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Ranger Energy Services (NYSE:RNGR) FY Conference November 19, 2025 10:55 AM ET Company ParticipantsMelissa Cougle - CFOStuart Bodden - CEOModeratorThe webcast. Sorry.Stuart BoddenAll right. This is going to be a challenge, but okay, we'll try to do it. First of all, thanks for coming. Again, Stuart Bodden, CEO; Melissa Cougle, CFO. We're excited to be here. We announced a transaction last Monday. We're very excited about it. Melissa will go kind of walk through some more details about that. Let me just kind ...

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Revenue Performance - Revenue for Q3 2025 decreased by $24.1 million, or 16%, to $128.9 million compared to $153.0 million in Q3 2024[105] - High Specification Rigs revenue decreased by $5.8 million, or 7%, to $80.9 million, with average revenue per rig hour decreasing 2% to $727[105] - Wireline Services revenue fell by $13.1 million, or 43%, to $17.2 million, driven by a 28% decrease in completed stage counts to 1,800[106] - Processing Solutions and Ancillary Services revenue decreased by $5.2 million, or 14%, to $30.8 million, with notable declines in coil tubing and snubbing services[107] - Revenue for the nine months ended September 30, 2025, decreased by $23.3 million, or 5%, to $404.7 million from $428.0 million for the same period in 2024[118] - High Specification Rig revenue increased by $5.6 million, or 2%, to $254.7 million for the nine months ended September 30, 2025, driven by a 1% increase in average revenue per rig hour[118] - Wireline Services revenue decreased by $31.1 million, or 36%, to $56.5 million for the nine months ended September 30, 2025, attributed to a 25% decrease in completed stage counts[119] Cost of Services - Total cost of services decreased by $12.9 million, or 11%, to $109.1 million, with cost of services as a percentage of revenue at 85%[109] - High Specification Rigs cost of services decreased by $2.0 million, or 3%, to $65.2 million, with costs as a percentage of revenue increasing to 81%[109] - Wireline Services cost of services decreased by $9.0 million, or 33%, to $18.6 million, with costs as a percentage of revenue rising to 108%[110] - Processing Solutions and Ancillary Services cost of services decreased by $1.9 million, or 7%, to $25.3 million, with costs as a percentage of revenue increasing to 82%[111] - Cost of services for the nine months ended September 30, 2025, decreased by $16.5 million, or 5%, to $339.5 million from $356.0 million for the same period in 2024[122] Net Income and Expenses - Net income for the three months ended September 30, 2025, decreased by $7.5 million, or 86%, to $1.2 million from $8.7 million for the same period in 2024, primarily due to reduced operating income in the Wireline segment[115] - Net income for the nine months ended September 30, 2025, decreased by $3.5 million, or 28%, to $9.1 million from $12.6 million for the same period in 2024, primarily due to reduced operating income in the Wireline segment[128] - General and administrative expenses decreased by $0.5 million, or 7%, to $6.6 million for the three months ended September 30, 2025, compared to $7.1 million for the same period in 2024[112] - Net interest expense decreased by $1.1 million, or 52%, to $1.0 million for the nine months ended September 30, 2025, due to higher interest income recognized on non-recurring items[126] - Income tax expense for the nine months ended September 30, 2025, decreased by $1.0 million, or 20%, to $4.0 million from $5.0 million for the same period in 2024[127] EBITDA Metrics - Adjusted EBITDA for the three months ended September 30, 2025, decreased by $8.3 million to $16.8 million from $25.1 million for the same period in 2024[134] - High Specification Rigs Adjusted EBITDA for the three months ended September 30, 2025, decreased by $3.5 million to $15.7 million, driven by a revenue decline of $5.8 million[134] - Wireline Services Adjusted EBITDA for the three months ended September 30, 2025, decreased by $2.3 million to $0.4 million, due to a revenue decline of $13.1 million[135] - Processing Solutions and Ancillary Services Adjusted EBITDA for the three months ended September 30, 2025, decreased by $3.3 million to $5.5 million, attributed to a revenue decline of $5.2 million[136] - Nine months Adjusted EBITDA for 2025 was $50.7 million, compared to $51.5 million for the same period in 2024[139] - Adjusted EBITDA for the nine months ended September 30, 2025, decreased by $4.1 million to $52.9 million from $57.0 million for the same period in 2024[140] Liquidity and Capital Management - Total liquidity as of September 30, 2025, was $116.7 million, consisting of $45.2 million in cash and $71.5 million available under the Wells Fargo Revolving Credit Facility[144] - Net cash provided by operating activities decreased by $6.9 million to $44.9 million for the nine months ended September 30, 2025[145] - Net cash used in investing activities decreased by $9.7 million to $17.5 million, largely due to decreases in fixed asset additions[147] - The company repurchased 945,600 shares of Class A Common Stock for a total of $11.6 million during the nine months ended September 30, 2025[156] - The quarterly dividend was increased to $0.06 per share in 2025, with total dividend distributions of $4.1 million for the nine months ended September 30, 2025[157] - The company had a working capital increase to $87.5 million as of September 30, 2025, compared to $78.7 million as of December 31, 2024[150] - As of September 30, 2025, the Company had no borrowings under the Wells Fargo Revolving Credit Facility, resulting in a potential interest expense change of less than $0.1 million per year for a 1.0% interest rate fluctuation[163] Trade Receivables - The top three trade receivable balances represented approximately 33%, 20%, and 7% of consolidated net accounts receivable as of September 30, 2025[164] - In the High Specification Rig segment, the top three trade receivable balances accounted for 44%, 20%, and 9% of total net accounts receivable[164] - In the Wireline Services segment, the top three trade receivable balances represented 29%, 16%, and 9% of total net accounts receivable[164] - In the Processing Solutions and Ancillary Services segment, the top three trade receivable balances accounted for 22%, 21%, and 16% of total net accounts receivable[164] Market Outlook - The Energy Information Administration forecasts crude prices to fall to approximately $62 per barrel in Q4 2025 and further to $52 per barrel in 2026[92] - OPEC+ is expected to increase production by 137,000 barrels per day starting November 2025, contributing to downward price pressure[92] - The Company does not currently hedge its indirect exposure to commodity price risk, which may affect demand for services due to fluctuations in oil and natural gas prices[165]

Core Insights - Ranger Energy Services, Inc. reported an EPS of $0.05 for Q3 2025, significantly below the Zacks Consensus Estimate of $0.38, representing an earnings surprise of -86.84% compared to $0.39 in the same quarter last year [1][5] - The company's revenue for Q3 2025 was $128.9 million, falling short of the Zacks Consensus Estimate by 8.58% and decreasing from $153 million reported in the same period the previous year [2][5] - Ranger Energy's acquisition of American Well Services, valued at approximately $90.5 million, is expected to enhance its scale and capabilities, increasing its rig count by about 25% [3] Financial Performance - The company has a price-to-earnings (P/E) ratio of approximately 13.34, indicating the market's valuation of its earnings [4] - Ranger Energy's price-to-sales ratio is about 0.51, suggesting a relatively low market valuation compared to its revenue [4] - The company maintains a low debt-to-equity ratio of 0.047 and a strong current ratio of 2.47, demonstrating good short-term financial health and liquidity [4]

Financial Data and Key Metrics Changes - Ranger reported revenue of $128.9 million for Q3 2025, a decrease of 16% from $153 million in Q3 2024 and down 8% from $140.6 million in Q2 2025 [17][12] - Net income was $1.2 million, or $0.05 per diluted share, compared to $8.7 million, or $0.39 per diluted share in Q3 2024, and $7.3 million, or $0.32 per diluted share in Q2 2025 [17][12] - Adjusted EBITDA for the quarter was $16.8 million, representing a 13% margin [17][12] Business Line Data and Key Metrics Changes - High-spec rig segment generated $80.9 million in revenue, down from $86.7 million in the prior year and $86.3 million in the prior quarter, with adjusted EBITDA of $15.7 million [18][12] - Prospecting Solutions and Ancillary Services delivered $30.8 million in revenue, down from $36 million in the prior year and $32.2 million in the prior quarter, with adjusted EBITDA of $5.5 million [19][12] - Wireline Services reported $17.2 million in revenue, with an operating loss of $4.2 million and adjusted EBITDA of $400,000 [19][12] Market Data and Key Metrics Changes - The company experienced declines in completion-focused areas and in some northern districts due to commodity price pressures leading to activity declines [11][12] - The combination of completion activity declines and reduced plug and abandonment activity due to depressed commodity prices has pressured the ancillary segment [13][12] Company Strategy and Development Direction - The acquisition of American Well Services for approximately $90.5 million is expected to enhance Ranger's position as the largest well servicing provider in the lower 48 and expand its market share in the Permian Basin [4][6] - Ranger anticipates realizing approximately $4 million in annual cost and revenue synergies post-integration [7][16] - The ECHO hybrid electric rig program is positioned as a significant innovation in the workover rig space, with strong customer interest and expected contracts in the coming quarters [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, expecting to generate over $100 million in adjusted EBITDA for the first time in the company's history [14][12] - The company has maintained strong cash flows and has been active in share repurchases, indicating a disciplined capital allocation strategy [22][20] - Management noted that the integration of AWS is already in motion and is expected to be completed efficiently by Q3 2026 [9][24] Other Important Information - Ranger's total liquidity as of September 30, 2025, was $116.7 million, consisting of $71.5 million of capacity on the revolving credit facility and $45.2 million of cash on hand [20][22] - Capital expenditures year-to-date totaled $19.1 million, down from $28.7 million in the prior year period [22] Q&A Session Summary Question: Geographic footprint of AWS - AWS operates exclusively in the Permian Basin [28] Question: Revenue comparison of tubing rentals and inspection - Approximately 55% of AWS's revenue overlaps with Ranger, while 45% consists of unique service lines [29] Question: Status of ECHO rigs - Two ECHO rigs have been delivered, with one expected to begin work on live wells shortly [30] Question: Customer base for American Well Services - AWS has a customer base similar to Ranger's, with some new relationships that could provide growth opportunities [34] Question: Adoption of ECHO rigs - ECHO rigs are currently additive, with expectations that they may eventually replace existing rigs over time [36] Question: Expected number of ECHO rigs built in 2026 - Management indicated an expectation of over 10 ECHO rigs being built in 2026 [38]

Acquisition Highlights - Ranger is acquiring American Well Services (AWS) for approximately $905 million, funded through $605 million in cash and 2 million shares, plus a $5 million earnout[7] - The acquisition is expected to generate ~$4 million in cost synergies, fully realized by 2027[7] - The purchase price represents a multiple of less than 25x AWS's Last Twelve Months (LTM) Q3'25 Adjusted EBITDA[7] Financial Performance & Metrics - AWS's LTM Q3'25 revenue was $186 million with a gross margin of 29%[16] - AWS's LTM Q3'25 Adjusted EBITDA was $43 million, representing a 23% Adjusted EBITDA margin[16] - Ranger's LTM Q3'25 Free Cash Flow was $531 million, with a 71% conversion rate[38] Strategic Benefits - The acquisition strengthens Ranger's position in the Permian Basin, expanding its customer base and service offerings[7, 11] - New service lines from AWS, such as tubing rentals, inspection, chemicals, and mixing plants, provide opportunities for pull-through revenue[7, 11, 22] - The combined company expects to repay borrowings within one year of closing, leveraging cash flows from the pro forma organization[11] - Ranger remains committed to returning a minimum of 25% of cash flows to shareholders[8]

Core Insights - Ranger Energy reported quarterly earnings of $0.05 per share, missing the Zacks Consensus Estimate of $0.38 per share, and down from $0.39 per share a year ago, representing an earnings surprise of -86.84% [1] - The company posted revenues of $128.9 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 8.58%, and down from $153 million year-over-year [2] - Ranger Energy shares have declined approximately 11.2% year-to-date, contrasting with the S&P 500's gain of 14.4% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.30 on revenues of $135 million, and for the current fiscal year, it is $1.24 on revenues of $552 million [7] - The estimate revisions trend for Ranger Energy was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Oil and Gas - Field Services industry, to which Ranger Energy belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]

Financial Performance - Revenue for Q3 2025 was $128.9 million, a 16% decrease from $153.0 million in Q3 2024, and an 8% decrease from $140.6 million in Q2 2025[4]. - Net income for Q3 2025 was $1.2 million, or $0.05 per diluted share, compared to $8.7 million, or $0.39 per diluted share, in Q3 2024[12]. - Adjusted EBITDA for Q3 2025 was $16.8 million, representing a 13% margin, down from $20.6 million in Q2 2025[4][13]. - Operating income for the three months ended September 30, 2025, was $8.6 million, compared to $2.6 million for the same period in 2024, representing a significant increase of 230.8%[25]. - Net income for the nine months ended September 30, 2025, was $9.1 million, a decrease of 28.0% from $12.6 million for the same period in 2024[28]. - The company reported a basic income per share of $0.33 for the three months ended September 30, 2025, compared to $0.06 for the same period in 2024[25]. - The company reported a net income of $9.1 million for the nine months ended September 30, 2025, compared to a net income of $12.6 million for the same period in 2024[34]. - EBITDA for the nine months ended September 30, 2025, was $46.6 million, compared to $53.0 million for the same period in 2024[34]. Cash Flow and Liquidity - Free Cash Flow for Q3 2025 was $8.0 million, or $0.37 per share, with total liquidity of $116.7 million at the end of the quarter[4][18]. - The company has generated $25.8 million of Free Cash Flow year-to-date 2025, compared to $23.1 million in the prior year period[19]. - Total liquidity increased to $116.7 million, consisting of $71.5 million in revolving credit capacity and $45.2 million in cash[18]. - Cash and cash equivalents increased to $45.2 million as of September 30, 2025, up from $40.9 million at the end of 2024[27]. - Net cash provided by operating activities for the nine months ended September 30, 2025, was $44.9 million, down from $51.8 million for the same period in 2024[28]. - Free Cash Flow for the three months ended September 30, 2025, was $8.0 million, compared to $10.8 million for the same period in 2024[36]. Segment Performance - High Specification Rigs segment revenue was $80.9 million, a decrease of 7% from the prior year period[13]. - Wireline Services segment revenue declined by 43% to $17.2 million compared to $30.3 million in the prior year period[15]. - The company experienced a net loss of $24.9 million in the processing segment for the nine months ended September 30, 2025[34]. Acquisitions and Capital Returns - The company completed the acquisition of American Well Services, enhancing its position as a leading well services provider in the Permian Basin[4][5]. - Year-to-date capital returns reached $15.6 million, including the repurchase of 667,500 shares for $8.3 million during the quarter[4][9]. Assets and Liabilities - Total assets decreased to $372.8 million as of September 30, 2025, from $381.6 million at the end of 2024[27]. - Total liabilities decreased to $102.8 million as of September 30, 2025, from $107.8 million at the end of 2024[27]. Operating Expenses - The company incurred total operating expenses of $132.0 million for the three months ended September 30, 2025, compared to $126.3 million for the same period in 2024[25]. - The company reported a decrease in accounts receivable, net, by $6.0 million for the nine months ended September 30, 2025, compared to an increase of $3.3 million for the same period in 2024[28]. Depreciation and Interest - The company incurred $1.0 million in interest expense for the nine months ended September 30, 2025[34]. - Depreciation and amortization expenses for the nine months ended September 30, 2025, totaled $32.5 million[34].

Core Viewpoint - Ranger Energy Services, Inc. reported its Q3 2025 results, highlighting a revenue decline and the acquisition of American Well Services, which is expected to enhance its market position and growth opportunities [1][4]. Financial Performance - Revenue for Q3 2025 was $128.9 million, a 16% decrease from $153.0 million in Q3 2024 and an 8% decrease from $140.6 million in Q2 2025 [5][11]. - Net income was $1.2 million, or $0.05 per diluted share, compared to $8.7 million, or $0.39 per diluted share in Q3 2024, and $7.3 million, or $0.32 per diluted share in Q2 2025 [5][13]. - Adjusted EBITDA was $16.8 million, representing a 13% margin, down from $20.6 million in Q2 2025 and $25.1 million in Q3 2024 [5][14]. - Free Cash Flow for the quarter was $8.0 million, or $0.37 per share, with total liquidity of $116.7 million at the end of the quarter [5][22]. Acquisition Details - The acquisition of American Well Services, a provider in the Permian Basin, is expected to create additional growth opportunities and enhance Ranger's service offerings [4][6]. - The combined entity will become the largest well services provider in the Lower 48 states, leveraging advanced technology [6]. Shareholder Returns - The company repurchased 667,500 shares for $8.3 million in Q3 2025, bringing total capital returns for the year to $15.6 million [5][10]. - A cash dividend of $0.06 per share was declared, reinforcing the commitment to return capital to shareholders [10]. Segment Performance - High Specification Rigs segment revenue was $80.9 million, down from $86.7 million in Q3 2024, with rig hours decreasing to 111,200 [16]. - Wireline Services segment revenue fell to $17.2 million, a 43% decline from $30.3 million in the prior year [20]. - Processing Solutions and Ancillary Services segment revenue was $30.8 million, down 14% from $36.0 million in the prior year [18]. Balance Sheet and Liquidity - As of September 30, 2025, total liquidity was $116.7 million, consisting of $71.5 million available on the revolving credit facility and $45.2 million in cash [22]. - The company had no borrowings under its loan facility as of the end of Q3 2025 [22].