RES - Earnings call transcript Q2 2022

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Operator

Good morning, and thank you for joining us for RPC, Inc.'s Second Quarter 2020 Financial Earnings Conference Call. Today's call will be hosted by Ben Palmer, President and CEO; and Mike Schmit, Chief Financial Officer. Also hosting is Jim Landers, Vice President of Corporate Services. [Operator Instructions]. I would like to advise everyone that this conference call is being recorded. started the us disclaimer. get will by forward-looking reading Jim

James Landers

morning, Thank good you, and everyone.

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

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

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

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

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

Ben Palmer

our Thank morning. you this thanks. for joining call Jim, all

and CEO the on As President of as to Jim mentioned, take pleased role I'm RPC. new

of company. Hubbell of was During remain and Board the the active Directors with second named Executive will Rick Chairman the quarter,

safe, a our services thank moment like Schmit their I also in employees operational all the new of outstanding strategic will take for , teams to with providing work corporate a hard shareholder-friendly to management customers. to We dedication our managing would our to continue RPC and also team. conservative, tradition manner. high-quality and Together, we the Mike CFO, work, of welcome our

regarding full earnings Let RPC's release improving strong a highlights pricing was few me begin earlier quarter that with markets second this a and financial result have of United the renewed These of issued the press reflect morning. utilization quarter geopolitical second politically results our the that the quarter such from world year. as stable are understanding in hydrocarbon events XXXX our energy States. conditions needs that

complete our end prices declined drill to the quarter, and of customers levels they Although new towards that oil the wells. motivate remain at

more complete highest addition, natural now gas-directed prices customers In to our a gas incentive natural drill in the provide and than renewed wells. XX years for

businesses shortages, to pressures, times, We are inflationary materially issues of driving lead impact will our focus domestic we but on markets. to equipment completion-oriented in continues manage and to RPC managing financial a results. number labor generate not strong budgets, customer do pleased service these ability believe

fleet the and Schmit. to overview, the Given to would intermediate-term effectiveness Mike and pumping ESG enhance that our of XX With our environment, view competitiveness have the next new CFO, I improve over of allocated capital our favorable months pressure introduce we our profile. operating like

Michael Schmit

part contribute RPC to company's and I'm the to of be pleased Ben. excited success. Thanks, to help

second the with start me sequential Let quarter overview. XXXX financial

improvements. quarter. the the during $XXX.X to $XXX.X and higher prior pricing in customer Cost increased revenues million million of second Second quarter by increased to activity $XXX.X to levels the quarter million by quarter in prior from million revenues $XXX.X X.X% XX.X% from due

$XX.X $XX.X million quarter the from compared coupled operating improved costs $XX.X of expenses general the Selling second pricing million higher and million to to quarter. revenues revenues, EBITDA to over As the to a performance. services. percentage cost administrative of revenues quarter by quarter, $XX with due slightly during $XX.X profit XX.X% the leverage direct Operating to XX.X% prior due was from was to in improved prior million XX.X% the prior for quarter of the improved million costs, during compared in employment RPC the prior variable quarter. second compensation including in with consistent million employment-related primarily $XX incentive in increased

by Our improvement Services million operating quarter. generated and This $XX.X activity results improved in segment Technical to $XX.X pricing. higher prior operating increased by $XX.X XX.X%. revenues million levels driven The the million compared were a in segment or primarily customer profit

Our the $XX.X compared in to increased Support Support million quarter. profit Services $X.X X.X% by to revenues was prior segment million $X.X million. Services operating

current year. prior same Now to quarter our I'll compared the the results discuss period in

For same pressure $X.X quarter quarter Operating of a $XXX.X customer and the to Revenues revenues year. in year. prior the XXXX, in the levels million the increased improved of million was the EBITDA profit prior $XXX.X year. quarter of quarter to in same active the pumping million the as for to second compared pricing million to higher as due operating compared of second larger prior second activity was increased $XX.X well $XX.X the fleet the million quarter of same an compared to loss million of for $XX.X quarter equipment.

direct due leverage million Cost increases over levels. breakeven compared in year. the compared per was of of from due million the in of of revenues second general revenues the prior in revenues to due quarter second $X.XX share increased diluted that of due Cost share year. administrative general year revenues revenues. of of term XX.X% prior increased Selling employment in a of higher compared activity higher employment-related and and leverage primarily XX.X% Our short the increases with prior costs $XX.X second expenses $XXX.X during revenues of quarter the the decreased the the in the million $XX.X XX.X% revenues Cost of million year. was to of revenues expenses $XX.X year, $XX.X earnings and costs to of expenses of in to same million higher X.X% results to were the million same quarter second XXXX and same consistent of of approached or relatively XXXX the as XXXX in during same per of $XXX.X of prior costs. percentage revenues. to primarily compared the that quarter to in quarter the of the revenues during or are amortization same the fixed of the prior quarter in quarter to to quarter quarter Depreciation XXXX Selling, administrative over to decreased

XXX.X% $XXX.X quarter Technical compared was Our customer Services revenues prior $X.X Segment levels year. our a million, quarter were increase resulting of in Technical to equipment $XXX.X higher utilization million operating The profit million in pricing Services in the of same segment second million quarter the results year. by and the improvements. were the higher operating driven existing same to $XX.X prior compared activity the of for improvements in

second of loss million $X.X Our million, in year. the same the operating segment for in revenues a the an Segment in $XX.X Support million the Services $X.X operating compared of quarter quarter prior profit prior to compared the were quarter of the of $XX.X XXXX same year. was million to quarter XX.X% increase second

for fleet the X operated horizontal which immaterial horizontal quarter. second quarter, an the quarter, ninth of the our the end reactivated RPC pressure impact had fleets near During results a and pumping on

an XXXX. estimate $XXX refurbish capital to to $XX.X Second were placed capital for opportunities. million. the the approximately currently cost maintenance existing be quarter Maintenance will that capitalized split and roughly include full year XXXX to in expenditures existing have selected We XXXX capital service increased expenditure million, equipment be estimates growth expenditures between been into fleet

RPC to final closing approximately it Ben in In for some acquired will lease remarks. pressure $XX million addition, over make XXXX. final payment pumping on an for back fleet now turn I'll the

Ben Palmer

Mike. you, Thank

up-cycles businesses, adding significant and demand. an supported investments industry-leading resulted services returns maintain capacity Our productive capacity, capacity, current environmentally make including to is to In financial perform outlook inevitably the strength friendly generate Previous long-term us has confidence by our financial technology encouraged in in industry our in leverage contrast, current pressure of manner. pumping. to the on focus industry investments enhance our our our have outpacing to our completions-oriented

our reinstate evidence action cycle further time, a current of shareholders. In commitment we're in for questions. joining address this strength happy the are our regular to And by the is and Directors quarterly confidence to of pleased addition, our Thanks to at us Board any morning. we of dividend. This this

Operator

Instructions]. [Operator

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

Stephen Gengaro

So two mind. things don't you for me, if

thinking talked And that is reactivation, And first and about how can the mentioned investment assets, and this idle about decision? And missed The much is into about your you the curious you back kind may CapEx needed? you're market? and I think about when just how of refurbishment, have fleet current also of there you new think refurbed brought be more within the that it, might do construction. you have refurbishment the

Ben Palmer

this is Stephen, Ben.

with Let part the question last me begin your of question. or last

end We confirm has to is initiated -- to year -- expected is before service early put be that of fleets significant investment. that, have project could XXXX. that to X, spending refurbishment, And just and refurbished all the expected and reactivated be without this that into that been X incur earlier more would of requiring that fleet to fairly on maybe point your -- the occur a is the that in spending idle and

in included So that's that.

expected think CapEx. we reported I So the last our numbers, updated was $XXX million quarter,

Now $XXX million. to up it's

that's we increased to previously It's a that CapEx. of expected had XXXX. that not which So decision the do decent in part necessarily refurbishment, to do

Stephen Gengaro

for Is first then 'XX? the in construction And incremental the new 'XX. half delivery there CapEx the there's in that

Ben Palmer

in That 'XX. be spending will

Stephen Gengaro

'XX. be will That

think How Okay. customers? might for customer are thinking And that? you commitments with Any when we about want. asset had you at you or should duration that sense you're looking about build, conversations

Ben Palmer

question. Obviously, good

that hydraulic to Our customers fracturing operating discussions point the that's have out we with not tagged again of that our confident work specific confident with in we're have opportunity increasing been that we'll inquiry these identified. do to But customers relationships be And not that we we're expect do fleets, in that capacity with our time. basins increasing will the additional we're secure for equipment. we a able the customer and be We to level investments. the productive which with quite clarify or are want or very all

day, refurbishment. expecting, fleet, and fleet, timing be out but to same either have newer them. to will when will We'll not refurbished make time. either same due additional We'll That fleets we of be need or the whether our completely have be brand-new fleet X to a do. it, will that this very add thereafter, wear about those the decision it upgraded to an add retire made and a we the we're some shortly So later, tear on we're But on service about in-service we may idle the take begin just or projecting or this coming it we things we the out retire we refurbed take begin service which of and of equipment decision them them of expect back effort a into surface. whether of

Stephen Gengaro

the And have Great. segment? maybe for then That's revenue one, one you breakdown Jim. by helpful. Do final

James Landers

Sure, Stephen, absolutely.

by the So to give is are I'm the quarter and XXXX of going percentages revenue service second for line. revenues. a percentage of This some consolidated

pressure it is consolidated line RPC XX.X% service pumping, largest revenues. of was Our

tubing. business revenues. Second largest consolidated of is question, XX.X% behind downhole motors to was rental of was revenues was services, Stephen. was Thanks for last tools support which the of is is our that within workover, X.X% quarter. X.X% second Tubing And X.X% snubbing which coiled Number nitrogen hydraulic Falling was revenues. largest of up consolidated service consolidated the is then Coiled line one for line revenues. service consolidated revenues. Solutions, Thru X.X% was the bring our business, and tools, three it our And it tubing

Operator

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

John Daniel

the have first is, and today. is you right? you I horizontal QX during X Did in quarter. think Impressive fleets guess I that -- I one at mentioned X the remarks prepared

Ben Palmer

correct. That is

John Daniel

you do have to that? fleets any And vertical in addition

Ben Palmer

couple fleets. of do. vertical do We have We a

John Daniel

Okay.

X to fleets the safe guidance here guidance, vertical else quarter, for well, for there's so an being formal the not fleets average guess then a X and horizontal but understand QX, So all I equal? assume just it's -- I

Ben Palmer

Yes. That's correct.

John Daniel

was bit on And but -- up you color you're you're fuel? just dual new fleet a it provide make said the -- a then I if that that doing -- little apologize, Can buying? Tier I of on assets you is distracted the the this, X

Ben Palmer

like also need for are Tier correct, equipment That's but And of that suite of description Yes. blenders tractors, well. a we your that. X we equipment, DGB. like in things any don't the We support more and as have believe support other kind we

John Daniel

Okay.

Can have question. or assets last But week selling your NexTier maybe not to would this the sort -- remember. active saw in may to Just or might to any I color emerging speak, coil happening. week, its on this data we my guys final line? may handy, that You Ben, you the be you segment consolidation can't in what coil was will of expand but that's views today, market, that this have it on Gladiator plans just that appreciated. be coil particular product

Ben Palmer

beneficial. we Yes, are John. we some currently like line, and a to and component a I are coil been and It's we said, service do Sure, to coil tubing. or XX in some in to We tubing. it. That's particular seeing pursuing actively our make some not that opportunities we're capacity. complement good current large diameter capacity. smaller with -- have And mean, any tubing plans but coil as our improvement not additions improvement have do has which additions significant capture offerings, XX We to I within or service any bundle XX able good diameter that services customers,

Operator

Instructions]. [Operator

is of Your next with Johnson from Rice. the Donald question Crist line

Donald Crist

you the to question gave wanted clarify just first. answer Stephen's I to

fleet way that's ordering, fleet that retire So that You're to that come keep going the Is you're heard the correct? that fleets and I fleets, you those at the active. refurbished answer X new going correctly? when X to

Ben Palmer

take the we X be we do to given capacity X that work existing we X spending More to both are expecting, could closely have surface. without able that of pretty incremental fleet, out this have X or fleets -- reactivated. to refurbish be our fleets potentially fleet to fleets with spending. less, to that to or think so that still idle the timing But we existing the we in doing new are any of is do an of the need put buy and that correspond incremental or incremental additional coming a some back But are going

clarify, refurbishment do if -- we But service. if did today, So and fleet, those X add take we fleets we add go additional -- right? we come that back we did just if XX, we out fleet, to the fleet would to have when just not would say, let's we X X additional fleets reactivate -- into brand-new

we more. move we're fleet. added be and But idle be at -- evaluating still the X would XX So we if to currently next respect currently, X with at the

Donald Crist

Okay. would 'XX, I didn't want you just have XX XX or to fleets in that be incorrect.

to to Is Okay. time you And the new order Caterpillar? week lag can in wanted right you talk today? still from if range XX-plus it engines now the

Ben Palmer

We've with some It suppliers. with doing Cat, working work is to been extended. the working

for to part about been a decisions, quite the new ordering question, yes, So necessarily do things this and add long. we've ahead to we've kind this isn't this lead vendors of is fleet time decisions refurbishment, that. to been But And these like of talking and quite talk your but the while.

And coordination quarter projects, guys great didn't maintaining a until lot took trigger lot and a put decision the to but vendors job think of relationships. ourselves work, be make did. to our trigger we this those So on the in supplier able it we a discussion a of a those I pull did to and position pull with negotiation lot when the to of of those

equipment work. that read seen our And quite have operational long. the that we've any Obviously, to So lead guys about for quite kudos are lead point, times for are that to all times additional that, and that extended.

Donald Crist

'XX, about of 'XX little hearing we've a pressure for lock today? you me. in pumping a about amongst just for speak E&Ps that? on bit to to Can one are been behavior you side. of surety pricing? And question mean, supply And the scramble today talk I up contracting current Can at Okay. for obviously, the discussions final you fleets

Ben Palmer

We today significant have of any some -- XXXX. contracts do long-term have not for we -- amount contract

the if more of our we we have are and where some Permian usually market mix our are in between half They're kind especially say that half point not ability a extended terms at with allows discussions. of and -- customers. a this material us position spot-type usually of of us there a a duration. contracts that. the in but and to our of do customer customers planning and have contract lot usually increases We sort level not We things -- are gain But price like increase like months pricing a We period, terms are those in operations. would of in shorter time they're allows that XX with of efficiency to lot half

we're now. So pleased mix right that with

Operator

[Operator Instructions].

Your from with the Coeli next of Joel Etzler Energy. line question is

Joel Etzler

Can you hear me?

Ben Palmer

Yes. Yes.

Joel Etzler

end I that to from $XXX that to the million. that this clarify just the you a refurbing. $XXX -- fleets at minimal said and understand year. mainly you're quite of sounds that increased wanted is But also But that to I properly on Good. said guidance you to you lot, so was spending But fleet for CapEx what you're missed that -- wanted understand here. just was million the it paying it that I those I then due the refurbed but like

Ben Palmer

idle We and to reactivation. CapEx recently The reactivate. require did able fleet, to yes. be reactivated not much we Yes, an very

Joel Etzler

refurbing the more one is But that you're Okay. expensive?

Ben Palmer

refurbishment, the emissions the major and -- higher more significant the is changing and lot spend. components new more that That's emissions a trailers, Yes, less a taking technology, efficiency. capacity the doing to existing technology. newer extensive very It's the out

significant a So amount. that's

Joel Etzler

year, have CapEx that Okay. part the And then on the of balloon you payment guidance? is that this

Ben Palmer

million. $XXX No. No. is $XX in call final out. million want we to That it the did not payment But balloon

So...

Joel Etzler

guess, sense. could CapEx, of we that in I it think But No. as

Ben Palmer

an Sure. essential requirement. Certainly

Joel Etzler

that you're for all on early build equipment -- getting, my that? 'XX, year final be And that for what you're understand in as the supporting that I is the paying would the you're the new -- price what paying you're yes. Yes, question with

Ben Palmer

think, numbers, negotiations. again, our the had we of think and In the we the timing discussions negotiation we pricing with round the given vendor, we received pretty with good

it So round $XX numbers, in million. was about

Operator

this further time. at call questions Mr. are I There turn Landers. no Jim now will to the over back

James Landers

Thank you we you again. listen, We'll called Thank questions everybody well. appreciate hope day. I lot and to the good who a to and and of a you, thanks talk in very have soon, to as you, operator,

Operator

www.rpc.net conference today's you on this today's call call. completion within concludes participating. This for call. hours the be replayed reminder, a of As will following Thank two

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RPC (RES) 27 Jul 222022 Q2 Earnings call transcript