RANGER ENERGY SERVICES, INC. The following discussion and analysis should be read in conjunction with the historical financial statements and related notes included in Part I, Item 1. Financial Statements of this Quarterly Report on Form 10-Q (the "Quarterly Report"). This discussion contains "forward-looking statements" reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors. Factors that could cause or contribute to such differences include, but are not limited to, market prices for oil and natural gas, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this report. Please read Cautionary Note Regarding Forward-Looking Statements. Also, please read the risk factors and other cautionary statements described under Part II, Item 1A.-"Risk Factors" included elsewhere in this Quarterly Report and in our Annual Report filed on Form 10-K for the year endedDecember 31, 2021 (our "Annual Report"). We assume no obligation to update any of these forward-looking statements. Except as otherwise indicated or required by the context, all references in this Quarterly Report to the "Company," "Ranger," "we," "us," or "our" relate toRanger Energy Services, Inc. ("Ranger, Inc. ") and its consolidated subsidiaries.
How We Evaluate Our Operations
Our service offerings consist of well completion support, workover, well maintenance, wireline, fluid management, other complementary services, as well as installation, commissioning and operating of modular equipment, which are conducted in three reportable segments, as follows:
•High Specification Rigs. Provides high-specification ("high-spec") well service rigs and complementary equipment and services to facilitate operations throughout the lifecycle of a well.
•Wireline Services. Provides services necessary to bring and maintain a well on production and consists of our wireline completion, wireline production and pump down lines of business. •Processing Solutions and Ancillary Services. Provides other services often utilized in conjunction with our High Specification Rigs and Wireline Services segments. These services include equipment rentals, plug and abandonment, logistics hauling, processing solutions, as well as snubbing and coil tubing.
For additional financial information about our segments, please see "Item 1. Financial Information - Note 15 - Segment Reporting."
Recent Events and Outlook
Significant progress has been made to combat COVID-19 and its multiple variants, however, it remains a global challenge and continues to have an impact on our financial results. The extent of the COVID-19 outbreak on the Company's operational and financial performance will significantly depend on further developments, including the duration and spread of the outbreak and continued impact on our personnel, customer activity and third-party providers. While commodity prices, as well as our stock price and operational activity, have improved during the quarter endedMarch 31, 2022 , we expect this global market volatility to continue at least until the outbreak of COVID-19, including any new variants, stabilizes, if not longer. TheU.S. government implemented a number of programs in the early wake of the impacts of COVID-19, including the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), the largest relief package inU.S. history, and the Main Street Lending Program established by theFederal Reserve . We qualified for limited aid under the CARES Act and have deferred payroll tax payments of$1.1 million as ofMarch 31, 2022 under the CARES Act, which will become due onDecember 31, 2022 . InFebruary 2022 ,Russia invaded neighboringUkraine . The conflict has caused turmoil in global markets, resulting in higher oil prices, and injected even more uncertainty into a worldwide economy recovering from the effects of COVID-19. Given the evolving conflict, there are many unknown factors and events that could materially impact our operations. These events have and continue to impact commodity prices, which could have a material effect on our earnings, cash flows, and financial condition. In the short-term, commodity price fluctuations are highly uncertain. Actual price outcomes will be dependent on the degree to which existing sanctions imposed onRussia , any potential future sanctions, and independent corporate actions affectRussia's oil production or the sale ofRussia's oil in the global market. In addition, the degree to which other oil producers respond to current oil prices, as well as the effects macroeconomic developments might have on global oil demand, will be important for oil price formation in the coming months. 19 -------------------------------------------------------------------------------- Financial Metrics How We Generate Revenues Rig hours and stage counts, as it relates to our High Specification Rigs and Wireline Services segments, respectively, are important indicators of our activity levels and profitability. The stage count metric has become increasingly important with the update in our external reporting segments. Rig hours represent the aggregate number of hours that our well service rigs actively worked, whereas stage counts represent the number of completed stages during the periods presented. Generally, during the period our services are being provided, our customers are billed on an hourly basis for our high-spec rig services or, as it relates to our wireline services, they are billed upon the earlier of the completion of the well or on a monthly basis. The rates for such rig hours and completed wells at which the customer is billed is generally predetermined based upon a contractual agreement.
Costs of Conducting Our Business
The principal costs associated with conducting our business are personnel, repairs and maintenance, general and administrative, and depreciation expense.
Cost of Services. Our primary costs associated with our cost of services are related to personnel expenses, repairs and maintenance of our fixed assets and perforating and gun costs. A significant portion of these expenses are variable, and therefore typically managed, based on industry conditions and demand for our services. Further, there is generally a correlation between our revenues generated and personnel and repairs and maintenance costs, which are dependent upon the operational activity. Personnel costs associated with our operational employees represent a significant cost of our business. A substantial portion of our labor costs is attributable to our field crews and is partly variable based on the requirements of specific customers. A key component of personnel costs relates to the ongoing training of our employees, which improves safety rates and reduces attrition. General & Administrative. As described above general and administrative expenses are corporate in nature and are included within the Other segment. These costs are not attributable to any of our lines of businesses nor reporting segments. We analyze our operating income or loss by segment, which we have defined as revenues less cost of services and depreciation expense. We believe this is a key financial metric as it provides insight on profitability and operational performance based on the historical cost basis of our assets.
Operating Income or Loss
We analyze our operating income or loss by segment, which we have defined as revenues less cost of services and depreciation expense. We believe this is a key financial metric as it provides insight on profitability and operational performance based on the historical cost basis of our assets.
Adjusted EBITDA
We view Adjusted EBITDA, which is a nonGAAP financial measure, as an important
indicator of performance. We define Adjusted EBITDA as net income or loss before
net interest expense, income tax provision (benefit), depreciation and
amortization, equitybased compensation, acquisitionrelated and severance
costs, gain and loss on disposal of assets, legal fees and settlements, and
other noncash and certain other items that we do not view as indicative of our
ongoing performance. See "-Results of Operations" and "-Note Regarding NonGAAP
Financial Measure" for more information and reconciliations of net income (loss)
to Adjusted EBITDA, the most directly comparable financial measure calculated
and presented in accordance with GAAP.
20
--------------------------------------------------------------------------------Results of Operations
Three Months Ended
The following is an analysis of our operating results. See "-How We Evaluate Our
Operations" for definitions of rig hours, stage counts and other analogous
information.
Three Months Ended
March 31, Variance
2022 2021 $ %
Revenues
High specification rigs $ 64.9 $ 21.7 $ 43.2 199 %
Wireline services 38.6 12.1 26.5 219 %
Processing solutions and ancillary services 20.1 4.5 15.6 347 %
Total revenues 123.6 38.3 85.3 223 %
Operating expenses
Cost of services (exclusive of depreciation and
amortization):
High specification rigs 50.8 19.0 31.8 167 %
Wireline services 40.4 11.3 29.1 258 %
Processing solutions and ancillary services 16.8 3.8 13.0 342 %
Total cost of services 108.0 34.1 73.9 217 %
General and administrative 9.2 3.5 5.7 163 %
Depreciation and amortization 11.6 8.0 3.6 45 %
Gain on sale of assets - - - 100 %
Total operating expenses 128.8 45.6 83.2 182 %
Operating loss (5.2) (7.3) 2.1 (29) %
Other expenses
Interest expense, net 2.1 0.6 1.5 250 %
Total other expenses 2.1 0.6 1.5 250 %
Loss before income tax expense (7.3) (7.9) 0.6 (8) %
Tax (benefit) expense (1.6) 0.4 (2.0) (500) %
Net loss $ (5.7) $ (8.3) $ 2.6 (31) %
Revenues. Revenues for the three months ended
High Specification Rigs. High Specification Rig revenues for the three months endedMarch 31, 2022 increased$43.2 million , or 199%, to$64.9 million from$21.7 million for the three months endedMarch 31, 2021 . The increase in rig services revenue included a 161% increase in total rig hours to 112,500 for the three months endedMarch 31, 2022 from 43,200 for the three months endedMarch 31, 2021 . The average revenue per rig hour increased 17% to$577 for the three months endedMarch 31, 2022 from$493 for the three months endedMarch 31, 2021 . Of the total segment revenue increase,$32.7 million is attributable to the assets acquired in the Basic Acquisition. The increase in revenue, rig hours and average revenue per rig hour is also related to increased crude oil pricing and industry activity. Wireline Services. Wireline Services revenues for the three months endedMarch 31, 2022 increased$26.5 million , or 219%, to$38.6 million from$12.1 million for the three months endedMarch 31, 2021 . The increased wireline services revenue was primarily attributable to completion services which included a 163% increase in completed stage count to 7,400 for the three months endedMarch 31, 2022 from 2,800 for the three months endedMarch 31, 2021 related to completion services. The increase in wireline services revenue included a 133% increase in average active wireline units to fourteen units for the three months endedMarch 31, 2022 from six units for the three months endedMarch 31, 2021 . Of the segment revenue,$7.3 million and$24.5 million are attributable to the assets acquired in the Patriot and PerfX Acquisitions, respectively. Processing Solutions and Ancillary Services. Processing Solutions and Ancillary Services revenues for the three months endedMarch 31, 2022 increased$15.6 million , or 347%, to$20.1 million from$4.5 million for the three months endedMarch 31, 2021 . Of the total segment revenue increase,$9.5 million is attributable to the Basic Acquisition. The increase in processing 21 -------------------------------------------------------------------------------- solutions and ancillary services is primarily attributable to a$5.5 million increase in both of our equipment rentals and plugging and abandonment services to$6.0 million and$5.7 million , respectively. Cost of services (exclusive of depreciation and amortization). Cost of services (exclusive of depreciation and amortization) for the three months endedMarch 31, 2022 increased$73.9 million , or 217%, to$108.0 million from$34.1 million for the three months endedMarch 31, 2021 . As a percentage of revenue, cost of services was 87% and 89% for the three months endedMarch 31, 2022 and 2021, respectively. The change in cost of services by segment was as follows: High Specification Rigs. High Specification Rig cost of services for the three months endedMarch 31, 2022 increased$31.8 million , or 167% to$50.8 million from$19.0 million for the three months endedMarch 31, 2021 . The increase was primarily attributable to an increase in variable expenses, notably employee costs and fuel costs, which amounted to$18.3 million and$2.9 million , respectively. Additionally, the increase corresponds with the increase in rig hours and revenues. Of the segment cost of services,$25.0 million is attributable to the Basic Acquisition. Wireline Services. Wireline Services cost of services for the three months endedMarch 31, 2022 increased$29.1 million , or 258%, to$40.4 million from$11.3 million for the three months endedMarch 31, 2021 . The increase was primarily attributable to increased employee costs due to the acquisitions of PerfX and Patriot, and, to a lesser extent, maintenance costs. Of the total segment cost of services,$26.6 million and$6.4 million is attributable to the assets acquired in the PerfX and Patriot Acquisitions, respectively, whereas the increased maintenance costs amounted to$1.6 million . Processing Solutions and Ancillary Services. Processing Solutions and Ancillary Services cost of services for the three months endedMarch 31, 2022 increased$13.0 million , or 342%, to$16.8 million from$3.8 million for the three months endedMarch 31, 2021 . The increase was primarily attributable to increased employee costs with the upturn in operational activity, which amounted to$6.2 million . Of the segment cost of services increase,$9.8 million is attributable to the Basic Acquisition. General & Administrative. General and administrative expenses for the three months endedMarch 31, 2022 increased$5.7 million , or 163%, to$9.2 million from$3.5 million . The increase in general and administrative expenses is primarily due to corporate employee costs and increased professional fees during three months endedMarch 31, 2022 . Depreciation and Amortization. Depreciation and amortization for the three months endedMarch 31, 2022 increased$3.6 million , or 45%, to$11.6 million from$8.0 million for the three months endedMarch 31, 2021 . The increase was attributable to assets acquired through the business combinations during the last half of the year endedDecember 31, 2021 . This was partially offset by depreciation expense related to fixed assets disposed of during the three months endedMarch 31, 2021 . Interest Expense, net. Interest expense, net for the three months endedMarch 31, 2022 increased$1.5 million , or 250%, to$2.1 million from$0.6 million for the three months endedMarch 31, 2021 . The increase to net interest expense was attributable to the increased principal balance on our Revolving Credit Facility (as defined below), higher interest rates on each tranche of the Loan and Security Agreement that closed onSeptember 27, 2021 , and interest paid on the Secured Promissory Note issued in connection with the PerfX Acquisition.
Note Regarding Non-GAAP Financial Measure
Adjusted EBITDA is not a financial measure determined in accordance withU.S. GAAP. We define Adjusted EBITDA as net income or loss before net interest expense, income tax provision (benefit), depreciation and amortization, equity-based compensation, acquisition-related and severance costs, gain or loss on disposal of assets, legal fees and settlements, and other non-cash 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 income (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 withU.S. 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 withU.S. GAAP. 22
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Three Months Ended
The following is an analysis of our Adjusted EBITDA. See "Item 1. Financial Information-Note 15-Segment Reporting" and "-Results of Operations" for further details.
Three Months Ended
Processing
Solutions and
High Specification Wireline Ancillary
Rigs Services Services Other Total
(in millions)
Net income (loss) $ 7.7 $ (4.5) $ 1.3 $ (10.2) $ (5.7)
Interest expense, net - - - 2.1 2.1
Tax (benefit) expense - - - (1.6) (1.6)
Depreciation and amortization 6.4 2.7 2.0 0.5 11.6
Equity based compensation - - - 0.8 0.8
Gain on disposal of property and
equipment - - - (1.0) (1.0)
Severance and reorganization costs - - - - -
Acquisition related costs - - - 3.2 3.2
Legal fees and settlements - - - 0.2 0.2
Adjusted EBITDA $ 14.1 $ (1.8) $ 3.3 $ (6.0) $ 9.6 Three Months Ended
Processing
Solutions and
High Specification Wireline Ancillary
Rigs Services Services Other Total
(in millions)Net income (loss) $ (2.1)$ (0.4) $ (0.9) $ (4.9) $ (8.3) Interest expense, net - - - 0.6 0.6 Tax (benefit) expense - - - 0.4 0.4 Depreciation and amortization 4.8 1.2 1.6 0.4 8.0 Equity based compensation - - - 0.9 0.9 Gain on disposal of property and equipment - - - (0.4) (0.4) Severance and reorganization costs - - - (1.4) (1.4) Acquisition related costs - - - - - Legal fees and settlements - - - - - Adjusted EBITDA $ 2.7$ 0.8 $ 0.7 $ (4.4) $ (0.2) Variance ($) Processing Solutions and High Specification Wireline Ancillary Rigs Services Services Other Total (in millions) Net income (loss) $ 9.8$ (4.1) $ 2.2 $ (5.3) $ 2.6 Interest expense, net - - - 1.5 1.5 Tax (benefit) expense - - - (2.0) (2.0) Depreciation and amortization 1.6 1.5 0.4 0.1 3.6 Equity based compensation - - - (0.1) (0.1) Gain on disposal of property and equipment - - - (0.6) (0.6) Severance and reorganization costs - - - 1.4 1.4 Acquisition related costs - - - 3.2 3.2 Legal fees and settlements - - - 0.2 0.2 Adjusted EBITDA $ 11.4$ (2.6) $ 2.6 $ (1.6) $ 9.8 23
-------------------------------------------------------------------------------- Adjusted EBITDA for the three months endedMarch 31, 2022 increased$9.8 million to income of$9.6 million from a loss of$0.2 million for the three months endedMarch 31, 2021 . The change by segment was as follows: High Specification Rigs. High Specification Rigs Adjusted EBITDA for the three months endedMarch 31, 2022 increased$11.4 million to$14.1 million from$2.7 million for the three months endedMarch 31, 2021 , primarily due to increased revenues of$43.2 million , partially offset by a corresponding increase in cost of services of$31.8 million . Wireline Services. Wireline Services Adjusted EBITDA for the three months endedMarch 31, 2022 decreased$2.6 million to a loss of$1.8 million from income of$0.8 million for the three months endedMarch 31, 2021 , primarily due to an increase in cost of services of$29.1 million , offset by increased revenues of$26.5 million . Processing Solutions and Ancillary Services. Processing Solutions and Ancillary Services Adjusted EBITDA for the three months endedMarch 31, 2022 increased$2.6 million to$3.3 million from$0.7 million for the three months endedMarch 31, 2021 , due to increased revenues of$15.6 million , offset by a corresponding increase in cost of services of$13.0 million . Other. Other Adjusted EBITDA for the three months endedMarch 31, 2022 decreased$1.6 million to a loss of$6.0 million from a loss of$4.4 million for the three months endedMarch 31, 2021 . The balances included in Other reflect other general and administrative costs, which are not directly attributable to High Specification Rigs, Wireline Services or Processing Solutions and Ancillary Services.
Liquidity and Capital Resources
Overview
We require capital to fund ongoing operations, including maintenance expenditures on our existing fleet and equipment, organic growth initiatives, investments and acquisitions. Our primary sources of liquidity are cash generated from operations and borrowings under our EBC Credit Facility. As ofMarch 31, 2022 , we had total liquidity of$10.2 million , consisting of$3.8 million of cash on hand and availability under our Revolving Credit Facility of$6.4 million . As ofMarch 31, 2022 , our borrowing base under the Revolving Credit Facility was$51.2 million compared to$19.8 million and$45.0 million as ofMarch 31, 2021 andDecember 31, 2021 , respectively, as a result of increased operational activity and accounts receivable balances. We strive to maintain financial flexibility and proactively monitor potential capital sources to meet our investment and target liquidity requirements and to permit us to manage the cyclicality associated with our business. We currently expect to have sufficient funds to meet the Company's liquidity requirements and comply with our covenants of our debt agreements for at least the next 12 months from the date of issuance of these financial statements. For further details, see "- Our Debt Agreements."
Cash Flows
The following table presents our cash flows for the periods indicated:
Three Months Ended March 31, Change
2022 2021 $ %
(in millions)
Net cash used in operating activities $ (12.1)
537 %
Net cash provided by investing
activities 5.0 - 5.0 100 %
Net cash provided by financing
activities 10.3 0.6 9.7 1,617 %
Net change in cash $ 3.2 $ (1.3) $ 4.5 (346) %
Operating Activities
Net cash used in operating activities increased $10.2 million to cash used
of $12.1 million for three months ended March 31, 2022 compared to cash used of
$1.9 million for the three months ended March 31, 2021 . The change in cash flows
from operating activities is primarily attributable to a decrease in gross
margins and operating income for the three months ended March 31, 2022 compared
to the three months ended March 31, 2021 . The use of working capital cash
increased $6.3 million to $8.6 million for the three months ended March 31,
2022 , compared to $2.3 million for the three months ended March 31, 2021 .
Investing Activities
Net cash provided by investing activities increased$5.0 million from no cash provided, nor used in, investing activities for the three months endedMarch 31, 2021 . The change in cash flows from investing activities is attributable to the significant asset sales that took place during the three months endedMarch 31, 2022 , partially offset by the fixed asset additions. 24 --------------------------------------------------------------------------------
Financing Activities
Net cash provided by financing activities increased$9.7 million from cash provided of$0.6 million for the three months endedMarch 31, 2021 compared to cash provided of$10.3 million for the three months endedMarch 31, 2022 . The change in cash flows from financing activities is attributable to increased net borrowings of$16.8 million to fund working capital obligations.
Supplemental Disclosures
During the three months endedMarch 31, 2022 , the Company added fixed assets of$0.8 million in finance leased assets, within our High-Spec Rigs and Wireline segments. Working Capital Our working capital, which we define as total current assets less total current liabilities, was$11.7 million as ofMarch 31, 2022 , compared to$2.5 million as ofDecember 31, 2021 . The increased accounts receivable and contract assets, coupled with assets considered to be held for sale led to the working capital increase, however was partially offset by increased net borrowings under the EBC Revolving Credit Facility. Our Debt Agreements
Eclipse Loan and Security Agreement
OnSeptember 27, 2021 , the Company entered into a Loan and Security Agreement withEclipse Business Capital LLC ("EBC") andEclipse Business Capital SPV, LLC , as administrative agent, providing the Company with a senior secured credit facility in an aggregate principal amount of$77.5 million (the "EBC Credit Facility"), consisting of (i) a revolving credit facility in an aggregate principal amount of up to$50.0 million (the "Revolving Credit Facility"), (ii) a machinery and equipment term loan facility in an aggregate principal amount of up to$12.5 million (the "M&E Term Loan Facility") and (iii) a term loan B facility in an aggregate principal amount of up to$15.0 million (the "Term Loan B Facility"). Debt under the Eclipse Loan and Security Agreement is secured by a lien on substantially all of the Company's assets. The Company was in compliance with the Eclipse Loan and Security Agreement covenants as ofMarch 31, 2022 . OnJanuary 7, 2022 , the Company entered into the First Amendment to Loan and Security Agreement (the Eclipse Loan and Security Agreement, as amended by the First Amendment, the "Amended Loan Agreement") withEBC and Eclipse Business Capital SPV, LLC , which increased the Maximum Revolving Facility Amount (as defined in the Amended Loan Agreement) to$65.0 million , among other things.
Revolving Credit Facility
The Revolving Credit Facility was drawn in part onSeptember 27, 2021 , to repay the indebtedness under the existing Credit Facility, which was terminated in connection with such repayment, and to pay for the fees, costs and expenses incurred in connection with the EBC Credit Facility. The undrawn portion of the Revolving Credit Facility is available to fund working capital and other general corporate expenses and for other-permitted uses, including the financing of permitted investments and restricted payments. The Revolving Credit Facility is subject to a borrowing base that is calculated based upon a percentage of the Company's eligible accounts receivable less certain reserves. The Company's eligible accounts receivable serve as collateral for the borrowings under the Revolving Credit Facility, which is scheduled to mature inSeptember 2025 . The Revolving Credit Facility includes a subjective acceleration clause and cash dominion provisions that permits the administrative agent to sweep cash daily from certain bank accounts into an account of the administrative agent to repay the Company's obligations under the Revolving Credit Facility. The borrowings of the Revolving Credit Facility, therefore, will be classified as Long-term debt, current portion on the Condensed Consolidated Balance Sheet. Under the Revolving Credit Facility, the total loan capacity was$51.2 million , which was based on a borrowing base certificate in effect as ofMarch 31, 2022 . The Company had outstanding borrowings of$44.8 million under the Revolving Credit Facility, leaving a residual$6.4 million available for borrowings as ofMarch 31, 2022 . Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to 5% in excess of the LIBOR Rate and 4% in excess of the Base Rate throughApril 1, 2022 . The weighted average interest rate for the loan was 6.0% for the three months endedMarch 31, 2022 . The Company capitalized fees of$1.8 million associated with the Revolving Credit Facility, which are included in Other assets in the Condensed Consolidated Balance Sheets. Such fees will continue to be amortized through maturity and are included in Interest expense, net on the Condensed Consolidated Statement of Operations. Unamortized debt issuance costs as ofMarch 31, 2022 were$1.6 million . 25
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M&E Term Loan Facility
Under the M&E Term Loan Facility, the Company had outstanding borrowings of$12.3 million where the monthly principal installments commenced onMarch 1, 2022 . Borrowings under the M&E Term Loan Facility bear interest at a rate per annum equal to 8% in excess of the LIBOR Rate and 7% in excess of the Base Rate. The weighted average interest rate for the M&E Term Loan was 9.0% for the three months endedMarch 31, 2022 . The M&E Term Loan Facility is scheduled to mature inSeptember 2025 . Any principal amounts repaid may not be reborrowed. The Company capitalized fees on$0.3 million associated with this M&E Term Loan Facility, which are included in the Condensed Consolidated Balance Sheets as a discount to the Long-term debt, net. Such fees will continue to be amortized through maturity and are included in Interest expense, net on the Condensed Consolidated Statement of Operations. Unamortized debt issuance costs as ofMarch 31, 2022 were$0.3 million .
Term Loan B
OnOctober 1, 2021 , the Term Loan B, was finalized in connection with the closing of the Basic Acquisition. Borrowings under Term Loan B bear interest at a rate per annum equal to 13% in excess of the LIBOR Rate and 11% in excess of the Base Rate. Term Loan B is scheduled to mature inSeptember 2022 . The weighted average interest rate for Term Loan B was 13.0% for the three months endedMarch 31, 2022 . OnOctober 1, 2021 , the Term Loan B was drawn in full to repay borrowings under the Revolving Credit Facility and as ofMarch 31, 2022 the principal balance outstanding was$11.0 million . Principal payments are generated from the proceeds from the sale of Basic assets, and may not be reborrowed. The Company capitalized fees of$0.6 million associated with Term Loan B, which are included in the Condensed Consolidated Balance Sheets as a discount to the Long-term debt, current portion. Such fees will continue to be amortized through maturity and are included in Interest Expense, net on the Condensed Consolidated Statement of Operations. Unamortized debt issuance costs as ofMarch 31, 2022 were$0.3 million . The Company paid approximately$4.9 million on Term Loan B subsequent toMarch 31, 2022 , where such cash was generated from the sale of Basic assets under the Term Loan B.
Secured Promissory Note
In connection with the PerfX Acquisition, onJuly 8, 2021 ,Bravo Wireline, LLC , a wholly owned subsidiary of Ranger, entered into a security agreement with Chief Investments, LLC, as administrative agent, for the financing of certain assets acquired. Certain of the assets acquired serve as collateral under the Secured Promissory Note. As ofMarch 31, 2022 , the aggregate principal balance outstanding was$8.3 million . Borrowings under the Secured Promissory Note bear interest at a rate of 8.5% per annum and is scheduled to mature inJanuary 2024 . The Company made a cash payment of$1.5 million payment inFebruary 2022 on the Secured Promissory Note, where such cash was generated from the sale of assets with an attached lien. Other Installment Purchases During the year endedDecember 31, 2021 , the Company entered into various Installment and Security Agreements (collectively, the "Installment Agreements") in connection with the purchase of certain ancillary equipment, where such assets are being held as collateral. As ofMarch 31, 2022 , the aggregate principal balance outstanding under the Installment Agreements was$0.9 million and is payable ratably over 36 months from the time of each purchase. The monthly installment payments contain an imputed interest rate that are consistent with the Company's incremental borrowing rate and is not significant to the Company.
Tax Receivable Agreement ("TRA")
During the year endedDecember 31, 2021 , the Company entered into a definitive agreement with affiliates ofCSL Capital Management ("CSL") andBayou Holdings ("Bayou") to terminate the TRA (the "Tax Receivable Agreement"). In consideration of the TRA Termination Agreement, the Company issued an aggregate of 376,185 shares of Class A Common Stock of the Company to affiliates ofCSL Capital Management andBayou Holdings . During the year endedDecember 31, 2021 , in connection with the TRA Termination Agreement,Ranger LLC redeemed CSL's and Bayou's outstanding units inRanger LLC and the corresponding shares of its Class B Common Stock for an equivalent number of shares of Class A Common Stock. Following this redemption, no shares of Class B Common Stock were issued or outstanding.
Critical Accounting Policies and Estimates
Our significant accounting policies are discussed in our Annual Report and have
not materially changed since
Off-Balance Sheet Arrangements
We currently have no material off-balance sheet arrangements.
26
--------------------------------------------------------------------------------Emerging Growth Company Status and Smaller Reporting Company Status
The Company is an "emerging growth company" as defined in the JOBS Act. The Company will remain an emerging growth company until the earlier of (1) the last day of its fiscal year (a) following the fifth anniversary of the completion of the Offering, (b) in which its total annual gross revenue is at least$1.07 billion , or (c) in which the Company is deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds$700.0 million as of the last business day of its most recently completed second fiscal quarter, or (2) the date on which the Company has issued more than$1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable to public companies. The Company has irrevocably opted out of the extended transition period and, as a result, the Company will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies. The Company will lose its EGC status onDecember 31, 2022 , as this will represent the last day of the fiscal year following the fifth anniversary of our first Form S-1, which was filed inAugust 2017 . The Company is also a "smaller reporting company" as defined by Rule 12b-2 of the Exchange Act. Smaller reporting company means an issuer that is not an investment company, an asset-back issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that (i) has a market value of common stock held by non-affiliates of less than$250 million ; or (i) has annual revenues of less than$100 million and either no common stock held by non-affiliates or a market value of common stock held by non-affiliates of less than$700 million . Smaller reporting company status is determined on an annual basis. 27
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information in this Quarterly Report includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act, as amended and Section
21E of the Exchange Act. All statements, other than statements of historical
fact included in this Quarterly Report, regarding our strategy, future
operations, financial position, estimated revenues and losses, projected costs,
prospects, plans and objectives of management are forward-looking statements.
When used in this Quarterly Report, the words "could," "believe," "anticipate,"
"intend," "estimate," "expect," "project" and similar expressions are intended
to identify forward-looking statements, although not all forward-looking
statements contain such identifying words. These forward-looking statements are
based on our current expectations and assumptions about future events and are
based on currently available information as to the outcome and timing of future
events. When considering forward-looking statements, you should keep in mind the
risk factors and other cautionary statements included in our Annual Report.
These forward-looking statements are based on management's current belief, based
on currently available information, as to the outcome and timing of future
events.
Forward-looking statements may include statements about:
•our business strategy;
•our operating cash flows, the availability of capital and our liquidity;
•our future revenue, income and operating performance;
•the volatility in global crude oil demand and crude oil prices for an uncertain period of time that may lead to a significant reduction of domestic crude oil and natural gas production;
•global or national health concerns, including pandemics such as the outbreak of COVID-19;
•political and economic conditions and events in foreign oil, natural gas and
NGL producing countries, including embargoes, continued hostilities in the
•our ability to sustain and improve our utilization, revenues and margins;
•our ability to maintain acceptable pricing for our services;
•our future capital expenditures;
•our ability to finance equipment, working capital and capital expenditures;
•competition and government regulations, including new and proposed legislation
by the
•our ability to obtain permits and governmental approvals;
•pending legal or environmental matters;
•marketing of oil and natural gas;
•business or asset acquisitions;
•general economic conditions;
•credit markets;
•our ability to successfully develop our research and technology capabilities and implement technological developments and enhancements;
•uncertainty regarding our future operating results; and
•plans, objectives, expectations and intentions contained in this report that are not historical.
We caution you that these forward-looking statements are subject to all of the
risks and uncertainties, most of which are difficult to predict and many of
which are beyond our control. These risks include, but are not limited to, the
risks described under "Risk Factors" in our Annual Report previously filed.
Should one or more of the risks or uncertainties described occur, or should
underlying assumptions prove incorrect, our actual results and plans could
differ materially from those expressed in any forward-looking statements.
All forward-looking statements, expressed or implied, included in this Quarterly
Report are expressly qualified in their entirety by this cautionary statement.
This cautionary statement should also be considered in connection with any
subsequent written or oral forward-looking statements that we or persons acting
on our behalf may issue. Except as otherwise required by
28
--------------------------------------------------------------------------------applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.
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