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 3 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. [Operator Instructions] 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 to 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 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 sideline some of our…

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 percent 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…

[Operator Instructions] And our first question here will come from Don Crist with Johnson Rice.

I wanted to start with Torrent. You haven't really talked about it too much over the past year or two and a lot has been made over the shift to DGB and natural gas usage in the Permian in particular. I was just wondering if you could kind of walk through what kind of segment your -- or what kind of services you're providing there? And is this scrubbing field gas, et cetera, to be used for completions? Just anything you can give us on the Torrent side.

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 kind of 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 haven't 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 6 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 that we are slowly gaining share in a couple of regions. Some of these things take time. Obviously, the incident that occurred was the unfortunate incident that occurred. It's sort of 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 encouraging that has been reversed now, right? So the second quarter should return fairly back to normal?

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

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

Stuart, just a question. I mean, when you look at the strength of the well service business, certainly relative to a lot of other segments out there, and frankly, also sort of the safety incident that impacted one of your peers and customers. I'm curious -- and maybe it's too bold to me to ask this, but are there actually chances for you to continue raising prices this year, just given the quality difference and service or no?

I'd love to tell that the answer is yes. I think right now, it's difficult to say if we're going to be able to kind of raise price 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 would seem 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.

[Operator Instructions] 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 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 like 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 are we generating to be able to sort of move into that space and how much line of sight do 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 not changing guidance, but we're also not giving specific guidance, John. When we -- at the last call, we said that we thought that the year would be relatively consistent versus last year. I'd highlight a couple of things. I mean, one is I think we see a very reasonable path to that happening. The completions market and the natural gas markets, as you know, are under a lot of pressure right now. And I think they are introducing some uncertainty in the market. So we're not really giving specific guidance right now, given some of the uncertainty we see in the market.

And so -- but plus or minus, there's uncertainty, but this seems like a bad quarter with a one-off incident that materially dinged your cash flow. You're guiding in the next quarter to returning to year-on-year growth in most of your business lines, I assume cash flow would kind of be a similar thing for the next quarter, assuming that's right. Then like it seems like when somebody asked about M&A, tuck-in acquisitions, you're very mindful of asset quality. It seems like there's -- it's going to be very difficult to find something more compelling than your share price right here. Are all of those thoughts right? Or if not, which ones aren't?

Yes, I think that is all right. And I think as we -- again, I think about the fourth quarter and the early part of Q1, we were very aggressive for exactly the reasons that you outlined, 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 so if that ends up being 20% of your shares outstanding this year, then great.

Yes.

Yes, that's right.

[Operator Instructions] 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.