Ranger Energy Services, Inc. 10-K

Item 8. Financial Statements and Supplementary Data RANGER ENERGY SERVICES, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Grant Thornton, LLP; Houston, Texas; PCAOB ID # 248 ) 46 CONSOLIDATED BALANCE SHEETS 48 CONSOLIDATED STATEMENTS OF OPERATIONS 49 CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY 50 CONSOLIDATED STATEMENTS OF CASH FLOWS 51 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 1—Organization and Business Operations 52 Note 2—Summary of Significant Accounting Policies 52 Note 3—Assets Held for Sale 56 Note 4—Property and Equipment 57 Note 5—Intangible Assets 57 Note 6—Accrued Expenses 58 Note 7—Leases 58 Note 8—Other Finance Leases 59 Note 9—Debt 60 Note 10—Equity 61 Note 11—Risk Concentrations 63 Note 12—Income Taxes 64 Note 13—Earnings per Share 66 Note 14—Commitments and Contingencies 66 Note 15—Related Party Transactions 66 Note 16—Segment Reporting 68 Note 17—Subsequent Events 70 45 Report of Independent Registered Public Accounting Firm To the Board of Directors and the Stockholders of Ranger Energy Services, Inc. Houston, Texas Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Ranger Energy Services, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023 and the results of its operations and its cash flows for each of the two years ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 4, 2025 expressed an unqualified opinion. Change in accounting principle As discussed in Note 2 to the consolidated financial statements, the Company has adopted new accounting guidance in 2024 related to the disclosure of segment information in accordance with ASU 2023-07, Segment Reporting (Topic 280). The adoption was retrospectively applied to 2023. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. 46 /s/ Grant Thornton, LLP We have served as the Company’s auditor since 2023. Houston, Texas March 4, 2025 47 RANGER ENERGY SERVICES, INC. CONSOLIDATED BALANCE SHEETS (in millions, except share and per share amounts) December 31, 2024 2023 Assets Cash and cash equivalents $ 40.9 $ 15.7 Accounts receivable, net 68.4 85.4 Contract assets 16.7 17.7 Inventory 5.7 6.4 Prepaid expenses 11.4 9.6 Assets held for sale 0.8 0.6 Total current assets 143.9 135.4 Property and equipment, net 224.3 226.3 Intangible assets, net 5.6 6.3 Operating leases, right-of-use assets 7.0 9.0 Other assets 0.8 1.0 Total assets $ 381.6 $ 378.0 Liabilities and Stockholders' Equity Accounts payable $ 27.2 $ 31.3 Accrued expenses 28.2 29.6 Other financing liability, current portion 0.7 0.6 Long-term debt, current portion — 0.1 Short-term lease liability 8.7 7.3 Other current liabilities 0.4 0.1 Total current liabilities 65.2 69.0 Long-term lease liability 14.1 14.9 Other financing liability 10.3 11.0 Deferred tax liability 18.2 11.3 Total liabilities 107.8 106.2 Commitments and contingencies (Note 14) Stockholders' equity Preferred stock, $ 0.01 per share; 50,000,000 shares authorized; no Series A shares issued and outstanding as of December 31, 2024 and 2023 — — Class A Common Stock, $ 0.01 par value, 100,000,000 shares authorized; 26,130,574 shares issued and 22,252,946 shares outstanding as of December 31, 2024; 25,756,017 shares issued and 23,398,689 shares outstanding as of December 31, 2023 0.3 0.3 Class B Common Stock, $ 0.01 par value, 100,000,000 shares authorized; no shares issued or outstanding as of December 31, 2024 and 2023 — — Less: Class A Common Stock held in treasury at cost; 3,877,628 treasury shares as of December 31, 2024 and 2,357,328 treasury shares as of December 31, 2023 ( 38.6 ) ( 23.1 ) Retained earnings 42.2 28.4 Additional paid-in capital 269.9 266.2 Total stockholders' equity 273.8 271.8 Total liabilities and stockholders' equity $ 381.6 $ 378.0 The accompanying notes are an integral part of these Consolidated Financial Statements. 48 RANGER ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except share and per share amounts) Years Ended December 31, 2024 2023 Revenue High Specification Rigs $ 336.1 $ 313.3 Wireline Services 110.2 199.1 Processing Solutions and Ancillary Services 124.8 124.2 Total revenue 571.1 636.6 Operating expenses Cost of services (exclusive of depreciation and amortization): High Specification Rigs 267.1 249.2 Wireline Services 107.3 180.7 Processing Solutions and Ancillary Services 98.4 101.8 Total cost of services 472.8 531.7 General and administrative 27.8 29.5 Depreciation and amortization 44.1 39.9 Impairment of fixed assets — 0.4 Gain on sale of assets ( 2.2 ) ( 1.8 ) Total operating expenses 542.5 599.7 Operating income 28.6 36.9 Other expenses Interest expense, net 2.6 3.5 Loss on debt retirement — 2.4 Total other expenses 2.6 5.9 Income before income tax expense 26.0 31.0 Income tax expense 7.6 7.2 Net income 18.4 23.8 Income per common share Basic $ 0.82 $ 0.97 Diluted $ 0.81 $ 0.95 Weighted average common shares outstanding Basic 22,518,726 24,600,151 Diluted 22,852,632 24,991,494 The accompanying notes are an integral part of these Consolidated Financial Statements. 49 RANGER ENERGY SERVICES, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (in millions, except shares) Years Ended December 31, 2024 2023 2024 2023 Quantity Amount Shares, Class A Common Stock Balance, beginning of year 25,756,017 25,446,292 $ 0.3 $ 0.3 Issuance of shares under share-based compensation plans 535,925 403,034 — — Shares withheld for taxes on equity transactions ( 161,368 ) ( 93,309 ) — — Balance, end of year 26,130,574 25,756,017 $ 0.3 $ 0.3 Treasury Stock Balance, beginning of year ( 2,357,328 ) ( 551,828 ) $ ( 23.1 ) $ ( 3.8 ) Repurchase of Class A Common Stock ( 1,520,300 ) ( 1,805,500 ) $ ( 15.5 ) $ ( 19.3 ) Balance, end of year ( 3,877,628 ) ( 2,357,328 ) $ ( 38.6 ) $ ( 23.1 ) Retained earnings Balance, beginning of year $ 28.4 $ 7.1 Net income 18.4 23.8 Dividends declared ( 4.6 ) ( 2.5 ) Balance, end of year $ 42.2 $ 28.4 Additional paid-in capital Balance, beginning of year $ 266.2 $ 262.6 Equity based compensation 5.5 4.6 Shares withheld for taxes on equity transactions ( 1.8 ) ( 1.0 ) Balance, end of year $ 269.9 $ 266.2 Total stockholder’s equity Balance, beginning of year $ 271.8 $ 266.2 Net income 18.4 23.8 Dividends declared ( 4.6 ) ( 2.5 ) Equity based compensation 5.5 4.6 Shares withheld for taxes on equity transactions ( 1.8 ) ( 1.0 ) Repurchase of Class A Common Stock ( 15.5 ) ( 19.3 ) Balance, end of year $ 273.8 $ 271.8 The accompanying notes are an integral part of these Consolidated Financial Statements. 50 RANGER ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Years Ended December 31, 2024 2023 Cash Flows from Operating Activities Net income $ 18.4 $ 23.8 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 44.1 39.9 Equity based compensation 5.8 4.8 Gain on disposal of property and equipment ( 2.2 ) ( 1.8 ) Impairment of fixed assets — 0.4 Deferred income tax expense 6.9 6.6 Loss on debt retirement — 2.4 Other expense, net 1.3 2.3 Changes in operating assets and liabilities Accounts receivable 16.7 5.3 Contract assets 1.0 9.2 Inventory 0.4 ( 0.9 ) Prepaid expenses and other current assets ( 1.8 ) ( 0.4 ) Other assets 2.1 2.1 Accounts payable ( 3.7 ) 6.6 Accrued expenses ( 2.4 ) ( 7.2 ) Other current liabilities ( 2.6 ) 0.3 Other long-term liabilities 0.5 ( 2.6 ) Net cash provided by operating activities 84.5 90.8 Cash Flows from Investing Activities Purchase of property and equipment ( 34.1 ) ( 36.5 ) Proceeds from disposal of property and equipment 3.0 6.8 Net cash used in investing activities ( 31.1 ) ( 29.7 ) Cash Flows from Financing Activities Borrowings under Revolving Credit Facility 27.3 325.2 Principal payments on Revolving Credit Facility ( 27.3 ) ( 327.7 ) Principal payments on Eclipse M&E Term Loan Facility — ( 10.4 ) Principal payments on Secured Promissory Note — ( 6.2 ) Payments on Other Installment Purchases ( 0.1 ) ( 0.4 ) Principal payments on financing lease obligations ( 5.7 ) ( 5.4 ) Principal payments on other financing liabilities ( 0.6 ) ( 0.8 ) Shares withheld for equity compensation ( 1.8 ) ( 1.0 ) Dividends paid to Class A Common Stock stockholders ( 4.5 ) ( 2.4 ) Repurchase of Class A Common Stock ( 15.5 ) ( 19.3 ) Deferred financing costs on Wells Fargo Revolving Credit Facility — ( 0.7 ) Net cash used in financing activities ( 28.2 ) ( 49.1 ) Increase in Cash and Cash equivalents 25.2 12.0 Cash and Cash Equivalents, Beginning of Year 15.7 3.7 Cash and Cash Equivalents, End of Year $ 40.9 $ 15.7 Supplemental Cash Flow Information Interest paid $ 2.0 $ 1.4 Supplemental Disclosure of Non-cash Investing and Financing Activities Capital expenditures included in accounts payable and accrued liabilities $ 0.4 $ ( 0.5 ) Additions to fixed assets through installment purchases and financing leases $ ( 8.6 ) $ ( 10.0 ) Additions to fixed assets through asset trades $ ( 4.6 ) $ ( 1.1 ) The accompanying notes are an integral part of these Consolidated Financial Statements. 51 RANGER ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 — Organization and Business Operations Business Ranger Energy Services, Inc. (“Ranger, Inc.,” “Ranger,” “we,” “us,” “our” or the “Company”) is a provider of onshore high specification well service rigs, wireline services, and additional processing solutions and ancillary services in the U.S. The Company provides an extensive range of well site services to leading U.S. E&P companies that are fundamental to establishing and maintaining the flow of oil and natural gas throughout the productive life of a well. Our service offerings consist of well completion support, workover, well maintenance, wireline, and 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 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 completion, production and pump down lines. • Processing Solutions and Ancillary Services . Provides complimentary services often utilized in conjunction with our High Specification Rigs and Wireline Services segments. These services include equipment rentals, plug and abandonment, logistics, coil tubing, and processing solutions. The Company’s operations take place in most of the active oil and natural gas basins in the U.S., including the Permian Basin, Denver-Julesburg Basin, Bakken Shale, Eagle Ford Shale, Haynesville, Gulf Coast, South Central Oklahoma Oil Province and Sooner Trend, Anadarko Basin, and Canadian and Kingfisher Counties plays. Organization Ranger Inc. was incorporated as a Delaware corporation in February 2017. In conjunction with the initial public offering of Class A Common Stock, par value $ 0.01 per share (“Class A Common Stock”), which closed on August 16, 2017 (the “Offering”), and the corporate reorganization Ranger Inc. underwent in connection with the Offering, Ranger Inc. became a holding company, and its sole material assets consist of membership interests in RNGR Energy Services, LLC, a Delaware limited liability company (“Ranger LLC”). Ranger LLC owns all of the outstanding equity interests in Ranger Energy Services, LLC (“Ranger Services”) and Torrent Energy Services, LLC (“Torrent Services”), and the other subsidiaries through which it operates its assets. Ranger LLC is the sole managing member of Ranger Services and Torrent Services, and is responsible for all operational, management and administrative decisions relating to Ranger Services, its subsidiaries, and Torrent Services’ business and consolidates the financial results of Ranger Services, its subsidiaries, and Torrent Services. Note 2 — Summary of Significant Accounting Policies Basis of Presentation The accompanying audited Consolidated Financial Statements of the Company have been prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). In the opinion of management, all material adjustments, which are of a normal and recurring nature, necessary for the fair presentation of the financial results for all periods presented have been reflected. All intercompany balances and transactions have been eliminated. Use of Estimates The preparation of Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. Management uses historical and other pertinent information to determine these estimates. Actual results could differ from such estimates. Areas where critical accounting estimates are made by management include: • Depreciation and amortization of property and equipment and intangible assets; 52 • Assets acquired and liabilities assumed in business combinations; • Impairment of property and equipment and intangible assets; • Income taxes; and • Equity-based compensation. Significant Accounting Policies Cash and Cash Equivalents All highly liquid investments with an original maturity of three months or less are considered cash equivalents. The Company maintains its cash accounts in financial institutions that are insured by the Federal Deposit Insurance Corporation. From time to time, cash balances may exceed the insured amounts, however, the Company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risks. Accounts Receivable, net Accounts receivable, net are stated at the amount management expects to collect from outstanding balances. Before extending credit, the Company reviews a customer’s credit history and generally does not require collateral from its customers. The allowance for credit losses is established as losses are estimated and are recorded through a provision for bad debts. Losses are charged against the allowance when management believes the uncollectibility of a receivable is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for credit losses is evaluated on a regular basis by management and based on past experience and other factors, which, in management’s judgment, deserve current recognition in estimating possible bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for credit losses to accounts receivable and current economic conditions. The balance of allowance for credit losses was $ 1.2 million and $ 3.8 million for the years ended December 31, 2024 and 2023, respectively. The allowance for credit losses recorded for the years ended December 31, 2024 and 2023 was $ 0.2 million and $ 0.9 million, respectively. Balance at Beginning of Year Charged to Operations Written Off Balance at End of Year Allowance for Credit Losses 2024 $ 3.8 $ 0.2 $ ( 2.8 ) $ 1.2 2023 $ 3.0 $ 0.9 $ ( 0.1 ) $ 3.8 Inventories Inventories are carried at the lower of cost or net realizable value and primarily consists of supplies held for the Wireline Services segment. The Company accounts for inventory using the weighted average cost method. Leases Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease, discounted at an annual incremental borrowing rate (“IBR”). ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Variable lease payments are excluded from the ROU asset and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. For certain leases, where variable lease payments are incurred and relate primarily to common area maintenance, in substance fixed payments are included in the ROU asset and lease liability. For those leases that do not provide an implicit rate, we use an IBR based on the estimated rate of interest for a fully collateralized, fully amortizing loan over a similar term of the lease payments at commencement date. ROU assets also include any lease payments made and exclude lease incentives. Lease terms do not include options to extend or terminate the lease, as management does not consider them reasonably certain to exercise at this time. Leases with terms of 12 months or less are considered short-term leases and therefore payments are recorded as an expense on a straight-line basis over the lease term. Any lease and non-components are combined. Operating Leases The Company enters into operating leases, primarily for real estate, with terms that vary from less than 12 months to nine years , where certain of the leases contain escalation clauses. The operating leases are included in Short-term lease liability and Long-term lease liability in the Consolidated Balance Sheets. Lease costs associated with our yards and field offices are included in Cost of Services and our executive offices are included in General and Administrative expenses in the Consolidated Statements of Operations. 53 Finance Leases The Company enters into lease arrangements for certain equipment, which are considered finance leases and generally have a term of three to five years . The assets and liabilities under finance leases are recorded at the lower of present value of the minimum lease payments or the fair value of the assets. The assets are amortized over the shorter of the estimated useful lives or over the lease term. The finance leases are included in Property and equipment, net, Short-term lease liability and Long-term lease liability in our Consolidated Balance Sheets. Property and Equipment, net Property and equipment is stated at cost or estimated fair market value at the acquisition date less accumulated depreciation. Depreciation is charged to expense on the straight‑line basis over the estimated useful life of each asset. Expenditures for major renewals and betterments are capitalized while expenditures for maintenance and repairs are charged to expenses as incurred. Depreciation does not begin until property and equipment is placed in service. Once placed in service, depreciation on property and equipment continues while being repaired, refurbished or between periods of deployment. Long‑Lived Asset Impairment The Company evaluates the recoverability of the carrying value of long‑lived assets, including property and equipment and intangible assets, whenever events or circumstances indicate the carrying amount may not be recoverable. If a long‑lived asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long‑lived asset exceeds its fair value. Intangible Assets Identified intangible assets with determinable lives consist of customer relationships. Customer relationships are straight-line amortized over their estimated useful lives. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. In valuing certain assets and liabilities, the inputs used to measure fair value may fall into different levels of the fair value hierarchy, which are summarized, as follows: Level 1—Quoted prices in active markets for identical assets and liabilities. Level 2—Other significant observable inputs. Level 3—Significant unobservable inputs. The Company’s financial instruments consist of cash and cash equivalents, accounts receivables and accounts payables and debt. The fair value of cash and cash equivalents, accounts receivables and accounts payables, which are determined to be Level 1 measurements, approximate fair value due to the short‑term nature of these instruments. The carrying value reported for debt approximates fair value because the underlying instruments are at interest rates which approximate current market rates and is considered Level 3 in the fair value hierarchy The Company did not have any assets or liabilities that were measured at fair value on a recurring basis at December 31, 2024 and 2023. Revenue Recognition In determining the appropriate amount of revenue to be recognized as the Company fulfills the obligations under its contracts with customers, the following steps must be performed at contract inception: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when, or as the Company satisfies each performance obligation. The services of each segment are based on mutually agreed upon pricing with the customer prior to the services being performed and, given the nature of the services, do not include any warranty or right of return. Pricing for services are offered at hourly or daily rates, where the rates are, in part, determined by when services are performed and the nature of the specific job, with consideration for the extent of equipment, labor and consumables needed. Accordingly, the agreed-upon pricing is considered to be variable consideration. Pricing for equipment rentals is based on fixed monthly service fees. 54 We satisfy our performance obligation over time as the services are performed. The Company believes the output method is a reasonable measure of progress for the satisfaction of our performance obligations, which are satisfied over time, as it provides a faithful depiction of (i) our performance toward complete satisfaction of the performance obligation under the contract and (ii) the value transferred to the customer of the services performed under the contract. The Company elected the “right to invoice” practical expedient for recognizing revenue. The Company invoices customers upon completion of the specified services and collection generally occurs within the payment terms agreed upon with customers. Accordingly, there is no financing component to our arrangements with customers. The Company will periodically incur costs to fulfill contracts with customers and will defer such costs over the earlier of 12 months or the estimated number of months in which they are expected to be consumed. The deferred costs are included within Prepaid expenses on the Consolidated Balance Sheets as of December 31, 2024 and 2023. During the years ended December 31, 2024 and 2023, the Company recognized deferred expenses of $ 2.0 million and $ 0.8 million, respectively. All revenue transactions are presented on a net of sales tax in the Consolidated Statements of Operations. Contract Balances Contract assets representing the Company’s rights to consideration for work completed but not billed amounted to $ 16.7 million and $ 17.7 million as of December 31, 2024 and 2023, respectively. Substantially all of the contract assets as of December 31, 2024 and 2023 were invoiced during the subsequent periods. The Company does not have any contract liabilities included in the Consolidated Balance Sheets as of December 31, 2024 and 2023. Income Taxes The Company provides for income tax expense based on the liability method of accounting for income taxes. Deferred tax assets and liabilities are recorded based upon differences between the tax basis of assets and liabilities and their carrying values for financial reporting purposes and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of a valuation allowance requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. Under U.S. GAAP, the valuation allowance is recorded to reduce the Company’s deferred tax assets to an amount that is more likely than not to be realized and is based upon the uncertainty of the realization of certain federal and state deferred tax assets related to net operating loss carryforwards and other tax attributes. The ultimate realization of the deferred tax assets depends on the generation of sufficient taxable income. As the Company continues to experience increasing profits and no longer has a trailing 3-year cumulative taxable loss, we currently believe that it is more likely than not that we will fully utilize all deferred tax assets including those associated with the net operating loss carry-forward. Accordingly, the Company released all valuation allowances of $ 1.7 million previously recorded resulting in a discrete tax benefit for the year ended December 31, 2023. Deferred tax expense or benefit is the result of changes in deferred tax assets and liabilities and associated valuation allowances during the period. The impact of an uncertain tax position taken or expected to be taken on an income tax return is recognized in the financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority. The income tax provision reflects the full benefit of all positions that have been taken in the Company's income tax returns, except to the extent that such positions are uncertain and fall below the recognition requirements. In the event that the Company determines that a tax position meets the uncertainty criteria, an additional liability or benefit will result. The amount of unrecognized tax benefit requires management to make significant assumptions about the expected outcomes of certain tax positions included in filed or yet to be filed tax returns. As of December 31, 2024 and 2023, the Company did not have any uncertain tax positions. The Company is subject to income taxes in the United States and in numerous state tax jurisdictions. The Company’s tax filings for 2024, 2023, 2022 and 2021 are subject to audit by the federal and state taxing authorities in most jurisdictions where we conduct business. None of the Company’s federal or state tax returns are currently under examination. In the event our tax filings are audited, we may be subject to assessments of additional taxes that are resolved with the authorities or through the courts. Equity-Based Compensation The Consolidated Financial Statements reflect various equity-based compensation awards granted by Ranger Inc. These awards include restricted stock awards, restricted stock units, restricted cash units, and performance-based restricted stock units. The Company recognizes compensation expense related to equity-based awards based on the estimated fair value 55 of the awards on the date of grant. The fair value of the equity-based awards on the grant date is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award, with an offsetting credit to a share-based liability. The fair value of the restricted stock awards and restricted stock units are estimated using the market price of the Company’s shares on the grant date. The fair value of the performance stock units are estimated using an option pricing model that includes certain assumptions, such as volatility, dividend yield and the risk-free interest rate. Changes in these assumptions could change the fair value of our unit-based awards and associated compensation expense in our Consolidated Statements of Operations. Forfeitures of all equity-based compensation are recognized as they occur. New Accounting Pronouncements Recently adopted accounting standards In November 2023, the FASB issued Accounting Standards Update No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company adopted this standard on December 31, 2024 within “Part II, Item 8. Financial Statements and Supplementary Data—Note 16 — Segment Reporting.” In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company adopted this standard on a prospective basis on December 31, 2024 within “Part II, Item 8. Financial Statements and Supplementary Data—Note 12 — Income Taxes.” Recent Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued Accounting Standards Update No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”). The guidance in ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures. Note 3 — Assets Held for Sale Assets held for sale include the net book value of assets the Company plans to sell within the next 12 months and are primarily related to excess non-working assets. Long-lived assets that meet the held for sale criteria are held for sale and reported at the lower of their carrying value or fair value less estimated costs to sell. As of December 31, 2024, the Company classified $ 0.8 million of rigs within our High Specification Rigs segment as held for sale as they are being actively marketed. For the year ended December 31, 2023, the Company classified $ 0.6 million of land and buildings within our High Specification Rigs segment as held for sale as they were being actively marketed. As of December 31, 2024, the Company had sold this land and buildings and recognized a gain on the sale of $ 0.2 million, which is included in the Gain on sale of assets on the Consolidated Statements of Operations. 56 For the years ended December 31, 2024 and 2023, the Company recognized a gain on sale of assets of $ 2.2 million and $ 1.8 million, respectively, which is shown on the Consolidated Statements of Operations. Note 4 — Property and Equipment, Net Property and equipment include the following (in millions): Estimated Useful Life December 31, (Years) 2024 2023 High Specification Rigs 15 $ 150.2 $ 138.4 Machinery and equipment 3 - 30 216.0 189.2 Vehicles 3 - 15 55.1 53.8 Other property and equipment 5 - 25 21.4 19.9 Property and equipment 442.7 401.3 Less: accumulated depreciation ( 229.0 ) ( 196.6 ) Construction in progress 10.6 21.6 Property and equipment, net $ 224.3 $ 226.3 On August 9, 2023, pursuant to an asset purchase agreement dated August 4, 2023, the Company acquired certain fixed assets from Pegaso Energy Services, LLC (“Pegaso acquisition”) for consideration of $ 7.3 million paid in cash. The fixed assets acquired from Pegaso were primarily engaged in pump down services for its customers. Under ASC 805 Business Combination, the Company accounted for the Pegaso acquisition as an asset acquisition. The consideration paid is similar to the fair value of the assets acquired and the Company allocated the consideration paid to each of the assets following the cost accumulation model. Depreciation expense was $ 43.4 million and $ 39.2 million for the years ended December 31, 2024 and 2023, respectively. The Company had assets under finance leases of $ 15.2 million and $ 12.4 million for the years ended December 31, 2024 and 2023, respectively. The Company reclassified $ 0.8 million and $ 0.6 million of property and equipment to Assets held for sale for the years ended December 31, 2024 and 2023, respectively. Impairment expense on fixed assets consists of non-cash impairment charges relating to long-lived assets. Impairments are determined using management’s judgment about our anticipated ability to continue to use fixed assets in-service and under development, current economic and market conditions and their effects based on information available as of the date of these financial statements. During the year ended December 31, 2023, the Company recognized a fixed assets impairment charge of $ 0.4 million to reduce the carrying value of the property to estimated net realizable value. Note 5 — Intangible Assets, Net Definite lived intangible assets are comprised of the following (in millions): Estimated Useful Life December 31, (Years) 2024 2023 Customer relationships 10 - 18 $ 11.4 $ 11.4 Less: accumulated amortization ( 5.8 ) ( 5.1 ) Intangible assets, net $ 5.6 $ 6.3 Amortization expense was $ 0.7 million for each of the years ended December 31, 2024 and 2023. Amortization expense for the future periods is expected to be as follows (in millions): For the years ending December 31, Amount 2025 $ 0.7 2026 0.7 2027 0.7 2028 0.5 2029 0.5 Thereafter 2.5 Total $ 5.6 57 Note 6 — Accrued Expenses Accrued expenses are comprised of the following (in millions): December 31, 2024 2023 Accrued payables $ 7.7 $ 13.0 Accrued compensation 15.6 13.7 Accrued taxes 2.2 1.7 Accrued insurance 2.7 1.2 Accrued expenses $ 28.2 $ 29.6 Note 7 — Leases Operating Leases The Company has operating leases, primarily for real estate and equipment, with terms that vary from one to nine years , included in operating lease costs in the table below. The operating leases are included in Short-term lease liability and Long-term lease liability in the Consolidated Balance Sheets. Lease costs associated with yard and field offices are included in cost of services and executive offices are included in general and administrative costs in the Consolidated Statements of Operations. Lease costs and other information related to operating leases are as follows (in millions): Years Ended December 31, 2024 2023 Short-term lease costs $ 12.8 $ 16.6 Operating lease cost $ 3.2 $ 3.2 Operating cash outflows from operating leases $ 3.3 $ 3.1 Weighted average remaining lease term 2.7 years 3.5 years Weighted average discount rate 8.1 % 8.1 % As of December 31, 2024, aggregate future minimum lease payments under operating leases are as follows (in millions): For the years ending December 31, Total 2025 $ 3.4 2026 3.0 2027 1.8 2028 0.4 Total future minimum lease payments 8.6 Less: amount representing interest ( 0.9 ) Present value of future minimum lease payments 7.7 Less: current portion of operating lease obligations ( 2.9 ) Long-term portion of operating lease obligations $ 4.8 58 Finance Leases The Company leases certain assets, primarily automobiles, under finance leases with terms that are generally three to five years . The assets and liabilities under finance leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the assets. The assets are amortized over the shorter of the estimated useful lives or over the lease term. The finance leases are included in Property and equipment, net, Short-term lease liability and Long-term lease liability in the Consolidated Balance Sheets. As of December 31, 2024, lease costs and other information related to finance leases are as follows (in millions): Years Ended December 31, 2024 2023 Amortization of finance leases $ 5.7 $ 4.0 Interest on lease liabilities $ 2.3 $ 1.7 Financing cash outflows from finance leases $ 5.7 $ 5.4 Weighted average remaining lease term 2.2 years 2.7 years Weighted average discount rate 6.5 % 5.8 % As of the December 31, 2024, aggregate future minimum lease payments under finance leases are as follows (in millions): For the years ending December 31, 2024 2025 $ 6.9 2026 5.2 2027 3.9 2028 1.3 Total future minimum lease payments 17.3 Less: amount representing interest and fees ( 2.2 ) Present value of future minimum lease payments 15.1 Less: current portion of finance lease obligations ( 5.8 ) Long-term portion of finance lease obligations $ 9.3 Note 8 — Other Financing Liabilities The Company has sale, lease-back agreements for land and certain other fixed assets with terms that vary from 18 months to 13 years. The sales did not qualify for sale accounting, therefore these leases were classified as finance leases and no gain or loss was recorded. The net book value of the assets remained in Property and equipment, net and are depreciating over their original useful lives. As of the December 31, 2024, aggregate future lease payments of the financing liabilities are as follows (in millions): For the twelve months ending December 31, Total 2025 $ 0.7 2026 0.7 2027 0.8 2028 0.8 2029 0.9 Thereafter 7.1 Total future minimum lease payments $ 11.0 59 Note 9 — Debt The aggregate carrying amounts, net of issuance costs, of the Company’s debt consists of the following (in millions): December 31, 2024 2023 Wells Fargo Revolving Credit Facility $ — $ — EBC Revolving Credit Facility $ — $ — M&E Term Loan Facility, net — — Secured Promissory Note — — Installment Purchases — 0.1 Total Debt — 0.1 Current portion of long-term debt — ( 0.1 ) Long term-debt, net $ — $ — Wells Fargo Bank, N.A. Credit Agreement On May 31, 2023, the Company entered into a Credit Agreement with Wells Fargo Bank, N.A., providing the Company with a secured, revolving credit facility (“Wells Fargo Revolving Credit Facility”) in an aggregate principal amount of up to $ 75.0 million. Debt under the Credit Agreement is secured by a lien on substantially all of the Company’s assets. The Company was in compliance with the Credit Agreement covenant by maintaining a fixed charge coverage ratio (“FCCR”) of greater than 1.0 as of December 31, 2024, which is applicable only under certain borrowing levels. The Company has up to $ 5.0 million available under the Wells Fargo Revolving Credit Facility for letters of credit, subject to assignment. At loan origination, the Company had a Letter of Credit in the amount of $ 1.6 million, to be utilized for working capital and general corporate purposes, as needed. On September 25, 2023, the Company entered into an agreement with Wells Fargo Bank, N.A. which designated an additional Letter of Credit in the amount of $ 1.6 million as part of incremental collateral requirements for the Company’s 2024 insurance renewal. The initial maturity date was September 25, 2024, with provisions for automatic annual renewal related to the same insurance policy. On September 25, 2024, the amount of the Letter of Credit was increased to $ 2.1 million as part of incremental collateral requirements for the Company’s 2025 insurance renewal, with a new maturity date of September 25, 2025. The interest rate for this Letter of Credit was approximately 1.8 % for the month ended December 31, 2024. The Wells Fargo Revolving Credit Facility was drawn in part on May 31, 2023, to repay the prior EBC Revolving Credit Facility, M&E Term Loan Facility, and the secured promissory note, each as described below. The undrawn portion of the Wells Fargo 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, such as dividends and share repurchases. The Wells Fargo Revolving Credit Facility is subject to a borrowing base that is calculated based upon a percentage of the Company’s eligible accounts receivable and unbilled revenue less certain reserves. The Company’s eligible accounts receivable serve as collateral for the borrowings under the Wells Fargo Revolving Credit Facility, which is scheduled to mature on May 31, 2028. The Wells Fargo Revolving Credit Facility includes an acceleration clause and cash dominion provisions which under certain circumstances permit 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 Wells Fargo Revolving Credit Facility. The borrowings of the Wells Fargo Revolving Credit Facility, therefore, are classified as Long-term debt, current portion on the Consolidated Balance Sheet. Under the Wells Fargo Revolving Credit Facility, the total loan capacity is $ 75.0 million, which is based on a borrowing base certificate in effect as of December 31, 2024. On June 17, 2024, the Company entered into the First Amendment to the Wells Fargo Revolving Credit Facility, which allows for a percentage of unbilled revenue to be included in the calculation of the borrowing base. The Company did not have any borrowings under the Wells Fargo Revolving Credit Facility as of December 31, 2024. The Company does have a $ 3.8 million in Letters of Credit open under the facility, leaving a residual $ 71.2 million available for borrowings as of December 31, 2024. Borrowings under the Wells Fargo Revolving Credit Facility bear interest at a rate per annum ranging from 1.75 % to 2.25 % in excess of SOFR and 0.75 % to 1.25 % in excess of the Base Rate, dependent on the average excess availability. The weighted average interest rate for the loan was approximately 7.2 % for the year ended December 31, 2024. 60 Eclipse Loan and Security Agreement On September 27, 2021, the Company entered into a loan and security agreement with EBC and Eclipse 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, consisting of (i) a revolving credit facility in an aggregate principal amount of up to $ 50.0 million (the “EBC 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”). On August 16, 2022, the Company fully repaid the Term Loan B Facility and M&E Term Loan Facility, making principal payments totaling $ 12.4 million and $ 1.5 million, respectively. On May 31, 2023, the Company extinguished the EBC Revolving Credit Facility and M&E Term Loan Facility, paying the remaining principal amount of $ 8.4 million to extinguish the debt, using funds from the Wells Fargo Revolving Credit Facility. The Company recognized a loss on the retirement of debt of $ 2.4 million in connection with the initiation of the Wells Fargo Revolving Credit Facility. Secured Promissory Note On July 8, 2021, the Company acquired the assets of PerfX Wireline Services (“PerfX”), a provider of wireline services that operated in Williston, North Dakota and Midland, Texas. In connection with the PerfX acquisition, Bravo Wireline, LLC, a wholly owned subsidiary of Ranger, entered into a secured promissory note with Chief Investments, LLC, for the financing of certain assets acquired. On May 31, 2023, the Company made principal payments totaling $ 5.4 million to extinguish the debt, using funds from the Wells Fargo Revolving Credit Facility. Other Installment Purchases During the year ended December 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. For the years ended December 31, 2024 and 2023, the Company paid down the Installment Agreements by $ 0.1 million and $ 0.4 million, respectively. As the year ended December 31, 2024, the Company had fully paid the Installment Agreements. Note 10 — Equity Class A Common Stock Equity Based Compensation Overview The Company has a Long-Term Incentive Plan (“LTIP”) for executives, employees, consultants and non-employee directors, under which awards can be granted in the form of stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), restricted cash units (“RCUs”), performance-based restricted stock units (“PSUs”), dividend equivalents, other stock-based awards, cash awards and substitute awards. Subject to adjustment in accordance with the terms of the LTIP, 3,850,000 shares of Class A Common Stock have been reserved for issuance pursuant to awards under the LTIP. Class A Common Stock withheld to satisfy exercise prices or tax withholding obligations will be available for delivery pursuant to other awards. The LTIP will be administered by the Board of Directors or an alternative committee appointed by the Board of Directors. RSAs The Company has granted RSAs, which generally vest in three equal annual installments beginning on the first anniversary date of the grant. The aggregate fair value of RSAs granted during the years ended December 31, 2024 and 2023 was $ 3.9 million and $ 4.7 million, respectively. As of December 31, 2024, there was an aggregate of $ 4.4 million of unrecognized expense related to RSAs issued, which is expected to be recognized over a weighted average period of 1.6 years. 61 The following table summarizes the unvested activity for RSAs during the years ended December 31, 2024 and 2023: Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Vesting Period Unvested at January 1, 2023 743,024 Granted 436,231 $ 10.83 1.9 years Forfeited ( 181,714 ) Vested ( 381,319 ) Unvested at December 31, 2023 616,222 $ 10.04 1.5 years Granted 379,367 $ 10.33 2.6 years Forfeited ( 14,058 ) Vested ( 307,405 ) Unvested at December 31, 2024 674,126 $ 10.48 1.6 years RSUs The Company has granted RSUs to certain non-employee directors, which cliff vest on the first anniversary date of the grant. During the year ended December 31, 2024, the Company granted approximately 47,300 RSUs, with an approximated aggregate value of $ 0.5 million. As of December 31, 2024, there was an aggregate $ 0.3 million of unrecognized expense related to restricted shares issued which is expected to be recognized over a weighted average period of 0.6 years. RCUs The Company has granted RCUs to certain non-employee directors, which cliff vest on the first anniversary date of the grant. During the year ended December 31, 2024, the Company granted approximately 16,400 . RCUs, which are cash-settled with the value of each vested RCU equal to the closing price per share of our Common Stock on the vesting date. The Company determined that RCUs are in-substance liabilities accounted for as liability instruments in accordance with ASC 718, Compensation—Stock Compensation, due to this cash settlement feature. RCUs are remeasured based on the closing price per share of the Company’s Common Stock at the end of each reporting period. As of December 31, 2024, the liability associated with unvested RCUs was $ 0.1 million, which is included in Accrued expenses in the Consolidated Balance Sheets. PSUs The Company has granted performance awards to certain key employees, in the form of PSUs, which are earned based on the achievement of certain market factors and performance targets at the discretion of the Board of Directors. The PSUs are subject to a three-year measurement period during which the number of Class A Common Stock to be issued in settlement of the PSUs remains uncertain until the end of the measurement period and will generally cliff vest based on the level of achievement with respect to the applicable performance criteria. Subsequent to such measurement period, the vesting of PSUs is subject to certification by the Board of Directors. As defined in the respective PSU agreements, the performance criteria applicable to these awards is relative and absolute total stockholder return (“TSR”). Achievement with respect to the relative TSR criteria is determined by the Company’s TSR compared to the TSR of the defined peer group during the measurement period. Achievement with respect to the absolute TSR criteria is based on a measurement of the Company’s stock price growth during the measurement period. The PSUs that were granted during the years ended December 31, 2024 and 2023 will cliff vest, subject to the achievement of applicable performance criteria and certification by the Board of Directors, on December 31, 2025 and December 31, 2026, respectively. As of December 31, 2024, there was an aggregate of $ 2.4 million of unrecognized compensation cost related to PSUs. 62 The following table summarizes the unvested activity for PSUs during the years ended December 31, 2024 and 2023: Relative Absolute Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Vesting Period Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Vesting Period Unvested at January 1, 2023 101,704 101,705 Granted 87,176 $ 15.08 85,573 $ 12.08 Vested ( 11,659 ) ( 10,056 ) Unvested at December 31, 2023 177,221 $ 13.17 1.2 years 177,222 $ 10.81 1.2 years Granted 139,607 $ 11.48 2.0 years 151,305 $ 9.68 2.0 years Vested ( 105,280 ) ( 116,978 ) Unvested at December 31, 2024 211,548 $ 13.03 1.3 years 211,549 $ 11.86 1.3 years Share Repurchases On March 7, 2023, the Company announced a share repurchase program allowing the Company to purchase Class A Common Stock held by non-affiliates, not to exceed $ 35.0 million in aggregate value. On March 4, 2024, the Company announced that its Board of Directors approved additional share repurchases of $ 50.0 million, bringing the total share repurchase program authorization to $ 85.0 million in aggregate value. Share repurchases may take place in any transaction form as allowable by the Securities and Exchange Commission. Approval of the program by the Board of Directors of the Company is valid for 36 months after the approval date, allowing the Company to utilize the expanded $ 50 million of approved capacity through March 4, 2027. During the years ended December 31, 2024 and 2023, the Company repurchased 1,520,300 and 1,805,500 , respectively, of the Company’s Class A Common Stock for an aggregate $ 15.5 million and $ 19.3 million, net of tax on the open market. Since the inception of the repurchase plan announced on March 7, 2023, an accumulated 3,325,800 shares of Class A Common Stock were purchased for a total of $ 34.8 million, net of tax as of December 31, 2024. The Company has accrued stock repurchase excise tax of $ 0.1 million for the year ended December 31, 2024. Dividends In 2023, the Board of Directors approved the initiation of a quarterly dividend of $ 0.05 per share. The Company paid dividend distributions totaling $ 4.5 million and $ 2.4 million to stockholders in the years ended December 31, 2024 and 2023, respectively. The declaration of any future dividends is subject to the Board of Directors’ discretion and approval. Warrant from PerfX Acquisition The PerfX acquisition purchase price included a warrant to acquire a 30 % ownership in the XConnect Business (“XConnect”), which expires on July 8, 2031. XConnect is the manufacturer of a perforating gun system developed by the PerfX sellers alongside the PerfX wireline service business. The warrant required the Company to maintain a specific minimum level of purchases of XConnect’s manufactured products. As of June 30, 2024, the Company did not maintain the specified minimum level of purchases, resulting in a forfeiture event. The Company elected not to cure the forfeiture event leading to a reduction in the ownership percentage to 15 %. During the latter half of 2024, the Company continued to fall below the minimum level of purchases required, which resulted in a second forfeiture event. The Company elected not to pay a penalty to cure the second forfeiture event and, as a result, the Warrant was cancelled effective November 28, 2024. The Company considered the value of the warrant at the time of its cancellation to be negligible. The Company finalized the purchase price allocation in the fourth quarter of 2021. Note 11 — Risk Concentrations Customer Concentrations During the year ended December 31, 2024, four customers accounted for approximately 22 %, 13 %, 13 % and 11 %, respectively, of the Company’s consolidated revenue. These customers contributed 43 % of the revenue for high specification rigs, 8 % for wireline services, and 8 % for processing solutions and ancillary services. As of December 31, 2024, approximately 61 % of the consolidated accounts receivable balance was due from these customers. For the year ended December 31, 2023, two customers accounted for approximately 10 % each of the Company’s consolidated revenue. These customers contributed 13 % of the revenue for high specification rigs, 3 % for wireline services, 63 and 4 % for processing solutions and ancillary services. As of December 31, 2023, approximately 20 % of the consolidated accounts receivable balance was due from these customers. Note 12 — Income Taxes The Company operates exclusively within the U.S. and is subject to U.S. federal and various state income tax. The effective U.S. federal income tax rate applicable to the Company for the years ended December 31, 2024 and 2023 was 29 % and 23 %, respectively. Total income tax expense for the year ended December 31, 2024 differed from amounts computed by applying the U.S. federal statutory tax rate of 21% primarily due to the impact of state income taxes as well as certain non-deductible expenses and for the year ended December 31, 2023 primarily due to the impact of state income taxes as well as certain non-deductible expenses offset by the benefit from the release of a previously recorded valuation allowance against deferred tax assets. The impact of state income taxes is primarily attributable to Texas and North Dakota, which represent more than 50% of the total state tax effect for the years ended December 31, 2024 and 2023. Historically, utilization of a portion of the Company's net operating loss carryforwards has been subject to limitations of utilization under Section 382 of the Internal Revenue Code of 1986 (“Section 382”), as amended. The Company incurred an ownership change, triggering another Section 382 loss limitation, during the three months ended June 30, 2023. As the Company continues to experience increasing profits and no longer has a trailing 3-year cumulative taxable loss, we currently believe that it is more likely than not that we will fully utilize all deferred tax assets including those associated with the net operating loss carry-forward. Accordingly, the Company released all valuation allowances previously recorded resulting in a discrete tax benefit for the period ended September 30, 2023. Years Ended December 31, 2024 2023 Current expense Federal $ 0.3 $ 0.1 State 0.4 0.2 Total current expense 0.7 0.3 Deferred expense Federal 6.4 5.6 State 0.5 1.3 Total deferred expense 6.9 6.9 Income tax expense $ 7.6 $ 7.2 64 Cash payments of U.S. federal and state income taxes, net of refunds, were as follows (in millions): 2024 2023 Cash payments of federal income taxes $ — $ 0.2 Cash payments of state income taxes Texas 0.4 0.4 Colorado 0.1 — Other states 0.1 — Total cash payments $ 0.6 $ 0.6 A reconciliation of the expected income tax expense on income before income taxes using the statutory federal income tax rate of 21% for 2024 and 2023 to income tax expense follows (in millions): December 31, 2024 2023 Tax Effected Rate Tax Effected Rate Income before income taxes $ 26.0 $ 31.0 Income tax expense computed at statutory rate $ 5.5 21 % $ 6.5 21 % Reconciling items State income taxes, net of federal tax benefit 1.0 4 % 1.2 4 % Changes in valuation allowances — — % ( 1.7 ) ( 6 ) % Meals 0.8 3 % 0.7 4 % Non-deductible executive compensation 0.5 2 % — — % Non-deductible expenses and other ( 0.2 ) ( 1 ) % 0.5 — % Income tax expense $ 7.6 29 % $ 7.2 23 % As of December 31, 2024, the Company has net operating loss carryforwards of approximately $ 53.6 million, all of which are subject to section 382 limitations. Of this amount, $ 47.6 million of losses will carry forward indefinitely with the remaining loss carry forwards expiring beginning in 2034. The tax effects of the cumulative temporary differences resulting in the net deferred income tax liability, which are shown in Deferred tax liability on the Consolidated Balance Sheets, are as follows (in millions): December 31, 2024 2023 Deferred income tax assets Net operating loss carryforward $ 11.9 $ 12.9 Stock based compensation 1.8 1.6 Right-of-use liability 1.7 2.2 Other 1.1 1.7 Net deferred income tax asset $ 16.5 $ 18.4 Deferred income tax liabilities Property and equipment ( 32.8 ) ( 27.3 ) Right-of-use assets ( 1.6 ) ( 2.1 ) Other ( 0.3 ) ( 0.3 ) Deferred income tax liability ( 34.7 ) ( 29.7 ) Net deferred income tax liability $ ( 18.2 ) $ ( 11.3 ) Other tax matters The Company is subject to the following material taxing jurisdictions: the United States and Texas. As of December 31, 2024, the Company had no current tax years under audit. The Company remains subject to examination for federal income taxes and state income taxes for tax years 2021 through 2024. 65 The Company has evaluated all tax positions for which the statute of limitations remains open and believes that the material positions taken would more likely than not be sustained upon examination. Therefore, as of December 31, 2024, the Company had not established any reserves for, nor recorded any unrecognized benefits related to, uncertain tax positions. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense in the Consolidated Statements of Operations. As of December 31, 2024, the Company had not recognized any interest or penalties related to uncertain tax positions in the financial statements. Note 13 — Earnings per Share Earnings per share is based on the amount of earnings allocated to the stockholders and the weighted average number of shares outstanding during the period for each class of common stock. Diluted earnings, or loss, per share is computed giving effect to all potentially dilutive shares. The following table presents the Company’s calculation of basic and diluted loss per share for the years ended December 31, 2024 and 2023 (in millions, except share and per share data): Years Ended December 31, 2024 2023 Income (numerator): Basic: Income attributable to Ranger Energy Services, Inc. $ 18.4 $ 23.8 Net income attributable to Class A Common Stock $ 18.4 $ 23.8 Diluted: Income attributable to Ranger Energy Services, Inc. $ 18.4 $ 23.8 Net income attributable to Class A Common Stock $ 18.4 $ 23.8 Weighted average shares (denominator): Weighted average number of shares - basic 22,518,726 24,600,151 Equity compensation awards 333,906 391,343 Weighted average number of shares - diluted 22,852,632 24,991,494 Basic earnings per share $ 0.82 $ 0.97 Diluted earnings per share $ 0.81 $ 0.95 Note 14 — Commitments and Contingencies Legal Matters From time to time, the Company is involved in various legal matters arising in the normal course of business. The Company does not believe that the ultimate resolution of these currently pending matters will have a material adverse effect on its consolidated financial position or results of operations. Note 15 — Related Party Transactions Stockholders’ Agreement In connection with the Offering, Ranger entered into a stockholders’ agreement (the “Stockholders’ Agreement”) with the Legacy Owners and certain other parties. Among other things, the Stockholders’ Agreement provides CSL and Bayou Wells Holdings Company, LLC (“Bayou Holdings”) with the right to designate nominees to Ranger’s Board of Directors (each, as applicable, a “CSL Director” or “Bayou Director”) as follows: • for so long as CSL beneficially owns at least 50 % of Ranger’s common stock, at least three members of the Board of Directors shall be CSL Directors and at least two members of the Board of Directors shall be Bayou Directors (which may include Brett Agee or any other person that may be designated by Bayou Holdings in accordance with the terms of the Stockholders’ Agreement); • for so long as CSL beneficially owns less than 50 % but at least 30 % of Ranger’s common stock, at least three members of the Board of Directors shall be CSL Directors; • for so long as CSL beneficially owns less than 30 % but at least 20 % of Ranger’s common stock, at least two members of the Board of Directors shall be CSL Directors; 66 • for so long as CSL beneficially owns less than 20 % but at least 10 % of Ranger’s common stock, at least one member of the Board of Directors shall be a CSL Director; and • once CSL beneficially owns less than 10 % of Ranger’s common stock, CSL will not have any Board designation rights. In the event the size of Ranger’s Board of Directors is increased or decreased at any time to other than six directors, CSL’s nomination rights will be proportionately increased or decreased, respectively, rounded up to the nearest whole number. Registration Rights Agreement On August 16, 2017, in connection with the closing of the Offering, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with certain stockholders (the “Holders”). Pursuant to, and subject to the limitations set forth in the Registration Rights Agreement, at any time after the 180 -day lock-up period, the Holders have the right to require the Company, by written notice, to prepare and file a registration statement registering the offer and sale of a number of their shares of Class A Common Stock. Reasonably in advance of the filing of any such registration statement, the Company is required to provide notice of the request to all other Holders who may participate in the registration. The Company is required to use all commercially reasonable efforts to maintain the effectiveness of any such registration statement until all shares covered by such registration statement have been sold. Subject to certain exceptions, the Company is not obligated to effect such a registration within 90 days after the closing of any underwritten offering of shares of Class A Common Stock requested by the Holders pursuant to the Registration Rights Agreements. The Company is also not obligated to effect any registration where such registration has been requested by the holders of Registrable Securities (as defined in the Registration Rights Agreement) which represent less than $ 25 million, based on the five-day volume weighted average trading price of the Class A Common Stock on the New York Stock Exchange. In addition, pursuant to the Registration Rights Agreement, the Holders have the right to require the Company, subject to certain limitations set forth therein, to effect a distribution of any or all of their shares of Class A Common Stock by means of an underwritten offering. Further, subject to certain exceptions, if at any time the Company proposes to register an offering of its equity securities or conduct an underwritten offering, whether or not for its account, then the Company must notify the Holders of such proposal at least three business days before the anticipated filing date or commencement of the underwritten offering, as applicable, to allow them to include a specified number of their shares in that registration statement or underwritten offering, as applicable. These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in a registration or offering and the Company’s right to delay or withdraw a registration statement under certain circumstances. The Company will generally pay all registration expenses in connection with its obligations under the Registration Rights Agreement, regardless of whether a registration statement is filed or becomes effective. The obligations to register shares under the Registration Rights Agreement will terminate as to any Holder when the Registrable Securities held by such Holder are no longer subject to any restrictions on trading under the provisions of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), including any volume or manner of sale restrictions. Registrable Securities means all shares of Class A Common Stock owned at any particular point in time by a Holder other than shares (i) sold pursuant to an effective registration statement under the Securities Act, (ii) sold in a transaction pursuant to Rule 144 under the Securities Act, (iii) that have ceased to be outstanding or (iv) that are eligible for resale without restriction and without the need for current public information pursuant to any section of Rule 144 under the Securities Act. Payments and Purchases The Company incurred $ 0.1 million and $ 0.2 million in expenses to CSL and other board members for the years ended December 31, 2024 and 2023, respectively. For the year ended December 31, 2023, amounts collected from Board member Brett Agee was approximately $ 0.2 million for asset sales. 67 Note 16 — Segment Reporting The Company’s operations are located in the United States and organized into three reporting segments: High Specification Rigs, Wireline Services, and Processing Solutions and Ancillary Services. 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. The reportable segments comprise the structure used by the Chief Operating Decision Maker (“CODM”) to make key operating decisions and assess performance during the years presented in the accompanying Consolidated Financial Statements. The Chief Executive Officer is regarded as the Company’s CODM. The primary profitability measurement used by the CODM to review segment operating results is Adjusted EBITDA. We define Adjusted EBITDA as net income or loss before net interest expense, income tax expense, depreciation and amortization, equity‑based compensation, loss on debt retirement, gain or loss on disposal of property and equipment, acquisition related costs, severance and reorganization costs, significant and unusual legal fees and settlements, impairment of fixed assets, and certain other non-cash and certain other items that we do not view as indicative of our ongoing performance. The CODM utilizes Adjusted EBITDA to allocate resources for each segment predominantly in the annual planning process and to monitor segment results compared to prior period, forecasted results, and the annual plan. The reportable segments have been categorized based on services provided in each line of business. The tables below present the operating income (loss) measurement and Adjusted EBITDA, as the Company believes this is most consistent with the principals used in measuring the financial statements. During the fourth quarter of 2022, the Company determined assets are routinely utilized across multiple segments and Management does not utilize the net property and equipment value as a metric to evaluate the profitability of the respective segments. Therefore, the net property and equipment values have been removed from the segment data presented below. 68 Segment information for the years ended December 31, 2024 and 2023 is as follows (in millions): Year Ended December 31, 2024 High Specification Rigs Wireline Services Processing Solutions and Ancillary Services Other Total Revenue $ 336.1 $ 110.2 $ 124.8 $ — $ 571.1 Employee expenses 172.6 49.1 46.3 17.4 285.4 Repair and maintenance 31.1 11.4 10.7 — 53.2 Other segment items* 63.4 46.8 41.4 10.4 162.0 Depreciation and amortization 22.2 11.4 8.6 1.9 44.1 Gain on sale of assets — — — ( 2.2 ) ( 2.2 ) Operating income (loss) 46.8 ( 8.5 ) 17.8 ( 27.5 ) 28.6 Interest expense, net — — — 2.6 2.6 Income tax expense — — — 7.6 7.6 Net income (loss) $ 46.8 $ ( 8.5 ) $ 17.8 $ ( 37.7 ) $ 18.4 Interest expense, net — — — 2.6 2.6 Tax expense — — — 7.6 7.6 Depreciation and amortization 22.2 11.4 8.6 1.9 44.1 EBITDA 69.0 2.9 26.4 ( 25.6 ) 72.7 Equity based compensation — — — 5.8 5.8 Gain on disposal of property and equipment — — — ( 2.2 ) ( 2.2 ) Severance and reorganization costs 0.9 0.6 0.2 0.1 1.8 Acquisition related costs 0.4 — — 0.1 0.5 Legal fees and settlements 0.2 — — 0.1 0.3 Adjusted EBITDA $ 70.5 $ 3.5 $ 26.6 $ ( 21.7 ) $ 78.9 Capital expenditures $ 26.8 $ 4.9 $ 15.2 $ — $ 46.9 _____________________________________ * Other Segment Items include Direct Materials, Subcontractor Expense, Reimbursable Expenses, Equipment Rentals, Fuel, Per Diem, Travel & Entertainment, Vehicles and Miscellaneous. These items, including Employee Expenses and Repair and Maintenance, are included in Cost of Services and General and Administrative expense in the Consolidated Statements of Operations. 69 Year Ended December 31, 2023 High Specification Rigs Wireline Services Processing Solutions and Ancillary Services Other Total Revenue $ 313.3 $ 199.1 $ 124.2 $ — $ 636.6 Employee expenses 161.2 74.5 49.4 16.8 301.9 Repair and maintenance 28.0 16.9 12.4 — 57.3 Other segment items* 60.0 89.3 40.0 12.7 202.0 Depreciation and amortization 20.1 11.3 6.9 1.6 39.9 Impairment of fixed assets — — — 0.4 0.4 Gain on sale of assets — — — ( 1.8 ) ( 1.8 ) Operating income (loss) 44.0 7.1 15.5 ( 29.7 ) 36.9 Interest expense, net — — — 3.5 3.5 Income tax expense — — — 7.2 7.2 Loss on debt retirement — — — 2.4 2.4 Net income (loss) $ 44.0 $ 7.1 $ 15.5 $ ( 42.8 ) $ 23.8 Interest expense, net — — — 3.5 3.5 Tax expense — — — 7.2 7.2 Depreciation and amortization 20.1 11.3 6.9 1.6 39.9 EBITDA 64.1 18.4 22.4 ( 30.5 ) 74.4 Equity based compensation — — — 4.8 4.8 Loss on retirement of debt — — — 2.4 2.4 Gain on disposal of property and equipment — — — ( 1.8 ) ( 1.8 ) Severance and reorganization costs — 1.7 — 0.4 2.1 Acquisition related costs — — — 2.1 2.1 Impairment of fixed assets — — — 0.4 0.4 Adjusted EBITDA $ 64.1 $ 20.1 $ 22.4 $ ( 22.2 ) $ 84.4 Capital expenditures $ 17.7 $ 16.7 $ 13.7 $ — $ 48.1 _____________________________________ * Other Segment Items include Direct Materials, Subcontractor Expense, Reimbursable Expenses, Equipment Rentals, Fuel, Per Diem, Travel & Entertainment, Vehicles and Miscellaneous. These items, including Employee Expenses and Repair and Maintenance, are included in Cost of Services and General and Administrative expense in the Consolidated Statements of Operations. Note 17 — Subsequent Events On March 3, 2025, the Board of Directors declared a quarterly cash dividend of $ 0.06 per share payable March 28, 2025 to common stockholders of record at the close of business on March 14, 2025. The declaration of any future dividends is subject to the Board of Directors’ discretion and approval. 70 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures Not applicable.