HOUSTON–(BUSINESS WIRE)– Ranger Energy Services, Inc. (NYSE: RNGR) has announced its financial results for the fourth quarter and full year ending December 31, 2023, revealing a year of unprecedented financial performance and strategic capital allocation. The company’s robust 2023 performance underscores its operational strength and commitment to shareholder value, even amidst fluctuating market conditions in the oil and gas sector.
Key Financial Highlights of Ranger Energy Services in 2023:
Ranger Energy Services demonstrated significant financial growth and efficiency throughout 2023, marked by several key achievements:
- Revenue Growth: Full-year revenue reached $636.6 million, a 5% increase from $608.5 million in 2022, indicating strong market demand and effective service delivery.
- Net Income Surge: The company reported a full-year net income of $23.8 million, or $0.95 per fully diluted share, a substantial rise from $15.1 million, or $0.65 per share in the previous year. This dramatic increase highlights improved profitability and operational efficiency.
- EBITDA Expansion: Adjusted EBITDA for 2023 was $84.4 million, a 6% increase from $79.5 million in 2022, with an impressive Adjusted EBITDA margin of 13.3%. This growth in EBITDA reflects Ranger Energy Services’ ability to enhance earnings from its core operations.
- Robust Free Cash Flow: Ranger Energy Services generated a free cash flow of $54.3 million in 2023, or $2.21 per share, representing a 22% yield relative to the company’s stock price. This strong cash generation capability underscores the financial health and operational effectiveness of Ranger Energy Services.
- Strategic Capital Allocation: Ranger Energy Services implemented a comprehensive capital allocation strategy, fully paying down its debt and initiating both a dividend and a significant share repurchase program. In 2023, $21.7 million was returned to shareholders, representing 40% of the free cash flow, showcasing a commitment to delivering shareholder value.
- Share Repurchase Program: Ranger Energy Services actively repurchased 1,805,500 shares in 2023, with continued repurchases into 2024, totaling 736,800 shares to date. Cumulatively, these repurchases represent over 10% of the company’s outstanding shares, reducing the total to 22,662,569 as of February 29, 2024.
- Increased Share Repurchase Authorization: The Board of Directors approved an additional $50 million for the share repurchase program, bringing the total authorization to $85 million, signaling ongoing confidence in the company’s value and future prospects.
- Sustainability Commitment: Ranger Energy Services published its inaugural Sustainability Report, demonstrating its dedication to environmental, social, and governance (ESG) principles, aligning with the growing industry focus on responsible operations.
These financial achievements reflect Ranger Energy Services’ strong market position and effective strategies in the energy sector.
CEO’s Perspective on Ranger Energy Services’ Performance
Stuart Bodden, Chief Executive Officer of Ranger Energy Services, expressed his satisfaction with the company’s record-breaking annual earnings in 2023. He credited the strong performance to robust customer relationships, superior service quality, and a strategic focus on production cycle services. Despite a 20% decrease in the U.S. land rig count compared to the previous year, Ranger Energy Services achieved record high revenue, EBITDA, free cash flow, and earnings per share.
Bodden highlighted 2023 as a transformative year for Ranger Energy Services, proving the company’s resilience amidst drilling activity declines and its ability to significantly strengthen its financial profile. The successful debt paydown, initiation of dividends, and substantial share repurchases underscore Ranger Energy Services’ dedication to enhancing shareholder value. The initial shareholder returns program distributed $21.7 million, representing 40% of free cash flow, through dividends and share repurchases, with repurchases continuing into the first quarter of 2024 due to the perceived undervaluation of shares. Bodden emphasized that these accomplishments were driven by the dedication and resourcefulness of the entire Ranger Energy Services team, embodying the company’s “OneRanger” spirit.
Addressing the fourth quarter, Bodden noted the impact of customer budget constraints and seasonal slowdowns. However, he pointed out the stability of their high-specification rigs business throughout 2023. The wireline segment experienced some weakness due to year-end frac slowdowns and seasonal factors in Northern basins. Pricing remained stable or improved across segments, and Bodden expressed optimism about the long-term opportunities for Ranger Energy Services and its capacity for growth with existing assets.
Bodden also proudly announced the release of Ranger Energy Services’ first Sustainability Report, detailing the company’s commitment to safe and responsible operations. He affirmed Ranger Energy Services’ long-standing commitment to environmental, social, and governance responsibilities and expressed pleasure in sharing the company’s progress and future vision in these areas.
Looking ahead to 2024, Bodden stated that Ranger Energy Services is entering the year from a position of financial strength, being debt-free with over $85 million in liquidity, and confident in navigating market uncertainties. The company’s strategic priorities for 2024 include continuing profitable growth and delivering meaningful capital returns to shareholders. Ranger Energy Services is actively pursuing acquisitions, targeting opportunities that offer lower capital intensity, increased in-basin scale, and align with their production cycle focus. Bodden reiterated the company’s commitment to its dividend policy and opportunistic share repurchases as key components of shareholder returns in 2024.
Strategic Pillars Driving Ranger Energy Services’ Success in 2023
Ranger Energy Services’ success in 2023 was built upon four strategic pillars designed to enhance shareholder value:
- Maximizing Cash Flow: Ranger Energy Services’ business model is inherently capital efficient, providing strong operating leverage that facilitates robust cash flow generation. In 2023, the company generated $63.0 million in free cash flow, adjusted for acquisition and integration costs related to pump assets acquired in the third quarter. Ranger Energy Services aims to maintain a free cash flow conversion rate of at least 60% of EBITDA in 2024, focusing on margin expansion in the wireline business to achieve this goal.
- Fortifying the Balance Sheet: Ranger Energy Services significantly strengthened its financial position, ending the fourth quarter with minimal debt of $0.1 million and a strong cash balance of $15.7 million. Liquidity exceeded $85 million. The company believes that maintaining minimal debt is crucial for maximizing shareholder returns through strategic investments and capital returns, particularly given current industry dynamics. Ranger Energy Services intends to maintain a strong balance sheet and will consider leverage primarily for acquisitions with high confidence in future cash flows.
- Growth Through Acquisition: Demonstrating its commitment to strategic growth, Ranger Energy Services completed the acquisition of pump down assets and related equipment in the third quarter of 2023. The company continues to actively evaluate acquisition opportunities, maintaining a disciplined approach to ensure that all transactions are value-creating for shareholders. This strategic expansion is part of Ranger Energy Services’ broader plan to enhance its service offerings and market presence.
- Returning Capital to Shareholders: Ranger Energy Services is committed to returning a minimum of 25% of its annual cash flows to shareholders through dividends and share repurchases. In 2023, the company repurchased 1,805,500 shares and has continued repurchases in 2024, with total spending exceeding $25 million since the program’s inception. The Board’s approval of an additional $50 million share repurchase authorization, bringing the total to $85 million, underscores this commitment. Furthermore, the Board declared a quarterly dividend of $0.05 per share of common stock, payable on April 5, 2024, to shareholders of record as of March 15, 2024, reinforcing Ranger Energy Services’ dedication to providing consistent returns to its investors.
These strategic pillars demonstrate Ranger Energy Services’ balanced approach to financial management, growth, and shareholder returns.
2023 Performance Summary: A Detailed Financial Review
In the fourth quarter of 2023, Ranger Energy Services reported revenue of $151.5 million, a decrease from $154.3 million in the same period last year and $164.4 million in the previous quarter. This decline is primarily attributed to reduced activity in the wireline and processing and ancillary services segments. However, full-year revenue for 2023 reached $636.6 million, a 5% increase year-over-year, driven by pricing improvements across all segments and increased operational activity in select service lines.
The cost of services for Q4 2023 was $129.7 million, or 86% of revenue, compared to $127.8 million, or 83% of revenue in Q4 2022. The increase in cost of services as a percentage of revenue is mainly due to inflationary pressures and reduced operating activity during the quarter. Year-to-date, the cost of services totaled $531.7 million, or 84% of revenue, compared to $503.9 million, or 83% in the prior year, reflecting inflationary impacts on labor, rentals, and repair costs, notably including a $3.5 million increase in medical costs per employee compared to 2022.
General and administrative expenses for the fourth quarter of 2023 were $6.8 million, down from $7.5 million in the same quarter of the previous year and $7.0 million in the prior quarter. Year-to-date general and administrative expenses totaled $29.5 million, a significant decrease from $39.9 million in 2022, primarily due to reduced acquisition and integration costs compared to the previous year.
Net income for the fourth quarter of 2023 was $2.1 million, compared to $7.6 million in Q4 2022 and $9.4 million in the third quarter of 2023. The decrease in net income from prior periods is mainly due to increased costs, including the aforementioned medical expenses. However, the full-year net income for 2023 was $23.8 million, a 58% increase from $15.1 million in 2022, showcasing substantial annual improvement.
Fully diluted earnings per share for Q4 2023 were $0.09, compared to $0.30 in Q4 2022 and $0.38 in the previous quarter. For the full year 2023, fully diluted earnings per share were $0.95, up from $0.65 in 2022, reflecting overall improved profitability on an annual basis.
Adjusted EBITDA for the fourth quarter of 2023 was $18.4 million, a decrease from $21.6 million in Q4 2022 and $24.0 million in the prior quarter. These decreases were driven by reduced wireline completions activity, declines in certain ancillary service lines, and inflationary cost pressures. Despite the quarterly decrease, the full-year Adjusted EBITDA for 2023 was $84.4 million, an increase of $4.9 million compared to the previous year, demonstrating annual growth in operational profitability for Ranger Energy Services.
Business Segment Financial Performance
Ranger Energy Services operates through three key business segments, each contributing to the company’s overall financial performance.
High Specification Rigs:
The High Specification Rigs segment showed resilience and growth in 2023:
- Revenue: Q4 2023 revenue was $79.0 million, a 9% increase from the prior year period and slightly down from $79.2 million in the previous quarter. Full-year revenue reached $313.3 million, a 7% increase compared to 2022.
- Operational Metrics: Rig hours decreased slightly to 107,900 in Q4 2023, down 4% from the previous quarter and 5% from the prior year period. However, hourly rig rates increased by 5% quarter-over-quarter to $733, and showed a 12% increase year-over-year, reaching $703 per hour for 2023.
- Profitability: Q4 2023 operating income was $10.0 million, a 2% increase year-over-year. Adjusted EBITDA was $15.4 million, up from $15.2 million in the prior year period. Full-year operating income was $44.0 million, a 28% increase from 2022, and Adjusted EBITDA for 2023 was $64.1 million, up from $60.5 million in the previous year, indicating improved profitability and efficiency in this segment.
Wireline Services:
The Wireline Services segment faced challenges but also showed areas of strength:
- Revenue: Q4 2023 revenue was $41.5 million, a 14% decrease compared to the prior year period and a 22% decrease from the previous quarter. Full-year revenue was $199.1 million, a modest 1% increase compared to 2022.
- Operational Metrics: Completed stage counts in Q4 2023 were 5,000, a 26% decrease from both the prior year period and the previous quarter. However, stage count pricing improved to $8,400 in Q4 2023, up from $7,100 in the prior year period and $7,800 in the previous quarter. Full-year completed stage counts decreased by 18% from 2022.
- Profitability: Q4 2023 operating loss was $1.8 million, a significant decrease from the operating income of $2.0 million in the prior year period and $4.3 million in the previous quarter. Adjusted EBITDA was $2.8 million, down 40% year-over-year and 62% quarter-over-quarter. However, full-year operating income was $7.1 million, and Adjusted EBITDA was $20.1 million, up from $18.6 million in 2022, showing annual improvement despite quarterly volatility.
Processing Solutions and Ancillary Services:
This segment demonstrated steady performance and growth:
- Revenue: Q4 2023 revenue was $31.0 million, a 7% decrease from the prior year period and a 3% decrease from the previous quarter. Full-year revenue reached $124.2 million, a 5% increase from 2022, driven by increased activity in coil tubing, plug and abandonment, and logistics services.
- Profitability: Q4 2023 operating income was $3.4 million, down from $4.6 million in the prior year period and $4.5 million in the previous quarter. Adjusted EBITDA was $5.3 million, also down from prior periods. Despite quarterly declines, the segment contributed positively to overall profitability.
Balance Sheet Strength, Cash Flow, and Liquidity
Ranger Energy Services maintains a strong financial foundation, as reflected in its balance sheet, cash flow, and liquidity:
- Liquidity: As of December 31, 2023, Ranger Energy Services had $85.1 million in liquidity, including $69.4 million of capacity on its revolving credit facility and $15.7 million in cash on hand, compared to $61.0 million in liquidity at the end of 2022.
- Debt Reduction: The company significantly reduced its debt, with total debt at $0.1 million as of December 31, 2023, a 99% reduction from $18.4 million at the end of 2022, showcasing a strong commitment to financial stability and reduced leverage.
- Cash Flow Generation: Year-to-date cash provided by operating activities was $90.8 million, a substantial increase from $44.5 million in 2022. Free cash flow improved significantly to $54.3 million year-to-date, compared to $30.7 million in the prior year, demonstrating enhanced operational efficiency and profitability. Capital expenditures for the year totaled $36.5 million, including $7.25 million for the pump asset acquisition completed in Q3 2023.
2024 Outlook: Navigating Forward with Confidence
Ranger Energy Services is optimistic about its long-term opportunities and growth potential. While anticipating stable operator activity levels in 2024 due to ongoing uncertainties in supply, demand, and global economic conditions, the company sees both opportunities and challenges ahead.
Activity levels began to rebound in the latter half of February after a slow start to the year, influenced by weather and external safety events. Ranger Energy Services is expanding its work under a key blue-chip customer agreement from 2023 and anticipates further growth from this and other opportunities. The company’s production-focused business model demonstrated its resilience in 2023 and supports a 2024 budget that projects modest year-over-year growth, contingent on stable operator behavior.
Ranger Energy Services aims to convert 60% of EBITDA to free cash flow in 2024 through efficient capital expenditure management, ensuring strong capital returns to shareholders throughout the year.
Conference Call Information
Ranger Energy Services hosted a conference call on Tuesday, March 5, 2024, to discuss the fourth quarter 2023 results. A replay of the conference call is available on the Investor Relations section of the company’s website, http://www.rangerenergy.com, for approximately seven days following the call.
About Ranger Energy Services, Inc.
Ranger Energy Services is a leading U.S. provider of high-specification mobile rig well services, cased hole wireline services, and ancillary services. The company supports operations across the entire lifecycle of a well, including completion, production, maintenance, intervention, workover, and abandonment phases. Ranger Energy Services is committed to providing superior service quality and creating shareholder value through strategic operational and financial management.
Forward-Looking Statements
This press release contains forward-looking statements as defined under federal securities laws. These statements reflect Ranger’s current expectations and beliefs regarding future events but are subject to risks, uncertainties, and factors outside of the company’s control that could cause actual results to differ materially. Ranger Energy Services undertakes no obligation to revise or update any forward-looking statements due to new information or future events, except as required by law. Investors are encouraged to review Ranger’s filings with the Securities and Exchange Commission for a comprehensive understanding of risks and cautionary statements.
View source version on businesswire.com
Image: Ranger Energy Services logo and contact information, promoting investor relations and media contact details.
Contact Information:
Melissa Cougle
Chief Financial Officer
(713) 935-8900
[email protected]
Source: Ranger Energy Services, Inc.
