• Revenue: $153 million, an 11% increase over the second quarter.
• Adjusted EBITDA: $25.1 million, a 20% increase from the second quarter.
• Net Income: $8.7 million, resulting in earnings per share of 39.
• Cost of Services: $122 million, representing 80% of revenue.
• Gross Margin: 16.5%.
• High Specification Rigs Revenue: $86.7 million, a 5% increase from the previous quarter.
• Ancillary Services Revenue: $36 million, a 17% increase from Q2.
• Wireline Revenue: $30.3 million, a 24% increase from the second quarter.
• Liquidity: $86.1 million, including $71.3 million of capacity on the revolving credit facility and $14.8 million of cash on hand.
• Free Cash Flow Year-to-Date: $23.1 million.
• Capital Expenditures: $28.7 million, slightly above 6% of revenue.
• Share Repurchases Year-to-Date: Approximately 1.5 million shares for $15.5 million.

• Warning! GuruFocus has detected 5 Warning Sign with RNGR.

Release Date: October 28, 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) achieved record quarterly revenue and adjusted EBITDA in its high specification rig segment, highlighting strong operational performance.
• The company's coil tubing business posted a new quarterly revenue record, with a 33% increase in revenue and a 52% increase in EBITDA over the previous quarter.
• Ranger's gas conditioning and processing service line, branded Torrent, showed impressive growth, nearly doubling its EBITDA from Q2.
• The company maintained a net debt zero position, providing financial flexibility and a strong balance sheet.
• Ranger returned over 80% of its free cash flow year-to-date to shareholders through dividends and share repurchases, demonstrating a strong commitment to shareholder returns.

Negative Points

• The wireline segment experienced a year-over-year decline of 43% in revenue, driven entirely by wireline completion activity declines.
• Seasonality and weather impacts are expected to affect business performance in Q4, potentially leading to declines in certain service lines.
• Despite strong financial results, the market continues to undervalue Ranger Energy Services Inc (NYSE:RNGR), according to management.
• The company faces challenges in the wireline completion's plug and perf space, which has become commoditized, putting pressure on traditional production wireline work.
• There is a bid-ask spread issue in potential M&A opportunities, which could hinder consolidation efforts in the fragmented industry.

Q & A Highlights

Q: Can you provide more details on how Ranger Energy Services is growing market share despite industry consolidation and slowdown? A: Stuart N. Bodden, President and CEO, explained that consolidation on the E&P side has been beneficial for Ranger. The company has focused on partnering with top customers, which has led to more work opportunities. Additionally, Ranger's production-focused business model has shielded it from some of the negative impacts affecting other service lines in the broader OFS complex.

Q: What gives you confidence in growth for 2025 despite expected seasonal slowdowns in Q4? A: Stuart N. Bodden expressed confidence based on discussions with customers across all service lines, including high-spec rigs, wireline, and ancillary services. He noted that the company expects growth in P&A work, coil tubing, and the Torrent service line, with a general positive outlook from customer interactions.

Q: Are there specific areas where Ranger Energy Services can further increase margins? A: Melissa Cougle, CFO, mentioned that margin improvements are expected through operational efficiencies, such as better well-site planning and optimizing labor. Additionally, growth in higher-margin service lines like Torrent is contributing to better overall margins.

Q: Are there acquisition opportunities that could be margin accretive and support capital return plans? A: Stuart N. Bodden stated that Ranger is actively exploring M&A opportunities that could strengthen the company. However, there is currently a bid-ask spread issue. The company maintains a conservative balance sheet to provide flexibility for potential acquisitions.

Q: Where is Ranger Energy Services likely to allocate growth CapEx in 2025? A: Stuart N. Bodden indicated that growth CapEx will likely focus on additional equipment around well service rigs, as major customers demand complete packages that include various ancillary equipment. This aligns with the highest demand from customers.

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