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Ranger Energy Services First Quarter 2020 Results

Share Print Bookmark    |    Thursday,April 30,2020

Ranger Energy Services, Inc. reported its Q1 2020 results.

Highlights:

• Revenue, net income and Adjusted EBITDA sequentially flat to up despite softening market

• Wireline recorded new peak period stage count

• High Specification Rigs posted record rig rates

• Aggressive cost cutting now taking place to reflect current market conditions

Consolidated Financial Highlights

Revenues increased 1% to $81.0 million in Q1, from $80.2 million in Q4. Our Completion and Other Services and High Specification Rigs segments saw increases, partially offset by decreased revenues attributable to our Processing Solutions segment.

Net income increased $2.9 million, from a loss of $0.1 million in Q4, to income of $2.8 million in Q1. The increase in net income was driven by a combination of increased revenues and a gain on retirement of debt.

Adjusted EBITDA¹ remained flat to Q4 results at $11.4 million.

“Our first quarter performance was highlighted by record high-spec rig revenue per hour and wireline stage count which drove consistent revenue and EBITDA performance. I believe the quarter's results speak for themselves and reflect what was to be a strong start to full year 2020. Unfortunately, market conditions have quickly changed and we are aggressively taking the necessary steps in response.

"While we continue to experience relative out-performance versus peers, on an absolute basis, the reduction in activity over the last several weeks has been extraordinary. We’ve immediately re-designed and right-sized our business to match these new activity levels.

"Our head count is currently down approximately 50% from mid-March. These reductions span across every field location and up to our corporate office. Additionally, we’ve implemented salary reductions across the entire organization. Within the first few weeks of implementing these difficult steps, our payroll expense has been reduced 60%.

"We have also begun to consolidate our operating locations and expect other costs such as repair and maintenance to be down materially on both an absolute and per-unit basis.

"These actions, along with several other operational, travel and organizational expense reductions to date, will result in more than $100 million of annual cost savings.

"On the capital spending front for 2020, all new growth CAPEX has been eliminated. While our maintenance CAPEX has historically been extremely low due the quality of our asset base, for the remainder of the year we expect an absolute minimal amount of spend.

"Although our industry is facing unprecedented challenges, we look for forward to relying on our incredible team members, the strengths of our organization and a sound balance sheet to allow us to excel when others cannot.”

Business Segment Financial Results

High Specification Rigs

High Specification Rigs segment revenue slightly increased by $0.1 million, to $34.9 million in Q1 from $34.8 million in Q4 2019. The increase in revenues was driven by a 4%, or $24, increase in hourly rig rates, to $558 from $534 in Q4. This increase was partially offset by a 3% reduction in total rig hours to approximately 62,400 hours in Q1 from 64,400 in Q4.

Operating loss decreased by $0.5 million to a loss of $0.3 million in Q1 from income of $0.2 million in Q4. Adjusted EBITDA decreased 7%, or $0.4 million, to $5.0 million in Q1from $5.4 million in Q4. The decrease in operating loss and Adjusted EBITDA was attributable to the increase in cost of services during Q1.

Completion and Other Services

Completion and Other Services segment revenue increased 5%, or $2.2 million, to $43.3 million in Q1 from $41.1 million in Q4 2019. The increase in revenue for the quarter was the net impact of an increase in our Wireline revenue, which was partially offset by declines in other, non-Wireline services within the segment.

Operating income increased $2.1 million to $8.9 million in Q1 from $6.8 million in Q4. Adjusted EBITDA increased 21%, or $2.0 million, to $11.6 million in Q1 from $9.6 million in Q4. The increase in operating income and Adjusted EBITDA was driven by the increased revenues, partially offset by reductions in the cost of services related to our Wireline services.

Processing Solutions

Processing Solutions revenue decreased 35% or $1.5 million, to $2.8 million in Q1 from $4.3 million in Q4 2019. The decrease was driven by a reduction in MRU rental revenue within the segment.

Operating income decreased $0.7 million to $0.7 million in Q1 from $1.4 million in Q4. Adjusted EBITDA decreased 35%, or $0.7 million, to $1.3 million in Q1 from $2.0 million in Q4. The decrease in operating income and Adjusted EBITDA is attributable to a decrease in rental revenue, partially offset by a decrease in cost of services.

Liquidity

We ended the quarter with $21.6 million of liquidity, consisting of $10.2 million of capacity available on our revolving credit facility and $11.4 million of cash. The Q1 cash ending balance of $11.4 million compares to $6.9 million at the end of Q4 2019.

Debt

We ended Q1 with aggregate net debt of $43.1 million, down $2.5 million as compared to $45.6 million at the end of Q4.

We had an outstanding draw on our revolving credit facility of $21.3 million at the end of Q1 compared to $10.0 million at the end of Q4. During the quarter, we borrowed $16.9 million, partially offset by payments of $5.6 million on the principal credit facility balance.

During Q1, we paid an aggregate $3.7 million to settle the Esco Note Payable balance of $5.8 million and recognized a gain on the retirement of debt of $2.1 million.

We had an outstanding balance on our Encina Financing Agreement of $27.7 million at the end of Q4 and we made aggregate payments of $2.5 million during Q1, leaving a principal balance of $25.2 million at the end of Q1.

Capital Expenditures

Capital expenditures recorded during the quarter were $5.5 million. High Specification Rigs segment incurred $3.8 million of capital expenditures on ancillary equipment related to our new and existing integrated customer contracts. Completion and Other Services segment incurred $1.2 million related to two new wireline trucks and other equipment. Maintenance capital expense for the quarter was $0.5 million.

Also, across all segments, $0.5 million of leased vehicles were added during the quarter.