Thank you, and welcome to Ranger Energy Services First Quarter 2024 Results Conference Call. Ranger has issued a press release summarizing operating and financial results for the three months ended March 31, 2024. This press release, together with accompanying presentation materials, are available in the Investor Relations section of our website at www.rangerenergy.com. Today's discussion may contain forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Further, please note that non-GAAP financial measures may be disclosed during this call. A reconciliation of GAAP to non-GAAP measurements is available in our latest quarterly earnings release and conference call presentation. Please also note that this event is being recorded today. And with that, I would like to now turn the conference call over to Stuart Bodden, Ranger's CEO; and Melissa Cougle, Ranger's CFO, for their prepared remarks. Please go ahead.

Thank you, and good morning, everyone. We are pleased to welcome you to our first quarter 2024 earnings call. Ranger had a challenging first quarter with revenue of $136.9 million and adjusted EBITDA of $10.9 million, both reductions from the prior quarter and the prior year quarter. The company was presented with a number of challenges and unique circumstances during Q1, and each of our segments was impacted. I will spend meaningful time in detail on today's call because I want to give you a sense of what we see as nonrecurring and why we remain bullish on Ranger's outlook and our production-focused business model. Although we were disappointed in the quarter, we believe this quarter is an anomaly and is not representative of the remainder of the year. As mentioned in our year-end call, 2024 got off to a slow start. As the quarter progressed, typical weather disruptions and events outside of our control, combined with unsustainable below-market pricing offered by competitors and a declining completions market created excess capacity, impacting our quarterly performance more than originally expected. While we weathered the back half of 2023 with resilience in the face of significant declines in U.S. onshore rig count, this winter brought additional pressure in our completions focused areas, which had the most significant impact on our Q1 results. We've mentioned before that our business is approximately 65% exposed to production and decommissioning services and about 35% exposed to completions, and it was this 35% where we saw the most pressure. U.S. frac spreads declined by 17% between November and mid-January, which idled Wireline and Coil Tubing assets during the already challenging winter months. In the North, we experienced a wave of competition that drove down pricing to unprofitable levels on the completions Wireline side and sidelined some of our assets temporarily on the Coil side. It is important to remember that our weakest quarters are typically the first and fourth quarters, where weather and generalized winter and holiday slowdowns materially impact our business. With that seasonal backdrop, we experienced compounding declines, given the dynamics I've just mentioned. I'll go into more detail on our Wireline and Ancillary services to give as much color in these areas as possible and then wrap up with the High Spec Rig business. Our Wireline Services segment experienced significant competitive and pricing pressures throughout the first quarter. Our North Wireline region has historically been insulated from the commoditization of Plug and Perf completion Wireline Services, but this winter season brought with it an influx of competition that led to significantly lower pricing, similar to the dynamics we saw last year in the Permian Basin and have mentioned on prior calls. Many of the quoted bid prices we've encountered are unprofitable and ultimately unsustainable. And we have chosen to only bid at levels that will generate an acceptable level of return for our business. In response to lower anticipated activity levels going forward, Ranger has aggressively adjusted our fixed and support cost basis. We have chosen to maintain our discipline in the face of these pressures and while it's painful in the moment, we believe doing so is essential for this industry to remain sustainable through the cycle. We also believe that the work we are pushing to grow in the production in pump down areas ultimately allows for margin expansion. Our investors know that this quarter is not the first time we have had issues with our Wireline Services business. Given that the barriers to entry to completions-related Plug and Perf operations have been significantly lower over the past five years. This is why we have been engaged in a strategic pivot away from completions work and have been leaning into production and pump down services, which performed relatively well through the winter months. Our Production and Pump Down businesses have grown year-over-year, and we consider its continued growth one of Ranger's most important 2024 strategic initiatives. This goal is important on a stand-alone basis given Ranger's broader production focus. We will continue to push even harder on this front, acknowledging that growth in this area will take time and resources as we cultivate different customer relationships and establish a broader skill set base in our operational employees. Moving on to Processing Solutions and Ancillary Services. This segment was also challenged by a decrease in operating activity in the first quarter primarily attributable to Coil Tubing services, where revenue declined in the North region due to increased competition and seasonal lows and activity. In Coil Tubing, the drop in completions activity freed up additional coiled tubing units in neighboring areas to compete directly with Ranger at lower prices. Different from our view on Wireline completions, however, we don't believe that market dynamics for Coil Tubing have fundamentally changed as we have already seen our coil activity begin to recover in March and April from the February low. We expect activity to continue to increase in May and June, with a more substantial rebound potentially on the horizon in the second half of this year. On the bright side, our rental service line performed quite consistently and has seen an improvement in pull-through revenue opportunity, which is creating a much more consistent margin profile each month. Additionally, the Torrent service line has received an increased number of inbound inquiries for infield gas processing given the increases in liquids pricing and the need for infield power generation, and we are optimistic about the opportunity to grow this business in the future. Finally, our Plug and Abandonment business is experiencing an uptick in demand to complete necessary decommissioning work, and we believe we are well positioned to capitalize on this growing market. P&A is another service line that tends to experience seasonality and declines in the winter months, so this pickup in activity is encouraging. Finally, turning to our High Specification Rigs business this quarter. Revenues were essentially flat quarter-over-quarter and increasing year-over-year. In our year-end investor call, we mentioned a material downtime event in January on a non-Ranger rig that was outside of our control. This event affected 75 rig days in the quarter during which time we had significantly reduced or zero rig revenue but full cost burdens and extraordinary inspection costs, which pushed down margins for the quarter. Our High Specification Rigs business has proven very reliable and the demand for its service has been consistent for the past two years. Despite the downtime and our typical seasonality, we grew revenues to $79.7 million and rig hours to 111,000 hours, and pricing remained strong at $718 per hour. We had our highest revenue quarter in this segment in Ranger's history, which is remarkable given the downtime and typical seasonality is highest in the first quarter. This business has already seen margins recover in March, and we expect to see historical margins of 19% to 21% moving forward. Strong activity in pricing continues to reflect the consistent demand we see in the High Specification Rigs business, and we are grateful for our strong partnerships with majors, along with large and small independent operators across the premier U.S. basins. We see these relationships only getting stronger supported by a backdrop of an increasing number of producing horizontal wells requiring maintenance each year. As we have repeatedly discussed on these calls, Ranger's production focus provides a buffer from dislocations in the market and a dependable revenue and free cash flow base from which to grow strategically and return capital to shareholders. We are the largest provider of well services in the United States and the only public company that has more than 50% of its revenue tied to production services. That said, this quarter makes clear we are not fully immune to completions activity declines, and we have made a series of changes to our business across all service lines. Considering what we view as sustained impairment to the completion space in Wireline and the acknowledgment of the efficiencies and process improvements we've generated in the business in the past couple of years, we undertook a deep cost review across all segments, identifying approximately $4 million of annualized cost savings that will help streamline the organization moving forward. These efficiencies are most significantly indirect personnel costs with additional efficiencies identified through select administrative and operational spending categories. Looking forward, we remain focused on creating long-term value based on our previously communicated four strategic pillars of: maximizing cash flows, defending the balance sheet, prioritizing shareholder returns; and growing through acquisitions. We continue to execute against these pillars despite a challenging quarter. Importantly, we maintained our net debt zero position and high liquidity, which has been one of our highest priorities because it allows us to ride through the variability of the energy cycle and maintain our dividend. We can have a tough quarter and still maximize our returns to shareholders because of our excellent free cash flow conversion rate and our strong balance sheet. In the first quarter, we issued a regular dividend of $0.05 per share and repurchased 846,900 shares for $8.5 million. And today, we are announcing our second quarter dividend. Since we implemented our shareholder returns program in the second quarter of last year, we have repurchased over 2.6 million shares for a total value of $27.6 million and returned over 65% of trailing 12 months cash flow to shareholders, with the remaining cash flows going toward repaying outstanding debt. These actions far exceeded our commitment of a 25% minimum free cash flow return. While we are eager to execute a transaction to grow our business, we have a disciplined capital allocation program that also takes into consideration the opportunities related to repurchasing our own stock at attractive prices. We have had numerous conversations over the past several quarters and remain in active dialogue with potential counterparties, but we will not consummate a transaction unless it has the ability to create meaningful long-term value for our shareholders. Finally, our view for the full year remains positive, having weathered a perfect storm these past few months from which we've emerged stronger. Through March and April, we have seen customer activity and revenue pick back up with a much improved margin profile, and we expect, as is typical, to have strong spring and summer seasons. Through all of this, we will remain committed to ensuring strong cash flow generation to maximize shareholder returns.

Good morning, everyone, and thank you for joining us today to discuss Ranger's first quarter 2024 financial results. Faced with challenging market conditions, our revenue for the first quarter totaled $136.9 million, a 13% decrease from $157.5 million in the first quarter of 2023. This decline was primarily due to lower activity levels in Wireline completions and Coil Tubing service lines. We reported a net loss of $800,000 or negative $0.03 per fully diluted share down from net income of $6.2 million or $0.25 per share a year ago and net income of $2.1 million or $0.09 per share in the fourth quarter of 2023. The decrease in net income from the prior year and prior quarter periods is primarily attributable to declining activity levels in Wireline as well as Processing and Ancillary Services Segment, and increasing costs due to inflationary pressures across cost categories. Cost of services for the quarter was $120.8 million, representing 88% of revenue compared to $130.9 million or 83% of revenue in the prior year period. The increase in cost of services as a percentage of revenue was primarily attributable to reduced operating activity during the quarter and inflationary pressures on labor, rentals and repair costs. The most significant inflationary cost increase noted is with regard to medical cost per employee which affected cost of services by $1.8 million in the first quarter of 2024 when compared to the first quarter of 2023. As a reminder, Ranger began to see these costs escalate significantly during the second quarter of 2023, and they have remained elevated. Adjusted EBITDA for the quarter was $10.9 million, reflecting a decrease of $9.2 million from the prior year period and $7.5 million from the prior quarter. With regards to our segment performance, High Specification Rigs revenue for the first quarter was $79.7 million, an increase of $2.2 million or 3% from the prior year period and an increase of $700,000 from the fourth quarter of 2023. Rig hours increased by 3% from the prior quarter period and decreased by 1% from the first quarter of 2023. The blended rig hourly rate for the first quarter was $718 per hour, which represented an increase of 4% year-over-year due to general pricing increases captured in 2023 and decreased 2% from the prior quarter due to customer and asset mix. This reflects relatively consistent pricing and operating levels quarter-over-quarter. In addition to the nonrecurring downtime event, rig transitions between customers during the quarter also impacted margins with slightly elevated operating costs due to make-ready tasks between jobs. In our Wireline Services segment, revenue was $32.8 million in the first quarter, down 34% as compared to the first quarter of 2023, with stage counts down 47% over that same period. Revenue was down 21% as compared to the fourth quarter of 2023, with stage counts down 32% over that same period. Stuart went into significant detail as to the dynamics in the completion space, and Ranger has initiated reporting of service line detail for this segment going forward to add greater clarity to our financial performance. We have seen year-over-year growth in both production and pump down services and we'll be focused on continuing that growth in 2024. In our Ancillary Services segment, revenue was $24.4 million in the first quarter, down $5.7 million or 19% from $30.1 million in the prior year period and down 21% from the prior quarter. Contributing most significantly to the decline was a reduction in operational activity in the Coil Tubing service line, affecting both operating income and adjusted EBITDA. Revenues have been improving in both March and April, along with profitability. In response to reductions in Wireline activity levels and to better align the business and drive further efficiencies, Ranger completed an extensive review of all fixed costs within the company, including direct operational costs and direct operational and administrative costs as well as corporate costs. Through this review, Ranger was able to identify approximately $4 million of annualized savings efficiencies, with $3 million of those savings associated with personnel reductions and another $1 million in support and service-related costs. These reductions will align more closely with the new operating levels anticipated in Wireline completions and allow for improved leverage going forward as revenues continue to ramp during the year. Turning to the balance sheet. We remain in pristine financial health and ended the first quarter with zero net debt once more. We've posted cash from operating activities of $12 million during the first quarter as we were able to further improve collections and saw a reduction in working capital. Capital expenditures of $6.5 million were slightly elevated as we continue to take delivery of assets associated with our new contract announced in 2023, and upgraded certain Coil Tubing assets. We expect capital expenditures will decline slightly in the back half of the year. Free cash flow for the quarter was $5.5 million, and we bought back over $8.5 million worth of Ranger shares aggressively, repurchasing when we saw an economic opportunity to do so. Finally, we ended the quarter with $66.5 million in liquidity, consisting of $55.4 million of capacity on our revolving credit facility and $11.1 million of cash on hand. We are committed to maintaining the highest degree of financial flexibility so that we can always act in the best interest of our shareholders. Looking ahead to the remainder of 2024, we expect modest growth in our High Specification Rigs business and Ancillary segment, while anticipating flat operator activity levels for the year. We will continue to focus on expanding our Production and Pump Down service lines within the Wireline Services segment and believe this segment can, as a whole, return to very modest profitability in the second quarter, although further Wireline revenue declines could occur. On a consolidated basis, we believe the improving trend we saw in March financials will continue in the coming months, providing for a return to more normalized levels of profitability. Our business will continue to prioritize high conversion of EBITDA to free cash flow, which will provide the means for returning meaningful capital to our shareholders.

And our first question here will come from Don Crist with Johnson Rice.

I wanted to start with Torrent. You haven't really discussed it much over the past year or two, and there has been considerable focus on the shift to DGB and natural gas usage in the Permian, in particular. I was wondering if you could outline what type of segment or services you are providing there. Is this about scrubbing field gas, for instance, to be used for completions? Any additional information you can share about the Torrent operations would be appreciated.

Yes, sure. Thanks for the question, Don. The bulk of our offering on the Torrent service line is infill gas processing using MRUs, mechanical refrigeration units. And that is for scrubbing infield gas, knocking out the liquids out in the field. We actually have a pretty exciting pilot we're running right now where we're out in the Permian scrubbing gas, and that's actually going into a microgrid and also going to a dual fuel frac fleet at the same time. And the reason that we're pretty excited about that is, obviously, if we can do processing for infill gas and actually have it go into a frac or into the power generation, it's a pretty exciting opportunity. So we're starting to see a lot more inbounds on that. We've made some changes to the sales organization inside of that about six months ago that we think are really starting to bear some fruit. So cautiously optimistic on that.

I appreciate that color. And one on the High Spec Rig side. It was unfortunate what happened in the first quarter, which caused some slowdowns there. Onetime in nature obviously. But given the recent industry consolidation and the events that occurred, are you gaining any market share in certain geographic regions? Or are you kind of the same place where you were before? Just curious as to if that operator that had the issue has been displaced or not?

Yes. We do feel like we are slowly gaining share in a couple of regions. Some of these things take time. Obviously, the incident that occurred was unfortunate, and it's taking a little bit of time to work its way through the system. But I think we do feel like that ultimately, it's potentially an opportunity for us. But again, it just takes a little bit of time to work through the system.

Okay. And all of those costs that we're incurring have been reversed now, right? So the second quarter should return fairly back to normal?

Yes. We are expecting the second quarter to return to normal levels.

And our next question will come from John Daniel with Daniel Energy Partners.

Stuart, I have a question. When you consider the strength of the well service business compared to many other segments, and in light of the safety incident that affected one of your peers and customers, I wonder if there are prospects for you to increase prices this year, given the difference in quality and service.

I'd love to tell you that the answer is yes. I think right now, it's difficult to say if we're going to be able to raise prices meaningfully. I do think kind of back to Don's question, we are getting more inbounds as a result of some operators thinking about shifting around their contractors. And ultimately, there could potentially come a point where as things tighten up, there’s an opportunity. Right now, we're holding it steady.

And then just given the strength of your balance sheet and so forth. Is now the right time to do the smaller tuck-in deals on the rig side? Just seems to lend itself well to more consolidation in an already strong market.

Yes. We have started to look at some smaller players. Again, I think that we're very conscious when we do that of asset quality. As we’ve said, we do have opportunities as we gained some share to pull some additional equipment off the fence and bring that into the market. So on smaller players, we're very, very focused on asset quality more than anything.

Our next question will come from John Fichthorn with Dialectic Capital.

So it looked like some of your share repurchasing was kind of on a trend line. And so although you did a nice job and bought back 10% of your shares over the last year, the recent couple of quarters looked like they were trending more towards a 20% type number. I appreciate the opportunistic nature of it. Your stock price is really cheap right now. Just help us understand how you're thinking about that in the present, either at a share price dependence level or just in general?

Yes, I'll start off and Melissa, obviously, will chime in. I think I'd highlight a couple of things. I mean, one, we're obviously very, very committed to returning capital to shareholders. We also feel that our stock is a very good value. And I think we have looked at that somewhat opportunistically through the last couple of quarters, and I think we'll continue to look at that. I'll also say, I think we're very committed as we go forward to continuing to return capital to shareholders. It's a core part of the program.

I would only add to that, John, I think we are so mindful of just what are our cash flows, right? So we moved in really aggressively through the end of the year and through the beginning of this year. And I think we're trying to be mindful of how much cash we're generating in light of how much we can repurchase to. So not that one has to match the other, but we're just mindful of how much cash we are generating to be able to sort of move into that space and how much line of sight we see the future cash flows too. So I think we feel that's an additional consideration.

Although you're not changing your guidance for the year, right, on this call? Is that right?

We're maintaining our guidance, but we're not providing specific figures at this time. During our last call, we mentioned that we anticipated this year would be fairly consistent with the previous year. There are a few important points to consider. First, we believe there is a reasonable path to achieving that consistency. However, the completions market and natural gas markets are currently under significant pressure, which introduces some uncertainty. Therefore, we are not offering specific guidance right now due to the uncertainties we see in the market.

There is some uncertainty, but this appears to be a challenging quarter due to a one-time incident that significantly impacted your cash flow. You are projecting a return to year-on-year growth in most of your business lines for the next quarter, and I assume cash flow will follow a similar trend. Are my thoughts accurate? If not, which parts are incorrect?

Yes, I believe that's correct. As I reflect on the fourth quarter and the beginning of Q1, we were quite assertive for the reasons you mentioned, John.

And so 65%, you guided to a minimum of 25%. You did 65% great, like applause, right? Are we sticking with our minimum of 25%? And if you guys continue to see the value in your share price like what you do out here, can we expect something similar? Or is there a reason not to?

I think absolutely.

Yes, I agree.

And this will conclude our question-and-answer session. I'd like to turn the conference back over to Stuart Bodden for any closing remarks.

Just want to thank everybody for joining the call this morning. Thank you for your continued interest and support of Ranger, and we will see you in the quarter. Thanks.

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