管理層發言
Good morning, and welcome to Ranger Energy Services Second Quarter 26 Earnings Conference Call. All participants will be in listen-only mode. To ask a question, please note this event is being recorded. I would now like to turn the conference over to Joe Mease, Vice President of Finance. Please go ahead.
Good morning, and thank you for joining Ranger Energy Services Second Quarter 26 Earnings Conference Call. Before we begin, Ranger has issued a press release outlining our operational and financial performance for the quarter ended June 30, 26. The press release and accompanying presentation materials are available in the Investor Relations section of our website at www.rangerenergy.com. Today's discussion may contain forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, changes in crude oil and natural gas prices, customer activity levels, operating risks, competitive pressures, weather conditions, integration risks related to acquisitions and other risks described in our filings with the Securities and Exchange Commission. Further, please note that non-GAAP financial measures will be referenced during this call. A full reconciliation of GAAP to non-GAAP measurements is available in our latest quarterly earnings release and conference call presentation. Joining me on the call today are Stuart N. Bodden, our Chief Executive Officer, and Melissa Cougle, our Chief Financial Officer. Following their remarks, we will open the call for Q&A. With that, I will turn it over to Stuart.
Thank you, Joe, and good morning, everyone. I appreciate you being with us today for Ranger's second quarter 26 results. I will take a few minutes to review where we are strategically and operationally and share some high-level financial context. Melissa will then walk through the more detailed P&L, cash flow, and balance sheet results. Overall, Ranger's second quarter performance reinforced the earnings power we believed we could achieve following the AWS acquisition. The integration of AWS continues to build momentum and the business is performing well. We were pleased to see the team's dedication and hard work translate into meaningful sequential improvement in both revenue and EBITDA. Activity levels were strong as anticipated and market sentiment continued to improve modestly throughout the quarter. Going forward, we remain focused on converting that momentum into sustained operating consistency, stronger execution across the combined footprint, and taking advantage of cross-selling opportunities. As always, our teams in the field remain focused on executing safely, reliably, and efficiently for our customers. Ranger once again delivered sequential top-line growth across our core segments with total revenue of $177 million, up 10.9% sequentially. Ranger generated adjusted EBITDA of $28.6 million, representing a 16.2% EBITDA margin, expanded 160 basis points quarter over quarter. We have now passed a key milestone of generating an annualized adjusted EBITDA run rate in excess of $100 million, consistent with the target we first shared with investors after the AWS acquisition. We continue to believe adjusted EBITDA for 2026 will exceed $100 million with Q3 expected to be similarly strong as Q2, before typical potential softening in Q4 due to holiday and weather impacts. Let me put the headline results in the context of what we are seeing in the market. At the start of the year, the U.S. onshore market was relatively muted, with activity expectations broadly consistent with 2025—stable to slightly lower. During the second quarter, we saw a modest increase in workover and maintenance activity supported by normal seasonal strength from longer summer days and more favorable weather. Those trends played out as expected across Ranger's broader portfolio. With a business model heavily weighted toward production-focused work, Ranger remains best in class at delivering cost-efficient, high-quality workover and intervention services on existing wells. In a market where customers continue to exercise capital discipline, demand for our fleet has remained strong. Providing some comments on each of our segments, our High Spec Rig segment had a strong second quarter with revenue increasing 4%, supported by increased rig hours quarter over quarter and a modest rate uplift on the back of fuel surcharges passed along to customers early in the quarter to offset increases in our fuel costs. The third quarter is traditionally our strongest quarter of the year and we are forecasting slight increases in the top line with margins expected to improve closer toward 20% as has traditionally been the case in our High Spec Rig segment. In our ancillary service lines, we saw standout performance from our coiled tubing service line during the quarter with good growth in our plugging and abandonment and Torrent service lines as well, with all three service lines growing by 20% or more quarter over quarter on the top line. Performance within the other service lines was somewhat inconsistent and we are focused on finding better opportunities to nurture and grow these businesses in the future. Contribution from our Wireline segment this quarter was exceptionally strong. We made changes to the leadership team a little less than a year ago and the entire Wireline team's effort over the past several months is showing real results. The team secured several contracts earlier this year that drove much of the outperformance, and it was encouraging to see profitability materialize for the Wireline segment. As we look ahead, the contract awards that drove these results have concluded. While our long-term outlook for Wireline is favorable, we expect the back half of the year to experience reduced EBITDA margins, potentially back to single digits, and a softer top line. The key themes driving our operational performance have not changed. We remain singularly focused on a few key areas this year. First, we always prioritize safety and service execution. Our operational teams continue to deliver work safely and on schedule, which is why we maintain the strongest relationships with the largest E&P operators in the U.S. market. Customers value our safety-forward culture and focus on ensuring asset reliability and crew competency, which positions us well as activity continues to pick up in the future. Second, we achieved a significant milestone last year with the acquisition of American Well Services, and we remain focused on fully completing the integration and capturing synergies. In our second full quarter post-acquisition, we continued to improve the legacy business, advance cross-selling opportunities, standardize billing protocols, and drive toward full utilization, greater consistency, and growth in adjacent service lines across the Ranger footprint. We also continue to make meaningful progress on the rollout of our Echo fleet. The construction of our fleet of next-generation hybrid electric workover rigs remains on schedule. The first two rigs contracted under the award announced at the start of the year are presently undergoing field testing and are expected to be operational by the end of the third quarter. Recently, we also announced that one of our core customers, Chevron, is committing to three additional Echo rigs. This vote of confidence in Echo's capabilities and this continued partnership is something we take great pride in at Ranger. Echo remains a differentiated asset in the market delivering enhanced safety, lower fuel consumption and emissions, and improved operating efficiency. We continue to see market signs that Echo adoption will accelerate in the future and provide further differentiation of Ranger services. Finally, Ranger began a journey to improve our cash flow generation potential over three years ago, and we continue to be focused on allocating capital where it has the potential to create maximum value for our shareholders while maintaining unparalleled balance sheet strength as a small-cap energy services player. This quarter, we deployed nearly $4.5 million of excess cash into share repurchases of 283 thousand shares and we have now repurchased 4.6 million shares for a total of $52.1 million since mid-2023, while also declaring our standard quarterly dividend. Deploying cash flow strategically—whether toward share repurchases, acquisitions like AWS, expanding our differentiated Echo rig fleet, or other opportunities—we feel our approach to capital deployment is as much a strategic advantage as our Echo fleet. Ranger is as strong as ever and continues to create value for shareholders, customers, and employees. We are positioning the company for long-term value creation and are increasingly optimistic about the growth opportunities ahead, tied to U.S. energy independence, the buildout of data centers and computing power, pursuing value-accretive acquisitions, expanding our Echo fleet, or strategically repurchasing shares in the open market. Ranger is setting a differentiated path to continued growth and strong performance. With that, I will turn the call over to Melissa for a few remarks and the financial performance specifics.
Good morning, and thank you, Stuart. We appreciate you all joining the call. This morning, I will take you through the numbers in more detail, providing some additional color on what is driving our results. Starting with net income, we reported $6.9 million in the second quarter, or $0.29 per diluted share, versus $3.0 million, or $0.12 per diluted share, in the first quarter and $7.3 million, or $0.32 per diluted share, in the year-ago quarter. Ranger remains a low federal cash taxpayer benefiting from historical net operating losses, which are expected to continue in the near to mid-term. Ranger's total consolidated revenue for the quarter was $177 million, up 10.9% sequentially from $159 million in the first quarter of 26 and up 25.5% year over year from $141 million in Q2 25. The quarter-over-quarter increases were driven by performance in both our ancillary services and Wireline segments, while year-over-year increases were largely a result of the AWS acquisition. From these revenues, Ranger generated adjusted EBITDA of $28.6 million, representing a 16.2% margin, which compares to $23.3 million and a 14.6% margin in Q1 26 and $20.6 million and a 14.7% margin in Q2 of 25. In absolute dollars, adjusted EBITDA increased 23% quarter over quarter and we are excited to be seeing margins once again above 15% and expect that trend to continue going forward. High Spec Rigs produced revenues of $113 million in Q2, an increase of $4.3 million, or 3.9% sequentially from $109 million in Q1 26 and an increase of $27.1 million, or 31.4% from $86.3 million in Q2 of 25. Rig hours were 147 thousand and modestly improved from the prior quarter, while up 25% year-over-year with the benefit of the expanded rig fleet. Average hourly rig rates were $772 per hour, up about 6% sequentially from $731 per hour and up about 5% year-over-year from $738 per hour. Sequential and year-over-year increases in rig rates were driven by pass-through surcharges to customers to cover increased fuel costs. Adjusted EBITDA for the High Spec Rig segment was $20.6 million compared to $21.4 million in the first quarter and $17.6 million in the year-ago quarter, while segment margins for the quarter were just under 19%. A small amount of softness on margins crept in this quarter and was driven by an unusual state sales tax audit that is currently under challenge as well as some make-ready costs on our upcoming Echo deployment. In our ancillary segment, Q2 revenue was $44.5 million, up 13% sequentially and 38% year over year. As Stuart mentioned, this segment has benefited from not only the AWS service lines acquired last year, but also from good expansion in our P&A and Torrent service lines. Adjusted EBITDA in this segment was $10.0 million for the quarter with margins of 22.5%. This segment continues to hold potential for Ranger through multiple service lines that we will be exploring in the back half of the year. Finally, we are happy to report a great quarter for the Wireline segment with revenue of $18.6 million, up 75% from $10.6 million in Q1 with 2.56 thousand completed stages and contributions from a completions contract that was efficient and well executed. Our pump-down service line hit record results during the quarter as well as more than doubling their top line with strong fall-through and a great margin expansion as a result. Our conventional production-focused service line tripled its margins while expanding top-line results from the prior quarter. The operating team knocked it out of the park this quarter producing overall margins of 19% with adjusted EBITDA of $3.6 million. We are focused on finding more good opportunities even if they are sometimes hard to find. Until then, we are facing softness in the back half of the year that will pull top line back down somewhat along with margin degradation expected with strong operating leverage that works both ways. Turning to the balance sheet, we made progress on collections early during the quarter although receivables and contract assets remained elevated at quarter end, due in part to delays experienced in June. We continue to diligently work with customers to resolve and reduce billing delays and improve collection timing while also pursuing further automation opportunities within our billing processes designed to reduce our DSO. We expect these initiatives to support incremental working capital improvements during the second half of the year. Capital expenditures year to date were $24.7 million with $12.7 million of that commitment specific to Echo rigs and the remainder allocated largely to maintenance CapEx. For the year, we believe total CapEx will be approximately $50 million with approximately $23 million of that Echo payment related, dependent on rig deliveries through year end. Finally, free cash flow for the quarter was a healthy $20.0 million supported by cash provided by operating activities for the quarter of $26.4 million. Year to date, free cash flow is neutral given the build in working capital early in the year and spend on the Echo fleet. We do expect further working capital releases in the back half of 26 to support further debt pay down and strategic opportunities. We used our free cash flow generated this quarter to fund more than $4.5 million of share repurchases during the second quarter and bought back 283 thousand shares at attractive prices. As of June 30, total liquidity remained healthy at $61.3 million comprised of $57.1 million available revolver capacity and $4.2 million of cash on hand. Now, I will turn the call back over to Stuart for closing remarks.
We thank everyone for joining us today. This quarter was gratifying for the whole team here at Ranger. Surpassing $25 million of adjusted EBITDA was a benchmark run rate for us post-acquisition and we handily beat it. Additionally, our Wireline group and some of our ancillary service lines including coiled tubing, P&A, and Torrent, posted incredibly strong results. Ranger's second quarter underscores yet again our operational resilience and ability to grow our business and create ever more differentiation while producing good cash flows and allocating capital wisely. We look forward to updating you again in November. With that, operator, let's open up the line for questions.
分析師問答
We will now begin the question and answer session. Our first question today comes from Don Crist with Johnson Rice. Please go ahead.
Good morning. I hope you are all doing well this morning.
Thanks, Don. How are you?
I am doing well. I wanted to start with the Workover Rig segment. We are hearing more anecdotes around the industry that E&P companies think oil prices will be higher for longer and they are starting to look toward 2027 for increased activity. I wanted to get your macro thoughts on that and how the business is developing now with more 24-hour work and weekend work than we have seen in months and quarters past. Any color along those lines would be helpful.
Thanks for the question, Don. I think we share the view that as you move into 2027, and as the forward curve strengthens in the back part of the curve, we will see an increase in activity. I am not sure it has translated yet into meaningful changes from customers. It will be interesting to see how things develop when they finalize budgets. What we are seeing right now is an increase in smaller programs—us filling white space, which is helping with utilization. But I do not think we have seen enough change yet to meaningfully add capacity into the market. We are watching closely as we move into budgeting season.
Okay. And then on the Echo rig program, I know you were spooling up with your vendor to try to hit a goal of a certain number of rigs per month. Any updates on where you are with that process? With the 18 rigs on order and two doing field testing now, are you on a run rate of one or two per month that we should expect for the back half of the year and into 2027?
Yes, Don. We have two in the field right now; those are the first two that went out. The two we referenced are two from the contract we announced earlier in the year. When those two go into the field at the end of Q3, that would bring four in the field. We announced 15 earlier this year and we expect those to all be deployed by the end of next year, which gets you to about 17. We think roughly one rig per month is a reasonable run rate and we are on track with that right now.
And then, obviously, you had the additional contract for three more, so there are now a total of 23 under contract?
Yes, we are at 20 under contract right now, and I would not be surprised to see more come under contract in the next nine to twelve months. One of the things we are working through is whether those rigs will be additive or will lead to some modest reallocation. We are getting increasingly confident that a lot of these will be additive, but we do expect to see some modest shuffling as we reallocate rigs.
Okay. Those should be incremental to your rig count, not displacing current rigs, right?
That is one of the things the team is working through. We are getting increasingly confident that many will be additive, but we do expect modest shuffling. I will turn it back to the operator and get back in queue.
Thanks for the answers.
I appreciate it, Don.
The next question is from Derek Podhaizer with Piper Sandler. Please go ahead.
Hey, good morning. Maybe sticking on Echo and just trying to think through the prepayments and how they affect margin. I know margins came off a little bit in High Spec; a couple of things were weighing on those. Could you help educate us as far as the margins attached with Echo as you get these rigs out? Are they accretive or dilutive? I know there are some accounting items with prepayments that impact cash flow and P&L. How should we think about these margins as you continue to ramp up Echo?
Good question, Derek. We will have additional clarity in the updated investor presentation coming out today. The best guidance for now is that the prepayments are largely muted in terms of margin impact. We will adjust out the amortization of the upfront payments, so in essence it will lift revenue but not EBITDA because it is a non-cash item over the longer term. That said, if premium day rates are part of contracts, those could have a positive margin effect because they are billed and collected in cash. We committed to the community that as this becomes noticeable and quantifiable—meaningful enough to move margins by measurable basis points—we will provide quarter-to-quarter updates. For now, the impact is largely muted.
Got it. That is super helpful, thanks, Melissa. You had a line in the press release talking about potentially stepping out with new service lines through advantageous acquisitions that position you well for the future. Stuart, could you talk to what you are seeing? Is this some of the stuff you got from AWS, some of it organic like Torrent, or other items you are targeting as you think about the shape of the recovery and the future of the business? Any thoughts on what you are seeing in M&A would be helpful.
Thanks, Derek. In ancillary in general, we were pleased with the quarter and the outlook. Coil, P&A, and Torrent all had strong quarters. From AWS we picked up a mixing plant business, a trucking business, and a tubing inspection business. Some of those have been mixed—some quite strong, some less strong—and we are focused on getting those more consistent. There are a couple that we like from a margin profile perspective, but we want to be confident in sustained demand before we meaningfully lean into them. Generally, we are looking at a number of opportunities, but they are by and large in line with the service lines we currently have.
Maybe a little more on Torrent. It is an interesting business as it relates to potential attachment to power generation. It sounds like it had a good quarter. What were some of the drivers and how are you thinking about that business longer term?
We were pleased with how Torrent performed. It is related to infill gas processing: cleaning up gas streams and removing liquids from gas that cannot get into permanent processing facilities. You can imagine the types of fields where that occurs. We are seeing an uptick in demand. Our focus is getting to sustained full utilization. We are not quite there yet, so we want to be thoughtful about further investment and are focused on getting existing equipment fully utilized.
Okay, great. Appreciate all the comments. I will turn it back.
Yeah. Thanks, Derek. Thank you.
The next question is from John Daniel with Daniel Energy Partners. Please go ahead.
Hey, good morning, Stuart and Melissa. Thanks for including me. Congrats on the Echo contract. When you look at companies like Chevron, which runs dozens of workover rigs across the country, do you envision a scenario or point in time where they might make a complete shift to Echo-type technology?
I'll give some flavor of the conversations we have with them. They are still trying to determine that. Some larger players have indicated they might want a certain base load to be electric rigs—under many long-term commodity price scenarios they will run X rigs and want X to be electric or hybrid rigs, then flex with conventional rigs on top of that. We have heard some customers want a more aggressive shift, but everyone is trying to figure it out. We are encouraged by the demand and the conversations we are having right now.
I misspoke slightly earlier.
We are at 20 under contract right now, and I would not be surprised to see more in the next nine to twelve months.
I would add to Stuart's comments that adoption depends on how these rigs perform in the field because they are still early. We have only had two in our fleet and the total number of electric workover rigs in the market has limited run time—about two years for the earliest models. They do not have the same economic track record as some other electrified technologies. A lot will depend over time on whether safety statistics and efficiency statistics meaningfully improve. If the efficiencies we expect ultimately mature, adoption is likely to increase.
I am not looking for names, but I would suspect the incremental orders you get in the near term would be more with existing customers. Assuming that is true, when would you anticipate some independent operators really kicking the tires?
We have a couple independents that are already evaluating Echo rigs, but it is early days. My informal view is that smaller players will want a longer field track record showing safety and efficiency gains before they commit broadly. The early signs are encouraging, but they want an established track record.
Very helpful. Final quick question about the U.S. coiled tubing market—what are you seeing?
Coiled tubing was a very strong quarter for us. We are focused in the Rockies and were encouraged by the results there. As drilling and frac counts slowly tick up, coiled tubing activity tends to follow. We were pleased with the quarter we saw.
Okay. Thank you very much.
All right. Thank you so much.
This concludes our question and answer session. I would like to turn the conference back over to Stuart N. Bodden for any closing remarks.
Again, thank you everyone for joining us today. We appreciate it and we look forward to speaking to you in November. Take care, everyone.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.