Ranger Energy Services, Inc. Class A

And welcome to the Ranger Energy's second quarter 2023 conference call. All participants will be in 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 and one on a touch-tone phone. To withdraw your question, if needed, please press star then two. Please note this event is being recorded. And now I would like to turn the conference over to Shelly Weiner, VP of Reporting and Finance. Please go ahead.

Thank you, Operator, and welcome to Ranger Energy Services' second quarter 2023 results conference call. After the market closed yesterday, Ranger issued a press release summarizing operating and financial results for the three and six months ended June 30th, 2023. This press release, together with accompanying presentation materials, are available in the investor relations section of our website at www.rangerenergy.com. Today's discussion may contain forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Further, please note that non-GAAP financial measures may be disclosed during this call. A full reconciliation of GAAP to non-GAAP measurements are available in our latest quarterly earnings release and conference call presentation. With that, I would now like to turn the conference call over to Stuart Bowden, Ranger's CEO, and Melissa Kugel, Ranger's CFO, for their prepared remarks.

Thank you, Shelly. Good morning, everyone. Thank you all for joining us today. We have a lot to announce and celebrate this quarter, and we are excited to speak with you this morning. I'll start by providing a high-level summary of our performance in the second quarter, and then discuss reaching our net debt zero target, followed by the status of our capital returns program. We had a strong quarter with revenue of $163.2 million, representing a 6% increase compared to the second quarter of 2022, and a sequential increase from our first quarter. Our net income of $6.1 million, or 24 cents per share, is up from a net loss of $0.4 million in the same quarter last year and represents an annualized yield of nearly 10% based on our recent share price. We also achieved a 22% increase in adjusted EBITDA to $21.9 million from $18 million in the second quarter of 2022. We achieved strong quarterly results despite dealing with significant market volatility, which made the first half of 2023 softer than we anticipated. Declining drilling and completions activity, largely in gas-loaded basins, caused more white space in our schedules due to asset movements between regions. However, We still achieved a 16% year-to-date increase in revenue compared to the same period last year, which is a testament to our service quality and the resiliency of our production-focused business model. We continuously monitor activity levels and pricing within our basins, and I'm pleased to report that pricing has been resilient. We have maintained pricing in our high-specification rig segment, and we have also seen recent stabilization in the wireline and ancillary service lines, which suggests the worst is behind us. Where we have strategically shifted assets from gas to oil basins, we've been able to do so at comparable rates. Our flexibility has allowed us to adapt to market conditions and optimize our operations accordingly. This would not have been possible without the constant hustle of our operations teams, who have stayed focused on keeping utilization up and holding price. Looking ahead to the second half of the year, we expect commodity prices will stabilize and drilling and frack activity will begin to rebound. However, in the event a recovery takes longer than we expect, Ranger's differentiated business model and significant production focus positions us successfully to navigate volatility and provide stability in our business. Importantly, we continue to see customers push to maintain their current production levels in the oil basins amid their expectations for increased oil demand in the medium term. Activity in gas basins remain slower, but the pricing outlook for the next 12 months is improving. Our commitment to staying agile and responsive to market dynamics has proven to be a key strength for us. We remain confident in our ability to adapt to changing conditions and deliver value to our stakeholders. Now, let's take a closer look at our business segment financial results. The revenue growth in our high-specification rig segment was slightly muted during the quarter with a 2 percent increase year-over-year. However, we are encouraged by the fact that our hourly rig rates were $687 per hour in the second quarter compared to $632 per hour in the same quarter of 2022. Year-to-date, we have achieved approximately 10 percent revenue growth in this segment compared to last year and continue to believe we can further grow this segment in the future. In our wireline segment, We've recently observed the wireline market is beginning to stabilize. We're also beginning to see fundamental improvements in the business, with segment revenue up 10% from last year in the second quarter on the back of increased operating activity. Finally, our processing solutions and ancillary services segment showed robust growth, with revenue up 27% year-over-year as compared to 2022. All lines of business within this segment, including coil tubing, processing solutions, rentals and fishing, and plugging and abandonment services, experienced solid increases. Before turning the call over to Melissa, I would like to provide an update on our net debt zero target and our capital allocation strategy. I am proud to report that our strategy of capital light operations and maximizing free cash flow conversion has been validated by the speed at which we have paid down our outstanding debt balance. We have paid down over $56 million of debt over the past 12 months, and we ended the quarter with just $300,000 in total debt, effectively achieving our stated goal of becoming net debt zero. Congratulations, and thanks to the entire Ranger team for staying laser-focused and executing at a high level every day to make this goal a reality. Our strong balance sheet gives us the ability to explore accretive and organic growth opportunities and expand our capital returns program. Earlier this year, we committed to instituting a dividend as we eliminated our debt, and I'm pleased to report that the Board will be initiating our first quarterly dividend of $0.05 per share to be paid out beginning this quarter. In addition to the dividend, we initiated our stock repurchase program earlier this year and bought back approximately $5.9 million worth of our common stock during the second quarter, representing 37% of our quarterly free cash flow. As a reminder, we committed to returning at least 25% of our annual free cash flow to investors through dividends and share repurchases. We intend to continue share repurchases and will continue to evaluate the best way to do so, considering our already significant shareholder concentration. Returning capital to our shareholders is a key priority for us, and we are excited that our robust free cash flow and balanced sheet strength gives us the ability to do so with confidence while also remaining active in pursuit of value-creating strategic opportunities. Case in point, I'm pleased to report that just last week we signed a purchase agreement to acquire 15 pumps and associated equipment for $7.25 million. We have fully inspected the equipment, and several are currently operating under current contracts. When Ranger closes the transaction, we will deploy these assets to our Permian and Northern regions in our high margin pump down service line within our wireline segment. Financially, we expect these assets to be immediately accreted to revenue and margins with an expected payback period of well under two years. These types of tuck-in acquisitions provide great pull-through revenue opportunities for our existing businesses and allow us to further expand our margins and presence with our customers. We continue to engage with potential sellers on various strategic opportunities, but we will remain patient. We have a strong track record of making accretive deals, and we'll wait until we find the right opportunity that will result in attractive returns on investment. With that, I will now pass the call to Melissa to provide a more detailed discussion of our quarterly financial results.