Ranger Energy Services, Inc. Announces Q1 2021 Results

Rhea-AI Summary

Ranger Energy Services (NYSE: RNGR) reported its fiscal Q1 results for 2021, showing a decline in revenues to $38.3 million, down 8% from the previous quarter. The net loss increased to $8.3 million due to reduced gross profits in the Completions segment and a non-cash tax expense. High-Spec Rigs segment revenue remained flat at $21.7 million. Despite disruptions from severe weather, a positive trend in rig activity was noted. The company successfully completed sale-leaseback transactions generating $16 million to improve its balance sheet.

Positive

• Completion of sale-leaseback transactions generating $16 million.
• High-Spec Rigs segment is positioned for a strong rebound with increased rig activity.
• Improvement in April composite rig rates and hours by 10% and 17% respectively.

Negative

• Revenue decreased $3.2 million (8%) from Q4.
• Net loss increased by $1.6 million from Q4.
• Completion and Other Services segment experienced significant revenue declines, driven by wireline business challenges.

Ranger Energy Services, Inc. (NYSE: RNGR) (“Ranger” or the “Company”) announced today its results for its fiscal quarter ended March 31, 2021.

• Sale-leaseback transactions provide $16 million of net cash proceeds through April 2021
• Weather and activity disruptions reduce quarterly results
• High-Spec Rigs continue to be positioned for a strong rebound

Consolidated Financial Highlights

Quarterly revenues of $38.3 million decreased $3.2 million, or 8%, from $41.5 million in Q4. Revenue decreases took place in the Completion and Other Services and Processing Solutions segments.

Net loss of $8.3 million increased $1.6 million, from a net loss of $6.7 million in Q4. The increase in the net loss was largely driven by decreased gross profits related to the Completions segment, coupled with a non-cash income tax expense.

Adjusted EBITDA¹ loss of $0.2 million decreased $3.4 million from earnings of $3.2 million in Q4. The current quarter’s loss of $0.2 million includes the removal of $1.4 million of a 401k forfeiture benefit and is inclusive of $1.1 million of make-ready expenses for rigs associated with deployments for our highest tier customers.

CEO Comments

“Our organization has grown accustom to delivering in challenging times, but the first two months of 2021 presented disruptions that were very difficult to overcome. We did not fully return to pre-holiday activity levels until the 4th week of January. Unfortunately, this was soon followed by the unprecedented Winter Storm Uri which impacted each of our operating locations for a period of seven to ten days. Because of these two issues, the positive momentum experienced in the back half of the quarter was not enough to offset the early losses.

As commodity prices see ongoing improvement and overall service activity levels move higher, our High Spec Rig activity continues on a very strong ramp. In spite of losing seven rig operating days due to Uri, our rig hours increased as compared to 4Q20. To further highlight the improving trends we are seeing in our High Spec Rig segment, our activity growth is being driven from a greater contribution of higher-value 24 hour rig work. As with last quarter, preparation and reactivation cost for this type work occurred during Q1 which negatively impacted our results. But we are pleased to see our resulting April composite rig rates and hours up 10% and 17% respectively, versus our first quarter monthly averages.

Within our Completion and Other Services segment, specifically our wireline service offering, we experienced ten days of weather and sand mine disruptions, along with a greater level of inefficiency as our primary customers move from trial phases to permanent adoption of simul-frac operations. While these events are one-time in nature, the Wireline sector as a whole continues to struggle with overcapacity and unsustainable low pricing, both of which our business is not fully immune to. The good news is this pricing cycle appears to have hit bottom and we are seeing select price increases across the sector. Additionally, we are in the final phase of executing on opportunities to drive both top and bottom line growth in our wireline business and we are excited to share the results with you when available.

Similar to wireline, we also believe our Processing Solutions segment is rebounding from a bottom. We continue to market these assets for their traditional applications with an expected ramp later in the year as drilling and completion fundamentals improve. Additionally, we are making material progress on a pivot to new ESG related uses of our assets. We have successfully completed gas processing jobs for both dual fuel and E-Frac fleets and anticipate more to come. Importantly, our team has been able to bring innovative solutions to the table in repurposing our existing MRU fleet to this new application. These solutions have required no material capex and return significant value to our customers.

As often mentioned, we see a pristine balance sheet as a key component to successful participation in pending industry consolidation. While historically pleased with our overall debt levels, we took pride in our ability to reduce our, already modest, long-term debt by nearly 50% during a trying 2020. Furthering that effort we are happy to have recently announced two sale-leaseback transactions resulting in $16 million of cash returning to our balance sheet. While the net result included $3.5 million of vehicle lease obligations coming back onto the balance sheet, these transactions reduced our pro forma net debt by an impressive 40% moving our total down to just $18 million.”

Business Segment Financial Results

High Specification Rigs

High Specification Rigs segment revenue remained flat at $21.7 million in Q1 and in Q4 2020. The rig hours increased slightly to 43,200 hours in Q1 from 43,100 hours in Q4. The slight increase in rig hours was offset by a marginal decrease of $10, or 2%, in the hourly average rig rate to $493 in Q1 from $503 in Q4.

Operating loss decreased by $0.5 million to a loss of $2.1 million in Q1 from a loss of $2.6 million in Q4. Adjusted EBITDA decreased 7%, or $0.2 million, to $2.7 million in Q1 from $2.9 million in Q4. The decrease in operating losses was attributable to a decrease in depreciation expense. Adjusted EBITDA’s decline was attributable to a reduction in cost of services, related to a reduction in reactivation costs.

Completion and Other Services

Completion and Other Services segment revenue decreased by $3.1 million to $15.5 million in Q1 from $18.6 million in Q4 2021. The decrease was primarily attributable to the wireline business which saw weather related disruptions along with ongoing pricing pressure.

Operating loss decreased $3.0 million to a loss of $1.3 million in Q1 from income of $1.7 million in Q4. Adjusted EBITDA decreased 75%, or $2.7 million, to $0.9 million in Q1 from $3.6 million in Q4. The decrease in operating income and Adjusted EBITDA was driven by decreased profit margins primarily attributable to our wireline business.

Processing Solutions

Processing Solutions segment revenue decreased marginally by $0.1 million to $1.1 million in Q1 and $1.2 million in Q4 2020. The decrease in revenue was du

FAQ

What were Ranger Energy Services' Q1 2021 revenues?

Ranger Energy Services reported Q1 2021 revenues of $38.3 million, an 8% decrease from the previous quarter.

How much did Ranger Energy Services lose in Q1 2021?

The net loss for Ranger Energy Services in Q1 2021 was $8.3 million, an increase from $6.7 million in Q4.

What improvements were noted in Ranger's High-Spec Rigs segment?

Despite challenges, the High-Spec Rigs segment showed increased activity and a strong positioning for recovery.

What significant financial moves did Ranger make recently?

Ranger completed two sale-leaseback transactions, generating $16 million in cash, which reduced net debt by 40%.

What impact did weather disruptions have on Ranger's performance?

Weather disruptions negatively affected Ranger's quarterly results, particularly in the Completion and Other Services segment.