Earnings call transcript Q4 2022

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Operator

Good morning and thank you for joining us for RPC Inc.’s fourth quarter and year-end 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.

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 morning. and good

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

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

release it be which we’ll compare earnings us today’s capital EBITDA referring of performance. structure. call, because conference a performance is over to a periods RPC and performance allows our EBITDA, as operating operating without in uses measure regard non-GAAP various changes to consistently of to measure In

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

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

a you not copy. for our press received at release a website for If rpc.net have visit any reason, please

turn over and call to Ben now the Palmer. will President I our CEO,

Ben Palmer

morning. finished our joining quarter. results this the the strong for XXXX very and an with in you thank call and Jim, year exceptional was Thanks year, we fourth

challenges expect in on and forward outstanding thanking dedication for our possible. We building work look XXXX. XXXX. hard to achievements made like by success start an would employees success and our I in continued overcoming many to Their our

no or Furthermore, fourth with holiday RPC’s little fourth customers from work to the financial very our quarter of downtime. throughout budget evidence continued results weather-related impact showed quarter exhaustion.

our customers above they new complete to recently wells. motivate sufficient from drill their levels have to prices oil highs, and moderated remain Although

than pumping that pure one for pressure While in a more pumper; can just a core companies are much very are provide pressure the advantage represents business play few we and certainly as is of the RPC, nearly we for of RPC required completion oil adds This competitive a a of services our or to customers. diversification for leading wells. value gas all provider complete services fact,

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

Mike Schmit

the fourth overview. Thanks sequential quarter Ben. with I’ll start financial XXXX

most due to revenues pumping increased pricing improved million our quarter reactivated from in service operations by for lines $XXX fleet. and equipment a higher to the $XXX.X Fourth of of by full most pressure prior recently quarter X.X% our supported quarter million in utilization,

quarter slightly quarter. of to decreased during the Cost revenues the from in $XXX.X prior million $XXX.X fourth million

improved the of strong our pricing of revenues, As from quarter mix to improved job XX.X% prior revenues for cost services. in a percentage due XX% to and continued

Selling, million both general and and quarters fourth administrative XXXX. expenses of $XX.X third in the were

participants. million the fourth charge recorded plan XXXX, plan offered of a defined related lump $X.X benefit settlement RPC a During quarter also to to sum pension

associated to we also of transfer third record contribution liability plan the final charge this $XX of settlement in in XXXX, million to a expect Also the quarter RPC approximately the an cash QX the with $XX.X During plan. a party, to connection of million ’XX. approximately expects with of termination make first

prior in $XX.X by prior million from to profit XX.X% to in XX.X% quarter quarter. by from EBITDA million million quarter. the $XXX.X $XXX.X $XXX increased fourth Operating the during million the increased

larger improvement results the customer active $XX.X quarter. by pricing, segment and levels, equipment. Our profit prior activity technical to X.X% revenues were The operating operating in improved by higher revenue-producing services million to million $XXX.X million. This segment a increased of $XXX.X generated in fleet compared of driven

fourth the the compared quarter. during unchanged to quarter. to prior profit, the in compared was were quarter revenues $X.X Operating $X.X million services prior of million though, XXXX Support

year--sorry, our increased $XXX.X million $XX.X quarter in $XXX the $XXX.X $X.XX compared These driven diluted $X.XX same the to customer by million. year. discuss results from the share million. million. of our Operating Now from current per to earnings million $XX.X I’ll from quarter to prior improved activity and compared pricing, increases to levels current $XXX.X higher EBITDA million Revenues year. profit to resulting the were prior in our quarter improving increased same increased to in

the in service of technical operating and segment million, increased profit same year. $XX.X revenues segment to to the XX.X% Our from $XXX.X million increased prior quarter million $XXX.X

revenues to quarter increased $XXX,XXX same of and Our year. $XX.X increased segment support prior to million $X.X an million operating from in the the profit XX.X% services of segment operating loss

briefly fuel and fleet capital second we into we discuss the We pumping to existing fleet during to expenditures an year Capital were place refurbishment. be at count. for to new fourth down $XX.X $XXX dual expenditures XXXX X expenditures which in I’ll quarter, a horizontal Now million currently full capital approximately $XXX our plan service take including pressure million fleet quarter. million, time estimate the expect Tier to

quarter, operated pressure highly XX During utilized we pumping horizontal fourth fleets. the

We expect horizontal fleets to XXXX. continue throughout XX operating

I will some it to back Ben remarks. now turn over for closing

Ben Palmer

Mike. you Thank

services current perform capacity, environmentally and focus productive contrast, selectively and investments technology our have in in should leading long-term in view Previous on friendly improve has our on our industry confidence that industry-leading to to current investments our of outpacing is in businesses. industry capacity, us an the capital financials to translate to maintain generate make encouraged returns how invested outlook completion-oriented inevitably manner. adding resulted also significant to up-cycles In current our Our our our with along demand. leverage

has the over combination and market repurchases, million shareholders returned open of dividends a share RPC Through decade. over $XXX to last

the morning cash evidence shareholders, our this our increase to confidence current As announced $X.XX the $X.XX per share. of cycle dividend in commitment our regular and strength of we in an to quarterly from

have. and us time, address questions morning, joining this for you to at happy we’re Thank this you may any

Operator

instructions] [Operator

Gengaro question We’ll Stifel. Stephen take at from our first

Stephen Gengaro

Thank you, everybody. good morning and

Ben Palmer

Stephen. Hey

Stephen Gengaro

from what of the pressure out adding and far to the maybe and sort think, there you think few new is about assets, etc. guess at operators there’s don’t dynamics, a as you think me, by in that, we you A similar much build things mind. as market a what look who are lot In bit people Is little sensing the now. about first experience and a of pumping see economics you the if different I when do I current field, how you approach see? your right industry talk

Jim Landers

about think I operators assets, when mean our us, talk Stephen, you not adding customers? you

Stephen Gengaro

yes. pressure pumpers general, Yes, sorry - I mean in

Ben Palmer

this is Ben. Stephen, Yes.

taking there that’s is that place. investment think I

I taking the is going like. more investment is than there’s ultimately whether to look think what equation place overall capacity

my indicated investments need I less to We’re working we’re make really we’re where committed more can service. to or provide sure to, comments, a we’re a continue plan to our trying we’re hard to--or that to we that, existing we making capacity, maintain to--as in upgrading but quality

going something But free or will precisely timing be our for we say trying But and want of we it have can really want that’s date. of take If existing we’re we’re lead those right to are happen know, the flow existing utilize during right, out looking between the times down, to necessarily but retire new to ready that’s as an this trying tricky, same at--you out service committed to then as it too don’t and quality cycle. it to can. the equipment, much right, when quickly, generate on service, fleet generate not we to get provide so we’re returns lay we getting to equipment, cash and long particular a adequate

As I a indicated, of lot we’ve time. cash to shareholders returned over

Our that history be done shows continue that. and committed that, we’ve to we to

say, about the of all last would don’t asked today way reasonably XX our return spend indications sudden profile we about where or we quarter, a and we XX months should last think are well, return, we ago our--and and so or so expect that, right, one or investment. returns So our different, are obviously you today, return wake versus or the or the unbelievable month ramp up completely our what it’s

the disciplined, want of and execute that expect to at longer We’re pace, try us to capacity, opportunities, remain maintain against selectively cash on to our customers, shareholders. to grow to focus our having advantage provide return appropriate to--we to trying or existing to and less, but go more a maintain allow our capacity services be we that term and excess there plan continuing take an plan, to

I responsive, Hopefully comments if and don’t other that’s on any else has that. additional know anybody

Mike Schmit

order about, to about up think year just going capital from Yes, commitment you making right betting and When equipment pumping, you’re market be that’s worth year Mike. too. could be to consideration this huge thinking the on financial to now capex. one That’s in other so now. there time, lead a to is what pressure allocation new is a a the add thing I’ll

Jim Landers

Stephen, one And last thing.

of time, going completion always up while has a with Mike’s take change and XXXX. here. At drilling believe we’ve industry, that. Nobody’s People we yet, a and runway for of that have seen it discipline in back the rigs disciplined this subject pretty market the We for--the canoe the at very to but good soaked before. frac is be so a period stood to spreads, our been much under-investment the to point demand long - probably in there in available up that up comment, time, is to this level being since haven’t catch a do that’s seem to we’re--we a got

Stephen Gengaro

you. very Great, helpful. Thank that’s

you DGB, refurb an I The take timing mentioned said the and been new go fair? other that the the of the to does you depend demand, X fleet parts out has quick it Is think just and going necessary Tier two it. asset? getting trouble and on then refurbish you work, to any there to were existing ones, Will that or and delivery

Ben Palmer

fleets it’s to with, ones that and other horizontal we fleets refurb we’ll take so working in takes the brand XXXX, fleets it, sort working--more indicated, down fleet one have of throughout or going older or the thing. that of gives to XX and money of back the for expecting otherwise refurb--yes, upgraded, need same expect some horizontal we’re we’ll refurbed spend work. to fleets we be dealt less as time, comes either can be--there that will come still around and and The When that that XX it down we’ll once are upgrade our refurb new it so the with

we’ve that. Supply been through managing chain, still

a think we’re We it’s with won’t shape We have and relationships we completed. good but good pretty until that. know, obviously, it’s vendor some always in challenge,

XX around we’re that We that the our time I planning are on fleets on. that to schedule plan we’re frame gets as sure horizontal around it confident that through and stay it of said, But our turned concerned, make us, continue will and and operate top but to working in throughout we’ll year. a we’re allow

Stephen Gengaro

Thank through revenue then Jim, one do you just other just you, mind by quick breakdown product by--the one. and segment running the line?

Jim Landers

do for I thanks didn’t comments. Absolutely, so question to it closing in have the

the percentages largest For was The revenue. the total of I’m for about pressure largest or fourth service XX.X%. percentage quarter line--the revenue are to our RPC quarter, a lines the as service at of largest fourth the give consolidated of each pumping percentages

at tools was second revenues. hole XX.X%. three tubing consolidated X.X% of down The Number at largest was coiled

was Our is line of nitrogen in there. X.X% got order sorry, our was X.X% of I services Rental support consolidated consolidated which out revenues. revenues--I’m service segment, tools, of

was I the quarter. nitrogen. Snubbing X.X% see revenues - fourth mentioned of consolidated for Let’s

Stephen Gengaro

Thanks gentlemen. details, Great. the for

Jim Landers

Stephen. you Thank

Operator

Crist Johnson next go at to We’ll Rice. Don

Don Crist

Morning gentlemen.

Jim Landers

Hey Don.

Don Crist

just finding the in all, wonder the you the there’s are We’ve assets broadly we’ve pumping of a late? moderation take talk as seen step of plays of the bit home calendar in about gas there gas if that further, I a Can a the that weakness plays. and shifting between to in pressure is rig your at oil a is pressure just that any heard pumping bit plays little but and count. affecting little

Jim Landers

Don, Jim. is this

regarding have much--you Your you would I would a the there’s weakness, one. is greater gas than than future point I the it’s demand going that happened near else. when results. in there say still anything natural the to is not opportunity but good calendar, cost because if an supply. in yet, might market term know, have say so is I white space isn’t more doesn’t no impact anything mean, something still

Ben Palmer

not wells, to I’ll towards We’ve try it, large Ben. consciously is not activity conscious oil been is have shift move been primarily way. made just our a shift. We’ve talking it’s the as assets This directed made add percentage basins focus of [indiscernible]. of that a about but the the on and or gas very to

Jim Landers

or oil Yes, XX% about little I think more. we’re right a now,

Don Crist

me. from that One Okay, color. I appreciate more

pricing has was out three more the run coil, or just and fourth was you your the pumping called outperformed to pricing can skewed two how and quarter you across in expectations. that, been of broad-based reasons You pressure it why consensus of segments? as How down of kind or one

Ben Palmer

with the new service been over sort in tremendous fourth put the that the about results, there was had nice--it quarter. especially I good There think of or went has in the piece don’t to--talking was--I work wins, pricing not us. It fleet fourth of quarter work quarter. steady the for Relative fourth we quarter a into at the process a last There know increases was nice two. to some a increase in wasn’t--we a

number little and fourth wasn’t to much two, and fact our it hard by normal we on I efficiency. as job The really mix efficient. was indicated, number very a there just we though, slowdown, think equipment, able was the driven one; was good quarter were as that quite is, fourth be quarter as

space, we on, was were good been earlier working guys in jobs good done on good a job tremendous overall job there There has mix, the just of minimal that of those that taking efficiency so have combination it white opportunities The just execution. presented. have I quarters, a a advantage as was been think

Don Crist

contract one the know the one any if, rolls expected on pricing do in contact significant openers have first major roll your I from or quarterly quarter? any know, we uplift whatnot had Okay, into final move and but first from you you contracts, me, quarter? don’t as

Ben Palmer

see nature improvement the opportunity no impact, significant contract portfolio, forward. an to that do no; we there’s pricing, our but are we but specific as rolling, have whatever work continuing event some of By or on move would but additional individually we

Don Crist

appreciate back. turn I’ll I Thank all the you. it color.

Ben Palmer

you. Thank

Jim Landers

Thanks Don.

Operator

Partners. at next Energy We’ll to go Daniel John Daniel

John Daniel

including morning good Hey, for Thank you me. guys.

Jim Landers

John. Morning

John Daniel

a quick question have capex budget. I on the

XXX that XXX-ish you is correct, that orders the or you on that XXX from is I’m said additional equipment you this are around aside if and is the new all budget for to think capex I were maintenance? is there fleet budget anticipated year, guide and ’XX. curious, that within monkey math my that one have any in for order,

Jim Landers

There’s refurbishment plenty of in there, John.

Ben Palmer

that you commitments the maintenance capex. not part any into go know, certainly on sort is you of how not we’re make but of the all and other capex, and delays thing, the and ready number new some timing from Yes, There’s there’s of are when for--you the significant of and much so some talking of delivered the make-up that of ’XX. builds, a spend lot only things equipment that about in ’XX

our indicated a we little lower bit had, than think came earlier. capex in quote-unquote, I

John Daniel

Okay.

Ben Palmer

current taking with any increase, increases comfortable the that we’ve capacity there’s is talked spend, there, of are level in here no, we’re about. that not certainly capacity But significant and a fleet we’re the and quarter not too other as

XX that around staying fleet. We’re operating

John Daniel

look in of on just any at your you’re business, remarks, it in fuel whether wire Fair as you you other X. or new it Tier curious, coil? enough. Anything your other said the I for than more the opening said there fuel know because on frac, electrification, is dual fleet, the line I’m segments? effort you be parts

Ben Palmer

fracturing to the service the toe more to significant opportunity to put up in We that technology That any it’s the an do at of within line, coming monitor. point. electric is hydraulic Not this and a an degree. pump trying utilize than all we’re something take--to dip chips but certainly watch in have

John Daniel

Fair enough.

etc. in your coming Do customer in? sand, curious--and had E&P the guys they’ve by price first them me, in relief? way, be the that going for but to one but your that I’m to nervous you coming what’s widespread message about your not guys tell request tell to contacts when a message comes start back, not requests RPC of relief to we those tell what’s for Nelly, guys, your anarchists, to or to ask granting to they’re once the started a few pound to gas light Last have and be us

Jim Landers

a Pound sand - mixed that’s metaphor.

Ben Palmer

to understand. Well, be there customer opportunities, the they don’t and in other that field are too what opportunities. But our think to I told helped, do, need guys other

this we do is at there alternative think choices. point some I confidence time have that in

not--you time their but be that but think that and to time increase and point your maybe it’s be some our relief, can activity would may it there you disruptive, be be--you Now, are know, in might some customers response right? maybe whatever, this take I or can give at ways know, us to important other

John Daniel

Fair enough.

Ben Palmer

way pricing step need respect pricing But move not with net continue utilization. to to to we would try We we’re and we to would forward backwards. a getting, find to look that that our

Mike Schmit

up And have with as I’ll capital gone add, and all continue to, significantly our maintenance. the costs well investments and

and not relief a so, either, demand. getting lot of fronts those on We’re any really there’s

Jim Landers

and Yes, sort can this is than market greater the still sort--it demand out. so supply, has to

John Daniel

Yes, question you I just I’m to the thought. agree. see asking what

Jim Landers

Sure, that’s fair.

Ben Palmer

You always good questions. ask

John Daniel

All for right, Thanks including me. care. a lot guys. Take

Jim Landers

thanks. Okay,

Operator

Barclays. next We’ll Podhaizer move Derek at to

Derek Podhaizer

morning. get attrition. in I really I decades. if just don’t attrition look mean, upcycle seen good wanted an thoughts we over the we’ve to past Hey, on your think I couple

I why the XX,XXX take by just stay market going in through is that’s of from because tight to all think underestimated that’s is different to parts thing broader the attrition horsepower obviously take your on supply going one current Would to I maybe and off to form have fleet, you’re could sidelines of it, supply bringing maintenance to longer, beefing a Pumps the think the staying sidelines chain, attrition. going that’s extended in on and You’re up a maybe out due refurb new XXXX. frac swings what XX,XXX-plus. love one your fleet it, today, being

Ben Palmer

speak of on activity high. competitors, are and we obviously is visibility difficult very Much direct don’t a work yes, the be of equipment. work is, the see, can into levels Ben. to the damaging, we what We only very, or our have lot can This whatever, the

fourth had wasn’t to that work quarter As I that quite nice can quarter. some vary as some in quarters, so difficult quarter indicated, the from we some previous as

activity this that. time either send are out service great trying refurb, type might guys this like for and fleet or of to with work to out completely off of work, a doing things amount appropriate forecast Our take be if it of when the

difficult. it’s I that think key of our be there being personnel to going some be from too, that maybe attrition some is may belief, operating underestimated,

is they Now lot there going amongst that striving is--as equipment fact peers, plan the about I lot indicated on, there their of of to spending new net fleet, to there’s orders implying discussion of take that our earlier, that too not service. a for to--they’re a of is lot there but not some are equipment out of going they so additions that’s a

certainly being that underestimated. could it what you’re be saying, happen. it With could it’s But

I guess tight everybody, think still it everybody is or if supply question think us will of for it I the ends attrition higher? remain the most working. and recognizes those Yes, great that be be real, being, will being up it tight. I that are how might even

Derek Podhaizer

it, leaving? acquisitions. on question guys--a been economics maybe of peers. or few maybe private some Are seeing coming given any where I in, you you know are, your of there’s privates Got new a Do just helpful your are that’s color. some entrants seeing you

view like the saw on private feel to narrative the cycles, past market hear a is but pumpers Just I this. in on around would coming like into because we over-building, private there market, sense and your also this love

Ben Palmer

not is equity some cycles and--so. on private prior demand they two don’t and equity big when to the big the in, coming that’s way, great. we way, privates we’ll question large coming comes more be that’s in able We’ve stay keep tend in and appropriately less degree. we’ve in or examples my of had, on, issue when in, not been big we strong to ask has to a If sidelines is balanced. heard hopefully some try hear recollection private supply in or so that That any the What come to a or the three

Derek Podhaizer

it, Got That’s helpful. okay.

Just one I could. more from if me,

they that get of is love curve, to de-risked? for the pumper The talking might you’re just being markets looking on different that. electric adoption the up it, the I on that you’re an but scale of technology just updated going e-frac be look of and on. you maybe wanted your waiting your not up to know some view thoughts learning I obviously frac. you’re to other your trying how looking out your curve Would at coming is, biggest peers at into on was challenges how e-frac what everyone yet, that to take there as Are it, some about the examples face day, there’s get

Ben Palmer

studied We’ve that heard just both partner as us, watched and or going examples to an for help We’ve It’s us, use a but vendor able not where curve, and the focus some some--a able to along us it’s tremendous to do some. of companies a situations be struggle. we’re and it opportunity them to a learning take we’ve it, do be to that we them been will for have for pump, well. with testing that and

at new early dual We we that have in fleet still year coming point--obviously this the fuel. is this

for strong a a term that be, think experimenting with on and be I we’re future I equipment for direction. foreseeable technology e-frac, DGB, don’t foresee other like like of of the will there’s transition, go plenty equipment. this, but more moving continue take so--you think, demand near us diesel transitions we to that so demand shift of the spending and I majority for are in in period traditional our to going see will to traditional the to the the the so it. know, time, of just I

ancillary equipment down fleet, the on full think of us, may a want in I point. to other be about There road, this that We bit a for us it. but may some that’s do at terms learn benefit applications little

Jim Landers

about. so to we’ve don’t we firsthand something I’m about experience, think Derek, heard, and on since Yes, to the everything what be but may work, don’t based yet have else say economics wrong,

Derek Podhaizer

can and us in refresh squeeze a have it, the XX Tier give of those DGBs could just breakdown give dual if categories? you now, Guys, it many on one different how in. Can more, the or fuels? Got you you I fleets

Jim Landers

Sure, let’s a always target. It’s see. moving

Let’s see.

active quarter ESG-friendly Our to X Tier fleet be our we of I’m and sorry, to X X XX%. closer Tier has plus XXXX, ESG-friendly composition diesels. Tier the By expect five DGB--or horizontal DGB that’s five fleets, DGB, second our

Ben Palmer

have We two X a DGB so they’re diesel, Tier but not of kind combination. they’re it’s Xs, Tier

So today XX% much our move that are and sometime closer we XX-plus horizontal about half of very fleets the ESG-friendly, next will in to expect months.

Derek Podhaizer

Got it, very helpful. Appreciate all back. the color. I’ll turn it

Jim Landers

Sure.

Ben Palmer

Thank you.

Jim Landers

Derek. Thanks

Operator

As please a a reminder, star, to you telephone like your if pause would We’ll on press a one ask question, keypad. moment. just

no we to for closing time, turn any this At remarks. have conference I’ll further over questions. the back Jim

Jim Landers

listen and Thank good you day, who to we’ll you. a and questions conversation. enjoyed today. appreciate in Hope talk appreciate everybody We the We the everybody called to has soon.

Operator

This today’s conference call. concludes

the replay access for two www.rpc.net you today’s participation. within of conference may hours of You completion on call. following Thank your the the

disconnect. now may You

RPC (RES) 25 Jan 232022 Q4 Earnings call transcript