Ranger Energy Services(RNGR) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $153 million, an 11% increase from Q2 and a 7% decrease year-over-year due to Wireline completion activity declines [33] - Net income for the quarter was$ 8.7 million, resulting in earnings per share of $0.39, an 86% improvement from the prior quarter [34] - Adjusted EBITDA for the quarter was$ 25.1 million, a 20% increase from $21 million in Q2 and a 5% increase over the prior year period [36] - Gross margin was 16.5%, nearly matching the prior peak level [37] Business Line Data and Key Metrics Changes - High Specification Rigs achieved record revenues of$ 86.7 million, a 5% increase from the previous quarter and a 9% increase year-over-year [37] - Ancillary Services generated revenues of $36 million, a 17% increase from Q2 and a 13% increase year-over-year [38] - Coiled tubing revenue increased by 33% quarter-over-quarter and adjusted EBITDA increased by 52% [39] - Wireline services saw revenue grow 24% from Q2, reaching$ 30.3 million, although year-over-year it was down 43% due to Wireline completion activity declines [41] Market Data and Key Metrics Changes - The drilling rig count has declined, and completion activity has decreased, contributing to challenging market conditions since early 2023 [7] - Despite these conditions, the company’s financial performance has been more resilient than the broader Oilfield Services (OFS) complex [7] Company Strategy and Development Direction - The company is focused on maintaining a strong balance sheet to provide flexibility for future opportunities and consolidation in a fragmented industry [21] - The strategy includes returning over 80% of free cash flow to shareholders through dividends and share repurchases [23] - The company aims to continue growing its market share by partnering with high-quality customers and investing in quality assets and personnel [11][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving year-over-year growth in 2025, driven by strong customer demand across multiple service lines [51] - The company believes it has likely found the bottom in Wireline services and anticipates improvement moving into spring [51] - Management highlighted that consolidation in the industry has been a net benefit, allowing for more potential work [50] Other Important Information - The company has returned over $40 million to shareholders through share repurchases and dividends over the past year [46] - The company maintains a net debt zero position, providing liquidity of$ 86.1 million at the end of the quarter [42] Q&A Session Summary Question: Industry consolidation and growth strategy - Management highlighted that consolidation has been beneficial, allowing for partnerships with the best customers and increased potential work [50] Question: Confidence in growth for 2025 - Management indicated confidence in growth across all service lines, with strong customer conversations supporting this outlook [51] Question: Margin improvement areas and acquisition opportunities - Management discussed ongoing efforts to improve margins through operational efficiencies and mentioned that M&A could provide further benefits [54][55] Question: Allocation of growth CapEx for 2025 - Management indicated that growth CapEx would likely focus on well service rigs and additional equipment to meet customer demand [57]