RNGR Q3 2026 earnings call transcript, November 10, 2026

Financial Officer. Stuart will begin with an overview of the quarter and our strategic progress, including the completion of the step-coiled tubing acquisition and the continued build-out of our ECHO rig fleet. Melissa will then walk through our third quarter financial results in more detail. Following their remarks, we'll open the call. for questions. With that, I'll turn it over to Stuart.

Walk through some additional color in this segment detail. Cash generation, however, remains strong. Ranger produced $20 million of free cash flow in the third quarter, which allowed us to fully repay our revolver borrowings while continuing to return capital to shareholders and giving us capacities to complete the step acquisition. Now let me turn to the step asset acquisition, which we closed on October 8th. I want to first welcome our new professionals to Ranger. The step team has earned a strong reputation for technical execution, service quality, and solving customers' most challenging drill-out applications safely and reliably. And they are a tremendous addition to our organization. This transaction does three important things for Ranger. First, it gives our coil tubing business scale. We have long been proud of our coil tubing operation in the north, but it was a single-basin business. And in coil tubing, scale drives utilization and return. STEP adds 13 coil tubing units operating from the Bakken through South Texas with its largest presence in the Permian Basin, right alongside our high-spec rigged fleet. We are now a multi-basin coil tubing provider in the U.S. coil tubing market estimated at $1.5 billion annually. Second, it gives us differentiated technology. The coil plus extended reach technology has helped operators successfully reach total depth on more than 60 long lateral wells with its deepest well exceeding 30,000 feet. As laterals get longer, that capability lets us compete.

for the most demanding work in our basins and it gives customers real flexibility in their drill up programs because Ranger can now offer either a coil tubing unit or a high spec rig for the job. Third, it creates pull through. The overlap between steps customers on our own is significant and a larger coil tubing business lets us provide more services and equipment to those customers across more of their wells. We acquired these assets for approximately $27.5 million and we expect steps quill tubing assets to contribute more than $10 million of adjusted EBITDA in 2027 with significant further upside expected in 2028. That is a compelling valuation for a business of this quality and exactly the kind of targeted M&A that continues to set Ranger apart. We are adding shareholder value at attractive prices in businesses we know well. Turning to ECHO. During the quarter, we were awarded contracts for four additional ECHO rigs. Added. This represents additional expansion of our ECHO relationship with Chevron this year, following the rigs committed to earlier in the year, and it will bring our total contracted fleet to 24 rigs by the end of 2027. Repeat orders from an operator of this caliber are the strongest validation of this technology we could possibly ask for. The ECHO bill program is also running slightly ahead of schedule. Five ECHO rigs have been delivered through the third quarter with the balance of the fleet scheduled for delivery through the third quarter of 2027. Customer feedback has been positive, reinforcing both the efficiency of operations and the enhanced safety ECHO brings to location.

Customer conversations point to additional rig commitments in the future. We are beginning to track safety and operational performance on these rigs and feel over time their value proposition will become increasingly evident in the data, driving further demand. Importantly, ECHO represents growth where our customers are investing alongside Ranger. Our agreements include upfront customer payments or day-rate premiums that support returns on the capital we invest. And as ECHO's efficiency gains are solidified, we expect the fleet to help push down overall service costs for our customers. That is a powerful combination in a market where operators are looking to do more with less. We have also now passed the one-year mark since closing AWS. We have realized approximately $5.2 million of annualized cost synergies ahead of the $5 million we targeted, and we have fully repaid the borrowings used to fund the transaction. The acquired high specification rigs have largely tracked our expectations. Some of the ancillary service lines, particularly transportation, mixing plants, and tubing inspection, underperformed during the third quarter. We have taken several operational steps to reorganize those operations to improve accountability, utilization, and profitability. In high specification rigs, customers manage their spending more closely in the third quarter, creating incremental white space across our fleet. At the same time, as Ranger has gained share through operator consolidation, smaller displaced competitors have offered price reductions to regain work, and some budget-constrained customers took advantage of those savings. We have held our pricing

in the third quarter. ... which allows us to maintain our standards for safety and service quality, and we expect that decision to pay off as the market normalizes and budgets reset next year. Elsewhere, our legacy rentals and plugging and abandonment service lines continue to perform well, with P&A supported by an expanding and steady base of work... from the Texas Railroad Commission. Our wireline segment performed, as we expected, with a break in customer well programs. The team managed the activity decline with timely cost reductions, demonstrating the progress made in creating a more responsive cost structure. New work programs began in October, and we believe that the fourth quarter will provide... ...improvement from this quarter. Stepping back, crude prices moved sharply higher during the third quarter, and U.S. production and land drilling activity continued to grow. Although commodity prices have recently retreated somewhat, we believe Ranger's production-focused services, which deliver the fastest and lowest cost incremental barrels from existing wells... ...are well positioned as our customers' budgets reset. As we head into 2027, we have a fast-growing EchoFleet, an expanded coil tubing platform, reorganized ancillary service lines, and a wireline segment that has shown its resilience. The moat is deeper now than it has ever been, and we remain focused... on our goal of achieving $100 million of annualized adjusted EBITDA supported by these initiatives. With that, I'll turn the call over to Melissa.

General and administrative expense was $7.7 million, essentially flat with the second quarter, with both quarters including expenses related to the AWS integration and the SEP acquisition. Turning to high-specification rigs, segment revenue was $110.5 million, a decrease of $2.9 million, or 2.0 million. 6.6% from $113.4 million in the second quarter, and an increase of $29.6 million, or 36.6%, from $80.9 million a year ago. Rig hours were 143,500 hours, down 2% sequentially from 143,500 hours. 46,800 hours in the second quarter, and up 29% year-over-year from 111,200 hours in the third quarter of 2025. Our average hourly rig rate was $770, essentially flat, with $772 in the second quarter, and up 6%. From $727 a year ago, largely reflecting the pass-through of fuel surcharges and changes in asset and regional mix. Segment adjusted EBITDA was $18.4 million, compared to $20.6 million in the second quarter, and segment margins were 16.7%. Down from 18.2% in the second quarter. With margins down roughly 150 basis points, I want to walk through a few drivers. The first was white space. Customers manage their spending more closely, and operators laid down rigs for intermittent periods. A rig idled for a week still carries its crew and equipment costs, so even modest gaps in the schedule weighed disproportionately on margins. These were rig breaks that were not anticipated given the macro backdrop, but reflect budget exhaustion early in the year given the strong activity in the second quarter. It is worth noting that our 24-hour rig activity increased about 6% sequentially as operators continued converting production

work to around-the-clock operations, but that growth was more than offset by white space and rig releases, which brings me to our second driver. During the quarter, we contended with a couple of smaller, new market entrances offering price reductions to win back lost share the past couple of years, particularly in the Permian Basin. A couple of key operations... ...who are now budget-constrained took advantage of those lower prices, which displaced a number of our daylight rigs. We made a deliberate decision not to follow pricing down. That kept our rates stable, but it did cost us some activity in the quarter. The third was cost inflation. Labor and fuel costs both increased as a percent of revenue with... employee expenses, including medical costs I mentioned, and diesel prices running even higher this summer, deteriorating margins further. We are presently redeploying some of our displaced rigs with customers who have work available, restructuring some of our operations, and working with key customers who see the value in ranger differentiation. on cost adjustments that reflect wage and fuel inflation. In processing solutions and ancillary services, segment revenue was $40 million, a decrease of $4.5 million, or 10% from $44.5 million in the second quarter. Segment adjusted EBITDA was $6.8 million. compared to $10 million in the second quarter, and segment margins were 17% compared to 22.5% in the second quarter.

Declines were attributable to a few service lines. Most notably, certain service lines we acquired through AWS, including transportation, mixing plants, and tubing inspections, saw significant declines. Declines in activity this quarter, which had a knock-on effect on margins. Torrent grew revenue on expanding contracts, but its results were affected by one-time charges, including legal fees, mobilization costs, and unique rental charges, along with the loss of some higher margin rentals. There were bright spots, though. The plug-in abandonment... ...as well as rental margins improving and reaching their highest level in the past several quarters. In wireline services, revenue was $12.3 million, an expected decrease of $6.3 million, or 34%, from $18.6 million in the second quarter. Our wireline completion service line saw... ...absent customer work schedules after the completion programs that drove our strong second quarter concluded. Segment adjusted EBITDA was $200,000 compared with $3.6 million in the second quarter. Turning to cash flow, cash provided by operating activities was $30.5 million in the third quarter and $53.5 million in the third quarter. Free cash flow was $20 million for the quarter, and year-to-date free cash flow was $18.3 million compared to $25.8 million over the same period in 2025, with the decrease primarily reflecting higher customer receivables resulting from a customer changing to 90-day payment term.

Partially offset by internal efforts that have reduced our internal processing time. Capital expenditures were $10.5 million in the third quarter and $35.2 million year-to-date, compared to $19.1 million over the same period in 2025, with approximately $16.8 million of this year. This year's spend, related to ECHO construction payments. Our ECHO contracts include upfront customer contributions, which re-record as contract liabilities and recognizes revenue over the life of those contracts. Short and long-term contract liabilities totaled $19 million at the end of the quarter. As of September... On September 30th, we had no borrowings outstanding under our revolving credit facility, and total liquidity was $76.2 million, consisting of $70.2 million of revolver availability and $6 million of cash on hand, up from $61.3 million at the end of the second quarter. Bringing down the outstanding borrowings this quarter means we fully repaid for the AWS acquisition within a year of closing. After quarter end, we funded the cash consideration for STEP with revolver borrowing, consistent with the plan we outlined when we announced the transaction. Ranger expects to allocate the majority of its cash flows in the next several quarters. to echo delivery payments and repayments on the borrowings used to fund STEP acquisition. On the capital returns front, we repurchased 142,100 shares during the third quarter for $2.2 million at an average price of $15.74 per share.

Since the inception of our repurchase program in 2020, 2023, we have repurchased approximately 4.8 million shares for $54.1 million at an average price of $11.31 per share. Year-to-date, we have returned $11.7 million to shareholders through repurchases and dividends, or 64% of year-to-date. free cash flow, well above our commitment to return at least 25%. Our board has also declared a quarterly cash dividend of $0.06 per share, payable on December 4th to stockholders of record as of November 20th. With that, I'll turn the call back over to Stuart for closing remarks. Thanks, Melissa. Before we open the

The first question is from Don Crist with Johnson Rice. Please go ahead.