Group 1 - Ranger Energy Services (RNGR) is positioned as an interesting investment option within the oilfield services industry, which may appear dull at first glance but has the potential to outperform its peers [1] - The company has a strong focus on the oilfield equipment services sector, indicating a specialized approach that could lead to competitive advantages [1] Group 2 - The analyst has over 14 years of experience in stock analysis, with a specific focus on the energy sector for the past 7 years, which adds credibility to the insights provided [1]

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Ranger Energy Services Conference Call Summary Company Overview - Ranger Energy Services is the largest well service provider in the United States, focusing on maintenance and production rather than drilling new wells [2][4] - The company reported revenue of approximately $550 million and EBITDA of about $75 million in the previous year, with a free cash flow conversion rate of around 60% [3][4] Recent Acquisition - Ranger recently acquired American Well Services (AWS), a Permian-based company, which contributed approximately $180 million in revenue and $35-$40 million in EBITDA [3][19] - The acquisition was valued at $90 million, primarily funded by $60 million in cash from Ranger's balance sheet [5][23] - This acquisition positions Ranger as the largest well service provider in the lower 48 states, enhancing its market leadership [20] Financial Performance and Strategy - Ranger has historically returned about 40% of its free cash flow to shareholders through dividends and share repurchases, with a commitment to return at least 25% [5][34] - The company has repurchased over 15% of its shares in recent years, indicating a strong focus on shareholder returns [4][34] - Ranger aims to generate over $100 million in EBITDA by 2026, reflecting a significant growth opportunity [30] Market Position and Competitive Advantage - Ranger differentiates itself from competitors by focusing on production and maintenance services, which are generally more consistent through market cycles [6][12] - The company primarily serves major oil companies like ExxonMobil, Chevron, and ConocoPhillips, benefiting from their stable work programs [12][13] - Ranger's service lines include high-spec rigs, processing and ancillary services, and a focus on safety and executional excellence [8][12] Technology and Innovation - Ranger is investing in new technologies, including the Echo electric hybrid rig, which features electric drawworks and regenerative braking [36][37] - The company is also developing an AI camera system called Overwatch to enhance safety on job sites [43] - Ranger's e-ticketing platform integrates with HR systems to streamline operations and improve cash flow [41] Financial Flexibility and Future Outlook - Ranger maintains a strong financial position with a leverage ratio of less than half a turn, allowing for continued share repurchases and potential future acquisitions [32][33] - The company expects to achieve pro forma cash flows of $80 million, providing ample resources for growth initiatives [33] Key Takeaways - Ranger Energy Services is strategically positioned for growth through its recent acquisition of AWS, strong cash flow generation, and focus on shareholder returns [19][30] - The company is committed to leveraging technology and maintaining a competitive edge in the well service industry [36][43] - Future earnings potential is promising, with expectations of exceeding $100 million in EBITDA by 2026, driven by operational efficiencies and market demand [30][31]

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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].