Ranger Energy Services(RNGR) - 2019 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements The unaudited interim financial statements for H1 2019 show total revenues of $172.6 million, a net income of $5.4 million, and total assets of $317.9 million, supported by $14.2 million in operating cash flow Unaudited Interim Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2019, and December 31, 2018 Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2019 (in millions) | December 31, 2018 (in millions) | | :--- | :--- | :--- | | Total current assets | $73.1 | $61.1 | | Property and equipment, net | $227.7 | $229.8 | | Total assets | $317.9 | $302.5 | | Total current liabilities | $57.9 | $58.9 | | Long-term debt, net | $47.8 | $44.7 | | Total liabilities | $115.8 | $110.5 | | Total stockholders' equity | $202.1 | $192.0 | Unaudited Interim Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net income (loss) for the three and six months ended June 30, 2019 and 2018 Consolidated Statements of Operations Highlights (in millions) | Metric | Q2 2019 (in millions) | Q2 2018 (in millions) | Six Months 2019 (in millions) | Six Months 2018 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $84.3 | $73.1 | $172.6 | $135.7 | | Operating income (loss) | $4.0 | $1.0 | $9.2 | $(9.8) | | Net income (loss) | $1.8 | $(1.2) | $5.4 | $(11.5) | | Diluted EPS | $0.11 | $(0.08) | $0.32 | $(0.76) | - For the six months ended June 30, 2019, revenue from Completion and other services grew significantly to $97.9 million from $52.9 million year-over-year, while High specification rigs revenue declined to $64.8 million from $75.9 million[9] Unaudited Interim Condensed Consolidated Statements of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2019 and 2018 Consolidated Statements of Cash Flows Highlights (in millions) | Cash Flow Activity | Six Months Ended June 30, 2019 (in millions) | Six Months Ended June 30, 2018 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $14.2 | $12.1 | | Net cash used in investing activities | $(15.5) | $(34.5) | | Net cash provided by financing activities | $0.4 | $27.6 | | Net change in cash | $(0.9) | $5.2 | - Cash used in investing activities decreased significantly year-over-year, primarily due to a reduction in the purchase of property, plant and equipment, which fell from $34.1 million in the first half of 2018 to $16.0 million in the first half of 2019[12] Notes to Unaudited Interim Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the interim condensed consolidated financial statements, including accounting policies and significant transactions - Effective January 1, 2019, the Company adopted the new lease accounting standard (ASU 2016-02), resulting in the recognition of an operating lease right-of-use asset and corresponding liability of $8.3 million[24][27] - As of June 30, 2019, total debt stood at $63.6 million, composed of the Wells Fargo Credit Facility ($25.8 million), Encina Master Financing Agreement ($32.0 million), and ESCO Notes Payable ($5.8 million)[41] - For the six months ended June 30, 2019, two customers, EOG Resources and Concho Resources, Inc., accounted for 17% and 14% of total revenues, respectively, indicating significant customer concentration[61] - In June 2019, the Board of Directors approved a share repurchase program, authorizing the purchase of up to 10% of outstanding Class A Common Stock held by non-affiliates, not to exceed 580,000 shares or $5.0 million. No shares were repurchased during the quarter[60] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q2 2019 revenue growth to Completion and Other Services, offsetting High Specification Rigs decline, leading to improved profitability and sufficient liquidity Results of Operations This section analyzes the company's financial performance, focusing on revenue drivers, segment contributions, and profitability metrics for the reported periods Q2 2019 vs Q2 2018 Segment Revenue (in millions) | Segment | Q2 2019 (in millions) | Q2 2018 (in millions) | Change ($ in millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | High Specification Rigs | $33.1 | $39.6 | $(6.5) | (16)% | | Completion and Other Services | $46.3 | $29.5 | $16.8 | 57% | | Processing Solutions | $4.9 | $4.0 | $0.9 | 23% | | Total revenues | $84.3 | $73.1 | $11.2 | 15% | - The 57% revenue increase in Completion and Other Services was primarily driven by the wireline business, which accounted for $13.6 million (81%) of the increase, supported by an 86% increase in the wireline unit count year-over-year[109] - High Specification Rig utilization decreased, with rig hours falling to 62,200 in Q2 2019 from 76,200 in Q2 2018. This was partially offset by an increase in average revenue per rig hour to $530 from $513[102] Adjusted EBITDA Reconciliation (in millions) | Metric | Q2 2019 (in millions) | Q2 2018 (in millions) | | :--- | :--- | :--- | | Net income (loss) | $1.8 | $(1.2) | | Adjustments (Interest, Tax, D&A, etc.) | $11.2 | $10.8 | | Adjusted EBITDA | $13.0 | $9.6 | Liquidity and Capital Resources This section discusses the company's cash position, credit facilities, working capital, and ability to meet its short-term and long-term financial obligations - As of June 30, 2019, the company had $1.7 million in cash and $14.0 million available under its $50.0 million Credit Facility. Management believes these sources are sufficient to meet liquidity requirements for at least the next 12 months[147][156] - The company is in a dispute regarding $5.8 million in ESCO Notes Payable and has stopped payments pending resolution of indemnification claims for breach of contract[155] - Working capital increased to $15.2 million as of June 30, 2019, from $2.2 million as of December 31, 2018[153] Item 3. Quantitative and Qualitative Disclosures About Market Risks The company faces market risks from oil and gas industry activity, interest rate fluctuations on variable-rate debt, and customer concentration, with a 1% interest rate change impacting annual expense by $0.6 million - The company is exposed to interest rate risk on its Credit Facility and Financing Agreement. A hypothetical 1.0% increase or decrease in the weighted average interest rate would change annual interest expense by approximately $0.6 million[177] - Significant credit risk exists due to customer concentration. As of June 30, 2019, the top three trade receivable balances represented approximately 11%, 11%, and 8% of total accounts receivable[178] - The company's business is indirectly exposed to commodity price risk, as fluctuations in oil and gas prices affect E&P customer activity levels and demand for its services[179] Item 4. Controls and Procedures As of June 30, 2019, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[180] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2019, that materially affected, or are reasonably likely to materially affect, internal controls[181] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is not currently subject to any material legal proceedings that would significantly impact its financial position or operations - The company is not currently a party to any material legal proceedings[183] Item 1A. Risk Factors No new risk factors are disclosed in this report, referring readers to the Annual Report on Form 10-K for a comprehensive description - The report does not add to or substantively change the risk factors previously disclosed in the company's Annual Report[184] Item 2. Unregistered Sales of Securities and Use of Proceeds The company settled a $3.0 million liability by issuing 206,897 Class A Common Stock shares and authorized a $5 million share repurchase program, with no repurchases made this quarter - A $3.0 million liability was settled through the issuance of 206,897 shares of Class A Common Stock in a private placement exempt from registration[185] - In June 2019, a share repurchase program was approved, authorizing the company to buy back up to 580,000 shares or $5 million in aggregate value. No repurchases were made in the three months ended June 30, 2019[186][187] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including CEO/CFO certifications and XBRL data files