Ranger Energy Services, Inc. Q1 FY2026 earnings call

• Despite a challenging start due to winter storm, Ranger delivered solid financial results with growth. - High-spec rigs were cornerstone, revenue increased driven by factors, margins over 20%. - Operational execution strong, rig rate expanded. - Progress on ECHO hybrid electric rig program, new contract signed, early results impressive. - Ancillary services growing, organic expansion opportunity, some service lines like P&A and tubing rental/inspection doing well, wireline services improved in March. - Market environment saw cautious start but sentiment improve, Ranger's business model suited to environment.

High-spec rig segment: Revenue was $106.2 million in the first quarter, compared to $92.3 million in the fourth quarter of 2025. Adjusted EBITDA increased to $21.4 million compared to $19.6 million in the fourth quarter and $17.4 million in the prior year quarter. Processing Solutions and Ancillary Services segment: Revenue was $42.3 million in the first quarter, compared to $37.5 million in the fourth quarter and $30.5 million in the first quarter of 2025. Adjusted EBITDA was $8 million, up from $6.2 million in the fourth quarter and $5.6 million in the prior year period. Wireline services segment: Revenue was $10.6 million in the first quarter. On an adjusted EBITDA basis, the segment was essentially break-even in the first quarter, a meaningful improvement compared to an adjusted EBITDA loss of $2.3 million in the prior year period

• Free cash flow for first quarter was negative $21.7 million, expect working capital to normalize over next two quarters. - Capital expenditures in first quarter totaled $18.3 million, driven by ECHO program, received upfront contribution from customer. - Liquidity as of March 31, 2026, was $42.5 million, balance sheet provides flexibility.

• Actual results may differ from forward-looking statements due to various risks like changes in oil and gas prices, customer activity levels, operating risks, competitive pressures, weather conditions, integration risks related to acquisitions.

Q: Good morning, guys. Hope you all are doing well. I wanted to start with what we've been hearing out of a lot of other companies that the oil strip has really kind of been reset here. And while a lot of people think that if the Iran war ended today that the long end of the strip is going to continue to rise going forward. I don't know if you have any thoughts on that kind of macro view, but can you relate that and how you're seeing your customer behavior conversations going as a result of kind of that narrative that we're seeing come through the industry?

A: Sure. Thanks for the question, Don. I think when we talk to our customers, what we're hearing, and it really depends a little bit on the size and kind of geography of the customer. So I think in our conversations, most of the biggest customers for now are remaining fairly disciplined. We are taking more inbounds. We're getting kind of more interest. But at the moment, they're not meaningfully changing work over. I mean, you know, their work over programs. I mean, I think we are seeing some stuff on the margins. I think as you get into some of the smaller players or in some basins that, you know, we're a little bit more on the margin, we are certainly seeing an increase in activity and more demand, particularly to accelerate barrels, right, so on the workover program. I think our sense is that as this continues to play out, that we think things are setting up pretty well for the back half of the year. And I guess the second thing, third thing I would highlight is, You know, on our quarter, and I think in the comments from both me and Melissa, and we highlighted that we exited the quarter strongly, and that's a trend that has continued into April. So we are certainly seeing some tailwinds.

Q: And, and just as a far as a, as a function of kind of white space in your calendars, I know when we met a couple of weeks back, you said that that was going away rapidly, but are we to the stage where you could possibly reactivate rigs to meet demand or, or we still have a little bit of slack in the system?

A: There's a little bit, but not much. I'd say we're, we're kind of getting to the point now, um, where like if somebody wants to do a SMAR program and we have a little bit of, you know, slack in the schedule, we can fit them in. But we're kind of getting to the point now to where, you know, we're hiring crews and we'll need to add capacity.

Q: Melissa, one for you. I think the working capital bill this quarter kind of shocked several of us. And I know in your comments you said that that should unwind, but any further comments there? I mean, it seemed like a pretty decent-sized number, but that should reverse pretty quickly in my opinion.

A: Yeah, John, we did. I think it was – we knew it would be, and we had tried to signal that it would be a negative cash flow quarter because we saw some of it early days. To be fair, I think we were hoping to have more progress by the time we hit to March 31st. The reality is we had a very substantial billing blackout by one of our biggest customers in December. And when we look at legacy Ranger businesses, we're still kind of hit with 10 days unwinding and trying to push through from that. Then on top of that, you had exacerbated issues around AWS because we were getting to combine pricing books where those price books they tend to drag out your billing cycle because you have to get all these different pieces of the puzzle in place to allow the invoices to flow through on the new price book. Then I would say on a final on the AP side, because we were moving the AWS organization into Ranger for April 1st, we made a call late in the quarter to actually clear out the open AP. So we paid out and there was an extra few million dollars that was paid out. That's Long-term benefit to Ranger to kind of make that transition much smoother. But again, short-term impact to the quarter on the working capital side. We do believe when we get into Q2 that the April 1st go live on the ERP will probably continue to leave us challenged for the next month. And then I think we'll start to finally start to see DSO really improve when we get into May and June. So I don't think you'll see everything get back to normal by the end of Q2, but I think we'll see a lot of normalization in Q2, and then we'll pick the final piece of it up in Q3 on the DSO side. Helpful? I appreciate the color. I'll turn it back. Thanks again.

Q: Hey, thanks, and good morning. I think I'm going to stick with the theme of Don's question because we also hear the same view that operators believe the forward curve is mispriced and should be higher. And, you know, smaller operators are reacting to that right now, as you mentioned and we've seen, and we know those small players are always the first movers, and larger companies, as we also know, tend to be slower. But presumably they make the upwards activity shift next year. So forgive that long-winded preamble to my question, but if you share that view – how would this glass have full outlook impact your vision for ranger? And what I mean by this steward is, is now the time to get ahead of it and either fast track consolidation is now the time to accelerate even more echo, you know, new builds, whereas, or do you just get a little bit aggressive on the front end and start pushing pricing a bit harder? I know there's probably other choices, but just kind of, if you could opine on strategy.

A: Yeah, I, I, I think you probably sort of characterize the conversations, right, in that I think as we go in and, you know, we look at activity, and it can be a range of things, right? Our willingness to give multi-rate discounts, as you can imagine, that's becoming more challenging to entertain. You know, as we think about sort of, you know, hiring a crew when you have line of sight to, you know, 50% utilization or full utilization. So I think on the margin, it's easier just to be more more confident, more aggressive on that. I do think on the ECHO program, you know, we've had a lot of discussion about as we bring those rigs into the market, will they displace rigs or will they be completely additive? And I think as we go forward, we're feeling more and more confident that they will be additive, which has a huge impact to the business. But I feel like with those rigs coming in, we are kind of naturally adding capacity and hopefully at the right time. So hopefully that kind of makes sense. But I mean, I think just in general,我think, you know, I'm not sure you're going to see a, you know, a massive shift in strategy, but I think on the margin, you know, we're certainly feeling pretty, pretty confident.

Q: And if I remember correctly in the slide deck, I think you had 193 active rigs. Maybe that was as of year end. Can you just say what the active count is today and A: Yeah, I mean, right now it's about the same. It hasn't meaningfully changed. That number includes, you know, you always have some rigs that are getting preventative maintenance or refurbs, et cetera. But I'd say right now it's about the same. But, again, kind of to Don's question earlier, you know, we're kind of getting near that point where to satisfy new demand, we're going to have to activate rigs.

Q: one of your very, very small competitors was complaining to me that they can't find parts to reactivate equipment. Can you just speak to the supply chain and do you think that's an anomaly or just how does that impact you guys?

A: I'm not sure it's an anomaly, but I don't think we have felt that. So I don't think we're feeling supply chain issues. What I would tell you is It wouldn't surprise me if, you know, two quarters from here, we're talking about labor tightness again, which we haven't really talked about for a while. But at the moment, we're not really having issues on supply chain.

Q: Hey, good morning. Wanted to hit on the production optimization theme that you highlighted in your opening comments, talking about accelerating barrels. Maybe just help educate us in the market as far as how we should think about Ranger taking advantage of the current macro, be it on the workover program. You obviously have rigs that are dedicated towards completion or production, coil tubing, anything else inside of the ancillary solution segment of yours. Just trying to think about how you guys can also benefit as these EMPs look to accelerate ducts or optimize their current production pace to take advantage of the front month here.

A: Thanks for the question, Derek, if you're doing well. Again, I think kind of when we talk to customers, I mean, obviously the shortest cycle barrels they have is to go in and do, you know, is to go into a workover. And certainly, you know, we're seeing right now some of the smaller, you know, customers get pretty aggressive on those programs. You know, to go do a drill completion, kind of create a program for that obviously takes, takes time and the curve is still pretty backward dated. And as you know, not very liquid, you know, from a trading perspective in the out year. So I think what we're seeing is people try to get, you know, physical barrels in the market pretty quickly. You know, that obviously is right down the fairway of everything that we do in the high spec rig segment. I would say for some of our other service lines that tend to be a little more completion-oriented, and so I'm thinking things like the cold tooling business, some of the ancillary completion-weighted services we picked up with AWS. I think what we are seeing is those are just kind of generally firming up. So I'm not sure it's, again, you know, it's not like it's a doubling of activity. but where somebody maybe in the past said, hey, I've got some work. I'm going to go give it back to you in six weeks. Now they're saying, you know what, I want to keep it because我don't want to give it back. So I think we are seeing, you know, just sort of really steady work on the completions side, which obviously sort of helps the financials across the board.