RPC (RES) 24 Jul 192019 Q2 Earnings call transcript

Company Profile

Participants

James Landers	VP, Corporate Finance
Richard Hubbell	CEO, President & Director
Ben Palmer	VP, CFO, Treasurer & Corporate Secretary
Bradley Handler	Jefferies
Praveen Narra	Raymond James & Associates
Chase Mulvehill	Bank of America Merrill Lynch
Thomas Moll	Stephens Inc.
Marc Bianchi	Cowen and Company
Vaibhav Vaishnav	Scotia Howard Weil
Waqar Syed	AltaCorp Capital
George O'Leary	Tudor, Pickering, Holt & Co.
Christopher Voie	Wells Fargo Securities
Connor Lynagh	Morgan Stanley
Dylan Glosser	Simmons Energy
Charles Minervino	Susquehanna Financial Group

Call transcript

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Operator

Good morning, and thank you for joining us for RPC, Inc.

Second Quarter 2019 Financial Earnings Conference Call. Today's call will be hosted by Rick Hubbell, President and CEO; Ben Palmer, Chief Financial Officer. Also present is Jim Landers, Vice President of Corporate Finance. [Operator Instructions]. advise this to recorded. is like would everyone conference that being I

will reading by us forward-looking Jim started the get disclaimer.

James Landers

Thank you, morning. Lisa, and good

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

you nature release that risks. number at a of of www.rpc.net. today and unknown statements on will this found our and the reflect made of XXXX on RPC's press could can which that other and call like to to along with public refer I'd website be Some all issued outline be be our forward-looking in XX-K risks, those known filings

is over as a to under our uses also structure. measure We're performance. in earnings RPC compare measure us without compliance it performance financial operating changes a use non-GAAP report today's consistently regard and we'll facility. to release capital be revolving to credit which with to various required In of EBITDA periods operating call, EBITDA allows conference performance of our covenants because referring EBITDA, to

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

visit not you've at website our www.rpc.net. please to seen now, If our one press like release would see and

Hubbell. CEO, will over I and our Rick call now turn the President to

Richard Hubbell

which improved of second because with service This quarter benefited of you. the issued Jim, thank activity revenues increased our for earnings morning, we compared most customer lines. of quarter release our XXXX. RPC's press RPC's first

and be regarding impacted our near-term uncertainty However, customer their continue by intense plans. to competition results

decline and indications third begin we activities half second XXXX. of may the quarter, the As that during are drilling there completion

evaluate and to accordingly. prospects our As industry continue adjust operations we a result,

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

Ben Palmer

Rick. you, Thank

in the and activity to pressure line. prior the $XXX.X $XXX.X mix due lower compared RPC's materials million XXXX of prior compared year. unfavorable in was second to compared primarily of year. profit was revenues the decreased million EBITDA levels to Operating the $XX.X $X.X an to the to quarter the service Revenues for pricing, year quarter decreased $XXX.X pumping within prior $XX Second quarter lower second million to same quarter for million for the million last period compared million year. second

earnings quarter decreased mix costs increasingly fuel well Cost as of to consistent due levels increased lower due lower of revenues, revenues per or quarter the supplies of pricing RPC's activity For diluted quarter diluted within of competitive $XXX.X revenues the lower services of per expense, inefficiencies. with materials as the or second our in revenues revenues a as revenues XX.X% to change $X.XX reported XXXX. of in second XXXX, compared revenues during during was compared share the XXXX $XXX.X of million of including second to Cost materials for pumping a year. earnings and RPC lower to of pressure million and costs, labor $X.XX share Cost prior XX.X% service line. percentage

million and of Selling, this quarter quarter compared second $XX.X of X% year the general the million and increased million $XX.X during $XX.X million an slightly in year. the year. administrative in the in second quarter compared to prior expenses prior to to Depreciation XXXX, $XX.X of increase expense second was amortization

pricing due activity second These profit in service decreases XX.X% Services prior the and year. pumping the Technical quarter decreased in within compared segment the lower was current quarter for to pressure $XX.X line. quarter million lower to the XXXX of million quarter. Operating same were in to revenues the our $X.X compared

quarter first second $XX.X the quarter. second quarter Services million to activity the across RPC's On in for This of XXXX basis, activity all sequential higher again from revenues service revenues higher segment to X.X%, million segment. within increased quarter lines a is $XX.X to the in levels. Support due due increased Our the to from $XXX.X levels million million $XXX.X

during the second of revenues $XX.X maintenance or -- by consistent material increases due increased million to primarily of activity I'm levels. Cost quarter XXXX sorry, repair expenses, and in higher X% with

points supplies lower the revenues As costs. decreased revenues, a current proppant XX.X% lower quarter in quarter of XX.X% and in percentage due cost from to expense of primarily X.X first the to percentage materials

and $XX.X during RPC million second million million the compared profit the general quarter. $XX.X loss of operating decreased year $X.X quarter generated in second to the prior an of administrative operating prior the XXXX Selling, to million to in compared of quarter. expenses quarter $X.X slightly this during

to EBITDA in increased in the million million quarter prior to $XX.X quarter. current RPC's the $XX.X

$X.X segment million quarter. prior to RPC's Our quarter. operating the Services second million increased in Technical by Services revenues a Technical to million loss or compared operating $XX.X the X.X% in profit of million $XXX $X.X segment

in essentially second revenues were $XX.X unchanged segment Services operating quarter to quarter. in $X from the compared million profit $X.X in the profit million, Operating quarter. prior prior current Support the million quarter was the

at RPC's hydraulic horsepower. remains pumping approximately X,XXX,XXX pressure fleet

quarter, the and of fleets pressure second revenues. During XX manned our generating pumping

third and the in end As the previously to pressure are pumping of on delivered service announced, X fleets quarter. schedule placed be by

to number pumping increase. fleets we generating of do expect manned the and pressure However, not revenue

currently Second full second million, year. and quarter the half of capital in $XXX $XXX estimate were or be expenditures million we XXXX $XX the expenditures approximately capital million year to

proposed improvements. estimate quarter, delayed capital of ago cash million, the XXXX was had balance outstanding no end operational the second debt. is well we unit months the X than updated we our shared Our because $XX.X X canceled lower we At as tubing as location coiled and expenditures several additions

now remarks. back I'll it to Rick turn with And closing some that, for over

Richard Hubbell

returns term. Directors continue our our our is to Ben, trends, our on over investments competing quality evaluate and maintaining challenging thank delivering industry We you. position environment. and dividend. Yesterday, we remain customers operating adequate In RPC our a long a services to Board light conservative of dynamic quarterly in suspended very of cash focused the generate balance sheet. capital the company to

at the the joining Thank time, for this open lines you this we'll And for us morning up questions. call. your conference on

Operator

[Operator take from We'll our Handler Instructions]. question Brad with Jefferies. first

Bradley Handler

just guess the maybe Could first percentage my routine help I for product all that line revenues the to is Jim. of the by coming you you question one share do? think us and way

James Landers

Yes, absolutely. Brad,

quarter I'm service is what about So for our to give percentages second of largest you RPC consolidated lines. revenues

revenue. X.X% Nitrogen revenues. quarter of June Services of X.X% our Thru X.X% segment, second pressure XX.X% of the Support of ended Solutions which revenue. for Coiled Tubing pumping tubing is So revenue. tools, was was XX.X% was Rental of XX, was consolidated revenues. was

Bradley Handler

to from a that start I your little bit. be that first, guys. Great. we think able of quarter the sort quarter more color guess, with And second through think experience in bit Should get as you a we'll different just reflects maybe little when I'll maybe customer dealing are how talk budget customer much -- that it when dynamic Or about of reflects talk thing management of customer so uncertainty? uncertainty, or with a same is different way well? we you a about you saying the second

James Landers

Jim. is this Brad,

basis projects closely. anecdotally, that, work the various customers job we managing of budgets that month-to-month I -- we more say wouldn't do like we just a know customers know Just don't because are on -- XXs believe the things delays their prices some and that or in people XXs have than that budgets. price to way. certainly the we manage who oil low in light as midyear, or down of slowing were rather were But approach there been a low commodity their bit of may

maybe activity we not So more being role do some robust. think that in played

Bradley Handler

half? Again, from was had them role around more to if predominant the if are little telling customers your you're the signals now pretty they -- place, giving walk But a mean getting of to would I customers I of off talking slow helpful. your in are fine. or risk the That's commodity intent second hold what that about about they clear bit just declines. intend of color Okay. obviously robust be visibility are until intend some you program hesitancy, suppose you what you they that to they environment?

Ben Palmer

question. Brad, Ben. this Appropriate is

are uncertain. I think it our customers is some of again

They necessarily make whether completing what forward cost moving not. are -- are competitors they us they're about are being cautious. the and they're and to in think I evaluating they or our wells don't quoting and decisions jobs trying interested of

them really whole a of don't typically we specifically lot of from terms what budget. get in guidance So with their doing they're

Therefore, rush more and the to to do we decisions they're can of so of in those cautious just remain creating, comments them spend broader and activity minds, and and cautious. press tea uncertainty about slower by and -- being reading we not our are just flow think the are a our remaining companies to are to responses are we their and they're try leaves cautious. and expect free key just cash about reading the focus So trying level what make in that will budgets on types

Operator

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

Praveen Narra

recovery guess the So go falls, for there in seeing adjusting onto the we'll I Or we willingness second equipment as think your down, stacked equipment? crew activity customers quarter? is about you stack potential additional XXXX? we can as think as Or holding Is count through half the about equipment? stack talk you slow and to somewhat it about guys in how then interest

James Landers

is this Jim. Praveen,

specifically assessing which of appropriate. have figuring overriding the what doing and do signaled aren't business we've right in we're the this more additional our quarter. probably now, right guess fleet stacking really place way for the evaluating concern fleets and really is about think the thinking of configuration saying to third pumping is to with at equipment need equipment are we at reductions do during cost we than sure condition at looking that rightsizing the configuration. new I this we point, are and is that's equipment the another and pressure we point, coming out that what if we but Right That I

additional now more we could our you fleet So probably stacking. that's tell focus about than right anything

Ben Palmer

sorry. is Ben. Praveen, this I'm Yes.

Obviously, quarter. me we're from Let bit. the little improved second pleased the to add results quarter just that we first a had

the that we're customers or on they saying. everybody are the and as Jim is But signaling some back what our environment part. So and to and progress what sitting again be seem assessing indicated, signals singling environment, competitive

we our to is to it So us, as fleets. want to Jim fleet, indicated, of available terms have makes we're again, looking band in at equipment that have available what what sense

we're number of quarters the to we're to prudent, try we there despite more in dynamics the quarters, our some in newer we are that given next some should that two couple that the say, I or at try assessment in current next We're we're, process industry this the be equipment. the manned the a as capable in just just environment, and necessarily on remarks, to current in lot going should be indicated be We we business, to we of have don't making And so think now assessments next of highly going to going least couple in be expect least undertaking that at positioned Again, the at fleets through crudes have now. the additional be do our believe and going compete to a because in always business. going stacking about equipment for or environment. fact we continue that coming up we're decide where not of that process time my in the to point we right that we're we're and new let's of and

Praveen Narra

going this prior budget. then do this the I a of is capital how you guys could it's how spending think XXXX, of it as of context and the years decision obviously, year? That's process about of being think making through we into very process? electric helpful. play in you're of. that And lot to next able year the capital and what flexibility But that think be Great. capital context likely in early know something fleets that upgrading doing But spending, of in to demonstrated do you're like the to you have flex about equipment spending also

Ben Palmer

This Ben. is

in the as have things XXXX, won't see in are So pumping look believe XXXX, improve, pressure new in X have If chances of unless we yearly, the we improve capacity. in don't at opportunities, time, board we add we to will before If we've that talked given to that that point evaluate not on conditions and to but XXXX. allows continuously, longer add necessarily any But will these in adding coming us part to fleets yes, plan fleet. At to we've industry continuously any. upgrade term capacity relative the got we we'll be that this. this we point, this and we expect the flexibility

are, studying relates it fleets, many something As it's are, we people to it. we're as that electric

open with is that customers will financial incentives are without out themselves it we guarantees are it, uncertainties, talking and what try highly our customers. are of spec and the unlikely working learn opportunities some the they something Everybody there's present fleet electric the lot wants into, what and on to to to to we're talking uncertainties to are. also and a understand add so From we but otherwise, an are We're real on still a go to and will what if so unlikely that We specific we a complexities vendors. very it go not unknowns it's out rush spec but perspective, planning but opportunities about about basis forth. and and basis, or

again, me forthcoming, clearly vendors. -- want seems it, about some that operational relationships perspective to and between it. We and been to configuration right the we to not clear -- about both And design differentials and I then that learn how see and that into to it's figure to talking it an the out is it's attractive think something whether what pricing new And but a to I'm customers don't and anybody able aspects perspective that we're, open from pricing technology. equipment something but not conventional to it's and have has from translates with customers has

decisions still made to just there. of So there's a lot be

we of be research of don't conducted. the that. a to expect on be And to edge lot leading think I

Operator

of question comes with Bank next Lynch. Mulvehill Our Merrill Chase America from

Chase Mulvehill

process then If could fleets have have. visibility. kind it you mean going and you're to XQ? I fleets fair in And if maybe it of guess, start manned the it don't drop here, profitability? of back you about, the half maybe come through you how But understand a fleets, up But less do I and talk to of there back guess trying like you kind would like revenue down? how of XQ the you many some outlook sounds ton I sounds in maybe today? many and is revenue down that assume going you're get some to profitability Could then if profitable was to about what drop be have

James Landers

fleet is we there's -- third how right manned for would think at although the and weakness we those that active of we September revenue fleets line the are and is metrics now. looking labor in right we operating We September inefficiencies, I would on which tell you we're actually the If will see of there will kind cannot But will idled, fleets just a indications bottom fleets due improve We on do quarter, Jim. XX. where scenario how solving many today, this fleets, have but and do tell cannot fleets decline. you now. manned cannot operating a idle Chase, low XX and many to be certainly anymore have XX. are inefficient cost utilized

Ben Palmer

relationships. is trying of judgment be of what to right? we potentially part is business to and That's talked working about increase, to the customer maybe Ben. adjust opportunity we this fleets more have just the before there's right as lot the it's to I the there's mean a hard get made we're dynamics think of number revenue Chase,

the potential and is in certainly there improvements So declining to revenue costs. have

number find the make number, is, feel we Jim or half with. that judgment as to should appropriate the what or move what assess number, we're into say So about latter to trying appropriate we for try solve a said, try to the

more on color So that. that's little a

that. benefits and we're new But we're challenges we what there leading say of we expect be of be to the going operational don't are potential the don't on And expect be fleets. terms I to said to opportunities on going capital and the electric to understand in expect the to e-frac earlier I leading edge edge, out be edge trying leading let that of me the spending

Chase Mulvehill

that's are about lot certainty And sense. some There's I lot of the too. there go to a and makes the really things unknowns decision, have industry, where out capital that across not a right right it deploy to going of now. think

margins, So I in XQ think I about guess stronger. a When revenue follow-up. quick came

You had that XX of kind had XX anticipated. fleets you rather fleets than maybe

least like better the So at in we felt, utilization came it feels across than what was but fleet margins softer.

that pricing? So there. maybe the from that really X struggled the Was just fleet kind or kind of of frame in us margin help it was a margin more Kind profile XQ happened mean, of an help understand I in operational standpoint? XQ. what there

James Landers

Jim. it's Chase,

own in things did we that to sand, brought a had of largest More little that And in-basin materials proppants that it, was is better, what would bit. extent It out. and their item. stable. that It's a impacted a but also a impacted in couple certainly largest is cost. stable is we improve. are a declined to Pricing of your to customers utilization Utilization bit, continue pumping exactly bit, in knowing as pumping sand have possibility been pricing but well. because have The second relatively not liked some us markup, put was the would it pressure be our might -- Just have our was have revenue line our quarter. model there but mix to margins and a

Chase Mulvehill

real should quick I'll just it be ask Okay. quick. pretty more one, one

the dividend. So a dividend, questions couple of on

of to maybe your kind cash down minimum levels. You're

kind that about dividend debt? think the pay the and you do of how potential with So having to

Ben Palmer

We've dividend that time back 'XX. 'XX and the being. for the suspended historically have in We done

So point. suspended this at is that

So it's we a that's where and quarter-to-quarter are. decision,

Operator

Tommy from Moll question next with We'll Stephens take our Inc.

Thomas Moll

you throughout and/or EBITDA flat, XQ, but just I Best revenue limited up to visibility say don't to on understandable Are you down It's want XQ? a given for or to ask anyway. sequentially for want if willing certainly guess. bogey the

Ben Palmer

we We provide not we're -- either. don't guidance, here and won't so

Thomas Moll

Okay.

macro the of half In terms if of CapEx the challenged the budget. year, second reduced capital the you've allocation, through remains the dividend, suspended

we and potentially tap be strategy, fourth quarter, Or we you're As et willingness anyway for to forward, go revolver? as operational running, would potentially additional continue the would the adjustments revolver many some short-term fleets how CapEx basis your to needing third avoiding solve cetera? operational to get there tap a into or on with you to reductions

Ben Palmer

certainly for. it's taboo, for us. to revolver it's good is but shoot for metric Tapping not a good It's us target absolutely a

use revolver. judgments and trying decisions. the We're of how not business make intention the to to again, where are doing. we're but have we that's the Our that's I driver, to And not good is primary indicator it's a right and said, as

the we intention I use it's to whether over it's the it to guess and so of But to primary the the had to business So it try to doesn't matter avoid clearly level reason growing. don't maintain use our have, conservatism that not point. hope whether it. we want that we we've want it. if and it. to is But manage to manage years, having to but and we clearly need it say It's something It's used and having to a we many therefore really not debt use that's to

Operator

from with question next Marc our take Cowen. We'll Bianchi

Marc Bianchi

second Is that anticipating with maybe some it about of see? that in you're start like sounds you the what characterization to from you wanted yet the and a you it fair the declines thus way haven't seen but just phrased half guess it you here, the quarter. guys I had commentary far

James Landers

hard into Jim. Marc, to X We're week-by-week. this It's this call on July. weeks really is

I second know We yet. our reviews year. Continuing about budgets. talked talked slowing have about that books half efficiency of just We not in haven't July down the the the goes the operational frac customers closed saying. They from fleet situation. without help does that know of

view So the now. information have our -- better right just the half will that the for lot don't a that of second We world us. right than is we year slow of now that of whole down don't

Ben Palmer

comment we fourth be one way is our last be would that's the think Ben, will guess what's that terms I just I will on. this the quarter years. thing to in is again assumption like that -- X will planning it's the is that's our it than weaker I -- of happened because in

our should experience be that third we doing less what that that first, we the as in given backdrop quarters. as the is activity now So and will and there fourth might have second expectation than quarter be we

part of assumption point. is planning our that this So at

Marc Bianchi

right. Right,

else going And these they're sounds you fleets fleets in customers Would are the two have it all EBITDA that X XX of Okay. with. fleets now. really impact are here have the come to forward positive end towards of anticipate right the these be that all are coming replacing same, to quarter, to the you overall the third those same? in, looking your Presumably that that once those working a else like

James Landers

demand fewer Marc, absolutely. higher. is efficient. more would of smaller, equal, new things be It's equipment people. this requires footprint Yes, yet The Other it

So maintenance be would downtime or maintenance lower. expense and associated downtime

So an yes, revenue any offset to activity that come would all from customer be declines potential equal, that slowdown. else

Marc Bianchi

wouldn't talking the And you're my make more capital adding mentioned we're two page. fleets you replacement on that of any to no just more depressed. we're on mean want then you I in be be When one we've assuming things understanding it. just capacity, are allocation XXXX capacity. here just pumping adding kind another in for wouldn't look new pressure these than talking adding XXXX? about you was our XXXX. example, two of that sure kind say I like that But that still about, these capacity that, the is new you fleets that know, Ben, that for vocabulary Got same that got two

Ben Palmer

time, Yes. any equipment. this At be in not will new adding point we

Marc Bianchi

Okay.

about half the point? look starting what a think XXXX CapEx as run could to being rate of like second in So kind then fair

Ben Palmer

No, no.

equipment we're the of Second that just arrival to. reflects speaking half of the 'XX

-- we're full includes includes we're we're for other but this for CapEx at some XXXX. And than $XXX not very at on growth spend anything year, to for CapEx. that is what XXXX, million And not little little other maintenance several So point, growth we're That again growth some expecting -- looking -- than very year. CapEx tubing. anticipating next CapEx anticipating coiled or we're

expecting equipment, we're So new fleets. the to to add not -- order to new

Marc Bianchi

Right.

if right mean fair below is numbers of I'm -- that to I've that, is million? here. $XXX So got my looking number it kind I think at maintenance

Ben Palmer

assumption. That's a reasonable

Operator

from Our Howard with comes Vaishnav next Weil. Vebs question

Vaibhav Vaishnav

I if talk guess Thru are business other just we helpful. can the how the business, Tubing particularly would progressing, about pumping that be nonpressure

James Landers

this Vebs, from and its most to. a a decent flattish, but It some quarter, Happy good was of -- Thru is other for of think, revenue upgrading be tubing, performer businesses. -- Jim. our us. its for of I the fleet. technologies. Coiled products was benefit It's it to Tubing continues some sequentially innovative it's to we're continues new

we to sequentially. but on work that it did So little a improve need bit,

is service Our all was flat. you I this Rental to line kind of at improved. this snubbing tools transparent mean point.

with So and completion but kind the else. better of everything along other actually businesses of the rig activity kind count are than well performing

revenues a environment talking did that. pumping it's flat We're sequentially. improve. So about to relatively course, of And pressure relating dynamics the

Vaibhav Vaishnav

as guys well? about half, drilling declining non-pressure activity pumping way completions is for the of second fair of in business think as that and So you rest the thinking

James Landers

that and then well Those drilling, to exposed as too. are Probably. completion

some various have yes. -- those their yes, mean improvements the reasons. other So, of I All for -- for businesses

to hard exposure We of pumping. completion kind it's So decline pressure in activities to think will a the real be tell.

Vaibhav Vaishnav

visibility early you U.S. what think real XXXX fourth guess? your if any quarter. Okay. But quarter a venture third on thoughts or would would And about don't activity into be, have understand just would we I I

James Landers

what looks when we're you flipping XXXX like of the It sorry, would us and sure quarter like. not don't oil, we'll know Tell tell to about that it. of you be I'm to disingenuous what we price looks like. be tell third activity we XXXX what mean looks

Ben Palmer

to standpoint, Well, from up a next activity planning our on will not that and were is levels again significant any and year we be assumption planning degree. not assumption picking

as commodity on else to, So customer and we're prices not and and have all said, respect Jim things. any information does we budgets counting don't better those with but it, anybody

for growth environment the the we're So on current to adjustments to deciding planning improving. appropriate company benefits occur. going levels upward that the positioning We're next not We're position not adjustments it for activity hopefully when going the be capture to and given make company year. upward what's to payer be does that the

Vaibhav Vaishnav

think flat going here Completely just maybe was XXXX visibility. is is, I and just activity -- guess in flattish, we say, no second fair U.S. is flattish half from with on that are let's if given where I to to like profitability what need fleet would the steps things in structure? that what the needed broader terms about total in improve think either taken pressure to are of be Or pumping? you in other basis corporate

Ben Palmer

question the level the higher becomes customers. with to -- able on and work then dynamics, trying have appropriate the we're is customers, of what's to mix consistent right execute same that we've been Well, of those the the revenue. and things If we're more customers the for. get That's staffing what still to striving

the into we in we're successes to some the those hope still we'll to progress take that's and regard progress and trying take approach metric, and we've hopeful So making operational our made that additional platform quality provide decisions right account, that to and take particular we're make need that to services that will those we the about customers. be what that in to change profile able

that's So forth work get flows number so to at our generate the as and again, disciplined CapEx, to and more and thing. that of disciplined better returns and predictable try that to we'll customers as it our that and remain business what we're staff point over with is us opportunity we is remain what, how can react that cash the of our more manage we'll sort results increase the this to time. relates any criteria returns with and going and But and business to, consistent new investments

Operator

from next Capital. AltaCorp Waqar question Syed Our comes with

Waqar Syed

this weakness heavily decent you're and in assets MidCon is half, in the about Permian exposure the where it more that have in versus DJ basis all basins? mentioning the have U.S. Or is You and and some multiple Is this Bakken? you the towards second weighted Haynesville

James Landers

Welcome Jim. is this back. Waqar,

Let's see.

MidCon. the We are probably in seeing some weakness

We best also that basins, don't Permian DJ. in there. other probably some maybe some the stronger can. have relatively actually in areas. bit a of probably about weakness the the mentioned we Bakken than the some extensive You seeing and The We're operations is that

Waqar Syed

How some, about there the Haynesville? Do you well? I exposure have as believe,

James Landers

the and the itself do. gas, completion We there probably the again I fine, strong do. is of that We Permian. Valley, the the not work than guess, natural Haynesville requirements And some do weaker, Cotton current we weaker in price is of that which other because

Waqar Syed

Okay. Fair enough.

going with what your there on days you saw coming was in how quarters? working receivables in quarter? up. to change Now capital your I that the also customers? what's outflow on the went And do you And Could expect comment the secondly,

James Landers

Waqar, for Yes, repeat something a question? first went up. the I you up. part second, could that something went of you lost

Waqar Syed

Yes. slowdown Days customers. receivables, from your the payments

Ben Palmer

slightly. are with normal We're there at particular concerns Maybe of our no and it's think the comfortable time, in quality and this I point There ebbs credits. flows.

our You business significant upon be dynamics terms are It asked to or most about activity forward. the We're will going to respond to activity there depend of levels. part. will levels working what any the extend in it capital. Obviously, not changes expecting continue for

Waqar Syed

quarter, second was inflows, capital in outflows? cash the the what And working change

James Landers

Q We yet. haven't published our

Ben Palmer

Calculated.

James Landers

Yes.

Ben Palmer

Based the sheet? on balance

James Landers

Yes.

Waqar Syed

what see cash to want just flow capital changes. I on the was from the table okay. That's working impact

Ben Palmer

[Indiscernible] differently. a apologize. that of I on the Again, people find number lot a about call.

Waqar Syed

then And fine. question. That's just final

percentage you running zipper pickup? of terms are of seeing terms service intensity, fleet what in flattening seeing fracs, you In your still out? zipper And now that of fracs? your Are was

James Landers

Waqar, it's again. Jim

if Service of and over be recent percentages fairly frac XX% to leveling between our out intensity other quarter zipper real out about stayed versus first it's and change consistent About stage one a of at that There's the work quarters. at talking XX-hour frac this sort the or second zipper thing, we're sand, was in leveling regarding the proppant not and XX% way this point. discernible point. seems traditional. Our

Waqar Syed

Okay. And one question. then maybe just last

So that these fourth fleets, they X add third in Is Not impact. quarter? will a correct? as have you quarter

Ben Palmer

it more. be will quarter again Yes, on minimal to which difficult third Fourth impact expecting it quarter be environment. we're

hopefully when equal, quarter a to one expect XXXX So things the up working very it actively quarter. position bit uncertain all contribution the we the fourth but do, could some fourth be, will and picks we compared what well in be in early about

Operator

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

George O'Leary

just the off. versus maybe pumped July how quarter it to given for July, however on market about hours you have you the your quarter turned to the to days just the would the utilization, again on but maybe cadence Could the about So activity there activity even of think process second it, describe you might haven't closed throughout think guys for the and -- the the just June started book frame trying how in April stages, guys out? think third or be Any just directionally might about how helpful, thought fleets? start color worked just

James Landers

we talk intended. No a intend actually granular get trouble detail. George, about pun every we pun time into was there --

talk weeks to not of So we're sort going or about that thing.

things like are. stronger During or percentages the second stronger the quarter, to the say financial But we end to going hole We the of have just a about stand results. they was than not let's our can go or that. quarter that much as We're quarter bit how rabbit published beginning. down a

Sorry.

George O'Leary

half, then heaviest about And quarter spend back from of CapEx just CapEx the -- frame in That's fleet quarter X third the perspective? perspective, deliveries, cadence you to be going the the the the from could is the QX okay. a just

Ben Palmer

Slightly heavier.

James Landers

Yes.

Operator

comes Wells Fargo. Our next from question Chris with Voie

Christopher Voie

business. actually question the coil about a So

is orders. mentioned Or tracking any the well actually deterioration I cut was think discipline just it that been from this CapEx but pretty there you primarily Has there? in mostly coming canceling two is CapEx driven? coil pricing

Ben Palmer

the of in, the getting We're I brought good customer fleet relationships. latter. pleased new with so think with to that establishing we and up more into speed units and far progress the the

be discernible very feel nice going But allows forward, environment contributor could segments been the near It that industry, a in pricing. there's if competitive in I of is it. certainly course. changes our that Pricing So say competitive. of we wouldn't that, remains all term

in is very that that similar of the new technology Some we've than past. had but brought we what we witnessed board. on different It's

sort But a can't to So I'm reasonable we're discovery there we of so now. year in are this some for in as still that we have well, really happy opportunities year. us, our compare them mode fleet think last and we

Christopher Voie

view. is our issue follow-up Waqar's follow-up for Okay. on in just profitability scale then Based to least on at question. in And frac important and my

of on you going you exit you or As evaluating any might any focus to making need cost basins are efficiency, whether forward? these tough decisions

Ben Palmer

service important. looks about things scale, that we'll mean by down all materials, really I by and location delivering efficiencies equal equipment our It looking from platform having are make we're quality question to appropriate gets can more benefits, the less we of some a standpoint service. mix quality what our the line, but we Certainly. so think logistics I and evaluate little that operational with result reserve scale, performance customers operational have line believe becomes monitor always with adjustments. and the location, what at like. And we're service with seeing Scale a our continue to provide business materials,

are at willing and that that, our the and how at in forth. to the are do the So hard changing looking looking dynamics changes industry customers very we're and and so

our so opened the we look a businesses. hard at And taking we're up as comments,

current the time Given process. we're during year, up the starting environment we're planning that our just the of and fact

So through it's to a time go good them.

Operator

take over Stanley. Morgan Connor next We'll Lynagh with from question

Connor Lynagh

there outlook point that fair here. covered ask activity, of just The trend you're to we've companies? downturn larger think I a that is brief one the on expectations the I'll a any you'd driving seeing so that that's that's business the here, there? company, smaller customer the privates, there choppiness anything clear in front between Is driving bit

James Landers

really. this is Connor, Jim. Not

budgets. about. great it enough or for have one, not understand probably but at clear that important couple may to argue a it's financing. argue nothing discernible ways. understand We Public more maybe talk may question. an Private We companies on the us scrutiny that's certainly could You there's different really their companies under

Connor Lynagh

enough. decreasing activity something Fair of like If things think or you've right fleets, addressing much fair margin, Okay. with underperforming of staffing this could inefficiency an Actually what the is we year lever got of like bit of inefficiency? look labor one the year, more. it a is The sounds some impact how about if now. next to flattish like that? certainly, big How a

James Landers

at margins with would it. just I come by can lower. and of that Connor, to up lever we work mean, improve revenue basis haven't point, we done pull this points the though a certainly be even would we -- is biggest our Services it Technical number the

Just trying to though. look question at the number and share It's valid with you right now. a

Operator

next Handler Jefferies. over take question We'll Brad from with

Bradley Handler

coil, getting thinking third -- as third But still units talked units the new about quarter the again, thing. from quarter. at -- units the X as -- I you're this the I of us on we're think just for in some if was private looking in contribution in new well X have upgraded

question up? Thru on margins, reasonable down chance and go a affected they of Perhaps mix, in that naturally a coil. getting fall chance are there that obviously there's margin others is because a of know nicely flat. could in more that margins if up still rise are the Do dynamic mix? it I It on but is, revenues have macro. to naturally seems then I'm the good by flat, so there's revenues But wondering what that pumping I'm is it So if it's up are in it's could at but And revenues demand fold some guess Tubing. ultimately revenues I and times. maybe offset case,

James Landers

that would more you're We're equal, The upward about margins. an bringing bias ideas things valid. you're tubing coming Thru then to talking talking up give for are Brad, about third shift quarter Tubing that's units coiled would you're outlining Solutions probably mix -- doing our that well. probably caveat. have Other

of a have that We're that is could very quarter muted come to we necessarily and easily in visibility third I back revenues. now. right to have doom we gloom, see saying sequential not So decline but just lack the

Bradley Handler

fair. that's Sure,

a sort me, And Okay. validating understanding again mindset. then you and it's one the of sort it. more of just and just probably thinking lot just But I guess for I of appreciate

to So your market that adequate utilization than line the terms in equipment, where earlier the apart. savings that you with But spreadsheet, still new top because returns I with comfortable it is your a answer choice, suppose fall you of and the to if an of consideration of being those can't now Is to to independent the continue if choice lot your you problem refresh we think realize described fracking all question. of get sitting right the if about is it's just efficiency the you're the in fleet? kind the investing will,

James Landers

work natural just money the hard care very to the being on earns hard it, is to are our much The be parts of continues pumping business. two work how be for doesn't pumping the is pressure fleet. might There refreshing for Brad. this, One dedicated we pressure It still equipment. it you. The and in on

to also equipment We replace comes capital have when the strength that up.

of other pumping if mindful want will and own various market we pressure our So the we in But certainly allocation to be equipment. sheet our capital balance things. general, and certainly decent, replace is

a they to if environment, electric it, at out assurance figure XX% and reasonable and the somebody to then let We've can't keep for that investing cost fleet a content more some by how fleets. make frac we works. we're them another which looking that frac about current to economics have And else been bring that, long too, but the of and There's investment in we can't that customers relates talking in going a time lot more.

your think question I those So ways about it X meant hope by the I'm to I responding investments.

Ben Palmer

this think I again, -- Ben. Well, and is

right. I think you're

a so New terms of driven was forth. equipment expectations decisions capability of by the and few in several performance positive, to but years payback. higher It's -- net are of a

into many and how they to happen competitors a market. our competitors, really, really are going are market are going the of to and little more more we how have what's back the have and to restructure or out to and how So business struggling to -- clarity going come going environment of them, competitive about are in there's go know many to our to many until

sheet and We like balance more trying generated buybacks and customers free debt the are being our of flow. much our shareholders always minimizing terms with to always and focused be have investments We we've and Just and been our cash all our capital those sorts focused managing dividends things. on and to prudent on -- been.

trying that to looking to type fleet our we're -- of not So of perform. is those capable doing focused grow the things. not We're the work we're on fleet. of on Much we're focused

it it. is adjustments some so to and of perhaps less again that we're ideal assessing Some than looking making at fleet

working. at do adjustments what won't in our levels point had essentially Whatever been capacity have activity that's or been we affect manned, this stacked, quarters we because not equipment not recent

coming move is we to but And there's our be rethinking we facts we is what right needs environment this what to can are. make some now light be our assess the quarters going would in the be near of capital and the investments It's to what assessment And then for from XXXX, decisions expansion facts -- our uncertain and like. opportunity are the too that's environments environment that whatever we'll that see what of an out putting latest term. going fleet. to for us in at to what point unfold. current expect not today, So think That's the right, look forward about in as the about natural fleet there, additional time

Operator

Simmons with Energy. Glosser Dylan from comes question next Our

Dylan Glosser

potential that you speak could free call, those? mentioned Can if pool those still you last guys augment cash flow you levers And to to an the remain generation. levers On option?

Ben Palmer

personnel. in talking levers were were the that, be probably We from improved being our quarter I still those we're pleased going primary All the quarter levers that things with are think first the of costs manned but second those to and earlier equal, we've about is number and quarter. to to last fleets refereed performance had general. we those are on

would labor So our are primarily and costs that those levers our be the cost.

Dylan Glosser

And last one me. for Okay.

likely before getting moving repurchases speak that to increase quarter, strategy forward? guys you your your dividend? this to past reinstating As And your share you with guys stock can buybacks you are increased the

Ben Palmer

the dynamics we've meeting and it dividend our suspended Reasonable you Board that the given a make environment question, decision That's more frame the at it. in time board thing, on a can recommendations. dividend. to specific as current And that has terms a those buybacks, go which timing sort obviously the opposed there's on decisions Obviously, flexibility of of gets that of that our and there's the that that. lot but based into makes with approved a

that So some when but relative that maybe can that's our put the repurchases just will those just made. meetings timing say decisions to the it's be of share into to be before back the decisions may occur we place, was do visibility likely more and board that dividend and

Operator

Instructions]. our question [Operator Minervino take Chuck from next We'll with Susquehanna.

Charles Minervino

thinking been lot's on know little of remainder bit year. to pricing get you're more for I color covered. a just pressure on want what I in the the pumping

of of you the as activity happened. the the equipment weaker of Just to impact offsetting well fact last about that coming been bunch this in stack. last but I you obviously And a off year a year thinking but point also industry year, would have some you're than rollover, have of that second started the pricing when half kind different activity to kind looking pricing for guess the

left of give? activity get do take to you think your guys far as will much what thinking there's it's pricing Or mindset, slowdown? So with trying of a kind leg you as not you to that think a are more do down just

James Landers

any up of going are to give as latter. activity more going don't up in see year, decline second the to We this More Chuck, certainly Jim. is the -- I we, industry, think but the the we're can of give half pricing. an

than and have rather out, the pointed we stacking this our I pricing all know, been et of we which think kind at cetera. and equipment, year working suboptimal peers you fleets As wears out certainly

always to cycles. that XX% smaller. lower seen getting will more willing than we've certainly XX% group than sidelined at to And this have point price competitor past in but think little else, who's been probably that speak is a I marginal fleets or discipline be there everyone the So the the

Ben Palmer

that And dynamic get what I'll to add the activity into sustain. you're -- is the to that be is and this is that pricing add able going that to Ben. -- goes I'll

it's several it have but and is itself that talk of and really single to in it, it pricing a piece dimension, in good of So about dimensions.

exactly it's volume And so when get. you always to you're price clear the not going work, much

one sometimes compare pricing So hard to another. it's to

striving be to hopefully, utilization. the by and at levels of and are that hopefully, demand business to can get at getting results. So our to where industry Jim get not are striving with get period we to trying we up is back our and can all it disciplined more like all successful like point reasonable at this our lowering point We're to, And just need so pricing improve pricing. returns. appropriate becoming a as improve reach still alluded to We're forth that of the everybody, just volumes to work more to we try customers supply winning and

Charles Minervino

other Okay. And just one question separately.

sounds looking transaction a space are have thoughts We I in like there's your seen get businesses. just that wanted there's and there pumping. some companies to are and looking to pumping Maybe on their pressure the it scale out pressure expand exit frac that -- in benefits. other to companies the find

check the thoughts on how companies Do X kind of to seeing consolidation industry to you to it's wanted months. for going a next them of more Just be over you kind want industry? do get to progress that is think Or going paid a hard for know some to of of anticipate transactions someone those write your the the and assets?

Ben Palmer

said, this be check the we and want I exit, current maybe companies the it I value to want feel would This difficult a like have Ben. in to with that environment, is will that to scale the to that pretty the geographic scale disbursed always can about sort viewed diverse of be. in exposure market. thing. have talk but we geographic, can beneficial, We a We've be that alluded

pretty a somebody to need another don't good not We exposure get that. have basin. -- need feel we acquire to will for So we ourselves to

the would capability to wanting equipment challenge. the is is quite benefit and configuration situations those properly business, equipment a us that and normally maintained thing and having that, who So somebody complex. with are And all again and their age whole exit

unlikely that that would pursue pressure that taking It's -- and beneficial, it's capacity if pumping we actively add to could going to we're to So lot or our would place it of beneficial. for be continue. be resources there's to is additional to a discussion about it love and up combinations it bid company. try And not something I

Operator

We'll take a Marc Cowen. follow-up question from with Bianchi

Marc Bianchi

next you guess perhaps your XX% It whole -- half there lot? is that Or change puts declines, this along see through sounds with cutting the maybe is of could million mid-XXs mentioned things U.S. speak more leverage top you settle quarters. quarter. and number are whatever I maybe competition Could EBITDA weaning per of or million sounds $XX maybe bottom second business something that's third to put and wanted can this the pricing back the your margin your It to occur, pricing like earlier. you of philosophically If we a opportunity the something we would as to of if year decrementals or around out range on that of on bottoming just a perhaps we And the where that, maybe think think we over in kind you quarter revenue activity and assuming for that? to somewhat add like get the EBITDA $XX the in declines outlook cost mid-single I that activity. of in decline there's half kind other is the takes market line doesn't year? competitive digits, that

James Landers

definitely to couple slowdowns. they are we peers' quarter be quarter give guidance fourth our like. on not over and if the to but look of our what view, fourth you years, at third reasonable a trying that's past is quarters Marc, going And were pronounced

venture not of guess any EBITDA look as any I might to so. scenario, under would So fourth like quarter sort kind of really what

Marc Bianchi

trying of kind on is is XXs mentioned that as something Ben don't into that expense. guess less perhaps with the to a basis was a you yes, Yes. range $XXX in if where Yes. go have or I CapEx, run of any I in low we interest million a we think go that earlier rate XXXX,

Your minimal. taxes be would

Do basis. be that's it Or way it? I right about that sustainable perhaps am like could think missing in you to anything? scenario generative a cash you the So think on seems

James Landers

we manage that's would a cash and want something to No, to flow neutral. view fair really

Operator

session. like turn that to And call the Landers would any over to for or question-and-answer additional the I closing remarks. back concludes Jim

James Landers

you Thanks. lot spending soon. and us. and thanks to Okay, with a you, hour everybody last everyone We'll hope Lisa. Thank has XX of We be for a day. good the minutes seeing

Operator

And that conclude does today's presentation.

the www.rpc.net conference and Thank call of reminder, replayed may a now hours you will completion the following your the be disconnect. you on As within call. for participation, X

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