UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20222023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-38183
RANGER ENERGY SERVICES, INC.
(Exact name of registrant as specified in its charter)
| | | | | |
Delaware | 81-5449572 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
10350 Richmond, Suite 550
Houston, Texas 77042
(Address of principal executive offices) (Zip Code)
(713) 935-8900
(Registrant’s telephone number, including area code)
| | | | | | | | | | | | | | |
Securities registered pursuant to Section 12(b) of the Act: |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Class A Common Stock, $0.01 par value | | RNGR | | New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | |
Large accelerated filer ☐ | | Accelerated filer ☐Filer ☒ | | Non-accelerated Filer ☒☐ |
Smaller reporting company ☒ | | Emerging growth company ☒☐ | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 27, 2022,30, 2023, the registrant had 24,700,21224,878,645 shares of Class A Common Stock and zero shares of Class B Common Stock outstanding.
RANGER ENERGY SERVICES, INC.
TABLE OF CONTENTS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information in this Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act, as amended and Section 21E of the Exchange Act. All statements, other than statements of historical fact included in this Quarterly Report, regarding our strategy, future operations, financial position, estimated revenue and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report, the words “may,” “should,” “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in our Annual Report filed on Form 10-K for the year ended December 31, 2022 (the “Annual Report”). These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.
We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, the risks described under “Risk Factors” in our Annual Report previously filed and those set forth from time-to-time in other filings by the Company with the SEC. These documents are available through our website or through the SEC’s Electronic Data Gathering and Analysis Retrieval (“EDGAR”) system at www.sec.gov. Should one or more of the risks or uncertainties described occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.
All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
RANGER ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions, except share amounts)
| | | March 31, 2022 | | December 31, 2021 | | March 31, 2023 | | December 31, 2022 |
Assets | Assets | | | | | Assets | | | | |
Cash and cash equivalents | Cash and cash equivalents | | $ | 3.8 | | | $ | 0.6 | | Cash and cash equivalents | | $ | 14.4 | | | $ | 3.7 | |
Accounts receivable, net | Accounts receivable, net | | 88.6 | | | 80.8 | | Accounts receivable, net | | 78.5 | | | 91.2 | |
Contract assets | Contract assets | | 20.3 | | | 13.0 | | Contract assets | | 32.2 | | | 26.9 | |
Inventory | Inventory | | 3.9 | | | 2.5 | | Inventory | | 6.5 | | | 5.9 | |
Prepaid expenses | Prepaid expenses | | 4.2 | | | 8.3 | | Prepaid expenses | | 7.7 | | | 9.2 | |
Assets held for sale | Assets held for sale | | 5.6 | | | — | | Assets held for sale | | 1.0 | | | 3.2 | |
Total current assets | Total current assets | | 126.4 | | | 105.2 | | Total current assets | | 140.3 | | | 140.1 | |
| Property and equipment, net | Property and equipment, net | | 250.5 | | | 270.6 | | Property and equipment, net | | 217.6 | | | 221.6 | |
Intangible assets, net | Intangible assets, net | | 7.6 | | | 7.8 | | Intangible assets, net | | 6.9 | | | 7.1 | |
Operating leases, right-of-use assets | Operating leases, right-of-use assets | | 6.3 | | | 6.8 | | Operating leases, right-of-use assets | | 10.6 | | | 11.2 | |
Other assets | Other assets | | 3.7 | | | 2.7 | | Other assets | | 0.1 | | | 1.6 | |
Total assets | Total assets | | $ | 394.5 | | | $ | 393.1 | | Total assets | | $ | 375.5 | | | $ | 381.6 | |
| Liabilities and Stockholders' Equity | Liabilities and Stockholders' Equity | | Liabilities and Stockholders' Equity | |
Accounts payable | Accounts payable | | $ | 23.1 | | | $ | 20.7 | | Accounts payable | | $ | 27.6 | | | $ | 24.3 | |
Accrued expenses | Accrued expenses | | 24.4 | | | 30.3 | | Accrued expenses | | 23.8 | | | 36.1 | |
Other financing liability, current portion | Other financing liability, current portion | | 1.1 | | | 2.2 | | Other financing liability, current portion | | 0.7 | | | 0.7 | |
Long-term debt, current portion | Long-term debt, current portion | | 61.1 | | | 44.1 | | Long-term debt, current portion | | 8.5 | | | 6.8 | |
Other current liabilities | Other current liabilities | | 5.0 | | | 5.4 | | Other current liabilities | | 6.6 | | | 6.6 | |
Total current liabilities | Total current liabilities | | 114.7 | | | 102.7 | | Total current liabilities | | 67.2 | | | 74.5 | |
| Operating leases, right-of-use obligations | Operating leases, right-of-use obligations | | 5.6 | | | 5.8 | | Operating leases, right-of-use obligations | | 9.0 | | | 9.6 | |
Other financing liability | Other financing liability | | 12.1 | | | 12.5 | | Other financing liability | | 11.4 | | | 11.6 | |
Long-term debt, net | Long-term debt, net | | 15.6 | | | 18.4 | | Long-term debt, net | | 7.1 | | | 11.6 | |
Other long-term liabilities | Other long-term liabilities | | 3.8 | | | 5.0 | | Other long-term liabilities | | 8.6 | | | 8.1 | |
Total liabilities | Total liabilities | | 151.8 | | | 144.4 | | Total liabilities | | 103.3 | | | 115.4 | |
| Commitments and contingencies (Note 15) | | 0 | | 0 | |
Commitments and contingencies (Note 14) | | Commitments and contingencies (Note 14) | |
| Stockholders' equity | Stockholders' equity | | Stockholders' equity | |
Preferred stock, $0.01 per share; 50,000,000 shares authorized; 6,000,001 shares issued and outstanding as of March 31, 2022 and December 31, 2021 | | 0.1 | | | 0.1 | | |
Class A Common Stock, $0.01 par value, 100,000,000 shares authorized; 19,223,189 shares issued and 18,671,361 shares outstanding as of March 31, 2022; 18,981,172 shares issued and 18,429,344 shares outstanding as of December 31, 2021 | | 0.2 | | | 0.2 | | |
Class B Common Stock, $0.01 par value, 100,000,000 shares authorized; no shares issued or outstanding as of March 31, 2022 and December 31, 2021 | | — | | | — | | |
Less: Class A Common Stock held in treasury at cost; 551,828 treasury shares as of March 31, 2022 and December 31, 2021 | | (3.8) | | | (3.8) | | |
Accumulated deficit | | (13.7) | | | (8.0) | | |
Preferred stock, $0.01 per share; 50,000,000 shares authorized; no shares issued or outstanding as of March 31, 2023 and December 31, 2022 | | Preferred stock, $0.01 per share; 50,000,000 shares authorized; no shares issued or outstanding as of March 31, 2023 and December 31, 2022 | | — | | | — | |
Class A Common Stock, $0.01 par value, 100,000,000 shares authorized; 25,677,673 shares issued and 25,086,445 shares outstanding as of March 31, 2023; 25,446,292 shares issued and 24,894,464 shares outstanding as of December 31, 2022 | | Class A Common Stock, $0.01 par value, 100,000,000 shares authorized; 25,677,673 shares issued and 25,086,445 shares outstanding as of March 31, 2023; 25,446,292 shares issued and 24,894,464 shares outstanding as of December 31, 2022 | | 0.3 | | | 0.3 | |
Class B Common Stock, $0.01 par value, 100,000,000 shares authorized; no shares issued or outstanding as of March 31, 2023 and December 31, 2022 | | Class B Common Stock, $0.01 par value, 100,000,000 shares authorized; no shares issued or outstanding as of March 31, 2023 and December 31, 2022 | | — | | | — | |
Less: Class A Common Stock held in treasury at cost; 591,228 treasury shares as of March 31, 2023 and 551,828 treasury shares as of December 31, 2022 | | Less: Class A Common Stock held in treasury at cost; 591,228 treasury shares as of March 31, 2023 and 551,828 treasury shares as of December 31, 2022 | | (4.2) | | | (3.8) | |
Retained earnings | | Retained earnings | | 13.4 | | | 7.1 | |
Additional paid-in capital | Additional paid-in capital | | 259.9 | | | 260.2 | | Additional paid-in capital | | 262.7 | | | 262.6 | |
Total controlling stockholders' equity | | 242.7 | | | 248.7 | | |
Noncontrolling interest | | — | | | — | | |
Total stockholders' equity | Total stockholders' equity | | 242.7 | | | 248.7 | | Total stockholders' equity | | 272.2 | | | 266.2 | |
Total liabilities and stockholders' equity | Total liabilities and stockholders' equity | | $ | 394.5 | | | $ | 393.1 | | Total liabilities and stockholders' equity | | $ | 375.5 | | | $ | 381.6 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.Condensed Consolidated Financial Statements.
RANGER ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except share and per share amounts)
| | | Three Months Ended | | | Three Months Ended | |
| | March 31, | | | March 31, | |
| | 2022 | | 2021 | | | 2023 | | 2022 | |
Revenues | | | | | | |
Revenue | | Revenue | | | | | |
High specification rigs | High specification rigs | | $ | 64.9 | | | $ | 21.7 | | | High specification rigs | | $ | 77.5 | | | $ | 64.9 | | |
Wireline services | Wireline services | | 38.6 | | | 12.1 | | | Wireline services | | 49.9 | | | 38.6 | | |
Processing solutions and ancillary services | Processing solutions and ancillary services | | 20.1 | | | 4.5 | | | Processing solutions and ancillary services | | 30.1 | | | 20.1 | | |
Total revenues | | 123.6 | | | 38.3 | | | |
Total revenue | | Total revenue | | 157.5 | | | 123.6 | | |
| Operating expenses | Operating expenses | | | Operating expenses | | |
Cost of services (exclusive of depreciation and amortization): | Cost of services (exclusive of depreciation and amortization): | | | Cost of services (exclusive of depreciation and amortization): | | |
High specification rigs | High specification rigs | | 50.8 | | | 19.0 | | | High specification rigs | | 60.1 | | | 50.8 | | |
Wireline services | Wireline services | | 40.4 | | | 11.3 | | | Wireline services | | 45.7 | | | 40.4 | | |
Processing solutions and ancillary services | Processing solutions and ancillary services | | 16.8 | | | 3.8 | | | Processing solutions and ancillary services | | 25.1 | | | 16.8 | | |
Total cost of services | Total cost of services | | 108.0 | | | 34.1 | | | Total cost of services | | 130.9 | | | 108.0 | | |
General and administrative | General and administrative | | 9.2 | | | 3.5 | | | General and administrative | | 8.4 | | | 10.2 | | |
Depreciation and amortization | Depreciation and amortization | | 11.6 | | | 8.0 | | | Depreciation and amortization | | 10.0 | | | 11.6 | | |
| Gain on sale of assets | | Gain on sale of assets | | (1.0) | | | (1.0) | | |
Total operating expenses | Total operating expenses | | 128.8 | | | 45.6 | | | Total operating expenses | | 148.3 | | | 128.8 | | |
| Operating loss | | (5.2) | | | (7.3) | | | |
Operating income (loss) | | Operating income (loss) | | 9.2 | | | (5.2) | | |
| Other expenses | Other expenses | | | Other expenses | | |
Interest expense, net | Interest expense, net | | 2.1 | | | 0.6 | | | Interest expense, net | | 1.2 | | | 2.1 | | |
| Total other expenses | Total other expenses | | 2.1 | | | 0.6 | | | Total other expenses | | 1.2 | | | 2.1 | | |
| Loss before income tax expense | | (7.3) | | | (7.9) | | | |
Tax (benefit) expense | | (1.6) | | | 0.4 | | | |
Net loss | | (5.7) | | | (8.3) | | | |
Less: Net loss attributable to noncontrolling interests | | — | | | (3.7) | | | |
Net loss attributable to Ranger Energy Services, Inc. | | $ | (5.7) | | | $ | (4.6) | | | |
Income (loss) before income tax (benefit) expense | | Income (loss) before income tax (benefit) expense | | 8.0 | | | (7.3) | | |
Tax expense (benefit) | | Tax expense (benefit) | | 1.8 | | | (1.6) | | |
Net income (loss) | | Net income (loss) | | 6.2 | | | (5.7) | | |
| Loss per common share | | | |
| | Income (loss) per common share | | Income (loss) per common share | | |
Basic | Basic | | $ | (0.31) | | | $ | (0.54) | | | Basic | | $ | 0.25 | | | $ | (0.31) | | |
Diluted | Diluted | | $ | (0.31) | | | $ | (0.54) | | | Diluted | | $ | 0.25 | | | $ | (0.31) | | |
Weighted average common shares outstanding | Weighted average common shares outstanding | | | Weighted average common shares outstanding | | |
Basic | Basic | | 18,472,909 | | | 8,581,642 | | | Basic | | 24,940,335 | | | 18,472,909 | | |
Diluted | Diluted | | 18,472,909 | | | 8,581,642 | | | Diluted | | 25,209,980 | | | 18,472,909 | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.Condensed Consolidated Financial Statements.
RANGER ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(in millions, except share amounts)
| | | Three Months Ended March 31, | | | Three Months Ended March 31, | |
| | 2022 | 2021 | 2022 | 2021 | | | 2023 | 2022 | 2023 | 2022 | |
| | Quantity | Amount | | | Quantity | Amount | |
Shares, Series A Preferred Stock | Shares, Series A Preferred Stock | | | Shares, Series A Preferred Stock | | |
Balance, beginning of period | Balance, beginning of period | 6,000,001 | | — | | $ | 0.1 | | $ | — | | | Balance, beginning of period | — | | 6,000,001 | | $ | — | | $ | 0.1 | | |
| Balance, end of period | Balance, end of period | 6,000,001 | | — | | $ | 0.1 | | $ | — | | | Balance, end of period | — | | 6,000,001 | | $ | — | | $ | 0.1 | | |
| Shares, Class A Common Stock | Shares, Class A Common Stock | | | Shares, Class A Common Stock | | |
Balance, beginning of period | Balance, beginning of period | 18,981,172 | | 9,093,743 | | $ | 0.2 | | $ | 0.1 | | | Balance, beginning of period | 25,446,292 | | 18,981,172 | | $ | 0.3 | | $ | 0.2 | | |
Issuance of shares under share-based compensation plans | Issuance of shares under share-based compensation plans | 339,401 | | 333,076 | | — | | — | | | Issuance of shares under share-based compensation plans | 318,482 | | 339,401 | | — | | — | | |
Shares withheld for taxes on equity transactions | Shares withheld for taxes on equity transactions | (97,384) | | (97,513) | | — | | — | | | Shares withheld for taxes on equity transactions | (87,101) | | (97,384) | | — | | — | | |
| | Balance, end of period | Balance, end of period | 19,223,189 | | 9,329,306 | | $ | 0.2 | | $ | 0.1 | | | Balance, end of period | 25,677,673 | | 19,223,189 | | $ | 0.3 | | $ | 0.2 | | |
| Shares, Class B Common Stock | | | |
Balance, beginning of period | — | | 6,866,154 | | $ | — | | $ | 0.1 | | | |
Balance, end of period | — | | 6,866,154 | | $ | — | | $ | 0.1 | | | |
| | Treasury Stock | Treasury Stock | | | Treasury Stock | | |
Balance, beginning of period | Balance, beginning of period | (551,828) | | (551,828) | | $ | (3.8) | | $ | (3.8) | | | Balance, beginning of period | (551,828) | | (551,828) | | $ | (3.8) | | $ | (3.8) | | |
| Repurchase of Class A Common Stock | | Repurchase of Class A Common Stock | (39,400) | | — | | (0.4) | | — | | |
Balance, end of period | Balance, end of period | (551,828) | | (551,828) | | $ | (3.8) | | $ | (3.8) | | | Balance, end of period | (591,228) | | (551,828) | | $ | (4.2) | | $ | (3.8) | | |
| Accumulated deficit | | | |
Retained Earnings (accumulated deficit) | | Retained Earnings (accumulated deficit) | | |
Balance, beginning of period | Balance, beginning of period | | $ | (8.0) | | $ | (18.4) | | | Balance, beginning of period | | $ | 7.2 | | $ | (8.0) | | |
Net loss attributable to controlling interest | | (5.7) | | (4.6) | | | |
Net income (loss) attributable to controlling interest | | Net income (loss) attributable to controlling interest | | 6.2 | | (5.7) | | |
Balance, end of period | Balance, end of period | | $ | (13.7) | | $ | (23.0) | | | Balance, end of period | | $ | 13.4 | | $ | (13.7) | | |
| Additional paid-in capital | Additional paid-in capital | | | Additional paid-in capital | | |
Balance, beginning of period | Balance, beginning of period | | $ | 260.2 | | $ | 123.9 | | | Balance, beginning of period | | $ | 262.6 | | $ | 260.2 | | |
Equity based compensation | Equity based compensation | | 0.8 | | 0.9 | | | Equity based compensation | | 1.1 | | 0.8 | | |
Shares withheld for taxes on equity transactions | Shares withheld for taxes on equity transactions | | (1.1) | | (0.5) | | | Shares withheld for taxes on equity transactions | | (1.0) | | (1.1) | | |
| Impact of transactions affecting noncontrolling interest | | — | | 0.7 | | | |
| Balance, end of period | Balance, end of period | | $ | 259.9 | | $ | 125.0 | | | Balance, end of period | | $ | 262.7 | | $ | 259.9 | | |
| Total controlling interest shareholders’ equity | Total controlling interest shareholders’ equity | | | Total controlling interest shareholders’ equity | | |
Balance, beginning of period | Balance, beginning of period | | $ | 248.7 | | $ | 101.9 | | | Balance, beginning of period | | $ | 266.3 | | $ | 248.7 | | |
Net loss attributable to controlling interest | | (5.7) | | (4.6) | | | |
Equity based compensation | | 0.8 | | 0.9 | | | |
Shares withheld for taxes on equity transactions | | (1.1) | | (0.5) | | | |
| Impact of transactions affecting noncontrolling interest | | — | | 0.7 | | | |
| Balance, end of period | | $ | 242.7 | | $ | 98.4 | | | |
| Noncontrolling interest | | | |
Balance, beginning of period | | $ | — | | $ | 82.9 | | | |
Net loss attributable to noncontrolling interest | | — | | (3.7) | | | |
| Impact of transactions affecting noncontrolling interest | | — | | (0.7) | | | |
Balance, end of period | | $ | — | | $ | 78.5 | | | |
| Total Stockholders' Equity | | | |
Balance, beginning of period | | $ | 248.7 | | $ | 184.8 | | | |
Net loss | | (5.7) | | (8.3) | | | |
Net income (loss) attributable to controlling interest | | Net income (loss) attributable to controlling interest | | 6.2 | | (5.7) | | |
Equity based compensation | Equity based compensation | | 0.8 | | 0.9 | | | Equity based compensation | | 1.1 | | 0.8 | | |
Shares withheld for taxes on equity transactions | Shares withheld for taxes on equity transactions | | (1.1) | | (0.5) | | | Shares withheld for taxes on equity transactions | | (1.0) | | (1.1) | | |
| Repurchase of Class A Common Stock | | Repurchase of Class A Common Stock | | (0.4) | | — | | |
Balance, end of period | Balance, end of period | | $ | 242.7 | | $ | 176.9 | | | Balance, end of period | | $ | 272.2 | | $ | 242.7 | | |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.Condensed Consolidated Financial Statements.
RANGER ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
| | | Three Months Ended March 31, | | Three Months Ended March 31, |
| | 2022 | | 2021 | | 2023 | | 2022 |
Cash Flows from Operating Activities | Cash Flows from Operating Activities | | | | | Cash Flows from Operating Activities | | | | |
Net loss | | $ | (5.7) | | | $ | (8.3) | | |
Adjustments to reconcile net loss to net cash provided by operating activities: | | |
Net income (loss) | | Net income (loss) | | $ | 6.2 | | | $ | (5.7) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |
Depreciation and amortization | Depreciation and amortization | | 11.6 | | | 8.0 | | Depreciation and amortization | | 10.0 | | | 11.6 | |
Equity based compensation | Equity based compensation | | 0.8 | | | 0.9 | | Equity based compensation | | 1.1 | | | 0.8 | |
Gain on disposal of property and equipment | Gain on disposal of property and equipment | | (1.0) | | | (0.4) | | Gain on disposal of property and equipment | | (1.0) | | | (1.0) | |
Income tax expense (benefit) | | (1.6) | | | 0.4 | | |
| Deferred income tax expense (benefit) | | Deferred income tax expense (benefit) | | 1.9 | | | (1.6) | |
Other expense, net | Other expense, net | | 0.2 | | | — | | Other expense, net | | 1.1 | | | 0.2 | |
Changes in operating assets and liabilities | Changes in operating assets and liabilities | | Changes in operating assets and liabilities | |
Accounts receivable | Accounts receivable | | (7.8) | | | (1.4) | | Accounts receivable | | 12.3 | | | (7.8) | |
Contract assets | Contract assets | | (7.3) | | | (0.6) | | Contract assets | | (5.3) | | | (7.3) | |
Inventory | Inventory | | (1.4) | | | — | | Inventory | | (0.8) | | | (1.4) | |
Prepaid expenses | | 4.2 | | | (1.0) | | |
Prepaid expenses and other current assets | | Prepaid expenses and other current assets | | 1.5 | | | 4.2 | |
Other assets | Other assets | | 0.9 | | | — | | Other assets | | 0.3 | | | 0.9 | |
Accounts payable | Accounts payable | | 2.4 | | | (1.2) | | Accounts payable | | 3.3 | | | 2.4 | |
Accrued expenses | Accrued expenses | | (5.9) | | | 1.7 | | Accrued expenses | | (12.3) | | | (5.9) | |
Other current liabilities | Other current liabilities | | (0.2) | | | — | | Other current liabilities | | 0.2 | | | (0.2) | |
Other long-term liabilities | Other long-term liabilities | | (1.3) | | | — | | Other long-term liabilities | | (1.1) | | | (1.3) | |
Net cash used in operating activities | | (12.1) | | | (1.9) | | |
Net cash provided by (used in) operating activities | | Net cash provided by (used in) operating activities | | 17.4 | | | (12.1) | |
| Cash Flows from Investing Activities | Cash Flows from Investing Activities | | Cash Flows from Investing Activities | |
Purchase of property and equipment | Purchase of property and equipment | | (1.6) | | | (0.4) | | Purchase of property and equipment | | (5.4) | | | (1.6) | |
Proceeds from disposal of property and equipment | Proceeds from disposal of property and equipment | | 6.6 | | | 0.4 | | Proceeds from disposal of property and equipment | | 4.3 | | | 6.6 | |
| Net cash provided by investing activities | | 5.0 | | | — | | |
Net cash provided by (used in) investing activities | | Net cash provided by (used in) investing activities | | (1.1) | | | 5.0 | |
| Cash Flows from Financing Activities | Cash Flows from Financing Activities | | Cash Flows from Financing Activities | |
Borrowings under Credit Facility | Borrowings under Credit Facility | | 137.9 | | | 6.4 | | Borrowings under Credit Facility | | 167.7 | | | 137.9 | |
Principal payments on Credit Facility | Principal payments on Credit Facility | | (120.0) | | | (5.3) | | Principal payments on Credit Facility | | (169.1) | | | (120.0) | |
| Principal payments under Eclipse Term Loan B | | Principal payments under Eclipse Term Loan B | | — | | | (1.4) | |
Principal payments on financing lease obligations | | Principal payments on financing lease obligations | | (1.3) | | | (1.2) | |
Principal payments on Secured Promissory Note | | Principal payments on Secured Promissory Note | | (0.6) | | | (2.1) | |
Principal payments on other financing liabilities | | Principal payments on other financing liabilities | | (0.2) | | | (1.5) | |
Principal payments on Eclipse M&E Term Loan | Principal payments on Eclipse M&E Term Loan | | (0.2) | | | — | | Principal payments on Eclipse M&E Term Loan | | (0.6) | | | (0.2) | |
| Principal payments under Eclipse Term Loan B | | (1.4) | | | — | | |
| Principal payments on Secured Promissory Note | | (2.1) | | | — | | |
Principal payments on financing lease obligations | | (1.2) | | | (0.8) | | |
Principal payments on other financing liabilities | | (1.5) | | | — | | |
Shares withheld on equity transactions | Shares withheld on equity transactions | | (1.1) | | | (0.5) | | Shares withheld on equity transactions | | (1.0) | | | (1.1) | |
Payments on Installment Purchases | Payments on Installment Purchases | | (0.1) | | | (0.2) | | Payments on Installment Purchases | | (0.1) | | | (0.1) | |
Principal payments on Encina Master Financing Agreement | | — | | | (2.5) | | |
Proceeds from financing of sale-leasebacks | | — | | | 3.5 | | |
Net cash provided by financing activities | | 10.3 | | | 0.6 | | |
| Repurchase of Class A Common Stock | | Repurchase of Class A Common Stock | | (0.4) | | | — | |
| Net cash provided by (used in) financing activities | | Net cash provided by (used in) financing activities | | (5.6) | | | 10.3 | |
| Increase in cash and cash equivalents | Increase in cash and cash equivalents | | 3.2 | | | (1.3) | | Increase in cash and cash equivalents | | 10.7 | | | 3.2 | |
Cash and cash equivalents, Beginning of Period | Cash and cash equivalents, Beginning of Period | | 0.6 | | | 2.8 | | Cash and cash equivalents, Beginning of Period | | 3.7 | | | 0.6 | |
Cash and cash equivalents, End of Period | Cash and cash equivalents, End of Period | | $ | 3.8 | | | $ | 1.5 | | Cash and cash equivalents, End of Period | | $ | 14.4 | | | $ | 3.8 | |
| Supplemental Cash Flow Information | Supplemental Cash Flow Information | | Supplemental Cash Flow Information | |
Interest paid | Interest paid | | $ | 0.3 | | | $ | 0.5 | | Interest paid | | $ | 0.3 | | | $ | 0.3 | |
Supplemental Disclosure of Non-cash Investing and Financing Activities | Supplemental Disclosure of Non-cash Investing and Financing Activities | | Supplemental Disclosure of Non-cash Investing and Financing Activities | |
Capital expenditures | | $ | — | | | $ | (0.6) | | |
| Additions to fixed assets through installment purchases and financing leases | Additions to fixed assets through installment purchases and financing leases | | $ | (0.8) | | | $ | (0.2) | | Additions to fixed assets through installment purchases and financing leases | | $ | (1.5) | | | $ | (0.8) | |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.Condensed Consolidated Financial Statements.
RANGER ENERGY SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1 — Organization and Business Operations
Business
Ranger Energy Services, Inc. (“Ranger, Inc.,” “Ranger,” “we,” “us” or the “Company”) is a provider of onshore high specification (“high-spec”) well service rigs, wireline services, and complementaryadditional processing solutions and ancillary services in the United States.States (“U.S.”). The Company also provides an extensive range of well site services to leading United States (“U.S”).U.S. exploration and production (“E&P”) companies that are fundamental to establishing and maintaining the flow of oil and natural gas throughout the productive life of a well.
Our service offerings consist of well completion support, workover, well maintenance, wireline, fluid management, and other complementary services, as well as installation, commissioning and operating of modular equipment, which are conducted in 3three reportable segments, as follows:
•High Specification Rigs. Provides high-spec well service rigs and complementary equipment and services to facilitate operations throughout the lifecycle of a well.
•Wireline Services. Provides services necessary to bring and maintain a well on production and consists of our wireline completion, wireline production, and pump down lines of business.
•Processing Solutions and Ancillary Services. Provides other services often utilized in conjunction with our High Specification Rigs and Wireline Services segments. These services include equipment rentals, plug and abandonment, logistics hauling, processing solutions, as well as snubbing and coil tubing.tubing, and processing solutions.
The Company’s operations take place in most of the active oil and natural gas basins in the U.S., including the Permian Basin, Denver-Julesburg Basin, Bakken Shale, Eagle Ford Shale, Haynesville Shale, Gulf Coast, South Central Oklahoma Oil Province and Sooner Trend, Anadarko Basin, and Canadian and Kingfisher Counties plays.
Organization
Ranger, Inc. was incorporated as a Delaware corporation in February 2017. Ranger, Inc. is a holding company, and its sole material assets consist of membership interests in RNGR Energy Services, LLC, a Delaware limited liability company (“Ranger LLC”). Ranger LLC owns all of the outstanding equity interests in Ranger Energy Services, LLC (“Ranger Services”) and Torrent Energy Services, LLC (“Torrent Services”), and the other subsidiaries through which it operates its assets. Ranger LLC is the sole managing member of Ranger Services and Torrent Services, and is responsible for all operational, management and administrative decisions relating to Ranger Services, its subsidiaries, and Torrent Services’ business and consolidates the financial results of Ranger Services, its subsidiaries, and Torrent Services and their subsidiaries.Services.
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The condensed consolidated balance sheet as of December 31, 2021 has been derived from audited financial statements and theunaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and the Securities and Exchange Commission’s (the “SEC”) instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain notesinformation and other informationdisclosures have been condensed or omitted. The Condensed Consolidated Financial Statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for the fair presentation of the results of operations for the interim periods. These interim financial statements should be read in conjunction with theour audited consolidated financial statements and related notes for the years ended December 31, 2021 and 2020, included in the Annual Report filed on Form 10-K for the year ended December 31, 2021 (the “Annual Report”).Report. Interim results for the periods presented may not be indicative of results that will be realized for future periods.
Investments in which the Company exercises control are consolidated and the noncontrolling interests of such investments, which are not attributable directly or indirectly to the Company are presented as a separate component of net income or loss and equity in the accompanying condensed consolidated financial statements. The Company had ownership interests in Ranger, LLC, which was consolidated within the Company’s consolidated financial statements, but was not wholly owned by the Company. Upon conversion of the Class B Common Stock during the year-ended December 31, 2021, all noncontrolling interests were eliminated. Changes in the Company’s ownership interest in Ranger, LLC, while it retains its controlling interest, are accounted for as equity transactions.
We have made certain reclassifications to our prior period operating revenue and cost of sales amounts due to the change in reportable segments whereby our Wireline and Ancillary Services were bifurcated from our historical Completion and Other
Services segment as a result of our fourth quarter operating segment changes. The Ancillary Services were combined with the historical Processing Solutions segment. None of these reclassifications have an impact on our consolidated operations results, cash flows or financial position.
Significant Accounting Policies
The Company’s significant accounting policies are disclosed in Note 2 — Summary of Significant Accounting Policies of the Annual Report.
Use of Estimates
The preparation of Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. Management uses historical and other pertinent information to determine these estimates. Actual results could differ from such estimates. Areas where critical accounting estimates are made by management include:
•Depreciation and amortization of property and equipment and intangible assets;
•Assets acquired and liabilities assumed in business combinations;
•Impairment of property and equipment and intangible assets;
•Revenue recognition;
•Income taxes; and
•Equity-based compensation.
Emerging Growth Company Status and Smaller Reporting Company Status
The Company is an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012. The Company will remain an emerging growth company until the earlier of (1) the last day of its fiscal year (a) following the fifth anniversary of the completion of its initial public offering (“IPO”), (b) in which its total annual gross revenue is at least $1.07 billion, or (c) in which the Company is deemed to be a large accelerated filer, which means the market value of the Company’s common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of its most recently completed second fiscal quarter, or (2) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. The Company has irrevocably opted out of the extended transition period and, as a result, the Company will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies. The Company will lose its EGC status on December 31, 2022, as this will represent the last day of the fiscal year following the fifth anniversary of our first Form S-1, which was filed in August 2017.
The Company is also a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as Amended. Smaller reporting company means an issuer that is not an investment company, an asset-back issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that has (i) market value of common stock held by non-affiliates of less than $250 million; or (ii) annual revenues of less than $100 million and either no common stock held by non-affiliates or a market value of common stock held by non-affiliates of less than $700 million. Smaller reporting company status is determined on an annual basis.
New Accounting Pronouncements
Recently Issued Accounting Standards
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASUAccounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses,, which replaces the incurred loss impairment methodology to reflect expected credit losses. The amendment requires the measurement of all expected credit losses for financial assets held at the reporting date to be performed based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2022, with early adoption permitted.2022. The Company is evaluating the effect ofadopted this accounting standard on its condensed consolidated financial statements.January 1, 2023. This adoption did not have a material impact on the Company’s Consolidated Financial Statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for accounting contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships and other transactions that reference the London Interbank Offering Rate (“LIBOR”) or another reference rate expected to be discontinued due to the reference rate reform. ASU 2020-04 became effective as of March 12,
2020 and can be applied through December 31, 2022. The2022, recently amended by ASU 2022-06 which has delayed the application date through December 31, 2024. On September 23, 2022, the Company has not made any contract modificationsentered into the Fourth Amendment to the Loan and Security Agreement (the Eclipse Loan and Security Agreement, as ofamended through and including the date of this report to transition to a differentFourth Amendment, the “Amended Loan Agreement”) with EBC and Eclipse Business Capital SPV, LLC where the Secured Overnight Financing Rate (“SOFR”) replaced LIBOR as the reference rate however it will consider this guidance as future modifications are made.for interest on borrowings, effective October 1, 2022.
With the exception of the standards above, there have been no new accounting pronouncements not yet effective that have significance, or potential significance, to the Company’s Condensed Consolidated Financial Statements.
Note 3 — Business Combinations
The Company completed 3 acquisitions during the year ended December 31, 2021 where all purchases were accounted for using the acquisition method of accounting under the FASB Accounting Standards Codification 805, Business Combinations (“ASC 805”). The results of operations for each of the acquisitions are included in the accompanying Condensed Consolidated Statements of Operations from the respective date of each acquisition. Under the acquisition method of accounting, the assets and liabilities have been recorded at their respective estimated fair values as of the date of completion of the acquisition and reported into Ranger’s Condensed Consolidated Balance Sheets.
Patriot Well Solutions (“Patriot”) Acquisition
On May 14, 2021, the Company acquired all of the outstanding stock of Patriot, a provider of wireline evaluation and intervention services that operate in the Permian, Denver-Julesburg and Powder River Basins and Bakken Shale.
As consideration for the Patriot Acquisition the Company paid an aggregate of $11.0 million, which included 1.3 million shares of Class A Common Stock and cash payments of $3.3 million, net of cash acquired. The financial results of Patriot are included in the Wireline Services reporting segment. The Company finalized the purchase price allocation in the fourth quarter of 2021.
PerfX Wireline Services (“PerfX”) Acquisition
On July 8, 2021, the Company acquired the assets of PerfX, a provider of wireline services that operate in Williston, North Dakota and Midland, Texas. Following the acquisition of PerfX, the Company significantly expanded its scale and scope of the existing wireline business. The financial results of PerfX are included within the Wireline Services reporting segment.
The aggregate consideration was $20.1 million, which included 1,000,000 shares of Class A Common Stock and a Secured Promissory Note of $11.4 million. The Class A Common Stock issuance includes 100,000 shares that will be issued by the Company on the 12-month anniversary of the acquisition date. The Secured Promissory Note bears an interest rate of 8.5% per annum and holds certain assets as collateral through the scheduled maturity date of January 31, 2024. Refer to “Note 10 — Debt” for further details related to the Secured Promissory Note. The Company finalized the purchase price allocation in the fourth quarter of 2021.
The Company reported revenue and an operating loss during the three months ended March 31, 2022 of approximately $24.5 million and $2.1 million, respectively.
The PerfX purchase price includes a warrant to acquire a 30% ownership in the XConnect Business (“XConnect”), which expires on July 8, 2031. XConnect is the manufacturer of a perforating gun system developed by the PerfX sellers alongside the PerfX wireline service business. The warrant requires the Company to maintain a specific minimum level of purchases of XConnect’s manufactured products. Should the Company fail to maintain the specified minimum level of purchases, a forfeiture event would occur. The Company may elect to cure the forfeiture event through a cash payment to XConnect. If the Company elects to not cure the forfeiture event, the ownership percentage would reduce to 15%. Upon the occurrence of a second uncured forfeiture event, the warrant is deemed to be cancelled. The value of the warrant by the Company is negligible as of March 31, 2022. The Company finalized the purchase price allocation in the fourth quarter of 2021.
The following table presents the fair value of assets acquired and liabilities assumed in accordance with ASC 805 (in millions):
| | | | | | | | |
| | |
Cash | | $ | 1.0 | |
Accounts receivable | | 4.6 | |
Inventory | | 2.4 | |
Prepaid and other current assets | | 0.1 | |
Operating leases, right-of-use asset | | 1.1 | |
Property and equipment | | 18.4 | |
Total assets acquired | | 27.6 | |
Accounts payable | | 5.4 | |
Accrued expenses | | 1.0 | |
Operating lease right-of-use obligation | | 1.1 | |
Total liabilities assumed | | 7.5 | |
Allocated purchase price | | $ | 20.1 | |
Basic Energy Services, Inc. (“Basic”) Acquisition
On September 15, 2021, Ranger Energy Acquisition, LLC (“Ranger Acquisitions”) entered into an Asset Purchase Agreement for certain assets of Basic and certain of its subsidiaries (the “Basic Sellers”), which closed on October 1, 2021. Ranger Acquisitions purchased assets associated with Basic’s well servicing, fishing and rental, coiled tubing operations, and rolling stock assets required to support the operating assets being purchased and real property locations inclusive of, but not limited to, real property owned in New Mexico, North Dakota, Oklahoma, and Texas.
All assets associated with the Basic Acquisition, were recorded at their fair value based on a preliminary purchase price allocation. The purchase price allocation has not been finalized due to additional items to be settled that the Company expects to be immaterial to the financial statements. The Company used the market approach to value as of the closing date, October 1, 2021, to apply fair values to the assets purchased based on the selling price of similar assets. As a result of comparing the purchase price to the fair value of the assets acquired, a $37.2 million bargain purchase gain, net of tax, was recognized in year ended December 31, 2021. The bargain purchase gain is primarily attributable Basic’s distressed financial position and lack of financing options available to avoid liquidation. The Company reported revenue and operating income during the three months ended March 31, 2022 of approximately $42.2 million and $7.5 million, respectively.
The following table presents the fair value of assets acquired and liabilities assumed in accordance with ASC 805 (in millions):
| | | | | | | | |
Property and equipment | | $ | 89.5 | |
Total assets acquired | | 89.5 | |
Finance lease obligations | | 3.9 | |
Bargain purchase deferred tax liability | | 10.8 | |
Total liabilities assumed | | 14.7 | |
Net assets acquired | | 74.8 | |
Bargain purchase | | 37.2 | |
Purchase price | | $ | 37.6 | |
Note 4 — Property and Equipment, Net
Property and equipment, net include the following (in millions):
| | | | | | | | | | | | | | | | | | | | |
| | Estimated Useful Life (years) | | March 31, 2022 | | December 31, 2021 |
High specification rigs | | 20 | | $ | 144.8 | | | $ | 145.4 | |
High specification rigs machinery and equipment | | 5 - 10 | | 45.8 | | | 47.8 | |
Wireline services machinery and equipment | | 5 - 10 | | 52.5 | | | 53.1 | |
Processing solutions and ancillary services machinery and equipment | | 3 - 30 | | 77.7 | | | 78.0 | |
Vehicles | | 3 - 15 | | 53.0 | | | 52.7 | |
Other property and equipment | | 5 - 25 | | 23.3 | | | 31.2 | |
Property and equipment | | | | 397.1 | | | 408.2 | |
Less: accumulated depreciation | | | | (149.2) | | | (140.5) | |
Construction in progress | | | | 2.6 | | | 2.9 | |
Property and equipment, net | | | | $ | 250.5 | | | $ | 270.6 | |
Depreciation expense was $11.4 million and $7.8 million for the three months ended March 31, 2022 and 2021, respectively.
Note 5 — Assets Held for Sale
Assets held for sale includes the net book value of excess assets acquired as part of the Basic Acquisition that the Company plans to sell within the next 12 months.months and are related to excess assets acquired from the Basic Energy Services, Inc. (“Basic”) Acquisition. Long-lived assets that meet the held for sale criteria are held for sale and reported at the lower of their carrying value or fair value less estimated costs to sell. The Company intends to sell the excess assets to fund repayment of the Eclipse M&E Termrepayments under the Amended Loan and the Eclipse Term Loan B.Agreement. Refer to “Note 109 — Debt” for further details related to the Eclipse M&E Term Loan and the Eclipse Term Loan B.details.
As of March 31, 2022,2023, the Company classified $0.6 million and $0.4 million of land and building assets and supporting equipment,buildings within our High Specification Rigs and Processing Solutions and Ancillary Services segments, and being actively marketed,respectively, as held for sale. Duringsale as they are being actively marketed.
Note 4 — Property and Equipment, Net
Property and equipment, net include the following (in millions):
| | | | | | | | | | | | | | | | | | | | |
| | Estimated Useful Life (years) | | March 31, 2023 | | December 31, 2022 |
High specification rigs | | 15 | | $ | 137.0 | | | $ | 138.0 | |
Machinery and equipment | | 3 - 30 | | 177.4 | | | 179.3 | |
Vehicles | | 3 - 15 | | 47.6 | | | 46.9 | |
Other property and equipment | | 5 - 25 | | 19.6 | | | 21.3 | |
Property and equipment | | | | 381.6 | | | 385.5 | |
Less: accumulated depreciation | | | | (170.7) | | | (167.2) | |
Construction in progress | | | | 6.7 | | | 3.3 | |
Property and equipment, net | | | | $ | 217.6 | | | $ | 221.6 | |
Depreciation expense was $9.8 million and $11.4 million for the three months ended March 31, 2023 and 2022, respectively. For the three months ended March 31, 2022, the Company did not record any gain or lossreclassified $5.7 million of property and equipment to assets held for sale as the carrying value was less than fair value less estimated costs to sell. Assets held for sale at March 31, 2022 consisted of the following (in millions):
| | | | | | | | |
| | March 31, 2022 |
Land and buildings | | $ | 4.4 | |
Other PP&E | | 1.3 | |
Assets held for sale | | $ | 5.7 | |
sale.Note 65 — Intangible Assets, Net
Definite lived intangible assets are comprised of the following (in millions):
| | | Estimated Useful Life (years) | | March 31, 2022 | | December 31, 2021 | | Estimated Useful Life (years) | | March 31, 2023 | | December 31, 2022 |
Customer relationships | Customer relationships | | 10-18 | | $ | 11.4 | | | $ | 11.4 | | Customer relationships | | 10-18 | | $ | 11.4 | | | $ | 11.4 | |
Less: accumulated amortization | Less: accumulated amortization | | (3.8) | | | (3.6) | | Less: accumulated amortization | | (4.5) | | | (4.3) | |
Intangible assets, net | Intangible assets, net | | $ | 7.6 | | | $ | 7.8 | | Intangible assets, net | | $ | 6.9 | | | $ | 7.1 | |
Amortization expense was $0.2 million and $0.2 million for the three months ended March 31, 2023 and 2022 and 2021 respectfully.respectively. Amortization expense for the future periods is expected to be as follows (in millions):
| For the twelve months ending March 31, | For the twelve months ending March 31, | | Amount | For the twelve months ending March 31, | | Amount |
2023 | | $ | 0.7 | | |
2024 | 2024 | | 0.7 | | 2024 | | $ | 0.7 | |
2025 | 2025 | | 0.7 | | 2025 | | 0.7 | |
2026 | 2026 | | 0.7 | | 2026 | | 0.7 | |
2027 | 2027 | | 0.8 | | 2027 | | 0.7 | |
2028 | | 2028 | | 0.7 | |
Thereafter | Thereafter | | 4.0 | | Thereafter | | 3.4 | |
Total | Total | | $ | 7.6 | | Total | | $ | 6.9 | |
Note 76 — Accrued Expenses
Accrued expenses include the following (in millions):
| | | March 31, 2022 | | December 31, 2021 | | March 31, 2023 | | December 31, 2022 |
Accrued payables | Accrued payables | | $ | 12.6 | | | $ | 12.5 | | Accrued payables | | $ | 11.4 | | | $ | 15.9 | |
Accrued compensation | Accrued compensation | | 8.3 | | | 12.7 | | Accrued compensation | | 8.7 | | | 12.5 | |
Accrued taxes | Accrued taxes | | 1.8 | | | 2.1 | | Accrued taxes | | 0.9 | | | 2.1 | |
Accrued insurance | Accrued insurance | | 1.7 | | | 3.0 | | Accrued insurance | | 2.8 | | | 5.6 | |
Accrued expenses | Accrued expenses | | $ | 24.4 | | | $ | 30.3 | | Accrued expenses | | $ | 23.8 | | | $ | 36.1 | |
Note 87 — Leases
Operating Leases
The Company has operating leases, primarily for real estate and equipment, with terms that vary from one to sevennine years, included in operating lease costs in the table below. The operating leases are included in operatingOperating leases, right-of-use assets, otherOther current liabilities and operatingOperating leases, right-of-use obligations in the Condensed Consolidated Balance Sheets.
Lease costs associated with yard and field offices are included in cost of services and executive offices are included in general and administrative costs in the Condensed Consolidated Statements of Operations. Lease costs and other information related to operating leases for the three and three months ended March 31, 20222023 and 2021 and 2021,2022, are as follows (in millions):
| | | Three Months Ended March 31, | | | Three Months Ended March 31, | |
| | 2022 | | 2021 | | | 2023 | | 2022 | |
Short-term lease costs | Short-term lease costs | | $ | 2.5 | | | $ | 0.3 | | | Short-term lease costs | | $ | 5.3 | | | $ | 3.1 | | |
Operating lease cost | | $ | 0.6 | | | $ | 0.3 | | | |
Operating lease costs | | Operating lease costs | | $ | 0.8 | | | $ | 0.6 | | |
Operating cash outflows from operating leases | Operating cash outflows from operating leases | | $ | 0.5 | | | $ | 0.3 | | | Operating cash outflows from operating leases | | $ | 0.8 | | | $ | 0.5 | | |
| Weighted average remaining lease term | Weighted average remaining lease term | | 5.0 years | | 5.9 years | | Weighted average remaining lease term | | 4.2 years | | 5.0 years | |
Weighted average discount rate | Weighted average discount rate | | 8.9 | % | | 8.5 | % | | Weighted average discount rate | | 8.1 | % | | 8.9 | % | |
Aggregate future minimum lease payments under operating leases are as follows (in millions):
| | | | | | | | |
For the twelve months ending March 31, | | Total |
2023 | | $ | 1.4 | |
2024 | | 1.4 | |
2025 | | 1.4 | |
2026 | | 1.4 | |
2027 | | 1.3 | |
Thereafter | | 1.2 | |
Total future minimum lease payments | | 8.1 | |
Less: amount representing interest | | (1.3) | |
Present value of future minimum lease payments | | 6.8 | |
Less: current portion of operating lease obligations | | (1.2) | |
Long-term portion of finance lease obligations | | $ | 5.6 | |
| | | | | | | | |
For the twelve months ending March 31, | | Total |
2024 | | $ | 3.2 | |
2025 | | 3.2 | |
2026 | | 3.1 | |
2027 | | 2.7 | |
2028 | | 1.1 | |
Thereafter | | 0.2 | |
Total future minimum lease payments | | 13.5 | |
Less: amount representing interest | | (2.2) | |
Present value of future minimum lease payments | | 11.3 | |
Less: current portion of operating lease obligations | | (2.3) | |
Long-term portion of operating lease obligations | | $ | 9.0 | |
Finance Leases
The Company leases certain assets, primarily automobiles, under finance leases with terms that are generally three to five years. The assets and liabilities under finance leases are recorded at the lower of the present value of the minimum lease payments or the fair valuee of the assets. The assets are amortized over the shorter of the estimated useful lives or over the lease term. The finance leases are included in Property and equipment, net, Other current liabilities and Other long-term liabilities in the Condensed Consolidated Balance Sheets.
Lease costs and other information related to finance leases for the three months ended March 31, 20222023 and 2021,2022, are as follows (in millions):
| | | Three Months Ended March 31, | | | Three Months Ended March 31, | |
| | 2022 | | 2021 | | | 2023 | | 2022 | |
Amortization of finance leases | Amortization of finance leases | | $ | 0.5 | | | $ | 0.8 | | | Amortization of finance leases | | $ | 0.8 | | | $ | 0.5 | | |
Interest on lease liabilities | Interest on lease liabilities | | $ | 0.1 | | | $ | 0.1 | | | Interest on lease liabilities | | $ | 0.3 | | | $ | 0.1 | | |
Financing cash outflows from finance leases | Financing cash outflows from finance leases | | $ | 1.2 | | | $ | 0.8 | | | Financing cash outflows from finance leases | | $ | 1.3 | | | $ | 1.2 | | |
| Weighted average remaining lease term | Weighted average remaining lease term | | 1.4 years | | 3.0 years | | Weighted average remaining lease term | | 1.7 years | | 1.4 years | |
Weighted average discount rate | Weighted average discount rate | | 1.9 | % | | 6.2 | % | | Weighted average discount rate | | 4.3 | % | | 1.9 | % | |
Aggregate future minimum lease payments under finance leases are as follows (in millions):
| For the twelve months ending March 31, | For the twelve months ending March 31, | | Total | For the twelve months ending March 31, | | Total |
2023 | | $ | 4.7 | | |
2024 | 2024 | | 2.2 | | 2024 | | $ | 4.5 | |
2025 | 2025 | | 0.5 | | 2025 | | 2.5 | |
| 2026 | | 2026 | | 1.3 | |
2027 | | 2027 | | 0.3 | |
| Total future minimum lease payments | Total future minimum lease payments | | 7.4 | | Total future minimum lease payments | | 8.6 | |
Less: amount representing interest | Less: amount representing interest | | (0.4) | | Less: amount representing interest | | (0.8) | |
Present value of future minimum lease payments | Present value of future minimum lease payments | | 7.0 | | Present value of future minimum lease payments | | 7.8 | |
Less: current portion of finance lease obligations | Less: current portion of finance lease obligations | | (4.4) | | Less: current portion of finance lease obligations | | (4.1) | |
Long-term portion of finance lease obligations | Long-term portion of finance lease obligations | | $ | 2.6 | | Long-term portion of finance lease obligations | | $ | 3.7 | |
Note 98 — Other Financing Liabilities
During the year ended December 31, 2021, theThe Company entered into an agreement to sell a parcel ofhas sale, lease-back agreements for land and a building attached thereto, and subsequently leased back the property. The Company received cash of $12.1 million from the sale and the lease has a 15 year term with an annual rent escalation of 2 percent per annum.
During the year ended December 31, 2021, the Company entered into an agreement to sell certain of other fixed assets and subsequently leased back such assets.with terms that vary from eighteen months to thirteen years. The Company received cash of $3.5 million to be paid over 18 to 60 months.
These sales did not qualify for sale accounting, therefore these leases were classified as finance leases and no gain or loss was recorded. The net book value of the assets remained in Property and equipment, net and are depreciating over their original useful lives.
As of March 31, 2022,2023, aggregate future lease payments of the financing liabilities are as follows (in millions):
| For the twelve months ending March 31, | For the twelve months ending March 31, | | Total | For the twelve months ending March 31, | | Total |
2023 | | $ | 1.1 | | |
2024 | 2024 | | 0.6 | | 2024 | | $ | 0.7 | |
2025 | 2025 | | 0.6 | | 2025 | | 0.7 | |
2026 | 2026 | | 0.7 | | 2026 | | 0.7 | |
2027 | 2027 | | 0.7 | | 2027 | | 0.7 | |
2028 | | 2028 | | 0.8 | |
Thereafter | Thereafter | | 9.5 | | Thereafter | | 8.5 | |
Total future minimum lease payments | Total future minimum lease payments | | $ | 13.2 | | Total future minimum lease payments | | $ | 12.1 | |
|
Note 109 — Debt
The aggregate carrying amounts, net of issuance costs, of the Company’s debt consists of the following (in millions):
| | | March 31, 2022 | | December 31, 2021 | | March 31, 2023 | | December 31, 2022 |
Eclipse Revolving Credit Facility | Eclipse Revolving Credit Facility | | 44.8 | | | 27.0 | | Eclipse Revolving Credit Facility | | $ | — | | | $ | 1.4 | |
Eclipse M&E Term Loan, net | Eclipse M&E Term Loan, net | | 12.0 | | | 12.2 | | Eclipse M&E Term Loan, net | | 9.6 | | | 10.4 | |
Eclipse Term Loan B | | 10.7 | | | 11.9 | | |
Secured Promissory Note | Secured Promissory Note | | 8.3 | | | 10.4 | | Secured Promissory Note | | 5.6 | | | 6.1 | |
Installment Purchases | Installment Purchases | | 0.9 | | | 1.0 | | Installment Purchases | | 0.4 | | | 0.5 | |
Total Debt | Total Debt | | 76.7 | | | 62.5 | | Total Debt | | 15.6 | | | 18.4 | |
Current portion of long-term debt | Current portion of long-term debt | | (61.1) | | | (44.1) | | Current portion of long-term debt | | (8.5) | | | (6.8) | |
Long term-debt, net | Long term-debt, net | | $ | 15.6 | | | $ | 18.4 | | Long term-debt, net | | $ | 7.1 | | | $ | 11.6 | |
Eclipse Loan and Security Agreement
On September 27, 2021, the Company entered into a Loan and Security Agreement with Eclipse Business Capital LLC (“EBC”) and Eclipse Business Capital SPV, LLC, as administrative agent, providing the Company with a senior secured credit facility in an aggregate principal amount of $77.5 million (the “EBC Credit Facility”), consisting of (i) a revolving credit facility in an aggregate principal amount of up to $50.0 million (the “Revolving Credit Facility”), (ii) a machinery and equipment term loan facility in an aggregate principal amount of up to $12.5 million (the “M&E Term Loan Facility”) and (iii) a term loan B facility in an aggregate principal amount of up to $15.0 million (the “Term Loan B Facility”). Debt under the Eclipse Loan and Security Agreement is secured by a lien on substantially all of the Company’s assets. The Company was in compliance with the Eclipse Loan and Security Agreement covenantscovenant by maintaining a fixed charge coverage ratio of greater than 1.0 as of March 31, 2022.2023.
On January 7, 2022, the Company entered into the First Amendment to Loan and Security Agreement (the Eclipse Loan and Security Agreement, as amended by the First Amendment, the “Amended Loan Agreement”) with EBC and Eclipse Business Capital SPV, LLC, which increased the Maximum Revolving Credit Facility Amount (as defined in the Amended Loan Agreement)Agreement (as defined below)) to $65.0 million, among other things. On September 23, 2022, the Company entered into the Amended Loan Agreement with EBC and Eclipse Business Capital SPV, LLC, which, among other things, designated the change in reference rate from LIBOR to SOFR, and designated a Letter of Credit in the amount of $1.6 million to be utilized for working capital and general corporate purposes, as needed.
Revolving Credit Facility
The Revolving Credit Facility was drawn in part on September 27, 2021, to repay the indebtedness under the existing EBC Credit Facility, which was terminated in connection with such repayment, and to pay for the fees, costs and expenses incurred in connection with the EBC Credit Facility. The undrawn portion of the Revolving Credit Facility is available to fund working capital and other general corporate expenses and for other-permitted uses, including the financing of permitted investments and restricted payments. The Revolving Credit Facility is subject to a borrowing base that is calculated based upon a percentage of the Company’s eligible accounts receivable less certain reserves. The Company’s eligible accounts receivable serve as collateral for the borrowings under the Revolving Credit Facility, which is scheduled to mature in September 2025. The Revolving Credit Facility includes a subjective acceleration clause and cash dominion provisions that permits the administrative agent to sweep cash daily from certain bank accounts into an account of the administrative agent to repay the Company’s obligations under the Revolving Credit Facility. The borrowings of the Revolving Credit Facility, therefore, will be classified as Long-term debt, current portion on the Condensed Consolidated Balance Sheet.
Under the Revolving Credit Facility, the total loan capacity was $51.2$55.6 million, which was based on a borrowing base certificate in effect as of March 31, 2022.2023. The Company had outstandingdid not have any borrowings of $44.8 million under the Revolving Credit Facility and a $1.6 million Letter of Credit, leaving a residual $6.4$54.0 million available for borrowings as of March 31, 2022.2023. Borrowings under the Revolving Credit Facility bear interest at a rate per annum equalranging from 4.5% to 5% in excess of the LIBOR RateSOFR and 3.5% to 4% in excess of the Base Rate, dependent on the fixed cost coverage ratio, through AprilOctober 1, 2022. The weighted average interest rate for the loan was 6.0%approximately 8.9% for the three months ended March 31, 2022.
The Company capitalized fees of $1.8 million associated with the Revolving Credit Facility, which are included in Other assets in the Condensed Consolidated Balance Sheets. Such fees will continue to be amortized through maturity and are included in Interest expense, net on the Condensed Consolidated Statement of Operations. Unamortized debt issuance costs as of March 31, 2022 were $1.6 million.2023.
M&E Term Loan Facility
Under the M&E Term Loan Facility, the Company had outstanding borrowings of $12.3$9.8 million where the monthly principal and interest installments commenced on March 1, 2022. Borrowings under the M&E Term Loan Facility bear interest at a rate per annum equal to 8% in excess of the LIBORSOFR Rate and 7% in excess of the Base Rate. The weighted average interest rate for the M&E Term Loan was 9.0%12.6% for the three months ended March 31, 2022.2023. The M&E Term Loan Facility is scheduled to mature in September 2025. Any principal amounts repaid may not be reborrowed.
The Company capitalized fees of $0.3 million associated with this M&E Term Loan Facility, which are included in the Consolidated Balance Sheets as a discount to the Long-term debt, net. Such fees will continue to be amortized through maturity and are included in Interest expense, net on the Condensed Consolidated Statement of Operations. Unamortized debt issuance costs as of March 31, 2022 were $0.3 million. The Company paid approximately $0.2 million on M&E Term Loan subsequent to March 31, 2022, where such cash was generated from the sale of certain assets under the M&E Term Loan.
Term Loan B
On October 1, 2021, the Term Loan B was finalized in connection with the closing of the Basic Acquisition. Borrowings under Term Loan B bearbore interest at a rate per annum equal to 13% in excess of the LIBORSOFR Rate and 11% in excess of the Base Rate. Term Loan B iswas scheduled to mature in September 2022. The weighted average interest rate for Term Loan B was 13.0% for12.4% through the three months ended March 31,maturity date of August 16, 2022.
On October 1, 2021,August 16, 2022, the Term Loan Bremaining balance of the loan was drawn in full to repay borrowings under$0.3 million, which was paid utilizing funds from the Revolving Credit Facility and as of March 31, 2022 the principal balance outstanding was $11.0 million. Principal payments are generated from the proceeds from the sale of Basic assets, and may not be reborrowed. The Company capitalized fees of $0.6 million associated with Term Loan B, which are included in the Condensed Consolidated Balance Sheets as a discount to the Long-term debt, current portion. Such fees will continue to be amortized through maturity and are included in Interest Expense, net on the Condensed Consolidated Statement of Operations. Unamortized debt issuance costs as of March 31, 2022 were $0.3 million. The Company paid approximately $4.9 million on Term Loan B subsequent to March 31, 2022, where such cash was generated from the sale of Basic assets under the Term Loan B.Facility.
Secured Promissory Note
On July 8, 2021, the Company acquired the assets of PerfX Wireline Services (“PerfX”), a provider of wireline services that operated in Williston, North Dakota and Midland, Texas. In connection with the PerfX Acquisition, on July 8, 2021, Bravo Wireline, LLC, a wholly owned subsidiary of Ranger, entered into a security agreement with Chief Investments, LLC, as administrative agent, for the financing of certain assets acquired. Certain of the assets acquired serve as collateral under the Secured Promissory Note. As of March 31, 2022,2023, the aggregate principal balance outstanding was $8.3$5.6 million. Borrowings under the Secured Promissory Note bear interest at a rate of 8.5% per annum and is scheduled to mature in January 2024. The Company made a cash payment of $1.5 million payment in February 2022 on the Secured Promissory Note, where such cash was generated from the sale of assets with an attached lien.
Other Installment Purchases
During the year ended December 31, 2021, theThe Company entered into various Installment and Security Agreements (collectively, the “Installment Agreements”) in connection with the purchase of certain ancillary equipment, where such assets are being held as collateral. As of March 31, 2022,2023, the aggregate principal balance outstanding under the Installment Agreements was $0.9$0.4 million and is payable ratably over 36 months from the time of each purchase. The monthly installment payments contain an imputed interest rate that are consistent with the Company’s incremental borrowing rate and is not significant to the Company.
Debt Obligations and Scheduled Maturities
As of March 31, 2022,2023, aggregate future principal payments of total debt are as follows (in millions):
| For the twelve months ending March 31, | For the twelve months ending March 31, | | Total | For the twelve months ending March 31, | | Total |
2023 | | $ | 61.4 | | |
2024 | 2024 | | 8.5 | | 2024 | | $ | 8.5 | |
2025 | 2025 | | 2.5 | | 2025 | | 2.6 | |
2026 | 2026 | | 4.8 | | 2026 | | 4.7 | |
| Total | Total | | $ | 77.2 | | Total | | $ | 15.8 | |
Note 1110 — Equity
Series A Preferred Stock
On September 10, 2021, the Company consummated the private placement under the Securities Purchase Agreement, dated September 10, 2021, with certain accredited investors of 6.0 million newly issued shares of Series A Convertible Preferred Stock, par value $0.01 per share, in exchange for cash consideration in an aggregate amount of $42 million. The transaction closed on October 1, 2021 and in April 2022, the Preferred Stock automatically converted into shares of the
Company’s Class A Common Stock upon effectiveness of the registration statement filed on Form S-1 by the Company on March 31, 2022 (File No. 001-699-039).
Equity-Based Compensation
In 2017, the Company adopted the Ranger Energy Services, Inc. 2017 Long Term Incentive Plan (the “2017 Plan”). The Company has granted shares of restricted stock (“restricted shares” or “RSAs”) and performance-based restricted stock units (“performance stock units” or “PSUs”) under the 2017 Plan.
Restricted Stock Awards
The Company has granted RSAs, which generally vest in 3three equal annual installments beginning on the first anniversary date of the grant. During the three months ended March 31, 2022, the Company granted approximately 385,400 RSAs, with an approximated aggregate value of $4.2 million. As of March 31, 2022,2023, there was an aggregate $2.5$7.2 million of unrecognized expense related to restricted shares issued which is expected to be recognized over a weighted average period of 1.52.1 years. Subsequent to March 31, 2022, the Company granted approximately 398,000 RSAs with an approximated aggregate value of $4.0 million.
Performance Stock Units
The performance criteria applicable to performance stock units that have been granted by the Company are based on relative total shareholder return, which measures the Company’s total shareholder return as compared to the total shareholder return of a designated peer group, and absolute total shareholder return. Generally, the performance stock units are subject to an approximated three-year performance period. During the three months ended March 31, 2023, the Company granted approximately 55,200 and 55,200 target shares of market-based performance stock units at a relative and absolute grant date fair value of approximately $15.71 and $13.12 per share, respectively. Additionally, the Company granted approximately 27,600 and 27,600 target shares of market-based performance stock units with a specified floor price per share at a relative and absolute grant date fair value of approximately $15.22 and $10.85 per share, respectively. Shares granted during the three months ended March 31, 2023 are expected to vest (if at all) following the completion of the applicable performance period on December 31, 2025. As of March 31, 2022,2023, there was an aggregate $1.0$3.2 million of unrecognized compensation cost related to performance stock units which are expected to be recognized over a weighted average period of 1.52.0 years. Subsequent
Share Repurchases
On March 7, 2023, the Company announced a share repurchase program allowing the Company to purchase Class A Common Stock held by non-affiliates, not to exceed $35.0 million in aggregate value. Share repurchases may take place from time to time on the open market or through privately negotiated transactions. The duration of the share repurchase program is 36 months.
During the three months ended March 31, 2022,2023, the Company granted approximately 72,000 PSUs (basedrepurchased 39,400 shares of the Company’s Class A Common Stock for an aggregate $0.4 million on target)the open market.
Warrant from PerfX Acquisition
The PerfX Acquisition purchase price included a warrant to acquire a 30% ownership in the XConnect Business (“XConnect”), which expires on July 8, 2031. XConnect is the manufacturer of a perforating gun system developed by the PerfX sellers alongside the PerfX wireline service business. The warrant requires the Company to maintain a specific minimum level of purchases of XConnect’s manufactured products. Should the Company fail to maintain the specified minimum level of purchases, a forfeiture event would occur; however, the Company may elect to cure the forfeiture event through a cash payment to XConnect. If the Company elects to not cure the forfeiture event, the ownership percentage would reduce to 15%. Upon the occurrence of a second uncured forfeiture event, the warrant is deemed to be cancelled. The value of the warrant by the Company is negligible as of March 31, 2023. The Company finalized the purchase price allocation in the fourth quarter of 2021.
Note 1211 — Risk Concentrations
Customer Concentrations
ForDuring the three months ended March 31, 2023, two customers each accounted for approximately 10% of the Company’s consolidated revenue. As of March 31, 2023, approximately 15% of the net accounts receivable balance, in aggregate, was due from these two customers.
During the three months ended March 31, 2022, two customers Occidental Petroleum Corporation and Chevron, accounted for approximately 11% and 10%, respectively, each of the Company’s consolidated revenues.revenue. As of March 31, 2022, approximately 27% of the net accounts receivable balance, in aggregate, was due from these two customers.
For the three months ended March 31, 2021, one customer, EOG Resources, accounted for 24% of the Company’s consolidated revenues. As of March 31, 2021, approximately 12% of the accounts receivable balance was due from this customer.
Note 1312 — Income Taxes
The Company is a corporation and is subject to U.S. federal income tax. The Company uses an estimated annual effective tax rate for purposes of determining the income tax provision during interim reporting periods. In calculating the estimated annual effective tax rate, the Company considers forecasted annual pre-tax income and estimated permanent book versus tax differences. Adjustments to the effective tax rate and other income tax related estimates could occur during the year as information and assumptions change which could include, but are not limited to, changes to forecasted amounts, estimates of permanent book versus tax differences, and changes to tax laws and rates. The effective U.S. federal income tax rate, excluding the impact of discrete items, applicable to the Company for the three months ended March 31, 2023 and 2022 was 24.0% and 2021 was 22.5% and (5.4)%, respectively. The Company is subject to the Texas Margin Tax, thatwhich requires tax payments at a maximum statutory effective rate of 0.75% on the taxable margin of each taxable entity that does business in Texas.
As Historically, utilization of a resultportion of the initial public offeringCompany's net operating loss ("NOL") carryforwards has been subject to limitations of utilization under Section 382 of the Internal Revenue Code of 1986, as amended. The Company may be subject to additional limitations due to ownership changes that could occur. The Company reviews changes in the ownership of its shares as such information becomes available to determine whether changes that would result in further limitation have occurred. Given the availability and subsequent reorganization,timing of such ownership information and the Company recordedunderlying analysis required to evaluate such changes, there can be no assurance that existing NOL carry-forwards or credits will not be subject to limitation as of the end of a deferred tax asset. However, areporting period.
A valuation allowance (“VA”) has been recorded to reduce the Company’s net deferred tax assets to an amount that is more likely than not to be realized. The VA is based upon the uncertainty of the realization of certain federal and state deferred tax assets related to net operating loss carryforwards and other tax attributes.
Total income tax expense for the three months ended March 31, 20222023 and 20212022 differed from amounts computed by applying the U.S. federal statutory tax rates to pre-tax income or loss primarily due to the release of the valuation allowance on deferred tax assets, the impact of permanent differences between bookpermanently non-deductible expenses, state income taxes and taxable income, and income attributable to noncontrolling interest that is not subject to federal income taxes.certain discreet tax benefits recognized during the three months ended March 31, 2023.
The Company is subject to the following material taxing jurisdictions: the United States and Texas. As of March 31, 2022,2023, the Company has no current tax years under audit. The Company remains subject to examination for federal income taxes and state income taxes for tax years 2019, 2018, 2017 and 2016.2016 through 2022.
The Company has evaluated all tax positions for which the statute of limitations remains open and believes that the material positions taken would more likely than not be sustained upon examination. Therefore, as of March 31, 2022,2023, the Company had not established any reserves for, nor recorded any unrecognized benefits related to, uncertain tax positions.
The Coronavirus, Aid, Relief and Economic SecurityIn August 2022, President Biden signed the Inflation Reduction Act (the “CARES Act”of 2022 (“IRA 2022”), which was enacted (Public Law Number 117-169) into law. This legislation is not expected to have a material impact on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws. For the three months ended March 31, 2022, there were no material tax impacts to the Condensed Consolidated Financial Statements as it relates to COVID-19 measures. However, the Company has deferred payroll tax payments of $1.1 million as ofour financial statements.
March 31, 2022 and was included in Accrued expenses on the Condensed Consolidated Balance Sheet. The Company will continue to monitor additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service and others.
Note 1413 — LossEarnings (loss) per Share
LossEarnings or loss per share is based on the amount of net income or loss allocated to the shareholders and the weighted average number of shares outstanding during the period for each class of Common Stock. The numerator and denominator used to compute earnings or loss per share were as follows (in millions, except share and per share data):
| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | | | |
| | 2022 | | 2021 | | | | | | | | |
Loss (numerator): | | | | | | | | | | | | |
Basic: | | | | | | | | | | | | |
Net loss attributable to Ranger Energy Services, Inc. | | $ | (5.7) | | | $ | (4.6) | | | | | | | | | |
Net loss attributable to Class A Common Stock | | $ | (5.7) | | | $ | (4.6) | | | | | | | | | |
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Diluted: | | | | | | | | | | | | |
Net loss attributable to Ranger Energy Services, Inc. | | $ | (5.7) | | | $ | (4.6) | | | | | | | | | |
| | | | | | | | | | | | |
Net loss attributable to Class A Common Stock | | $ | (5.7) | | | $ | (4.6) | | | | | | | | | |
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Weighted average shares (denominator): | | | | | | | | | | | | |
Weighted average number of shares - basic | | 18,472,909 | | | 8,581,642 | | | | | | | | | |
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Weighted average number of shares - diluted | | 18,472,909 | | | 8,581,642 | | | | | | | | | |
| | | | | | | | | | | | |
Basic loss per share | | $ | (0.31) | | | $ | (0.54) | | | | | | | | | |
Diluted loss per share | | $ | (0.31) | | | $ | (0.54) | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | | | |
| | 2023 | | 2022 | | | | | | | | |
Income (loss) (numerator): | | | | | | | | | | | | |
Basic: | | | | | | | | | | | | |
Income (loss) attributable to Ranger Energy Services, Inc. | | $ | 6.2 | | | $ | (5.7) | | | | | | | | | |
Net income (loss) attributable to Class A Common Stock | | $ | 6.2 | | | $ | (5.7) | | | | | | | | | |
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Diluted: | | | | | | | | | | | | |
Income (loss) attributable to Ranger Energy Services, Inc. | | $ | 6.2 | | | $ | (5.7) | | | | | | | | | |
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Net income (loss) attributable to Class A Common Stock | | $ | 6.2 | | | $ | (5.7) | | | | | | | | | |
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Weighted average shares (denominator): | | | | | | | | | | | | |
Weighted average number of shares - basic | | 24,940,335 | | | 18,472,909 | | | | | | | | | |
Effect of share-based awards | | 269,645 | | | — | | | | | | | | | |
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Weighted average number of shares - diluted | | 25,209,980 | | | 18,472,909 | | | | | | | | | |
| | | | | | | | | | | | |
Basic income (loss) per share | | $ | 0.25 | | | $ | (0.31) | | | | | | | | | |
Diluted income (loss) per share | | $ | 0.25 | | | $ | (0.31) | | | | | | | | | |
During the three months ended March 31, 2022, and 2021, the Company excluded approximately 0.7 million and 0.9 million of equity-based awards respectively, in calculating diluted loss per share, as the effect was anti-dilutive. During the three months ended March 31, 2022 and 2021, the Company excluded 6.0 million shares of Series A Preferred Stock issuable upon an effective registration statement and 6.9 million shares of Common Stock issuable upon conversion of the Company’s Class B Common Stock, respectively, in calculating diluted loss per share, as the effect was anti-dilutive.
Note 1514 — Commitments and Contingencies
Legal Matters
From time to time, the Company is involved in various legal matters arising in the normal course of business. The Company does not believe that the ultimate resolution of these currently pending matters will have a material adverse effect on its condensed consolidated financial position or results of operations.
Note 1615 — Segment Reporting
The Company’s operations are located in the United States and organized into 3three reportable segments: High Specification Rigs, Wireline Services and Processing Solutions and Ancillary Services. The reportable segments comprise the structure used by the Chief Operating Decision Maker (“CODM”) to make key operating decisions and assess performance during the years presented in the accompanying Condensed Consolidated Financial Statements. The CODM evaluates the segments’ operating performance based on multiple measures including Operatingoperating income, Adjusted EBITDA, rig hours and state counts. The tables below present the operating income measurement, as the Company believes this is most consistent with the principals used in measuring the Condensed Consolidated Financial Statements.
The following is a description of each operating segment:
High Specification Rigs. Provides high-spec well service rigs and complementary equipment and services to facilitate operations throughout the lifecycle of a well.
Wireline Services. Provides services necessary to bring and maintain a well on production and consists of our wireline completion, wireline production and pump down lines of business.
Processing Solutions and Ancillary Services. Provides other services often utilized in conjunction with our High Specification Rigs and Wireline Services segments. These services include equipment rentals, plug and abandonment, logistics hauling, processing solutions, as well as snubbing and coil tubing.
Other. The Company incurs costs, indicated as Other, that are not allocable to any of the operating segments or lines of business and include corporate general and administrative expenses as well as depreciation of office furniture and fixtures and other corporate assets.
SegmentCertain segment information as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 20222023 and 20212022 is as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | High Specification Rigs | | Wireline Services | | Processing Solutions and Ancillary Services | | Other | | Total |
| | Three Months Ended March 31, 2022 |
Revenues | | $ | 64.9 | | | $ | 38.6 | | | $ | 20.1 | | | $ | — | | | $ | 123.6 | |
Cost of services | | 50.8 | | | 40.4 | | | 16.8 | | | — | | | 108.0 | |
Depreciation and amortization | | 6.4 | | | 2.7 | | | 2.0 | | | 0.5 | | | 11.6 | |
Operating income (loss) | | 7.7 | | | (4.5) | | | 1.3 | | | (9.7) | | | (5.2) | |
Interest expense, net | | — | | | — | | | — | | | 2.1 | | | 2.1 | |
Net income (loss) | | 7.7 | | | (4.5) | | | 1.3 | | | (10.2) | | | (5.7) | |
Capital expenditures | | $ | 1.2 | | | $ | 0.9 | | | $ | 0.3 | | | $ | — | | | $ | 2.4 | |
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| | As of March 31, 2022 |
Property and equipment, net | | $ | 133.7 | | | $ | 38.3 | | | $ | 61.0 | | | $ | 17.5 | | | $ | 250.5 | |
Total assets | | $ | 210.5 | | | $ | 60.3 | | | $ | 96.1 | | | $ | 27.6 | | | $ | 394.5 | |
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| | High Specification Rigs | | Wireline Services | | Processing Solutions and Ancillary Services | | Other | | Total |
| | Three Months Ended March 31, 2021 |
Revenues | | $ | 21.7 | | | $ | 12.1 | | | $ | 4.5 | | | $ | — | | | $ | 38.3 | |
Cost of services | | 19.0 | | | 11.3 | | | 3.8 | | | — | | | 34.1 | |
Depreciation and amortization | | 4.8 | | | 1.2 | | | 1.6 | | | 0.4 | | | 8.0 | |
Operating income (loss) | | (2.1) | | | (0.4) | | | (0.9) | | | (3.9) | | | (7.3) | |
Interest expense, net | | — | | | — | | | — | | | 0.6 | | | 0.6 | |
Net income (loss) | | (2.1) | | | (0.4) | | | (0.9) | | | (4.9) | | | (8.3) | |
Capital expenditures | | $ | 1.0 | | | $ | 0.2 | | | $ | — | | | $ | — | | | $ | 1.2 | |
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| | As of December 31, 2021 |
Property and equipment, net | | $ | 140.4 | | | $ | 41.5 | | | $ | 63.3 | | | $ | 25.4 | | | $ | 270.6 | |
Total assets | | $ | 203.9 | | | $ | 60.3 | | | $ | 91.9 | | | $ | 37.0 | | | $ | 393.1 | |
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| | High Specification Rigs | | Wireline Services | | Processing Solutions and Ancillary Services | | Other | | Total |
| | Three Months Ended March 31, 2023 |
Revenue | | $ | 77.5 | | | $ | 49.9 | | | $ | 30.1 | | | $ | — | | | $ | 157.5 | |
Cost of services | | 60.1 | | | 45.7 | | | 25.1 | | | — | | | 130.9 | |
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Depreciation and amortization | | 5.5 | | | 2.4 | | | 1.6 | | | 0.5 | | | 10.0 | |
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Operating income (loss) | | 11.9 | | | 1.8 | | | 3.4 | | | (7.9) | | | 9.2 | |
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Net income (loss) | | $ | 11.9 | | | $ | 1.8 | | | $ | 3.4 | | | $ | (10.9) | | | $ | 6.2 | |
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Capital expenditures | | $ | 2.1 | | | $ | 1.3 | | | $ | 4.3 | | | $ | — | | | $ | 7.7 | |
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| | High Specification Rigs | | Wireline Services | | Processing Solutions and Ancillary Services | | Other | | Total |
| | Three Months Ended March 31, 2022 |
Revenue | | $ | 64.9 | | | $ | 38.6 | | | $ | 20.1 | | | $ | — | | | $ | 123.6 | |
Cost of services | | 50.8 | | | 40.4 | | | 16.8 | | | — | | | 108.0 | |
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Depreciation and amortization | | 6.4 | | | 2.7 | | | 2.0 | | | 0.5 | | | 11.6 | |
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Operating income (loss) | | 7.7 | | | (4.5) | | | 1.3 | | | (9.7) | | | (5.2) | |
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Net income (loss) | | $ | 7.7 | | | $ | (4.5) | | | $ | 1.3 | | | $ | (10.2) | | | $ | (5.7) | |
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Capital expenditures | | $ | 1.2 | | | $ | 0.9 | | | $ | 0.3 | | | $ | — | | | $ | 2.4 | |
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Note 1716 — Subsequent Events
Series A Preferred Stock
On September 10, 2021,The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to April 30, 2023. Based upon this review, the Company consummateddid not identify any other subsequent events that would have required adjustment or disclosure in the private placement under the Securities Purchase Agreement, dated September 10, 2021, with certain accredited investors of 6.0 million newly issued shares of Series A Convertible Preferred Stock, par value $0.01 per share, in exchange for cash consideration in an aggregate amount of $42 million. On April 18, 2022, the Preferred Stock were automatically converted into shares of the Company’s Class A Common Stock upon effectiveness of the registration statement filed on Form S-1 by the Company on March 31, 2022 (File No. 001-699-039).financial statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the historical financial statements and related notes included in Part I, Item 1. Financial Statements of this Quarterly Report on Form 10-Q (the “Quarterly Report”). This discussion contains “forward-looking statements” reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors. Factors that could cause or contribute to such differences include, but are not limited to, market prices for oil and natural gas, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this report. Please read the Cautionary Note Regarding Forward-Looking Statements. Also, please read the risk factors and other cautionary statements described under Part II, Item 1A.-“Risk“Risk Factors” included elsewhere in this Quarterly Report and in our Annual Report filed on Form 10-K for the year ended December 31, 20212022 (our “Annual Report”). We assume no obligation to update any of these forward-looking statements. Except as otherwise indicated or required by the context, all references in this Quarterly Report to the “Company,” “Ranger,” “we,” “us,” or “our” relate to Ranger Energy Services, Inc. (“Ranger, Inc.”) and its consolidated subsidiaries.
How We Evaluate Our Operations
Our service offerings consist of well completion support, workover, well maintenance, wireline, fluid management, other complementary services, as well as well installation, commissioning and operating of modular equipment, which are conducted in three reportable segments, as follows:
•High Specification Rigs. Provides high-specification (“high-spec”) well service rigs and complementary equipment and services to facilitate operations throughout the lifecycle of a well.
•Wireline Services. Provides services necessary to bring and maintain a well on production and consists of our wireline completion, wireline production and pump down lines of business.service lines.
•Processing Solutions and Ancillary Services. Provides othercomplimentary services often utilized in conjunction with our High Specification Rigs and Wireline Services segments. These services primarily include equipment rentals, coil tubing, plug and abandonment, logistics hauling, processing solutions, as well as snubbing, and coil tubing.processing solutions.
•Other. Other represents costs not allocable to the reporting segments and includes corporate general and administrative expense and depreciation of corporate furniture and fixtures, amortization, impairments, debt retirements and other items similar in nature.
For additional financial information about our segments, please see “Item 1. Financial Information — Note 1516 — Segment Reporting.Subsequent Events.”
Recent EventsBusiness Outlook
We continue to expect business opportunities and Outlook
Significant progress has been madefinancial results to combat COVID-19show mild increases as the global economy continues to slowly stabilize and its multiple variants, however, it remainsimprove. The International Energy Agency stated that global oil demand is set to rise by 1.9 million barrels per day in 2023 where the U.S. ranks as the world’s leading source of supply growth. Commodity pricing reached over $130 per barrel with a low of $70 per barrel during 2022 and is expected to remain at approximately $80 to $85 per barrel during 2023 as global oil inventories increase. However, this increased demand could prove to be a challenge and continuesas OPEC+ announced additional reductions of approximately 1.2 million barrels per day. Additionally, we believe the geopolitical events will continue to have an impact on the macroeconomic backdrop of our financial results. The extent of theindustry, specifically surrounding China as COVID-19 outbreak on the Company’s operationalrestrictions are lifted and financial performance will significantly depend on further developments, including the duration and spread of the outbreak and continued impact on our personnel, customer activity and third-party providers. While commodity prices, as well as our stock price and operational activity, have improved during the quarter ended March 31, 2022, we expect this global market volatility to continue at least until the outbreak of COVID-19, including any new variants, stabilizes, if not longer.
The U.S. government implemented a number of programs in the early wake of the impacts of COVID-19, including the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the largest relief package in U.S. history, and the Main Street Lending Program established by the Federal Reserve. We qualified for limited aiduncertainty regarding Russia’s oil supply while under the CARES Act and have deferred payroll tax payments of $1.1 million as of March 31, 2022 under the CARES Act, which will become due on December 31, 2022.sanctions.
In February 2022, Russia invaded neighboring Ukraine. The conflict has caused turmoil in global markets, resulting in higher oil prices, and injected even more uncertainty into a worldwide economy recovering from the effects of COVID-19. Given the evolving conflict, there are many unknown factors and events that could materially impact our operations. These events have and continue to impact commodity prices, which could have a material effect on our earnings, cash flows, and financial condition. In the short-term, commodity price fluctuations are highly uncertain. Actual price outcomes will be dependent on the degree to which existing sanctions imposed on Russia, any potential future sanctions, and independent corporate actions affect Russia’s oil production or the sale of Russia’s oil in the global market. In addition, the degree to which other oil producers respond to current oil prices, as well as the effects macroeconomic developments might have on global oil demand, will be important for oil price formation in the coming months.
Financial Metrics
How We Generate RevenuesRevenue
Rig hours and stage counts, as it relates to our High Specification Rigs and Wireline Services segments, respectively, are important indicators of our activity levels and profitability. The stage count metric has become increasingly important with the update in our external reporting segments. Rig hours represent the aggregate number of hours that our well service rigs actively worked, whereas stage counts represent the number of completed stages during the periods presented. Generally, during the period our services are being provided, our customers are billed on an hourly basis for our high-spec rig services or, as it relates to our wireline services, they are billed upon the earlier of the completion of the well or on a monthly basis. The rates for such rig hours and completed wells at which the customer is billed is generally predetermined based upon a contractual agreement.
Costs of Conducting Our Business
The principal costs associated with conducting our business are personnel, repairs and maintenance, general and administrative, and depreciation expense.
Cost of Services. Our primary costs associated with our cost of services are related to personnel expenses, repairs and maintenance of our fixed assets and, as it relates to our Wireline Services segment, perforating and gun costs. A significant portion of these expenses are variable, and therefore typically managed based on industry conditions and demand for our services. Further, there is generally a correlation between our revenuesrevenue generated and personnel and repairs and maintenance costs, which are dependent upon the operational activity.
Personnel costs associated with our operational employees represent a significant cost of our business. A substantial portion of our labor costs is attributable to our field crews and is partly variable based on the requirements of specific customers. A key component of personnel costs relates to the ongoing training of our employees, which improves safety rates and reduces attrition.
General & Administrative. As described above, general and administrative expenses are corporate in nature and are included within the Other segment.Other. These costs are not attributable to any of our lines of businesses nor reporting segments.
We analyze our operating income or loss by segment, which we have defined as revenues less cost of services and depreciation expense. We believe this is a key financial metric as it provides insight on profitability and operational performance based on the historical cost basis of our assets.
Operating Income or Loss
We analyze our operating income or loss by segment, which we have defined as revenuesrevenue less cost of services and depreciation expense. We believe this is a key financial metric as it provides insight on profitability and operational performance based on the historical cost basis of our assets.
Adjusted EBITDA
We view Adjusted EBITDA, which is a non‑GAAP financial measure, as an important indicator of performance. We define Adjusted EBITDA as net income or loss before net interest expense, income tax provisionexpense (benefit), depreciation and amortization, equity‑based compensation, acquisition‑related and severance costs, gain andor loss on disposal of assets, legal fees and settlements, and other non‑cash and certain other items that we do not view as indicative of our ongoing performance. See “—Results of Operations” and “—Note Regarding Non‑GAAP Financial Measure” for more information and reconciliations of net income (loss) to Adjusted EBITDA, the most directly comparable financial measure calculated and presented in accordance with GAAP.
Results of Operations
Three Months Ended March 31, 20222023 compared to Three Months Ended March 31, 20212022
The following is an analysis of our operating results. See “—How We Evaluate Our Operations” for definitions of rig hours, stage counts and other analogous information.information, as well as key operating metrics.
| | | Three Months Ended | | | Three Months Ended | |
| | March 31, | | Variance | | March 31, | | Variance |
| | 2022 | | 2021 | | $ | | % | | 2023 | | 2022 | | $ | | % |
Revenues | | | | | | | | | |
Revenue | | Revenue | | | | | | | | |
High specification rigs | High specification rigs | | $ | 64.9 | | | $ | 21.7 | | | $ | 43.2 | | | 199 | % | High specification rigs | | $ | 77.5 | | | $ | 64.9 | | | $ | 12.6 | | | 19 | % |
Wireline services | Wireline services | | 38.6 | | | 12.1 | | | 26.5 | | | 219 | % | Wireline services | | 49.9 | | | 38.6 | | | 11.3 | | | 29 | % |
Processing solutions and ancillary services | Processing solutions and ancillary services | | 20.1 | | | 4.5 | | | 15.6 | | | 347 | % | Processing solutions and ancillary services | | 30.1 | | | 20.1 | | | 10.0 | | | 50 | % |
Total revenues | | 123.6 | | | 38.3 | | | 85.3 | | | 223 | % | |
Total revenue | | Total revenue | | 157.5 | | | 123.6 | | | 33.9 | | | 27 | % |
| Operating expenses | Operating expenses | | Operating expenses | |
Cost of services (exclusive of depreciation and amortization): | Cost of services (exclusive of depreciation and amortization): | | Cost of services (exclusive of depreciation and amortization): | |
High specification rigs | High specification rigs | | 50.8 | | | 19.0 | | | 31.8 | | | 167 | % | High specification rigs | | 60.1 | | | 50.8 | | | 9.3 | | | 18 | % |
Wireline services | Wireline services | | 40.4 | | | 11.3 | | | 29.1 | | | 258 | % | Wireline services | | 45.7 | | | 40.4 | | | 5.3 | | | 13 | % |
Processing solutions and ancillary services | Processing solutions and ancillary services | | 16.8 | | | 3.8 | | | 13.0 | | | 342 | % | Processing solutions and ancillary services | | 25.1 | | | 16.8 | | | 8.3 | | | 49 | % |
Total cost of services | Total cost of services | | 108.0 | | | 34.1 | | | 73.9 | | | 217 | % | Total cost of services | | 130.9 | | | 108.0 | | | 22.9 | | | 21 | % |
General and administrative | General and administrative | | 9.2 | | | 3.5 | | | 5.7 | | | 163 | % | General and administrative | | 8.4 | | | 10.2 | | | (1.8) | | | (18) | % |
Depreciation and amortization | Depreciation and amortization | | 11.6 | | | 8.0 | | | 3.6 | | | 45 | % | Depreciation and amortization | | 10.0 | | | 11.6 | | | (1.6) | | | (14) | % |
| Gain on sale of assets | Gain on sale of assets | | — | | | — | | | — | | | 100 | % | Gain on sale of assets | | (1.0) | | | (1.0) | | | — | | | — | % |
Total operating expenses | Total operating expenses | | 128.8 | | | 45.6 | | | 83.2 | | | 182 | % | Total operating expenses | | 148.3 | | | 128.8 | | | 19.5 | | | 15 | % |
| Operating loss | | (5.2) | | | (7.3) | | | 2.1 | | | (29) | % | |
Operating income (loss) | | Operating income (loss) | | 9.2 | | | (5.2) | | | 14.4 | | | 277 | % |
| Other expenses | Other expenses | | Other expenses | |
Interest expense, net | Interest expense, net | | 2.1 | | | 0.6 | | | 1.5 | | | 250 | % | Interest expense, net | | 1.2 | | | 2.1 | | | (0.9) | | | (43) | % |
| Total other expenses | Total other expenses | | 2.1 | | | 0.6 | | | 1.5 | | | 250 | % | Total other expenses | | 1.2 | | | 2.1 | | | (0.9) | | | (43) | % |
| Loss before income tax expense | | (7.3) | | | (7.9) | | | 0.6 | | | (8) | % | |
Tax (benefit) expense | | (1.6) | | | 0.4 | | | (2.0) | | | (500) | % | |
Net loss | | $ | (5.7) | | | $ | (8.3) | | | $ | 2.6 | | | (31) | % | |
Income (loss) before income tax benefit | | Income (loss) before income tax benefit | | 8.0 | | | (7.3) | | | 15.3 | | | 210 | % |
Income tax expense (benefit) | | Income tax expense (benefit) | | 1.8 | | | (1.6) | | | 3.4 | | | 213 | % |
Net income (loss) | | Net income (loss) | | $ | 6.2 | | | $ | (5.7) | | | $ | 11.9 | | | 209 | % |
Revenues.Revenue. RevenuesRevenue for the three months ended March 31, 20222023 increased $85.3$33.9 million, or 223%27%, to $123.6$157.5 million from $38.3$123.6 million for the three months ended March 31, 2021.2022. The change in revenuesrevenue by segment was as follows:
High Specification Rigs. High Specification Rig revenuesrevenue for the three months ended March 31, 20222023 increased $43.2$12.6 million, or 199%19%, to $64.9$77.5 million from $21.7$64.9 million for the three months ended March 31, 2021.2022. The revenue increase inis attributable to improved efficiencies, as the average revenue per rig services revenue included a 161% increase in total rig hourshour increased 19% to 112,500$689 for the three months ended March 31, 20222023 from 43,200 for the three months ended March 31, 2021. The average revenue per rig hour increased 17% to $577 for the three months ended March 31, 2022 from $4932022. Total rig hours held consistent at 112,500 for both the three months ended March 31, 2021. Of the total segment revenue increase, $32.7 million is attributable to the assets acquired in the Basic Acquisition. The increase in revenue, rig hours2023 and average revenue per rig hour is also related to increased crude oil pricing and industry activity.three months ended March 31, 2022.
Wireline Services. Wireline Services revenuesrevenue for the three months ended March 31, 20222023 increased $26.5$11.3 million, or 219%29%, to $38.6$49.9 million from $12.1$38.6 million for the three months ended March 31, 2021.2022. The increased wireline services revenue was primarily attributable to completion services which includedof $3.1 million related to increased pricing and the addition of standby charges, offset by a 163% increase14% decrease in completed stage countcounts to 6,400 for the three months ended March 31, 2023 from 7,400 for the three months ended March 31, 2022 from 2,800 for the three months ended March 31, 2021 related to completion services. The increase in2022. Additional increased wireline services revenue included a 133% increase in average active wireline unitswas attributable to fourteen units for the three months ended March 31, 2022 from six units for the three months ended March 31, 2021. Of the segment revenue, $7.3pump down services and production services of $5.4 million and $24.5$2.9 million, are attributable to the assets acquired in the Patriot and PerfX Acquisitions, respectively.
Processing Solutions and Ancillary Services. Processing Solutions and Ancillary Services revenuesrevenue for the three months ended March 31, 20222023 increased $15.6$10.0 million, or 347%50%, to $20.1$30.1 million from $4.5$20.1 million for the three months ended March 31, 2021. Of the total segment revenue increase, $9.5 million is attributable to the Basic Acquisition.2022. The increase in processing
solutions and ancillary services is primarily attributable to a $5.5 million increase in both of our equipment rentals andcoil tubing, plugging and abandonment services and equipment rentals, which amounted to $6.0$5.2 million, $2.0 million and $5.7$2.0 million, respectively.
Cost of services (exclusive of depreciation and amortization). Cost of services (exclusive of depreciation and amortization) for the three months ended March 31, 20222023 increased $73.9$22.9 million, or 217%21%, to $108.0$130.9 million from $34.1$108.0 million for the three months ended March 31, 2021.2022. As
a percentage of revenue, cost of services was 87%83% and 89%87% for the three months ended March 31, 20222023 and 2021,2022, respectively. The change in cost of services by segment was as follows:
High Specification Rigs. High Specification Rig cost of services for the three months ended March 31, 20222023 increased $31.8$9.3 million, or 167%18% to $50.8$60.1 million from $19.0$50.8 million for the three months ended March 31, 2021.2022. The increase was primarily attributable to an increase in variable expenses, notably employee costsrelated labor, travel, and fuelmaintenance costs, which amounted to $18.3$5.9 million, $1.4 million, and $2.9$1.1 million, respectively.respectively, coupled with a $0.4 million increase in expense related to general operating expenses. Additionally, the increase corresponds with the increase in average revenue per rig hours and revenues. Of the segment cost of services, $25.0 million is attributable to the Basic Acquisition.hour.
Wireline Services. Wireline Services cost of services for the three months ended March 31, 20222023 increased $29.1$5.3 million, or 258%13%, to $40.4$45.7 million from $11.3$40.4 million for the three months ended March 31, 2021.2022. Wireline Services cost of services as a percentage of revenue decreased from 105% for the three months ended March 31, 2022 to 92% for the three months ended March 31, 2023 due to the increase in revenue attributed to increased utilization of assets. The increase was primarily attributable to increased employee costs due to the acquisitions of PerfX and Patriot, and, to a lesser extent, maintenance costs. Of the total segment cost of services, $26.6$2.7 million and $6.4 million is attributable to the assets acquired in the PerfX and Patriot Acquisitions, respectively, whereas the increased maintenance costs amounted to $1.6of approximately $1.2 million.
Processing Solutions and Ancillary Services. Processing Solutions and Ancillary Services cost of services for the three months ended March 31, 20222023 increased $13.0$8.3 million, or 342%49%, to $16.8$25.1 million from $3.8$16.8 million for the three months ended March 31, 2021.2022. The increase was primarily attributable to increased employee costs with the upturn in operational activity, which amounted to $6.2approximately $3.1 million. Of the segmentAdditionally, cost of services increase, $9.8service expense increased by $2.4 million is attributableprimarily related to the Basic Acquisition.increased activity in our coil tubing and plugging and abandonment services.
General & Administrative. General and administrative expenses for the three months ended March 31, 2022 increased $5.72023 decreased $1.8 million, or 163%18%, to $9.2$8.4 million from $3.5$10.2 million. The increasedecrease in general and administrative expenses is primarily due to corporatedecreased accounting, legal and professional expenses, partially offset by increased employee costs and increased professional fees during three months ended March 31, 2022.2023.
Depreciation and Amortization. Depreciation and amortization for the three months ended March 31, 2022 increased $3.62023 decreased $1.6 million, or 45%14%, to $11.6$10.0 million from $8.0$11.6 million for the three months ended March 31, 2021.2022. The increasedecrease was attributable to assets acquired through the business combinations during the last half of the year ended December 31, 2021. This was partially offset by depreciation expense related to fixed assets disposed of during the three months ended March 31, 2021.2022.
Interest Expense, net. Interest expense, net for the three months ended March 31, 2022 increased $1.52023 decreased $0.9 million, or 250%43%, to $2.1$1.2 million from $0.6$2.1 million for the three months ended March 31, 2021.2022. The increasedecrease to net interest expense was attributable to the increaseddecreased principal balance on our Revolving Credit Facility, (as defined below)M&E Term Loan Facility, and payoff of Term Loan B Facility.
Income Tax Expense (Benefit). Income tax expense for the three months ended March 31, 2023increased $3.4 million, or 213%, higher interest rates on each trancheto a tax expense of $1.8 million from a tax benefit of $1.6 million for the Loan and Security Agreement that closed on September 27, 2021, and interest paid onthree months ended March 31, 2022. The increase in tax expense was attributable to the Secured Promissory Note issuedincrease in connection with the PerfX Acquisition.income over two consecutive quarters.
Note Regarding Non-GAAP Financial Measure
Adjusted EBITDA is not a financial measure determined in accordance with U.S. GAAP. We define Adjusted EBITDA as net income or loss before net interest expense, income tax provisionexpense (benefit), depreciation and amortization, equity-based compensation, acquisition-related and severance costs, gain or loss on disposal of assets, legal fees and settlements, and other non-cash andor certain other items that we do not view as indicative of our ongoing performance.
We believe Adjusted EBITDA is a useful performance measure because it allows for an effective evaluation of our operating performance when compared to our peers, without regard to our financing methods or capital structure. We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net lossincome (loss) determined in accordance with U.S. GAAP. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are reflected in Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an indication that our results will be unaffected by the items excluded from Adjusted EBITDA. Our computations of Adjusted EBITDA may not be identical to other similarly titled measures of other companies. The following table presents reconciliations of net income (loss) to Adjusted EBITDA, our most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
Three Months Ended March 31, 20222023 compared to Three Months Ended March 31, 20212022
The following is an analysis of our Adjusted EBITDA. See “Item 1. Financial Information—Note 15—Segment Reporting” and “—Results of Operations” for further details.details (in millions).
| | | Three Months Ended March 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | High Specification Rigs | | Wireline Services | | Processing Solutions and Ancillary Services | | Other | | Total | | High Specification Rigs | | Wireline Services | | Processing Solutions and Ancillary Services | | Other | | Total |
| | (in millions) | | Three Months Ended March 31, 2023 |
Net income (loss) | Net income (loss) | | $ | 7.7 | | | $ | (4.5) | | | $ | 1.3 | | | $ | (10.2) | | | $ | (5.7) | | Net income (loss) | | $ | 11.9 | | | $ | 1.8 | | | $ | 3.4 | | | $ | (10.9) | | | $ | 6.2 | |
Interest expense, net | Interest expense, net | | — | | | — | | | — | | | 2.1 | | | 2.1 | | Interest expense, net | | — | | | — | | | — | | | 1.2 | | | 1.2 | |
Tax (benefit) expense | | — | | | — | | | — | | | (1.6) | | | (1.6) | | |
Income tax expense | | Income tax expense | | — | | | — | | | — | | | 1.8 | | | 1.8 | |
Depreciation and amortization | Depreciation and amortization | | 6.4 | | | 2.7 | | | 2.0 | | | 0.5 | | | 11.6 | | Depreciation and amortization | | 5.5 | | | 2.4 | | | 1.6 | | | 0.5 | | | 10.0 | |
EBITDA | | EBITDA | | 17.4 | | | 4.2 | | | 5.0 | | | (7.4) | | | 19.2 | |
| Equity based compensation | Equity based compensation | | — | | | — | | | — | | | 0.8 | | | 0.8 | | Equity based compensation | | — | | | — | | | — | | | 1.1 | | | 1.1 | |
| Gain on disposal of property and equipment | Gain on disposal of property and equipment | | — | | | — | | | — | | | (1.0) | | | (1.0) | | Gain on disposal of property and equipment | | — | | | — | | | — | | | (1.0) | | | (1.0) | |
| Severance and reorganization costs | Severance and reorganization costs | | — | | | — | | | — | | | — | | | — | | Severance and reorganization costs | | — | | | — | | | — | | | 0.2 | | | 0.2 | |
Acquisition related costs | Acquisition related costs | | — | | | — | | | — | | | 3.2 | | | 3.2 | | Acquisition related costs | | — | | | — | | | — | | | 0.6 | | | 0.6 | |
Legal fees and settlements | | — | | | — | | | — | | | 0.2 | | | 0.2 | | |
| Adjusted EBITDA | Adjusted EBITDA | | $ | 14.1 | | | $ | (1.8) | | | $ | 3.3 | | | $ | (6.0) | | | $ | 9.6 | | Adjusted EBITDA | | $ | 17.4 | | | $ | 4.2 | | | $ | 5.0 | | | $ | (6.5) | | | $ | 20.1 | |
| | | Three Months Ended March 31, 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | High Specification Rigs | | Wireline Services | | Processing Solutions and Ancillary Services | | Other | | Total | | High Specification Rigs | | Wireline Services | | Processing Solutions and Ancillary Services | | Other | | Total |
| | (in millions) | | Three Months Ended March 31, 2022 |
Net income (loss) | Net income (loss) | | $ | (2.1) | | | $ | (0.4) | | | $ | (0.9) | | | $ | (4.9) | | | $ | (8.3) | | Net income (loss) | | $ | 7.7 | | | $ | (4.5) | | | $ | 1.3 | | | $ | (10.2) | | | $ | (5.7) | |
Interest expense, net | Interest expense, net | | — | | | — | | | — | | | 0.6 | | | 0.6 | | Interest expense, net | | — | | | — | | | — | | | 2.1 | | | 2.1 | |
Tax (benefit) expense | | — | | | — | | | — | | | 0.4 | | | 0.4 | | |
Income tax benefit | | Income tax benefit | | — | | | — | | | — | | | (1.6) | | | (1.6) | |
Depreciation and amortization | Depreciation and amortization | | 4.8 | | | 1.2 | | | 1.6 | | | 0.4 | | | 8.0 | | Depreciation and amortization | | 6.4 | | | 2.7 | | | 2.0 | | | 0.5 | | | 11.6 | |
EBITDA | | EBITDA | | 14.1 | | | (1.8) | | | 3.3 | | | (9.2) | | | 6.4 | |
| Equity based compensation | Equity based compensation | | — | | | — | | | — | | | 0.9 | | | 0.9 | | Equity based compensation | | — | | | — | | | — | | | 0.8 | | | 0.8 | |
| Gain on disposal of property and equipment | Gain on disposal of property and equipment | | — | | | — | | | — | | | (0.4) | | | (0.4) | | Gain on disposal of property and equipment | | — | | | — | | | — | | | (1.0) | | | (1.0) | |
| Severance and reorganization costs | Severance and reorganization costs | | — | | | — | | | — | | | (1.4) | | | (1.4) | | Severance and reorganization costs | | — | | | — | | | — | | | — | | | — | |
Acquisition related costs | Acquisition related costs | | — | | | — | | | — | | | — | | | — | | Acquisition related costs | | — | | | — | | | — | | | 3.2 | | | 3.2 | |
Legal fees and settlements | Legal fees and settlements | | — | | | — | | | — | | | — | | | — | | Legal fees and settlements | | — | | | — | | | — | | | 0.2 | | | 0.2 | |
Adjusted EBITDA | Adjusted EBITDA | | $ | 2.7 | | | $ | 0.8 | | | $ | 0.7 | | | $ | (4.4) | | | $ | (0.2) | | Adjusted EBITDA | | $ | 14.1 | | | $ | (1.8) | | | $ | 3.3 | | | $ | (6.0) | | | $ | 9.6 | |
| | | Variance ($) | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | High Specification Rigs | | Wireline Services | | Processing Solutions and Ancillary Services | | Other | | Total | | High Specification Rigs | | Wireline Services | | Processing Solutions and Ancillary Services | | Other | | Total |
| | (in millions) | | Variance ($) |
Net income (loss) | Net income (loss) | | $ | 9.8 | | | $ | (4.1) | | | $ | 2.2 | | | $ | (5.3) | | | $ | 2.6 | | Net income (loss) | | $ | 4.2 | | | $ | 6.3 | | | $ | 2.1 | | | $ | (0.7) | | | $ | 11.9 | |
Interest expense, net | Interest expense, net | | — | | | — | | | — | | | 1.5 | | | 1.5 | | Interest expense, net | | — | | | — | | | — | | | (0.9) | | | (0.9) | |
Tax (benefit) expense | | — | | | — | | | — | | | (2.0) | | | (2.0) | | |
Income tax expense (benefit) | | Income tax expense (benefit) | | — | | | — | | | — | | | 3.4 | | | 3.4 | |
Depreciation and amortization | Depreciation and amortization | | 1.6 | | | 1.5 | | | 0.4 | | | 0.1 | | | 3.6 | | Depreciation and amortization | | (0.9) | | | (0.3) | | | (0.4) | | | — | | | (1.6) | |
Impairment of fixed assets | | Impairment of fixed assets | | — | | | — | | | — | | | — | | | — | |
EBITDA | | EBITDA | | 3.3 | | | 6.0 | | | 1.7 | | | 1.8 | | | 12.8 | |
Equity based compensation | Equity based compensation | | — | | | — | | | — | | | (0.1) | | | (0.1) | | Equity based compensation | | — | | | — | | | — | | | 0.3 | | | 0.3 | |
| Gain on disposal of property and equipment | Gain on disposal of property and equipment | | — | | | — | | | — | | | (0.6) | | | (0.6) | | Gain on disposal of property and equipment | | — | | | — | | | — | | | — | | | — | |
| Severance and reorganization costs | Severance and reorganization costs | | — | | | — | | | — | | | 1.4 | | | 1.4 | | Severance and reorganization costs | | — | | | — | | | — | | | 0.2 | | | 0.2 | |
Acquisition related costs | Acquisition related costs | | — | | | — | | | — | | | 3.2 | | | 3.2 | | Acquisition related costs | | — | | | — | | | — | | | (2.6) | | | (2.6) | |
Legal fees and settlements | Legal fees and settlements | | — | | | — | | | — | | | 0.2 | | | 0.2 | | Legal fees and settlements | | — | | | — | | | — | | | (0.2) | | | (0.2) | |
Adjusted EBITDA | Adjusted EBITDA | | $ | 11.4 | | | $ | (2.6) | | | $ | 2.6 | | | $ | (1.6) | | | $ | 9.8 | | Adjusted EBITDA | | $ | 3.3 | | | $ | 6.0 | | | $ | 1.7 | | | $ | (0.5) | | | $ | 10.5 | |
Adjusted EBITDA for the three months ended March 31, 20222023 increased $9.8$10.5 million to income of $9.6$20.1 million from a loss of $0.2$9.6 million for the three months ended March 31, 2021.2022. The change by segment was as follows:
High Specification Rigs. High Specification Rigs Adjusted EBITDA for the three months ended March 31, 20222023 increased $11.4$3.3 million to $14.1$17.4 million from $2.7$14.1 million for the three months ended March 31, 2021, primarily2022, due to increased revenuesrevenue of $43.2$12.6 million, partially offset by a corresponding increase in cost of services of $31.8$9.3 million.
Wireline Services. Wireline Services Adjusted EBITDA for the three months ended March 31, 2022 decreased $2.62023 increased $6.0 million to $4.2 million from a loss of $1.8 million from income of $0.8 million for the three months ended March 31, 2021, primarily2022, due to anincreased revenue of $11.3 million, partially offset by a corresponding increase in cost of services of $29.1 million, offset by increased revenues of $26.5$5.3 million.
Processing Solutions and Ancillary Services. Processing Solutions and Ancillary Services Adjusted EBITDA for the three months ended March 31, 20222023 increased $2.6$1.7 million to $3.3$5.0 million from $0.7$3.3 million for the three months ended March 31, 2021,2022, due to increased revenuesrevenue of $15.6$10.0 million, offset by a corresponding increase in cost of services of $13.0$8.3 million.
Other. Other Adjusted EBITDA for the three months ended March 31, 20222023 decreased $1.6$0.5 million to a loss of $6.0$6.5 million from a loss of $4.4$6.0 million for the three months ended March 31, 2021.2022. The balances included in Other reflect other general and administrative costs, which are not directly attributable to High Specification Rigs, Wireline Services or Processing Solutions and Ancillary Services.
Liquidity and Capital Resources
Overview
We require capital to fund ongoing operations, including maintenance expenditures on our existing fleet and equipment, organic growth initiatives, investments and acquisitions. Our primary sources of liquidity arehave historically been cash generated from operations and borrowings under our EBC Credit Facility. As of March 31, 2022,2023, we had total liquidity of $10.2$68.4 million, consisting of $3.8$14.4 million of cash on hand and availability under our Revolving Credit Facility of $6.4$54.0 million.
As of March 31, 2022,2023, our borrowing base under the Revolving Credit Facility was $51.2$55.6 million compared to $19.8$51.2 million and $45.0$60.3 million as of March 31, 20212022 and December 31, 2021, respectively, as a result of increased operational activity and accounts receivable balances.2022, respectively. We strive to maintain financial flexibility and proactively monitor potential capital sources to meet our investment and target liquidity requirements and tothat permit us to manage the cyclicality associated with our business. We currently expect to have sufficient funds to meet the Company’s short and long term liquidity requirements and comply with our covenants of our debt agreements for at least the next 12 months from the date of issuance of these financial statements.agreements. For further details, see “— Our Debt Agreements.”
Cash Flows
The following table presents our cash flows for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | Change |
| | 2022 | | 2021 | | $ | | % |
| | (in millions) |
Net cash used in operating activities | | $ | (12.1) | | | $ | (1.9) | | | $ | (10.2) | | | 537 | % |
Net cash provided by investing activities | | 5.0 | | | — | | | 5.0 | | | 100 | % |
Net cash provided by financing activities | | 10.3 | | | 0.6 | | | 9.7 | | | 1,617 | % |
Net change in cash | | $ | 3.2 | | | $ | (1.3) | | | $ | 4.5 | | | (346) | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | Change |
| | 2023 | | 2022 | | $ | | % |
| | (in millions) |
Net cash provided by (used in) operating activities | | $ | 17.4 | | | $ | (12.1) | | | $ | 29.5 | | | 244 | % |
Net cash provided by (used in) investing activities | | (1.1) | | | 5.0 | | | (6.1) | | | (122) | % |
Net cash provided by (used in) financing activities | | (5.6) | | | 10.3 | | | (15.9) | | | (154) | % |
Net change in cash | | $ | 10.7 | | | $ | 3.2 | | | $ | 7.5 | | | 234 | % |
Operating Activities
Net cash used infrom operating activities increased $10.2$29.5 million to cash usedprovided of $12.1$17.4 million for three months ended March 31, 20222023 compared to cash used of $1.9 million for the three months ended March 31, 2021. The change in cash flows from operating activities is primarily attributable to a decrease in gross margins and operating income for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The use of working capital cash increased $6.3 million to $8.6 million for the three months ended March 31, 2022, compared to $2.3 million for the three months ended March 31, 2021.
Investing Activities
Net cash provided by investing activities increased $5.0 million from no cash provided, nor used in, investing activities for the three months ended March 31, 2021. The change in cash flows from investing activities is attributable to the significant asset sales that took place during the three months ended March 31, 2022, partially offset by the fixed asset additions.
Financing Activities
Net cash provided by financing activities increased $9.7 million from cash provided of $0.6 million for the three months ended March 31, 2021 compared to cash provided of $10.3$12.1 million for the three months ended March 31, 2022. The change in cash flows from financingoperating activities is primarily attributable to an increase in gross margins and operating income for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. The use of working capital cash increased $25.1 million to $16.5 million for the three months ended March 31, 2023, compared to cash used of $8.6 million for the three months ended March 31, 2022.
Investing Activities
Net cash from investing activities decreased $6.1 million to cash used of $1.1 million for three months ended March 31, 2023 compared to cash provided of $5.0 million for the three months ended March 31, 2022. The change in cash flows from investing activities is attributable to increased net borrowingsfixed asset additions that took place during the three months ended March 31, 2023, coupled with the asset disposals, related to assets acquired from Basic, that took place during the three months ended March 31, 2022.
Financing Activities
Net cash from financing activities decreased $15.9 million from cash provided of $16.8$10.3 million for the three months ended March 31, 2022 compared to fund working capital obligations.cash used of $5.6 million for the three months ended March 31, 2023. The change in cash flows from financing activities is primarily attributable to cash from asset sales and operations being utilized to pay down debt.
Supplemental Disclosures
During the three months ended March 31, 2022,2023, the Company added fixed assets of $0.8$1.5 million inprimarily related to finance leased assets within our High-Spec Rigs and Wirelineacross all operating segments.
Working Capital
Our working capital, which we define as total current assets less total current liabilities, was $11.7$73.1 million as of March 31, 2022,2023, compared to $2.5$65.6 million as of December 31, 2021.2022. The increased accounts receivableincrease in working capital can be attributed to a higher cash balance and contract assets, coupled with assets considered to be held for sale led to the working capital increase, however was partially offset by increased net borrowings under the EBC Revolving Credit Facility.
Our Debt Agreementsas well as a decrease in accrued expenses.
Eclipse Loan and Security Agreement
On September 27, 2021, the Company entered into a Loan and Security Agreement with Eclipse Business Capital LLC (“EBC”) and Eclipse Business Capital SPV, LLC, as administrative agent, providing the Company with a senior secured credit facility in an aggregate principal amount of $77.5 million (the “EBC Credit Facility”), consisting of (i) a revolving credit facility in an aggregate principal amount of up to $50.0 million (the “Revolving Credit Facility”), (ii) a machinery and equipment term loan facility in an aggregate principal amount of up to $12.5 million (the “M&E Term Loan Facility”) and (iii) a term loan B facility in an aggregate principal amount of up to $15.0 million (the “Term Loan B Facility”). Debt under the Eclipse Loan and Security Agreement is secured by a lien on substantially all of the Company’s assets. The Company was in compliance with the Eclipse Loan and Security Agreement covenants as of March 31, 2022.2023.
On January 7, 2022, the Company entered into the First Amendment to Loan and Security Agreement (the Eclipse Loan and Security Agreement, as amended by the First Amendment, the “Amended Loan Agreement”) with EBC and Eclipse Business Capital SPV, LLC, which increased the Maximum Revolving Facility Amount (as defined in the Amended Loan Agreement) to $65.0 million, among other things.
On September 23, 2022, the Company entered into the Amended Loan Agreement with EBC and Eclipse Business Capital SPV, LLC, which, among other things, designated the change in reference rate from LIBOR to SOFR, and designated a Letter of Credit in the amount of $1.6 million to be utilized for working capital and general corporate purposes, as needed.
Revolving Credit Facility
The Revolving Credit Facility was drawn in part on September 27, 2021, to repay the indebtedness under the existing Credit Facility, which was terminated in connection with such repayment, and to pay for the fees, costs and expenses incurred in connection with the EBC Credit Facility. The undrawn portion of the Revolving Credit Facility is available to fund working capital and other general corporate expenses and for other-permitted uses, including the financing of permitted investments and restricted payments. The Revolving Credit Facility is subject to a borrowing base that is calculated based upon a percentage of the Company’s eligible accounts receivable less certain reserves. The Company’s eligible accounts receivable serve as collateral for the borrowings under the Revolving Credit Facility, which is scheduled to mature in September 2025. The Revolving Credit Facility includes a subjective acceleration clause and cash dominion provisions that permits the administrative agent to sweep cash daily from certain bank accounts into an account of the administrative agent to repay the Company’s obligations under the Revolving Credit Facility. The borrowings of the Revolving Credit Facility, therefore, will be classified as Long-term debt, current portion on the Condensed Consolidated Balance Sheet.
Under the Revolving Credit Facility, the total loan capacity was $51.2$55.6 million, which was based on a borrowing base certificate in effect as of March 31, 2022.2023. The Company had outstandingdid not have any borrowings of $44.8 million under the Revolving Credit Facility and a $1.6 million Letter of Credit, leaving a residual $6.4$54.0 million available for borrowings as of March 31, 2022.2023. Borrowings under the Revolving Credit Facility bear interest at a rate per annum equalranging from 4.5% to 5% in excess of the LIBORSOFR Rate and 3.5% to 4% in excess of the Base Rate, dependent on the fixed cost coverage ratio, through AprilJuly 1, 2022. The weighted average interest rate for the loan was 6.0%approximately 8.9% for the three months ended March 31, 2022.
The Company capitalized fees of $1.8 million associated with the Revolving Credit Facility, which are included in Other assets in the Condensed Consolidated Balance Sheets. Such fees will continue to be amortized through maturity and are included in Interest expense, net on the Condensed Consolidated Statement of Operations. Unamortized debt issuance costs as of March 31, 2022 were $1.6 million.
M&E Term Loan Facility
Under the M&E Term Loan Facility, the Company had outstanding borrowings of $12.3$9.8 million where the monthly principal installments of $0.2 million commenced on March 1, 2022. Borrowings under the M&E Term Loan Facility bear interest at a rate per annum equal to 8% in excess of the LIBORSOFR Rate and 7% in excess of the Base Rate. The weighted average interest rate for the M&E Term Loan was 9.0%12.6% for the three months ended March 31, 2022.2023. The M&E Term Loan Facility is secured by a lien on certain high-spec rig assets and is scheduled to mature in September 2025. Any principal amounts repaid may not be reborrowed.
The Company capitalized fees on $0.3 million associated with this M&E Term Loan Facility, which are included in the Condensed Consolidated Balance Sheets as a discount to the Long-term debt, net. Such fees will continue to be amortized through maturity and are included in Interest expense, net on the Condensed Consolidated Statement of Operations. Unamortized debt issuance costs as of March 31, 2022 were $0.3 million.
Term Loan B
On October 1, 2021, the Term Loan B was finalized in connection with the closing of the Basic Acquisition. Borrowings under Term Loan B bear interest at a rate per annum equal to 13% in excess of the LIBORSOFR Rate and 11% in excess of the Base Rate. Term Loan B is scheduled to mature in September 2022. The weighted average interest rate for Term Loan B was 13.0% for12.4% through the three months ended March 31,maturity date of August 16, 2022.
On October 1, 2021,August 16, 2022, the outstanding balance of Term Loan B was drawn in full to repay borrowings under$0.3 million, which was paid utilizing funds from the Revolving Credit Facility and as of March 31, 2022 the principal balance outstanding was $11.0 million. Principal payments are generated from the proceeds from the sale of Basic assets, and may not be reborrowed. The Company capitalized fees of $0.6 million associated with Term Loan B, which are included in the Condensed Consolidated Balance Sheets as a discount to the Long-term debt, current portion. Such fees will continue to be amortized through maturity and are included in Interest Expense, net on the Condensed Consolidated Statement of Operations. Unamortized debt issuance costs as of March 31, 2022 were $0.3 million. The Company paid approximately $4.9 million on Term Loan B subsequent to March 31, 2022, where such cash was generated from the sale of Basic assets under the Term Loan B.Facility.
Secured Promissory Note
In connection with the PerfX Acquisition, on July 8, 2021, Bravo Wireline, LLC, a wholly owned subsidiary of Ranger, entered into a security agreement with Chief Investments, LLC, as administrative agent, for the financing of certain assets acquired. Certain of the assets acquired serve as collateral under the Secured Promissory Note. As of March 31, 2022,2023, the aggregate principal balance outstanding was $8.3$5.6 million. Borrowings under the Secured Promissory Note bear interest at a rate of 8.5% per annum and is scheduled to mature in January 2024. The Company made a cash payment of $1.5 million payment in February 2022 on the Secured Promissory Note, where such cash was generated from the sale of assets with an attached lien.
Other Installment Purchases
During the year ended December 31, 2021, the Company entered into various Installment and Security Agreements (collectively, the “Installment Agreements”) in connection with the purchase of certain ancillary equipment, where such assets are being held as collateral. As of March 31, 2022,2023, the aggregate principal balance outstanding under the Installment Agreements was $0.9$0.4 million and is payable ratably over 36 months from the time of each purchase. The monthly installment payments contain an imputed interest rate that are consistent with the Company’s incremental borrowing rate and is not significant to the Company.
Tax Receivable Agreement (“TRA”)Capital Returns Program
DuringOn March 1, 2023, the year ended December 31, 2021,Board of Directors announced a $35.0 million share repurchase program that can be utilized for up to 36 months. Additionally, the Board of Directors has approved a quarterly dividend of $0.05 per share, which will be initiated once the Company entered intoachieves its goal of being net debt zero. The Company believes that a definitive agreement with affiliatesshare repurchase and dividend framework provides the best overall value creation potential for investors and intends to return at least 25% of CSL Capital Management (“CSL”) and Bayou Holdings (“Bayou”)annual cash flows to terminate the TRA (the “Tax Receivable Agreement”). In consideration of the TRA Termination Agreement, the Company issued an aggregate of 376,185 shares of Class A Common Stock of the Company to affiliates of CSL Capital Management and Bayou Holdings.
During the year ended December 31, 2021, in connection with the TRA Termination Agreement, Ranger LLC redeemed CSL’s and Bayou’s outstanding units in Ranger LLC and the corresponding shares of its Class B Common Stock for an equivalent number of shares of Class A Common Stock. Following this redemption, no shares of Class B Common Stock were issued or outstanding.investors going forward.
Critical Accounting Policies and Estimates
Our significant accounting policies are discussed in our Annual Report and have not materially changed since December 31, 2021.2022.
Off-Balance Sheet Arrangements
We currently have no material off-balance sheet arrangements.
Emerging Growth Company Status and Smaller Reporting Company Status
The Company is an “emerging growth company” as defined in the JOBS Act. The Company will remain an emerging growth company until the earlier of (1) the last day of its fiscal year (a) following the fifth anniversary of the completion of the Offering, (b) in which its total annual gross revenue is at least $1.07 billion, or (c) in which the Company is deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of its most recently completed second fiscal quarter, or (2) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable to public companies. The Company has irrevocably opted out of the extended transition period and, as a result, the Company will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies. The Company will lose its EGC status on December 31, 2022, as this will represent the last day of the fiscal year following the fifth anniversary of our first Form S-1, which was filed in August 2017.
The Company is also a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act. Smaller reporting company means an issuer that is not an investment company, an asset-back issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that (i) has a market value of common stock held by non-affiliates of less than $250 million; or (i) has annual revenues of less than $100 million and either no common stock held by non-affiliates or a market value of common stock held by non-affiliates of less than $700 million. Smaller reporting company status is determined on an annual basis.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information in this Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act, as amended and Section 21E of the Exchange Act. All statements, other than statements of historical fact included in this Quarterly Report, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in our Annual Report. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events.
Forward-looking statements may include statements about:
•our business strategy;
•our operating cash flows, the availability of capital and our liquidity;
•our future revenue, income and operating performance;
•the volatility in global crude oil demand and crude oil prices for an uncertain period of time that may lead to a significant reduction of domestic crude oil and natural gas production;
•global or national health concerns, including pandemics such as the outbreak of COVID-19;
•political and economic conditions and events in foreign oil, natural gas and NGL producing countries, including embargoes, continued hostilities in the Middle East and other sustained military campaigns, the armed conflict in Ukraine and associated economic sanctions on Russia, conditions in South America, Central America and China and acts of terrorism or sabotage;
•our ability to sustain and improve our utilization, revenues and margins;
•our ability to maintain acceptable pricing for our services;
•our future capital expenditures;
•our ability to finance equipment, working capital and capital expenditures;
•competition and government regulations, including new and proposed legislation by the Biden Administration aimed at reducing the impact of climate change;
•our ability to obtain permits and governmental approvals;
•pending legal or environmental matters;
•marketing of oil and natural gas;
•business or asset acquisitions;
•general economic conditions;
•credit markets;
•our ability to successfully develop our research and technology capabilities and implement technological developments and enhancements;
•uncertainty regarding our future operating results; and
•plans, objectives, expectations and intentions contained in this report that are not historical.
We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, the risks described under “Risk Factors” in our Annual Report previously filed. Should one or more of the risks or uncertainties described occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.
All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by
applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.
Item 3. Quantitative and Qualitative Disclosures about Market Risks
Recent Events
We continue to expect business opportunities and financial results to show mild increases as the global economy continues to slowly stabilize and improve. The outbreakInternational Energy Agency stated that global oil demand is set to rise by 1.9 million barrels per day in 2023 where the U.S. ranks as the world’s leading source of supply growth. Commodity pricing reached over $130 per barrel with a low of $70 per barrel during 2022 and is expected to remain at approximately $80 to $85 per barrel during 2023 as global oil inventories increase. However, this increased demand could prove to be a challenge as OPEC+ announced additional reductions of approximately 1.2 million barrels per day. Additionally, we believe the geopolitical events will continue to have an impact on the macroeconomic backdrop of our industry, specifically surrounding China as COVID-19 has spread across the globerestrictions are lifted and has been declareduncertainty regarding Russia’s oil supply while under sanctions.
Russia invaded neighboring Ukraine and these events have and continue to impact commodity prices, which could have a public health emergency by the WHO and a National Emergency by the President of the United States. The extent of the impact of the COVID-19 outbreakmaterial effect on our operationalearnings, cash flows, and financial performancecondition. In the short-term, commodity price fluctuations are highly uncertain. Actual price outcomes will significantly dependbe dependent on certainthe degree to which existing sanctions imposed on Russia, any potential future sanctions, and independent corporate actions affect Russia’s oil production or the sale of Russia’s oil in the global market. In addition, the degree to which other oil producers respond to current oil prices, as well as the effects macroeconomic developments includingmight have on global oil demand, will be important for oil price formation in the duration and spread of the outbreak and its continued impact on customer activity and third-party providers.coming months. The direct impact to our operations began to take affect at the close of the first quarter ended March 31, 2020,2022, and has continued through March 31, 2022,2023, however the extent to which the COVID-19 outbreakinvasion may further affect our financial condition or results of operations is uncertain. For more information, please see “Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition — Recent Events andBusiness Outlook”.
Interest Rate Risk
We are exposed to interest rate risk, primarily associated with our Credit Facility and Financing Agreement. For a complete discussion of our interest rate risk, see our Annual Report. As of March 31, 2022,2023, we had $44.8a $1.6 million outstanding under our RevolvingLetter of Credit, Facility, with a weighted average interest rate of 6.0%4.5%. As of March 31, 2022,2023, the aggregate principal balance outstanding under the M&E Term Loan was $12.3$9.8 million, with a weighted average interest rate of 9.0%12.6%. A hypothetical 1.0% increase or decrease in the weighted average interest rate would increase or decrease interest expense by approximately $0.7less than $0.2 million per year. We do not currently hedge out interest rate exposure. We do not engage in derivative transactions for speculative or trading purposes.
Credit Risk
The majority of our trade receivables have payment terms of 30 days or less. As of March 31, 2022,2023, the top three trade receivable balances represented approximately 17%12%, 10%9%, and 9%7%, respectively, of consolidated net accounts receivable. Within our High Specification Rig segment, the top three trade receivable balances represented 19%, 17%13% and 16%12%, respectively, of total High Specification Rig net accounts receivable. Within our Wireline Services segment, the top three trade receivable balances represented 21%14%, 12%11%, and 9%10%, respectively, of total Wireline Services net accounts receivable. Within our Processing Solutions and Ancillary Services segment, the top three trade receivable balances represented 34%20%, 10%8%, and 7%8%, respectively, of total Processing Solutions and Ancillary Services net accounts receivable. We mitigate the associated credit risk by performing credit evaluations and monitoring the payment patterns of our customers.
Commodity Price Risk
The market for our services is indirectly exposed to fluctuations in the prices of oil and natural gas to the extent such fluctuations impact the activity levels of our E&P customers. See “— Recent Events” above for further details. Any prolonged substantial reduction in oil and natural gas prices would likely affect oil and natural gas production levels and therefore affect demand for our services. We do not currently intend to hedge our indirect exposure to commodity price risk.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report.
Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of March 31, 20222023 due to the material weaknessweaknesses previously disclosed in our 2022 Annual Report.
Material Weaknesses in Internal Control Over Financial Reporting
In connection with the evaluation of the Company’s internal control over financial reporting as described above, management has identified during the year endedfollowing deficiencies in our control environment in the current period that constituted material weaknesses in the Company’s internal control over financial reporting as of December 31, 2021.2022:
The•Ineffective controls over segregation of duties related to the review of manual journal entries and account reconciliations. Specifically, certain personnel had the ability to both (a) create and post journal entries within our general ledger system, and (b) review account reconciliations.
•Ineffective information technology general controls related to administrative user access to the Company’s information systems that are relevant to the preparation of financial statements to ensure appropriate segregation of duties and to adequately restrict access to financial applications and data.
In addition, the following material weakness relatedpreviously reporting in our 2021 Annual Report continued to ineffectiveexist as of December 31, 2022.
•Ineffective controls over the accounting for non-routine and/or complex transactions. To address this
Notwithstanding we did not identify any material weakness, we along withmisstatements to the oversightconsolidated financial statements and there were no changes to previously released financial results as a result of our audit committee, are evaluating our controls over accounting for non-routine and/or complex transactions in an effort to identify additional controls to timely identify misstatements and strengthen our overallthese material weaknesses, the control environment as well as continuing to assess our accounting personnel staffing requirements.deficiencies created a
reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis.
Remediation Efforts to Address the Material Weaknesses Existing in the Current Period
•During the fourth quarter of 2022, management implemented a remediation plan to update its design and implementation of controls to remediate the deficiency related to manual journal entries and enhance the Company's internal control environment. The Company has designed and implemented controls to prevent or detect a material misstatement resulting from certain personnel with the ability to create and post journal entries within the Company’s general ledger system. Management has designed and implemented controls over the review of all manual journal entries initiated and approved to ensure appropriate segregation of duties.
•Management has initiated a remediation plan to enhance the design of information technology general controls related to administrative user access by restricting privileged access, implementing controls over user access and enforcing proper segregation of duties within IT environments based on roles and responsibilities.
•Management is enhancing processes and designing and implementing additional internal controls to properly account for complex transactions. Additionally, the Company has hired additional accounting personnel and implementing training of new and existing personnel on proper execution of designed control procedures.
The material weaknesses will not be considered remediated until the controls have operated effectively, as evidenced through testing, for a sufficient number of instances.
Any failure to implement and maintain the improvements in the controls over our financial reporting, or difficulties encountered in the implementation of these improvements in our controls, could cause us to fail to meet our reporting obligations. Any failure to improve our internal controls to address these identified weaknesses could also cause investors to lose confidence in our reported financial information, which could have a negative impact on the trading price of our stock.
Changes in Internal Control over Financial Reporting
Other than theManagement continues to remediate previously disclosed material weakness described above, thereweaknesses. There were no changes in our internal control over financial reporting during the quarter ended March 31, 20222023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
Our operations are subject to a variety of risks and disputes normally incident to our business. As a result, we may, at any given time, be a defendant in various legal proceedings and litigation arising in the ordinary course of business. However, we are not currently subject to any material litigation and in the opinion of management, the outcome of any existing matters will not have a material adverse effect on the Company’s consolidated financial position or consolidated results of operations. We maintain insurance policies with insurers in amounts and with coverage and deductibles that we, with the advice of our insurance advisers and brokers, believe are reasonable and prudent. We cannot, however, assure you that this insurance will be adequate to protect us from all material expenses related to potential future claims for personal injury and property damage or that these levels of insurance will be available in the future at economical prices.
Item 1A. Risk Factors
Factors that could materially adversely affect our business, financial condition, operating results or liquidity and the trading price of our Class A Common Stock are described under “Risk Factors,” included in our Annual Report. This information should be considered carefully, together with other information in the Quarterly Report and the other reports and materials we file with the SEC.
The ongoing military action between Russia and Ukraine could adversely affect our business, financial condition and results of operations.
On February 24, 2022, Russian military forces invaded Ukraine, and sustained conflict and disruption in the region is likely. Although the length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable, this conflict could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences as well as increase in cyberattacks and espionage.
Russia’s recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military action against Ukraine have led to an unprecedented expansion of sanction programs imposed by the United States, the European Union, the United Kingdom, Canada, Switzerland, Japan and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic, including, among others:
•blocking sanctions against some of the largest state-owned and private Russian financial institutions (and their subsequent removal from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment system) and certain Russian businesses, some of which have significant financial and trade ties to the European Union;
•blocking sanctions against Russian and Belarusian individuals, including the Russian President, other politicians and those with government connections or involved in Russian military activities; and
•blocking of Russia’s foreign currency reserves as well as expansion of sectoral sanctions and export and trade restrictions, limitations on investments and access to capital markets and bans on various Russian imports.
In retaliation against new international sanctions and as part of measures to stabilize and support the volatile Russian financial and currency markets, the Russian authorities also imposed significant currency control measures aimed at restricting the outflow of foreign currency and capital from Russia, imposed various restrictions on transacting with non-Russian parties, banned exports of various products and other economic and financial restrictions. The situation is rapidly evolving as a result of the conflict in Ukraine, and the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories. Such sanctions and other measures, as well as the existing and potential further responses from Russia or other countries to such sanctions, tensions and military actions, could adversely affect the global economy and financial markets and could adversely affect our business, financial condition and results of operations.
We are actively monitoring the situation in Ukraine and assessing its impact on our business, including our business partners and customers. To date we have not experienced any material interruptions in our infrastructure, supplies, technology systems or networks needed to support our operations. We have no way to predict the progress or outcome of the conflict in Ukraine or its impacts in Ukraine, Russia or Belarus as the conflict, and any resulting government reactions, are rapidly developing and beyond our control. The extent and duration of the military action, sanctions and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and our business for an unknown
period of time. Any of the above mentioned factors could affect our business, financial condition and results of operations. Any such disruptions may also magnify the impact of other risks described in this prospectus.
Item 2. Unregistered Sales of Securities and Use of Proceeds
Issuer Purchases of Equity Securities
On March 7, 2023, the Company announced that its Board of Directors authorized a share repurchase program, allowing the Company to purchase currently outstanding Class A Common Stock held by non-affiliates, not to exceed $35.0 million in aggregate value. Share repurchases may take place from time to time on the open market or through privately negotiated transactions. The duration of the share repurchase program is 36 months and may be accelerated, suspended or discontinued at any time without notice.
The following table provides information with respect to Class A Common Stock purchases made by the Company during the three months ended March 31, 2022.2023.
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Period | | Total Number of Shares Repurchased (1) | | Average Price Paid Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs |
January 1, 2022 - January 31, 2022 | | — | | | $ | — | | | — | | | — | |
February 1, 2022 - February 28, 2022 | | — | | | — | | | — | | | — | |
March 1, 2022 - March 31, 2022 | | 97,384 | | | 10.75 | | | — | | | — | |
Total | | 97,384 | | | $ | 10.75 | | | — | | | — | |
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Period | | Total Number of Shares Repurchased (1) | | Average Price Paid Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | | Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (3) |
January 1, 2023 - January 31, 2023 | | — | | | $ | — | | | — | | | — | |
February 1, 2023 - February 28, 2023 | | 1,057 | | | 11.71 | | | — | | | — | |
March 1, 2023 - March 31, 2023 | | 125,444 | | | 10.38 | | | 39,400 | | | 3,397,219 | |
Total | | 126,501 | | | $ | 10.39 | | | 39,400 | | | 3,397,219 | |
_________________________
(1) Total number of shares repurchased during the first quarter of 20222023 consists of 97,38487,101 shares withheld by usthe Company in satisfaction of withholding taxes due upon the vesting of restricted shares granted to our employees under the 2017 Plan.Plan and 39,400 shares repurchased pursuant to the repurchase program that was announced on March 7, 2023.
(2) As of March 31, 2023, an aggregate of 39,400 shares were purchased for a total of $0.4 million since the inception of the repurchase plan announced on March 31, 2023.
(3) As of March 31, 2023, the maximum number of shares that may yet be purchased under the plan is 3,397,219 shares of Class A Common Stock. This is based on the closing price of $10.19 of Ranger Energy Services, Inc.’s Class A Common Stock on the New York Stock Exchange as of March 31, 2023.
Item 6. Exhibits
The following exhibits are filed as part of this Quarterly Report.
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INDEX TO EXHIBITS |
Exhibit Number | | Description |
2.1†*10.1† | | Asset PurchaseForm of Restricted Stock Agreement dated July 8, 2021 by and among PerfX Wireline Services, LLC, Bravo Wireline, LLC,(Employees) under the Ranger Energy Services, Inc., Charlie Thomas, Shelby Sullivan, Jeff Thomas and Jimmie Hayes (incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K (File No. 001-38183) filed with the Commission on July 14, 2021 2017 Long Term Incentive Plan.(2023) |
2.2†*10.2† | | Asset Purchase Agreement dated as of September 15, 2021, by and among Ranger Energy Acquisition, LLC, Basic Energy Services, Inc., Basic Energy Services, L.P., C&J Well Services, Inc., Taylor Industries, LLC and KVS Transportation, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K (File No. 001-38183) filed with the Commission on October 4, 2021). |
2.3† | | Closing Agreement and Amendment No. 1 to Asset Purchase Agreement, dated as of October 1, 2021, by and among Ranger Energy Acquisition, LLC, Basic Energy Services, Inc., Basic Energy Services, L.P., C&J Well Services, Inc., Taylor Industries, LLC and KVS Transportation Inc. (incorporated by reference to Exhibit 2.2 to the Registrant’s Form 8-K (File No. 001-38183) filed with the Commission on October 4, 2021). |
3.1 | | |
3.2*10.3† | | |
4.1 | | |
4.2 | | |
10.1 | | First Amendment to the Loan and Security Agreement, dated January 7, 2022, by and among RNGR Energy Services, LLC and certain of its subsidiaries, Ranger Energy Services, Inc., the lenders party thereto, and Eclipse Business Capital, LLC, as agent (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 001-38183) filed with the Commission on January 13, 2022) 2017 Long Term Incentive Plan (2023) |
31.1* | | |
31.2* | | |
32.1** | | |
32.2** | | |
101.CAL* | | iXBRL Calculation Linkbase Document |
101.DEF* | | iXBRL Definition Linkbase Document |
101.INS* | | iXBRL Instance Document |
101.LAB* | | iXBRL Labels Linkbase Document |
101.PRE* | | iXBRL Presentation Linkbase Document |
101.SCH* | | iXBRL Schema Document |
104* | | Cover page interactive data file (formatted in iXBRL and contained in Exhibit 101) |
* Filed as an exhibit to this Quarterly Report on Form 10-Q.
** Furnished as an exhibit to this Quarterly Report on Form 10-Q.
+ Compensatory plan or arrangement.
† Schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant will furnish a supplemental copy of any omitted schedule or similar attachment to the SEC upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Ranger Energy Services, Inc. | | |
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/s/ J. Brandon BlossmanMelissa Cougle | | April 29, 2022May 5, 2023 |
J. Brandon BlossmanMelissa Cougle | | Date |
Chief Financial Officer | | |
(Principal Financial Officer) | | |