Q4 2021 Ranger Energy Services Inc Earnings Call
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.
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Please note. This event is being recorded I would now like to turn the conference over to Stuart Bogan CEO . Please go ahead.
Thank you operator, good morning, everyone. This.
This is Stuart <unk>, President and CEO of Ranger Energy services I am joined today by Rangers CFO Brendan Bosman.
I'll come to the Q4 2021 Ranger energy services analyst call.
Before we begin I would like to recognize the citizens of Ukraine. So Russian invasion of Ukraine has made it difficult to celebrate the most recent run up in oil prices, but the Ukrainian his bravery and resilience as it is an inspiration to us all.
Regarding Ranger, Brendan and I have been looking forward to speaking with you for some time, we're excited about the basic integration Rangers 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 in field gas processing business coiled tubing, plugging and abandonment P&A related cementing services and rental and fishing tools.
Like everyone. We are experiencing increased demand for our services and better pricing, however, supply chain and labor issues persist in 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, but 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 were already material and successful businesses in their own right. The.
The basic acquisition brought several new lines of business to this segment and we have evaluated each of these businesses for sure.
We have decided not to sell any of these businesses at this time as I'm 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 is 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.
At the segment level high spec rigs had revenue of more than $59 million and segment level EBITDA of approximately or up $8 8 million generating approximately 15% EBITDA margins wireline had revenue of $45 million and segment level EBITDA of $1 million generating 2% margins.
Assessing 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 three 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 with 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 and both both on an operational and on an accounting basis.
The spread between last quarter's numbers in 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 that $6 million as 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.
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.
The adjusted numbers include meaningful adjustments related to the particularly the basic acquisition. So specifically as the bridge between an unadjusted $32 million of EBITDA and our adjusted reported number of $9. One include the following items.
One <unk>.
The 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 need.
To book a gain 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.
A 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 adjusted the Unadjusted number also includes $1 $5 million worth of bad debt expense, which were 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 and perforating gun expense in Q4 on an inventory true up which was more properly related to Q3 wireline operating expenses.
Some of all of these in and outs returns the reported $9 $1 million of Q4 adjusted EBITDA.
Alright, so thats over with an industrial move onto 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 Kpis details that we generally provide first the high spec rigs segment.
This continues unchanged and structure from our legacy reporting share recapture 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 highest spec rate what is new in this segment. This quarter is of course. The addition of the basic service rig fleet.
However, due note that beyond the addition of the basic employees.
The location and the service rates from the basic deal. 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.
Revenue was up sequentially to X from 30 to nearly $60 million of revenue while segment Ebitdas segment, EBITA margins moved down slightly from 16% to 15% <unk>.
Average rigs working during the quarter.
Moved from 67 to 167, an increase of 150%.
<unk> revenue hours moved from 51200 to 111600 or 120% increase note that this 120% increase is fully attributable to the addition of the basic service rates. The legacy range of hours were approximately flat quarter over quarter.
Order.
Offsetting that increased in revenue hours was a drop in the composite revenue rate, which moved down 9% from 584, an hour to $5 33, an hour.
Let me provide some color around that Q4 average rate.
So that $5 33.
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 $561 per hour rate I also note that as we move forward through the Q1 little bit.
A teaser here we're back to at least the rates that we saw free 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 commingled with other range of branded services and reported on a.
Composite or collected basis, we are now disaggregate in wireline as a stand alone reporting entity.
This segment as a reminder includes last year's Patriot and perfects 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 rely on wireline related pumping work.
So overall this segment again on a quarter over quarter basis had revenue moving down slightly from $46 million 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 our 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 11400 in Q3, two 9900 in Q4, a 13% decline.
Here comparing Q3 to Q4, both the average working truck count and the preorder stage cap 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 $3400 a stage to $3800 a stage. This on a combination of both customer mix shift and customer.
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 this some of our legacy businesses along with several other service lines, both legacy Ranger and new to us from the <unk>.
<unk> acquisition.
Given that this segment includes.
Such why it is such a wide ranging group of business lines we.
We do not yet have a single set of operational metrics that standout 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 will be able to breakout some operating metrics, but we have nothing to share today on the operation operating metrics side.
And then just to wrap up on the on our Q4 comparison basis revenues in this new segment moved up from $6 million in Q3 to $19 million in Q4.
It's more than a three times.
And like the rigs business largely on the addition of the basic service lives.
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 Q4 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 perfect acquisition debt, which has a current balance of right around $10 million.
Liquidity at year 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 base on our revolver plus approximately $1 billion of cash on.
On hand.
Mid mid week. This week that number was largely unchanged and stood at approximately $18 billion of liquidity.
I think that's it for me and the numbers and let me hand, it back over to Stuart great. Thanks. 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 today as noted earlier incremental revenue and EBITDA from Q3 to Q4 is primarily related to the addition of the basic asked.
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 basically brought all employees and assets onto Ranger systems on day, one that was not possible with the wireline acquisitions and although smaller in wireline acquisitions had 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 range or legacy assets was $8 million at the end of Q4, we expect to wrap up another $2 million to $4 million by the end of the current quarter. We have line of sight to an additional $5 million to $7 million in asset sales before the end of the year, which does not include physical prop.
<unk> there are seven additional physical properties that we intend to sell which we believe will realize another $5 million 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 a 135 rigs out of the U S land market through our rig recycling impact program, where our IP.
This includes 120 rigs that had been destroyed and recycled and 15 rigs that had been sold internationally were out of the market. We have recycled approximately 4500 U S tons of steel to date from our <unk> program we.
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 perfect 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 bringing 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 dollars of asset sales.
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 million 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 will elaborate on this shortly.
For rigs were expecting steady increases in revenue and margins 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 Torrance and our P&A business have positive ESG benefits and are seeing increasing interest from customers. Another.
Another example, coil tubing, which is primarily the DJ basin business has already realized more than 6 million in revenue and segment EBITDA margins of approximately 20% in the five months, we have owned it.
Now back to wireline.
There've been two primary issues in wireline and we are actively addressing both of them.
First the typical structure for plug and perf operations, our completion operations leave service companies at the Mercy of supply chain issues, such as delays in sand deliveries or the late arrival of Frac 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 and current cost and our crews needing to be paid for their time on location.
Given the tightening market, we are now working with customers to put it in a day rate, we're 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've 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 and a growing market as.
As indicated both of these issues are being addressed and we expect to see considerable improvement in wireline as you 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 million to $45 million, which does include the asset sales highlighted by this.
This range represents expected EBITDA deducting capex light duty vehicle.
<unk> 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'd 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 answer session to.
To ask a question you May Press Star then one on your Touchtone phone.
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At this time, we will pause momentarily to assemble our roster.
The first question today comes from John inch Thorne from Dialectic capital. Please go ahead.
Hey, guys.
Nice job in integrating all those deals it's really impressive.
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 country of the company.
Just love it if you could kind of expand on what that means over the longer term and maybe also on the on the potential of these new businesses in the processing solutions and in ancillary services segment, if you might.
Yeah. Thanks, Thanks, Jonathan for the question appreciate it.
Yeah.
I think kind of how we're thinking about the business is really maybe just take the three segments.
On the rig business. It is its really kind of all systems go.
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 this upside stuck in our others and our other service lines.
What I would say is we're projecting modest growth in those right now and that's religious a function of.
They're pretty new for us.
Think in their current state they would just take the normal amount of maintenance capex, but what we're really trying to do is to figure out are these businesses that we might actually want to put growth capex into right, which could provide further upside will 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.
Good morning, guys. How are you all this morning.
Good morning.
Can you talk about.
Demand and.
So the question is a lot of people.
Come out on calls over the last six weeks or so.
And so the demand was super strong, but then were 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 do you see it today.
Yeah sure. Thanks, Thanks for the question and Brendan obviously.
And so I think what we saw is just kind of walk through the quarter I think like a lot of people, we actually had a.
What felt like a bit of a slow start in early January .
That was a combination like we did see a holiday impact.
So.
I think we saw that but really started kind of building very steadily through through January February was a short month. There were if you remember to weather days hit on a Thursday and Friday in the Permian Basin. So we were shut down for four days, So I think all of that.
Combined to make it feel like Q1 was a bit of a slow start plus or kind of started slowly.
And then obviously as we highlighted we are seeing frac crew delays and delivery delays all of that is impacting operations.
That said I think we are exiting the quarter.
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'd just say from the last comment is.
When I when I listened to the E&P companies talk you know there is still sort of talk of Hey, we're not going to go.
Overinvest, we're going to remain disciplined on the other hand, we're seeing a lot of inbound and bound calls I would say more inbound calls about equipment, then would kind of match that commentary so.
It'll be easier to see how that plays out but what I would tell you is we're getting a lot of inbound calls right now.
Yes, and I'll just wrap it up with just a comment on a general comment.
I think yet parse out the demand versus.
The logistics of it so weather early in the year as COVID-19 or weather or supply chain issues that doesn't mean the demand wasn't there that means that the systems just stretched so tight that it disruption anywhere along the path means that the the.
The effect of that disruption is magnified at extra 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 of the supply chain as necessary to make sure that that debt.
That service, whether it's the completion of production job is going to happen on top.
Okay I appreciate the color there and with the 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 that are keeping those prices kind of in check right now.
No I would say were pretty encouraged by what we've been able to accomplish on the pricing side.
Kind of going back to the comments that Brandon made about if you just look at sort of as an example rig.
Rig rate pricing.
On our hourly basis.
We.
Almost absorbed all of the lower basic pricing by the end of this quarter. So we're definitely seeing that ability and on the wireline side. An example, I would give us.
And 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.
We're not going to take it in and it's different today, we are we're having success doing that.
Appreciate all the time this morning, I will turn it back.
Thanks, Don.
As a reminder, if you have a question. Please press star then one to be joined into the question queue.
The next question comes from William Kim with <unk> asset management. Please go ahead.
Good morning, Stuart Brandon.
Good morning.
Just a few for you today. So if you can just.
Some of your time here.
When you start writing them down.
Yeah.
I was looking at your working capital as kind of the growth.
Phase here.
There's quite a bit of fluctuation in your receivables and wanted to kind of get.
Just some context around what would you consider a normalized payment terms like going forward.
If you go back to kind of 2019 to good day.
We see a range of somewhere between 45 and 75 days.
And obviously with business continued to grow at one one.
Okay better ideas.
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.
I'll keep it.
Relatively short.
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 tranche the movement onto a <unk>.
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.
Two.
These new platforms and we.
Actually I think we are ahead of the curve in terms of service providers in providing in our side to be fully automated we have in house developers.
They actually take quite a bit of pride in our ability to.
Build and.
Integrate with these systems.
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 days outstanding lag.
This is not because the customer quality. These are global integrated E&ps, we are going to get paid but they are having some growing pains with their systems.
<unk> gating in absorbing working capital on our side.
We are very aware of the issue and we are throwing a lot of internal resources at it or.
Our current target is to pull down that working capital days 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 of three weeks and we expect to easily meet that as 15 days subtraction target here over the next six months.
And if I can just add onto 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 customers who acquired a large company two years ago.
And still to this date, they haven't integrated onto one system and now they are saying well wait a second you build our target you've got to build the parent no. He built the parent need to build the target. So it's.
It's been a little bit interesting to really sort of dive into them as Brendan said I think we're pretty optimistic that we're starting to get ahead of it I'm, sorry, where little passionate about.
Exactly.
So I'll stop there.
Okay.
That's great color.
Alright, so it kind of works to about a 45% to 50 day window.
There is potential here to kind of get similar capital benefit.
Rest of the year, even as we move into the <unk>.
<unk> hundred 40 high 40 range, so thats kind of accurate.
That's accurate yes.
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. Thanks.
Moving on to the next question on the well servicing side, if we look at the hourly rig rates.
Seeing now in the color you gave.
And then again.
Looking at 584 coming out in the.
The current quarter.
Can we look at that as some sort of a normalized run rate going forward or is there still some more improvement.
You see out there.
Yeah.
Yes.
I am looking at our SVP of well 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 that 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 fours, 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 <unk> in 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.
Maybe not peak number but better than mid cycle number here as we move through the macro landscape over the next 24 months.
Yes.
Got it great.
Next I want to kind of moving to more of their wireline and ancillary services businesses.
I think this is kind of the first quarter.
Forgive me if I missed it.
You guys gave me more mid stage count number.
So I wanted to see how is that relative to kind of previous years and quarters.
Do you have any number in front of you that you can share.
Sure as far as completed stage counts in 2019, 'twenty and in the first half of 'twenty one.
Yes.
We're happy to circle back with anybody that's interested in the historic numbers.
Historically, we've tried to sprinkle that end of 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 <unk>.
Segment, but.
The comparability.
Our ability 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 completions fleet post acquisition of <unk> in particular versus pre acquisition of Fairfax.
Okay got it.
And then on the wireline side.
No.
It seems that.
Are you now dedicating a certain wireline units to P&A work.
Going forward that revenue will.
Sure only in the ancillary services side. It seems like if you look at previous quarters at some revenue was taken from.
The wireline.
Segment and push it to the ancillary services.
I don't want to get a better idea of how assets are dedicated.
Wireline units and to each segment.
How you see that playing forward.
So going forward wireline will only be in the wireline segment with one small exception, we do have our P&A business that does use wireline trucks in the range of branded businesses.
But that is de minimis in size in revenue so for all practical purposes, our wireline truck will sit in the wireline segment.
Okay.
Okay got it.
Yes.
Last one just revolves around.
Last couple just your thoughts around your capital structure. So what are the other financing liabilities and 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 millican facility.
Okay great.
And just looking at.
Your guidance here the last question.
You know if we kind of take your ongoing G&A number is roughly $16 million and take.
Taking the midpoint on your revenue guidance midpoint on your EBITDA margins and that's kind of been playing an 80 million segment EBITDA number.
And closer to 100 million run rate at year end does that is that and then thinking about that correctly or am I double counting there.
No I don't think you're double counting.
And that brings up.
The combat comment our conversation on G&A.
Ironically, I think our internal discussions are around maybe running too light on G&A.
So.
May be.
We would expect to see G&A at least in the first part of 2020 to move up a little bit.
Essentially that would be work around ensuring that we're fully optimized and ready to go.
<unk> 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 it.
The fire drill getting everything up and running and running well enough to optimizing all of those systems and processes. So we are actually actively adding head count to G&A.
Right now to ensure that we are as efficient as possible. We will see how that turns out at the end of the year. We may be very successful in being 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 yes for sure.
Great. Okay very good thank you guys.
Great quarter.
Alright, Thanks, Brian .
This concludes our question and answer session I would like to turn the conference back over to Stuart voted for any closing remarks.
Again, thank you operator.
I appreciate everybody joining the call today.
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.