Q4 2024 Ranger Energy Services Inc Earnings Call
Good day and welcome to the Ranger Energy fourth quarter 'twenty 'twenty four conference call all participants will be in a listen only mode.
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Joe: I would now like to turn the conference over to Joe <unk> Vice President of Finance. Please go ahead, Sir thank.
Joe Meath: I would now like to turn the conference over to Joe Meath, Vice President of Finance. Thank you and welcome to Ranger Energy Services fourth quarter and full year 2024 result conference. Ranger has issued a press release summarizing operating and financial results for the three and 12 months ended December 31st, 2024. The press release and 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 forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission.
Joe: Thank you and welcome to Ranger Energy services fourth quarter and full year 2024 results Conference call Ranger has issued a press release summarizing operating and financial results for the three and 12 months ended December 31st 2020 for the press release and accompanying presentation materials are available on the investor.
Joe: <unk> section of our website at Www Dot Ranger energy Dot com.
Joe: 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.
Joe Meath: accept as required by law, we undertake no obligation to update our forward-looking statement. 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.
Joe: Except as required by law, we undertake no obligation to update our forward looking statements.
Joe: 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.
Stuart Bodden: With that, I would now like to turn the conference call over to our CEO, Stuart Bodden, and our CFO, Melissa Cougle, for their prepared remarks. Thanks, Joe. Good morning, everyone. And thank you for joining us today to discuss our fourth quarter and full year 2024 results. We closed out 2024 on a strong note, delivering another quarter of outperformance that reflects our team's focus on operational execution, disciplined cost management, and smart capital allocation. We have consistently showcased the resilience of our production focused business model, exceeding expectations and generating stable earnings and cash flow, despite ongoing lower drilling rig and frac crew count.
Speaker Change: With that I would now like to turn the conference call over to our CEO Stuart potent and our CFO Melissa Google for their prepared remarks.
Speaker Change: Thanks, Joe.
Speaker Change: Everyone and thank you for joining us today to discuss our fourth quarter and full year 2024 results.
Speaker Change: We closed out 2024 on a strong note.
Speaker Change: Another quarter of outperformance reflects our team's focus on operational execution disciplined cost management and smart capital allocation.
Speaker Change: We have consistently showcase the resilience of our production focused business model.
Speaker Change: Seeding expectations and generating stable earnings and cash flow despite ongoing while we're drilling rig and Frac crew counts.
Stuart Bodden: And today we are putting our money where our mouth is by announcing an increase in our dividends. We are excited about several things at Ranger, the outstanding results of our high-spec rigs business, the double-digit growth in our Torrent business line last year, and that business line's prospect of being fully utilized later this year. to significant growth and margin expansion in our P&A and rental business. the strong momentum in our share price from the fourth quarter through significant liquidity and share volumes, and a 2025 that shows the promise of continued steady growth. And looking at the quarter, we reported revenue of $143.1 million and adjusted EBITDA of $21.9 million, achieving a margin of 15.3%, a 320 basis point improvement over the same period last year, and the best profitability on record during a fourth quarter period.
Speaker Change: And today, we're putting our money where our mouth is by announcing an increase in our dividend.
Speaker Change: We're excited about several things that Ranger the outstanding results of our highest spec rigs business the double digit growth in our torrent business line last year in that business lines prospect of being fully utilized later this year.
Speaker Change: The significant growth and margin expansion in our P&A and rental business.
Speaker Change: Momentum in our share price during the fourth quarter through significant liquidity and share volumes and a 2025 that shows the promise of continued steady growth.
Speaker Change: Looking at the quarter, we reported revenue of $143 $1 million and adjusted EBITDA of $21 $9 million, achieving a margin of 15, 3% at 320 basis point improvement over the same period last year and the best profitability on record during our fourth quarter period.
Stuart Bodden: This quarter marked the third consecutive quarter of year-over-year margin growth.
Speaker Change: Quarter marked the third consecutive quarter of year over year margin growth.
Stuart Bodden: How did we achieve these results? Ranger is different because we have built a well service business that is resilient through the cycle. It has generated strong cash flows and grown despite an unstable market and multiple customer consolidations. As more wells are drilled in the U.S. basins, more well servicing work is needed and, as our customers further consolidate, they recognize the need to consolidate vendors as well and partner with strong service providers. ever since our transformative acquisitions in 2021. We have focused on driving efficiencies throughout the portfolio. We now have industry leading well service capabilities in the Permian Basin, South Texas, the DJ Basin in Bakken, as well as in the mid continent.
Speaker Change: How did we achieve these results Ranger is different because we had built a well service business that is resilient through the cycle. It has generated strong cash flows and grown despite unstable market and multiple customer consolidations as more wells are drilled in the U S basins more well servicing work is needed and.
Speaker Change: As our customers further consolidate they recognize the need to consolidate vendors as well and partner with strong service providers.
Speaker Change: Ever since our transformative acquisitions in 2021.
Speaker Change: We are focused on driving efficiencies throughout the portfolio.
Speaker Change: We now have industry, leading well service capabilities in the Permian Basin, South, Texas, The DJ Basin, and Bakken as well as in the mid continent region. We had built a reputation for outstanding service quality reliability and safety.
Stuart Bodden: We have built a reputation for outstanding service quality, reliability and safety. Factors that have made us the wealth service vendor of choice for some of the largest companies in the world. Ranger has gained market share because we have good relationships with major operators. And they are increasingly looking for vendors with strong reliability and safety programs that can provide full package solutions for their well site.
Speaker Change: Or is that have made us the well service vendor of choice for some of the largest companies in the world.
Speaker Change: Grainger has gained market share because we have good relationships with major operators and they are increasingly looking for vendors with strong reliability and safety programs that can provide full package solutions for their well site needs.
Stuart Bodden: This dynamic is most apparent in our high specification rigs. which has been a workhorse for Ranger Energy Services Inc. It is a very resilient business because it focuses so heavily on our customers production. It boasts strong margins of greater than 20% and delivers through macro environment and commodity price. We have continued to aggressively drive efficiencies and expand relationships with our major customers to reduce white space on our operations calendar. These efforts have resulted in an average of 20% year-over-year EBITDA growth in the past three quarters. I received consistent feedback when engaging with our Blue Chip customer base that Ranger's well site inspections and field visits are second to none in this space.
Speaker Change: This dynamic is most apparent in our high specification rigs business, which has been a workhorse for Ranger. It is a very resilient business because it focuses so heavily on our customers' production base.
Speaker Change: At both strong margins are greater than 20% and delivered through macro environment and commodity price shifts. We have continued to aggressively drive efficiencies and expand relationships with our major customers to reduce white space on our operations calendar.
Speaker Change: These efforts have resulted in an average of 20% year over year EBITDA growth in the past three quarters.
Speaker Change: I receive consistent feedback been engaging with our blue chip customer base that Rangers well site inspections and field visits are second to none in this space our rigs are properly certified and maintained and our crews are engaged and aware of the expectations of them on both the safety and service front throughout our organization.
Stuart Bodden: Our rigs are properly certified and maintained, and our crews are engaged and aware of the expectations of them on both the safety and service front. Throughout our organization, we focus on servicing our customers first and foremost, and through doing so, we differentiate ourselves and become more like a partner to customers who begin to appreciate that this level of service deserves a margin in return that supports the sustainability of our business. Both inside and outside of high specification rigs, we like to maximize profit by making smart investments in high margin growth areas. This is evident in the selective capex we deployed to augment our rigged but also in ancillary services, which contains a number of smaller businesses that have seen meaningful growth and margin expansion, thanks to strong demand.
Speaker Change: We focus on servicing our customers first and foremost and for doing so we differentiate ourselves and become more like a partner to customers who begin to appreciate that this level of service deserves a margin and return that supports the sustainability of our business.
Speaker Change: Both inside and outside of high specification rigs, we look to maximize profit by making smart investments in high margin growth areas. This is evident in the selective capex, we deploy to augment our rig business, but also in ancillary services, which contains a number of smaller businesses that have seen meaningful growth and margin expansion. Thanks to <unk>.
Speaker Change: Strong demand.
Speaker Change: While revenues were relatively flat in 2024, adjusted EBITDA increased by 19% and margins increased from 18% to over 21%.
Stuart Bodden: While revenues were relatively flat in 2024, adjusted EBITDA increased by 19% and margins increased from 18% to over 21%.
Stuart Bodden: One business we have previously highlighted is Torrent, our infield gas processing Torrent provides modular mobile equipment to capture, condition, and process wellhead natural gas that would likely otherwise be flared into the atmosphere. Our units provide a processing solution for stranded gas to deliver pipeline spec natural gas for a wide variety of uses, including mobile power generation, dual fuel frack, and even cryptocurrency mining. This year, we saw significant demand from our customers for this service, which allowed us to double EBITDA. And we expect to more than double EBITDA again in 2025 and potentially achieve full utilization later this year.
Speaker Change: One business. We have previously highlighted is touring our infield gas processing business.
Speaker Change: And it provides modular mobile equipment to capture condition and process wellhead natural gas it would likely otherwise be flared into the atmosphere.
Speaker Change: Our units provide a processing solution for stranded gas to deliver pipeline spec natural gas for a wide variety of uses including mobile power generation dual fuel frac and even crypto currency mining this.
Speaker Change: This year, we saw significant demand from our customers for this service, which allowed us to double EBITDA and we expect to more than double EBITDA again in 2025 and potentially achieve full utilization later this year we.
Stuart Bodden: We are looking at further strategic investments in this service to expand our capacity to continue to maximize the potential of this service.
Speaker Change: We are looking at further strategic investments in this service to expand our capacity to continue to maximize the potential of this service line.
Speaker Change: We have also seen progress in our plugging and abandonment business. This past year the business saw year over year growth in 2024, and significant margin expansion as our business saw improved utilization and greater efficiencies.
Stuart Bodden: We have also seen progress in our plugging and abandonment business this past year. The business saw year over year growth in 2024 and significant margin expansion is our business all improved utilization and greater efficiency. We allocated additional resources into this business in late 2024 to pursue additional opportunities, and we think this will continue to grow meaningfully in the future.
Speaker Change: We allocated additional resources into this business in late 2024 to pursue additional opportunities and we think this will continue to grow meaningfully in the future.
Stuart Bodden: While we focus on expanding high margin growth areas, we have also had to make strategic decisions where demand and pricing have deteriorated. We have discussed the wireline completion service line at length in the past, noting the fundamental change in its economic model. Its frack crew counts have declined, and it has become increasingly commoditized due to lower barriers to entry. The margins have become largely uneconomic in this product line, which had previously represented a large percentage of the revenues in our wireline segment. As a consequence, we have focused on pivoting to capture more work associated with conventional wireline service.
Speaker Change: We focused on expanding high margin growth areas. We have also had to make strategic decisions where demand and pricing have deteriorated.
Speaker Change: We have discussed the wireline completion service line at length in the past, noting the fundamental changes economic model as Frac crew counts have declined and it has become increasingly commoditized due to lower barriers to entry.
Speaker Change: Our margins have become largely uneconomic in this product line, which had previously represented a large percentage of the revenues in our wireline segment.
Speaker Change: As a consequence, we are focused on pivoting to capture more work associated with conventional wireline services.
Stuart Bodden: 2024 was a year of transition, and we saw wireline revenue drop by nearly half and margins fall to single digits for the year, as the loss of scale out in the business negatively affected the remaining product line. We acknowledge the challenges in wireline conclusions, and the management team stays highly engaged in our pivot to conventional wireline, which we believe will position us to stabilize the segment and extract long-term value when possible.
Speaker Change: 24 was a year of transition and we saw wireline revenue dropped by nearly half and margins fall to single digits for the year as the loss of scale in the business negatively affected the remaining product lines.
Speaker Change: We acknowledge the challenges in wireline completions and the management team is highly engaged in our pivot to conventional wireline, which we believe will position us to stabilize this segment and extract long term value impossible.
Stuart Bodden: Now, let me turn to our strategic priorities and give you an update on how we are creating long-term value for shareholders. Our priorities have been consistent over time. The maximization of free cash flow, the prioritization of shareholder returns, and growth through accretive acquisitions while defending our balance sheet. We maximize cash flows by benefiting from light capital intensity, particularly as it compares to drillers in practice. Each year, we expect maintenance capex to be between 4% and 6% of revenue, which allows us to generate significant pre-tax In 2024, we achieved free cash flow of $50.4 million, or 64% of adjusted EBITDA.
Speaker Change: Now, let me turn to our strategic priorities and give you an update on how we are creating long term value for shareholders. Our priorities have been consistent over time, the maximization of free cash flow the prioritization of shareholder returns and growth through accretive acquisitions, while defending our balance sheet strength, we maximize.
Speaker Change: Cash flows by benefiting from Mike capital intensity, particularly as it compares to drillers and trackers each year, we expect maintenance capex to be between 4% and 6% of revenue, which allows us to generate significant free cash flow in 2024, we achieved free cash flow of $50 4 million or 64%.
Speaker Change: Adjusted EBITDA when you consistently generate cash as a small company. It provides flexibility for management to make the highest return capital allocation decisions and you see that in our shareholder returns this year.
Stuart Bodden: When you consistently generate cash as a small company, it provides flexibility for management to make the highest return capital allocation decisions. And you see that in our shareholder returns this year. We have also prioritized returning capital to our shareholders. We made a commitment in 2023 to return at least 25% of free cash flow to shareholders. And we greatly exceeded that baseline in 2023 and 2024, returning 40% of free cash flow to shareholders through a regular dividend and opportunistic share repurchases in both because of our high cash conversion rate and our pristine balance sheet, we can take advantage of opportunities, whether internal or external to the company.
Speaker Change: We have also prioritized returning capital to our shareholders. We made a commitment in 2023 to return at least 25% of free cash flow to shareholders and we greatly exceeded that baseline in 2023, and 2020 for returning 40% of free cash flow to shareholders through a regular dividend and opportunistic share repurchases.
Speaker Change: In both years.
Speaker Change: Because of our high cash conversion rate and our pristine balance sheet. We can take advantage of opportunities are there internal or external until the company.
Stuart Bodden: For much of this year, the value of our own stock was the most compelling investment we could make, and we bought aggressively. spending $15.5 million net of tax to repurchase shares and reducing outstanding shares at an average price of just $10.11 per share, an investment that has returned nearly 60% at current prices.
Speaker Change: For much of this year the value of our own stock was the most compelling investment we can make and we bought aggressively spending $15 $5 million net of tax to repurchase shares and reducing outstanding shares at an average price of just $10 11 per share and investment that has returned nearly 6%.
Speaker Change: At current prices.
Stuart Bodden: As we look at 2025 and our continued belief in our strong cash flows, management, together with our board of directors, is pleased to announce a 20% increase to the regular quarterly dividend from five cents per share to six cents per share, reflecting our confidence in the stability and strength of our business, and further demonstrating our commitment to return capital to shareholders in meaningful ways. When it comes to our balance sheet, if you have been a ranger shareholder for a while, you've heard us repeat the theme of flexibility, being able to take advantage of opportunities to grow long term value.
Speaker Change: As we look to 2025 and our continued belief in our strong cash flows management together with our board of directors is pleased to announce a 20% increase to the regular quarterly dividend from <unk> <unk> per share to <unk> <unk> per share, reflecting our confidence in the stability and strength of our business and further demonstrating our.
Speaker Change: Commitment to return capital to shareholders in meaningful ways.
Speaker Change: When it comes to our balance sheet. If you have been a range of shareholder for a while you've heard us repeat the theme of flexibility being able to take advantage of opportunities to grow long term value, we can be nimble and opportunistic and smart allocators of capital because of our balance sheet strength at year end, we had nearly $41 million in cash.
Stuart Bodden: We can be nimble, opportunistic and smart allocators of capital because of our balance At year-end, we had nearly $41 million in cash and zero long-term debt. We are constantly evaluating opportunities for where our next dollar of capital should be deployed or returned.
Speaker Change: And zero long term debt, we are constantly evaluating opportunities for where our next dollar of capital should be deployed or returned.
Stuart Bodden: which leads us to our final priority of growing through creative acquisition. We believe we are a natural consolidator of a fragmented industry.
Speaker Change: Which leads us to our final priority of growing through accretive acquisitions. We believe we are a natural consolidator of a fragmented industry. We have been diligent in our search for opportunities to take Ranger to the next level, but also prudent is the bid ask spread has been too wide for comfort.
Stuart Bodden: We have been diligent in our search for opportunities to take Ranger to the next level, but also prudent as the bid-ask spread has been too wide for comfort. We remain highly disciplined in evaluating opportunities and will only pursue acquisitions that are strategically and financially We don't see signs of capitulation in the services M&A market, but we do see it becoming more rational and believe there may be attractive opportunities to pursue in 2025 that would add scale and efficiencies to the Ranger portfolio.
Speaker Change: We remain highly disciplined in evaluating opportunities and will only pursue acquisitions that are strategically and financially accretive.
Speaker Change: We don't see signs of capitulation in the services M&A market, but we do see it becoming more rational and believe there may be attractive opportunities to pursue in 2025 that would add scale and efficiencies to the range of portfolio.
Stuart Bodden: As we enter 2025, we are well positioned to build on our momentum, leveraging our operational strengths and financial flexibility to drive sustainable growth and shareholder value. Our commitment to discipline capital allocation remains and we will continue to prioritize shareholder returns while investing in opportunities that drive sustainable growth.
Speaker Change: As we enter 2025, we are well positioned to build on our momentum leveraging our operational strength and financial flexibility to drive sustainable growth and shareholder value.
Speaker Change: Our commitment to disciplined capital allocation remains unchanged and we will continue to prioritize shareholder returns while investing in opportunities that drive sustainable growth.
Melissa Cougle: Melissa will now review our financials in 2025 outlook, and we think you'll see in the numbers why we are so confident in the strength of our business and our ability to deliver shareholder value. Melissa. Thanks, Stuart. And good morning, everyone. As Stuart mentioned, we delivered another great quarter, continuing our track record of operational excellence and financial Revenue for the fourth quarter was $143.1 million, down from $153 million in the third quarter, reflecting typical seasonality through the holidays. Adjusted EBITDA came in at $21.9 million, with a margin of 15.3%, which is slightly lower than the previous quarter, but up 320 basis points from the fourth quarter of 2020.
Speaker Change: Elissa will now review our financials in 2025 outlook and we think Youll see in the numbers. While we are so confident in the strength of our business and our ability to deliver shareholder value.
Speaker Change: Melissa.
Melissa Google: Thank you and good morning, everyone.
Melissa Google: As Stuart mentioned, we delivered another great quarter, continuing our track record of operational excellence and financial discipline.
Melissa Google: Revenues for the fourth quarter was $143 $1 million down from $153 million in the third partner, reflecting typical seasonality and the holiday season.
Melissa Google: Adjusted EBITDA came in at $21 $9 million with a margin of 16, 3%, which is slightly lower than the previous quarter, but up 320 basis points from the fourth quarter of 2023.
Melissa Cougle: It's worth repeating Stuart's earlier comment that each of the past three quarters have boasted margin improvement over the previous year. We are seeing continued operational efficiencies and growth in some of our higher margin service lines supporting our profitability. For the full year, revenue of $571.1 million was 10% down from the previous year, almost exclusively due to lower activity levels and wireline completion. Adjusted EBITDA of $78.9 million was down slightly from $84.4 million in 2023, largely a consequence of the slower start to the year, as well as the previously mentioned wireline completions activity decline. Most notably, cash flows in the fourth quarter were expected to be and came in quite strong, enabling us to achieve a full year free cash flow of $50.4 million in 2024.
Melissa Google: It's worth repeating earlier comment that each of the past three quarters.
Melissa Google: Margin improvement over the previous year.
Melissa Google: We are seeing continued operational efficiencies and growth in some of our higher margin service lines.
Melissa Google: Identity.
Melissa Google: For the full year revenue of 571 1 million.
Melissa Google: 10% down from the previous year, almost exclusively due to lower activity levels and wireline companies.
Melissa Google: Adjusted EBITDA of $78 $9 million was down slightly from $84 $4 million in 2023 Marsh as a consequence of a slower start to the year as well as the previously mentioned wireline completions activity decline.
Most notably in cash flows in the fourth quarter were expected to be in came in quite strong, enabling us to achieve full year free cash flow of $54 million in 2024.
Melissa Cougle: Looking at segment results, High-Spec Rigs set another quarterly revenue record at $87 million. We reported adjusted EBITDA of $19 million, which is up 21% over the same period last year, with slight margin compression compared to the third quarter due to holiday operations. For the full year 2024 was the best year in the company's history for high spec rates with revenues of $336.1 million and adjusted EBITDA of $70.5 million of 7% and 10% respectively year over year. Ancillary Services also had its best year in the company's history with revenue of $124.8 million and adjusted EBITDA of $26.6 million, increases of 1% and 18% respectively year over year.
Melissa Google: Looking at segment results high spec rig another quarterly revenue record at $87 million, we reported adjusted EBITDA of $19 million, which is up 21% over the same period last year with slight margin compression compared to the third quarter due to holiday offerings.
Melissa Google: For the full year 2024 was the best year in the company's history for Hiseq range with revenues of $336 $1 million and adjusted EBITDA of $70 $5 million of 7% and 10% respectively year over year.
Melissa Google: Ancillary services also had its best year in the company's history with revenue of $124 $8 million and adjusted EBITDA of $26 6 million increases of 1% and 18% respectively year over year.
Melissa Cougle: The 300 plus basis point improvement in margin and significant increase in adjusted EBITDA was driven mainly by our plug-in abandonment, rentals, and torrent service lines, each of which saw increases in 2024.
Melissa Google: The 300 plus basis point improvement in margin and significant increase in adjusted EBITDA was driven mainly by our plug and abandonment rentals and Torrance service lines, each of which saw increases in 2024.
Melissa Cougle: Finally, and as Stuart touched on, wireline remained a challenge. Fourth quarter revenue of $22.6 million was 26% lower than the prior quarter breakeven margin. These declines were anticipated, and the margin shifts between the third and fourth quarters illustrate the heavy operating leverage in this segment. Winter slowdowns have been heavy thus far in 2025, and we expect that the first quarter will continue to be depressed given the extreme winter weather we've experienced. That said, we will benefit from the same operating leverage beginning in the second quarter as spring arrives and activity picks back up. Our balance sheet remains in great shape.
Melissa Google: Finally, and as Stuart touched on wireline remains.
Melissa Google: Fourth quarter revenue was 20, $269 was 26% lower than the prior quarter breakeven margins.
Melissa Google: These declines were anticipated in the Martin shifts between the third and fourth quarters illustrates a heavy operating leverage in this segment.
Melissa Google: When do you slowdown had been heavy thus far in 2025, and we expect that the first quarter will continue to be depressed given the extreme winter weather we've experienced.
Melissa Google: That said, we will benefit from the same operating leverage beginning in the second quarter as spring arrived and activity.
Melissa Google: Sure.
Melissa Google: Our balance sheet remains in great shape, we built cash during the fourth quarter and ended the quarter with $40 $9 million in cash and total liquidity of $112 $1 million. This liquidity gives us ample flexibility to execute on our strategic priorities.
Melissa Cougle: We built cash during the fourth quarter and ended the quarter with $40.9 million in cash and total liquidity of $112.1 million. This liquidity gives us ample flexibility to execute on our strategic priorities. We remain disciplined in our approach to capital expenditures and saw lower CapEx during the fourth quarter totaling $5.4 million. We had CapEx spent for the year of $34.1 million, including the incremental growth CapEx that we deployed earlier in the year in support of new customer contracts.
Melissa Google: We remain disciplined in our approach to capital expenditures at a lower capex during the fourth quarter totaling $5 $4 million.
Melissa Google: We had capex spend for the year of $34 $1 million, including the incremental growth Capex that we deployed earlier in the year and support a new customer contract.
Melissa Cougle: Looking ahead, we expect the U.S. land services market to remain subdued through the first half of 2025, with potential for some recovery in the back half of the year. Our largest customers have indicated consistent activity levels throughout the year. However, Ranger's start to the year has been impacted by two polar vortex events, significantly reducing activity levels in January and February. Given these challenges, we believe it is unlikely that total company EVA job will reach $20 million in the first quarter. That said, absent further disruptions, we should get above mid. For the full year we expect 2025 to track closely with 2024 with the potential for modest upside in the back half of the year as commodity prices hold up.
Melissa Google: Looking ahead, we expect the U S land services market remains a gain through the first half of 2025.
Melissa Google: The potential for some recovery in the back half of the year.
Melissa Google: Our largest customers have indicated a consistent activity level throughout the year. However, ranger start to the year has been impacted by two polar vortex events.
Melissa Google: Inefficiently, reducing activity levels in January and February given these challenges. We believe it is unlikely that total company EBITDA will reach $20 million in the first quarter that's been asked.
Melissa Google: Further disruptions, we should get above mid teens.
Melissa Google: For the full year, we expect 2025 to track closely with 2024 with the potential for modest upside in the back half of the year, if commodity prices hold that.
Melissa Google: Getting into the segment.
Melissa Cougle: Getting into segment specifics, we expect that high spec rig and ancillary segments will post modest year over year growth. We do not see significant improvement in broader market conditions for the wireline segment issue. We will continue pushing for growth of conventional wireline work. Regardless of this growth in the more production exposed area, we believe it is possible that wireline revenues may decline slightly year over year. We do expect margins will improve to the high single digits in this segment in the second and third quarter. Similar to 2024, we expect maintenance capex will remain in the range of 4 to 6% of revenue.
Melissa Google: We expect the high spec rigs and ancillary segment will post modest year over year, Greg we.
Melissa Google: We do not see significant improvement in broader market conditions for the wireline segment this year.
Melissa Google: We will continue pushing progressive conventional wireline work, regardless of this growth and the more production exposed area. We believe it is possible that wireline revenues may decline slightly year over year.
Melissa Google: We do expect margins will improve to the high single digits in this segment in the second and third quarter.
Melissa Google: Similar to 2024, we expect maintenance Capex will remain in the range of 4% to 6% of revenue we.
Melissa Cougle: We are anticipating modest investment of additional growth capex for opportunities make sense, and believe that capex for 2025 will be similar to 2024. We remain committed to enhancing shareholder value through a balanced approach to growth and return.
Stuart Potent: We are anticipating modest investment of additional growth capex for opportunities make sense and believe that capex for 2025 will be similar to 2024, we remain committed to enhancing shareholder value through a balanced approach to growth and returns with that I'll turn the call back over to Stuart for closing remarks.
Stuart Bodden: With that, I'll turn the call back over to Stuart for closing remarks. Before we conclude, I want to reiterate a few key takeaways. 2024 was a year of consistent execution, financial discipline, and strategic progress. We continue to strengthen our position as the leading production focused oil services company, delivering solid results despite market fluctuations and customer consolidation. Looking ahead, we enter 2025 with momentum and a clear focus on value creation. Our priorities remain unchanged. Maximize free cash flow, return capital to shareholders, maintain our financial strength, and pursue disciplined growth opportunities. With a strong balance sheet, a resilient business model, and a proven ability to execute, we are well-positioned to drive sustainable, long-term value for our shareholders, customers, and employees.
Stuart Potent: Before we conclude I want to reiterate a few key takeaways 2024 was a year of consistent execution financial discipline and strategic progress we continue to strengthen our position as the leading production focused health services company delivering solid results despite market fluctuations and customer.
Stuart Potent: Consolidation.
Stuart Potent: Looking ahead, we enter 2025 with momentum and a clear focus on value creation.
Stuart Potent: Our priorities remain unchanged maximize free cash flow returned capital to shareholders, maintaining our financial strength and pursue disciplined growth opportunities with a strong balance sheet, a resilient business model and a proven ability to execute we are well positioned to drive sustainable long term value for our shareholders.
Stuart Potent: Customers and employees.
Stuart Bodden: Thank you for your time today.
Stuart Potent: You for your time today and with that we'll open the call for questions.
Unknown Executive: And with that, we'll open the call 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 and then 2.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Stuart Potent: If you are using a speakerphone please pick up your handset before pressing the keys.
Stuart Potent: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star and then two at this time, we will pause momentarily to assemble our roster.
Unknown Executive: At this time, we will pause momentarily to assemble our roster.
Stuart Potent: Okay.
Donald Crist: And your first question today will come from Don Chris with Johnson Rice. Please go ahead. Good morning, Stuart and Melissa, and happy Mardi Gras. Happy Mardi Gras, Don. How are you? I'm doing well. Stuart, I think I heard you correctly. And you're prepared to mark saying that y'all made some investments into the P&A market out there.
Speaker Change: And your first question today will come from Don Crist with Johnson Rice. Please go ahead.
Don Crist: Good morning, Stuart Melissa I'm happy Mardi Gras.
Speaker Change: Alright.
Speaker Change: Mardi Gras, Don how are you.
Speaker Change: I'm doing well.
Stuart Potent: Stuart I think I heard you correctly in your prepared remarks, saying that John made some investments into the PMA market out there.
Stuart Bodden: Excuse me, um, can can you discuss kind of what those investments may have been? And is the increase in P&A work? Is that driven just by the EMPs? Or is it more government related? That's driving the increase in the P&A market as we move through 25?
Speaker Change: Excuse me.
Speaker Change: Can you discuss kind of what those investments may have been.
Speaker Change: Is the increase in P&A work is that driven just by the E&ps or is it more government related that's driving the increase in the PMA market as we move through 'twenty five.
Stuart Bodden: Because it's mainly on the ENP side, we do have an effort to really get a lot more kind of focused on potentially getting and bidding on some of the government work that's associated with IRA. As far as the equipment and the spreads, a lot of that is just activating additional spreads on the P&A side, which typically consists of a wireline truck, a well service rig, and then a cementing unit. So that's really what the investment has been. Okay.
Speaker Change: It's mainly on the E&P side.
We do have an effort to really get a lot more kind of focus on potentially.
Speaker Change: Getting and bidding on some of the government work that's associated with IRI as.
Speaker Change: As far as the equipment and the spreads a lot of that is just activating.
Speaker Change: Additional spreads on the P&A side, which typically consists of a wireline truck a well service rig and then submitting unit. So that's really what the investment has been.
Speaker Change: Okay.
Stuart Bodden: Um, and as we've gone through earnings this season, we've heard a couple gas companies that are several gas companies that have talked about adding rigs, particularly in the Haynesville and other gas basins. In your discussions, are you seeing the potential for a pickup as we kind of move into the third quarter, maybe fourth quarter to get ready for some LNG gas that's needed in 26? Are you hearing those as well? We are hearing that right now in the back half of the year. We've also seen some strength in the kind of MidCon and Haynesville markets on the well service side with the recent run up in gas prices.
Speaker Change: And as we've gone through earnings season, we've heard a couple of gas companies that are several gas companies that have talked about adding rigs, particularly in the haynesville and other gas basins in your discussions or are you seeing the potential for a pickup as we kind of move into the third quarter, maybe fourth quarter.
Speaker Change: To get ready for some LNG gas thats needed in 2006 are you hearing those as well.
Speaker Change: We are hearing that right now in the back half of the year. We've also seen some strength.
Speaker Change: And the kind of mid con and in the Haynesville markets on the well service side.
Speaker Change: With the recent run up in gas prices. So we have seen some strengthening.
Stuart Bodden: So we have seen some strengthening. I think we are cautiously optimistic as we kind of look forward, but we are hearing some of the same things that you are, Donald.
Speaker Change: I think we are cautiously optimistic.
Speaker Change: We kind of look forward, but we are we are hearing some of the same things that you are done.
Speaker Change: Okay, and if I could ask just a more kind of broader question on the health of the business.
John Daniel: Okay, and if I could add, ask just a more kind of broader question on on the health of the business, you know, you highlighted the TRIR in the press release and congratulations on that.
Speaker Change: Highlighting the CRA or in the press release and congratulations on that but as you're talking to these larger companies that continue to get larger through M&A.
Stuart Bodden: But as you're talking to these larger companies that continue to get larger through M&A, how important is the safety record and the maintenance schedules and the training of your people factoring into to contracts and work as you, you know, work for these larger and larger companies as they continue to consolidate? Yeah, I'll start off and Melissa can chime in as well. So we're seeing it becoming increasingly important, John. You know, typically when we deploy a spread, you know, not only does it go through our own inspection process before we deploy it, but typically the largest customers will come in and inspect the equipment.
Speaker Change: Important is the safety record and the maintenance schedules and the training of your people factoring into contracts and work as you work for these larger and larger companies as they continue to consolidate.
Speaker Change: Yeah, I'll start off and those who can chime in as well so we're seeing it becoming increasingly important dawn.
Speaker Change: You know typically when we deploy spread not only it doesn't go through our own inspection process before we deploy it but typically the largest customers will come in and inspect the equipment very often they will go.
Melissa Cougle: Very often they will go, you know, make sure that the training documents for our crew have been completed. And again, we're very open about our safety programs. And a lot of times we're even going through some of our customers training programs, our crews are as well. So I think we're seeing it becoming increasingly important. We've also commented in the past that, you know, they want not only a well service rig, but they want a complete package on the well site from us. And again, I think that all just goes to confidence in our systems and our safety and maintenance records.
Speaker Change: Make sure that the training documents for our crew have been completed and again, we were very open about our safety programs.
Speaker Change: A lot of times, where <unk> been going through some of our customers training programs. Our crews are as well. So I think we're seeing it becoming increasingly important. We've also commented in the past that they want not only a well service rig that they want a complete package on the wealth side from us.
Speaker Change: And again I think that all just goes to confidence in our systems and our safety and maintenance Records I think the only thing I'd add to that John is that the scale of it too. So in addition to everything that you referred is because theyre looking to shrink vendor list. They are looking to work with vendors that can work with them across multiple basins.
Melissa Cougle: I think the only thing I'd add to that, is that the scale of it too. So in addition to everything that Stuart said is because they're looking to shrink vendor lists, they're looking to work with vendors that can work with them across multiple basins. So that also puts Ranger in only a couple of our peers really in the runnings for some of these bigger, you know, some of our customers have shown interest in a lower 48 contract. Well, they want somebody who can cover and provide rigs across all basins. And so the ability to have, you know, all of the things that Stuart mentioned, but across multiple basins, I think is actually proving to be somewhat of a differentiation as well.
Speaker Change: So that also puts a ranger and only a couple of our peers really in the running for some of these bigger.
Speaker Change: Some of our customers have shown interest in our lower 48 contract well they want somebody who can cover and provide rigs across all basins and so the ability to have all of the things that Stuart mentioned, but but across multiple basins. I think is actually proving to be somewhat of a differentiation as well.
Stuart Bodden: And Don, if I can, just as an example, last week, our EVP of well services and I were in an all day event with one of our largest customers and a select number of vendors on their side. And so these were all global vendors and going through their safety systems and records and brainstorming, with them, what we can all do to improve. So again, we're all tied pretty closely at the hip. I appreciate the call. I'll get back in queue. Thanks.
Speaker Change: And Don if I can just as an example last week.
Don Crist: Our <unk> or our EVP of well services and I were an all day event with one of our largest customers in a select number of vendors on their side and so these were all global vendors and going through their safety systems and records.
Don Crist: And brainstorming with them, what we can all do to improve so again, we're all tied pretty closely at the hip on this.
Don Crist: I appreciate the color I'll get back in queue. Thanks.
John Daniel: Thanks, Don. And your next question today will come from John Daniel with Daniel Energy Partners. Please go ahead. Hey guys, thanks for including me. Hopefully you can hear me okay. Yep, we can.
Don Crist: Thanks, Tom.
Speaker Change: And your next question today will come from John Daniel with Daniel Energy Partners. Please go ahead.
John Daniel: Hey, guys. Thanks for including me hopefully you can hear me okay.
Speaker Change: Yes, we can.
Stuart Bodden: Stuart, I'm just curious, at this stage, do you have much visibility into the rig demand coming up from the major oil and gas companies over the next few quarters? Are you getting calls for more rigs? Just any color there would be appreciated. I think what we're seeing, John, is with the largest customers, what we kind of hear is steady as she goes. So very consistent demand going forward over the next couple of quarters. So that's the message we hear. We are hearing from some of our biggest customers that have consolidated or that have bought other companies, that we may pick up a little bit of work associated with that.
Speaker Change: I'm just curious at this stage do you have much visibility into the <unk>.
Speaker Change: Rig demand coming up from the major oil and gas companies over the next few quarters are you getting calls for more rigs just any color there would be appreciated.
Speaker Change: I think what we're seeing John is with the largest customers will be kind of here is steady as she goes so very consistent demand going forward over the next couple of quarters.
Speaker Change: That's the message we hear we are hearing from some of our biggest customers that have.
Speaker Change: That have consolidated a word that have bought other companies that we may pick up a little bit of work associated with that but generally the overall message is very consistent work programs.
Stuart Bodden: But generally, the overall message is just very consistent work program.
Stuart Bodden: Okay, and then I guess a little bit of a follow on to sort of Don's questions, the, are you getting any indication, any indication from those operators that they might be dropping smaller incumbents so that even though their work is flat, you guys get more work yourselves? or is it? That's certainly what happened through 2024. And we think some of that will continue into into 2025. So, so, so we are seeing that it just takes a little bit of time if you go, you know, some of these majors now have incredibly large workover programs. But yes, we do think that the overall trend is that, that we as a larger player will gain share at the expense of smaller ones.
Speaker Change: Okay, and then I guess, a little bit of a follow on to <unk>, our dawns questions.
Speaker Change: Are you getting any indication any indication from those operators that they might be dropping smaller in comments that even though they're working.
Speaker Change: What you guys get more work yourselves.
Or is it that's certainly what happened through 2024, and we think some of that will continue into into 2025.
Speaker Change: So so so we are seeing that it just takes a little bit of time. If you go some of these majors now have incredibly large workover programs, but.
Speaker Change: Yes, we do think that the overall trend is that that we as a larger player will gain share at the expense of some of the smaller ones.
Speaker Change: Okay. That's all I had thanks for including me.
John Daniel: That's all I had. Thanks for including me. Thanks, John.
John Daniel: Thanks, John.
John Daniel: Includes our question and answer session I would like to turn the conference back over to Stuart Bowden for any closing remarks.
Unknown Executive: This concludes our question and answer session.
Stuart Bodden: I would like to turn the conference back over to Stuart Bodden for any closing remarks. Thanks, operator. Thank you everyone for joining us today. Thank you for your interest in Ranger, and we look forward to hearing from you. Have a great day, everyone.
Speaker Change: Thanks, operator, thank you everyone for joining us today. Thank you for your interest in <unk> and Ranger and we look forward to hearing from you have a great day everyone.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Unknown Executive: The conference is now concluded. Thank you for attending today's presentation.
Unknown Executive: You may now disconnect.