- Earnings call transcript Q3 2022

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Operator

Good morning. And thank you for joining us for RPC, Inc.’s Third Quarter 2022 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] Jim will get us started by reading the forward-looking disclaimer.

Jim Landers

morning. good and you, Thank

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

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

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

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

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

Ben Palmer

We multi-year achieving pricing, you a part, low continued are to operating in rather large period coupled in RPC’s as than the up build quarter this reflect third Hi, is we has run all believe improvement fixed over joining our morning. with margin this this to currently that and room utilization fact of financial a Jim. cycle. for cycle costs. shaping investment, to the leverage Thanks. And our thank call both results and

our motivate natural and new levels quarter-over-quarter, remain complete by declined Although oil customers they wells, to further at that prices high prices. supported drill gas

will next enhance operating service the of Given our our the our we view quarters of to environment, improving while capital profile. allocate over ESG lines favorable the service various effectiveness several

also have will our investments improve position. competitive and opportunistic that small strategic made We several

as pleased completion cover every customers can needs. companies the From wells, provider aspect well comprehensive industry-leading oriented completing RPC services, to perforating, need something to services when is that service manage service as in of covered milling are few the tubing-conveyed work and We process And full then a over We to gas fracturing, and nearly completion to business. too. of oil our hydraulic very customers’ our clean between wells, have existing out many for we claim.

the in and near plugging way, current executing well our the thank can opportunities, by safe of challenges, employees all for end advantage our expertise. controlled their handle managed of abandonment a wells dedication, as environment. well the life, the many and Finally, process taking working would through in and operating we I environmentally-friendly to their like

more detail, in which some Schmit, comments. this after closing results and Mike our will CFO, Our I discuss financial will provide

Mike Schmit

a Ben. financial sequential third Thanks, start with I'll quarter overview. XXXX

quarter improvements, of Third revenues in million favorable million to million due activity $XXX.X the $XXX.X increased quarter in $XXX.X from to XX.X% quarter by XX.X% increasingly quarter. prior and levels mix. Cost higher million revenues $XXX.X by job increased the prior to pricing customer well the from during as third as

to compensation prior cost variable to third quarter, quarter quarter, of including coupled related the revenues XX.X% primarily in was by incentive the $XX.X due quarter. to consistent performance. $XX.X million As expenses due pricing while employment to the XX.X% controlling due million costs $XXX increased by EBITDA $XX.X and This a $XX.X prior revenues, XX.X% higher in improved expenses. million with with during operating from percentage in from of improved revenues, SG&A to over increases, direct the employment of inflationary $XX.X increased the from revenue profit leverage coupled general XX.X% from effectively prior our improvements along administrative for prior quarter Operating million by to Selling, increased RPC's costs third some million our the X.X% costs, to ability the improved with million to services. pass during in some large quarter.

driven This activity larger, were by in generated equipment. to improvements increased results compared pricing $XX.X of million. fleet an higher operating Technical active operating million quarter. XX.X% to Our improved $XX.X in customer Services levels, profit The million segment revenues pressure a by prior segment $XXX.X the and pumping

quarter increasing Services I'll million increased quarter year. increased and increases segment to million. from our from year. earnings in $X.X revenues per the profit diluted $X.XX in profit to from with resulting results by improved the compared $XXX.X quarter by line. million. These also was in Support customer million pricing quarter, higher $XXX in EBITDA while $X $X.XX And of million, same driven to compared discuss to million current to Revenues Operating $XX.X million. $XXX.X operating largely were the prior $X.X $XX.X increased now share, the to prior activity improved million same improving million levels by XX.X% rental service to the compared $XX.X prior to tools our driven Our

Our $XX.X million, year. the the of Technical increased $X.X Services segment in quarter segment to resulting XXX.X% million in million, operating compared prior same of revenues profit $XXX.X a to

Services XX.X% quarter briefly now same an million segment increased the of prior expenditures. loss a Support revenues $XX.X in $XX,XXX the and of capital year. $X.X fleets our to I'll of million, to profit discuss resulting operating in Our segment compared operating

into highly placed utilized, service be $XXX refurbish pressure third expenditures the million quarter. to year horizontal be $XX.X full operated XXXX Capital fleets. the the including in an estimate approximately that nine quarter, were currently During We we expenditures cost pumping fleet million, third XXXX. in capital existing will to

closing payment we into million for pressure for placed Additionally, remarks. approximately fleet over lease finance some quarter on back as began, the turn now I'll fourth in made XXXX. a to final service pumping $XX an Ben it

Ben Palmer

more of energy through world's considering Discussions have Thank several hydrocarbon future. a that than responsibly, potential been seeking this service compliment resources conversation. that Mike. look to recession, and a policy We source geography it abundant fuel-based viewpoints with foreseeable dominate about this it noise their external carbon-based U.S. energy remain dominant year combined confusing the caused the with have used opposing public and no term a near you, sources, voices create North companies capital with response there globe's for will power energy produced the These sources. E&Ps, many energy. believe prominent is and for fossil When And America. is the alternative to the stable is uncertainty

these For environment downturns are in operating our occur. our to and should industry time. a industry for some we Though enjoy volatile is reasons, likely know pricing strong hydrocarbon

for benefits discuss we of understanding capital. to decision of opportunities shareholders longer to We is well. allocation strong RPC joining maintain on unpredictability balance Our sheet and morning, questions. existed. positions our a to drives focus this time, has which Thanks long-term us view this our are of informs continue this than rely reason financial thrived external our most have to one This on returns needing at our and profitability, peers advantage this and take happy capital us any believe as approach without and

Operator

with Don question Instructions] comes [Operator from first Rice. Our Crist Johnson

is line open. Your

Don Crist

all gentlemen, Morning how are today? you

Ben Palmer

Good, you. hear to Don. Good from

Don Crist

quarter the I number be fourth supply on I delivered wanted I XXXX. chain, equipment in to mean, about you supposed to here order in ask or is one. have know which early

track? on six from, greater Just getting months kind wanted ago? it, if just supply if could on those or worse if to delivery know of expand are and things And are times you chain call still the better

Ben Palmer

receipt – that original the the and ordered ago several of may far or is quarter, little is refurbished fleet off were. bit receipt scheduled early a quarter This our late generally by extended. on been large the new fleet has which for first months a second be plans not what fourth we is quarter time of in The

hearing turned each place to ahead. continues to to worked have and every plan to But an We've of it's requirement with vendors but results say sufficient to sooner they refers, but to be disruption of we're one are point, the through routine on certainly orders ongoing meet having Right. are, challenge we significant But that pumps try not repairs from repairs to would around in here some be try like challenges some this we that's comfortable large at the there to. and and hearing challenges to get quickly We're challenge we're or than So planned. not had that to not with some It delays. to a advance the as vendors causing where are pumps. any it's to repairs experiencing large we as that day commit try to for and pump our address with work and required, that. going that try we

bit, So that it's say everybody there every have still challenge. I It's that we little change. still is but big a on a been citing to And improving wouldn't as has maybe day. a work something

Don Crist

that a just at somebody everybody. or be delayed And like that's just clear, kind cat warning of to like for

Ben Palmer

That's Right. correct.

Don Crist

these get to second items flow I of past move into mean, as my obviously free lot And question, we fleets. a two CapEx cash you going after Okay. for are you generate XXXX, these

you cash are give putting broader move what or broader the you would us stock put And in do returns? buybacks back as comments into hold, You we like can XXXX? thoughts be just shareholders, money with place, but shareholder to that? whether Just it to dividend on going on anything

Mike Schmit

a as this sure. we question. quarter. Sure, We've steady you've Yes, quarter. reinstate this held for That's morning seen great last did a dividend

point years, we over to couple the XXXX. a at correct, next certainly XXXX, of You are are flow this of lot cash expecting free generate

expect improve. result compared we expect look We discuss something a expect increases expect We will I and will But CapEx with of a a and something expected. to shareholders But we flow quarter. year. there. slightly to at returning be through look to on have very spending the of free dividends. would each that's I year certainly flow. some of board it should be take have discuss at that we'll combination cash will cash would cash hard this I free the as next some lot in probably history that's a higher

quite back stock any in bought haven't a We while.

depending of for an that's too we certainly at the is upon value and relative alternative. share at to our looking that return the price looking will possibility think a profile I certainly But it expectations to continue equipment, at capacity And the future. we as environment this business maintain it. expect foreseeable does time will it supports certainly point and in our the our maintain long as

Don Crist

it the turn Okay. I'll back. and color I appreciate

Ben Palmer

Don. Thanks,

Operator

John Our comes [Operator Daniel question Partners. Instructions] Energy next Daniel from with

open. is line Your

John Daniel

morning, good Hey, guys.

Ben Palmer

Good morning John.

John Daniel

questions for me. Housekeeping

QX, in fleets you averaged I on to those have any addition did nine? vertical think nine you said horizontal fleets in

Ben Palmer

Yes. do a John, of couple fleets, We have do vertical that operate consistently.

John Daniel

from make running then And in that one you've service year. and but placed XX fleet the just visibility not – guys, right...? sequence that'll then fleets the basically here, horizontal that having new modeling got fleet I'm a go just so I'll a you sure. be to Is into XXXX next

Ben Palmer

Right work have enough trying we with some or and an to put other equipment older the some have we done hit – it now a little of together we've can today be bit equipment. fleet challenges With miss. additional

it planning on one what we've But of fleet, the consistently with I or out fleet net what another during up it which that it spending it we one how repair refer next that fleet about point older is out So just to fleet more see of time. up we'll and year with result it horizontal and will as pumps, – of some shops retire well. pull not, net we because upon it's will older with some now withdraw some to free hasn't But us we're play those right this in think that hung some some the we ad we are as flexibility. XXXX new probably but and expect that depending refer But need the refurb and of either send to would additional at it things the the gives yet. in operating another that's our may been trailers expect one result if talked would in

John Daniel

Fair enough.

walk we things here As lot and can calls, do other of will markets on recent focus well utilization consolidated? would what ThruTubing like a opine we you on Any Just there you're just had business because appreciated? the just a lot units us to like your visibility businesses. frack coil From high got if some in particularly good coil you've you've in industry really some when as consolidation. know, other you a pricing terms of changes of through level you but tend the seeing be

Ben Palmer

the I other and start two leave add things to I'll may out. can

nature, been tubing, pleased has much proprietary coiled that and existing tools tools, been very are It's, by out versions make we're with in think accepted that some seeing. come consolidation seen but there we're improvements we our in with. there's And You're of – to I to right, being are new there. there Nice market. room to new improvement activities come which completion some still with the with that we of tied improvements, many able there some we'd we've out were we've progress tools seen make downhole have that additional there the

just many quicker others. some really of of start. quick our room run, our bit have businesses, are improvements. I of I a but would a frac like other lines off bit maybe gotten would the little behind overall, say seen we have and So additional recovered service little have some a all It's peers. than to

John Daniel

I And then guess... Okay.

Mike Schmit

lines also year-over-year. of Yes. just our from major service and is and add Hey John, a improved Michael, revenue this profitability quarter-over-quarter I'll all

So Solutions service all on in greater a pressure but across ThruTubing lines. some percentage, did two we obviously but largest, more pumping improve are

John Daniel

Is there... Okay.

Jim Landers

at Jim. during John improvement saw come I'll quarter. the in that the in coiled and just a say some is pricing good end we tubing

saw – do there. also some coiled We to but at some maintenance tubing, have pricing good it we so

John Daniel

the this and present year stand nicest going to Christmas one Okay. which one? get out Does as

Ben Palmer

let's rising those... A tide all

John Daniel

enough. Fair Got Right. it.

for You your you guys Thank so time. are good.

Mike Schmit

John. Thanks

Ben Palmer

Yes, John, thanks

Operator

closing [Operator Instructions] over of the back reached session, remark. question-and-answer We end have I'll for the Jim turn the call and Landers to

Jim Landers

the come provide up little would share to give information and to percentages case a to like with queue in. else also wants of anybody in I'd I service to our revenue everybody Okay. people lines. more like then major time

that So percentage in each consolidated for following of the what lines revenue RPC I'm the third – about is accounted only. quarter third to give service you of the quarter

line service pressure was largest is quarter. consolidated which during our revenues third So pumping, XX.X% the of

was was Solutions our mention was Second one was was largest Number in ThruTubing is of revenues. of tools snubbing. that Number which revenues. and four rental the third tubing of services revenues. support was XX.X% coiled X.X% which downhole Snubbing revenues X.X% I'll tools Then X.X% three of segment, last is the for quarter.

there sure that information Just for their apparently wanted had is to and another question. make that modeling everybody

will we to hearing look So forward that.

Operator

Wong comes Your next question from Simon with Gabelli.

Your line is open.

Simon Wong

Hi. Good morning, gentlemen.

Ben Palmer

Simon. Good morning,

Mike Schmit

Simon. Hey

Simon Wong

mentioned a – remarks, you talk from your you can bit prepared investments You that little in investments that? small strategic may about few you mentioned a

Ben Palmer

are able will We've case cost of Yes. to supplier, that able us we some one time. in the think them number individually we the over of expect and supplier acquire significant. them savings nice been Simon a none to a there assets be addition result to been a to we have of

to we're are where other for excited filled or there talk some it equipment it think not this and lines pumping Also service into two gaps and up which opportunity at others able in up had presents separately geographic demand. and of of three that the that As a it We've or we talked opportunities none us. had about, our that pick morning. about we've the been some nicely additional within enough significant some there we've are pressure nice was we integrate to to some pick least gaps business, but fit about was

of in out the So we quarters next that to well. expect as here couple help us

Simon Wong

investment the altogether? was much How

Ben Palmer

it our million. don't $XX $XX know, I to contributed cost may have million,

Simon Wong

you. Thank Okay. Got it.

Ben Palmer

Thanks Simon.

Mike Schmit

in which pointed that be excuse reflected the I of quarter, wouldn't closed fourth some current here they me, somewhere the in point so results. out, I'll Some

Operator

Instructions] [Operator

Ben Palmer

in make comment. will significant reported experienced to minds capital, like have too the working with I'm certainly our of be, rise revenue. capital if increase be increased I'd currently in our several have sure a it'll not on an about working who people's peers we

that's about minute do to that? So you but Mike, unexpected a want talk not

Mike Schmit

us do in Mike, cash just get Ben it mention I'll over just lot is next as capital quarters we this to expenditures as mentioned. And the – of couple is to opportunity planned Yes. a I'll have focus for

an something that at as look on. we opportunity focused So that us we're and for

Ben Palmer

help free That'll year. flow some generate us additional next cash

good that'll a So we're, be thing.

Operator

Pelisek Millennium. question comes next Our from with Andrew

Your open. line is

Andrew Pelisek

Hi gentlemen.

in the years exhaustion budget press and Just slowdown a wanted motivation hot to the versus crew. touch release. and mention on previous is the up a seasonal just is a know that to about this dynamic I every we compares how see to give year reluctance whether something wondering

talk that curious about just you So dynamic? could if

Jim Landers

– we so running just going give may crew always else reluctant doesn't tight. out can think is to all list. it's utilization New unpredictable, point think important guarantee. but And Andrews, keep want cause Thanksgiving high, that crew that's that be on year thing helpful. our and – busy a that that I always I'll there make up Also, think to budget We exhaustion. capacity's Year's, its so to Jim. to somewhere anymore, a is we could a are one kind New our them don't month-and-a-half. and we It's which it's could do if weekend, they – Christmas Year's said E&Ps a don't we We this between so and that's keep that Having for want sideline go selection of fall another get be group there because waiting

some wild weather discipline, fourth down to about could continue in the then is capital quarter. talk so slow Our be card and E&Ps there always

Ben Palmer

talking just leaders, I'll any significant about say hearing our we're discussion And not unit business to downtime.

a be even quarter, five hard it'll the problem over The a off first fourth quarter it quicker to be relatively referenced the few quarter, to It it the So we'll that we're that only to begin first a right. over start, been back-up everybody and because some or times not reasons has stop to mild to again again. always affects the the sort able helps we've because time when there's get them relatively that four for last and for that, helps Gen experienced hopeful active of the all years. get last takes Jim

us it roll into early efficiently should XXXX. help So and effectively

Andrew Pelisek

the Great. Makes sense. thoughts. Appreciate

Ben Palmer

Sure. Andrew. Thanks

Operator

comes from next Energy. Etzler question with Our Coeli Joel

open. line is Your

Joel Etzler

the but as skew I Thanks ask for Yes. Hi actually about guys. my I to question. just a wanted well, can bit. taking QX question

so so or be flattish And activity strong, to to expect in speak. the QX you

pricing ask increases I are net for pricing terms – can you of you if In QX? if expectations have further into

Jim Landers

Joel, do. this allow we that demand visibility we XXXX. increased and imbalances the the market net We quarter is believe and in our Jim. us supply to customer's needs give during Yes, have pricing improvements and the fourth will

So yes, is strong. pricing we think

Ben Palmer

mean, we'll early we ahead that get expect trudging than to degree very surprised the to very I fourth and not would I said, less would don't, blow continued possibly as or I quickly pricing, It's clear be strong think our we do little quarter, for from about some But that improvement be be the all customers, to But there's at it able a to if weaker enough pricing, I is the quarter. XXXX. to quarter quarter fourth days expected. just started impact not fourth in pricing but third I to good continue will opportunities quarter. that's be Jim mean a be past off any

Joel Etzler

Okay.

activity, but lower moderately slightly higher maybe So prices?

Ben Palmer

said. Correct. go. you. Very well Thank you There

Joel Etzler

much. so you Thank

Jim Landers

Joel. Thanks

Operator

no are back Jim questions Instructions] over I'll further this at turn the Landers. time. [Operator There to call

Jim Landers

a thanks day. and everyone good who it who you called listened. appreciate and hope We has Thank and in everybody

We you soon. will talk to

Operator

hours. reminder, replayed conference two today's will As today's call call. www.rpc.net conference be next the This on concludes a within

disconnect. You may now

RPC (RES) 26 Oct 222022 Q3 Earnings call transcript