RPC (RES) 24 Oct 182018 Q3 Earnings call transcript

Company Profile

Participants

James C. Landers	RPC, Inc.
Richard A. Hubbell	RPC, Inc.
Ben M. Palmer	RPC, Inc.
Stephen D. Gengaro	Stifel Financial Corp.
Chase Mulvehill	Bank of America Merrill Lynch
Marc Bianchi	Cowen & Co. LLC
Praveen Narra	Raymond James & Associates, Inc.
James Wicklund	Credit Suisse Securities (NYSE:USA) LLC
George O’Leary	Tudor, Pickering, Holt & Co. Securities, Inc.
Tommy Moll	Stephens, Inc.
Ken Sill	SunTrust Robinson Humphrey, Inc.
John Daniel	Simmons & Company International
Daniel J. Boyd	BMO Capital Markets (United States)
Blake Gendron	Wolfe Research, LLC
Judson E. Bailey	Wells Fargo Securities LLC

Call transcript

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Operator

Good morning, and thank you for joining us for RPC Incorporated's Third 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.

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

James C. Landers

good morning, Thank you, Riley, everybody. and

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

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

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

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

Richard A. Hubbell

XXXX. pricing XXXX in X.X% This quarter issued domestic X,XXX, second for these period quarter in pumping to quarter weakness additional RPC's the to due horsepower We of an as Jim. market. to increase during to the activity revenues contrast increase quarter decreased release lower In the XXXX, industry of our pressure improvements press our was to in for XXXX lower the third and began you, to metrics, same compared XXXX. enter our earnings services average we the of count rig for slightly U.S. XX.X% services. RPC's compared pricing and third third morning, The the Thank continued a experience levels

pumping has In overcapacity. further which the addition, continued improve, pressure efficiencies site contributed to to at well

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

Ben M. Palmer

Rick. you, Thank

prior decreased Revenues year quarter and to pressure third service period lower $XXX third pumping same $XX.X to year. compared the the period million, the compared our within million million EBITDA to for to of to quarter, million, Operating same decreased the compared decreased $XX.X primarily lower profit in $XXX.X pricing, activity year. For revenues for to prior the slightly quarter levels prior the million, was $XX.X in $XXX million to line. the for compared last due the year.

within during period lower Our lower adjustment, the activity primarily employment including service the year. to XX.X% again, line. Cost due due the offset XX.X% to of share third to to increased Cost partially were revenues, pumping declined costs, compared diluted revenues which revenues, year. per million, a revenues the per earnings last during pressure was $X.XX expenses, by or of in or and $X.XX of tax of favorable share same higher levels, supplies million, particularly materials prior $XXX.X $XXX.X quarter $X.XX, compared discrete

last the to of to expenses revenues increased year. cost levels $XX.X compared third $XX.X higher costs. As due of inconsistent a employment million activity were and administrative Selling, in general revenues, percentage and million quarter

during the relatively the revenues, prior $XX.X short to lower of these expenses in year the increased X.X% and third year, the $XX compared revenues in nature million year. a of quarter an due these to increase Depreciation costs prior this million As X.X% term. X.X% to amortization and were of of percentage during from fixed the

Services to third pressure prior decreased to Operating the pumping of revenues $XXX.X compared compared decreased and to year. in profit activity the the Technical the million $XX.X due year, X.X% quarter quarter segment Our pricing. lower for million prior to

in and Our million same levels $XXX Support million an slightly in profit for XX.X% to period activity second to decreased revenues of decreased consistent the a and quarter to a pricing. revenues last third million million lower Services work Revenues loss operating segment year. quarter. $X.X the $X.X from the improved RPC's lower operating basis, $XXX.X to from due increased of On quarter compared sequential lack

employment Our in and the quarter lower costs. million million by compared third revenues million, of during $XX X.X%, third quarter XXXX the of prior primarily expenses lower $XX.X decreased to $XX.X to by the operating supplies offset profit higher materials Cost or expense, and during partially due and repairs quarter. was maintenance

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

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

million quarter. segment to prior compared the X.X% in $XX.X Services million $X.X quarter profit or $X.X third operating of the Again, generated million quarter. Support the in Our than was higher revenues prior

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

Richard A. Hubbell

million than on in million of this million RPC more end at I'd $XXX.X third improved invested share up our stock lines cash Board questions. service Directors in intensity, cost of uses Ben, thank and and in thank competitive optimal million oil, year-end leverage of increasingly RPC combined reduced quarter call This but cash additional site quarter a utilization. XXXX. your these cash, special profitability. our you. Despite our has us $XX.X we'll pumping spent the for paid capital million regular Year-to-date, dividend. joining out an and $XX morning. share quarterly our $XXX.X conference efficiencies like at increased $X.XX less ended well per per Yesterday, repurchases, reflected with our $XX.X dividends, of pressure service pricing impacted cash, with to the than the open in the expenditures. results on and Including fixed And for you $XX.X this $X.XX third line approved time, negatively dividend

Operator

take ahead. Stephen our we'll question Stifel. And with first Gengaro from Please go

Stephen D. Gengaro

Good you. Thank gentlemen. morning,

Richard A. Hubbell

Stephen. Hi,

Stephen D. Gengaro

I guess things. two

others hearing assets kind at we're we next obviously, mentioned, in with pumping quarter You as environment of the how viewing How should guys the versus or space that sort calendar? as pricing you're – are deterioration. white seeing about as and far pricing dealing look two? you think your utilization the And we play pressure and from operating and between of

Ben M. Palmer

Ben. is This Good the that's mean, fundamental question. I question.

very to pricing are, trying The as that's with balance. to we be always disciplined think I equipment. continue done to that work harsh find right is trying being – and be, our on we're

as seek so and delicate more as trying our we're are we jobs, balance, areas equipment some a we're others, for. than always protect balance some that pricing to difficult in can. much protect is striving correct trying but that So, But that to are

search to reflects that everybody's and dynamic quarter right think wasn't Third where environment it I we it for ideally would that now to trying the perhaps right like but be, combination. is very

there's Of about But course, have things slowdown fourth we're activity uncertainty in this – right quarter, impact. in the the of XXXX. and expecting level for of at again, that the striving quarter going we're fourth that, a all some environment better mix to point, looking lot a that forward equal, we'll holiday into being there's

Stephen D. Gengaro

a us Would versus is average you be current kind in quarter? we where third pricing of where now able rough on idea to of were the give

James C. Landers

Stephen, is this Jim.

right declined update that X% pressure sequentially between fourth it little in utilization. an the third a for and revenue for so about have catalyst front of pumping don't decline us was or of The now, bit Let way, answer larger because Pricing us. quarter. the it's quarter we second this in

site on but space operational for was our various that there in calendar white Ben completion productivity high, well happen site. well is very As reasons the mentioned,

So, – one those larger rather utilization were larger the the the But two for those the main revenue decline. of was pricing. two catalysts than

Stephen D. Gengaro

Great. Thank you.

James C. Landers

Stephen. Thanks,

Operator

next from And Please Chase we'll question Merrill Mulvehill take go America our Bank ahead. Lynch. of with

Chase Mulvehill

Hey, everybody. good morning,

James C. Landers

Hey, Chase.

Richard A. Hubbell

Good morning.

Chase Mulvehill

of mean, light there will reason line like the some that top then your about maybe mean, decrementals on I it constraints outlook. budget top it you to incrementals? XQ the capacity through completion historically guess maybe fair color market. double-digits? been be and issues and have range? that you that any think (XX:XX:XX) got assume some to And of I the down to obviously, XX% kind be then XX%. any impacting pipeline kind are some outside Is could of going I on looks you'd is line downturn to Hey. shed be

Ben M. Palmer

fringes, earlier moment. but thinking we I the our I terms we adjustments mean, Certainly, not not current we're we during making at of that We're and there's expecting goes we adjustments because decrementals, percentages. the any indicated much But to fill beyond, at and I've moment. calendar to specific the we're can. already, are don't improvements there that's as at lot are mean, that. to a on comment Well, expecting this my cost significant around point into as guess, comments this that making are structure at XXXX significant – adjustments want some least up this I with any in slowdowns. would trying holiday I –

James C. Landers

October cautious encourage Chase, The visible year our it and else we what us remember QX activity pretty And metrics if that in happened we about to through this levels, last of we are but are operational terms is can. good because Yeah. Jim. to of everybody look

looming is know the make budgets there all budget fourth quarter which now. yet, issue or and probably are but holiday about have issue, discussions revenue weeks. capacity to slowdowns, combine on for five takeaway will low about double-digit Permian seen big exhaustion based declines another holidays we not we we that this could not the But what four and know again, So uncertainty

Chase Mulvehill

utilization into spot. When think then going the kind as it's of over go Okay. it's utilization, kind so, just a would utilization year? the kind utilization Do be Would you of sag this to this on we you fleet about your of soft obviously, color as think utilization couple to And any you quarter? quarters. you to game later expect next we of think bottom? through first if continues And go

Ben M. Palmer

quarter first holiday we and unclear be the think quarter then holidays. We of quickly think after and some I bounce some about always reflect back there'll slowdowns. the it's improvement think things kind how it. first optimism alluded the there's We to will around

it Some it years bit Last the does; a hold to XXXX. traction some a early did doesn't. take it take in time year, years for of little

So I that thing surprised it that we're wouldn't can't way. we be but could short-term, to a planning as much and everything working whole lot up around realizing either of we the in fill that as occur doing can, the kind given can dynamics just of do with. calendar We the

Chase Mulvehill

it seems Where dedicated little like more today. dedicated a And sit fleet today you've that from does Okay. bit a exposure got exposure?

James C. Landers

little XX% time. and are XX% Jim. precise a half fleets to number, is of this this our a It's at between give dedicated Chase, over

Chase Mulvehill

back job over. that. one, turn it All right. Nice Okay. And on last I'll

You're doing a dividend. special

been have versus I M&A slither quarter. may strategy? does capital buyback? Why think small during into allocation there then dividend your how fit And a the buybacks

Richard A. Hubbell

continue in capital and the managing going dividend we advantage year-end different Well, quarter did we'll have of not of take lot always and a we'll kind have proud we we've We're developed it's big we – that with and focused to special we business, that going we're to that high reward we're sheet shareholder of And maybe the balance things shareholder in some that do lot – repurchases a the have to our returns transactions good we – are and to there. buybacks, And any the are seek that's at certainly share a share a a try fruition of we've streak investments on of to front, well, right remain of disciplined plan that. that. to comes to to do our And M&A to then prices between and continue risks. balance and dividends. We a price have The may on been come that. think shareholders. – paying fourth well

that believe and where about particular continue us returns for have growth and be and invest those from to of how pursuing opportunities. continue we'll we kind come historically So, to best the organic

Chase Mulvehill

Jim. hear Thanks, to more Ben. righty. sector. (XX:XX:XX), in discipline this All Thanks, Ben. capital about Love

Ben M. Palmer

Chase. Thanks,

Richard A. Hubbell

Okay. you soon, See Chase.

Chase Mulvehill

Okay.

Operator

go And we'll next Marc with ahead. question from Bianchi take Cowen. Please our

Marc Bianchi

you. Thank

James C. Landers

Good morning.

Marc Bianchi

earlier in third you clarify about October you to thank comment is – you were Just saying are where – an average than October, better on to quarter? clarify on the

James C. Landers

saying Marc, I'm the true just know for was my that around about year fairly But this metrics we right last want – that the closed and It may emphasize not Thanksgiving. we say haven't that is Jim. sure I slowdown or books that comment. didn't October. that's I not. don't is until October did October the have didn't strong. all be, QX I'm we to

fourth a quarter even what fourth though forecast, that's difficult. right So, we're in quarter very now, makes

Marc Bianchi

Sure. Sure.

the percentage was business what for revenue? say you Can Okay. lines of

James C. Landers

absolutely. absolutely. Sure, Yeah,

XXXX about for are to percentage I'm as give of a RPC figures the the of quarter consolidated third So, revenues.

again, at XX% line revenue. pumping, of pressure service largest our So,

service largest number was second solutions And tools, is tubing business of was the consolidated line which X.X% for Services, tubing and thru rental at revenues Support three Coiled Our XX.X%. X.X%. our rental tools quarter. is that in was

Marc Bianchi

Jim. Thanks, Great.

can creating and to kind maybe mentioned of seeing be what we some supply/demand talk about how this you expect, longer could efficiency issue You more help the Can quantify guys the much much headwind a there how balance? slack. you're efficiency

James C. Landers

quarter. it's Marc, activity days quarter the our business, Again, the this more third terms lower. to pressure was is the We measured of Jim. we utilization in actually, stages did in in in of completed second than pumping hard say. But

And efficient. soon have you just common too we're we're know, business vernacular working we're the for the and finished very costs revenue days so today, know really then is times and when working, other hard and three that labor generating you two were that what in that we when the you there would means or costs you and as way the early is But you job time. it weren't might at finished be

impact clear know. How don't big sure. you're kind if approaching We certainly, the pumping much kind be Now, utilization that stage can get? efficient may that of returns, it's but certainly coupled by pressure some pricing it more we revenue, of catalyst. of necessarily with that We margin hope really doesn't that, was by stage, (XX:XX:XX) but emission industry point paid not the we're lowers your and that

Ben M. Palmer

are we're, be today. of It job employment It of – as a of things, Efficiency course, this be logistics working stages, cost also right, execute both with measured amount to all be measured number your more fleet we're in. number material that a processes; and systems is to your on. we're and we're at at programs can mean, those configurations. executing working I can Ben. those equipment over in processes. initiatives cost all fringes HR of got costs We're can and ourselves. now the looking our we're on. Efficiencies And of defined sort updating you and things you of We've need our it per managing there to and we're the try looking create But of time. our realize undergoing benefits, of around a things for efficiencies the lot maintenance

to there's to of we're data better data analyze help better of So and make and operational efficiencies our to a data to things decisions. our doing, relates other and of there's also variety that all and our capture – management kind with

management our period try been on over much as are this make and fringes kind to we'll are past. possible We've many but to we those to times, do team and the time. and been time, over many, as that well we've Benefits, – and has adjustments got So confident through our this necessary have of will again, things ongoing. we in come we're costs so just the through we'll like adapt leverage that before perform the continue

Marc Bianchi

Right.

if it's level Okay, early. what still have remind one maintenance XXXX well, of I and know us you typically the more. any is. that. for CapEx provide kind thanks I initial can thought and But If – on just

Ben M. Palmer

decision us. that going it's for Obviously, right process critical We're a point now. through

to decision. on again, but invest our returns. We going of total shareholder have a made to the are it's... But But company variety ways, focused final again, in continue not in

Marc Bianchi

Is from likely it's fair to that it say up say is would more XXXX? you down, more – flat that to likely CapEx or

Ben M. Palmer

No. this At point, would say I flat. probably

Given we I was but right that we look invest. where mean, are, decisions equipment we we're advantage equipment and right we going that to We anywhere, And think invest, going that balance I we – our right to invest. think I the the to make aggressively try configurations probably thing. in over would to I And decision. is we're it sort to in in to grow to continue say time invested. of the aggressively continue right as continue don't going time, going this in think believe invest not we're of point back, to and industry will and not the take at and XXXX, sheet and the

So, would likely probably is investment at the I point, at most say point in this time. similar a this

Marc Bianchi

Great. Thanks Ben. the so much for comments,

Ben M. Palmer

Sure.

Operator

And Please with James. question from our Narra Praveen we'll take go next ahead. Raymond

Praveen Narra

guys. morning, Good Hi.

James C. Landers

Morning.

Praveen Narra

Marc's question for Maybe zipper Did I Hi. XQ? you miss frac Did I efficiency can percentage give on follow-up gains. the the if on that?

James C. Landers

Jim. is Sure. this Praveen,

in me of in our We make have number. sure second compared pressure quarter. is it, zipper right and quarter was it XX% you work I pumping the third let – give XX% to

Praveen Narra

we could out of getting. lot from talking about competitors how pricing perfect. talk competitive pricing the anecdotes question And some about is Okay, guess A I of then if beginning. the

if use to is I talk your you trying willingness As on it about since contracts fourth I through the to you going be the versus if add are we Can to where to turn attempt clearly it operators how this pretty sign the do to away? edge could leading work as guess weak. go and an guess, low. it's compares pricing's quarter, And

James C. Landers

is Praveen, Jim again. this

If are are about not engaging know XX% are you're which bids lower we XX%, us. in mean, talking And we're prices at mean, leading than we there edge, those. know for work I that I you working.

to utilization. the of and means has even it do the extent on intensity Part Our possible, that of preference pricing sacrificing how hard equipment. is with the is work to it service reason if preserve the to

are try a of fourth you operating the don't Will So contracts any I that get we don't which sign – to that's into – bids customers to than lower sign I – you're good that. bit prices today. we're have hearing don't quarter? at really. during know visibility

Ben M. Palmer

going And quarter. period not to don't fill Jim fill fourth down up alluded be it working a to much as alluded to and this a – this as pricing It's pricing is Ben try slow And this. can calendar We're we to looking want XXXX, point to time. for in going chase to – we're chase probably. the up to better hard to to so at down the forward we the

whatever a talking take to pursue that we'll comes may we've fourth for bit little to quarter, be advantage take of been about. – – the it's knowing again, continue seasonally, it pursue our typically, strategy the balance our So, sheet that we'll way weaker. But

Praveen Narra

maybe I assume repair margins could to or in than think XQ. XQ, a going of we'll than bit the pretty given incremental I higher whole a I high, to is Right. that that Is a think it but lot XX%? be I one is fair normal about it guess, into this and would XQ, transitory reads be fact think maintenance I it normal. and XXXX, decremental just labor XXXX. if XQ than should I margin if in don't a should thing terms higher higher be incrementals But that to think And I guess recoup little pause, on clarify being for bit

James C. Landers

because that's yeah, so, have couple going I lay to weeks. are six we fact mean, Praveen, reasonable. not But slow a people has we do, a as Ben we to times, that's in if off alluded reasonable. of

Praveen Narra

Okay. very you much, Perfect. guys. Thank

Ben M. Palmer

Praveen. Thanks,

Operator

(USA) Please ahead. we'll Wicklund James - LLC with question go And guys. Suisse. James take Wicklund Good Credit morning, next Credit Suisse our Securities from

James C. Landers

Securities - quarter. what your what that I'm Wicklund James Credit you dropped pricing the so And X% Jim. about Hi, than in Permian any is slowdown the say Suisse is hearing efficiencies LLC (USA) rather

hadn't for You're not down of weakness. and the and good. end Permian quarter, to pricing any seen that's sacrifice going At utilization, drop the you all

October, Here at of slowdown? the you any not end still we are, seen Permian-related have

Ben M. Palmer

– Jim, that. is certainly, down guys what We're we're guess this Well, read now. and they call is customer But our saying aren't just in about of got from slowing what our issue, or we I the saying we right we a keep industry-wide, Ben. because anecdotes said – we're takeaway Permian hearing

that we LLC I down, think... Credit at I haven't have. that working, Securities James So gone about not frac of and the it's spread spreads Suisse explicitly, right? are - so the and (USA) fewer so just any look lost Wicklund been count, that other Is Well, talking lost, that guys means I'm mean, And but it? but it means you have that people crews

James C. Landers

Well, mean, That this moved people correct. - Suisse LLC why Jim, Wicklund is asking. actually fleets... I'm Credit I is (USA) that's who've Securities – Okay, James the Jim.

James C. Landers

to and now. among an just I best down. we activity we to know. do last we people are slow metrics seeing October, us are interest the planning they not in various emphasize, not decline be to fleets the who've though, when Yeah, our emphasize other right see will want customers' want to things. through It's And moved I to the tell

my you So... right point, period. to Suisse going James only basis, if Well, seen I point we're At drop, then picked that's the (USA) a LLC Wicklund this but work for, a haven't holiday on - right? Credit – Securities clients is understand, you into fundamental

James C. Landers

proxy can accept saw quarter your next but year at year you Securities this you what James to happens XX% a happened nobody happen sure. fourth understand is Okay. point, We'll And at mean, this - for (USA) last the what Credit Suisse I guys. anyway, To never utilization. LLC right? were it Wicklund QX, that. we year, Well, point

Richard A. Hubbell

right. That's

James C. Landers

Correct.

Richard A. Hubbell

view LLC QX it. the Suisse stage we the make James in Credit way I'm you the okay. count? numbers? give That's give (USA) Jim, the right. Could mentioned Wicklund the sure. Okay, QX. you stage Securities increase just checking to us - to you us Can That's count from

James C. Landers

We (USA) do Credit talk Suisse around but don't that, I'll Securities Jim. that, do LLC really yeah. the - percentage can we Wicklund increase, James

James C. Landers

Yeah.

between quarter So is if and revisions big that and XX%. third you investors there's significant. stage earnings second of of just have cores sentiment and the Securities sooner for if XXXX Credit guidance, and... could (USA) we still the Okay. companies a for while start quarter the that the thought and around Wicklund LLC give James understand increased count make a explicit fine, that total That's And Suisse - our would world (XX:XX:XX), all upward don't an they really could they consensus, you then ended bones unknown, having give the wave be bare among what estimate that's

James C. Landers

everything will start... LLC ...and Right. (USA) Suisse - better. Wicklund work Credit Yeah. could Securities We James

too I'd the mention of over in free thought next knock terms when to down days, couple just see feel we're I if the guys, So consensus you that aggressive. you us of

Okay?

James C. Landers

the all Well, too game. call, on peers, this Okay. for mature people are that Jim, your

operates factoring - guys XXXX? said cost you got analysis their in – operation XXXX. that inflation company XX% looking are at was just for you labor XX% we're into for in They labor to wish your try cost the is Suisse they're don't What I've Credit (XX:XX:XX). best inflation Permian. our to give James Oh, LLC (USA) Securities So one to going God, Wicklund that true.

Ben M. Palmer

level. On a Securities basis? Credit per - (USA) LLC that head, James per Wicklund Not Okay. Suisse

Ben M. Palmer

we'll calendar, It's struggle to up probably attract the retain this is trying well. mid-to-upper as like remains single-digits point. in and a mean, see. trying white fill I employees competitive, space But at and your it just to

So... people still or James camps? rush mentality? still (USA) from Are Wicklund doing things and settled Securities you're we LLC man down has Are out camps we the gold - Credit circulating still Suisse doing man

James C. Landers

describe I'll it Jim, way. this

specifically among number three We And that operational moved have, have a in for basins, to Texas, and times, different have continue at of the people that sort areas we we and various apartments thing. employees. of

James Securities but call place QX. to certainly you Suisse I Okay. (USA) another. leased LLC appreciate very we apartments or thank in Credit luck for Best people live wouldn't So I it camps, man it. temporarily - one have much. of Wicklund Gentlemen,

James C. Landers

Jim. right, All

Ben M. Palmer

much. so Thanks

Operator

And we'll Tudor, Pickering, question Company. & next take our George Holt Please from ahead. with O'Leary go

George O’Leary

guys. Good morning,

Ben M. Palmer

George. Hey,

George O’Leary

From direction in more largely those you of a My describe given understanding you basis on dedicated third the have that spot, the negotiate guys to few the opposed QX sequentially quarter. you quarters next being how in fleet advance quarter? dedicated last perspective, versus trended would pricing is a fleet

play to So XX% because bids too maybe XX% in agreed quarter? down to you you XX%, if on that's fleet are your play to spot of what or that you dedicated don't have for pricing's Can low. speak (XX:XX:XX) so in the fourth the

James C. Landers

around but specific I looks would is the pricing we come fourth I much. just generally say you October They that, January George, about reset not changed, any what X has I this and quarter is previous not whenever that's down, based like. the mean, These on X. Jim. that tell bias everything will but That's on know, hard have to say. agreement I I finish. pricing don't information mean, don't

George O’Leary

of guys you then right. I working, in earlier of terms imply Fair think enough. a your And you kind in question holding fleets seemed fleet responses to all is to that count, of one active held in

this was was of quarter. rate was what the what the during fleet exit end the active that third average count quarter at curious third the and Just

Ben M. Palmer

change. Ben – in the did is fleet of – this not Well, it count terms

different mean, and a define active there's that. of to inactive, In lot terms of I ways

this not But a about So question, the adding I'm at But guess. that I third thinking that decreasing or we fleets operationally reasonable we have or metric. during are are not sure I quarter. either point

the any? guess I way only you Jim, have do answer No? So that's could it. I really

James C. Landers

No, no.

George O’Leary

(XX:XX:XX). sneak selling more Fair I I'll if one the then on enough. in, could,

imagine increase any labor business underlying adjustments your we still that's an that. anticipation to exit But in level attrition first the quarter I not there's of business. XXXX, with in of is activity of broadly. in more the market People fairly You're tight some making workforce, given how is the there the regularly. happening and would agree

Ben M. Palmer

Yeah.

George O’Leary

but be people as So come system not the not re-hiring that you're you there actively some just fill adjustments, maybe are of leave and may people costs to making seats? those out in

Ben M. Palmer

people There not as may of that a – we're right now. delays decision hiring just edges, be I conscious that a in holidays. mean, some employees but around making little aren't maybe the around the openly there the because may bit looking aggressively be that's aren't

lower again, but that not we head reduce necessarily, So the slow slightly decision a rate exit to a that's making at wouldn't fourth maybe to we or we're count. conscious quarter, that the doubt I out-and-out than enter

George O’Leary

all I got. guys. That's right. Thanks, All

Ben M. Palmer

George. Thanks,

James C. Landers

Thanks, George.

Operator

we'll from Stephens. take Please next Tommy Moll go ahead. And our question with

Tommy Moll

Good for Thanks questions. morning. taking my

James C. Landers

Tommy. Sure,

Tommy Moll

out that you as called you additional of public other pricing on see in private? can entering some some mid-sized terms you QX. that did horsepower generalize you in release And well? it referencing public the who the limited there? for business players, the were just of was market players, basins drivers Permian, in one Was So, Was frac that to larger the or in

James C. Landers

Bakken I and more broad-brush the so were it's sure, maybe infusions. now probably Jim. growing also the and was completely some think and areas largest smallest there put East – It both Texas, the the fairly of are And Permian, the was Midcontinent formerly was in, I due comment. a and Tommy, it ends who good a bit then to this equity is not very think well, barbell. as it The where fleets

Tommy Moll

of about And yet one Okay. quarter we changed quickly. in but space sand today, talked Thank haven't has pretty that market then you. the

there quickly, a now? in in-basin grades or So down through coming impact next it's a to And with sand be pass-through is read frac know pumping are there? pretty be for there and profitability all interested to I'd much your the line to shouldn't your few how across quarters, pricing you the straight just bottom any

James C. Landers

is a this you Thank Tommy, Jim. That's good Yeah, it. question. for

a came mines. came XX% in-basin, natural third the from less the than of During the sand quarter, from Basin we used Permian little

We in pressure declined pumping we of pricing also which lot cost in just does You're the revenue cheaper. you due on revenue. the same, up. and margins mark-up, sequential of want right sand were about is But XX% with fact being serve that a to to And XX% in-basin profit that a that maybe for while It has was that decline the same that increased the make availability to it. were decrease lower, marked our is terms has about everything proppant. and the do pumping

they Our capital. always some customers are help so to profit everything proppant that a declining benefit endeavor that, return of mark-up on that a but expect and and aware the from we that, reasonable we price do earn reasonable with some is

reasonable on So of Who going economic additional keeps but remains that's dynamic be grant what is question part the a seen. that there. to

Tommy Moll

thank Okay, me. you. all That's for

James C. Landers

Thanks, Tommy.

Operator

Humphrey, Please Ken take SunTrust Robinson ahead. go we'll next with from And our Incorporated. Sill question

James C. Landers

Ken. Good morning,

Richard A. Hubbell

may We You there? you be on mute. Are hear you. can't

Ken Sill

me you now? Can hear

Richard A. Hubbell

Yes.

James C. Landers

can. Yes, we

Ken Sill

headset hear my I couldn't I you, Yeah, died Hello? could guess. but me. hear you

in on So, following sand own up you your And a in there versus that the did use guys question, trend? of sand change is QX QX? much how

Ben M. Palmer

sand, it our was sand. I of Of think XX% believe I see. we've got our Yes, let's –

James C. Landers

It down. was

Ben M. Palmer

was It XX%, sequentially. to XX% XX% down.

Ken Sill

XX%, XX%, else's with X%, as is down price of coming fast? or everybody And out. about X%. that figure down Kind not your hard one so to

Ben M. Palmer

Don't or rate, at know. In lesser greater other cost a the of declining sand Ken? our words, is

Ken Sill

Yeah, is down like price coming your everybody else's? average selling

Richard A. Hubbell

(XX:XX:XX) it not the not Well, ourselves, to we're cost so changing. selling is changing, is

Ken Sill

Yeah.

many the the Permian of frac Okay. do And outside Permian? in then guys fleets, how you versus have on the

Ben M. Palmer

outside of total and fleets of horizontal Out XX a being XX two Permian. the XX vertical, are

Ken Sill

expectations, got arrangements, far says where to of you've in find is fleets to which big kind better everybody think that's that doing a is finding be And pretty everybody they're then interesting out way helps. I year. dedicated a are a dedicated uptick planning different number dedicated customers XXXX just of it's kind But miss the in of going fleets, right How with your it but fashions. your our now? I

James C. Landers

that is a this. or the service get periods. not the contractual myriad your Ken, customer I paid it job whether I to customer and or sites year, it's of are has fault and fully, today down companies been question. know But If another got do Dedicated understands that let and agreement arrangements fleet their slows on make we site, this want more them if of goes everybody we a sure dedicated little answers I've that late that our Jim. September for for job not a a on with a a answer issue are agreements me in the prior downtime.

And so that of not annuity dedicated an is is fleet a reason today's that any sort.

Ben M. Palmer

mean not is mean, not I certainly of site. it's a dedication. guarantee you guarantee well a have relationship into, volume, to that it's it's not days but relationship on feels a that relationship to entering work dedication, a decision it good and I if a but a likely and it's of customer more you're have not than it that for firm

Ken Sill

a I now? not – year it's I to deeper Yeah. jobs guess going only are in got their question XX planned firm, mean, being are that calendars about guys, yet, out digging only frac need it my big days, got out right is, And they're how that's they for talking looking they it but know far still next little was have I they bit they've XX October? to those

James C. Landers

Probably term, Ken. more shorter

Ken Sill

down that mean I mid-November. when to customers sense. talking I far the all are dedicated are because shutting are to you and these missing their so mean, reporting in guys, Okay. listening then And makes I'm people guys

You're not that. seeing

of don't money your and some actually missed back didn't else lot keep providing expected to of you, coming you that were maintenance because to Somebody for customers you they with their your sense Well, about make long-term guys pushing you that without whether okay, they're with. doing your you question fracking. than these issue caring to on you my enough are service. make guess, things something seem a I an because costs that's pricing peers higher zipper have

James C. Landers

Yes, absolutely.

Ken Sill

until Yeah, people... just so it's –

James C. Landers

Like bids than business, our present match is lower are are happy every other much to to that and correct. competitive competing they us ask them, that rates current

Ken Sill

hope about Thanks. Well, you doing think uncertain and are market, an good job right guys next year. you're in I a I

Ben M. Palmer

Ken. Thanks,

Richard A. Hubbell

Thank you.

Operator

with go & ahead. Please take John Company. Daniel next question our And Simmons we'll from

John Daniel

squeezing for me Thanks winning guys. Hi, in. guys the And competition. you Ben, barbecue congrats on

Ben M. Palmer

holding was great a John. Thanks event, Yeah. for That it.

Richard A. Hubbell

great. it. Yeah. That was appreciate – that's We

John Daniel

All right, get next I'll year. them well,

to equipment I've $XX spend step correct, going about which guys you delivered does it my are the ballpark. up if looks calculation next any – million, is to CapEx year? So QX will include that's QX like correctly, CapEx deposits new If for be done

Ben M. Palmer

It does CapEx some not, some and That tubing coil involves snubbing John. CapEx.

John Daniel

Okay. And I assume that's more large diameter units?

Ben M. Palmer

Oh, yes, absolutely.

John Daniel

on have you stand any order, on – large or granularity? walk Can you you're doing units you where what just and through the of in terms what's us there and of number coil, diameter

Ben M. Palmer

honest. right have us. front We that in Yeah. John, be I'll don't of

very have we diameter few large more, units We so... coiled and tubing need

John Daniel

sure and which constraints, year, out of there peers' enough. Fair your takeaway of Permian but I'm you you've higher DUC calls, some listened you next growing eventual budgets get resolution wind you inventory. have the the is, down earnings get the to XXXX is there then of narrative the

frac could the all that collectively, there And wondering, frac the curious of of should we're is the modicum I'm is companies to seeing recovery heel so lead dampen efficiencies efficiencies Achilles' think and supply. if with new And some nirvana. I'm the a just narrative. forming. be that you call There's though, which you out still to new going still

Just thoughts. your

James C. Landers

be point do marginal to but will you diminishing it a Well, continue of hit offset, an returns. John,

to from of zipper But day hours fracs. service go to the XX there's four incredibly can day this hours providers failures there different a on actually equipment on a all and XX eight to site. are working You of coordination complex

only probably be so can you so efficient. And

what's be uncertainty using So continue to for an we an offset. of But that's oil and to with. price to to too, your differently. be be It better that we need deal technology continue of level and And love going will do I are offset. but – a think to scenario be XXXX, that'll the things so others probably we

John Daniel

enough. Fair

give spend, think I better which you in look know CapEx right? you frac totally XXXX equipment, is horsepower, new want need We're to number, doesn't about new But But we a market don't as the investment the clearly horsepower. to oversupplied. specific fair. As you and need

a up equipment might And entire how what you year? so fleet? you little then that And to speak do can you next designs you as look to the for the order roll can to through equipment bit quickly change

Ben M. Palmer

couple place. respond to mean, I equipment we've the situation Good Ben. question. we've that intensive that more is work – last of ordering the and this the suitable that's we've for additions tried taking high higher horsepower of type by John, work, to that's done,

work comes the than will that robust components add not, type to going going taking able be forward, certainly, place I of think is today. horsepower that's likely order more we the and more majority equipment do So that time to what we that higher would of be the when

be safely fleet, need and for to can. units – old, more for I to we and have taking efficiently, opportunities we've older, there's think who upgrade I the equipment we but maintained to our to robust the equipment somebody seven, work work, and their don't that. still that's work lot that, the we keep put eight there extent of say, be of need there's don't there's opportunities and five, still that's be work think to older that think with think been going But years all can are some there legacy going to – there'll four, I work to pumps. we be I on going components are the that it's a there competitive, not

John Daniel

Entirely?

Ben M. Palmer

right. That's right. That's

John Daniel

Fair enough.

I'll Okay. for a can good have it? month, to following potentially, EBITDA in one impact? on we sort a decline just next Jim, always just six about questions in some about Can Last but just good against – rains handle revenue of know it's you sort pretty low wall a you been digit October double heavy address talk the me it then the setting the here, does that historically throwing Wicklund's And over And QX, turn does I it then month, pasta two, expectations. person. Permian. potentially One, pretty of had is

James C. Landers

It's with But these rain. your which address me in to second double due seen the question, we everything based site, to on on your issues gets let even duration moving once say far haven't decline possible. in any Then, trouble six raining. now, know, you is mean, it's if it's we – that – Permian you I would it handle, is your you're first, that's on with it's be equipment sequentially, very low answer don't jobs, right I'll a stay question the can revenue right now. I so raining. if feasible. first of know John, EBITDA hard just digit

in any October haven't rain-related issues we in the So had Permian.

John Daniel

much very you Thank your time. for

James C. Landers

Thanks, John.

Operator

Dan take we'll from question Boyd next And Capital Please our with go Markets. ahead. BMO

Daniel J. Boyd

Hi. Thanks, guys.

just that would contemplate more and that follow-up pressure pumping in some maintaining on of the what side, of scenario for year, or you next additional CapEx In is have? another of kind outside CapEx. equipment pumping Just flat additions the

Ben M. Palmer

I in last to Ben. and for is orders not some will quarter point time. But have take at said in we XXXX. new the continue of said last any before this couple equipment I in quarters that expect or I This placed I think liberty say equipment we have the of that

Daniel J. Boyd

Okay.

half good, Does that of half of that draw even the So for the that's near-term. XXXX least in at understand given that willing using on And to of for cash a some waters commented you're you imply but or I for in and year? the balance looks revolver then the choppy bit CapEx that use the the the second down very your first there. sheet. balance And outlook XXXX

Ben M. Palmer

If necessary.

Richard A. Hubbell

Sure.

Daniel J. Boyd

how a think are it there little that as I'm just quarter? other on then just don't at it few the And how we on one drivers? shapes big quarters on that efficiency – but fracs, you you me has second opposed I zipper are over because the day, to shift gains, going the measure I a that's evolved Can now think wrong, see? stages Is us efficiencies the maybe what looking maybe purely just detail bit Okay. or maybe more last on primary just past the give brewing if the to And things how to recovery. third topic correct that's per as

James C. Landers

Jim. is this Dan,

in all was XXXX quarter we of time quarter third that quarter be Let's stage were working than count third third XXXX XXXX. because the lower clear in

right the (XX:XX:XX). of stages right don't that we're that stages of me worked, day now... just number per in I site, terms day it increased. day, on In front per have per has stages

Ben M. Palmer

Zipper fracs – have fracs up. been this going is Ben. Zipper

to think of are the try coordination a with eke to us. providers can with case. a lot customer, we're out are customer, doing stages. between sharing to generate service typically and things more point, that stages with metrics when lot But them customers coordination the on the better your better You we they're location, our that's That's there I more sharing

improve, doing has and over thing nice pace slower site to now, on. but going have the that's But well increases same when are competitors to our the been strides. we Jim's there allude comments a we're that I It lot it quantified in continue have will have a to but right don't – there's the efficiencies on back some believe, there So earlier, there've – been than there last, have XX it nice at been been some say, months.

Daniel J. Boyd

it Okay. All turn right, back. thanks. I'll

Operator

Research. Please our Wolfe from And with Gendron take ahead. Blake next go we'll question

Blake Gendron

Hey, thanks, guys.

consolidating So I it and very found horsepower, fewer of to basically peers a about several your consolidating number something talked taking fleets. of fleets one interesting,

be So Thanks. follow around to this and horsepower? as efficiency does frac development the that more playing to move the done to of look rest from work consolidating you And dynamics the advocate market, on supply/demand mode of is there how here, we domestic gains devil's the broader industry? through delineation the

James C. Landers

same the that understand equipment number Blake, We by implicitly having this adding fleets. we've comment and Jim. is done thing same the and of

more you're quickly, more get because the fact think will general horsepower I not takes for speaking don't back more horsepower do run lower same that equipment So of that, done and to type on the if work it need that is but site have to principle work and to much the at you longer, up thing. it you're dictate speeds physics more because

So an pumping is capacity That if of that in you're is certainly measuring terms one offset fleets. pressure offset.

Richard A. Hubbell

Yeah.

James C. Landers

And also (XX:XX:XX).

Blake Gendron

me. for it that's Okay,

Richard A. Hubbell

Yeah.

Blake Gendron

Thanks. it. Got

Operator

our Please take next ERF we'll with And question (XX:XX:XX). Pfingst go Ryan ahead. from

Unknown Speaker

Hi. Good morning, guys.

Richard A. Hubbell

Good morning.

James C. Landers

Hi.

Unknown Speaker

Permian those next your Were the said of mobilized And where Jim out to months think the to XX Just Permian currently. do of have now, to are mobilize located I back plans due or you anymore Permian the takeaway few constraints? in so? outside are some going you fleets the

James C. Landers

probably some question, deserves No. a good It's clarification.

We other of out to have any the fleets moved areas. Permian not

we than a to of about has forth But for little have moved jobs. half things in We a the is and while. been catch – little less horsepower in and general, Permian back a our

areas, in that East opportunity But capacity would issues frequently. up have Bakken other anticipated the We and due the there's migration at to equipment short-term equipment South if Texas, of that and been or Midcontinent happy takeaway we in Permian this bases medium-term be a and no there Texas, time. better job established do was move to

Unknown Speaker

estimate changed then, industry's that And the months? have horsepower marketed that. Jim, for frac last of the you whether current you three and has do thank Okay, of fleet an in meaningfully

James C. Landers

increased say I increased it's about don't in the bit. months. anecdotally how not. don't I It's do a some past know that know. that I We've could over talked few little by our much. comments. I

Sorry, haven't done the work.

Unknown Speaker

No worries. All right. Thanks, guys.

Ben M. Palmer

you. Thank

James C. Landers

Thanks.

Operator

question Wells from And next Jud we'll take Fargo. with our Bailey Please go ahead.

Judson E. Bailey

Good were Most Thanks. morning. questions of my answered.

or you're next you go-forward capital that lines to year and some other Just on at – kind level needs that I'm you increasing may of capital high And on maybe and next the will on allocating portfolio decreasing trying it? a coil across question between touched is be Just needs had where capital for and a level how year. thinking been areas you thinking your think be high one talk of capital or about basis. where of just your allocation that's could business

James C. Landers

and opportunities this have we have there. do been something is see some Jud, large tubing Jim. time, that's a long expertise in for diameter so We in some coil

increasing component size going side. upgrade on whenever parts some some we older the that the we are we're – components intermittent replacement. to of fleet. do discussed, duty it's fleet replace as we buy we're components to pumping continuous equipment new equipment, – Pressure will mix And big diameter our to of the large So probably time replaces older duty with of going coil that tubing is

got now, continuous As different you engines the harder. we've work duty know, is components and

real So I We CapEx think don't currently, those don't know – big needs. of any are the other ones. know

Ben M. Palmer

the Nothing ordinary. of out

James C. Landers

Yeah.

Judson E. Bailey

Okay.

Ben M. Palmer

amount of point. because continue of Reasonable question, CapEx nature this I a think boil the service capital-intensive standpoint, tubing coil and larger from at size it to to but the Pressure down pumping demand largest the does its will pressure line. and pumping

Judson E. Bailey

on Okay. improvement follow-up a is that's of in made you to the or a increases efficiency, course. just driver, work, of And guys one zipper my frac then frac follow-up and dedicated been comments

I drive well or recently help elaborate that around to comment technologies things better Could think you quantify to the some were you're also improvement on efficiency. you you're quarter or earlier the maybe this than cited things year? site using in doing you better or

Ben M. Palmer

like more something that. of referring that's people on things because well of I it's Yeah, the an on perhaps you made as to to efficiently many alluded you need that opportunity able equipment little being Well, with just operate data I nature on to our employees need don't location, initiatives. a long-term around think some as I be think of more well location to earlier equipment maybe you the easy not to – and the may people as move around site, many less

type That's flow quarters. do incremental and to hasn't but other overall systems be and to, we on on evident quantify? time, on, and like show initiative we're that I It's with the that think one that it'll pumps the some not for few we're that returns. be anticipate this will – So clear fewer hope it's just things doing, the pumps we've we in our something be it opportunities looking personnel the And of able try again, to enough honest, in those that. with and been operate in focus yet to Is some next point. to it things it improvements is working with that for Again, of in, kicked at will through to that time. we of up over get site

Judson E. Bailey

turn back. color. Okay. I'll it Well, I the Thanks. appreciate

James C. Landers

Jud. Thanks,

Operator

And we'll Marc from question Please ahead. final our Bianchi go Cowen. with take

Marc Bianchi

you mix the I guys around wanted on you a frac Thank the think follow-up you. revenue around Based up XX%. count I Jim, couple revenue, stage was XX%. down growth on implies it gave, of comments being to made of

bit. down, but but mentioned so there? I down you could up to commentary a sand You revenue little some why like pricing just the XX% just would was the around that, if activity of curious XX% much, provide were think prices you But more mentioned be mismatch

James C. Landers

consider a get it's there hold fact you that by hard paid utilization, honestly, of pricing. the we was to are stage. when But Marc,

probably I to than white space utilization. in did think It's just emerged more we difficult calendar. stages we were the because many equipped to It's really of do that quantify.

Ben M. Palmer

original – well, you and so. we that impacted – sand your as impacts alluded in-basin Well, revenues earlier to the

James C. Landers

Yeah, that's correct.

Marc Bianchi

Okay. that. And it. for Thanks appreciate

James C. Landers

Thanks. Marc. Okay,

Operator

And from have it we question that Daniel & queue one go the ahead. do Please appears Company. Simmons last in with John

John Daniel

Thanks Hey. in. squeezing for me

James C. Landers

Hi, John.

John Daniel

Jim, change all ever I but rebuilt before, going how That's answered many I've it how overhauled and don't us that you tell XXXX quick. or XXXX? think you've I'm got. might try in Can pumps guys real in frac this you

James C. Landers

John, me. of I number in have don't front that

That's your pretty tell get to and are XX axles XXXX, to already is three and and going not you going that XX small new let's I them a number. transmissions. good get full have between – that in answer are, We That that a are just say, there to can will be, pumps they're on question.

front So me. that in have I of don't

John Daniel

of that's just XXXX. people shown the up I'm in just if believe accelerating I'm is aftermarket to curious actually get a if you into sense another will happen. there That's data. that activity, your trying will,

James C. Landers

too to pressure ask can't answer You about pumping, questions one. just I that the have many don't

Ben M. Palmer

back, kind think I I it it's reasonable of mean, question. a think gets I John.

upgrading, I and think the of of crushing, terms be the it'd at still planning whether our in whatever, timing magnitude this we're point fleet.

now. have we planning now. kind This our of reasonable some the kind question, is but season of So don't we're of decisions that that, to answers underway through and those working right right still are

John Daniel

right, Thanks for all All the it. guys. questions. Got taking

James C. Landers

All right, John. Thanks.

Operator

back no Landers to for And would I there closing the conference questions. turn At to this Jim like are any further time, remarks.

James C. Landers

Rick, remark. XX closing One just about long was you. ago, that notified, I too minutes. webcast our Ben for were thank Riley, and not Okay, disconnected

Q&A. the that have a know replay that we technological through data So sources the including was what's for various our see the on contain the it, remarks that. we prepared then website apologize The you'll on our and have entire everything call error didn't on you transcript will and It web happening. will

who Take see you So and interest for we that. just I again that, RPC we your all And to in appreciate want with note will called everybody in soon. care.

Operator

And this concludes today's call.

now participation a for you for disconnect. As thank reminder, may www.rpc.net. want and replay available on call We your will to be the you this

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