Ranger Energy Services, Inc. (NYSE:RNGR) Q3 2023 Earnings Conference Call October 31, 2023 10:00 AM ET
Company Participants
Justin Whitley – General Counsel
Stuart Bodden – Chief Executive Officer
Melissa Cougle – Chief Financial Officer
Conference Call Participants
John Daniel – Daniel Energy Partners
Don Crist – Johnson Rice
Donovan Schafer – Northland Capital Markets
Jeff Robertson – Water Tower Research
Operator
Good day and welcome to the Ranger Energy Third Quarter 2023 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]
I would now like to turn the conference over to Justin Whitley, Ranger’s General Counsel. Please go ahead.
Justin Whitley
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 results — press release, together with accompanying presentation materials, are available in our 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 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 an 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
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. Results that reflect Ranger’s resilience and ability to succeed, despite a lower US onshore drilling activity experienced 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 to the macro set 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 US rig count dropping by more than 15% since the end of last year. We talk frequently about 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 do have 30% to 40% of our revenues exposed to completion activity in some of our assets in gassier basins. We saw some of those exposed assets get released during the spring and early summer. Due to the hustle of our operation teams and strong collaboration across regions along with a strong reputation for service quality and safe operations, we were able to redeploy idle assets efficiently to keep revenue moving in the right direction in the high-specification rig segment this year.
We did have to contend with more white space than anticipated due to rig redeployment in the third quarter, but having the bulk of our assets allocated to production focused work in earlier basins allowed us to limit churn and turn over to keep our baseline activity largely unaffected.
Our ability to hold our revenue level and even increase them in some segments despite the decline in overall onshore activity this year should provide clear evidence about the flexibility and robustness of our production-focused business model and strong operational teams.
Finally, and as further support of our strong operational performance, we are pleased to have signed a new customer agreement with a major integrated onshore operator this quarter that provides for significant market share of the well service work in their onshore US asset portfolio.
This agreement and commitment for work provides us with higher confidence in our 2024 plan and opportunities for further growth from an already strong base of revenue with this customer.
We have talked in the past about our positioning with larger customers and vendor consolidation momentum. And it is encouraging to realize the first of what we hope will be a series of similar agreements.
Stated already, but worth reiterating, is the fact that our highest quality customers are willing to get stickier in their agreements with Ranger which is a testament to the commitment and service reliability of our teams and the industry-leading quality of our assets.
Moving on to our third quarter specifics, we reported net revenue of $164.4 million, the second highest revenue quarter in Ranger’s history. Looking at trends in our business, I’m pleased that although down from our record third quarter of last year, we have been able to provide steadily increasing results across 2023.
Net income on a year-to-date basis is $21.7 million or triple that of 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 increased from 12.8% at the beginning of this year to 14.6% in the third quarter.
We realized higher EBITDA quarter-over-quarter in all segments and feel this sequential growth quarter-over-quarter will prove rare across North American onshore service providers.
Our High Specification Rigs business has been a consistent source of stability and strength for us this year. We’ve talked a lot about Ranger’s production focus and how it helps us weather energy sector volatility. And this segment’s performance this year is Exhibit A.
Despite unexpected white space in the schedule due to several rig change outs that created some additional labor costs, rig hours held steady quarter-over-quarter with slight pricing improvements.
Moving on to our Wireline business, the North region which is our largest contributor to this segment substantially improved its margins this quarter, by focusing on strong execution and efficiency.
However, the South region continues to experience significant competition and price destruction and completion services, operating much of the progress we made last year. We’re continuing to make a strategic focus — a strategic shift to focus on production and pump-down oriented wireline work within the South region, while choosing not to bid at breakeven levels or below.
This work better aligns with Ranger’s production focus and comes with higher margins as well. And we expect this realignment will result in stronger segment contribution, as we move into 2024 and provide for more seasonal resilience.
Relative to the fourth quarter of 2022, we’ve grown revenue by 10%, despite the decline in US drilling and completion activity and we’ve also more than doubled operating income over the same period and increased adjusted EBITDA by 57%.
Finally, with our ancillary services business, we have achieved modest sequential improvements largely across the board into 2023. Our P&A business has grown by double digits this year which has been an intentional effort on our part and our Coil and Rentals businesses have held steady despite activity declines.
We have seen some pricing declines both within our Coil business as well as our Rentals business, because of new competition that migrated from gas basins this year which has affected our year-to-date margins.
We’re hard at work to maintain growth momentum in our P&A business and also restart growth in our Rentals and Coil business. We have achieved steady albeit, moderated growth this year, despite significantly lower-than-expected customer activity. The activity declines on the completion side certainly throughout our original much more ambitious growth plans for the year, and we have aggressively reacted to those activity declines by redeploying assets, pursuing operating efficiencies, and reorganizing where appropriate.
The great news is that the challenges we’ve experienced in 2023 have made our fundamental business stronger today than it was a year ago, with higher margins and more streamlined operations. You saw in our earnings release this morning that we adjusted our full year guidance to calibrate year-to-date results, and I’m disappointed to pull back our expectations.
Our team has handled the market challenges this year remarkably well, and is poised to hit the ground running in 2024. We’re also still on track to convert 60% of our adjusted EBITDA to free cash flow this year, which has been an important differentiator for Ranger, and influences our capital return strategy. The latter part of 2022 and early part of this year has been evaluating developing and ultimately rolling out a capital return framework. The framework we announced included returning at least 25% of free cash flow to shareholders through a quarterly dividend and/or share repurchases.
No other small-cap well full service company has the fundamental strength and confidence in its business to be able to offer this kind of share order returns program. In the third quarter, we paid out the first quarterly dividend in Ranger history of $0.05 per share. Additionally, I’m pleased to report that year-to-date, we have repurchased approximately 781,000 shares for approximately $0.6 million reflecting our belief that Ranger shares traded at a compelling discount to their intrinsic value.
We have approximately $26 million of authorization remaining or 14% of our current float and intend to opportunistically deploy that capital to buy back shares should conditions be supportive, although, we remain mindful of liquidity.
Through the end of the third quarter, we have already exceeded our 25% annual shareholder return commitment. Looking ahead, we hold a similar view to other industry observers who believe the rig count is close to its bottom and we anticipate increased activity levels in 2024, as cut budgets reset. The tight global supply and demand balance suggests a constructive oil and gas market and our early conversations with customers have been positive.
Furthermore, the recent major consolidation announcements in E&P indicate both a positive long-term view of North American resource development and an opportunity for the highest-quality service providers to continue to gain market share. We are observing an increasingly prevalent trend among our customers to consolidate their service providers which holds positive implications for Ranger’s business particularly as we look forward to recovery in rig activity going into 2024.
In conclusion, while we have faced unexpected headwinds this year our ability to adapt, innovate and focus on efficiency has allowed us to not just weather the storm, but to thrive. We remain steadfast in our commitment to create value for our shareholders, the steps we’ve taken, including accretive acquisitions, share repurchases and the initiation of a quarterly dividend showcase our dedication to delivering value to our shareholders.
Before I turn the call over to Melissa, I want to mention our other press release issued this morning. As part of our Board’s succession process, we initiated a search earlier this year for two new Board members and we are happy to announce that Carla Mashinski and Sean Woolverton have agreed to join the Ranger Board starting in the New Year. They both bring a wealth of industry-related experience and fresh perspectives to our Board that we are excited to have available to us.
As part of these changes Bill Austin, who has been our Chairman; and Dick Agee, who merged his private wealth service company into Ranger before the IPO will both be exiting their seats at the end of this year. Both have helped nurture and guide Ranger for these past several years and have been instrumental in the growth experienced since 2021. Because of their leadership and guidance, Ranger has successfully completed multiple acquisitions, simplified its capital structure, achieve net debt zero and implementing a capital returns program.
We could not have done this without them and we wish them well, as they take on new endeavors. As part of this transition, Michael Kearney will assume the role of Chairman in 2024. Mike has been Chairman of two other publicly traded companies, and brings not only the deep knowledge of Ranger having served on the Board for several years, but also his wealth of knowledge from prior experiences. It’s an exciting time at Ranger. We are successfully navigating the headwinds in 2023, and positioning the company for continued growth and to benefit from E&P consolidation.
With that, I’d like to turn the call over to Melissa to discuss our financial results and outlook.
Melissa Cougle
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 a 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 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 re 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 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.
Question-and-Answer Session
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from John Daniel with Daniel Energy Partners. Please go ahead.
John Daniel
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 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 mine those rigs, or will you just transition rigs from existing customers to take that work?
Stuart Bodden
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 trees that we can. But again, I think I would reiterate is I think just sort of depending on how budgets play out, it could be a combination of new rigs or incremental rig adds but also some kind of reshuffling amongst customers.
John Daniel
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
No. It allows for pass-throughs.
John Daniel
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
I appreciate the question, John. They can be repurposed for production work relatively easily. We do through the acquisitions have a fair amount of kind of wireline production-related equipment and tools. So we don’t think we need to really do anything incrementally other than just really kind of put greater emphasis on that.
John Daniel
Okay. Thank you very much.
Stuart Bodden
You bet.
Operator
Our next question comes from Don Crist with Johnson Rice. Please go ahead.
Don Crist
Morning, guys.
Stuart Bodden
Morning, Don.
Don Crist
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
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 for 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
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
I think ultimately, we feel like it’s a positive. I think there might be — without kind of getting — you must have to answer about each one of the announcements a little bit differently. So I think there’s one that we would very clearly feel like is a long-term positive for us. I think there is one that we would say will be a positive long-term, but there could be a little bit of kind of near-term choppiness just depending on sort of how that closes. But generally, I think we view that the trend of consolidation, the trend to our E&P, customers wanting fewer providers, fewer higher-quality providers. We think that’s just ultimately a good thing for Ranger.
Don Crist
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
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
Okay. I appreciate it. Thanks so much everybody.
Stuart Bodden
Yeah. Thanks, Don.
Melissa Cougle
Thanks, Don.
Operator
Our next question comes from Donovan Schafer with Northland Capital Markets. Please go ahead.
Donovan Schafer
Hey guys. Thanks for taking the questions. The first one I want to ask is with the lower rig count, I know that some of that in some basis is being offset by focusing on longer — trying to go a bit longer on the laterals, and so I’m wondering, if there’s any kind of offsetting benefit for you guys have thought over time? Just I know, the focus on high-spec rigs, with services is with the idea in mind that more wells are going to have — are going to be horizontal and acquire the ability to pull heavier loads against friction and horizontal section or whatever. So it’s a slowdown near-term, is there any like later benefit a year out two years out when these wells go on — need to go on artificial lift or something and it skews things more favorably or adds to the relative value of your High-Spec Rigs? Thank you.
Stuart Bodden
Yes. Again, and let’s chime in. No, I appreciate the question, Donovan. So again, I think long term we would say that does help us, because I think to go do whether it’s routine well work or more intensive work over work you do need higher cycle equipment over time to get into the outer reaches of the lateral. So we do think that, that will help us and it becomes harder and harder, as an example to get coil out there, if you’re doing any kind of remedial work.
So ultimately, we think that’s a good thing for us. And I think you’re also kind of highlighting another issue that we’ll just say that, as long as the industry is drilling more new wells than are being sort of plugged and abandoned. Ultimately, we feel like our total addressable market is growing. So — and certainly, we believe we’re in that environment right now. So again, I think long-term, we think that that’s a positive.
Donovan Schafer
Okay. And then a follow-up question on that. With kind of talking about your different segments and wireline completion activity is obviously going to be pretty tightly tied to the rig count for drilling new wells, but I’m curious for the servicing side the High-Spec Service Rigs. Is there any kind of rule of thumb or anything for like a time lag, where if you get a big jump, or a big drop in the rig count for — on the new well side of things? Is there like a one year lag two year lag where you see maybe, it’s a less pronounced movement, but some kind of — some kind of a correlated movement on demand for the High-spec Servicing Rigs? Again, maybe it’s like a typically a one year before they go to artificial lift or something like that? Just any way to kind of what the lag there is between rig count on the front end for new wells and kind of demand for the high-spec servicing rigs?
Stuart Bodden
I don’t think we found, a situation where we can kind of model it with any kind of accuracy. But again, Donovan, I think I guess, I would just say a couple of things. Generally, within the first year or less, after a well has been drilled. We typically go back — we the industry typically goes back in and put that well on artificial lift. So, I do think that that happens relatively quickly and then every year or two, you tend to go back into the wells to do well service work.
I think the other thing, I would just sort of point to is, if you kind of look at on the high-specification rig segment through this year, hours have really been quite steady all through the year despite the fact that drilling rig count has dropped pretty substantially. So again, I think we kind of talked about it earlier but I think we feel like being really exposed and oriented towards this production-focused business model and making sure that we’re keeping existing wells online just makes us a lot more resilient through the cycle.
Donovan Schafer
Okay. That’s helpful. And on the plugging and abandoning, kind of, opportunity is something I haven’t — I need to kind of brush up on I’m trying to remember the state of legislation around there. So just has there been any more updates or guidance clarifications or anything around potential to monetize credits for reducing methane emissions from going back and doing plugging and abandoning whether at the federal or the state level or just kind of the current state of affairs for the subsidized or statutory kind of side of that equation would be great?
Stuart Bodden
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’re — 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 this that they’re really developing their own P&A programs outside 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 does it make 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 sort of 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
Yes. No that does. And actually if I can squeeze just one more in about kind of I’m curious if there are any trends to be mindful of like in terms of approaches to workovers or artificial lift installations that are either — either hurt or benefit the economics for work the High-Spec workover rigs. Like think about if there’s more use of electric submersible pumps versus displacement pump jacks or something. Any kind of trends there moving positively or negatively?
Stuart Bodden
So I don’t think we’ve seen any trend on the — as an example the type of artificial lift. I mean obviously it varies by region a bit. But I don’t think we’ve seen that trend. I do think what we’ve seen with customers is as customers have become very focused on efficiency I think as it relates to a lot of our work what they see is that continuity of crews and specific crews is actually really driving a lot of efficiency.
So I actually think that we talked about the contract earlier. I think a lot of that is driven by safety is one but I think it’s also driven by efficiency. And they’re saying, I think our biggest customers are saying, they recognize that, if they have steady work programs, that basically allows for crew continuity, they see improved performance across the board.
Melissa Cougle
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
Okay. That makes a lot of sense. All right. Thanks guys. I’ll take the rest of my questions offline.
Stuart Bodden
All right. Thanks, Donovan.
Melissa Cougle
Thank you.
Operator
Your next question comes from Jeff Robertson with Water Tower Research. Please go ahead.
Jeff Robertson
Good morning. Thanks for taking my question. Stuart, on the contract, can you — I assume it’s a one-year contract from the way the press release is written. And secondly, can you just talk about what level of business you would like to see underwritten by these types of agreements?
Stuart Bodden
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 to it through time. What I can just say is that we have some other larger customers that are again and 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 et cetera.
Jeff Robertson
I presume that’s just to help drive their efficiencies in their capital programs as Melissa alluded to earlier?
Stuart Bodden
Absolutely.
Jeff Robertson
And secondly, is this agreement — does it span multiple basins, or is it just in one basin?
Stuart Bodden
It’s multiple basins.
Jeff Robertson
Thank you, very much.
Stuart Bodden
You bet.
Operator
Your next question is a follow-up from Don Crist with Johnson Rice. Please go ahead.
Don Crist
Thanks for letting me back ion. 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
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 if you will, 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
Completely understandable. Thanks for letting me back in. I appreciate it.
Melissa Cougle
No problem.
Operator
Our next question comes from William Kim with [indiscernible] Asset Management. Please go ahead.
Unidentified Analyst
Hey Stuart, Melissa, how are you?
Melissa Cougle
Morning.
Stuart Bodden
Good morning.
Unidentified 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 between in determining what do you think intrinsic value is squaring?
Melissa Cougle
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 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
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
No. That William was just part of a kind of ongoing reprice process that we undertook. So, there was — again, it’s been sort of been in the works for a while and planned just to make sure as part of good governance we’re kind of keeping good turnover to the Board.
Melissa Cougle
Yes, I mean you saw — I’ll add to that. You saw us do a little bit earlier as part of proxy. We made some initial changes. These have been discussed sort of at a high level back then and we’ve been working towards — our Board hadn’t — we had outside parties institutions point out our Board lacks and diversity, number one. And then also frankly had not had any turnover in it. So, we thought it was appropriate to kind of start that process.
Unidentified 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
You can go first.
Stuart Bodden
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, just 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 or 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
Yeah. I mean, I would only add to that to say, I think what we’re also doing from just pure financial and management perspective is, we’ve really worked hard over the past year to get more real-time data, before I even showed up Stuart had been working on Power BI dashboards to show what rigs are working, where, how much. We’ve really worked to expand that to make our monthly financial reviews much more impactful to really start to proliferate, much more deeply our views on profitability.
And then, I finally say, look, we have a lot of the same team, Matt Hookers here in the room with us. He helps manage the COVID process, if you will and Ranger appreciates that survivability is priority number one. And I would tell you that if we had — no one wants to make such decisions again, but we recognize we have two at times.
Stuart Bodden
Yeah.
Unidentified Analyst
I think that last part is kind of where I was looking for some clarity. Ranger was very, very quick to cut costs when you saw weakness out there. I guess, what is the state of the labor market now in your industry? And how does that compare to 2020, 2021?
Stuart Bodden
Yeah. I mean, it’s — as I said earlier, what we would say is essentially still pretty tight. It hasn’t kind of freed up like you might have thought. But again, I think just to kind of reiterate what Melissa said and this is a team that for better or for worse has been through a couple of downturns. And we know that acting quick is in the best interest of really the survivability of the company. So hopefully, we don’t have to do that, but we’re ready if we have to.
Unidentified Analyst
Great. Thank you. Keep up the great work.
Stuart Bodden
All right. Thank you.
Melissa Cougle
Thank you.
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
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
The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
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