Ranger Energy Services, Inc. (RNGR) Q3 2019 Earnings Report, Transcript and Summary

Good morning and welcome to the Ranger Energy Third Quarter 2019 Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.I would now like to turn the conference over to Darron Anderson, Chief Executive Officer. Please go ahead.

Thank you, operator. Good morning and welcome to Ranger Energy Services' third quarter 2019 earnings conference call. Joining me today is Brandon Blossman, our CFO, who will offer his comments in a moment.This morning I'm not going to dwell on the challenging macro backdrop, budget exhaustion or even the hope of an early 2020 E&P budget reload, as these are all factors well outside of our control. Instead, I will focus more on what we already do have control of, what we've accomplished to date and we continue to spend our efforts and what we hope to accomplish in the coming quarters.With the close of third quarter here's what we've accomplished: First, cash flow and net debt reduction. During the third quarter, we produced cash flow from operations of $22 million and reduced net debt by $17 million. Our continued operational performance, resolving onetime working capital issues and minimal maintenance CapEx spend required by our high-quality asset base, all led to the significant cash generation that we expected to deliver across 2019.Second, our Wireline is back on track. Last quarter we've spent some time talking about our Wireline business, but we've particularly made the decision to reposition a core set of assets from one customer to another. While this decision did have a material negative impact to our Q2 results, we are pleased with the decision and note that for Q3 our fleet utilization is back to the highs of early 2019.Next, high grading of our High-Spec Rigs customer base. We continue to leverage our young fleet, improving systems and streamline processes to deliver high quality work to customers who are willing to value these attributes. In line with this objective, this quarter we're announcing an additional global integrated new customer contract. While this new contract was a great win for us for the quarter, our Q3 High-Spec Rigs were negatively impacted by onetime costs associated with preparing several rigs for this contract and other existing top-tier customers. This expense and associated capital investment taken in the quarter will pay material dividend in the future.Other Services: An area on the performance for the quarter was within our other surfaces outside the Wireline. Here we saw decline in activity in one particular service line. However, during the quarter, we completed a full restructuring of the service offering to better align our cost structure with a near-term expected revenue stream. And finally our Processing Solutions: This segment delivered solid performance, producing their best quarter of 2019. Here increased revenue and EBITDA on incremental gas cooler deployments, higher mechanical refrigeration unit pricing and increased mobilization/demobilization revenue, were partially offset by lower MRU utilization.Now to give you a little more detail on the quarter. Total revenue for the quarter was nearly unchanged rounded to $84 million each of Q2 and Q3. Both Wireline and Processing Solutions saw significant revenue uptake which were offset by decline in our non-Wireline business within our Completion and Other Services segment as well as a modest revenue decline in High-Spec Rigs.Specifically, within the High-Spec Rigs we experienced a revenue decrease of 2%. This decrease was driven by 2% decrease in hourly rates. Rigs also were largely unchanged, up just slightly. While our Q3 topline in performance implies a fairly flat non-existing quarter, in reality, it was actually quite the opposite. As I mentioned in my opening comments, I'm excited to announce another significant contract win for our High-Spec Rigs segment.Similar to our announcement earlier this year, we have been awarded a multiyear multi-rig well service contract with another global integrated customer. Because this is a completely new class for Ranger, during the quarter, we completed an extensive operational audit and executed a trial project, culminating into this new long-term relationship.In addition to this new contract, we also gained market share with two existing clients: one being from our previously announced IOC-contracted customer. Between the dates of September 12 and October 16, we placed eight rigs into service for this group of clients alone with an expectation to deploy an additional two to three more rigs before year end with these set of clients.I am aware that this type of activity is accounted to the market sentiment. Here we believe at least a portion of our market share gains are being realized as customers actively switch from encumbered service providers in order to align with Ranger's newer better-funded rig fleet.Moving on to Completion and Other Services. Our Mallard-branded Wireline completion business returned to full effective utilization, achieving a Q3 stage count that matched Q1 2019 record high for the business. While Q2's decision to move a core set of assets consisting of two Wireline trucks and two pump-down spreads to alternative clients hard Q2's performance. The team's success in repositioning these assets across three high-quality publicly traded clients support the decision as the right one.And finally, we are seeing some pricing pressure in this business line. However, to-date we have been able to offset that pressure with per unit cost reduction.Revenues from our remaining services captured within the segment were down for the quarter. While most of the service lines showed often revenue puts and takes, well testing had a material fall-off versus Q2. Here we made some significant structural changes to better align cost and revenue. Additionally, the less new contracted rigs are now pulling through well-testing assets as part of a total service solution. We expect to reverse the negative impact of this service line element segment going forward.And finally, our Processing Solutions segment returned its best quarter since inception. Overall, revenue was up 29% on an increasing gas cooler and services revenue. This is despite of a decrease in MRU utilization. While lower MRUs utilization is negative, it does mean that there's any more potential in this segment as we sort opportunities to deploy idle MRUs into our current markets space or for other potential new applications.On the capital spending front, during the quarter we added some incremental CapEx which was all associated with rolling out additional rig packages for our new IOC customers. The remaining balance of our Q3 CapEx spend was the wrap-up of previously budgeted gas cooler capital.Moving on to consolidated earnings. Adjusted EBITDA decreased 6% to $12.2 million from $13 million in Q2, while margins decreased from 15.4% to 14.5%. Brandon will walk you through these details by segment in a moment. In summary, in spite of a challenging oil field service market we continue to focus on what we can control; positioning ourselves to serve the high-quality customer base, delivering safe and efficient operations, immediately adjusting our cost structure when required and disciplined capital spending all leading to market share gain and a free cash flow generation.I will now turn the call over to Brandon for his remarks.

Thank you, Darron and good morning to everyone. All right. Let's jump right into a full walk-through of the numbers for the quarter. I'll repeat some of the numbers that Darron gave you and add a bunch of incremental color.So as Darron mentioned on a consolidated basis, overall revenue was materially unchanged sequentially down just $200,000 from $84.3 million to $84.1 million. Adjusted EBITDA did move down 6% or $800,000 from $13 million to $12.2 million while resulting adjusted EBITDA margins ticked down slightly from 15.4% to 14.5%.Now let's move on to the segment details and start with revenue. Quarter-over-quarter revenues saw decreases at both High-Spec Rigs and Completion and Other Services segments, declines which were partially offset by growth in Processing Solutions.Specifically in our high specs -- High-Spec Rigs segment, revenue was down 2% or $600,000 to $32.5 million on a 2% decrease in rig rates which was slightly offset by a small uptick in period rig hours. Rig hours went up from 62,200 to 62,400 hours while hourly rig rates went down from $530 an hour to $519 an hour. Our completion rig count held steady during the quarter at 13 rigs. And overall rig utilization held flat at around 63%.In the Completion and Other Services segment revenue was down 2% or $1 million to $45.3 million. Underneath that quarter-over-quarter decline was an uptick in Wireline revenues which was more than offset by a decline in other non-Wireline service lines within that segment.Wireline revenues were up sequentially as those assets returned to targeted utilization levels with a Q3 stage count back to our record-setting -- previous record setting Q1 2019 peak for that business. The drop-off in other non-Wireline service lines in that segment was driven by well testing as Darron mentioned, which saw a meaningful customer loss and returned a negative EBITDA for the quarter. As Darron noted, we are taking the necessary action here and don't expect this to impact future periods.And finally moving to our Processing Solutions segment, here revenues were up $1.4 million or 29% from $4.9 million to $6.3 million. The primary driver of this increase was incremental installation mobilization and demobilization revenue along with some incremental gas cooler rental revenue.Operationally the quarter saw an average of 11 additional gas coolers deployed with the units going out on contract as soon as completed. Gas cooler utilization for Q3 maxed out at 100%, up from Q2's 98% average. Offsetting the gas cooler growth was a drop in MRU utilization which moved down from 78% in Q2 to 66% this quarter. While utilization was a mixed bag for this segment both gas coolers and MRUs saw an increase in rental rates with rates averaging up 9% quarter-over-quarter.Now moving to segment level EBITDA and margins. Overall, consolidated segment level adjusted EBITDA, now this is before corporate G&A saw a decline of $1.2 million or 6% quarter-over-quarter. And as with revenue, EBITDA decreases in High-Spec Rigs and Completion and Other Services were partially offset by an EBITDA increase at Processing Solutions.Specifically for the quarter, High-Spec Rigs saw an EBITDA decrease of $1.1 million; and Completion and Other Services saw an EBITDA decrease of $600,000. These two declines were partially offset by Processing Solutions' $500,000 EBITDA increase.On the margin front consolidated segment margins, again before corporate G&A were down from 22% to 21%. Disaggregating that overall margin decline to the segment level starting with Completion and Other Services, margins here held flat at 24%.Here an improvement in Wireline margin was offset by the materially weaker other non-Wireline services margins driven by four Q3 well testing results as discussed earlier. High-Specs -- High-Spec Rigs margin saw a decrease from 13% to 10%. This decrease was driven equally by the combined impact of the lower rates and an incremental $700,000 of operating cost incurred in preparing for new rig deployments as Darron noted in his prepared comments.Absent these new rig prep costs, High-Spec Rig margins would have been a bit north of 12% for the quarter. Processing Solutions segment margins moved down from 61% to 56%. Here the decline was driven by the increased contribution of what is typically lower margin installation revenue.Moving on to G&A expense, G&A as adjusted was down $400,000 sequentially. That decline was largely the combined effect of a reduction in our corporate bonus accrual on lower expected full year results and lower medical benefit cost and bridging from EBITDA to adjusted EBITDA which showed $600,000 of adjustments for Q3. This adjustment is made up for several items including; the add-back of a capital item write-down on a vendor non-performance issue; severance expense in our Other Services segment; the shutdown costs on the consolidation of our Permian High-Spec Rig business to our Odessa facility; and the last installment on a handful of retention bonuses dating back to the ESCO acquisition.And finally, some detail on the change to the net income line quarter-over-quarter. For Q3, we reported a net income loss of $900,000, that is a $2.7 million decrease from Q2's $1.8 million of net income.The biggest portion of this sequential variance is driven by Q3's $1.1 million of recorded tax expense. This tax expense is wholly non-cash and associated with the utilization of pre-IPO NOLs which resulted in an income tax provision booked in the quarter. The remaining decrease in the net income on a quarter-over-quarter basis is explained via the EBITDA change and in the increase in depreciation expense.Now, let's move on to the balance sheet and cash flow starting with CapEx. Total CapEx recorded for the quarter was $3.7 million, which breaks down into $2.3 million related to High-Spec Rigs. This spend was nearly fully attributable to new assets and upgrades to rig packages and preparation for work for our new and existing integrated customers.Processing Solutions saw a $1.2 million of capital spend for the completion of 15 previously budgeted and currently contracted gas cooling units. Maintenance CapEx was just $200,000 for the quarter, well below our $1 million per quarter expected 2019 run rate. Also we added $1.2 million of new leased light duty vehicles to our fleet.Now for debt. Our term debt balance stood at $30 million at the end of Q3, down $2.5 million quarter-over-quarter per our quarterly amortization schedule. On liquidity, we ended Q3 with $25 million of liquidity. This is up $9 million from Q2 on a combination of increased cash and a reduction in our revolver draw, partially offset by a reduction in our quarter end borrowing base.Specifically, at quarter end, cash was up $6 million from $2 million to $8 million, our revolver draw was $8 million to $18 million, and our borrowing base was down $5 million from $40 million to $35 million on a reduction in eligible receivables.Now for cash flow. Q3's operating cash flow was a very healthy $22 million the result of a combination of Q3's performance and an $11 million reduction in working capital. A quick reminder on working capital. Last quarter we spent some time discussing a few items that have negatively impacted that quarter's cash flow.Specifically, Q2 suffered from a couple of stale uncollected receivables and a spike in Wireline gun inventory. This items consumed a material amount of working capital during Q2. These are issues which have been largely reversed during Q3.And finally, at the end of Q2, we announced a $5 million stock buyback program. During Q3 we were able to buy back a handful of shares 47,000 or about $300,000 worth of shares.And that is it for me and my prepared comments. Darron?

Thank you, Brandon. As Brandon highlighted, the wins for us this quarter were the delivery of a big free cash flow number and a subsequent net debt decrease along with the new IOC contract win.Going forward, our near-term focus is on continuing High-Spec rig customer high-grading efforts. We've had success on this front, but there's still more work to do. Penetrating new IOC customers is simply step one. We must continue our focus on delivering safe, efficient operation through excellent personnel, and best-in-class assets, which will lead to continued market share growth with these clients and others.On the competitive front, pricing at the bottom end of the services market continues to be a concern with some of our peers seemingly pricing work below full economic cost. We believe we are now seeing the consequence of that below-cost pricing as competitors exit markets presumably due to core earnings.While this landscape creates the opportunity for additional share growth, we are committed to working at a price level that allows for long-term sustainability on each rig deployments rather than just a short-term utilization win.As a side note, our disciplined pricing allows us to run a sustainable business, which we believe benefits our customers and this enables us to train our personnel, operate and service our rigs effectively and make the necessary capital investments when needed for both our longer-term success.With our Completion and Other Services with Wireline utilization back to near 100%, our focus will be at the continued delivery of best in-basin efficiency, ex the continued rig pressure, will require careful cost management to ensure the ongoing success in this business. To date we have been successful on this front. Going forward, similar success will require the redoubling of our efforts.Within our non-Wireline Other Services, because most of our smaller service lines did not enjoy the geographical or customer diversity as our larger offering and therefore more susceptible to customers' activity swings, we will continue our efforts to engage these services as part of a solution offering with our 24-hour rig when possible. We will also be disciplined and efficient in responding to market changes as they occur.And finally, Processing Solutions. Our record quarter here still allows for meaningful upside with the current asset base. As Brandon noted, MRU utilization was 66% for the quarter. Recently, in addition to our sales effort to traditional channels, we have been spending incremental marketing efforts on new opportunities for our gas processing unit.Some of our top-tier customers have expressed pull-through interest in contracting our MRUs for both the traditional use and in some cases for alternative uses of these assets. As these opportunities develop we look forward to sharing more.In regard to capital spending, we'll continue our current strategy of investing in assets that are supported by contractual arrangement, our ancillary asset that complete a full package for our very best customers and yield a quick payback.And finally, on the strategic front, we are very pleased with our position. Our young purpose-built fleet, efficient operation, low leverage and strong cash flow, places us in a unique position amongst our peers. We have the optionality to partake in validation opportunities, as well as continue the course of market share gains, which translates into organic investment opportunities. Regardless of the outcome of a number of potential strategic options, we continue to believe our market performance, our position and strategic direction will benefit our shareholders.This concludes our prepared remarks. We will now open the call for questions, operator.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from John Daniel with Simmons Energy. Please go ahead.

Hey, guys. Thanks for putting me in. Darron, congrats, first on the new customer win.

Thank you. As you -- I know you guys are averse to giving guidance, but I'm going to try to tee one up for you. When you look at these customer wins and you sort of alluded to this. One of the reasons is the equipment quality Ranger has and I think you said -- essentially trying to say, you're not under the financial duress that others are in, which one might assume a customer would be paying attention to. Do you think the health of the company, the age of the fleet that you're positioned to grow your rig business to hours in 2020 over 2019, along with these recent customer wins?

John, I think, everything you just described is completely accurate. And the right conversations with customer that we're picking up some of this new market share is exactly what you said, with stability of our organization, our asset quality, our performance is leading to some market share gains.As we sit here, come again to this fourth quarter, again we don't give guidance. But I will say that with a significant load out that occurred at the last two weeks of September and the first week of October of eight rigs, with those three customers alone and the opportunity we have in front of us. We're very excited about the fourth quarter.Now I will caution that with -- we will have our continued -- with the customers decline from the standpoint of budget exhaustion holiday. And I think even this year as operators are focused on their own cash flow generation we'll play an impact there.So I think these customer wins are outstanding. It will offset some of the market constraint that we will have at the back half of the quarter. As it translates into 2020, I think we're very bullish on 2020, because of these new contracts these deployment they're having at year-end when we start to spike that up from rebounding in I would say latter part of Q1 as budgets aren't being fully deployed for 2020. I would expect that we should see hours growth over the 2019 performance.

Okay. And I'm going to stick -- I've got two more query, one is a bit tied to guidance. Knowing that you won't give me any specifics but some of your public peers today have talked -- their activity guidance for Q4 points-to-date reductions of 20-plus-percent quarter-over-quarter. I'm assuming given the nature of your business you would not expect that type of drop-off in Q4. Is that fair?

I'm not expecting that type of drop-off. Again, we don't know what the latter part of the fourth quarter is going to hold for the reasons I've stated before. But from everything that we have in front of us right now and what's been occurring over the last month, there's nothing that implies in our business across any of our segments of the Ranger toward the Mallard brand that we would see the type of drop-off.

Got it. So a better business model. Okay. And then finally you alluded to consolidation. Obviously, we and others have been harping on this for about 10 years now. I haven't really seen it. Do you feel more comfortable today that we are likely to see some sort of consequential consolidation whether or not you played it or not to be determined but do you see that happening in the well service sector in 2020?

I do see it happening. I think the condition of this part of sector is very difficult as we all know. There are strategic opportunities out there. We review a lot of things but we're going to be very, very selective. So not committing that we will participate in them. But we are looking at a lot of things and I do think we will see some consolidation one way or the other.

Guys, thank you very much for the time.

Thanks for the questions John.

Our next question comes from Daniel Burke with Johnson Rice. Please go ahead.

Yes, good morning, guys.

Good morning, Dan.

Let's see, hard to follow-up, John. John covers a lot of ground. Just a couple of questions left. In terms of -- nice job offsetting pricing pressure that's immersed in the Wireline business. Just to build on that though, can you maybe elaborate a little more on where you had success addressing in materials costs? And how you characterize that the labor market now out there in West Texas with the ability to cut some costs there as well?

Yes. I mean on the completion market in the Permian, as you all know that market is softening. So the constraint of the wide market is definitely not there. I think that our Mallard has been a great business for us. We've got a great workforce there. But I also think that we're all at the realization that we're happy to be -- keep our active levels where you are relative to the peer group. And as a result, the group had to want to make decisions except those visions that's not able to allowed us to reduce the cost on the labor front itself with the person now.That's being traded by the full utilization of the asset base that they're getting in the work that they're getting. From a cost of goods sold or supply standpoint, as you all know, our gun costs is our most expensive cost that we have within that service line. And so we've been able to work with our vendors, they understand the market that we are in and give them some offsetting relief there. So between the labor majority of our gun cost control is where we've been able to offset some of the pricing pressure.

Okay. Great Darron. That's helpful. And then to switch over to the rig side. Maybe the other question I will have would be that is an impressive ramp that you've identified with three customers, two of them integrated. You might be reticent to talk about this. But within that group and I guess, specifically taking about that couple of integrated customers, what type of additional runway do you think you might have over the forward 12 months?

Yes. I think the way I would characterize that is when I look at the eight rigs that had been put out September 12 again through the October 16 time frame, two of those were with the first contract we announced back in Q1, three of those rigs went out along with the new contract that we just announced. Now those three that went out, two of them were contracted rig but here's the opportunity.The third rig that went out to them was not part of the original contract; it was actually for another geographical region. But we picked up a rig with that particular customer picking up market share.The next three were for another distinct customer that we have for a total of the eight. As we think about moving forward with these second contract and most recent win, we will deploy a third contracted rig out for that customer starting on December 1st. We will deploy another non-contracted rig in a different geographical region on November 15th.So what I'm trying to explain to you is winning a particular contract in a certain geographical region, we love the award of that contract but it also gives us the opportunity to gain market share in other regions as it get better results to Ranger.So again here we're looking at from mid-September to December 1st with this one particular customer alone, five rigs are going out to them; three of them 24-hour, three of them are deferred contracts for two years.I think those opportunities will continue to present themselves. We're still early in this process, but we are seeing great opportunity with the international companies. And we got -- we really are paying attention to their service provider what their balance sheet look like, what are the healthy organizations, what is the long-term sustainability and I think that is driving some demand toward Ranger.

Got it. That's a great answer. And maybe I'll finish off with just one last one. I would assume that the CapEx run rate you're going sustained in the second half of 2019. I can't think of any reason in 2020, you'd have a different philosophy about deploying capital at this time but I figured I'd clarify that.

When you look at the overall market condition, we're not in the mood of going to just build asset and trying to find homes for them. So when you look at even our Q3 numbers that we just reported, we're talking about items such as 10,000 BOPs that were needed to supply to your contracts.We will continue to make those investments again contractual type investment or investments to where we may have a full package and a customer need that ancillary assets and we'll bring those out.Outside of that, we're not expecting to do an aggressive CapEx spend for 2020 this market is not needing more asset. But strategically we will make necessary investments when we get our return for particular customers where we know we're going to have success.

Got it. Thank you Darron. I appreciate all those answers. Thanks for the time.

Great. Thanks for the questions.

Our next question comes from Derek Podhaizer with Barclays. Please go ahead.

Hi, good morning guys.

Derek.

Just wondering if you can expand on some of the pull-through you discussed in your other well servicing businesses. You described it as an integrated well solution. So what type of customer are driving this strategy? Is this mainly aligned with the two IOCs? Just if you can give some color there.

Yeah. It's definitely -- the focus is with two IOCs as we've had success actually with both of them. With our first one we saw some pull-through on some ancillary rental equipment that traditionally doesn't go out with the rig.And our second contract we're seeing things closer to such as our well testing assets. So the second contract, it's consuming some of our very best rigs, 60 rigs against 10,000 BOPs power swivels, high-pressure pumps, a nice set of assets. But in addition it's pulling through choke manifolds, plug captures, floor warrant assets that would typically be consumed from a well testing operation, but it's being pulled in with the rigs as well.We have some additional opportunity that contain strategy of integrating more of our rigs if nothing packages with our rigs as well too. So it’s these type of asset that we're trying to focus on more dilution approach with the larger IOCs who prefer to deal with one supplier and having a total solution offering.

Got it. That's helpful. Follow-up question, we've seen a lot of asset recalibration so far. A lot of itself helps just to deal with an oversupplied market. I mean, you discussed how the lower end of the well servicing fleet is under some pricing pressure. Have you thought about your fleet size and where you are today? And where that is -- where that should be right sized for today's current market demands? Just want to get your thoughts around like potential asset retirements or anything like that?

So, no, we're not looking at any asset retirement. We're comfortable with our fleet size. But just -- if we're not looking at the retirement not looking at asset additions. We have an ample rig fleet. I think right now we are growing our utilization entering Q4 for the things we've already described based with the new IOC customers. So, as we think about consolidation, I mean that's one of the factors that we have to consider that we do have some spare capacity.We're picking up market share continue that strategy versus going out and trying to consolidate the market and getting a lot of assets that potentially adhered to our current asset base. So, all that is going into our decision process. But as far as our fleet, we're happy with our fleet. We're not planning on any additions. But there will be, of course, ancillary additions, as I talk about more 10k BOPs or high pressure pumps at more rig platforms, especially the higher tier type work.

Got it. And just squeezing one just a housekeeping item, the average monthly hours for rigs, I know you really disclosed that number. We're at 143 last quarter, I'm just curious if you gave an update on third quarter.

Can we give -- do you have that handy?

Yeah. Derek, it's going to be -- I don't have it handy, but I think that should be at 145.

Got it. Great, guys. That’s it for me. Appreciate the time.

Thanks for the question.

Our next question comes from Thomas Curran with B. Riley. Please go ahead.

Good morning, guys.

Good morning, Tom.

Darron, starting with the high spec rigs fleet. On this new multi-rig multi-year contract, would you please tell us which basin the rigs are headed to? And then, what percentage of your active rig count is now with high grade customers? And what was -- or would you estimate with that percentage a year ago?

Yeah. So, as far as basins, I would say that without giving too much detail on any particular basin the Eagle Ford and the Bakken would be two basins that we're referring with the most recent contract and some of this new work for this one particular customer.As far as percentages, I don't have those on hand. I'm looking at my team here, if they would have any thought process. But when you think about this, the first contract, as I said, we've got five rig hours per rig, probably more running at a six rig equivalent, because we bounced back and forth between daylight 24 hours. So those six, we've got another five that will be out here with the new contract, so that's 11 just from the two customers alone. And then 13% roughly, so 13% today as we sit here with some of these new higher tier customers that we've been focusing on.

Okay. And then, when it comes to your continuously evolving array of strategic opportunities, would have been the most noteworthy changes in that set just since the 2Q call?

The number?

I think all -- this is almost literally true really nothing has fallen out of the opportunity set to over the last -- I'm looking at there in nine months and things have been added. So deals keep circulating back that we reject with -- and in many cases better terms and conditions or offers or more aggressive sellers.And then it's pretty incredible, the new deals coming the front door here pretty regularly. So the absolute number is what's changed. I don't think anything and other -- anything else materially has changed other than perhaps the incremental enthusiasm around taking equity as opposed to cash from a seller's perspective.

All of which sounds to the extent there have been changes directionally they've been in your favor?

It is a buyer's market for sure.

Right. Okay. Fairly obvious but just wanted to confirm that. And then Brandon, please remind us, what is your target level arranged for total debt? And given that the buyback we did see was sort of a one-off unique situation, should we expect that once you've hit that target for total debt, you would just then build surplus cash on the balance sheet?

So on a short-term basis yes. The target for total debt, we haven't fully endorsed it. But I think for all stakeholders, the number is zero. So as we -- and what we're really doing here is preparing for the consolidation opportunities and making sure that we are in the best position possible if and when they come. So, to us that means no debt and plenty of capacity on that side of the balance sheet if needed.But right now, it doesn't look like that will be needed, so no debt. We will build the cash versus buying back stock if this gets elongated in terms of how long the opportunities take to mature. I think that would probably be a balance there. But I don't want to speak too far ahead of where the Board is. They have approved that $5 million of buyback and we haven't used that up yet. So, we don't have to make a decision around until that gets used up.

Got it. Okay. I appreciate the Q&A time.

Thanks Tom.

This concludes our question-and-answer session. I would like to turn the conference back over to Darron Anderson for any closing remarks.

No. I just want to thank everyone for their participation and wonderful questions here at the end. And I personally thank all of our outstanding Ranger team members who are continuing their great efforts in building essentially a great organization. So this concludes our call and thank you everyone.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.