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Ranger Energy Services, Inc. Announces Q2 2018 Results

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Ranger Energy Services, Inc. (NYSE:RNGR) ("Ranger" or the "Company")
announced today its results for its fiscal quarter ended June 30, 2018.

  • Top line growth was seen in all segments of our business driven by
    higher utilization, improved pricing and select asset additions.
  • The Company's completion wireline business in the Permian Basin
    continued its growth ending the quarter with a total of eight trucks.
  • Ranger's liquidity position materially strengthened with our
    previously announced $40 million secured debt facility.

Q2 2018 Financial Highlights

Revenues saw a sequential increase of 17% to $73.1 million, from $62.6
million in Q1 2018.

Net loss decreased $9.1 million to a net loss of $1.2 million from a net
loss of $10.3 million in Q1. The reduction in net loss was driven by
improved operating results and the non-recurrence of the Q1 $9.0 million
goodwill impairment, partially offset by increased income tax expense.

Adjusted EBITDA1 increased 87% to $9.7 million, from $5.2
million in Q1. The Adjusted EBITDA increase was driven primarily by
revenue growth and partially offset by a higher underlying costs of
services.

The average hourly rates for high-spec rigs increased by 5% to
approximately $513 from $487 in Q1.

Rig hours increased 4% to approximately 76,200 from 73,600 in Q1.

Rig utilization as measured by average monthly hours per rig increased
to 187 hours from 184 hours in Q1.

_____________________________

1   "Adjusted EBITDA" is not presented in accordance with generally
accepted accounting principles in the United States ("GAAP"). Please
see "Ranger Energy Services, Inc. Supplemental Non-GAAP Financial
Measures (Unaudited)" at the end of this press release for a
reconciliation of the non-GAAP financial measure of Adjusted EBITDA
to the most directly comparable GAAP financial measure.
 

CEO Comments

Ranger continued its momentum of improving results in the second quarter
delivering an 87% sequential increase in Adjusted EBITDA. All segments
of our business experienced top line growth driven by higher
utilization, improved pricing and select asset additions.

Ranger's ongoing focus on shale completion activity continues to pay
dividends, driving improved results. Our High Spec Rigs again
experienced increasing demand from completion related activity. Our
Permian Wireline Completions business continues to operate on a 100%
dedicated basis with an average unit count of seven during the quarter,
up from five in the first quarter. And finally, our Processing Solutions
Group experienced a 38% increase in sequential top-line growth driven by
additional assets placed into service, and contract roll-overs to higher
rates that are more reflective of the current commodity price
environment.

During the quarter we strengthened our liquidity position with the
previously announced $40 million secured debt facility.

Looking forward we remain excited about the opportunities ahead of us.
As customers continue to focus on completion efficiency, we expect the
service market to see ongoing segregation based on operational
performance and total value. We believe our talented work-force and
purpose-built asset base are delivering the value that our customers
need, driving continued demand for our services and fueling future
investment opportunities.

Financial Results

Revenues

During the quarter, revenues increased 17% to $73.1 million from $62.6
million in Q1. The improvement was primarily attributable to the
increased activity of our wireline completions business and higher
hourly rates for our high-spec rigs in the Well Services segment. The
results by segment were as follows:

Well Services' segment revenue increased 16% to $69.1 million in Q2 2018
from $59.7 million in Q1 2018, principally due to our wireline activity
and hourly rig rates. Revenues in our Permian Basin wireline completions
business increased sequentially by 44% with an increase in wireline unit
count from five in Q1 to seven in Q2. Average hourly rig rates increased
5% to $513 on improved pricing and stronger revenue mix driven by
increased completions work in select basins. Rig utilization, as
measured by average monthly hours per rig, increased to 187 from 184.
Total rig hours increased 4% to approximately 76,200 hours in Q2 from
73,600 in Q1. The average number of rigs in our fleet increased to 136
rigs for Q2 from 134 in Q1. During Q2, three rigs were delivered and two
rigs delivered in prior periods entered service.

Processing Solutions revenue increased to $4.0 million in Q2 2018 from
$2.9 million in Q1 2018 mainly due to increased rental rates.

Operating Loss and Net Loss

During the quarter, operating income increased to $1.0 million from a
loss of $10.8 million in Q1 2018. In Q1 2018 the Company wrote off all
of its $9.0 million of goodwill. Excluding the $9.0 million goodwill
impairment, operating income improved by $2.8 million as compared to Q1
mainly due to improved gross margins.

During the quarter, the net loss improved by $9.1 million to $1.2
million from $10.3 million in Q1 2018. The improvement was due to the
higher Q2 revenues and margins as discussed above.

Adjusted EBITDA

Adjusted EBITDA increased to $9.7 million in Q2 from $5.2 million in Q1
2018. The improvement was largely due to increased revenues from our
wireline activity higher average hourly rates for high spec rigs,
increased margins in other lines of business and a reduction in general
and administrative costs.

Liquidity

At the end of Q2 Ranger had $10.5 million of cash which compares to $1.1
million at the end of the Q1 2018. Also we had an outstanding draw on
our revolving credit facility of $15.0 million leaving $16.7 million of
capacity on a quarter end borrowing base of $31.7 million.

On June 22, 2018, we entered into a Financing Agreement in an amount of
up to $40 million with an initial draw of $22 million. This incremental
liquidity allows us the flexibility to add capital equipment as market
opportunities arise.

Capital Expenditures

Total capital expenditures during the quarter were $22 million. Of the
total amount, $11 million was related to service rigs including the
purchase of three new high-spec rigs along with make-ready costs for
those and previously delivered rigs along with associated ancillary
equipment. The total amount also includes $5 million that was wireline
related and included the purchase of two new wireline units and
pump-down pumps. The majority of the balance was non-cash items
associated with truck leases.

Conference Call

The Company will host a conference call to discuss its Q2 2018 results
on August 8, 2018 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time).
To join the conference call from within the United States, participants
may dial 1-833-255-2829. To join the conference call from outside of the
United States, participants may dial 1-412-902-6710. When instructed,
please ask the operator to join the Ranger Energy Services, Inc. call.
Participants are encouraged to log in to the webcast or dial in to the
conference call approximately ten minutes prior to the start time. To
listen via live webcast, please visit the Investor Relations section of
the Company's website, http://www.rangerenergy.com.

An audio replay of the conference call will be available shortly after
the conclusion of the call and will remain available for approximately
seven days. It can be accessed by dialing 1-877-344-7529 within the
United States or 1-412-317-0088 outside of the United States. The
conference call replay access code is 10122015. The replay will also be
available in the Investor Resources section of the Company's website
shortly after the conclusion of the call and will remain available for
approximately seven days.

About Ranger Energy Services, Inc.

Ranger is an independent provider of well service rigs and associated
services in the United States, with a focus on unconventional horizontal
well completion and production operations.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this press release constitute
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. These forward-looking statements represent Ranger's expectations
or beliefs concerning future events, and it is possible that the results
described in this press release will not be achieved. These
forward-looking statements are subject to risks, uncertainties and other
factors, many of which are outside of Ranger's control that could cause
actual results to differ materially from the results discussed in the
forward-looking statements.

Any forward-looking statement speaks only as of the date on which it is
made, and, except as required by law, Ranger does not undertake any
obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. New factors
emerge from time to time, and it is not possible for Ranger to predict
all such factors. When considering these forward-looking statements, you
should keep in mind the risk factors and other cautionary statements in
our filings from time to time with the Securities and Exchange
Commission (the "SEC"). The risk factors and other factors noted in
Ranger's filings with the SEC could cause its actual results to differ
materially from those contained in any forward-looking statement.

 
RANGER ENERGY SERVICES, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions,
except share and per share amounts)
       
Three months ended
June 30, 2018 March 30, 2018
Revenues
Well Services $ 69.1 $ 59.7
Processing Solutions   4.0     2.9  
Total revenues   73.1     62.6  
 
Operating expenses
Cost of services (exclusive of depreciation and amortization shown
separately):
Well Services 56.0 49.9
Processing Solutions   1.9     1.4  
Total cost of services 57.9 51.3
General and administrative 7.2 7.0
Depreciation and amortization 7.0 6.1
Impairment of goodwill       9.0  
Total operating expenses   72.1     73.4  
 
Operating loss 1.0 (10.8 )
 
Other expenses
Interest expense, net   (0.5 )   (0.4 )
Total other expenses   (0.5 )   (0.4 )
Loss before income tax expense 0.5 (11.2 )
Tax expense (benefit)   1.7     (0.9 )
Net loss (1.2 ) (10.3 )
Less: Net loss attributable to non-controlling interests   (0.5 )   (4.6 )
Net loss attributable to Ranger Energy Services, Inc. $ (0.7 ) $ (5.7 )
 
Loss per common share
Basic $ (0.08 ) $ (0.68 )
Diluted $ (0.08 ) $ (0.68 )
Weighted average common shares outstanding
Basic 8,792,585 8,423,445
Diluted 8,792,585 8,423,445
       
RANGER ENERGY SERVICES, INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS

(in millions, except share
and per share amounts)
 
June 30, 2018 December 31, 2017
Assets
Current assets
Cash and cash equivalents $ 10.5 $ 5.3
Accounts receivable, net 43.3 32.1
Unbilled revenues 3.3 6.0
Prepaid expenses and other current assets 6.8 5.7
Assets held for sale   0.6     0.6  
Total current assets 64.5 49.7
Property, plant and equipment, net 214.9 189.2
Goodwill 9.0
Intangible assets, net 10.4 10.8
Other assets   0.1     1.0  
Total assets $ 289.9   $ 259.7  
 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 33.6 $ 32.0
Accrued expenses 17.8 11.6
Capital lease obligations, current portion 2.8 8.0
Long-term debt, current portion 12.5 1.3
Other current liabilities   3.0      
Total current liabilities 69.7 52.9
Capital lease obligations, less current portion 4.4 1.5
Long-term debt, less current portion 30.1 5.8
Other long-term liabilities   0.6     3.8  
Total liabilities 104.8 64.0
 
 
Stockholders' equity / net parent investment
Preferred stock, $0.01 per share; 50,000,000 shares authorized, no
shares issued or outstanding as of June 30, 2018 and December 31,
2017
Class A Common Stock, $0.01 par value, 100,000,000 shares
authorized, 8,906,682 shares issued and outstanding as of June 30,
2018 and 8,413,178 shares issued and outstanding as of December 31,
2017
0.1 0.1
Class B Common Stock, $0.01 par value, 100,000,000 shares
authorized, 6,866,154 shares issued and outstanding as of March 31,
2018 and December 31, 2017
0.1 0.1
Accumulated deficit (12.6 ) (6.6 )
Additional paid-in capital   110.1     110.1  
Total stockholders' equity 97.7 103.7
Non-controlling interest   87.4     92.0  
Total stockholders' equity   185.1     195.7  
Total liabilities and stockholders' equity $ 289.9   $ 259.7  
     
RANGER ENERGY SERVICES, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)
 
Six months ended
June 30, 2018
Cash Flows from Operating Activities
Net loss $ (11.5 )
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 13.1
Bad debt expense 0.2
Impairment of goodwill 9.0
Equity based compensation 1.0
Loss on sale of property, plant and equipment 0.4
Changes in operating assets and liabilities, net of effect of
acquisitions
Accounts receivable (11.4 )
Unbilled revenue 2.6
Prepaid expenses and other current assets (1.2 )
Other assets 0.7
Accounts payable 3.7
Accrued expenses 5.8
Other long-term liabilities   (0.3 )
Net cash used in operating activities   12.1  
 
Cash Flows from Investing Activities
Purchase of property, plant and equipment (34.1 )
Proceeds from sale of property, plant and equipment 3.6
Acquisitions, net of cash received   (4.0 )
Net cash used in investing activities   (34.5 )
 
Cash Flows from Financing Activities
Borrowings under line of credit agreement 27.7
Payments on long-term debt (13.5 )
Borrowings on long-term debt 22.0
Principal payments on capital lease obligations   (8.6 )
Net cash provided by financing activities   27.6  
 
Decrease in Cash and Cash equivalents 5.2
Cash and Cash Equivalents, Beginning of Year   5.3  
Cash and Cash Equivalents, End of Year $ 10.5  
 
Supplemental Cash Flows Information
Interest paid $ (0.4 )
Supplemental Disclosure of Noncash Investing and Financing Activity
Non-cash capital expenditures $ (10.2 )
Non-cash additions to fixed assets through capital lease financing $ (5.9 )
 

RANGER ENERGY SERVICES, INC.
SUPPLEMENTAL NON-GAAP
FINANCIAL MEASURES
(UNAUDITED)

Adjusted EBITDA is not a financial measure determined in accordance with
GAAP. We define Adjusted EBITDA as net income (loss) before interest
expense, net, income tax provision (benefit), depreciation and
amortization, equity-based compensation, acquisition-related and
severance costs, impairment of goodwill, gain or loss on sale of assets
and certain other items that we do not view as indicative of our ongoing
performance.

We believe Adjusted EBITDA is a useful performance measure because it
allows for an effective evaluation of our operating performance when
compared to our peers, without regard to our financing methods or
capital structure. We exclude the items listed above from net loss in
arriving at Adjusted EBITDA because these amounts can vary substantially
within our industry depending upon accounting methods and book values of
assets, capital structures and the method by which the assets were
acquired. Adjusted EBITDA should not be considered as an alternative to,
or more meaningful than, net loss determined in accordance with GAAP.
Certain items excluded from Adjusted EBITDA are significant components
in understanding and assessing a company's financial performance, such
as a company's cost of capital and tax structure, as well as the
historic costs of depreciable assets, none of which are reflected in
Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be
construed as an indication that our results will be unaffected by the
items excluded from Adjusted EBITDA. Our computations of Adjusted EBITDA
may not be identical to other similarly titled measures of other
companies. The following table presents reconciliations of net income
(loss) to Adjusted EBITDA, our most directly comparable financial
measure calculated and presented in accordance with GAAP.

The following table is a reconciliation of net income (loss) to Adjusted
EBITDA for the three months ended June 30, 2018 and March 31, 2018, in
millions:

             
Three Months Ended
June 30, 2018 March 30, 2018 Change $
Net income (loss) $ (1.2 ) $ (10.3 ) $ 9.1
Interest expense, net 0.5 0.4 0.1
Tax expense (benefit) 1.8 (0.9 ) 2.7
Depreciation and amortization 7.0 6.1 0.9
Equity based compensation 0.8 0.2 0.6
Acquisition and severance costs 0.6 0.6
Impairment of goodwill 9.0 (9.0 )
Loss on property, plant and equipment   0.2     0.7     (0.5 )
Adjusted EBITDA $ 9.7   $ 5.2   $ 4.5  

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