RPC (RES) 25 Oct 172017 Q3 Earnings call transcript

Company Profile

Participants

Jim Landers	Vice President of Corporate Finance
Rick Hubbell	President and Chief Executive Officer
Ben Palmer	Chief Financial Officer
Jim Wicklund	Credit Suisse
Chase Mulvehill	Wolfe Research
Marc Bianchi	Cowen and Company
Praveen Narra	Raymond James
Brad Handler	Jefferies
Michael LaMotte	Guggenheim
John Daniel	Simmons & Company
Waqar Syed	Goldman Sachs
Rob MacKenzie	IBERIA Capital
David Anderson	Barclays
Kenneth Sill	SunTrust Robinson Humphrey
Thomas Curran	FBR
Jud Bailey	Wells Fargo

Call transcript

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Operator

Good morning and thank you for joining us for RPC, Inc.’s Third Quarter 2017 Financial Earnings Conference Call. Today’s call will be hosted by Rick Hubbell, President and CEO; and Ben Palmer, Chief Financial Officer. Also present is Jim Landers, Vice President of Corporate Finance. At this time, all participants are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. at for provided up to be questions. for will that you time queue Instructions to that advise is like would I everyone being this recorded. call conference disclaimer. Jim get us by the will started forward-looking reading

Jim Landers

Thank you morning. and good

call today, to a order our few Before we that about begin I to not that talk to remind going we’re are want company, things in you mention facts. our historical

unknown earnings referring of forward-looking be risks. in you a we’ll press statements compare other the release and XXXX those regard this be our on capital on of over outline of of it website refer EBITDA made known like structure. risks, RPC performance, RPC’s conference XX-K changes because that various that to in number I’d periods non-GAAP us which measure will which can and allows today’s be is and operating a to performance. of operating to nature release found as could along Some uses reflect to issued and at www.rpc.net. a be measure with in all to filings consistently call our EBITDA, public today, call, our performance without Also

financial We’re EBITDA report also covenants facility. to required credit under compliance to revolving with our use

if Our disclosure income, you’re of our interested the it’s press release seeing Please website net that today in reconciliation EBITDA nearest measure. to in provides a review GAAP calculated. financial how

the reason, over release Hubbell. any I press received please our and turn you’ve If a our President CEO, to www.rpc.net call for copy. website visit not will now our Rick at for

Rick Hubbell

XX% results count and of though previous $X.XX dividend a count lower demand Directors than $X.XX a rate intensive customer’s of than Board third rig release press our the Based at strong our a by and earnings RPC’s improved third of XXXX. continued high greater quarterly sequentially, year-end share highly an the service quarter our balance providers, RPC’s has XXXX, special for of environments. issued we cash morning, during operating on This in per of quarters. service dividend. additional The in increased domestic U.S. sheet, our again of share Jim. oilfield revenue declared the quarter much four rate because capable per increased Thanks, regular for

repurchased shares In XXX,XXX addition, RPC’s the we the stock market almost third common during on of open quarter.

CFO, Ben which detail, in I results closing review have few will financial a our after Our Palmer will comments. more

Ben Palmer

Thank you, Rick.

higher and to to was third million, levels third activity year. due quarter same service the services, period of same last to Operating the prior activation the compared was to year. increased $XXX.X compared $XXX year. For million, or the increased loss and during the $XX.X to million activity prior loss during increased idled period Cost to revenue-producing million, $XXX.X the $XXX.X XX.X% year. quarter the revenues period for higher to $XXX.X service Revenues higher our intensity equipment. pricing of a third million, year prior was the quarter compared for quarter million in revenues the for $X.X compared our of previously to same the third levels of profit revenues compared an or million, $XX.X Cost operating revenues, XX.X% for of last due of during and intensity. in EBITDA

to expenses employment administrative and leverage levels. pricing to increased costs, million due in with over the of higher last compensation our the as direct for well in activity expenses period third year. quarter, costs. As improved general Selling, expenses of consistent a compared as primarily These incentive $XX.X compensation other same were higher million $XX.X decreased to revenues cost as percentage of higher revenues, due as services, revenues well

revenues over year. due period to decrease quarter same $X.X As a to X.X%, XX.X% the $XX.X period year, of Depreciation the on compared same for amortization third period in expenses. last million year. to Net compared to decreased fixed same higher in costs million assets and the of a million compared percentage XX.X%, million the XXXX, revenues, were these last $XX during the to of of disposition gain the quarter, $XXX,XXX of in last third was leverage

improved million segment increased compared levels. Technical for higher the Services $XXX.X Our million, profit of year revenues XXX%, compared the due activity to of operating quarter prior loss third Operating last the to to year. was quarter $XX.X and to an pricing

due levels revenues is operating the decreased segment. activity tool line the quarter the increased segment to service in while period rental XX.X%, XX.X%, for loss service principally year by Services Support largest and within the improved pricing Our to which same last this compared the line,

by moment. discuss and our $XX.X due revenues from and sequential quarter. million materials costs, third sequential higher levels services XX.X% of million to a in activity and due of XX.X% Cost and as our for pricing equipment. as the from On supplies intensity. million increased well improved or a quarter prior increased increased service $XXX.X to idled activation employment activity which RPC’s results basis, Now higher revenues resulted for to Revenues $XXX higher revenue-producing expenses levels

only leverage percentage of XX.X% Selling, general revenues compared the expenses quarter administrative from during higher quarter of revenues, from prior decreased cost third prior of XX.X% to by the increased due to to a improvements X.X% and quarter. and activity XXXX pricing As in the operational levels.

$XXX,XXX RPC’s in as due from during sale operating an second the increase third relatively XXXX was XX.X%. quarter RPC’s $X.X the However, to $XX quarter. million revenues, higher percentage in a to over expenses. quarter prior of XX.X% $XX.X million, SG&A million third revenues prior about in the to quarter compared of on leverage profit decreased fixed from X.X% of to the decreased the expenses in gain quarter, of

operating or during pipe As earnings $X.XX the sequential quarter. $XXX.X $X.XX $X.X from share include gain line quarter our million quarter. from equipment quarter, million that million earnings $XX.X approximately we service mentioned the second per in per margin diluted last income adjustments of the XX.X% the share quarter, third million the second related we by $XX.X recorded the to impacted during increased quarter diluted or million from oilfield $XXX.X increased on in inspection the sale negatively earnings current Net a improved diluted to XX.X% EBITDA in The $X.XX. quarter third and XX.X%. per to share of tax EBITDA RPC’s to

to Technical Operating of Our revenues million, in million $XXX.X than the to revenues $XXX.X $XXX.X generated profit the prior which segment Services prior million was XX.X%higher quarter. compared million, in quarter. of $XX.X improved

Our operating this to XX.X% in quarter. from increased margin segment current in the XX.X%

prior million $XX.X quarter. to higher $X.X XX.X% segment Operating Services of which than in is decreased to compared quarter. million loss in revenues the million, the Our Support $X.X million, generated of revenues $XX.X prior

$XXX,XXX third As of at the end hydraulic of the fleet of quarter. the is to horsepower, end RPC’s of XX% and remained approximately which prior work; and to available unchanged the pressure at manned pumping this XX% quarter, compares

increased X.X% the head Also the count million. third expenditures total capital Our during quarter. quarter XXXX $XX.X third were

capital We approximately of expect will of full which the expenditures XXXX portion million, be half with during purchase XXXX. towards to a be the XXX,XXX directed $XXX delivery horsepower first year expected hydraulic

quarter, to balance nine I’ll Rick back as million With the remarks. cash repurchased common stock market. approximately XXXX, now turn first some RPC’s shares of months the And we of was third the on no that, open $XXX.X over with for our a of it total end outstanding During closing of the X,XXX,XXX of debt.

Rick Hubbell

Ben. Thanks,

we third increased managed began order the raw these minimize on During labor experience inflation, cost material in quarter, their but and to profitability. impact cost increases have to our

of substantially ordered discussed, additional all our activated idled pumping As and pressure we equipment previously equipment. have

We are very and with pleased current operating environment the prospects.

has RPC’s moderated, open morning. strong XXXX. Thank Although this of the customer At call remainder this count increase the and of we for us time, rig XXXX you joining have we drilling for conference will in your lines questions. the activities for for up the indications into

Operator

Credit Thank Jim first you. Please ahead. take from Instructions] with our question go Suisse. [Operator We’ll Wicklund

Rick Hubbell

Jim?

Jim Landers

if cannot can… we Jim, sorry, you you, hear

Rick Hubbell

can you. barely We only hear

Jim Landers

Yes.

Jim Wicklund

that Is that? How better? about

Jim Landers

Yes, better. much

Rick Hubbell

Yes.

Jim Wicklund

[Indiscernible]

Rick Hubbell

Okay.

Jim Wicklund

get realize in You XXXX knows now? up XXXX, E&P ask get part, that I But the if oil of that the going say is How think is at first be do year. industries you which it up? won’t cash margins remainder the of are equipment. think outspend the visibility right momentum be high continue ordering the do these half you do far of I through Obviously, which investors this look will XXXX, and And the guys if will booked because everybody to and in best pricing, are margins And positive in same you’re XXXX, have that, the prices the course, you that business. flow. the the but nobody start – in you new good, to that of pricing concerned enough,

XXXX into But you afford just pricing so. do So of and know XXXX? far through have think what I’m to can curious how visibility to you you

Ben Palmer

Jim, Ben. this is

spot and good us. the have market, on about XXXX. about certainly we discussion ongoing our much, discussions from for need and drilling there’s are talking E&P be commitments, customers, actively much desire no know to But we but contracts with into plans do deep firm we or but continue there’s all We of services their for

about So talking plans. good, a very we look are lot at that long-term and obviously we as

is change their that’s or that varies. whether all that, the off can know you But know customer we plans how deep into puts – So whatever. XXXX, it if that

up, change. we talked you can funding As their drives about if know that

we And but expect with with for some activity in said, can increased hopeful We seeing as it it, – backdrop of That’s other what some out the think some some So the of. so there pumpers pressure margins. and we’re we’re of have market, positive people with and some be well, not some doing – well, from service of that and there struggles – you pricing on maybe are that we’re I are some you know we dynamics of people hope momentum anticipating competitors it. pricing. good doing not counting intensity given and and that we’re with planning the

but returns, higher. we We to forward would have good be love even

team teams and the right businesses as a we’re executing very good some are well. executing the and I spots. in And Our is environment good in well, said,

in numbers. So the it’s reflected

Jim Wicklund

good, time adjective the good to how spot market. for margins And good run. really not I’m sure, a well enough a be It’s is in your

you You little the talked guys On green tell was on on us business crews. logistics about and efficiencies, vertically have have integrated. reported you E&P going own logistic Can bit keeps how you today? and one. in But sand own educate mile us Last you And on so blamed sand, can on your are of recently companies companies doing side? sand obviously. logistics sand logistic that the what’s the a side,

Jim Landers

is Jim, Landers. Jim this

expensive, more provides to nice the have use, it’s it’s As of more when you sand it’s total that process sand but trucking there. managed has comments do a gotten we a fairly we’ll minimal a we’ve amount It it’s out, well. and echo have we mine. pointed Certainly, been but difficult, that

Our than demurrage expense not in financial higher but results. third to second quarter quarter slightly move minimal, was the enough still

and a third has it’s just have not have So not it something process quarter way. just to impacted manage. to in us negative in we a us we – impact Again, manage, did

Ben Palmer

add… can I – I’ll

Jim Wicklund

guys. Congratulations,

Ben Palmer

Thanks, Jim.

Jim Wicklund

Go ahead, I’m sorry.

Ben Palmer

did reflected our relationships we’ve with increase I to in say bit being that onto was would And numbers our cost pass sand I But to spot customers. in going and too say, we our see margins. our customers, is in of able a and on the been prices. most little the of increases that the market

Jim Wicklund

Okay, thanks thanks. quarter, Great guys.

Ben Palmer

you. thank Jim,

Jim Landers

Thanks, Jim.

Operator

Research. to go of Mulvehill Chase Wolfe ahead. from our question Please We’ll next go

Chase Mulvehill

morning. good Hey,

Jim Landers

Hey, Chase.

Chase Mulvehill

Hey.

pumping ask to fleet. about So efficiencies across wanted real pressure your quickly, just I

So your you doing the variability narrow And talk of could the fleet? comments between your skew if or the to efficiencies kind feet? maybe across there add then variability you’re across the to of maybe the skew just some what’s and

Jim Landers

I’ll to Chase, Jim. respond try that this is one. to

in on We allows are Permian than that frac you’re for those the on very Basin long you’re And work everyone to knows, different some as stay now longer. on zipper site And doing because site you this jobs, more zones. time call doing of were. we

going a So hours and allows onto to really XX-hour days the That many you’re you helps XX there for a day time. efficiency. day jobs. make also job a a It long successive

us. helped has that So

about talking You’re skew.

know vertical do You work. we still some

Those that shorter, small at but are all. of terms profitable. jobs they’re We in revenue, they’re haven’t very abandoned and

efficient, The is the overly only us you while that not it’s profitable efficient like. work would efficiency in for might that that’s the and think those we all about work most say place just going. probably across So look and different… all the at things probably say And logistics of we are to our how Permian and and that have I because we comments place that’s real variability

Ben Palmer

things This the one it we Again, color. can as that of Ben. a execution are more is keep doing the great be. our I trying little a to might utilization as That’s add job wise, clearly do maybe high focus on. guys

I benefit and things. it particular spot we market and let you’re another think out" one to slip That you delays say, from they of the job to a have I customer scheduled on of a the had of is of we oops, need the – being with weeks and need couple if now, "booked call customer slip.

you’re in job. a reschedule are to and try sort our If you’re customer can’t redirect an processes that. nimble another tight to to of and customer, onto to our But be approach that such committed our try relationships managing spot are we can you crews

and things us that that more so keep we efficient being helps. All And otherwise the up fill calendar than would equal, be. helps

Chase Mulvehill

we’re zipper your percentage what compare XQ? to in fracs, fleet fracs Okay. that was doing does how And – or stages zipper then And XQ? of

Jim Landers

and by the zipper quarter. the low second in stage XX% up fracs in XX%s that’s from XQ,

Chase Mulvehill

you Okay. do zipper on And of you you max the get what’s can you think can what peak that frac think? kind – penetration

Jim Landers

Don’t [Indiscernible] better. More know. is

Chase Mulvehill

Yes.

So continue push to do efficiency? efficiencies do across think at Or think you peak fleet? opportunity that you got you’ve to your you’re

Jim Landers

trying it’s places done. Chase, we on job providers could of location group get completion a are better. service huge get And a there a always to

up. You better. efficiencies been could But always around and always know eliminate get come little They’ve a know get I things you that. don’t minimal.

Ben Palmer

what great to and of balance, again, Part a doing team’s this. had done job we’ve

that’s not be difficult that’s out the very to As we rolled perfect. equipment, idle –

a out. steady. stayed great. equipment of by has deployed the The now the end now that quarter, all utilization it’ll third things equal of But So be been rolling the little most expect we’ve that been would has more we that

efficiency. staff with help staff less should then incremental create and will least We some at that of green employees itself and and in

Chase Mulvehill

Okay.

compared side. your done You’ve peers there, especially margin job a to the great on

one, easy a and quick So last one.

about or deflation inflation think we and or do deflation, when So inflation why? sand sand prefer you

Ben Palmer

business gasoline the about think me Makes or something.

Jim Landers

away don’t secrets give We Yes. don’t know. I either. trade

Chase Mulvehill

leave I’ll it what I Okay. it at there. probably realize go there.

thanks Ben, [indiscernible] all right, Jim, So

Jim Landers

to you. thanks Yes,

Operator

Next Marc Bianchi question and comes from Company. with Cowen

Marc Bianchi

Maybe breakdown just revenue you could Jim, by line? you. Thank the first, business provide

Jim Landers

Yes. Absolutely, to. Happy Marc.

about give our line you of for it quarter. was of third our second the of biggest So and third consolidated is top revenues. revenue that comprise service percentages is of was five largest tubing the numbers was service XX.X% the I’m Pressure are to our lines revenues. line, X.X% pumping Solutions revenues. and that Coiled Thru Tubing our is XX.X% largest, and service

nitrogen rental Support We of then, have during a service X.X% And of line, quarter. revenues quarter. – the in our third for the Services is which accounted X.X% revenues tools for business third was

Marc Bianchi

Okay, great. Thanks.

here versus So tell like you us that with grew much that in pumping how the pressure looks about activity XX% Can was quarter. business the price? it of third

Ben Palmer

Yes.

it just basically, it price. and that We’re would X/X was about guess I X/X was – we say of was activity

Marc Bianchi

about the pricing are front some about comments a term. think you of a a little on to you the your to in XXXX. then And think now end of it getting perhaps cost spot Or now seeing, more you you’re you uplift excess player, cost? at the in where as asking also getting cover longer-term of stabilizing. us cost it price, or you’re And some if great. about But as color could. near give the if pricing right earlier little is to you’re the just below being if are inflation it and Please perhaps you hear bit maybe cost? relates things Jim Curious near-term, Okay, bit there, was are

Ben Palmer

to alluded little bit a Well, earlier. I it

our depends the we’re this the for during required and again, point, on results, celebration to push much think that required I we’ll is will everybody is get. saying, think with as our uncertainty we’ll this holidays customers, mix. is not, be, I with margins, a holidays pricing, how pricing it and time seen. we’re about our returns our heading – at of or lot But to whether this our it’s busy yet job into relationships the looking think I be this But

need talk modifying pricing. increases, price So we to about if our we have

And working Again, that’s so for the that’s reflective in us. and numbers.

earlier, I returns competitors try some looking hopefully margins the returns their be alluded hearing dynamics get as everybody to hope we’re to to a and will we and with and of across the So what – to board more level. acceptable and

and think we bit those a of oil backdrop which So we that And pricing those increases to to increasing maybe backdrop that the continued pricing, are from set us in a to service with capacity all there’s that going all to may be benefit frac things will is intensity, some or impetus indications, price foundation provide for hope more able absorb well. things And as for which firming more up. improve. we’ll industry-wide

Marc Bianchi

the you plans the are now Sure, of that to in look deployed new and right fourth sounds to being okay. and quarter, flat? as none can equipment’s you everything really going pumping with you to pressure And hit what activity is fourth reactivation, holiday and in Fair the revenue see with of your the of could about pretty think like portion the pace quarter. be where deployed

Ben Palmer

average, equipment Well, have on deployed. we’ll, more

Jim Landers

Yes. true. That’s

Marc Bianchi

Okay.

exit benefit some little bit higher a So rate? from

Jim Landers

Yes.

Marc Bianchi

well, I’ll back. turn Okay, thanks. it

Jim Landers

Marc. Thanks,

Ben Palmer

Thanks.

Operator

Narra We’ll from Raymond with take next our question James. Praveen

Praveen Narra

guys. morning, good Hey,

Ben Palmer

Praveen. Hey,

Praveen Narra

kind thinking in I fleet of guess quarter, sorry. those the so we related the – before? deployment And about of as just still talked kind additions back-half were about

Ben Palmer

of We by XX%. quarter, sorry. end the the third I’m indicated we’re about

But pumps the not that deployed. the the is few a mid-XXs. average quarter yet had just for were there been in So somewhere

Praveen Narra

Is XXXX. of with the all the the is lock I Jim’s talked customers any as plans – longer-term talked well some contracts, is to or longer-term on contract? that that the terms in of kind about well centers you then hesitancy talking And portion and guess question, into in about on perfect. you customers Okay, to to

Ben Palmer

that we wouldn’t a relationship say up there’s a customers act. is spot things that the that. say might we point And market. now. times It’s a had a that would like we to would They we customers. enter a But like like where contract. In something our to have good at to I able does with right? be of relationship more amounts levels activity So in. lower that customer and Pricing like that at level balancing love terms certainly the the not we and lot. are with, bring often that experience establish that certain looks we always promising not lock work, our some It we some with

So to we’re push not very the trying very, it end. to

trying that be for again we have efficient maintain we – needs to keep push to right to And We’re now for relationships, together, to services they we’re together – again, those good that have busy, to look ways all keep working met. job, their the if those. want get us and

Praveen Narra

of terms Right. Technical then fair on guess, that in an accretive And the basis? pressure margins pumping business, EBITDA the Services it I to are is that think to

Ben Palmer

Meaning Yes, sure. accretive higher EBITDA? to revenues

Jim Landers

Yes.

Praveen Narra

by revenues from Okay. do ballpark we pressure sand? have a chance the derive you that then for pumping And of

Ben Palmer

No.

Praveen Narra

much, okay. guys. very No, you Thank

Ben Palmer

Okay, you. Praveen. Thank

Operator

take Handler We’ll Jefferies. our next question from Brad with

Brad Handler

Yes. Thanks. morning. Good

Ben Palmer

Hey, Brad.

Brad Handler

see think I Harvey the your had impact quarter. release, press I in have on didn’t which, small it your respect. I revenues you I for us, did But in quantify your operations? Harvey can the on a mentioned impact word guess, an

Jim Landers

was Brad, it minimal.

services Houston. a one with in few have tubular locations, we know You business

employees, impact a down that home letting for from in South homes on were We West of sort Texas and think who maybe check shut their I Texas some few go indirect days. families. to their and was had

employees had some things some who doing homes. to damage their to We’re help

not talked to impact But impact shortages We’re but negative enough been there, and There a out It’s disruptions there lot. didn’t us some enough some supply notice. about internally. temporary of in a really call assets doing revenue that was way. were to

Ben Palmer

don’t have We any offshore work.

Jim Landers

Yes.

Ben Palmer

noticeable no impact. really so And

Brad Handler

XXXX, future? in I sand of I his give curious, okay. I’m availability result all? you’re And then that, around designs West a one it very as are question. whatever your considering using of Texas coming conversation? more around question, maybe and but just up context It’s sand from I’m that talking customers maybe if you’re Okay, you getting leading I changing that guess curious Fair around the as can well is enough. was in And with But me. if sense And perhaps, Chase the unrelated your an am one having sort at conversations with customers curious West at Texas guess obviously getting around impact availability are a the sand

Ben Palmer

discussions as changing sand. a or Texas and don’t availability of our binary Brad, so guys operations sense making it’s job designs outcome West is know their and much based night, a visits we last as sand of someway that from potential Texas their with or the wildcard sort of operational recent field our West increased of anybody plans recently on

So that don’t any just we have one. on information

Rick Hubbell

early Too tell. to

Ben Palmer

to tell. Yes, too early

Brad Handler

Okay, very good.

thanks that. it for I’ll turn back. Okay,

Ben Palmer

Thanks, Brad.

Operator

our take We’ll LaMotte Guggenheim. with Michael from question next

Michael LaMotte

Thanks. Good morning, guys.

Ben Palmer

Hey, Mike.

Michael LaMotte

of seeing follow-up to that happening size you on as the intensity the fleets wanted I Is well? your Are growing in capacity. increasing? average comment absorbing more fleet

Jim Landers

site at a in there for We given that lower hours that’s running you’re the equipment a historically for on to the all you’re Michael, some at time XX speeds. and multiple the running reality running, more need redundancy days, to break, running also equipment but for that been equipment used day intermittent are, sense when long when a you has operational equipment have without

a So sizes. fleet catalyst that larger That’s correct. is dynamic for

Ben Palmer

gate, more service that it that intensity. that the to out talked type of I’d – or of activity so revisions in. Ben, participating would with new higher to also new time for we to And the reflected equipment suited wells we that been is the and of our that, add of equipment had too are components some this longer, of we now making months has some design to about we’re that ordered that right handle reality several that forth the for on be

of ends and years other top it’s that the fluid ago, things with same all like components yes, a designs with that. we’re the like had So been and we number thing to doing deal

up respond the to hope ahead keeping those approaches trends, we’re that at opportunities changes frac we well to trends to in able responding we’re or of that changing least the and us. new and to the designs to be present with So the

Michael LaMotte

you, rate, Thank of in million year, I to you’re sort capital the I ask guess, on if EBITDA. And could on do Okay. $XXX Ben. question allocation, a this run about

$XXX right, CapEx. If do And in my million what if You dividends math throughout end you million like? you’ll is in the returning of $XX were CapEx and roughly margins would the with mentioned think look to cash. repurchases mix up same XXXX, about stay to cash return

Jim Landers

be CapEx will higher because buying equipment. we’re

Ben Palmer

Yes.

Jim Landers

part easy. that of answer the So is

– also of very and We know our cash as shareholders to responsible dedicated as most as possible. being people stewards are rewarding much

So dividends appropriate, for can and, when look repurchases. you I healthy share think

same the don’t of kind as higher just CapEx, and something debt. always, of plan to go legs sheet. it’s balance the into good extraordinarily Unless being just to responsible we tool happens, So three

Ben Palmer

forecast are things, those not those what view, to I’m healthy do best periodically on to to returned too, that But some saying that, about us at are to think about and did out They think decisions it, the shareholders made are are. advance. I’m I based we cash not time. and add it’s in which much the of are our made alternatives available prospects, are alternatives, – I think decisions think going possibilities CapEx to but what both

we’re our So making months to are what from about returns decisions now. going or to months shareholders be not today nine six

Michael LaMotte

that cash right? balance is excess need on question to stockpile is the return? gets no Really, ask sheet, to way there cash another the Maybe

Ben Palmer

say. fair to That’s Yes.

Jim Landers

Yes. to We cash right. want be That’s efficient.

Michael LaMotte

guys. Okay, great. Thanks,

Jim Landers

thanks. Sure,

Operator

next Simmons Daniel to Company. go We’ll of & John

John Daniel

returns is, versus just driven how the spend thank the Jim, look decision Hey guess, ahead now? desire the you. the out first question healthy for and those much when get by of of locked to you guys, transition horsepower make at me equipment that X additions, was get I the on to new Tier

Jim Landers

about future need those all are requirements yet, I our belief Healthy – returns of or haven’t pumping, pressure spoken going all things are to important. of the sort those equipment to of that that cost of XX% all people enhances wear-and-tear were Tier Flinstones that on that is and above. the decision fact high ahead cuts the our the of continue there of and equipment, the prospects by Getting of the X for

a without buy that cheaper. a execute, about equipment our was factor. it’s feel So the just it because we wouldn’t In were if didn’t deciding words, key good saying it ability or to other but not factor not we goes market good

John Daniel

equipment Okay. running any you Tier Are X now?

Ben Palmer

very I do very, we little. believe

Jim Landers

had We Yes. are customers years running. couple X of but them of the if know in a equipment of a Tier interested any Northeast don’t who I couple in were ago,

John Daniel

Fair you know to But your the spend, I probably would is, enough. assume sort range, finished The is given just XXXX lot your provide Okay. a a be budget. CapEx how haven’t I high given CapEx expansionary of CapEx up maintenance going utilization the too.

Ben Palmer

Yes.

range. Jim it’s too give really a earlier. alluded much I think and to early that’s a of yes, to statement, fair

we’re reasonable be it to of various think here than but our higher that’s equipment. and and early XXXX, looking will my was be be too what going to reevaluating would – we’re fleets projecting I to for opportunities guess Again, at it’s assume it tell.

now. on right going that’s so And

John Daniel

All frac? Or Are anything tubing, expansionary other CapEx efforts, focused on else it is any just right. that’s noteworthy? coiled there primarily

Jim Landers

pressure pumping, just point, this John. At

but We’re always to you this looking things as at point, know, pumping. pressure

Ben Palmer

no And this orders firm announced to point. at be

John Daniel

a probably Okay. offering Have me. lost price? And any guess I answer this but is customers guys any with lower was no, – due the I’ll to last one a incumbent ask work just competitor And the you then for anyway.

Ben Palmer

time. the sure It all happens gosh. Oh,

Jim Landers

Yes.

John Daniel

okay. So there is –

Ben Palmer

back. competitor say come does at competitor the it lot lost the who back a been of we When we customers, around comes bad or you may didn’t job. We’ll a have job or get particular a

may we’ll So price, now to back on our customers come us. the

have jobs all won not on. So certainly, been we’ve we

Rick Hubbell

the But that price of costs. booked no out, this in out Yes, the being we’re would absolutely. real future, we opportunity there’s costs weren’t in in there opportunity since Plenty at if be point sense booked competitive point.

John Daniel

okay. Okay, Thank much. you got. I’ve very all That’s

Rick Hubbell

thanks. John,

Ben Palmer

Thanks.

Operator

Syed We’ll to go Goldman with Sachs. next Waqar

Waqar Syed

Thank you.

much how going how XXXX? the new In the in incurred of for be CapEx much builds, is and year to terms this

Jim Landers

We already have it. XXXX. It’s

Ben Palmer

year. very about be very, get out, few It’s total year the have upon some very, make prepayments. CapEx the to have and they way may to late next of X/X late the delivery a pumps won’t but we will right? to X/X drive CapEx, Obviously, But but delivery. in the it We’ll drive fourth XXXX, equipment scheduled And this Yes. We’ll we and that the work. contribute not the revenue. much availability in take quarter would

Waqar Syed

something then build million for CapEx million, $XXX the new And what, roughly, Okay. in $XXX total to the that is range?

Ben Palmer

That’s right.

Jim Landers

Yes.

Waqar Syed

I fracs by clarification. earlier, Okay. was wanted on some But asked And then question Chase. just believe, zipper a

If fracs jobs what look you you done, traditional versus just systems? percentage those the zipper horizontal the were at of have that

Jim Landers

you’re Waqar, was zipper percentage of horizontal what asking work? work

Waqar Syed

correct, That’s yes.

Jim Landers

on or me work call to. the that. end the Let by of try it I’ll answer

Ben Palmer

Expect the horizontals. already from

Jim Landers

Yes.

Waqar Syed

and what then many And quarter? were the us – in And average also you then quarter? third on for working the exit was crews how tell could the rate

Ben Palmer

the fleets the Crews difficult. of around are a There sizes I we’ve type with kinds were Crews are the different types work. very we upon and way XX depending talk and the, exited quarter them. lower. the we equipment, think, as third But about added bit

XX-hour doing a we’re of work. lot So

So…

Waqar Syed

Okay, XX fleets.

Ben Palmer

zipper was XX% horizontal approximately our work Waqar, frac. of

Waqar Syed

great. you. very Okay, Thank That’s helpful.

Ben Palmer

Waqar. Thanks,

Operator

with next IBERIA our MacKenzie from take question Capital. We’ll Rob

Rob MacKenzie

Thanks. Good morning, guys.

Ben Palmer

good Hey morning. Rob,

Rob MacKenzie

you may. i.e., driven availability the being back come pumped? little well amount sand I volumes question has from optimal volumes see to design lack late of by if per think you comes do available bit Permian expect sand sand [indiscernible] as How to such, sand the as of different the And to have supply in wanted for do online, sand pumped angle I much constrained increase of the of again? a versus being job? desired been guys

Jim Landers

issue. has sand We we We of that the of guess because don’t more – know customers that an answering using I’m know it I availability been opposite kind way. sand. think our like

And so I think I a don’t don’t know. been factor. it’s

think I available everything had they wanted they’ve available, that so…

Ben Palmer

the I was I digits. pricing, than to show will for most right? low more part, think increasing much think, in pricing If mid-single that up

that’s would there’s think But that indicate that designs significant sand point. this I of prices, at think that don’t shortage. inflation I a given there impacting that much was not

Jim Landers

Right.

Rob MacKenzie

your And services. a overall in guess, with again, many shifting creeping market in competitors deflationary a XXXX? expansion as for despite profitability, price further and gears, to of scores? for then go more Okay, the acknowledges interpret outlook bit quarter frac still thanks. undersupplied this Do that how from at And we you everyone I room is little moderating you pricing do increases pressures still into subpar their price there have

Jim Landers

demand so to equipment geography doing. we is the the continue what wearing believe the more Rob, you expenditures, simply maintenance wherever the If Customers the we’re work causing harder out, maintenance or or equipment. to on more put want that’s because statements. financial capital on is

both work go country. return so that make will there I drilling and will it up – just down earn need the And better either hope the to a really as as everybody completion work. will reasonable happen price I But we will prediction. but So is much continues work oil a In for to says, important case, happen customers to I’m And be market for need or in harder, which is this hope the pushback, a that this getting their later. and pricing. eventually, of you, free slow go doing and and will

Ben Palmer

our if the from opportunity know going to – we’re go there’s stay higher, up the I guess, if certainly, So to same. costs to returns, and has I have to returns harder gets and margins and are pricing full M&R pricing the maintain to work a perspective,

there’ll will hope So those industry returns we be need total, hopeful say we’re returns know very frac whether that we’ve that there’ll net that in to acceptable and get Again, look we can recently pricing up our seen – get get what of the industry you the improvements, special that. to we – be pushing We go for can’t we know don’t returns. a on happen that more if some it because it forever. consistent little will,

with burn our and is positioned will and to customers the difficulties. going the equipment we’re and Luckily, in are Just with very financial able our with provide where quality to severe – have positioned of position we’re we the our equipment services. people up quality

will those not more of situations, our We’re competitors we’re push experiencing same but hoping pricing.

Rob MacKenzie

share then how about going you’re stems towards spending in your can terms some question and you a, spend final playing What that, into visibility having whether they I And next my guess customers. in the of think Thanks. Okay. of, as with here with us year perhaps pressure you see as terms around How have into to flow? of choice or do complete and drill wells? recent that to dynamic their cash part growth any And that, you the docks do new out? conversations

Jim Landers

now some your or as those Wall is and about insight many sales impact operations community aware impact topic and in night, haven’t living discipline As E&Ps. capital analyst last recently an in seen there. within or And any a question the Obviously, asked of we means huge right don’t the operational people our with of but regulatory we conversations, yet. have and we’re Street forecasting

Rob MacKenzie

turn I’ll Okay. guys. back. it Thanks,

Jim Landers

Rob, thank you.

Operator

We’ll to David Anderson Barclays. go with next

David Anderson

Hi, pricing we’ve fleets. about times. only customers good a of I know be kind you noted just the spot kind market of this a on the your on also morning. few seem lot better getting was you’ve approach but wondering of touched better on I not margins. dedicated But versus your to that

more just Is you how book ability have of about more your ability of curious, also think on being of it kind efficient? touched because the be you to nimble. a that? Is So different that customers? You do

like sounds can switch some these of of who around. it avoid pitfalls So customers you

talk could you of So that about you different? why kind a little of bit think it’s just

Jim Landers

quarter higher contract right spot Landers. Jim during a market bit a discussed customer rig pricing pretty and general now. your drilling In our conference, comment, is than base is this at the mirrors And David, much the count the general, we’ve as pricing. U.S. if

do it regrets for his than – the about nothing we going a ready more the customer them, or to that nobody just is have most, that, but there’s may faith doing. the more base. enter being And little E&Ps able in unique customer, were you like good about not private with contract beyond One is it but relationships. contracts don’t that particularly control, think they position. that and be go, probably we good predominance customer be reasons her to work and our thing beyond they so We said second But have in a to we your regret but into we

two might if or easily. extend you have you waiting can jobs And job you, transaction we’re said of pushed spot some that earlier, people replace when So but market. a position that’s for pads more those months in now where a the get month, as That’s or that. not a market, something of we’re like series Ben couple a reason, a daily them for for in those

So to and that’s driver able we’re being being people work position with is the or nimble in, if to a key success, slip. people replace things

ourselves said, We So Ben just a the we that’s as price. now. great right right contract with – find love where

You all understand they customer going be try do plan and they’re that about have see the we best have Kind to your to to now. really the operations well. do if to be to want to and work choosy of answer and their able as do right

David Anderson

Well, a it’s Yes. great answer.

Ben Palmer

add to further. add is I just would I’ll and Ben. this that,

shows a and cost the even the returns. a consistently it just and and good We again, And costs jobs. and comes always that better the we cost job and that we’ve our a able handle to intensely our long right across handle costs guys I the to have much when focus plan assumptions in on. numbers just bidding and it’s job ourselves, that’s of think through And to and in where I’ve the margins up. operational services. in in alluded showing to can the setting applying in a try worked done for numbers, standards terrific jobs delays But and it’s done. than of long, getting more to and something impact on the easier have said our Again, downturn time it’s understand that and be that our on the measure accordingly understanding we and the cause doing the –

David Anderson

Now spot pick the this kind kind fleet kind last that thing? you don’t like of of the when same the this versus time? Did guess, that cycle of you’re to Or same been I’ve strategy cycle? up. or primarily the kind of I that at you something know, XXXX I still is dedicated spot XXXX, strategy, starting is thinking do employed

Jim Landers

No. was Fayetteville. and customer to back different. that the plans It of XXXX, start – the we was and different. And shale work Haynesville point, At go that presence gas nature nature very a play of huge like you the the natural in had if the the

pressure pumping a contract. and we So on XXXX had, fleet between XXXX, of had our material percentage

in to pumping us us, allowed and our environment. have figure appropriate work it. plan pressure glad out it’s It also was and a it So we’re to did like a for high-service-intensity what fleet we operations

was point, another for path. this positive particular that we’ve So again. But us Maybe positive chosen then. at

David Anderson

that’s seeing see need obviously about to your know utilization adding to finally And to replace Based for when if you’re levels of replace your year. early equipment. XX your had think next it’s thinking equipment, you talked have Earlier, you activity Understood. you horsepower – going announced utilization do half you’re replacing XX sense XXX,XXX you’re a going to projected me. this I much you of and you upon but horsepower, you’re for the today, – I about how mean, based upon of you XXXX, today, going and what for as next year?

us think sense of give you horsepower look replacement a you that can like? to what So kind might as

Jim Landers

actually pumps We horsepower it lower-horsepower smaller. where go going don’t our the in work as are are We’ve that vertical to characterize plants replacing. got some fleets

older some site of We’re equipment also at important change. don’t designs to have repurpose optimal is service line, amount Job sense The you change. have going dynamic may right this which on business pump-down as well. of that point. a The to now. We a the equipment is

right have to great fleets we’ll and don’t sort as now So thing. number just that of we of to the offer you numbers have

David Anderson

Okay. Thanks, Jim. it. Appreciate

Jim Landers

Thanks.

Operator

We’ll go SunTrust Humphrey. next to from Robinson Kenneth Sill

Kenneth Sill

guys. Yes, good morning

you ever equipment that up don’t kind per pieces different on the you Just can actually se retired one. but following replace see question, of is First trailer. a software on out, The because

there to is XXX,XXX got guess, equipment. That’s you’ve existing no reduce I what all horsepower to incremental in There – adding your through are attrition. horsepower right So plans now, right? you’re

Ben Palmer

here we may of jobs fall down and they few down may of Ben. more pumps and Not any a there that when There any is of think pumps it are out the on – line working decision fleet. can be capable intense we to that significant of a don’t push Not that the push them degree. some to in this

we’ve an the there of we anticipate about As we count much point, significant get to the as of can equipment don’t add on Jim for year. amount said, to time incremental in being by maybe pretty talked lines. that other XXX,XXX We capacity to think at that – be this the today pumping. have end will you drop next pressure repurposed our the a will we But service that

Kenneth Sill

Okay.

And what just thanks. it wears it seems kind So appreciate talking out how But you to guys are listening about, works. that, like that faster.

indicator But be versus is Your run going sand are I or about maintenance is hours the to wearing now more seems to out? talked don’t the ago? volumes you equipment CapEx out think me two a It it. that How much volumes. higher. better faster three And than years sand time? Or wearing it’s on it equipment based is run of

Jim Landers

to this lot the is out wearing two general is complicated question. now puts The answer a question is equipment There did but are answer. or that it three ago, of Jim. years Ken, and than unquestionably. a good a takes It’s

replacing where anybody of fluid all are suited that comment times. Some run – ends to components continuous we more offsets the replaced longer, we’re and to them that we components, can the with are that replaced duty lasting longer when are

run would of is thinking also about and life that fluid through hours more We that the volume equipment versus ends. agree with you time goes of sand

There and equipment So definitely to puts to on are out put a faster. takes, it’s that. hard is wearing some summarize, and percentage

Kenneth Sill

sense. reporting side gradually I a, if make mind the the scale money matters these aren’t of these other final right guys to would It make capital try do The sense have One some guys returns. But making makes of with to adding consolidate don’t b, still to mean, bigger it more guys yet. guys are some got mean, that of much deploy think seems to you I mean, your But changing. the look ever kind that. I you’ll you And business consolidating is something you it I you equipment things? about. does me We’ve guys really at? Appreciate is now? to industry-leading question. guys how weaker capacity. sense something M&A logistic that think of in that is talk

Jim Landers

that don’t if is in M&A but we suspect Jim to always is that consolidation, within many and out that, you basin. equipment, matters have times basin which larger our this And again. Ken, buying and because you’re a advantages you’re think Scale to only you’re logistical know cultures of blend. answer one – you when

wouldn’t So justified you financially. the premium above paying be book – value might be that that you’re

So are only we a been well consolidate companies long pumping look for notice you forced time pressure when noticed, in always and that to. you’ve you an if the if industry as they as analyst,

people with agree most this. think I So will probably

Ben Palmer

what the buy we over up there’s should be high-quality even and to long We not at higher market are are you buy you you adding a go that the for what organically. returns let’s the in. is guesswork to faster extra because are, into one us, they we capacity, We buying haven’t multiple and interested – could it see to out that grow just you equipment well, of historically spent conundrums whatever, a something get when standard look had their know we If typically organically. those whatever the said, take potential deferred And think this then or Either typically the comes they maintenance, we pressure of term. just pump to can become pressure lot a is growing kind pumper, the reason. or struggling returns, oversupplied. I can bring of when for that’s

last not know quite add necessary come could under quarter, the Our before. to or how decision as But pointed out. we the again. quarter we coming everybody industry on Certainly, think but returns has we good, solely quarter dependent the not about is the are that pressure the equipment is – did

better and the We utilization feel adds the moment. good runway think incremental the with to to give and we get some So some to pretty that think we us even have and ability. going we pricing, ability continue our still at industry about is

consolidating, at something we seriously ourselves. that So not would probably look

Kenneth Sill

I color. the appreciate

Just one XX% so ahead QX last final question, revenues, we of to active XX% ourselves now. your make on quarter, fleet that don’t sure of get

So A that’s heading pricing, into up but you’re sequentially. XX%, then little bit XX% better season. holiday

that? pressure implication low-double So than are revenues is digits? conservative pumping more kind you the could you see of up Or

Jim Landers

two there’s just I conservative. Year’s our and Well, shutdown. that always mean, come that’s customers going you involved. any have that, and of holiday I for day, days. way, which can’t to which holidays those the we’ll shutdown is If a for on the We more it be an work the idea jobs. Monday, back two be and don’t – from work are by guarantee you Christmas middle that’s better mentioned for long currently extended week, New more in can mildly

positive. mildly it’s So

we’re revenue but we – – give guidance, So don’t as you know.

Kenneth Sill

going. I what kind Okay. just out of laid is else

Jim Landers

we it, We understand and appreciate Ken.

Operator

We’ll FBR. to go Thomas Curran with next

Thomas Curran

me looking prior follow-ups morning don’t But questioning. you on greedy, guys. for going have good being a Hey, weeks. we’re to few of about lines guys Thanks in quick squeezing I really two just in. guess, I [indiscernible]

where of how pricing. guys relative the compare you beginning leading bottoms? First, the does your been the to it on since And upturn, that frac the in point at edge? market spot pricing where average is have to spot Since this

Jim Landers

analyze a enough tell the you pretty probably and Pricing of but the up something little like to trough, is about. a try to today spot close is where bit edge. that. pricing is XX% Tom, from probably There’s leading lag not to

Ben Palmer

that get about here. to like We’d

Jim Landers

Yes.

Thomas Curran

to turning then frac And sand.

which stage, For per consumption is your sand in much how standard measure of XQ? frac sequentially increase intensity, it did

Jim Landers

declined usage per but Total sand to quarter. stages, higher second quarter declined third was per third from declined usage the second Frac total stage as sand stage in was Frac sand sand much mid-single digits. quarter per to slightly. stage actually

Thomas Curran

behind factors of that could issue see that upon in designs? what some just of color was reversal some a trend? decrease. your And it of some biggest Maybe Have around terms efficient you behind expound more to to in customers Was you the started disruption delivery? going

Jim Landers

looked we indicate Remember, few in of it major we jobs. not have does about a not one sense revenues. XX% or and meaningful customers just was what’s do different XX% or is in it. a at that a that It it couple of it are the who customers way Tom, other. a not basins asked have Yes. trend had And happening,

So it was just mix. job

Thomas Curran

last your Okay. for largest last customers, who us When so, And year? could single customer comes to And new it your largest from changed one you then has major exiting if it customers? was the me. tell who

Jim Landers

XX% We don’t have any customers that more for of account than revenues.

telling we’re got you are our is. revenue. pretty who a a that’s not It’s largest But small to whoever so nice customer a of we’ve customer diversified of customer mix. And largest is is, – tell way you going percentage

Thomas Curran

Okay.

how it So necessarily or that into even might you’re has if to nothing have sounds it mix read saying? evolved like

Jim Landers

E&Ps. coming revenue an the with the more they’re earlier – from we to Correct, much community think it’s or answer count these to But not that we correct. have to either. things private an pretty analyst In rig become aren’t trend, customer do meaningful again, our nears us don’t a question, drilling the until mix exception

Thomas Curran

you your I Okay. appreciate stop guys. gone the time. We’ve see I’ll an here. we’ll over hour. And generosity already with

Jim Landers

Okay.

Operator

Bailey Instructions] with from [Operator our to We’ll go next Fargo. question Jud Wells

Jud Bailey

ask Thanks, about wanted me drives could. the morning. business frac non-frac I your biggest and EBITDA, Understanding in. squeezing if to good is but your I it Thanks for

next flattish and call standpoint? an completions from call few those think you should revenue in businesses Just particularly see flattish of XXXX, we a, of slightly quarters count those with are up, businesses count. and it, rig the where next do over thru coiled kind how it, margin tubing, a you progressing flat, or How rig year think about environment

Jim Landers

secular usually start Jud, started Coiled pumping it I downturn it the be down. well that. Jim. of There and because other that, Having have ways hoping answer. reasons understands. that call but we pressure – laterals. to – its probably has it completions out tubing question, because all longer that the coiled it’s of an application can further challenges up lagged said – work pumping and this there That’s for for everybody fact at out, businesses to get it improved tubing of lag you is and knows – the in recently, and can a Coiled bit pressure completion this our was challenged saying we’re with doesn’t by both as are coming are the and some does

Tubing Solutions, So should to that a continue. improve we think has. the pumping Tubing completion margins, mean, it’s performer, if it Thru Solutions, you’re revenue just how looking stages are Thru business, States, and correlation it’s because Tubings a going between Thru I strong to maybe be vital being frac United for and to done anything extent way that pressure the good forecast many in would to continue the not highest else.

other best had businesses, and we being now. businesses business, for right have time just more Some the of and has third demand tubing Tubing the coiled offer largest than lower challenged. drill tougher the of of because tool The Solutions. our Kind been Thru second a could rental pipe,

Ben Palmer

is impacted off it It’s just as as of balanced The pumping due things and – about it the not just Tubing that. specialized go Solutions. like I the to add as Thru as hasn’t might the hard far. because didn’t nature down reason bottom services pressure

the completion other to. lines. they little rig more a volatile historically have will they the less steady, it’s of service changes, bit outperformed and I continue But again, than So some count expect

Jud Bailey

and Okay. there turn I’ll you Thank to back off guys. it cut it you.

Jim Landers

All Thanks. Jud. right,

Operator

question it Jim to further closing to for We like Landers remarks. I’d this time. turn additional have back over no or any at

Jim Landers

you to Stephanie, soon. the and your good forward interest for appreciate RPC to interest. in day. thanks calling seeing in We a Okay. Have look all and everybody Thank you, and

Operator

call. This today’s concludes

now in disconnect. call you participation, hours, www.rpc.net. be you replay your As Thank a will two reminder, and this for on may available for

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