Ranger Energy Services, Inc. Class A

Good day and welcome to the Ranger Energy Services fourth quarter 2021 conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Stuart Bowden, CEO. Please go ahead.

Thank you, operator. Good morning, everyone. This is Stuart Bowden, President and CEO of Ranger Energy Services. I'm joined today by Ranger's CFO, Brandon Blossman. Welcome to the Q4 2021 Ranger Energy Services Analyst Call. Before we begin, I would like to recognize the citizens of Ukraine. The Russian invasion of Ukraine has made it difficult to celebrate the most recent run-up in oil prices, but the Ukrainians' bravery and resilience is an inspiration to us all. Regarding Ranger, Brandon and I have been looking forward to speaking with you for some time. We're excited about the basic integration, Ranger's Q4 results, and our outlook for 2022. As you may have noted, we have changed our reporting lines to provide greater transparency into our primary service lines. We are now reporting three segments, high-spec rigs, wireline, and processing solutions and ancillary services. High-spec rigs includes production and completion-related well-servicing work. The wireline segment includes production and completion-related wireline work. Processing solutions and ancillary services includes our torrent infield gas processing business, coiled tubing, plugging and abandonment, P&A-related cementing services, and rentals and fishing tools. Like everyone, we are experiencing increased demand for our services and better pricing. However, supply chain and labor issues persist, and attracting new labor into the industry in particular remains a challenge. That said, we believe Ranger is set up for a very strong 2022. The high-spec rigs business continues to perform in line with our aggressive expectations. We are the clear market leader. Demand is increasing, and we have been successful in increasing price and leveraging the performance of our high-spec rig fleet. The wireline business has a more competitive landscape. However, both pricing and operational performance are now showing improvement. We definitely see a clear path to a very successful second half of the year, both from a demand and a pricing perspective. The legacy business lines embedded in our new processing solutions and ancillary services segment who are already material and successful businesses in their own right. The basic acquisition brought several new lines of business to this segment, and we have evaluated each of these businesses for fit. We have decided not to sell any of these businesses at this time. As on review, we now believe they are all capable of generating solid returns with growth prospects beyond what we experienced in Q4 2021. Before we dive into the Q4 results, It's important to remember that the fourth quarter represents the first quarter where we can see the impact of all of our recent acquisitions. The impact of the basic asset acquisition can be clearly seen when comparing Q4 to Q3. The third quarter represented a full quarter of our wireline acquisitions, whereas the fourth quarter represents a full quarter of the addition of the basic assets. Revenue for Q4 was $123 million with adjusted EBITDA of $9.1 million. At the segment level, High-spec rigs had revenue of more than $59 million and segment-level EBITDA of approximately or of $8.8 million, generating approximately 15% EBITDA margins. Wireline had revenue of $45 million and segment-level EBITDA of $1 million, generating 2% margins. Processing solutions and ancillary services had revenue of $19 million and $3.6 million of segment EBITDA, generating approximately 19% EBITDA margins. Corporate G&A after adjustments represented a very modest 3.5% of revenue. I'll now turn it over to Brandon to discuss Q4 in more detail.

Thank you, Stuart, and good morning to everybody on the call. Let me try to provide some incremental color to our Q4 numbers. First, I'll start at net income. So here, net income moved up quarter over quarter from a loss of $9 million in Q3 to a gain of $24 million in Q4. That's an increase of $33 million, driven essentially all by the positive impacts of the basic transaction, both on an operational and on an accounting basis. The spread between last quarters numbers and this quarter's numbers and also between the adjusted numbers for Q4 and the unadjusted numbers on both EBITDA and net income are particularly wide. So I'm going to take a little bit of time here to run through all of the adjustments that make up the delta between the net income and EBITDA as reported and as adjusted. So first on the net income, there is an adjustment of $6 million to That $6 million is a release of a tax valuation allowance that is associated with the 2021 tax year, and that is driven largely by the shift from a loss to a gain on the net income tax book, basically. Now, everything else will also be included in the EBITDA adjustments. So here we posted $9.1 million of adjusted EBITDA from Q4. And as you would expect, post a major acquisition, the adjusted numbers include meaningful adjustments related to particularly the basic acquisition. So specifically, the bridge between an unadjusted $32 million of EBITDA and our adjusted reported number of 9.1 include the following items. One, a reduction in EBITDA of $37 million. That's net of tax. on the booking of a bargain purchase for the basic transaction. Here, the minimum reasonable net book value that we recorded for the basic assets was well above our purchase price, putting us in the unusual position of needing to book again on that acquisition. Next, on the add-back side, we recorded $7 million worth of transaction costs, which were associated with the basic acquisition itself, our related equity capital raise, and the termination and refinancing of our revolver and term loan A, along with the addition of the term loan B. Also done in conjunction with the basic deal, as previously disclosed, we terminated our tax receivable agreement, which was settled with a $4 million stock issuance. This was also an add-back to EBITDA and net income. The unadjusted number also includes $1.5 million worth of bad debt expense, which we are adjusting out, which primarily relates to the still ongoing bankruptcy process of a former customer, and this is related to work completed in early 2019. And finally, we recorded $1.4 million worth of wireline perforating gun expense in Q4 on an inventory true-up which was more properly related to Q3 wireline operating expenses. The sum of all of these in and outs returns the reported $9.1 million of Q4 adjusted EBITDA. All right, so that's over with, and let's move on to the segment details. As Stuart noted, this reporting season marks the beginning of our new segment reporting structure, And as I go through the segments, I'll take a moment to share some additional notes related to that reporting structure, along with our historic KPI details that we generally provide. First, the high spec rig segment. This continues unchanged in structure from our legacy reporting. Here we capture the revenue and expenses of our service rig fleet, along with the revenues associated with any additional related equipment or onsite services, during that service delivery of the high-spec rig. What is new in this segment this quarter is, of course, the addition of the basic service rig fleet. However, do note that beyond the addition of the basic employees, the location and the service rigs from the basic deal of this segment remains fully comparable period to period. So on a quarter-over-quarter basis, so Again, this is the pre-basic versus post-basic comparison. The high-spec rig segment revenue was up sequentially 2x from $30 to nearly $60 million of revenue, while segment EBITDA margins moved down slightly from 16% to 15%. Average rigs working during the quarter moved from 67 to 167, an increase of 150 percent. Period revenue hours moved from 51,200 to 111,600, a 120 percent increase. Note that this 120 percent increase is fully attributable to the addition of the basic service rigs. The legacy ranger hours were approximately flat quarter over quarter. Offsetting, that increased in revenue hours was a drop in the composite revenue rate, which moved down 9 percent from 584 an hour to 533 an hour. Let me provide some color around that Q4 average rate. So that 533, as we entered into Q4, so the 533 was the average. As we entered into Q4, post-acquisition, the first month's average was 496, quite a bit lower But we exited the quarter, Q4, at a $561 per hour rate. I'll also note that as we move forward through the Q1, a little bit of a teaser here, we're back to at least the rates that we saw pre-basic acquisition on a composite basis. Now moving to wireline. A standalone wireline segment is new to our reporting structure. In the past, the Wireline business was co-mingled with other Ranger-branded services and reported on a composite or collected basis. We are now disaggregating Wireline as a stand-alone reporting entity. This segment, as a reminder, includes last year's Patriot and Perfex acquisitions, along with the legacy Mallard business. Here, we'll continue reporting the same set of operating metrics for the completion wireline business as we had historically. But note that this segment now includes the three largely integrated wireline services, as Stuart noted, completion work, production work, and also wireline-related pumping work. So overall, this segment, again, on a quarter-over-quarter basis, had revenue moving down slightly from $46 to $45 million, a drop of about 3%, while margins dropped from 3% to 2%. And then for the operating metrics, again, note that the operating metrics that I'll provide are like what we have provided historically and relate just to the completion side of the business. However, this still constitutes more than 80% of the segment's total revenue, So obviously very relevant to the overall segment. So again, just for completion trucks, the average working truck count moved from 20 to 18, a 10% decline, while the total completed stage count moved down from 11,400 in Q3 to 9,900 in Q4, a 13% decline. Here, Comparing Q3 to Q4, both the average working truck count and the period stage count declines were largely attributable to the weather and holiday schedule disruptions that we typically see in Q4. On the revenue side, the rate largely offset the declines in stage count and increased from $3,400 a stage to $3,800 a stage. This on a combination of both customer mix shift and individual customer price increases. And then finally, our last new recast segment. As Stuart noted, the processing solutions, the new processing solutions and ancillary services segment is the sum of our legacy torrent businesses along with several other service lines, both legacy ranger and new to us from the basic acquisition. Given that this segment includes such a wide-ranging group of business lines, we do not yet have a single set of operational metrics that stand out as useful in understanding the segment as a whole. We will continue to evolve on that front, and hopefully as perhaps some of those businesses grow in size, we'll be able to break out some operating metrics. But we have nothing to share today on the operating metrics side. And then just to wrap up, on a Q4 comparison basis, revenues in this new segment moved up from $6 million in Q3 to $19 million in Q4. That's more than three times again, like the Riggs business, largely on the addition of the basic service lines. Offsetting that slightly, margins moved down modestly from 23% to 19%. That's it for the segments. And now back to the overall company. CapEx for the quarter in total, was $2 million, with the majority of that spend associated with a multitude of small upgrades to the basic rig fleet necessary for those rigs to meet Ranger standards. At the end of 2004, net term debt stood at just over $34 million. That consists of a term loan A and a term loan B, each with an approximate balance of $12 million and our Perfex acquisition debt, which has a current balance of right around $10 million. Liquidity at year's end stood at $19 million. That was up $5 million from Q3's ending $14 million, and that $19 million was composed of $27 million of draw against a $45 million borrowing based on a revolver plus approximately $1 million of cash on hand. Mid-week this week, that number was largely unchanged and stood at approximately $18 million of liquidity. I think that's it for me and the numbers, and let me hand it back over to Stuart.

Great. Thanks, Brendan. Thanks, Brendan. We'd like to spend a couple of minutes discussing the integration of our recent acquisitions. Given the size and complexity of the basic asset acquisition, evaluating, purchasing, and integrating the basic assets has been the primary focus of the senior management team over the last several months. We are very pleased with our progress to date. As noted earlier, incremental revenue in EBITDA from Q3 to Q4 is primarily related to the addition of the basic assets. In Q4, we had $42 million of incremental revenue and approximately $6 million of incremental EBITDA. suggesting a non-optimized pull-through of approximately 14%. BASIC was our largest acquisition to date, and we have been very focused on getting it right. With BASIC, we brought all employees and assets onto Ranger Systems on day one. That was not possible with the wireline acquisitions, and although smaller, the wireline acquisitions have been more complex from a systems and processes perspective. We are now giving them increased attention. Current asset sales, which includes both basic and some Ranger legacy assets, was $8 million at the end of Q4. We expect to wrap up another $2 to $4 million by the end of the current quarter. We have line of sight to an additional $5 to $7 million in asset sales before the end of the year, which does not include physical properties. There are seven additional physical properties that we intend to sell, which we believe will realize another $5 to $7 million. All told, we expect asset and property sales to be more than $20 million in total, with approximately $8 million completed to date. To date, we've taken 135 rigs out of the U.S. land market through our Rig Recycling Impact Program, or RIP. This includes 120 rigs that have been destroyed and recycled and 15 rigs that have been sold internationally or out of the market. We have recycled approximately 4,500 U.S. tons of steel to date from our RIP program. We have posted links to videos about our program on our social media accounts, and I would encourage you to take a look. Before I turn our attention to the outlook for Q1 and for the full year 2022, I would like to quickly review the accomplishments of the Ranger team in 2021. Through the acquisitions of Patriot, Perfects, and the Basic Assets, we tripled the size and revenue potential of the company, building meaningful scale in both our rigs and wireline businesses. We also acquired several new business lines as part of the basic asset purchase that we feel bring meaningful upside to the earning power of the company. We also greatly simplified our capital structure. We refinanced our entire balance sheet, eliminated our TRA, and collapsed our multi-tiered equity structure into a single class of stock. As noted in our call in early October about the basic asset purchase, We modeled approximately $30 million of EBITDA in 2022 with 15-plus million of asset sales. Given the success of the integration and results to date, we believe we will meet or exceed those numbers, meaning we purchased the basic assets for less than one times EBITDA. We are proud of what we accomplished in 2021, and we're excited about what lies ahead. For full year 2022, we expect revenues to be between $520 and $560 million, which is an increase from our previous guidance of $450 to $500 million. We expect EBITDA to range between 11% and 13% for the full year. We are still targeting a 15% EBITDA run rate by the end of the year for Ranger as a whole. For Q1 2022, we are anticipating revenue of roughly $120 million, although we anticipate exiting the quarter at a run rate closer to $130 million. We are expecting similar revenue growth quarter on quarter for the rest of the year. We should highlight that we expect the pattern of margin and EBITDA development to be more weighted to the back half of 2022 than originally anticipated. The primary reason for this is that we expect Q1 to underperform relative to Q4 because of challenges in our wireline segment during the first couple of months of the year. I'll elaborate on this shortly. For RIGS, we're expecting steady increases in revenue and margin throughout the year. Again, this business is performing well and as expected. We modeled modest growth for processing solutions and ancillary services, but we do see further upside in these businesses. As an example, both Torrent and our P&A business have positive ESG benefits and are seeing increasing interest from customers. Another example, Quail Tubing, which is primarily a DJ Basin business, has already realized more than $6 million in revenue and and segment EBITDA margins of approximately 20% in the five months we have owned it. Now back to Wireline. There have been two primary issues in Wireline, and we are actively addressing both of them. First, the typical structure for plug-and-perf operations or completion operations leave service companies at the mercy of supply chain issues, such as delays in sand deliveries or the late arrival of frat crews. Common industry practice has been to charge plug-and-perf services on a per-stage basis, regardless of the number of stages completed that day. Unfortunately, we have had instances of sand delivery delays that resulted in zero stages completed for several days and therefore zero revenue, despite ranger incurring costs and our crews needing to be paid for their time on location. Given the tightening market, we are now working with customers to put in a day rate or standby charge to eliminate or minimize this risk. Second, tight labor markets have limited the flexibility of our labor and service model. In anticipation of increased work, we decided to hire additional personnel ahead of expected demand. When some of the work did not materialize as expected, we strategically decided to pay our crews to keep them working for Ranger. Normally, we would have had the flexibility to send these folks home, but we decided we did not want to risk losing them because we wanted to ensure that we have available crews in a growing market. As indicated, both of these issues are being addressed, and we expect to see considerable improvement in wireline as we move into the second quarter. When looking at the full year, we expect to generate meaningful cash flow in 2022. We are projecting free cash flow of $35 to $45 million, which does include the asset sales highlighted above. This range represents expected EBITDA, deducting CapEx, light-duty vehicle leases, and working capital build, plus additional asset sales. As we begin to generate positive cash flow, our first priority will be paying down our long-term structured debt, which today totals approximately $32 million. Once our long-term structured debt has been retired, we would like to keep some powder dry on hand to position us for future acquisitions, and we will also consider a dividend depending on the market conditions at that time. Thank you for listening to our commentary. This is the end of our prepared remarks, and we'll open it up for questions.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from John Fichthorn from Dialetic Capital. Please go ahead.

Hey, guys. Nice job in integrating all those deals. It's really impressive. Stuart, you said something on the call that caught my attention. You said post all these acquisitions, you've tripled the size and revenue potential of the company. I'd just love it if you could kind of expand on what that means over the longer term and maybe also on the potential of these new businesses and the processing solutions and an ancillary services segment, if you might.

Yeah, thanks, John, for the question. Appreciate it. You know, I mean, I think kind of how we're thinking about the business is really maybe to take the three segments – You know, on the rig business, it's really kind of all systems go. You know, it's performing exactly like we had hoped. We expect margins to continue to grow, revenue to continue to grow. The wireline business is very material. It's not performing as we want, but we really do think that we got our head around it and turning around. And then we have all those upsides stuck in our other service lines. I mean, what I would say is we're projecting modest growth in those right now, And that's really just a function of, you know, they're pretty new for us. We think in their current state, you know, they would just take the normal amount of maintenance CapEx. But what we're really trying to do is to figure out, you know, are these businesses that we might actually want to put growth CapEx into, right, which, you know, could provide further upside. We'll be pretty conservative in doing that. But, again, I mean, I think just as we kind of look at the second half of 2022 and then into 2023, we're pretty excited about what we got. Great. Thanks a lot, guys.

The next question comes from Don Crist with Johnson Rice. Please go ahead.

Morning, guys. How are y'all this morning? Morning. Can you talk about demand? And the basis of the question is a lot of people have, you know, come out on calls over the last six weeks or so and said that demand was super strong, but then we're hearing a little bit of slow start to the first quarter from some people due to some of the things that you highlighted in your prepared comments, you know, sand, et cetera. Can you talk about how demand has kind of ebbed and flowed and where it is going into the second quarter, how you see it today?

Yeah, sure. Thanks for the question, and Brandon, obviously, chime in. So I think what we saw is, if I just kind of walk through the quarter, I think like a lot of people, we actually had what felt like a bit of a slow start in early January. That was a combination, like we did see a holiday impact, and so I think we saw that. It really started kind of building very steadily through January, and February was a short month. There were, if you remember, two weather days that hit on a Thursday and Friday in the Permian Basin, so we were shut down for four days. So, you know, I think all of that, you know, combined to make it feel like Q1 was a bit of a slow start, plus, or, you know, kind of started slowly. And then, obviously, you know, as we highlighted, you know, we are seeing frat crew delays, sand delivery delays. All of that is impacting operations. That said, I think we are exiting the quarter at a pretty high run rate, and we think that will continue to grow. So we're pretty excited about what we're seeing there. I guess what I would just say from the last comment is when I listen to the E&P companies talk, there is still sort of talk of, hey, we're not going to go – you know, overinvest. We're going to remain disciplined. On the other hand, we're seeing a lot of inbound calls. I would say more inbound calls about equipment than would kind of match that commentary. So, it'll be interesting to see how that plays out. But, you know, what I would tell you is we're getting a lot of inbound calls right now.

Yeah, and I'll just wrap it up, Don, with just a comment, a general comment. I think you have parsed out the demand versus the logistics of it. So, whether early in the year is COVID or weather or supply chain issues, that doesn't mean the demand wasn't there. That means that the system's just stretched so tight that a disruption anywhere along the path means that the effect of that disruption is magnified at the service delivery end of the process. So I think we have a queue of customers that are looking for services that are currently unmet So, again, the demand is there. It is just getting crews that are healthy and out on location and all the supply chain that's necessary to make sure that that service, whether it's a completion or production job, is going to happen on time.

Okay. I appreciate the color there. And with the demand – being where it is in your eyes, are you able to push meaningful price increases or is there, you know, competitors out there that are keeping those prices kind of in check right now?

No, I would say we're pretty encouraged by what we've been able to accomplish on the pricing side. You know, kind of going back to the comments that Brandon made about if you just look at sort of, you know, as an example, rig rate pricing, you know, You know, on our hourly basis, you know, we almost absorbed all of the lower basic pricing, you know, by the end of this quarter. So we're definitely seeing that ability. And, you know, on the wireline side, an example I would give is, you know, I think even three, four months ago to go walk into a client and say, hey, look, we need to put in a standby charge or a day rate, they would have said, you know, we're not going to take it, and it's different today. We're having success doing that.

I appreciate all the time this morning. I'll turn it back.

Thanks, Don.

As a reminder, if you have a question, please press star then 1 to be joined to the question queue. The next question comes from William Kim with Presidio Asset Management. Please go ahead.

Good morning, Stuart, Brandon. How are you guys doing? I have a few for you today, so if you could just provide some of your time here. We're going to start writing them down. I was looking a bit at your working capital as we go through kind of the growth phase here. You know, there's quite a bit of fluctuation in your receivables, and I wanted to kind of get some context around what would you consider a normalized payment term like going forward? If you go back to kind of 2019 to today, You know, we see a range of somewhere between 45 and 75 days. And, you know, obviously with the business continuing to grow, I wanted to get a better idea of how much working capital usage we can see in 2022.

Okay. Well, I will take that one, and I have probably way too much color to provide on that, so I'll keep it relatively short. So we're at 63 days currently. We believe that's too long and we believe we can bring it down. The color around that is that many of our largest customers have done acquisitions and or combining those acquisitions with the movement onto a third party in the cloud invoicing system. And this all sounds like a lot of noise and unnecessary detail, but it's actually quite meaningful. we have to revamp our side of that process in order to submit and monitor the invoices in these third-party systems. And, again, our largest customers have all, over the last couple of years, moved to these systems. Our largest customers have all done some meaningful acquisitions and have moved some of their acquired customers over to these new platforms. And we, actually, I think we are ahead of the curve in terms of service providers in providing our side to be fully automated. We have in-house developers actually take quite a bit of pride in our ability to build and integrate with these systems. But having said all that, there are a lot of delays on our customer side in terms of being able to stand up their process. which means that our day's outstanding leg, this is not because of customer quality. These are global integrated ENPs. We are going to get paid, but they are having some growing pains with their systems. That's elongating and absorbing working capital on our side. We are very aware of the issue, and we are throwing a lot of internal resources at it. Our current target is to pull down that working capital day sales outstanding by 15 days, which should be about $15 to $17.5 million of working capital reduction, keeping revenue constant. So anyway, we're very aware of it, and we're actually quite pleased with the success of this initiative over the last couple, three weeks, and we expect to easily meet that 15-day subtraction target here over the next six months.

And if I can just add on to that, just to highlight, I think, something that Brandon said. I mean, these are global companies that have acquired major – I mean, we have, not to mention any names, we have, you know, customers who acquired a large company two years ago and still to this day they haven't integrated onto one system. And now they're saying, well, wait a second, you build our target, you have to build the parent. No, you build the parent, you need to build the target. So it's been a little bit interesting to really sort of dive into it. But as Brandon said, I think we're pretty optimistic that we're starting to get ahead of it. Sorry, we're a little passionate about this. Yeah, exactly.

Sorry. We'll go stop there. Yeah.

That's great, Tyler. So it seems like, you know, if we kind of work through about a 45 to 50-day AR window, there is potential here to kind of get some more capital benefit into the rest of the year, even if we move revenues up into the 520, 540 range. Does that sound accurate?

That's accurate, yes. So the lower end of our range, we would expect the benefit. We would expect that benefit to be offset with the incremental revenue at the higher end of the revenue forecast.

Great. Great. Thanks. And then moving on to the next question, on the well service side, if we look at the hourly rig rates that you're seeing now and the color you gave a minute ago, looking at 584 coming out into the current quarter. Can we look at that as some sort of normalized run rate going forward, or is there still some more improvement left that you see out there?

Yeah, I'm looking at our – SVP of World Servicing right now. And of course, I'm going to tell him he needs to keep doing more. So I actually do think that there is still some upside. The market is getting increasingly tight. Labor is tight. I think we are starting as an industry, beginning to get to the point. I think we're in a fortunate position that we still have assets that we can put into service if we can get the crews without a lot of capex. But you are starting to get to that point to where the next rigs coming off the fence line need Cat 4s. They actually need some work on them. So the market feels quite tight. So I think that there is still more upside.

And I'll just note that on a longer-term historic basis, we're nowhere near the margins that we saw in 2013 and 2014. Given the tightness on the macro side, it would not be – unreasonable to expect us to be able to return to kind of a historic, at least, you know, maybe not peak number, but better than mid-cycle number here as we move through the macro landscape over the next 24 months.

Got it. Great. Next, I want to kind of move into more the wireline and ancillary services businesses. I think this is kind of the first quarter, and forgive me if I missed it, that you guys gave more of a stage count number. And so I wanted to see how is that relative to kind of previous years and quarters? You know, do you have any number in front of you that you can share as far as completed stage counts in 2019, 20, and then the first half of 21?

Yeah, we're happy to circle back with anybody that's interested in the historic numbers. We try to have Historically, we've tried to sprinkle that into the calls one way or another. The only issue with it is historically and still a mismatch between that one set of metrics and the overall results of the segment. But the comparability from once upon a time to post Q2 of last year is going to be colored pretty strongly by the tripling of the size of the completion fleet, post-acquisition of Perfects in particular versus pre-acquisition of Perfects.

Okay. Got it. And then on the wireline side, so it seems that Are you now dedicating certain wireline units to P&A work and going forward that revenue will show up only in the ancillary service side? It seems like if you look at previous quarters that some revenue was taken from the wireline segment and pushed into the ancillary services side. So I kind of want to get a better idea of how assets are dedicated from the wireline units into each segment. and how you see that playing forward.

So going forward, wireline will only be in the wireline segment. With one small exception, we do have a P&A business that does use wireline trucks in the Ranger-branded businesses, but that is de minimis in size and revenue. So for all practical purposes, a wireline truck will sit in the wireline segment.

Okay, got it. The last one just revolves around – well, the last couple just revolve around your capital structure. So what are the other financing liabilities in the net debt number that you guys provided in the press release?

That would be the sale leaseback that we did last year on the Milliken facility.

Okay, great. And just looking at your guidance here, last question – you know, if we kind of take your ongoing GNA number of roughly 16 million and take a midpoint on your revenue guidance and midpoint on your EBITDA margins, you know, that's kind of implying an 80 million segment EBITDA number and closer to 100 million run rate at your end. Am I thinking about that correctly or am I double counting there?

No, I don't think you're double counting. That brings up a comment or a conversation on G&A. Ironically, I think our internal discussions are around maybe running too light on G&A. So you may be, you know, we would expect to see G&A at least in the first part of 2022 move up a little bit. And essentially that would be work around ensuring that we're fully optimized and ready to go for another acquisition if that should come into our focus. So we've had a lot of work to do over the last six months, and now we're kind of shifting focus to the fire drill, getting everything up and running and running well enough to optimizing all those systems and processes. So we're actually actively adding headcount to GNA right now to ensure that we are as efficient as possible We'll see how that turns out at the end of the year. We may be very successful and be able to move back down to the historic G&A number, but it has been – our people have been stretched very thin on the corporate side over the last six months. Let me just say that. Yeah, for sure.

Great. Okay. Very good. Thank you, guys, both. Great quarter.

All right. Thank you. Thanks, William.

This concludes our question and answer session. I would like to turn the conference back over to Stuart Bowden for any closing remarks.

Again, thank you, Operator. Again, I appreciate everybody joining the call today. I don't really have much to add. I hope everybody has a nice rest of the day and a great weekend. Thanks, everyone.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.