RES - Earnings call transcript Q4 2017

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Operator

Good morning and thank you for joining us for RPC, Inc.'s Fourth 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 and forward-looking be risks. in you press statements the this referring found on outline of those on of to of operating refer two XX-K conference today's made known like risks be at that public number I'd will website and and to to and can In nature release non-GAAP could www.rpc.net. measure along which XXXX Some filings reflect RPC's earnings issued a be performance. other be with all we'll that call our release today, of our call,

EBITDA results Management income of the reform. because operating RPC's the various various and periods. to excluding presenting measure over implementation EBITDA. time And is a net of of believes as tax impact the first regard second the without impact periods performance that us performance, earnings the tax of diluted to compare operating our of implementation per operating compare of without enables share measures changes set to reform RPC performance capital The are financial consistently in structure. us allows consistently uses non-GAAP it over

interested these calculated. review that to press financial Please nearest income if the contain of you're which GAAP Our reconciliations these non-GAAP and today net in financial things measures release issued website how our measure. are seeing disclosure is

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

Rick Hubbell

in sequentially the quarter we constraints. with tax in U.S. earnings Board of to decreased increased balance financial for recount corporate during quarter to issued Jim. press of results, expected The fourth average of RPC's the our compared Thank of $XX decrease customer XXX, X.X% finish of cash quarterly dividends We cash $X.XX to but X.X% due sheet an domestic seasonal higher quarter of and RPC's budget increase has fourth based including XXXX quarter per our million slowdowns same XXXX. rates a by morning, XX.X% or than share. XXXX. compared Directors release our XXXX, revenues XXXX period regular strong and in lower third you, was This fourth the the

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

Ben Palmer

you, Thank Rick.

year. and revenues to increased quarter Revenues to intensity for equipment. levels higher for $XXX operating profit quarter due fourth an compared the $XX.X $XX.X $XXX.X service prior the to compared million in million million the prior period pricing year higher fourth increased to the increased for $XXX.X activity to fleet services, to in quarter our to year. EBITDA to a and of year. Operating the $XX.X million, larger loss prior revenue-producing for increased same the the For last compared compared active million

tax reform recorded to the During in $XX.X tax lower to due result of corporate primarily free items XXXX, the permanent quarter changes. rates of million nets was the XXXX, by enacted the related benefit law as the benefit the effective using The of tax tax offset of fourth a quarter. partially tax revaluation adjustments RPC deferred during

net diluted to compared quarter $XX.X and materials fourth share the loss last compared both higher share, cost Cost due tax diluted revenues XX.X% earnings $X.XX during employment loss million driven year. was higher or $XXX Cost year. per activity which to by and $X.XX XX.X% share earnings million million million of expenses reform, primarily revenues same $XX.X in to revenues of of for million levels. XXXX net per $XX.X a of during increase or was the benefit supplies quarter fourth income the period $X.XX $XXX.X last the Excluding of of or of or or were per

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

same X.X%, $XX decreased million compared percentage to as of the these $XX.X prior year, quarter over and revenues during a XXXX, primarily of in fixed due the leverage of Depreciation were in to fourth last decrease the higher XX.X% a year. XX.X% As of period amortization to million compared revenues, costs costs. the to

pricing for core an revenue quarter due segment million improved Services the increased XX% of $XX loss and the $XX.X the increased profit levels. activity year. compared million Technical higher year prior Our Operating to compared of the prior to operating to fourth in

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

to revenues quarter, compared fourth of prior quarter from was $X.X XXXX to XX.X%. increased was declines Revenues sequential fourth cost total profit improved the due quarter. of of constraints. a our and due to pricing during prior This partially materials $XXX.X by producing RPC's to quarter by seasonal to revenue and customer $XX.X in budget due by decrease resulting year-end fleet caused including of lower offset quarter decreased headcount. million by larger decrease or active employment million lower million operating fourth expenses partially X.X% Cost slowdowns the temporary decrease during activity RPC's results. offset the a million in higher $XXX levels Now million supplies $XX.X revenues discuss the activity equipment. from

revenues pricing. Selling, revenues, the general increased a quarter in third partially quarter resulting X.X% As expenses XXXX of in improved by from the levels XX.X% fourth to the activity prior quarter increase XX.X% and or from of administrate lower offset during quarter. to fourth the compared by inefficiencies to due percentage costs

Excluding fourth the the quarter of discussed reform tax quarter for $X.XX of margin was the the per impact prior fourth to per million prior sequential XX.X%. $XXX.X share million or decreased XXXX and diluted in from EBITDA from or quarter million the $XX.X income XX.X% earnings $XX.X in quarter. $XXX.X compared EBITDA decreased RPC's net as to the million earlier, earnings share diluted to in $X.XX

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

margin segment operating in XX.X%. this Our from XX.X% to decreased

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

of horsepower. pressure full fleet million headcount quarter RPC's end million. pumping fourth quarter. the XXXX quarter X% XXXX total Our the capital of to increased as was $XXX.X Fourth the XXX,XXX and CapEx expenditures $XX.X during the year hydraulic remained unchanged were

majority this and be the XXXX, no $XX XXXX directed approximately new our towards outstanding horsepower full capital the million operating be will be of will expect XX% currently $XXX back equipment of of in cash maintenance estimate XXX,XXX our to A will XXXX of which completing portion Rick earnings in directed with year the our in is of financial towards end some revenue those and be million annual the business recently hydraulic ordered rate producing to balance Since results RPC's for equipment. debt. to expenditures of reform We remarks. we increased our expect XXXX. turn that the impact was I'll we purchase on At over a through closing XXXX tax beyond. in now effective XX%. have cash domestic, enacted tax to range it and meaningful positive flow We

Rick Hubbell

RPC's additions industry fleet strong. results along results. Thanks prices trends in during pleased interrupted the recognize oil year to with are natural indications past several will remain the placed and Higher to pumping XXXX pressure insisted services our fourth Ben. positive service quarter of quarter. for improving the demand second be The we are quarters that trends the plan full are our however gas with We

the XXXX, to of demands. for lines continue staff we conference call RPC's we additional morning. market for recruit time, to will the joining train and In employees equipment and addition, this quarter this your meet the fourth At Thank us during you up questions. open for

Operator

Thank you. question take We'll Research. with Chase first Mulvehill Instructions] [Operator Wolfe from our

Chase Mulvehill

Hey, morning. good

Jim Landers

Hey Chase.

Chase Mulvehill

talk question the is into I exhaustion, moving first talked of the can in you to don't kind that where in quarter? then impact guess talk expect we can maybe the and was of first the I XQ of you so look as back so maybe about in budget kind you parts maybe utilization the about that kind that if XQ and know quarter, Jim, you of kind about snap utilization first do fleet Hey,

Jim Landers

saying Chase, otherwise and this good bit But their make bit, extreme harder. right told and to Dakota. bit revenue pricing term lower calendar some that for service fill Jim. us slowing margin month we're lower the that people was calendar would they right because have a was we up in the trying now them late our higher from worst pumping budget. fill of was of a profitability up in fleet running that the educate budget just long December decline. a main then not trying December. the seasonality, decision. did little sequential out that little and of provide work people a North - as this chose we're about customers might And to improved the was point, good it is we're catalyst We We pressure the Utilization the majority just pricing actually not you was Pricing really to of for for utilization We've had an but improved not of a month margin down customers were at revenue actually expect work during who some us in weather with impact out November felt giving to to quarter. off there XXXX just been the with

absolutely really So was utilization. fell Utilization it off.

Ben Palmer

to so of Ben. possible. with that is part there aligned get of And is slowdown our business be whether as And would much challenge and you base lot in And our to our happens and as to We customers discounts term our calendar and a more that those a fully holidays out up utilized things, all to start on goes of and thought portfolio the to late and Chase, quarter, this model us that offer customer fourth try detrimental. that with we as other can were seasonal given movement over is run Jim to try up. said would very get the to focus imagine say work. with fill it it given going to get we didn't the our customers as that large want to I long was

about So made what we nicely, good filling we will quarter, good first comments back but match we we we're didn't the it this quarter were year were about turned XXXX. is turn question very period about when the out out. we're are that calendar higher we're optimistic about earlier about about very know the so oil all results the of XXXX feel And it. how But it, certainly is. And would and point we're about we good are even comfortable we not things, be are over ramp-up, it that we looking and the worried the have three other really concerned results we we like we favorably our look prices understand and those customer and way we once people and overtime, is last it's impacts, and back the several is we're on think impacted there impacted and think still time and XXXX the not a seasonal exactly we over demand we XXXX up and the and quarters XXXX yes strong the very we way how there full feel way are overly at shocked up last focused all posted feel certainly perform our always will about with

Chase Mulvehill

Okay.

maybe So I guess you around your and you we think we do to fully quarter, quarter first the you in be going fleets those of gaps be the about utilization utilized the about but still out think the you'll all look of fill year the some think XX-XX when kind unitization think to calendar. or as first we exited was fleets, fleets, it think about

Ben Palmer

I immediately as indicated back that up. can ramp-up think go if just the ramp a and there I it from there slower be

slow it quarter a similar At I quarter full look the little calendar end be a will So to back third but will think have for that of levels the and was is back. bit up, the ramp-up filling will be where third very quarter.

Chase Mulvehill

Okay. it fair ramps end And activity on in the of kind high to if the we XX% kind the quarter, end through to incremental of, low is that the incremental then is on first of the book XX%? to

Jim Landers

can Jim. them QX Chase, margin we are Ben just hired more decline be in that think headcount range, this about ramp-up on by increase quarter. mentioned was know if we've X%, don't One QX reason we're question for There first as for of actually look quarter and now a than is XX% higher I for lot we a so you higher the wiggle trained anticipate actually that few but depends people. nice think in in employee the looking right the look your there incrementals how incrementals fourth to Ben mentioned our the higher to in we that's incrementals, incrementals. much

Chase Mulvehill

color. more great Jim, That's Appreciate you thanks go. Ben Okay. it. and Thanks

Jim Landers

Thanks.

Operator

with James we'll Suisse. Wicklund to Credit Next go

James Wicklund

Good morning, guys.

Jim Landers

Jim. Hey,

James Wicklund

Can top order? some in you're top who's you the in particular not your the reminded no us who customers percentages are three but Permian of are

Jim Landers

to forward we're in this that without a your it's answer let names. disclosing question time but disclose We Jim, haven't customer or XXXX quite not statement, answer I XX% was and one is that over actually for going But XX-K Jim. had we disclose to either. try our can a some - me to looking don't naming

in small names can you'd companies the the the we what there if of see. waiting is Our customers that's general, you players public tend the In or Permian. cap a in mid-cap to be independents private the companies Permian, towards larger show and kind versus

James Wicklund

or called sand appreciate is as that did an the people in been how sand talk more Can sand that your make issue the Okay. as however the you and on. than what business That's impacted as you make helpful. our I is this that. what not seeing did and business doing business, you you year had for you a talk later positive costs in you're thought about QX? about can comes fracturing they much sand, thought And had money noted in that regional Permian you you money can hydraulic sand

Jim Landers

Sure.

are We've Just provide in regional do want set and customers willing to and that's couple what sand to to we things, level that's our our we go. we not regional have and us a where happy used any sand up to the to they talked are if willing with Permian suppliers that lining if yet.

of cost what our talk aware no of there's about terms So sand regional any of answer. in in other We're people inflation.

of the so or about increase We percentage revenue the percentage Sand really a quarter seen if during you fourth is of it's as not did trucking in much in regional in fact total specifically and have cost. not that the quarter, even probably think the declined even sand. minimal a expense as

Ben Palmer

at Delta quarter-over-quarter all. sand then attribute the

Jim Landers

was a it nonevent for it really us. Yeah, was

are change. We trying to

James Wicklund

Excuse me.

that, guys, else. I'll thank Okay, you. somebody only let

Jim Landers

Thanks.

Operator

over to Stephens with Moll Next Tommy Inc.

Tommy Moll

Good Thanks taking morning. for question. my

Jim Landers

Tommy. Sure

Tommy Moll

even have you sense and the run frac pricing, have there start may timing bit budgets of new no year any of increases, on we there year any begins do On you to set price as think do room as of any here? how what's just be do much sense wait still a for rating is up we it's CapEx run the you as be or to a low pause

Jim Landers

That's is this a very Jim. question but difficult a question. great Tommy,

for clearly are strong budgets set is a really said year, there's February that are talking going seen think yesterday acting as so sure customer until activity is bias increases. Wall probably pricing a this article be couple of right aren't now. intelligence about customers to to how field times, recent But as prices good commodity Street most Journal XXXX, we Ben in in going Our I'm you've and be

muted increases the quarter there. will difficult everything of we acceleration given first else, I we will pricing think and think it a cadence quarter We more the again that's but second third and be everything that as pricing to now see in in quarter, first one be call. ramp-up people know although

Tommy Moll

to the which could dividend follow-up, Okay. reform, combined Thanks. tax you cash reduced ask one get And enviable after look at the the what recent you're of the you the the the squint flow a with maybe us help increased then you balance at would think the front in the toward opportunities and you new cash free year, clean if would sheet, ask the risk Thank in on cart sheet I'll you should build priorities the the would generate horse, at was that side? just able the position would I Can little we of you. still putting given morning. balance an on it this when point anyway, for see of about return this shareholder say bill in be be to harder good significant even cycle end or after

Ben Palmer

at not Ben. those We've one time. This is Good decisions question. made this

fleets. XXXX allow actual the net more work more our that won't which say also probably That's it capacity to capacity to time surprised the looking say some coming XX% we that at improvement what to of intensive in read result of a it then pumps have a maybe growth, more for jobs we've be us frac we about less that. be that us will and consistently increase which that on there of that be order in look in maybe to and terms into in a is in the for we any XX% X% expect purpose serious end already orders, consideration past in or past - but be at announced. looking at increase mid-single-digits would in us not like our will repurposed on commitments a positive intense some this I more more that of the, number XX% have retired the point in larger to and service lines at increase and some the fleets, capacity our now any I though we I think we equate beyond don't have we expect like don't But our not something that placing for some months of ads from we we're our our maybe will would

So orders from fleet actually balance we'll that pumping be and question continued a our net there looking think expect room perspective, for healthy will be do, expect what we and in I whether we're placed. over but some they'll ordering quarters our with in several capacity I but always that's pressure whatever additional increase the I a will do investment be next there

Tommy Moll

That's Thank Great. you. all from me.

Operator

comes Tudor, from Next & George O'Leary Pickering, Company. question with Holt

George O'Leary

guys. morning, Good

Jim Landers

George. Hey,

George O'Leary

to Is guys pricing than a looking in third the even little is possibility and good Technical first be through getting think the segment snap not we those follow-on at levels horsepower better you'll maybe utilization that comments there or as your was XXXX, even in exhausting a quarter. back guess of trying bit Services quarter? be the just more quarter perspective shot prior as from top it you and expectation the relative and you line QX, to to back there not that budget would quite the QX a though around of some entered the as the at third In running could be that I a same segments give QX might a maybe

Jim Landers

certainly can serving and sort business, but ramp QX, I Jim. kind now, an is QX the of to about this levels pumping right existing think really of of quarter We exiting in in know but can QX. George, give run for we you our we full that's best back the QX run revenue be pressure information talked rate certainly we rate that's

George O'Leary

of kind the could guys call? helpful. super the business That's revenue given on just backup line And breakdown by you maybe you often

Jim Landers

the gave, like that Absolutely, end run and rate. I to just QX I thinking answer Sure. be could quarter more of want amend we're third XXXX

Ben Palmer

think that frac first the be the by calendar end quarter exciting QX. of first pull so looks more the will we Another, will it like the be quarter

Jim Landers

George service your lines. answer then about And major to question second our

X.X% accounted the consolidate for fourth pumping the was the of for quarter X.X% pressure XX.X% rental consolidated and fourth revenue, nitrogen of through was quarter revenue, RPC X.X% and coiling Solutions for revenues RPC's of on Tubing accounted XX.X% revenue, accounted tubing basis, consolidated revenue, So for of XXXX. tools that's RPC for pour

George O'Leary

Thanks.

Operator

go Next Bill will Thompson to Barclays. with

Bill Thompson

Hey, good morning.

to pretty the maybe on with I of have highlighted a pricing good you've E&Ps? efficient understand work to kind E&Ps efficiencies versus help more think Jim, is highlighted of of to a and your customer efficient your representation larger the mix, detain recount their before cons you some with a E&Ps, that the number dedicated small big competitors basis with more preference able spot pros do maybe more us be higher maybe gaining

Jim Landers

Yeah, that's in We continues. the right our space certainly that understand now. debate sure

On you big increasingly out have work with important. highly you your the E&Ps, get well which line contracts positive is to plan logistics if side, to you get and your really efficient

months that's and to going over helpful. next few you're the where all be know You

of those is are full jobs where people efficiencies which that a is if field contractual fairly following people work market. even of which sort think are frac getting contracts operational at big The the part talk growing our the into. we discussion about time of the spot you're aren't in that reason, in our guys ever to that We helpful a what you and have honestly continue that now to are, is for big contracts we time discussion have anyway work. the doing kind this And a and we believe they is calendar agreements what and

not you work which saw XXXX that will will agreements this this of do So in a of But contractual of a work it's kind the ones their of understand in that they sort lot pricing today time get, the back are take period. customer when thing. pay percentage we are the economics or we or being true you inked promises the

look you of we revenue declined had at little would XXXX, have if RPC a might be with bit reasonable was, it our way if contracts that know, question fourth a we revenue Now, been downturn would the have quarter have who don't from the slow with relationships down insulated going we've we people time. that the when down, they're customer be working slow were contract But the the in you these seen oilfield decides to such know, whole might too, so. the

Ben Palmer

our a Yeah, have customers, that of alluded were of for there approach is don't that a slots to few earlier we comments them that the other around bit manage flexible month, customers with list every to and this not and to that's our on follow-up be are to model frac focus. little and customer a all our available that's calendar able move manage our business that's we is we work and

we really but an of of relationships quarter. that as unusual be third I is work's is can issues. model may holidays an do last point not three where illustration And for our in favorably say up the quarters rather can have industry. XXXX, exacerbated were seen also potential I quickly think to quarters within of that where the over But I didn't perhaps customer-to-customer, I go the quarter I work the is from, by and returns over match negative out you how we think fourth will The back see think think have fourth I constraint opportunity-to-opportunity. prepared But again come fourth of the and that fact up well. quarter more the two be the the budget if if year it it what we've it certainly have some and customer limited and model and from going it move certainty last performance I'll to quarter is and business number be the with of full you as about of where really, set would people's will to and Some a illustration the to we're we the perform again are degree think

Bill Thompson

helpful. That's

Ben Palmer

up, going with what a the will And and and calendar quarter really going couple back. during the about quarter the first that to is we we be unexpected is but first will little bounce going super quarter long fourth and frac all be that maybe quarter strong bit to the a becoming good customers that rest one back there to our the And ramp, I with and thing. of we but fact ramp-up our bit more is we're again are feel is the of capital term not if if with disciplined, a fourth little in good be wanted think purchase be XXXX

Bill Thompson

versus maintenance? should million maybe of to new in be then the of CapEx, you it the And how can build XXX XXXX terms is just help quantify much allocated that of

Ben Palmer

$XX and maintenance. remainder to new build the $XX million million or Probably to

Bill Thompson

again. Thanks Okay.

Ben Palmer

Thanks.

Operator

John Company. We'll & next with Daniel Simmons go to

John Daniel

Thanks guys.

here, capacity, on that? you the can elaborate more to relates I from you couple you place made to one a of expect that to response orders think one new equipment, as questions Just it statement and your a do

Ben Palmer

this will sometime in new equipment. John, think I if the an place Ben. Do future we expect, for is order

John Daniel

Okay.

Ben Palmer

because think it's now, like and are don't when no order year time the we place where plans we or future have surprised of kind not, we and no we'll in negotiations, in look to I because there's figure I but know, we have we that, an know We think be don't have discussions of active and have in something things out of to year plans equipment their point wouldn't this going where or times demand know, we lead so this don't we this read and the but increased at or whether at equipment on we'll attrition. things are I

in an order future new the time. time but this when at we some will place equipment So for I we think in know don't at point

John Daniel

Fair enough.

Okay.

to You Did slow any also your large when said question this? to discounts did in that comment competition get response price not you a you down. work on things to a make see

Ben Palmer

competition. this don't know is John, exactly our We Ben. what really we don't

John Daniel

In the fourth quarter…

Ben Palmer

know. would our be response, we don't That

Jim Landers

Yeah. know. Yeah. Don't

John Daniel

win lot be mean spot to this curious frac I one including I'm companies emerging in and mean a sort to someone your concern the risk address emerging we're be of to else market susceptible that to that's price concessions could somebody I lost you how from work given guess of capacity companies would these coming just like a and a the is assertive to crew, push of number some I you work tend of the you characterize more more stuff if to evidence hearing market customer on there's perhaps bit base? you that there dedicated to that these have there's a work. fleets, are customer I a not any or you and your lost to just you crew. that

Ben Palmer

you because away This And said crew, post crew. don't post pricing John. work is Ben. taking or you know

John Daniel

make Either a sure things some a I you crews these their and programs you I'm they some which to thoughts people guys who's or new really training training they know But of your player didn't just or at need companies would was program. that I better could more that that? two you that somebody your it stealing happen know headcount you be say win but startup up don't on that look for right, competitors as honestly mean give price have

Ben Palmer

work coming last or the well, characteristic to every for to. I reasons service this the always personnel, will I be we But because super that our want go that we continue always happen know are and didn't fracturing be have hope our don't benefit didn't isn't nature third for some more of to us aren't. we've about. will same quarter quality with happened out for something try there offered they very perhaps. be again know better not our that past the end the there or where some just lower somebody could that work, and because people or a and deferring the low from exactly in to a oilfield where point in will they that if is reasons always continue don't to because the it matter of and going work or they but exactly, net do the pricing, and back price was and characteristics to always pricing not we think to work calendar combat, quarter that the samples but probably industry mean will low case missed us, more quarter examples the pricing accept think do our up fourth quarter they're that you often case may the don't hope lost and we standards be the to fourth talked it's rarely the surprise customers a their industry whatever, our of We But often we super that today. full to continue me think will Well in we wouldn't be we have competition always is in times the customers to those and we'll thought, in is customers their quality I as of but It there know exist and up are coming to of we

John Daniel

That's to is why. first I'm guys Look beat my company this you so not fine. reporting that's up, trying

Ben Palmer

Right, to we too exists. sometimes I'm still either not to sound, those I'm things defensive trying trying sound know. not but

John Daniel

go will XXXX? be higher assume therefore what to were is in QX in in in got you to you end excess you margins I've it that margins, QX quick QX, of revenue expect for One QX, said that of QX to two you QX. where ones. your or final pricing be run end believe Do rate and scenario back safe you QX that guys you should QX, by us the Yeah, only

Ben Palmer

to difficult understand, Well, to lot would the our quarter would levels we in a that the to certainly that I quarter they that there's of certainly and back and there's up quarter that But the made think case. be be probability I a results to pleased I high logical move of third to were, a absolutely compare. third obviously potential for think we were there's think it's with the got we pleased fourth that say were

John Daniel

Thanks Okay. guys.

Jim Landers

margins and quarters towards device reaching the third third this margins quarter John, XXXX year. definitely us is

John Daniel

appreciate I Okay. it.

Ben Palmer

John. Thanks, Sure.

Operator

with Thomas to Curran over Riley FBR. Next B.

Thomas Curran

Good morning, guys.

Jim Landers

Hey, Tom.

Thomas Curran

industry your increasing year-end, ensure at the own XXXX level much exit by your how fleet industry proprietary frac increase XX%, how this capacity total do point Jim, to from and I if market so for you how maintain through have your call, to net fleet have you of the do the has supply that that much model of you changed know so increasing? total from from diligently the model year-end marketed XQ this are in set demand end horsepower, guys total year, currently you

Jim Landers

about pressure not don't we and understand sort really believed demand and think supply yet of attrition nature appreciate well question of of that think into Tier credibility attrition still that came I've X hidden property. know Tom, the checks. heard also orders because really than greater to in I do the maybe before kind whatever other to we've are for channel intellectual we We I back that's people there's is sort thing. waiting new the just regulations people and standing people an that my or don't said proprietary that of believe how still effect of We test year-end lot have pumping the especially that. much there we updated people and that componentize equipment. nature a of is of equipment got in in the the that

right and coming don't the I have analysis talk that it pressure together, do for appreciate about I'll for higher list remain my it to happy demand my now. will that I capacity up, think pumping for we just we once reminder get So be

Ben Palmer

we only or but but adding add it's think might logical add mean will our perspective. X% really be in a of I illustration, from from fleet this obvious I to going that XX% we're capacity And our

numbers think illustration, the the an and there jobs whatever are is they're probably whatever people to and from XX of out pass more So XX that is say to fill numbers some Attrition whatever out equate capacity capacity capacity I is amount quantify, or not that whatever put be the the if tight larger board works would it's on capacity takes we're lower going on much increase don't with else capacity. it not unknown, math some to percentage I these higher might in. be so go would bringing frac I as continues the doesn't horsepower adds think. lot the wise to to know more a again the same that or difficult But remain be everybody us to are is going to

Thomas Curran

clarify new Jim talk still tight. you've that saying and supply the model demand remaining about, foreseen to when And even all your just after you surpassing of Are you it then exceeding out in still it build you're of demand wide orders end you of there aware as to that would tight least the that at point or XXXX, that the see look you market market. supply add

Jim Landers

now work capacity Yes, know that Also it equipment. train Based symbol would we that well has on remember what ready define maintained agree we a to the to that. one Tom. and a is as fleet is workable we that with and support has crew

issues - up probably but lower equipment and buying than the at higher logistical just were previous the cycles are this it's in from personal point. employment, suppliers, seem not to be it's So constrained they

a engines and hiring screening, this as recruiting point. buying yeah is at employees deal transmissions as training and So big

got market under yes, supply. remains the all So think there we've that in we

Thomas Curran

would that's this in intensity then And if but XQ modifier with I'm missed sorry market. which how how us could define And that? consistent if roughly have with you in capacity not sand you provide shared is and why market of exchange that your I changed your specifically use frac I

Ben Palmer

We'd be sand is Jim happy slightly. with to, over discussion downs our in not the stage that, per we did go

line is mid-single-digits for X% down a it's a bit, just up slightly frac of in sand very is the intensity stage. about but down Our well per to matter X% which frac sand

Thomas Curran

the for intensity measuring metric keep used consistently is Which correct? Right.

Ben Palmer

Yes. That correct. is

Thomas Curran

Okay. big X%. Last which end single follow-up however to mid-XXXX that me whether that X% XXXX? it's currently for sub a with I whether exchange to changed is one customer it or Jim. from it's customer When largest comes XX%, through largest also is know or Has

Jim Landers

I I don't believe believe so. so. don't

Thomas Curran

answers, your Okay. Thanks for guys.

Jim Landers

you. Thank Sure.

Operator

comes Humphrey. Sill Next Robinson with from question Kenneth SunTrust

Kenneth Sill

but the no sourcing? morning, seeing good on seems you're out are QX topic to sand hope could money with Hey, you following of the itself you're at all push sand rebound in little I on for a a things. think a of your conversation lot a this looking reason guys. is operators that be little save bit, to they Kind the customers ground Permian sandbagging bit of self-sources up

Jim Landers

us customers to There's Ken, customers, pressure service. that intended who a to that's now. that willing Okay. number space from our topic to choose right big we Certainly, always are another provide in and look of

the points and the sand from was mine our actually few quarter in or procured was pumped So that delivered we percentage third actually of that fourth either sand quarter. ours from basis we a

thing the customers to we've think well So responsible something it's when of that's a for there a we are we are good I and much always lot us to tell the need for discussed. and and for why we're as sand so we there want selecting - reasons us they're be very we customers think that all them and

we don't or it's think trend don't impact a didn't quarter it So results it think that we fourth huge way. negative

Kenneth Sill

companies E&P know contract a an I certain to want to they in think that them happy let risk. take I guy. to be scale take as And sand on would

Jim Landers

Right, it third about works time. the of

Kenneth Sill

logistics It been see last cycle? it was as How I interesting the but issue not really as moving would guys would you in hasn't not cost be move or sand just think an like to bad trucker hear sand going yet. given is you're to says load you for shortages that up guys and sounds

Jim Landers

cycle and but a in the paid suppliers sand that capacity our our the both. with from with majority facility they to answer It or our downturn our up really really transport with last and is vendors. we come it that Ken, us. I and mean into our upturn, we remember sound year the so on work we to worked - may during the bills tried want the of relationships

from I which mentioned good demurrage actually dynamics me that in So earlier of down quarter. is to third measure was fourth a certain quarter

XXXX far haven't thus so. them to on managing with and with issues do a step had wood, in the to vendor trying big be has cycle, in say relationships, last to railroads logistical knock the had it we customer that So the XXXX, just we

Kenneth Sill

I'll ask one. And just it's of kind Okay, the great. than question one question. then Last last question more

that's then fleet of allocated one fleet, new imply be one and doing XXX,XXX is rest horsepower I horsepower correct? or So of that's going be that new kind the fleets other if is to am X%, math to new that can out

Jim Landers

implies. Yes, that's that what

Ben Palmer

our down. go horse can to have that pump the of to other power capacity the also older and which then can pumping the the and have and Permian in lower locations older vertical go we Yeah pumps asset

pump pressure these You've completions or seen line two rated lower to you wire and unconventional where use down trucks do got in pumping between three you've jobs stages.

business small older So a that we grow this is repurchasing a by but one can equipment. line one we that think

Kenneth Sill

there? And your you were change the of Permian a pads single well crews then have in versus number in multi in the stop gone sizes and and guys I'll seen pad trends

Jim Landers

of was the third little for - percentage incrementally higher a sorry higher work revenue example so frac amount than revenue, that moving was in of inching that's quarter The is higher. I'm was it us. That incrementally quarter pad bit our the in fourth for work zipper

Kenneth Sill

you. Thank

Jim Landers

Thanks, Ken. Sure.

Operator

go to with Citigroup. [indiscernible] we'll Now

Unidentified Analyst

morning, How it's going? guys. Good

Jim Landers

are How you Good. doing?

Unidentified Analyst

well. Doing

expect I Just quick to you think is comment how next of much on now question. your the got and or go so? just a Can work year you over refractory where

Jim Landers

expect do have that can not to total. it's or is and couple was quarter zipper certainly fourth we higher it the that think a work. XXX% between and it's asset mid because by a XX's XXX% it more XX% and we XX% percentage in I expected in it's the we We to third crews of definition in fourth go said was work as and I'm XX% a go like of it but Permian, vertical little incrementally not be quarter. never higher, a it that believe and a that quarter down as still sorry We've do actually bit

just very So And clarify quarter that's was quarter, was a for good XX% third and decline, a to it a XXX% our work zipper go can stage higher apologize and we I be that. think slowly were we pumping it's pressure don't think continue higher to. fourth We that's at XX% will and in going of thing. we actually think to we to and move but it's going

Unidentified Analyst

it. Thanks. Got

Operator

we'll go James. Narra Now, with to Praveen Raymond

Praveen Narra

just to morning, question that could ask, if correctly. I guys. may If John's evolve I it I Hi, good question understand

I - correctly? to me of change success quarter-on-quarter, like did rate that terms it In didn't material read that sounded the any have

Jim Landers

Excess what sorry? I'm rate for

Praveen Narra

customer you much? guess didn't Yeah, number bids those I a changed then the all have, that number were of the seem sound of bids accepted point like that by out it to didn't it

Jim Landers

that was No, a results drove or dynamic one that our not way the other.

change So is no yeah there there.

Praveen Narra

additional given pick percentage Perfect. we downtime then us did the the guess all in fourth taking R&M up I of time? idle And Okay. quarter, the see just advantage that

Jim Landers

a almost did tick bit. It Good actually answer question. up is And there. little

of everybody question, percentage and down increase because revenue a of the percentage repair time Exactly, to in and clarify maintenance revenues fourth revenue we took partially good did for question. maintenance. as partially expenses because a was Praveen's and quarter just As for

Praveen Narra

to guess wash, on? as from kind cost at costs that I look of of kind first your take increase X And that expecting Okay. you guys the you in Tier incremental what build

Jim Landers

it. to give will equipment in X that's, I that and number think if a engines XX% to on more that are but ancillary think horsepower, emissions per more to think I Tier the cost think XX% we XX% going per number, cost about If and we it, than you the equipment think about you step there's we cost some relating I've horsepower. higher the it's cost about shuffled The cost, X Tier be Tier don't want to equipment X

Praveen Narra

sure across fleet entire fleet channel, just of the engine the Just et transmission all cetera? or not be entire the to engine that's the the cost

Jim Landers

I crew Tier and would would X units fleet be outfitted fully XX% supervisor with be all higher the equipment. kitted Tier think fully of and rather if completely to than LAS that sort that doing you're Yes, a XX% X hydration and units pickups out

Praveen Narra

guys. very you Thank Okay. Perfect. much

Jim Landers

Sure, Praveen. Thanks.

Operator

John next Well Cowen. Hunter with Instructions] [Operator go to

John Hunter

Thanks guys. morning, question. for my taking Good

Jim Landers

John. Sure,

John Hunter

how revenue a much feel to versus October lower first strong, fourth November? the get off assuming quarter, and through December November progression trying pretty So for the were was revenue

Ben Palmer

intra aside I say weakest said obviously give month. think but We December this information was don't earlier to quarter the we

John Hunter

Right.

you Okay. assuming expect was said up I'm would And increase pricing, you then in fourth a if mid-single the first perhaps pricing a first was bit increase correct little fourth or the more? on in wrong, quarter in me you similar say pricing the the in digits another and up quarter, expect

Ben Palmer

seasonal fourth up that I it was probably I quarter little a will some - of up the so be everybody so factors will in a we bit going of again ramp-up, expect single-digits Pricing was be and probably and single-digits. and impacted only low single like by again there slightly low probably would it's to think that say

John Hunter

for me That's the coming customer the Okay. second is for have you I last on commitments of have quarter horsepower, Do XXXX. one helpful. guess the you that horsepower in yet?

Ben Palmer

always don't contracts, the Because we and as discussed. any the we is quarter through customer in don't customers our have calendar firm commitments, do have being but frac process second we're coordinating going the with we even

good said utilization we way we So quarter. of the fleet out second will that another additional get we during confident are that

John Hunter

for my you Okay. Thank taking questions.

Ben Palmer

Sure.

Operator

back there to questions over Mr. any the like like no call are for turn so at this closing Landers to or Jim looks I additional further time, It remarks.

Jim Landers

Take the calling care. quarter. the into and seeing to we you. forward look soon We talking Okay, questions, first thank everyone during appreciate listen, well appreciate everybody

Operator

their today's conclude does for participation. everyone That call. thank We

this www.rpc.net we that time. patience. Let's be conference replayed call two you Once again thank this within remind hours will for your on you of

disconnect. may You now

RPC (RES) 24 Jan 182017 Q4 Earnings call transcript