RPC (RES) 25 Jul 182018 Q2 Earnings call transcript

Company Profile

Participants

Jim Landers	Vice President, Corporate Finance
Rick Hubbell	President and CEO
Ben Palmer	Chief Financial Officer
Jacob Lundberg	Credit Suisse
Brad Handler	Jefferies
Praveen Narra	Raymond James
Marc Bianchi	Cowen & Co. LLC
John Daniel	Simmons & Company
Ryan Pfingst	B. Riley FBR, Inc
George O’Leary	Tudor, Pickering, Holt & Co. Securities, Inc.
Tommy Moll	Stephens, Inc.
Waqar Syed	Goldman Sachs & Co. LLC

Call transcript

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Operator

Good morning and thank you for joining us for RPC Incorporated Second Quarter 2018 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. [Operator Instructions] I would like to advise everyone that this conference call is being recorded. started the us disclaimer. get will by forward-looking reading Jim

Jim Landers

morning. Thank good you, and

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

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

are to use EBITDA covenants under to We our credit also compliance with facility. record required financial

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

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

Rick Hubbell

our activity a X.X% supported the same the favorable drilling Oilfield first the rig compared increase quarter and moderately to in oil a activities. XXXX. XXXX for issued The press XX.X% second quarter X,XXX, during second of of RPC quarter This prices XXXX. as increase count customers' Jim. completion we the morning release you, earnings of XXXX, compared during Thank average quarter U.S. improved domestic to was period second our and

generally are operational our the pleased during quarter. performance with We

to raise increasing the However, has the limited competition at prices oilfield service present companies time. ability of

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

Ben Palmer

Thank you, Rick.

the second increased prior second higher quarter year. to and $XXX.X last of increased to to the compared activity in Revenues a revenues the for Operating quarter year. the the period year. compared $XXX.X was increased in profit for a revenue-producing to $XXX.X compared million, million due the $XXX.X larger million $XX levels, million EBITDA For $XX same quarter, million prior equipment. fleet million to for

per of same the XX.X% higher vary $XXX to $X.XX levels. $X.XX, earnings were to and materials second with XX.X% year. period Cost of expenses, or activity due compared revenues other year. expenses million, last to increased share compared last the primarily revenues, of Cost of costs, and revenue quarter or diluted $XXX.X Our supplies revenues employment was during million during which

As second Selling, a million to last to year. increased percentage quarter of and prices. $XX.X higher compared $XX.X general and revenues, administrative in were revenues cost job due expenses the fuel million mix of

cost of profit equipment. prior our XX.X% of revenues of for pricing million these prior the during to the to compared activity active of prior levels, $XX.X Technical the second due the to $XX.X $XX.X quarter to year. Services and a to segment increased Operating prior over $XX.X due X.X% year. XX.X% year XXXX, the the compared in higher for revenue-producing quarter larger the to increased quarter higher services fleet second decreased revenues, percentage As improved million of was million leverage in compared cost. from fixed of a a amortization and primarily decrease million to in Depreciation revenues year X.X%

slightly loss the [ph] compared equipment, $XXX.X expenses for second million due to segment RPC's second Our million, again activity basis, X.X%, $X.X of the revenue-producing of profit to the [$X.X] XXXX to operating activity of $XX levels. higher revenues while million, in sequential from XX.X%, quarter supplies, quarter. in in $XX.X higher million On associated last during materials a revenues the an was was profit our second and increased quarter increased operating levels. year. quarter. by revenues $XX.X operating with prior primarily to Revenues by the million higher during period increased increased due quarter fleet $XXX.X same to quarter and the of Services which Support compares larger Cost million or prior

expenses the to relatively prior the administrative from or As during a million RPC's unchanged. prior quarter the remained the percentage revenues decreased of general quarter $XXX.X $X.X Selling, EBITDA in $XXX.X quarter. quarter. to million current revenues, second in and million, by compared of cost X.X%, increased

Services $XX.X the or quarter. segment compared Technical revenues by $XX.X quarter. in profit to was million Our X.X% $XX million Operating increased million, second million in prior $XXX.X the to

revenues the than higher $XX.X in quarter million of the quarter. million, prior XXX,XXX $XX.X approximately second supplement $X.X in RPC's to second to the Operating second pumping prior was horsepower pressure loss our Our by compared or Support fleet $XXX,XXX hydraulic to quarter horsepower was operating quarter used revenues the an the Services existing of fleets. segment of profit X,XX,XXX. quarter. in This in increased during additional million generated X.X%

but customers' of we outstanding makeup pumping and fleet our the to fleet continuously have requirements. no our size meet evaluate orders We pressure to expand our

we the outstanding to expect quarter turn that, Second approximately And with have to over XXXX we was million. I'll capital second for expenditures balance year And million. closing At remarks. to expenditures quarter, back be $XXX it million, Rick our capital cash of debt. XXXX some the full no $XX.X end were and continue $XX.X

Rick Hubbell

customers improve Thank continues to RPC efficiencies safe and services. partner its with provide to Ben. you, operational

our The have market We experienced potential open morning. Board quarter Basin RPC $X.XX we repurchases RPC domestic at are our million and Permian Directors ended prepared we dividend. more the paid and results. our $XX.X warrant. capital the in equipment $XXX.X stock Including it other and basins cash move financial near-term in the these for you $XX.X Year-to-date invested to of U.S. risk out are of a at while in time, expenditures. of aware than Thank share second and of reduction for We constraints. activities a number the personnel with joining basins to of a the your a yet Basin this industry's our conditions concerns call And should to for is market, due dividend this questions. Permian operate Yesterday in to issue, other operating largest per in takeaway will on million million and not capacity any regarding represents XXXX. approved cash, lines the us up end uses spent this oilfield

Operator

question Jim Wicklund first Suisse. our take now will We of Instructions] from Credit [Operator

Jacob Lundberg

Hey, in dynamics on Jake good the This Permian. I and guys. talk for was Jim. current competitive morning, you pricing wondering is could about just

it in in of release, but referenced a would kind color You the press little more helpful. the be

Ben Palmer

is Ben. This

environment, In people levels second were competitors I can market, jobs they the of larger terms in where jobs, being bit some during of fleets given And be delivery our little quarter clearly interested be. current several additional talking of they'll and expect are that activity nature the and winning, lumpy. the reactivated. the continue the there increased we of and a to taken lots about of competition additional We've are clearly so in the is equipment,

relative been to we perspective able as pricing, that from increase terms pricing job of trying get a between mix utilization able we achieve. In a indicated, depends we're pricing, to the right lot of we're haven't to to to balance able on but and get what the

try where find probably moving those. to So for our a down And would up, is to not for two too on that's in an this like tendency between us process environment the is good an pricing prices chasing to say of the not balance us side ongoing err typically I of quickly.

We much in us opportunities; The in to miss on wear this We of as some result that's equipment terms long-term that think market. may the right market. extensive may wear we're want we relative type as the that in can we to sometimes think tendency. testing I our tear make that that's tear. so decision is and getting sure the quite and of paid and And

go in continue perform could expect well, ongoing and to some reasonably but do process So we our there results. will through, lumpiness an it's we be expect we that

particular So in dynamic, competition dynamic. pumping is there, continues still be to pressure is it always market very It's -- is. the and

and still as looking we going very amount we at so we that it's aggressively, and is fleet And think to have it'll out. fleet our think a We at right now. that segment our market a making we're continuously in makeup compete at, the and of something to sure look indicated we continue closely looking shake and we're

Jacob Lundberg

Okay.

price? moving just that negative if understood haven't I like seen in you prices correctly actually movement any sounds it and So sideways

Ben Palmer

different I would a to type Price point, and it not ways, this general collapsing right. is for more job say, clearly maintain probably prices it's of of at determined don't are up in and but yes, of pricing, mix It's a see struggle in we jobs, moving lot but the that sure.

Jacob Lundberg

question you release see it's more that a to no need plans or feel terms point? you what at the order equipment new in maybe any ordering hurdle visibility I in commented then And just return equipment to of this to guess would confident guys

Jim Landers

period just visibility, of is internal lower behind contract A Right XXXX hurdle for or the Jim. this perhaps time cost see XXXX We are we certainly of capital, more to to kind don't moment, would XXXX rates behind those capacity that our Permian certainly the long-term we takeaway want capacity extremely right be get helpful. Basin than XXXX returns now. this new-build, us, in us. our financial issue Jake, to higher than had but takeaway

present no prompted at new comment time. bills that's Ben's So the what about

Ben Palmer

order the And that I we I'd think is or make our the size in equipment, that when to is at fleet is I’d to time like be decision to point to -- more new that reconfiguration. the of add to increase see add going we is question further

question we and have the that's now. to answer So that don't right

time that that characterize or the fleet meet the is changing we've done customers' the announce our expansion at will repositioning way. it Is up requirements. fleet in decision make and we or fleet what to certainly we'll So it

sense So where we're intensely into to certainly in time. that's that again said now. We're urgency we We orders for point look looking sense more at looking here a something beginning through equipment, something and and comments always stand term. the of at. this we're to season at place saying we're no Is any our we planting -- kind that we longer sense right little that's now

Jacob Lundberg

more you. be stand the given Got Can market you I just thoughts could a bit think guys you What sneak on configuration where dedicated? about and spot you if would current do in. versus one optimal And talk the today? do

Ben Palmer

a there's of but we work” dedicated, I would we than today ago. possibilities or months not range again to and say more that three “dedicated in dedicated or did six clearly have there, last the months

like pricing and utilization and good something I the think less we're nice always right place right utilization, of would of than would of be. be might that's more pricing level and but probably the be we a level the XX% mix, XX% at somewhere for so maybe north to it

Operator

Our Jefferies. Handler of ahead. from Please question Brad next go

Brad Handler

just bit throw you I'm a Thanks, little of the today? any a guess to had good them, okay, track any have that you crews released morning, but perhaps example, of all. seeing Permian hearing in make couple of and for look market what broader for out to you're I'm I you are and the I Could being disruption if it Appreciate you activity think but what hearing that's questions harder please -- you you keep you going haven't to us at give curious said, more

Rick Hubbell

sure. great, Okay,

Brad Handler

your [Permian] for me experience Let but some your urgency Great, stop right. be are [ph] in seen actually -- your just working that on that that current customers, the part great. the the own affecting crews change I'll utilization make I the would Have on right commentary there, I'll you be in of of easy might any it of them? sense

Jim Landers

is this Brad, Jim.

are they're operationally. we all people to but times see say and trying area doing now --we I work and now about it's we conceivably about know and I do going a to yet that We may well, if refinery you that in said -- have when difficult thinking is and aren't -- not think complete do information, that few there due see done that's panacea but that capacity get XX access seen math either. coming to lot fearing in that try cost of have now, out calculation something were months takeaway But seen a we One We to involved. get any not our in given lot have they'll that a transport production, to customers a capacity whole you're months. mean tell mean see may the from concerns our And also customers peers issue be urgency to six any There us. anecdotally they kind the some don't been want about before it. you at there's they cheaper. have a thing and willing a really it wait takeaway in if that hard to slot barrel right I to things not you our that know takeaway through per math now towards blanket of make nothing of to publicly oil about an everything because to flexibility is hours, that region the it statements for capacity. but time, customers E&Ps have to us say we but would be have that that's talk nothing, We not customers a can the that. the

it seen issue We've haven't seen an just operationally we not operationally. So yet.

Brad Handler

you. Maybe Okay, helpful, thank it's that's related a and a as follow-up one.

in of do XXst an there half for you trying I that, the half for own course income fleet expectation half the first extent growth, to a to we change reframe full but do it might in you And the take result sense healthy have healthy growth hard recognized year all I can. the things it the of sales and think we year estimates guys versus our second second of the the we we're your quickly quarter, of make that of as think how get, the know is right. to to operating

guess that's a lessening I heard any pricing urgency is just seeing that certainly positive, you equal say you're and the not so what a I seeing So suggesting, work. you're no, far I think not you're necessarily guess that else all of I around

environment So are equipment that the with style, be the comment to of in there you just the absent your exactly yes, in a today but improvement you say, out know --I this quarter on third based able are kind able expectations are for on isn't what and even that stretch any it somewhat like issues, additional reasonable, and see given you the seems challenging the pricing takeaway that to seems but might region. environment respect in challenging

Jim Landers

again. Jim is this Brad,

enhance just as and of bit. We you framing that published the up the on and Let's little that your our in count accurate quarter, well. grew count was second based Everything job grew completion said data. a see

of So sort we're maintaining market share thing. that and doing

up system going right right know makes a translate to of that to and is be we're second just results. pushed the predictable However, for their And second it's but to relate hesitant other discussing now, the service regret are in from help choppiness. in either, makes the it hard happening are of that quarter drilling overall so there's the some choppiness and which the it get quarter uncertain. makes us --I jobs choppy who third various And here, because just It we getting lot and little near-term leads strains reasons. of quarter to choppiness. things these --there's macro nature A was the choppiness, macro say this operational us which doesn't to that I'm into just into intense the providers, pad bit overall system which all of relate some completion of completed that service some wells to very trends us,

Brad Handler

if Maybe quick I one. one understood. just could steal more Okay,

mentioned willingness you a to to you more a a to does Do you to reposition. expect expect if Do making be own? comments your that decision you another base? a Some customer to bit you reposition there take on or were fleet have --

Jim Landers

said Ford, time in Texas. if basins East long moved moved bases Permian as work we've in other I'm easily great you've down Eagle move more be equipment from I'm times, but ideal, in we the West we've that and bases be making can would and that North Texas other also two Brad, many half, up. would the established Mid a between East customer Dakota. And from South in but the established to Texas, pumping doing equipment In Texas Bakken, rigs known pressure Texas this Continent two South because and and latter we're past forth and equipment The back a laying and just equipment. and and Oklahoma year to borrowed the

these do area, would better established if have we've easily back welcoming can It to there much us we now. a locations So got there customers be customer and was that. that

Operator

Our next Raymond Praveen question from go ahead. Narra James. Please from

Praveen Narra

follow-up If you where can kind you given percentage guys. early percentage I expect a could that morning, takeaway seen for Brad's to any guess good of ask Hi, do and see questions the I a stood zipper to you of indications one have slowing? the XQ, or give frac trend us

Jim Landers

Praveen, see, got the let's number. we've Now

Ben Palmer

no slowing. it see of It's XX% it traditional. indications XX% like you XX%, QX zipper, was

Jim Landers

correct. Okay,

Praveen Narra

to feel we do out that to reconfiguration to year-end like more you that we wait guess in particularly to back of that point make to new then supplement, terms where on don't make before based can equipment? supplemental in in I time or need better there a ordering decision? the times just order until figure the really if comments Is And fleet decision need your term. to equipment near we need will going a to that you have you expect of are if to Is or

Jim Landers

is. nimble, address an Jim. issue what Praveen, the up this understanding time we'll it as comes flexible with just We're the are lead is just and and --we

to So at point. there imminent do this reconfiguration much plans no

Praveen Narra

I in. sneak could sand much how If you right. sourced one and about that any self you've kind in --whether pumped talk of sand for gone you your how just far? was basin Perfect, Can thus has of more and process

Jim Landers

Sure.

pumped first we XXXX So second we little up small a the amount bit during from very was from procured quarter a That's site. that it sand the that the brought of about sand XX% of was, to and quarter. job

know pumped sand. field from don't have bit well the personally any or went whether indications little I poorly. Basin of a We in of it

view. do from of for customer an agnostic happy fine its we it the it's that's what it There and to wants to think and I --we're point but differences, we're are operational logistical it. fairly paid

Operator

question Please Cowen. Bianchi next Our from - Marc ahead. go

Marc Bianchi

Thank you.

going Following up sand. far, Can seen? there any any West if Texas up seems number holding on about to has about pricing I'm of on thus have come Praveen's ground? talk last and you've question the for the just you pricing just what's curious seem trends now on these mines been of the but like thoughts in you have that curious

Jim Landers

your of sand, Marc, question for pricing if you. haven't any is really pumped Basin Texas West it insight trends in for we about to enough have

Marc Bianchi

say on and having other to for this not point. it's regions at influence fair from pricing Okay sand any

Jim Landers

hard say, say to to that. hard It's

Ben Palmer

have a We enough data points to draw conclusion.

Jim Landers

And that's true. Yes.

Marc Bianchi

Okay. line? share Jim, by you mix could product business the us with

Jim Landers

happy absolutely, Yes, to.

consolidated XX.X%, X.X% XX.X%. So consolidated solutions RPC's as rental production the a fifth second the revenues, Thru of quarter. and and was things revenues consolidated revenues, was and and for that percentage X.X% quarter was pressure for was pump then pumping consolidated pumping of other the was X.X% business tools of fluid down largest revenues, does tool coil was our some tubing of tubing rental it

Marc Bianchi

$XX of a June today? goal third just quarter may Could and revenue we second it has you appreciate in thanks third guess posts maintain that you sense kind third Could get where sit be are rate the that. million changes be but you to call from the for of And into lot the run third if great, quarter for what up quarter. what be Okay, hazard expecting? sort if a from of just you could nothing of uncertainty so of we a it, kind that your it

Jim Landers

I mean things couple that month. a in June mixed good a question. was Marc,

a as So jumping-off pretty being when point it's hard we see to choppy. things take June

it's So to just hard say. very

Marc Bianchi

two that kind Okay more Could prior here? about I increased could. you have just and how reason guidance I and if from The CapEx if of thoughts CapEx right. for was that from beyond the would million what on talk $XX to progress bucks

Jim Landers

I in The nothing mean question particular. it's

We're coil we're the I but we number. in to line, a longer now, our of tubing of midst and big do about discussion again planning and the have the that going and does necessarily frac fleet think relate anything service know near-term throes that term. And portends XXXX. in that now. not of We're I it our don't what the for

sure not not on in about we're yet XXXX. placing bets So We're XXXX.

Marc Bianchi

us And give assuming tree uncertainty third that to much decision Sure, how there's deciding and understand the into just fleets? in some get you last least is And how or quarter, into point? of lots what yes, any a of need probably a park but much okay. goes at to disruption can it, before variables then to there get one, worse there's market that you the some sense lot of is

Jim Landers

the is now. not mean right we're Marc, making I money. market bad

If they fleets customers not that the this contacts are stacking to we talking --I'm work in line at if the So every rigs-- region things other allows and market moving working are .So and point. work. be sales on up self-evident. our ready forces I know has And get call sure and if activity about is Permian, slows we that's they'll in

Ben Palmer

Let about connect but of me --they've that dots. not been they're bad. our assets better, talked they're track a can on they're if not see Jim not returns I bad, couple current

lead up opened can --we have behind the mean to ability as in approach We to or try best our best is our race want little for So pricing pricing, capture the willing not be discussed, to to I going we trying to the my to the prices in that I bit is would down. we're to stable think but stay would and the get lower bottom we go in means to on some, is that tendency if best could utilization. tremendously. don't calendar a pricing mind, the us get the We if relative to prices. mind

So to always that that find trying find balance. we're trying to

pricing would or want actively it, of the permanently ability So a any we you call more to a to down think for and go there's whatever some time period we there's equipment before over quarter. for stack

Operator

next John & Simmons go Daniel question Our from Company. of ahead. Please

John Daniel

guys. thing, thoughts. the Hey, Thanks I come me and want QX kind Jim, in. I whole guess me put just let to back some of start off

As to pricing set keep we enter think on here price working a know dynamics We intent for potential correctly, which about is to discounting. few capacity rise. is know stated the the if code we a Halliburton competitive I And new equipment me to still is market. recall

to I but Permian accelerations.QX yet already and perhaps on the as mean as me likely. and XX%. and likely to see some we're seems choppiness wrong? Where revenues probably that package in am completions down like seen are the we customers as get again have just I have haven't opposed it in evidence more more to much had in in QX, QX therefore, so environment, more feels delays to You Marcellus, already. the seen X% it current And some slowdown, delayed it together

Jim Landers

seeing That's comes items of in that one revenue it will a will second the continuing just second on between quarter. to the John, litany market. the quarter large first you names believe pass, sequentially will third said, will. peers some It that quarter. having Well, our all, fall reconditioned yes, if and We're and happened we to absolutely then competitor from of of third in -- continue bought it put believe based they've we what equipment

people, smaller market people some have putting in larger of a are and to the they equipment lot become now. We want who right

pricing -- And seen market some in true, pricing declined has parts that are so mentioned us but we've declined. has not some Ben of for -- that we're the

fall. So you come I'm not pricing and wrong, the you're enumerated or then to past if things will just but saying right that

Ben Palmer

revenue -- And

Jim Landers

yes. fall, will revenue And

John Daniel

it I'm mean point. are there's some some I look an but on things now, pick at right trying does your to not impact way you interval and outside have that

with assume It that to QX, it then So knowing you disagree as QX line own we in all that? would look my that play. those diatribe equal. changed, that comes right. than expectation, I'm holidays Would from QX a again just at hasn't likely was perspective is I have manage being into seem top the typically that lower QX my seasonality point you

Varun Choyah

the that's Yes, would all trend, yes, being those normal yes. be equal that accurate,

John Daniel

a trend. That's normal

here. it the I that like EBITDA then once there's trend then issues I capacity can you the before leveling a in mean in So away QX again give specific know take are a lower lower number and reality that out QX be don't fixed, right starts recovery. just-- but I feels

Ben Palmer

That's a believable story.

Jim Landers

Yes.

John Daniel

acquisitive guys years. that you shareholder great been Now in have of stewards capital you haven't been and all good stuff. recent And

discipline But old and given I to let this maintain we interest habits? here so And choppy the keep for mean what's many out companies do of an and be bit? less given ever sort to we that discipline in that or Do propensity that should space likely sell. and changing overpay to you just assets. have consolidating shown haven't bit you in want hearing others assume You there a

Jim Landers

John, this is Jim.

said mid XX companies. do happens last They're have right. are lot of to pressure years First lot We're the it ought consolidate, so of --we except cycle various and of the do smaller now lot they who all, people you're that but There A -- the never -- want right If that's sell are a companies companies. there probably every tier reasons. a pumpers to want of for to for others will consolidation. duress. let under

may see I than think market it at duress when do in space, and our helping comes, more yourself. you're that until the So consolidation And point, don't helping the happening. you consolidation some you're we

seen does we But there's that go, fantastic those. will much been have as of we let can't different on haven't the consolidation just just that's in a probably occur, management sidelines past. Unless sort we we team the if So thing. geography, be typically a situation with

John Daniel

just to guys very much in as others. I you fluid bounce over just then turn question, do and it and I life, one that always. around Well and your but I'll to appreciate the trends speak have candor I'll technical seeing you're

Jim Landers

fluid On do It in different than fluid of kind work more been ends. just has rather for the -- increasing We've us. how in life is life them differently. fluid managing actually is we with it to

end actually than was fluid bit second but bit higher a fourth First-quarter expense lower. a quarter, was quarter

break. fluid is nature when to of just Some of ends are going that the unpredictable

your don't But know life tire going car been increasing, in has You do. when you until you're little general a in to flat fluid-end a have bit.

Operator

go take Pfingst our B. question FBR. Riley from Please next ahead. Ryan of We

Ryan Pfingst

good morning, metric XQ? sequentially guys. in per your Jim, frac how Hey, evolve sand did stage

Jim Landers

bit, Let's see. It down was flat little a down a little to bit.

did decline it see, Let's

Ben Palmer

single-digits client Mid

Jim Landers

Yes.

Ryan Pfingst

digit. Mid-single

Jim Landers

Yes -- it and mean results, it a see as your probably but a because -- issue. don't it it's trend, meaningful as drives just financial see we I we it's that job mix don't that

Ryan Pfingst

then of about have been well issues Okay, interference more thank complaining heard you on issues? that of or you. lately any interference customers And jobs your have encountered

Jim Landers

in yes. a We and communication hand. company, call that been on Yes, of more lot our it there's yes recently

Operator

ahead. go George Our O’Leary Holt. from Please Tudor, next from question Pickering,

George O’Leary

morning, Good guys.

one and pockets presence about your in where across playing basins different your you speak talked mentioned pockets kind various look questions also number is the of others. spreads you there any if of pressure more pays pressure are a pockets in You the and John's than to may it pricing be so are the that and of strength today. of across frac US some you wondered I as geographic of guys relative just of under you weakness spreads could pump relative

Jim Landers

have better to nature thing hard second in been Continent difficult things say, than have things about the that to of a okay quarter. good it The in any on, --it's region that lot of just on, or worse Mid been the in of Bakken, say particularly things is George, going others. it kind that's makes kind saying it's of choppy goes

But or has way this some we As but equipment standouts are there no around. necessarily one other. saying and wheels say the bad isn't always can move

George O’Leary

was noise? what is the I efforts? quarter-on-quarter. Okay, that of And dipped that quarterly the housekeeping that's Or corporate a that? that driver costs that helpful. Is just just cost-cutting explicit then guess some notice I item

Ben Palmer

The quarterly noise.

higher employment primarily I think quarter. first it's just taxes in the the

Operator

question go ahead. Stephens. Please Tommy next from Our Moll from

Tommy Moll

for Good morning, taking thanks questions. my

competing with and others industry headwinds focused like there a it playing are And share who discipline are the I where seems game. are couple roster participants in that of would you schools in thought then you've So market a whole some current remaining more of category. pricing, include on on and price terms the of got frac margin,

segments discrepancy is difference is they in wondered being aggressive feel the in bid of customer could price for? whom does players it terms which some --is good that base versus a overlap it incumbents market there's insight most newer equipment? your terms Is the some the that Do any give going players it market? And out So I that more Is the you in of any us that most be the the it entrants? of the of and or customers aggressively? of types you oriented share if like terms new price. after are into of might of Is after, large or these old in market going

Jim Landers

Tommy, we've new about that share. a equipment get not market and de down where company better does to to pricing a the would or anything We questions. aggressive lot Jim. know that aggressive speed It ones trends build big just of They expanding or equipment good and say any thing. been come of they're They sort want in is the don't reliability, of This put the big. I gets field empirical novo more to whatever. on pricing who've those are seen. competitors upstart all want that

equipment get equipment and better the So that believed customer pricing because does the new perform provider the service efficiently. will perhaps more

So there that causing play. effect might that be in

Ben Palmer

just Reasonable trying do seek to utilization. the share their some everybody's to We optimum of trying they that they questions. levels Ben. market they're or whether here This maintain or larger and to pricing or the have I large of to and here is whether close share optimum mean compete. players trying

to, both segments. try race tend question, reasonable I to think I you're have mean but alluding we as hard to think compete trying to to the it's I I not and it's said, and pretty think I as bottom. be everybody's

see it So we fairway, little --we then how shakes so bit more have a out.

Tommy Moll

to for of capital that well own Yes, given. leads your allocation which my next in plans terms is question

no have for You've indicated -- today you equipment. no new plans new

sheet a have balance. and balance pristine cash healthy You a

where hit in deploy capital potentially little maybe or then cash economics build returns? new the terms accumulating given closer rank you of equipment your a getting how new for we are So get when do pressure pumping cycle, aggressive with more we versus in of priorities to terms

Ben Palmer

I think, this is Ben.

we before orders times, some I three. mean that but expect now will decision of of I perhaps not evaluate believe. my times of made place think lots think again delivery to XXXX, equipment decisions I now. still before I equipment we there we're change obviously, haven't that a think new There's equipment And long will new I think end mind right all lots before time some end prediction some terms ordering new right I I take of is order a in yet. for And ready new but and the the have will I of we'll and be believe we to make mix of said of our XXXX, that I any equipment

We have no presently. plans

a but are in there of there's the this been don't, right, and it back place into across those it we'll time of --and bad, long come returns I to at and the a They've whether that get about a sometimes outlays lot we knows take So mix but decision, and between make I order period sometimes and but delivery there's everyone of and is degree service, I allocation decision, decision aren't decision. three think go think have decisions to you're equipment a And that a try the still and that'll there's you just to in to our to similar the to long-term the capital. you do cash place forward more cash lead alluded time, think continue Jim right -- great, so uses add some our the you making that time has those results and to mix question, point. that the better and business so not that not they're thinking but bad. and and be your decent original capital risk and result

Operator

go Our next Sachs. Goldman from Waqar Please question Syed ahead. from

Waqar Syed

Thanks.

old As hear assets in through that from coming give maybe that rebuilding more retired. the and need three may cycles to gone that old to Is years equipment years? ten some asset candidates you coming your has than years of you We that at in need could in retirement may XX us years? is be replaced be and have look mix of may for there would be a fleet typically manufacturers are any your the you fleet what

Ben Palmer

older old. that expect timeframe, I retire some have at have equipment certainly particular lower to would ten in is may reasonable yet horsepower. more this not we is the But or we This that Ben. the I equipment, but point probably equipment that a come and time guess that's than years be We're not the we appropriate conclusion.

We some may pumping as be fracing the play to or, out we decision put it is and of opportunity opportunities part our to -- we lines. fluid going are of the other to of that's see our other take and some with fleet some repurpose of that so equipment. be We service service do our lines an support of into have it

continue in age significant. that that we capital as returns produce quite despite and to as nice the an of the the tear equipment, see the on wear So a be way that to and opportunity won't equipment reallocate

think and I of higher So horsepower with the being equipment. probability out I equipment it carved fleet be clearly the replaced older would has think, highest which of the

Waqar Syed

some you bet there that may equipment case pumping? mostly you were mentioned ordering from if retire that be you new for you in may replacement be So like would equipment to some be

Ben Palmer

Well, decision. that would be our

to our time yet size net that it I don't to if of comes would it yet the been be made significant be yes, add be expect are equipment predict at depend-- but that the point we time but order the know the fleet. we the more fleet, a will fleet. Net, yet. any expect at increasing equipment decrease to will buying decision in equipment, just order we'll the of in Our know to we the we --it size this reasonable size again the fleet question, that to of would I maintain will net, whether in time had more And addition hasn't have and don't don't fleet. it to it point decision when

Waqar Syed

Fair enough.

inflation sand and or seeing any excluding Now for input your costs frac in you are deflation pumping?

Jim Landers

this Jim. Waqar, is

not. you seeing general labor, if count-- increases coming you probably of we are labor, no, If in other we cost the include than but in some that are

Waqar Syed

trucking is like --is no? any that Now that and issues things there or

Jim Landers

you're results financial the the cost like increases trucking general Permian, we in no In seeing in haven't yet. had

basins have costs reasonable are increase will think We coming that period. And other the a bit. we all couple little projections of in the trucking a in

Waqar Syed

that little labor pricing you're will in there the on current And all what bit. to it or flat ability so a pass they're you're absorbed to pumpers? trucking any come or under may with the the seeing cost by be given pressure saying Is at could be higher best market customer

Jim Landers

to our pricing way to best answer be is those proposals and the costs up. we include do proposals that that coming be know what do may Waqar, we pricing that we

So where competitive, into unprofitable go the may as rather we it market place a then we into than may said our price you take get work, a free letting work Ben point it. but get are -at couple you this --we have towards and times, bias a

know our do it are to what about there, those from then we factor where to ourselves, costs, but costs are. best into goes our cost we customers be our be and proposals and So what our with going know and our honest see to they

Ben Palmer

you cost with the discussing increases that would making what we're and We'd talking we're engagement to of that customer particular would entertain would this relationship that work our capture language opportunity, cost adjusting to And pricing this like hey, say, to able try depending the possibility you going be that to we're the that there increases. be if or is customer, to something today, input and the upon open length We have pricing to about. us commitment were discussion the the is be those last willing to for weeks. to the

is that there opportunity. So

Sometimes reasonable ourselves but to cost engagements impacted protect or position themselves with pricing to part by get to cost increases, customers increases, a us be trying that's with range term, shorter caught all there likewise within position maybe And to our try and shorter of of each try other again we that but could customers. market our by is. what

Operator

last will to speakers And question. conclusion. we now pass That back the for was

Jim Landers

soon. We listened. good everyone. people and the called Hope we in see you. And the day. everyone a We'll has you questions. enjoyed who Thanks Thank appreciate

Operator

this Ladies today's and gentlemen, concludes conference call.

call replayed As be a you your reminder, this participation. two hours for will within wwe.rpc.net. on Thank

disconnect. may You now

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