RES - Earnings call transcript Q2 2021

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Operator

Good morning and thank you for joining us for RPC, Inc.'s Second Quarter 2021 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 Services. At this time, all participants are in listen-only mode.

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

Jim Landers

Thank you, good Andria morning. and

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

website earnings and a be that risks. known Some adjusted we to call, and without today's made could loss, In with along nature, consistently us are will operating be These and which outline to to conference over at share, and that non-recurring compare non-GAAP statements like performance adjusted several release you unknown public risks, XX-K We're today net other these call periods will non-GAAP release our per forward-looking of number operating items. allow referring can all and refer reflect adjusted loss the RPC's performance. this on regard non-GAAP in of they our press measures of various found XXXX measures be those filings measures using of because today, I'd to EBITDA issued to EBITDA. adjusted on be loss, www.rpc.net.

is to RPC report our facility. compliance required EBITDA addition, to use under In credit with financial revolving covenants

they loss, and today these in website loss GAAP reconciliations are how financial contain operating review measures. nearest issued to of are Please you're our disclosures release in non-GAAP press calculated. interested per net financial share, the seeing Our measures if loss which these

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

Rick Hubbell

we numerous of calendar pocket our some broad This morning the jobs saw shaping of quarter This for the second of for of the being quarter than third our consistent did services with due is we've a Permian. be a XXXX. we press since third is full second increased visibility runway [ph] substantially experience quarter. Nevertheless, Jim, have second and to July RPC. for thank transition June customer issued and We quarter signs activity This quarter demand for represented earnings up RPC's release our at you. most in better remainder in pre-COVID. an July heavy the this pushed quarter rains and appears had to point. most

discuss I'll closing this in Our financial and and some detail CFO more provide will Ben Palmer results other comments.

Ben Palmer

Thank you, Rick.

expenses the second of this same million quarter the per-share loss the quarter the adjusted in EBITDA during XXXX was million the XXXX. general certain Revenues $X.XX and direct and the $XXX.X to of leverage administrative to in the of quarter offset with costs. levels. amortization compared second the primarily quarter increased higher severely Second Cost compared due year. to of Selling, the imported COVIDXX. revenues relatively $XX.X of of higher increases revenues activity second prior revenues higher of $XX.X the loss results expenses Depreciation the in percentage and second million increased the to debt all $XX.X quarter compared pricing CapEx by negative compared in of the of expenses quarter $XX XXXX the second prior this year. prior to share XX.X% by in million the These the year. to due in of decreased fixed activity operating or bad sector the of to consistent decreased from to levels of primarily quarter revenues prior period of increased year. because slightly $XX.X XXXX Cost higher XXXX of of adjusted to or year-over-year $XX.X our million approach was breakeven We an has prior in a million year and over in of of the revenues second of expense impacted to compared quarter of to million the lower of prior of revenues compared revenues levels per the to of XX.X% year. of XXXX million of remained revenues $XX.X year compared the quarter increased for consistent Revenues quarter due affected second second the activity quarter the primarily with $XXX.X direct year [ph] also cost. EBITDA expenses quarter increased was as the in million [Audio in second impact This quarter second low. $XX.X as comparisons. second million prior Cost year year. included quarter second second costs, of prior higher gap] for

year XXX.X% prior was to compared higher the to of quarter profit the Our in in in million compared operating same technical second XXXX the pricing revenues Segment to of for the $XX.X second quarter increased activity with loss quarter the the operating services improvement. due in prior some $X.X significantly year. segment quarter million

the July. in an segment our the from $XXX.X the year. to XXXX the loss improvement million negatively of this revenues of The activity million prior of the million unchanged support was revenues $X.X pushing fact most X.X% increases quarter quarter [ph] operating quarter prior of services prior second was of quarter year. $XXX.X quarter our second a quarter. Our the was to loss due to impacted million by multiple compared $X.X compared increased the the Segment in second increased relatively in sequential service in lines. for basis, same into in year On from XX.X% Cost prior revenues jobs quarter operating

impact administrative operating expenses service to in compared quarter as several $X.X the of and general incurred revenues, the RPC second in quarter quarter. $.X.X to of compared million prior XX.X% credit. this Cares loss cost this due quarter the the favourable of job $XX.X the first is percentage to XXXX to XXXX RPC's decreased quarter quarter million an tax credit revenues $X.X during also X.X% to and the quarter to compared loss quarter. XX.X% a the of decreased operating first $XX.X the in due second during well million in $XX.X as a year retention the of the As from we the million an during during retention impact mix of employee Selling, in of second the of million was of Act prior to quarter. recognized EBITDA the EBITDA million lines to that

$X.X or services million $XXX.X second activity profit service levels to in the compared the services operating increased generated $X.X due $X.X services million an by million the increase quarter. million current million of compared million RFC's or $X.X technical technical million in most quarter $X.X quarter. to previous Our Support in loss second during to of the of revenues an prior. the lines. a segment segment Operating segment's X% to operating by loss million revenues the operating in increased in to XX.X% $XX.X $X.X was loss quarter

third be for of $XX.X XXXX incremental remarks. currently approximately fleet $XX and we million opportunities. pressure the it quarter, year capital maintenance growth capitalized by back quarter, existing selected I equipment to million expenditures full With for comprised will merely over closing to our that Rick turn estimate seventh and some meet second and in During minimal to or we horizontal at demand. fleets expenditures to six quarter, In second pumping RPC the the up early we're cost XXXX operated reactivated capital

Rick Hubbell

Thanks Ben.

Second a our quarter revenues improved pleased completion sequentially and prices pass activities with economy. and strengthening We were to ability as to increase activity the and to increased continued customers. increase oil costs drilling levels improving through through our

able that We improvements, that net achieve but change consistently to yet will optimistic been pricing not have soon. are

thank here and plans We Our expect base preferences frack fuel high in of to pricing this this very indications second demand at end commodity lines we'll RPCs increased up we for ESG time and free. for began the third in questions. the completion your higher that remainder RPC's tier prices to responding At with see drilling the and our like of And power with debt cash four us to quarter, equipment remain all is joining call year balance the we I open you and would $XXX was XXXX. the into customer dual morning. during million first. conference is quarter the for and

Operator

Piper [Operator with Instructions].Your first Ian question comes from the Sandler. line of Macpherson

Ian Macpherson

though So it not sounds great pricing. like up quarter giving nicely, shaping net third even you're

that's around you us? quarter that little third book corner. up lurking the that You or some could this at Is for bit point a confidence double-digits top refine have line

Jim Landers

That's Yes. This possibility. in very is the much realm Jim. of

Ian Macpherson

Okay.

If there. with incremental QX the I margins. help was Act if Cares it you specified that QX? mentioned the You that missed I'm wasn't, and where us sorry for the could benefit

Rick Hubbell

-- about $X.X that quarter that about and technical number and services. was for million just so overall remainder costs -- million under $X.X or our $X.X of the million the is corporate million, in million in is primarily we in Yeah. $X.X $X

operating would $X.X profits. services in be So operating technical that reported We profit. million

have million operating about been without would loss it So a that $X credit.

Ian Macpherson

optimism the end you thinking of of for Okay. first pricing with at point? half possibility that improvement, Thanks. see you on about terms this by one And Or regards net in to of more year? last as me do the then that just a are the this XXXX

Rick Hubbell

the see tightening will hopeful that increasing market we're activity. pricing We and improvement. see think I we some

So, -- -- we and we to remain one. to forward we are hopeful we we were doing that are can conservative, we're but hopeful pushing we help are everything but rank and try

Ian Macpherson

Certainly. All it. thanks much. right. Appreciate very Well

Operator

the with from Gengaro comes line of Stephen Stifel. question next Your

Stephen Gengaro

Thanks. And good morning, gentlemen.

can revenue the services things couple I'll down a So, or breaking you the lines? -- product you major technical for mind start do within with

Jim Landers

happy that. to is do Stevens Yeah. Jim,

about quarter I'm major the for to our So the percentage lines. the are for consolidated numbers revenue service give of

pressure Our largest is That's revenues. of service line pumping. consolidated XX.X%

which XX.X% of that tubing revenues. behind consolidated revenues, at technical our coiled was rental and consolidated Next comes tools comes XX.X% segment, revenues, of consolidated through at solutions services then tubing X.X% is

Finally, nitrogen X.X% was revenues. consolidated of

Stephen Gengaro

Thank you.

margins margins as the profile and to, how we into impact fleet triangulate of look out to that back that the flush that moving within deployment in as you the the the about sort So, pieces try just of pressure of get pumping quarter we sort revenue and how we should alluded when margin an there and overall are think obviously half some on the additional the of at year? you with growth

Jim Landers

Jim this Stephen, hey is again.

we had acceptable wouldn't is some bit profile right pumping in lower the large our we it fleet such a pressure that put other is than think margin now The of field So a margin if returns. didn't service lines. little

be overhead. margin in will absorb also to would line hard more it It dollars, So say percent. about accretive bottom some

bottom but say to that is enhance say, Hard quarter. will it it to hard truly So our percent. line third

Stephen Gengaro

Okay.

coming I low about you're sort we think a that, give of sales follow-up and or you it's always do the off if Just of OpEx know change a I the Cares? sort Would could get excluding margin quick little to if third of bottom incrementals realistic? quarter. take said XX% numbers envision kind that you the of dealing incrementals when number about can you the with into you you a hard gain just was and don't bit envision funky. or still growth you you're to positive asset when But got so a talk know as revenue get on

Rick Hubbell

in the certainly possibility. realm is income operating of Positive

Stephen Gengaro

appreciate color. Okay, great. the I

Operator

comes John with Daniel question from next Your Energy of Partner. Daniel line the

John Daniel

try opine me What's demand behind thanks on of if Hey deploy putting that? on. wondering a to you I'm fleet for might number. the sort could guys when set you Guys, just

Rick Hubbell

good a John. that's question, Well,

soon comfortable, are As we right. as

As full. third quite is early we the visibility we indicated in calendar frac demand soon have quarter as the

job a and disciplined remained pace. of out team and trying I of far to too We plan Our and really to to ahead not remain slow roll think of conservative had ourselves. try good done has kind getting things a

they're not to now. So incremental fleet, aggressive additional obviously And have a to personnel. now, right I you would plans say deploy right need

moment, So an we're ready ongoing we an as always not aggressively right. fleet, at program. this are recruiting eighth But, and very hiring for

we but weeks. be this at in we not we third probably have it another in hey, heading one quarter, weeks in say, during down the don't I moment point have quickly. place But, relatively in will or very we plans get at next that that should -- six in this people the So are sometime direction, hopeful put that's four maybe that but can we our to

John Daniel

Fair enough.

to. Sort more of two one The I relates you. another, for got next

step math, from for of from again, go up You call six, simple of Is call seven activity QX? fleets in product other lines that that's it percent doing representative it XX% terms of increase. increase the in type just

Rick Hubbell

significant. that not Probably

John Daniel

last as the concern COVID the then And out much getting how West is, one, and that strategy? popping on how, enough. just do with rising, cases you of Fair it being If it your tight Okay. think up just thoughts just with relates in is? what's labor general as you to cases start Texas? Or a

Jim Landers

pleasant more, did increase if it do cost our game It that that's plan past in with this people year the Jim it'll every a of but probably more than is It game -- happens. social executed which and we incrementally a and worked. in, it employees. people It that and half, complied did over quarantines, happened. past same need and theoretically checking we've because John, wasn't be over the the you It year having customer costs but would for respect was is that what requirements. it'll plan good but distancing, half,

John Daniel

Okay.

Ben Palmer

this not experts, been that is I and would have We're John, this we impact cost there recent is recently has but right not and Jim right been say over haven't entire Ben. direct not the time, in or my any certainly have it or had on incremental that months, respond have of some impact of. a impact, we're that leaves it. us. hopefully impact will we'll does significant incremental that the If reading to I'm hopeful tea is significant aware

were COVID. in We that those once, to address by rare, not able it. was strong word, impacted once and place, But we procedures it all place but had have it a maybe things processes was to relatively in we constant being be

it hopeful I we or increase spread operate the I'm that if through think fairly to us not effectively. will that, the I'm So impact cases but in number begins one, impact significantly, it hopeful us, can

John Daniel

done of terms we policies is the lot one looking the a would Okay. a last of talk because like at And service whole job just do ask the like capacity, out just labor here. customers be time full every in any the or in And right? reason get for question I is not then issue one conservatism as the level the and field? I the as ahead you sense guess company, steam The basis backup to number the this of it's that's are of the sort same there's

Jim Landers

related, not is hearing of issues that Right. Certainly We're is it's hearing that labor with issue. about but an right not a lot now. anecdotes issue, COVID we're an that

Operator

of Zurcher Your next Taylor question comes from the line Pickering. with Tudor,

Taylor Zurcher

taking for thanks guys, question. Hey my

what some You more what and frac QX, the in for same in least fully talked QX sounds QX. there just be give delays also is and customer-related like fleets. you going on at pumping operational impact could impacting that with a pressure calendar sort hoping vein about us that bit will seven color booked the had as horizontal of on And to

those should issues you could QX So frame utilization in effective just seven what if about in QX the you for how curious and we help calendar have? spreads six thinking be horizontal to

Jim Landers

quarter. said that. know delays had I We customer we've Jim. in second operational it's Taylor some already

and was of just Some the orchestrate, a related when in happened job was heavy rain Texas logistics to pushes job it of sets on it related you're West some to trying that site. XX to of

things happened those continue pop up. and So do to they

the With our down result, a good seven bit. It we utilization in in certainly was not see field by quarter. in in was completes we it was the third -- what the utilization had it the first a it higher was As more was fleets, quarter.

now feel from come that guarantee job all So purposes won't with intents third a pretty horizontal unexpectedly. But because with white about good utilization out for no us be we in more practically that calendar there other full and we've see delays up will space we utilization be the can't one and they quarter. got we what fleet right is

Taylor Zurcher

still and great. the but gears the just tubing coal pressure Okay, half know thinking shoots those year, here, And the over of sorts half about green perspective I pumping into tubing pricing of maybe challenged frac? back activity you're a outside of year? a I'm and shifting pricing from heading or back a service from service to relative tubing thinking of bit lines maybe any cold curious a solutions, the perspective, those about how through lines

Jim Landers

bit doing improvement -- or or pricing our I'd good up probably for there job asking net but turning say little there. we teams more a it's I it, pushing say strong higher is significantly, wouldn't a are for it.

capacity I more lines. success fleets or have gives in capacity seven think quote in unquote, of frac XX%, we service lines. those ramp We we much idle going in six from XX% as increasing our revenue having some the our increase and as service quickly increase other there ability to are ability us talk than about that don't some other being to

it regard numbers. at -- without So, more those overall we the more activity I adding lines pump due just again, say produce that incremental service are the capacity increase time, as we as other improvement to correct, this on would would But then. to lot can percentage take service can are but move pressure point even lines increasing in aren't are this significantly that higher experiencing those at we have a capacity, experiencing right, that to potentially frac the we point a given

Operator

question Stifel. Stephen Gengaro line [Operator of from the Instructions].Your next of comes

Stephen Gengaro

the follow this, quarter, Jim, if jobs first I the because from -- quick second the being six and from apologize I the the a bit ups quarter fleets out? were of pushed those those Two weeks Thanks. missed of utilization in down

Jim Landers

what That's utilization. impacted Yes. Yes.

Stephen Gengaro

Jim? give I'm it. you missed sorry the number did utilization And I if

Jim Landers

XX% by or first hard hard it's different, kind We was -- to it's kind denominators portray everybody's a so it bit but little because down quarter. to, of of it didn't, was from

Stephen Gengaro

the are are market now, see pumping? can looking if you makeup I this kind Are hear bifurcation you pricing from within you assets different second perspective others your you. right pressure dynamics pricing on of any Thank for? in seeing that now? And of us what just seeing the right that remind we just have and what And question from you the of -- then relative sort your Okay. for the customers assets of

Rick Hubbell

talking you Are Steven? about pressure pumping,

Stephen Gengaro

sorry. am Yes. I Yes,

Jim Landers

So current, sure. the

either blending. the fleets are ESG are of quarter, tier that dynamic the four we their four in they gas friendly, second had So or six because

So we have natural to component it. the gas

utilization way can decent a to good ESG friendly think equipment, you you pumping it I if pretty today's is have achieve pricing. characterize pressure at

don't There's you can decent get with market the You equipment in and mix you gas equipment. utilization. increased can diesel premium pricing demand regular pricing, and get dynamic blending

So you everything can utilization that hope and answered effectively of high make pretty high pretty your I question.

Stephen Gengaro

no, Yeah, adds that appreciate I good. some color.

help. think the in good I I'm for Thanks shape.

Operator

I call Mr. turn like would over closing. now for any to to the Landers

Jim Landers

Okay. Well, talk day. it and to you good today. everybody hope soon. have a called in you participated thank who and Thanks you. We'll We appreciate

Operator

completion Ladies and www.rpc.net for within Thank be gentlemen, the replay of this call for on two call. This hours the concludes today's conference will following you your participation. call. available

disconnect. may You now

RPC (RES) 28 Jul 212021 Q2 Earnings call transcript