Ranger Energy Services(RNGR) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total company revenue for Q2 2024 was $138.1 million, a slight increase from Q1 2024 but down 15% year-over-year [25][14] - Adjusted EBITDA was$ 21 million, nearly double the $10.9 million from Q1 2024, with a consolidated EBITDA margin of 15.1%, the highest in nearly two years [28][15] - Net income rebounded to$ 4.7 million or $0.21 per share from a net loss of$ 800,000 in Q1 2024 [26] Business Line Data and Key Metrics Changes - High Specification Rig revenue reached a record $82.7 million, a 4% increase from Q1 2024 and a 7% increase year-over-year [29] - Ancillary Services segment revenue was$ 30.9 million, a 27% increase over Q1 2024, while remaining flat year-over-year [31] - Wireline Services segment revenue was $24.5 million, down 25% from Q1 2024 and down 55% year-over-year, with stage counts down 77% [32] Market Data and Key Metrics Changes - The US onshore rig count declined by over 20% over the past 12 months, impacting overall market conditions [3] - Despite market challenges, several service lines showed year-over-year improvement, particularly in P&A and gas processing [3] Company Strategy and Development Direction - The company is focused on maximizing cash flow conversion, growing through acquisition, maintaining a strong balance sheet, and returning capital to shareholders through dividends and share repurchases [37] - Ranger is strategically pivoting towards production-focused wireline work, which has shown encouraging growth [33][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's earnings potential and highlighted the importance of strong customer relationships in navigating market challenges [13][11] - The third quarter is expected to show modest growth compared to Q2 2024, driven by seasonal activity and continued demand from large customers [49][36] Other Important Information - The company has repurchased nearly 1.4 million shares in 2024, totaling approximately 14% of outstanding shares as of June 30 [5][43] - Cash from operating activities for the year-to-date was$ 34.1 million, with capital expenditures front-loaded [40] Q&A Session Summary Question: Customer behavior and market share - Management noted that consolidation trends are helping Ranger gain market share, with increased demand from large customers continuing into Q3 [49] Question: Wireline segment reorganization and margin recovery - Management discussed restructuring efforts, including headcount reductions and reorienting assets towards production, with hopes of margins rebounding to historical levels [50][51] Question: M&A opportunities and market valuations - Management is exploring M&A opportunities but remains focused on existing service lines for consolidation, while noting that bid/ask spreads are narrowing [53][54] Question: Long-term contracts and vendor consolidation - Management confirmed ongoing discussions for long-term contracts and noted that larger customers are looking to reduce their vendor lists, creating opportunities for Ranger [61]