Earnings Call Transcript - RNGR Q3 2023

Operator, Operator

Good day and welcome to the Ranger Energy Third Quarter 2023 Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Justin Whitley, Ranger's General Counsel. Please go ahead.

Justin Whitley, General Counsel

Thank you, operator and welcome to Ranger Energy Services third quarter 2023 results conference call. Before the market opened today, Ranger issued a press release summarizing operating and financial results for the third and nine months ended September 30, 2023. The press release, together with accompanying presentation materials, are available in our Investor Relations section of our website. 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 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 non-GAAP financial measures may be disclosed during this call. A full reconciliation to non-GAAP measurements is available in our latest quarterly earnings release with the conference call presentation. 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.

Stuart Bodden, CEO

Thank you, Justin, and good morning everyone. Thank you for joining us today. I'm pleased to share our third quarter 2023 financial and operational results. These results reflect Ranger's resilience and ability to succeed, despite lower US onshore drilling activity this year and sustained weakness in natural gas basins. I will begin with a summary of our third quarter performance by segment, followed by our thoughts on the macro environment as we head into our 2024 planning cycle. As we reflect on our business this year, we are incredibly proud of the hard work of our teams and the resilience demonstrated by our business. At a consolidated level, Ranger has seen sequentially increasing revenue, adjusted EBITDA, and adjusted EBITDA margin each quarter in 2023, despite the US rig count dropping by more than 15% since the end of last year. We frequently discuss our production-focused business model and our differentiation in service quality and safety performance, and this year, we saw that differentiation in action. To elaborate, we have 30% to 40% of our revenues exposed to completion activity in some of our gas-oriented assets. We saw some of those exposed assets get released during the spring and early summer. Due to the efforts of our operations teams and strong collaboration across regions, along with our strong reputation for service quality and safe operations, we were able to efficiently redeploy idle assets to keep revenue moving in the right direction in the high-specification rig segment this year. We did face more white space than anticipated due to rig redeployment in the third quarter, but having most of our assets allocated to production-focused work in earlier basins allowed us to limit churn and maintain baseline activity. Our ability to maintain and even increase revenue levels in some segments despite the decline in overall onshore activity this year provides clear evidence of the flexibility and robustness of our production-focused business model and strong operational teams. Additionally, we are pleased to have signed a new customer agreement with a major integrated onshore operator this quarter that secures significant market share of their well service work in the onshore US asset portfolio. This agreement gives us higher confidence in our 2024 plan and opportunities for further growth with this customer. We have talked about our positioning with larger customers and the trend toward vendor consolidation. It is encouraging to see the first of what we hope will be a series of similar agreements. It is worth reiterating that our highest quality customers are choosing to commit more closely to Ranger, which speaks to the reliability of our teams and the quality of our assets. Now regarding our third quarter specifics, we reported net revenue of $164.4 million, the second highest revenue quarter in Ranger's history. While this is down from last year's record third quarter, we have steadily increased our results across 2023. Year-to-date net income is $21.7 million, which is three times the $7.5 million reported over the same period in 2022. Adjusted EBITDA for the core was $24.0 million, and adjusted EBITDA margin has risen from 12.8% at the start of the year to 14.6% in the third quarter. We achieved higher EBITDA quarter-over-quarter in all segments, and this sequential growth is relatively rare among North American onshore service providers. Our High Specification Rigs business has provided consistent stability and strength this year. Despite unexpected scheduling changes that introduced some additional labor costs, rig hours remained steady quarter-over-quarter with slight pricing improvements. In our Wireline business, the North region, which is our largest contributor, significantly improved its margins this quarter by focusing on efficient execution. However, the South region continues to face intense competition and pricing pressures in completion services, limiting progress from last year. We are strategically shifting our focus in the South region toward production and pump-down oriented wireline work, avoiding bids at breakeven levels or below. This approach aligns with Ranger's production focus and offers improved margins. We expect this realignment to enhance our segment contribution as we transition into 2024 and provide more seasonal resilience. Compared to the fourth quarter of 2022, we've grown revenue by 10%, despite declines in US drilling and completion activity, while more than doubling operating income and increasing adjusted EBITDA by 57% over the same period. In our ancillary services business, we have made modest sequential improvements across the board this year. Our P&A business has seen double-digit growth, which has been a deliberate effort on our part, and our Coil and Rentals businesses have remained steady despite activity declines. We have experienced some pricing drops in our Coil and Rentals due to new competition that has emerged from gas basins this year, affecting our margins. We are focused on maintaining growth momentum in our P&A business and rejuvenating our Rentals and Coil business. Despite significantly lower-than-expected customer activity, we have achieved steady, although moderated, growth this year. The declines in completion activity have hindered our original more ambitious growth plans, and we have actively responded to these declines by redeploying assets and pursuing operational efficiencies. The positive news is that the challenges faced in 2023 have strengthened our fundamental business, yielding higher margins and more streamlined operations. As indicated in our earnings release, we have adjusted our full year guidance to reflect year-to-date performance, and I am disappointed to revise our expectations. Our team has navigated market challenges remarkably well and is ready to engage strongly in 2024. We are also on track to convert 60% of our adjusted EBITDA to free cash flow this year, which has set us apart and influences our capital return strategy. During the latter part of 2022 and into early 2023, we evaluated and established a capital return framework, announcing our commitment to return at least 25% of free cash flow to shareholders through dividends and/or share repurchases. No other small-cap full-service well company can offer such a shareholder returns program with the same fundamental strength and confidence in their business. In the third quarter, we issued the first quarterly dividend in Ranger's history of $0.05 per share. Additionally, we've repurchased approximately 781,000 shares for about $0.6 million this year, reflecting our belief that Ranger shares are trading at a significant discount to their intrinsic value. We still have about $26 million of authorization remaining, which is 14% of our current float, and we plan to use that capital opportunistically for share buybacks when conditions support it, while remaining mindful of our liquidity. By the end of the third quarter, we have already exceeded our commitment to return 25% of our annual free cash flow to shareholders. Looking ahead, we share the perspective of others in the industry who believe the rig count is nearing its bottom and anticipate increased activity levels in 2024 as budget cuts are adjusted. The tight global supply and demand balance suggests a favorable market for oil and gas, and our initial conversations with customers have been optimistic. Moreover, recent major mergers and acquisitions in exploration and production signal a positive long-term outlook for North American resource development, as well as an opportunity for the highest-quality service providers to gain market share. We are witnessing a growing trend among our customers to consolidate their service providers, which bodes well for Ranger's business as we look toward a recovery in rig activity in 2024. In conclusion, while we have faced unexpected challenges this year, our adaptability, innovation, and focus on efficiency have allowed us not only to endure but to thrive. We remain committed to creating value for our shareholders. The actions we have taken, such as accretive acquisitions, share repurchases, and the initiation of a quarterly dividend, demonstrate our dedication to delivering value to our shareholders. Before I hand over the call to Melissa, I want to mention another press release issued this morning. As part of our Board's succession process, we began a search for two new Board members earlier this year and are pleased to announce that Carla Mashinski and Sean Woolverton will be joining the Ranger Board at the start of the New Year. They both bring extensive industry experience and fresh perspectives that we are excited to have on our Board. Bill Austin, our Chairman, and Dick Agee, who merged his private wealth service company into Ranger before the IPO, will be leaving their positions at the end of this year. Both have played crucial roles in guiding Ranger over the years and have been instrumental in our growth since 2021. Their leadership and guidance have enabled Ranger to complete multiple acquisitions, streamline our capital structure, achieve net debt zero, and establish a capital returns program. We wish them all the best as they embark on new ventures. Michael Kearney will take on the role of Chairman in 2024. Mike has served as Chairman of two other public companies and brings valuable knowledge of Ranger from his time on the Board, along with valuable insights from his past experiences. It's an exciting time at Ranger. We are effectively navigating the challenges of 2023 and laying the groundwork for continued growth and benefits from consolidation in the exploration and production sector. Now, I would like to turn the call over to Melissa to discuss our financial results and outlook.

Melissa Cougle, CFO

Thank you, Stuart. Good morning, everyone. I'll now provide further insights into our financial performance for the Third Quarter. In the Third Quarter of 2023, our revenue was $164.4 million, marking a 1% increase from the second quarter of this year. As Stuart mentioned, we experienced some unexpected white space early in the quarter in our high-spec rig business, which resulted in lower growth than expected. Year-to-date our revenue was $485.1 million, marking a 7% increase from the prior year. Our net income for the quarter was $9.4 million or $0.38 per fully diluted share. This is a significant improvement from the $6.1 million or $0.24 per share in the Second Quarter of this year. Our continued focus on operational efficiency has contributed to this increase. Year-to-date net income stands at $21.7 million or $0.86 per fully diluted share, a significant improvement from $7.5 million or $0.33 per share in the prior year. We achieved an adjusted EBITDA of $24 million in the third quarter, representing a 10% increase from the Second Quarter of this year. This performance underscores our commitment to controlling what we can control. We achieved an adjusted EBITDA of $66 million year-to-date, representing a 14% increase from the prior year. During the quarter, we repurchased $2.7 million worth of shares under our existing share repurchase authorization, bringing the total repurchases year-to-date to $8.6 million. We also initiated a $0.05 per share quarterly dividend during the quarter, and announced today that the Board has approved our fourth quarter dividend as well. On the growth side, during the quarter, we closed on our acquisition of pump-down assets for our Wireline business paying approximately $7.25 million, with some of those assets already working and the remainder undergoing upgrades and refurbishments to bring them up to Ranger standard. We remain screening acquisition and consolidation opportunities, but have committed to being very disciplined in our approach. The pump assets proved a great fit, given their relatively easy pull-through in our existing service lines and were too good to pass up from a valuation perspective with payback economics of less than two years. We would call attention to the increase in capital expenditures this quarter, as not only were the pumps treated as CapEx as well as their ongoing refurbishment, but we also spent some capital dollars in support of the contract that Stuart mentioned earlier. We expect capital costs may remain a bit elevated in the next couple of quarters driving us to the high end of our guidance range as these certifications and refurbishments are completed and additional equipment on order is delivered. To conclude, our review of the financials, let me touch briefly on the balance sheet. Our liquidity was $70 million at the end of the quarter. We ended the quarter with approximately $10.3 million in debt and $8.2 million of cash. Financially, Ranger is as strong as it's ever been, with near zero net debt and over double the liquidity it had one year ago. Free cash flow for the quarter was affected by the accounting treatment of the pump-down assets that were treated as capital expenditures and some build in working capital, which is already trending in the right direction in the fourth quarter once more. Turning to 2023 guidance. As Stuart previewed in his comments, given the lower-than-expected results during the third quarter, we have revised our expectations accordingly for the year. While revenue growth hasn't been as robust as we had hoped at the beginning of the year, the revised forecast does reflect the resiliency of our business amid what has been a trough in onshore activity this year. We would stress that our fourth quarter will be dependent on a variety of factors both positive and negative and we expect a lighter quarter before picking back up in 2024. We are already continuing with some early winter effects and talking about holiday planning with customers. Offsetting those challenges, we have continued to deploy new assets during October, which somewhat moderate our seasonality impact. These adjustments reflect our commitment to transparent communication, delivering value to our shareholders and our dedication to managing our financial performance in an ever-changing environment. We are currently in the process of preparing and reviewing our 2024 budgets and look forward to sharing insights on 2024, and updating our investment community with those insights as part of our year-end report. We remain positive on our market fundamentals and the constructive backdrop for a multiyear growth cycle and we currently expect activity to increase modestly in 2024. Thank you again for your time and interest this morning. We look forward to updating you on our progress next quarter. With that we would like to open the floor to any questions you might have. Operator, please go ahead.

Operator, Operator

Thank you. We will now begin the question-and-answer session. The first question comes from John Daniel with Daniel Energy Partners. Please go ahead.

John Daniel, Analyst

Hey, all. Thank you for having me. And congratulations on the incremental work you guys are getting from the bigger E&P companies. I guess the first question Stuart is is there any way that you can provide some quantification as to what the incremental rig opportunities will be? And then just touch on the ability to find people to man those rigs, or will you just transition rigs from existing customers to take that work?

Stuart Bodden, CEO

Good morning, John, thanks for the question. I think it's going to be a little bit of both. I think there will be some rigs that transition from existing customers. I think there will be some incremental growth as we go into the year. I think on the labor markets, what we're finding is it still is a tight labor market. But it is certainly better than it was in 2023. So I think we're confident that if we need to find those crews that we can. But again, I would reiterate that it could be a combination of new rigs or incremental rig adds but also some kind of reshuffling amongst customers.

John Daniel, Analyst

Okay. And then just two other quick housekeeping. Does the agreement provide for pass-throughs in the event of inflationary labor or other costs, or are you locked in at a certain rate?

Stuart Bodden, CEO

No. It allows for pass-throughs.

John Daniel, Analyst

Okay. And then on the wireline business as you shift to more of a production work. What happens – are you idling some of the completion-oriented units? Did those become candidates to sell, or can you just repurpose them for the production work? That's my final question.

Stuart Bodden, CEO

I appreciate the question, John. They can be repurposed for production work relatively easily. We do, through acquisitions, have a fair amount of wireline production-related equipment and tools. So we don't think we need to really do anything incrementally other than just really put greater emphasis on that.

John Daniel, Analyst

Okay. Thank you very much.

Stuart Bodden, CEO

You bet.

Operator, Operator

Our next question comes from Don Crist with Johnson Rice. Please go ahead.

Don Crist, Analyst

Morning, guys.

Stuart Bodden, CEO

Morning, Don.

Don Crist, Analyst

It looks like the fourth quarter is going to be impacted by normal seasonality. But given that we're in the RFP season right now, I mean obviously you signed a new contract, but can you give us any indication on 2024 with the caveat that I know it's still early?

Stuart Bodden, CEO

Yeah. I think what we'd say is early and kind of hard to get a definite read. I mean, what I would say is on the rig side and with the contract that we recently signed that pricing was strong so we're excited about that. I think we are seeing in some RFPs like on the wireline side, for instance, there have been some contracts that we won that I think we would say are attractive pricing. And then there have been some that we have lost at pricing that we've been really quite surprised at how low they went from what we understand. So I think it's a bit of a mixed bag at the moment. And again, I think as you said, it's still kind of early days.

Don Crist, Analyst

Okay. And on the recent consolidation, obviously, those deals haven't closed the bigger ones anyway. Do you think that impacts your business any? Do you think there's any kind of synergies there that maybe you could go or working for those bigger companies now and kind of expand operations, or how do you think that kind of plays out over time?

Stuart Bodden, CEO

We ultimately view the situation positively. While each announcement may need to be assessed individually, we believe one will definitely have long-term benefits for us, and another may also be positive in the long run, though there might be some short-term fluctuations based on how it concludes. Overall, we see the trend of consolidation and our exploration and production customers seeking fewer, high-quality providers as a favorable development for Ranger.

Don Crist, Analyst

Okay. And it looks like the pricing, at least, the hourly pricing on the rigs ticked up a little bit. Is that the indication of the market bottom in your opinion, or do you think that that's just a shift between lesser quality customers towards higher quality customers in your opinion?

Stuart Bodden, CEO

Yeah. In general, I think we would say it's a move to higher quality customers. I think underlying that too I think as we've gone forward, we've really been focusing on getting additional ancillary equipment out with those rigs that ultimately helps pricing and margins as well.

Don Crist, Analyst

Okay. I appreciate it. Thanks so much everybody.

Stuart Bodden, CEO

Yeah. Thanks, Don.

Melissa Cougle, CFO

Thanks, Don.

Operator, Operator

Our next question comes from Donovan Schafer with Northland Capital Markets. Please go ahead.

Donovan Schafer, Analyst

Thank you for taking the questions. My first inquiry relates to the decreased rig count. I understand that in some regions, this is being balanced by an emphasis on extending the lateral lengths of wells. I'm curious if there have been any considered benefits in the long run due to this approach. I'm aware that the push for high-spec rigs is driven by the expectation that more wells will be horizontal, which allows for handling heavier loads due to friction in those sections. Given the near-term slowdown, could there be potential long-term advantages, perhaps in one to two years, when these wells require artificial lift? Would this create a more favorable outlook or enhance the value of your high-spec rigs? Thank you.

Stuart Bodden, CEO

Yes, I appreciate the question, Donovan. Long term, we believe that this helps us because whether it's routine work or more complex tasks, higher cycle equipment is necessary to reach the outer parts of the lateral. We anticipate that this will benefit us, as it becomes increasingly difficult to deploy coil for any remedial work. Ultimately, we see this as a positive development. You also pointed out another important aspect: as long as the industry is drilling more new wells than are being plugged and abandoned, we believe our total addressable market is expanding. We certainly think we are in such an environment right now, so again, we view this positively in the long term.

Donovan Schafer, Analyst

Okay. I have a follow-up question on this topic. When discussing your various segments, wireline completion activity is clearly linked to the rig count for drilling new wells. I'm interested in the servicing side with High-Spec Service Rigs. Is there a general rule of thumb for the time lag that might occur when there is a significant increase or decrease in the rig count for new wells? For example, is there typically a one-year or two-year lag where you observe a less pronounced, but still evident correlation in demand for High-Spec Servicing Rigs? Perhaps it's the case that it usually takes about a year before they switch to artificial lift or something similar. Can you provide any insight on estimating the lag between the rig count for new wells and the demand for high-spec servicing rigs?

Stuart Bodden, CEO

I don't think we've encountered a scenario where we can accurately model it. However, I would like to highlight a couple of points. Generally, within the first year or less after a well is drilled, the industry usually goes back to put that well on artificial lift. This typically happens quite quickly, and then every year or two, it is common to return to the wells for service work. Additionally, if you examine the high-specification rig segment this year, the hours have remained quite steady throughout, despite a significant drop in the drilling rig count. We believe that being focused on a production-oriented business model and ensuring that we keep existing wells operational enhances our resilience throughout the business cycle.

Donovan Schafer, Analyst

Okay. That's helpful. Regarding the plugging and abandoning opportunity, I need to review the current legislation on that. Have there been any updates or clarifications about the possibility of monetizing credits for reducing methane emissions through plugging and abandoning, at either the federal or state level? It would be great to understand the current situation regarding the subsidized or statutory aspects of this.

Stuart Bodden, CEO

So on the P&A side there's a lot of different ways to kind of to start to answer the question, but I'll sort of start. As you know, there's a lot of money that was in the Inflation Reduction Act that was targeted to the orphan well program and that federal money that ultimately gets distributed by the states. I think what we're seeing is kind of very early days some of that state money is actually showing up in the industry in the form of former bids. So we've seen kind of one of the early ones that have come out in the last several weeks. So on the orphan well program as it relates to the Inflation Reduction Act, I would say that money is just now starting to come in. I think what we are seeing on kind of a broader trend is that certainly our larger customers feel like that they're really developing their own P&A programs outside of the IRA because they feel like that that's part of their ESG effort. And so a lot of our work right now on the P&A side is actually directly with E&Ps outside of the Inflation Reduction Act. And I guess the third thing I would say is, I think there's several people that are trying to think through if it makes sense to buy a big package of wells, do P&A on them and then take the carbon offsets. I'm not sure there is a business model that has developed that is 'the winning way' yet, but we're seeing lots of different people trying to piece that together. So hopefully that answers the question Donovan.

Donovan Schafer, Analyst

I'm curious if there are any trends to consider regarding approaches to workovers or artificial lift installations that might impact the economics for High-Spec workover rigs. For instance, is there a growing preference for electric submersible pumps over displacement pump jacks, or any other trends that might be affecting this area positively or negatively?

Stuart Bodden, CEO

I don't think we've observed any trend regarding the type of artificial lift. It varies somewhat by region, but we haven't seen a clear trend. What we've noticed with customers is that their focus on efficiency is significant in our work. They find that having continuity of crews greatly enhances efficiency. Regarding the contract we discussed earlier, safety is one factor driving this, but efficiency plays a big role as well. Our major customers are recognizing that having steady work programs allows for crew continuity, which leads to improved performance overall.

Melissa Cougle, CFO

I'll just add to that. I think Stuart's point, that's a trend that you're seeing sort of multiple service lines, whether that be frac, whether that be whatever drilling, the programs are getting tighter which altogether is better serves the industry. There's less white space for everyone. I think this year has been a bit anomalous, just given the gas market that we had to kind of freed up and then to this had to deal with assets being redeployed.

Donovan Schafer, Analyst

Okay. That makes a lot of sense. All right. Thanks guys. I’ll take the rest of my questions offline.

Stuart Bodden, CEO

All right. Thanks, Donovan.

Melissa Cougle, CFO

Thank you.

Operator, Operator

Your next question comes from Jeff Robertson with Water Tower Research. Please go ahead.

Jeff Robertson, Analyst

Good morning. Thanks for taking my question. Stuart, regarding the contract, is it a one-year contract based on the press release? Additionally, could you discuss what level of business you would like to see supported by these types of agreements?

Stuart Bodden, CEO

So, it is a one-year contract that has evergreen provisions in it. So we actually think it can go for quite a long time. So that's on the first. We don't really have a target per se. This type of a contract is pretty unique. I think if you look in our portfolio, we can point to one other. It has slightly different mechanics, but I think it has a lot of the same kind of duration if you will through time. What I can just say is that we have some other larger customers that are again, I think it relates to the conversation about efficiency and continuity of work that have kind of opened up discussions about doing something similar. It does tend to be with larger customers is again, I think that they want us to get a lot more enmeshed with their SOPs and guidelines and protocols etc.

Jeff Robertson, Analyst

I presume that's just to help drive their efficiencies in their capital programs as Melissa alluded to earlier?

Stuart Bodden, CEO

Absolutely.

Jeff Robertson, Analyst

And secondly, does this agreement span multiple basins, or is it just in one basin?

Stuart Bodden, CEO

It's multiple basins.

Don Crist, Analyst

Thanks for letting me back in. Melissa, just one for you. The working capital ticked up a little bit in the Third Quarter, but it sounds like it's starting to release a little bit. Any color there? And should we expect all of that to kind of come out in the fourth quarter? Just kind of trying to model your cash as we go into the fourth quarter year-end?

Melissa Cougle, CFO

Good question. And yes, we actually saw a nice big release. We had done some automation, where we were pushing through sort of invoices automatically with customers and saw a nice big release early in the year. What we didn't anticipate is over the summer that we basically hit a wall as we ran out of on several of our biggest customers. And things really got spelled out in getting those POs replenished. And by the time we noticed, we were in remediation mode, but these things just take a couple of months to sort themselves out. So, I do think we're going to get back right here in the fourth quarter. Fourth Quarter is always tricky because everybody sort of manages their cash at year-end. But we certainly have seen the contract asset more running into AR and more collections and really we had sort of our best collection week just the week before last. So we certainly see it trend back in the right direction. If that holds, we'll get to a really comfortable place for year-end. It's just there's a little bit of anybody's guess depending upon who wants to squeeze cash at the end of the year.

Don Crist, Analyst

Completely understandable. Thanks for letting me back in. I appreciate it.

Melissa Cougle, CFO

No problem.

Unidentified Analyst, Analyst

Hey Stuart, Melissa, how are you?

Melissa Cougle, CFO

Morning.

Stuart Bodden, CEO

Good morning.

Unidentified Analyst, Analyst

Good morning. You mentioned one in your call, I think in your prepared remarks regarding the intrinsic value of your shares looking like attractive for repurchase. I guess how are you viewing intrinsic value? What do you I guess what was the thought process behind determining what do you think intrinsic value is square?

Melissa Cougle, CFO

Yes. So, we had an initiative we kicked off this year. I'll take this one. I guess it's a passion project of mine. We had an initiative we kicked off this year to actually do some intrinsic value work. So, we actually did a multiyear model built out our first ECS. We started with just kind of a three-year view and we're adding on to a five-year view. So, we're driven by that. That's how we get to intrinsic value assessment and then we also synthesize that. So, what happens is there's some upside? What happens if things continue to languish? So, we build a fundamental model that we think is here is our best guess of what we think the world is going to play out to be and here's a much harsher view and here's an upside view. And then we try to triangulate between those as well as sort of where the share price is at say. And every quarter we're now refreshing if this is actually the second quarter we refreshed it. So, we're really proud to get it done and then we kind of sit back around the table Stuart and I on how we want to think about share repurchases through that lens and then we also make an approach in the proposals to the Board to the same extent.

Unidentified Analyst, Analyst

Got it. And then as a separate follow-up change in the Board. Is there something that prompted that? This is just regular retirement? How does that kind of come about?

Stuart Bodden, CEO

No. William was simply part of an ongoing refresh process that we initiated. It has been in the works for some time and was planned to ensure we maintain good governance with regular turnover on the Board.

Melissa Cougle, CFO

Yes, I can add to that. We made some initial changes earlier as part of the proxy, which we discussed at a high level back then. We've been working towards this because outside parties and institutions pointed out that our Board lacks diversity and has not had any turnover. Therefore, we thought it was appropriate to start that process.

Unidentified Analyst, Analyst

Got it. And I guess last question for me is if you look at the last downturn in 2020, 2021 Ranger advantage to kind of hang in there pretty well as a company. I guess if there's a lot of talk of recession coming if that were to kind of happen again. How are you looking at liquidity cash flow? And how do you think in the current asset base because it's a much larger company now how do you think Ranger would fare?

Melissa Cougle, CFO

You can go first.

Stuart Bodden, CEO

So, again, I appreciate the question. I think a couple of things that I'm really quite proud that the team has done is much like we had back then. But we've been very focused on making sure that we have large operations in basins versus a lot of scattered kind of local shops which really in a downturn in particular, if you have like a lot of scattered shops, it's very hard to control costs in those environments. I think we've done a very good job by doing that and consolidating our footprint is kind of one of the first things that you do structurally to prevent or to position yourself for a downturn if it happens. So I think we've actually done a really nice job of that. I think that's one thing. We run very lean G&A, again, kind of on purpose both in the corporate center and also in the regions again, trying to be protected in case there is something. I'd also sort of highlight that in the wake of the acquisitions, we have a larger percentage of our yards and shops that we own, which actually just kind of levers our burn rate in a downturn. So I guess I feel like that a lot of the structural things that we've kind of worked on position as well.

Melissa Cougle, CFO

I would like to add that we have put in significant effort over the past year to obtain more real-time data from a financial and management standpoint. Before I joined, Stuart had already been developing Power BI dashboards to track rig operations, including where they are working and their performance. We have worked hard to enhance our monthly financial reviews, making them more significant in promoting our understanding of profitability. Additionally, many members of our team, including Matt Hooker, who manages our COVID processes, have remained with us. Ranger values survivability as our top priority, and while we hope not to face difficult decisions again, we acknowledge that such situations may arise.

Unidentified Analyst, Analyst

Great. Thank you. Keep up the great work.

Stuart Bodden, CEO

All right. Thank you.

Melissa Cougle, CFO

Thank you.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Stuart Bodden, for any closing remarks.

Stuart Bodden, CEO

Thank you everyone for your interest in Ranger, joining the call today. Happy Halloween. And I hope everybody has a great and safe week. Thank you.

Operator, Operator

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