Ranger Energy Services Inc (RNGR) (Q1 2024) Earnings Call Transcript Highlights: Navigating ...

• Revenue: $136.9 million, a decrease from $157.5 million in Q1 2023.

• Net Income: Loss of $800,000, down from a net income of $6.2 million in Q1 2023.

• Earnings Per Share (EPS): Negative $0.03 per fully diluted share.

• Adjusted EBITDA: $10.9 million, down from $20.1 million in Q1 2023.

• High Specification Rigs Revenue: $79.7 million, up from $77.5 million in Q1 2023.

• Wireline Services Revenue: $32.8 million, a 34% decrease from Q1 2023.

• Ancillary Services Revenue: $24.4 million, down 19% from Q1 2023.

• Free Cash Flow: $5.5 million for the quarter.

• Dividend: Issued regular dividend of $0.05 per share.

• Share Repurchases: 846,900 shares for $8.5 million in Q1.

• Liquidity: Ended the quarter with $66.5 million.

• Warning! GuruFocus has detected 2 Warning Sign with RNGR.

Release Date: May 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ranger Energy Services Inc (NYSE:RNGR) maintained a net debt zero position and high liquidity, ensuring financial stability and flexibility.

• Despite challenges, the high specification rigs business saw revenues of $79.7 million, marking the highest revenue quarter in this segment's history.

• Ranger Energy Services Inc (NYSE:RNGR) continued to return significant capital to shareholders, repurchasing 846,900 shares for $8.5 million and issuing a regular dividend of $0.05 per share.

• The company identified approximately $4 million of annualized cost savings, enhancing operational efficiency and reducing expenses.

• Ranger Energy Services Inc (NYSE:RNGR) saw an uptick in demand for its plug and abandonment business, positioning it well to capitalize on this growing market.

Negative Points

• Ranger Energy Services Inc (NYSE:RNGR) experienced a revenue decline to $136.9 million in Q1 2024, a 13% decrease from the previous year, primarily due to lower activity levels in wireline completions and coiled tubing service lines.

• The company reported a net loss of $800,000 in Q1 2024, a significant drop from net income in the same quarter the previous year.

• Increased competition and pricing pressures in the wireline services segment led to reduced profitability and operational challenges.

• Seasonal impacts and a slow start to the year adversely affected the company's performance in the first quarter.

• Inflationary pressures increased costs across various categories, including labor, rentals, and repairs, impacting the cost of services and overall profitability.

Q & A Highlights

Q: Can you discuss the services provided by the Torrent service line, particularly in relation to the shift to DGB and natural gas usage in the Permian? A: (Stuart Bodden - President, CEO, Director) The Torrent service line primarily offers in-field gas processing using mechanical refrigeration units for scrubbing field gas. A pilot project in the Permian involves scrubbing gas for a microgrid and a dual fuel frac fleet. This service line has seen increased interest and is expected to grow, especially with recent sales team improvements.

Q: Given the recent industry consolidation and incidents, are there opportunities for Ranger Energy to gain market share in certain geographic regions? A: (Stuart Bodden - President, CEO, Director) Ranger Energy is gradually gaining market share in some regions. The process is slow, but the recent incidents provide potential opportunities for growth.

Q: Are there opportunities to raise prices this year given the strength of the well service business and recent safety incidents affecting competitors? A: (Stuart Bodden - President, CEO, Director) While it would be ideal, it is currently challenging to raise prices significantly. However, there may be potential for price adjustments as market conditions evolve and operators reconsider their contractor choices.

Q: Is now a good time for Ranger Energy to consider smaller tuck-in acquisitions, particularly in the workover rig sector? A: (Stuart Bodden - President, CEO, Director) Ranger is exploring opportunities with smaller players, focusing on asset quality. The company is cautious about acquisitions, ensuring they align with strategic goals and market conditions.

Q: How is Ranger Energy managing its share repurchase strategy given the current stock price levels? A: (Stuart Bodden - President, CEO, Director; Melissa Cougle - CFO, SVP) Ranger is committed to returning capital to shareholders and views its stock as a good value. The company has been aggressive in repurchasing shares and plans to continue this strategy, balancing it with cash flow considerations.

Q: Can you confirm if there are any changes to the guidance for the year, and how does the recent quarter's performance influence future expectations? A: (Stuart Bodden - President, CEO, Director) There are no changes to the guidance, but specific guidance is not being provided due to market uncertainties, particularly in the completions and natural gas markets. Ranger expects to maintain performance consistent with the previous year, barring unforeseen market shifts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.