balance, US$22.2 million is in term debt.
Our revolving credit line balance at the end of the second quarter was $33.9 million compared to $44.8 million at the end of the first quarter.
Operating cash flow in the second quarter of 2022 was $19.9 million, a significant improvement from operating cash flow of $12.1 million in the first quarter. The company focused its efforts and resources on better management of working capital and achieved a reduction in the number of days to sale by more than ten times during the quarter.
The company expects capital expenditure in 2022 to be approximately $15 million. The company invested $1.5 million in capital expenditure on ancillary equipment related to our roll business in the second quarter and expects to add $500,000 in related capital expenditure to begin winding in the second half of the year.
The Company will hold a conference call to discuss the results for the second quarter of 2022 on August 1, 2022 at 9:30 am Central Time (10:30 am ET). To join the conference from the US, participants can dial 1-833-255-2829. To join the conference from outside the US, participants can dial 1-412-902-6710. When instructed, ask the operator to join the Ranger Energy Services, Inc. call. Participants are encouraged to log in to the webcast or join the conference call approximately ten minutes before the start. To listen to the webcast, visit the Investor Relations section of the company’s website at http://www.rangerenergy.com.
Audio replay of the conference call will be available shortly after the conference call and will be available for approximately 7 days. It can be accessed by calling 1-877-344-7529 in the US or 1-412-317-0088 outside the US. The conference replay access code is 8410515. The replay will also be available on the investor resources section of the company’s website shortly after the conference call and will be available for approximately seven days.
Ranger is one of the largest providers of high performance mobile drilling, cased well drilling and ancillary services to the US oil and gas industry. Our services facilitate operations throughout the life cycle of a well, including completion, production, maintenance, intervention, workover and abandonment.
Certain statements contained in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements reflect Ranger’s expectations or beliefs regarding future events and may not result in the results described in this press release. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are beyond Ranger’s control, that could cause actual results to differ materially from those discussed in the forward-looking statements.
Any forward-looking statement is effective only as of the date it is made, and Ranger undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. . New factors emerge from time to time, and the Ranger cannot predict them all. In considering these forward-looking statements, you should be aware of the risk factors and other cautionary statements in our filings with the Securities and Exchange Commission. Risk factors and other factors mentioned in Ranger’s filings with the SEC could cause actual results to differ materially from those contained in any forward-looking statement.
(1) “Adjusted EBITDA” and “Adjusted Net Debt” are not presented in accordance with US generally accepted accounting principles (“US GAAP”). The non-GAAP support schedule is included in the statement and schedule accompanying this press release, which can also be found on the company’s website at www.rangerenergy.com.
Preferred shares, $0.01 per share; 50,000,000 shares allowed; as of June 30, 2022, there are no shares outstanding or outstanding; as of December 31, 2021, there are 6,000,001 shares outstanding.
Class A common stock with a par value of $0.01, 100,000,000 shares are authorized; 25,268,856 shares outstanding and 24,717,028 shares outstanding as of June 30, 2022; 18,981,172 shares outstanding and 18,429,344 shares outstanding as of December 31, 2021
Class B common stock, par value $0.01, 100,000,000 authorized shares; as at 30 June 2022 and 31 December 2021 there are no outstanding shares.
Less: class A treasury shares at cost; 551,828 own shares as of June 30, 2022 and December 31, 2021
The Company uses certain non-GAAP financial ratios that management believes are useful in understanding the Company’s financial performance. These financial ratios, including Adjusted EBITDA and Adjusted Net Debt, should not be considered as more significant or as a substitute for similar US GAAP financial ratios. A detailed reconciliation of these non-GAAP financial ratios with comparable US GAAP financial ratios is provided below and is available in the Investor Relations section of our website, www.rangerenergy.com. Our presentation of Adjusted EBITDA and Adjusted Net Debt should not be construed as an indication that our results will not be affected by items excluded from reconciliation. Our calculations of these non-GAAP financial ratios may differ from those of other companies.
We believe that Adjusted EBITDA is a useful performance measure as it effectively evaluates our operating performance relative to our peers, regardless of how we fund or capitalize. We exclude the above items from net income or loss when calculating Adjusted EBITDA as these amounts can vary significantly in our industry depending on the accounting method, book value of assets, capital structure and method of asset acquisition. Some items excluded from Adjusted EBITDA are an important part of understanding and evaluating a company’s financial performance, such as the cost of capital and the company’s tax structure, and the historical cost of depreciable assets that are not included in Adjusted EBITDA.
We define Adjusted EBITDA as less net interest expense, income tax provisions or credits, depreciation and amortization, equity-based acquisition-related compensation, termination and restructuring costs, gains and losses on asset disposals, and certain other non-monetary and we identify Goods that are considered unrepresentative of our ongoing business.
The following table provides a reconciliation of net income or loss to Adjusted EBITDA for the three months ended June 30, 2022 and March 31, 2022 in millions:
We believe that net debt and adjusted net debt are useful indicators of liquidity, financial health and provide a measure of our leverage. We define net debt as current and long-term debt, finance leases, other financial liabilities offset by cash and cash equivalents. We define adjusted net debt as net debt less finance leases, similar to the calculation of some financial covenants. All debts and other liabilities show the outstanding principal balance for the respective period.
The following table provides a reconciliation of consolidated debt, cash and cash equivalents to net debt and adjusted net debt as at 30 June 2022 and 31 March 2022: