Earnings call transcript Q1 2023

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Operator

Good morning and thank you for joining us for RPC Inc.’s First Quarter 2023 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

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

we’ll call, because measures also performance. and diluted profit, performance consistently conference and adjusted be over of to earnings operating We're non-GAAP net release non-GAAP us earnings non-GAAP per using today’s periods. This today income, several to operating EBITDA various compare they EBITDA. are allow measure measures adjusted adjusted adjusted referring share, In these

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

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

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

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

Ben Palmer

fourth operating quarter environment for quarter. call the first morning. a our this strong joining results Thanks, thank to financial you Jim, and RPC's similar reflect

the by than remain long-term of with adding vast view of multiyear exploration period is production The underinvestment equipment standards. leaves on -- is It earlier Although was length coupled net companies this oil declined services rather our majority The for oilfield of have gas the and industry. replace cycle. year, total new to of that of vast that health discipline, current using constructive companies, majority manager the and wearing us the their by services service industry natural recovery tight out capacity. service the this our been necessary prices

quarters over to our of expect our allocate ESG next capital while service several of the also enhance businesses, various effectiveness the to profile. lines We improving

quarter's CFO, discuss Our Mike comments. after I Schmit, closing will will results, the provide which financial

Mike Schmit

Thanks, quarter XXXX Ben. sequential overview. the I'll start first financial with

First was in in RPC's in change decreased job prior by $XXX.X a of decrease the quarter largest pumping, slightly to slightly revenues quarter and million line. revenue nominal quarter. disruptions from from the pressure decreased $XXX.X mix to primarily also prior $XXX $XXX.X service revenues the in million The million million in cautious quarter. weather first during Cost

prior compared the a As as revenues remain quarter. cost revenues, of percentage XX% the to same of

in $XX.X taxes Selling, that payroll first the quarter of administrative general This million expenses quarter expenses typically the of higher employer and compared million in to quarter, match. XXXX the XXX(k) first increase fourth increased driven to and in including by was incurred are XXXX. $XX.X

reported also benefit million RPC a charge. first pension XXXX, the During $XX.X plan of termination quarter defined

quarter. cash an connection In expect to this of the third-party, planned with termination million the of approximately of associated we during liabilities additional the contribution made record the final million XXXX, RPC QX, During $X.X to plan. $X a settlement transfer with charge a first

in from to to decrease quarter. million prior million by $XXX.X million quarter, the the the decreased in the XX.X% million $XXX.X to $XX.X in quarter. prior during was in Adjusted $XXX.X X.X% decreased million quarter compared from Adjusted a prior slightly the also $XXX operating profit profit quarter. $XXX.X Operating first first by X.X% million EBITDA

in quarter. Operating of prior operating prior to quarter of the decreased of This prior quarter. by segment $XXX.X Our Support million compared revenues first $X.X generated quarter. revenues $XXX to compared X.X% in the segment Services million by XXXX profit services the Technical the revenue million $XXX.X X.X% $X.X million. to increased -- million to during profit compared

our quarter to results $XXX.X million same in million. compared discuss year. increased the $XXX.X to Revenues operating $XX from from increased million. quarter prior current now million EBITDA EBITDA $XX Adjusted the to million. million profit operating Adjusted profit to million I’ll an from of $XXX.X $XXX -- increased of $XXX.X

diluted higher improving in the were $X.XX, share customer compared improved to driven to quarter in resulting activity adjusted by same of prior levels year. increases These and earnings pricing, our $X.XX per the

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

profit Our million segment operating Support Services segment of $X.X the million the to year. $X.X increased and $XX.X from XX% million in prior same to revenues quarter increased

be $XX.X includes between This million. discuss Now capital expenditures X $XXX service. dual recently $XXX pumping pressure fleet were and in the fuel million we currently I'll to first expenditures estimate million new Capital capital equipment our in and the horizontal full count. year XXXX We that Tier expenditures placed quarter.

has for of amount refurbishment. old out similar equipment been a sent While

utilized Consistent during first fleets we of the pressure with prior the quarter quarter, XXXX. operated horizontal XX highly pumping

We the expect number this throughout of to continue remainder of operating year. the fleets

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

Ben Palmer

Thanks, Mike.

RPC, excellent some First quarter weather quarter an notwithstanding minor of XXXX was disruptions. for

materially quarter. again cycle second oil natural dropped the goes With of big and on. services. this as did our for it during year are early to A ongoing for stream rebounding we quarter, the you quarter, about is not thank prices warranted this demand delivering optimistic our in results prices gas the impact While the oil the employees

I unit our employees, and employees. site business leaders, and well want our surfaces managers our operations enterprise to our corporate thank

cash every tradition million to ROIC our doubled shares for day. of working quarter. million repurchased our quality dividend services to to we look per continue tirelessly We industry-leading customers share per capital the All $X.XX our them provide $X.X quarter returning of and $X shareholders. of generating are first X.X our In obviously to XXXX, approximately and of million or

Board an share we cash in of approved and increase $X.XX another repurchase RPC's share. dividend our per declared This announced morning, authorization

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

us joining for any time, At this happy this Thanks address questions. we're to morning.

Operator

[Operator is Please with Stephen go from Stifel. Gengaro first Instructions] question ahead. Your

line Your is open.

Stephen Gengaro

everybody. Good Thanks. morning,

Ben Palmer

Good morning.

Stephen Gengaro

couple guess of I things. a

continue XX expectation the now? the supply/demand the the perspective fleets in Can right to of on mentioned to year. pricing market throughout us operate dynamics You give you your sort pressure property and

Ben Palmer

discussions like Ben. indicated, some are there and with maintain our stay minimize some changes. we but Like point our stayed had typically any Stephen, busy things efficiencies are We're time. that we to customers results. fleets impact as this in don't -- with changes see some strong. some them But is happens, big moving working our There We pricing. about on some we're this around in it's at to and downtime, any

are. and So historical good we we think it's still about type is as where standards we still, feel by we indicated,

Stephen Gengaro

And when you you at or growth the much next in see attrition the overall order net four sort the look the over to in fleet, market what book are relative natural seeing you of of quarters? three

Ben Palmer

to level, new the out the our There's comments, business a said what our equipment good while think doing allow We that in we're thing, is my I us as information see capacity. And we work of fleet send as it's certainly services doing but pretty not oilfield are equipment trying the across replace to to typically job provided. peers I increase significantly other for right, existing maintain in older same being refurb. equipment various

out will There'll equipment take coming another the that we're removing months. comes once be fleet it The now, of that back in service.

others have an continue for So of we capacity at a wearing you fleets have remain additional fleet time put thing. doing can indication hopeful think of that there to same if temporary spending periods expect And be that that extra that's may period the for but field And to We in are this we're XX the maintain. there's where they do case, out. to the equipment believes somebody they time, is the being.

So going forward. in will remain place that we're hopeful that, discipline

Stephen Gengaro

just Thank line quick one first And more the the product you through quarter? one. Great. Can for revenue by you. run

Jim Landers

about give service values is The RPC are This of percentage Jim. each by comprised the Yes, these David, that's consolidated of I'm sure. lines. revenue, to

revenues. pumping of first our was So largest XX.X% XXXX pressure in quarter the at

motors, is of tools Our XX.X% four which are second rental tools, is of was which tubing, three then downhole of revenues. revenues. largest brand Thru coiled that's revenues. Solutions X.X% Number at is which Tubing and X.X% revenues, service is nitrogen Number line X.X% of comes

Finally, first Snubbing revenues which for RPC was X.X% of quarter. the consolidated

Stephen Gengaro

That's great. Jim. Thank you,

Operator

Johnson Please Rice. from next ahead. go question Your Crist Don at is

open. line is Your

Don Crist

fleet gentlemen. How that ask of of wanted to your Stephen's morning, as were are had more count question. you Good the quarter? to were of many I as How a fleets been percentage lot total in the a know of of follow-up gas that either kind a you? a gas as around to bit kind basins. first little Haynesville basins moved has shifted in weaker or the or been have dedicated those oily I

Jim Landers

Hey, Jim. is John, this

a Let us correct that. on bit little you

Texas. what haven't was fleets thinking We of been East West fleet Haynesville might the We in -- reactivated for working you we had it's starting last a Texas, in -- be in while. is the working summer, but that

We've we fleets in and Mid-Continent the any moved the we got rest really around. two not the still in have Permian. -- are So got

been Wyoming there [ph]. for any So geographic movement hasn't

Ben Palmer

do Texas in has Jim indicated, Texas. little but that, area, that two done fleets typically, can upon fleets, might more East did the model and time and West our and closer work from as that But to some the one things from is in West we operating opportunities some like of time move work one, of the Texas of fleet a it bit the depending calendar or mid-con to

optimal are we're time So opportunities know, and and the that's something placement valuing. that given you all work of managers that team the what's sales on the our fleets,

Don Crist

is two been I heard XX correctly mistake this quo of How And chain or does as so some months supply coming My was old to I way that of, subsiding look? months there. talking or thinking data. supply it to engine? status kind you're get an over going past has the chain, kind year. there, that think, or it to the lead nine that and Okay. about I kind Is times inflation, takes fleets where refurbish the of, -- down, you it

Ben Palmer

that, that a that it's very the initiate We and high probably too there think, say components ahead may case be is making that are – that been certainly, soon signs sure I we Well, of improved programs. some we've it's significantly. we have the reform demand bit before planning there availability think, to little these

and So it's with had many like just valuable plan suppliers to that. and our we've things coordinate through something very

are issue, So times, long for us. ahead plan been to lead it have an -- but just hasn't there you

equipment our needs laid We've and refurbished. be levels got out that intensity overhauled activity plan of or to a think expected on what activity we've based we

So to available we're the the the planning able commitments -- key to in to place we in that be undertake put have refurbishment want commitments activity. able to to make components put place the

as even tier -- be had we when and leading we the have able to placed even for of parts recently to months procure the to new service, And that we've equipment key that several complete this ago, assembly. components same do in received into to thing

know we've So don't again, let in I volatility wouldn't to be pricing. But a of take any up significant seen bit we've there's given the little if lately. the bit surprised a that yet little planning, I but of seen some that,

Don Crist

Okay. it you. turn I I'll color. back. the Thank appreciate

Ben Palmer

you. Thank

Jim Landers

Simon. Thanks,

Operator

question of Your Derek from go Barclays. ahead. Podhaizer is next Please

Your line is open.

Derek Podhaizer

that just wanted I to go morning, guys. to back Good Thanks.

Ben Palmer

Derek. morning, Good

Derek Podhaizer

Changing job. Hi. pumping. changing in job The mix pressure

changing we pressure spot private more comment? just Is that market a within Just it little is color versus mix a color if a public? pumping around, that job expand type, dedicated? more versus your Maybe Just customer on can on

Ben Palmer

Well, add-on. you can do I think, guys

-- think with provided. us little bit We we a less had well, we too. I fuel job refer weather bit little impacted than mix, a the

lot of fuel. You margin whole the know, there's on not a

have The a to an case, that it we the mix not revenue, have little -- our of been a or mix they a that customers their private. customers, significantly. was nice been significant who of impact changed but that in but provide they didn't margins. not, impacted new a would lot and do bit had it the between do. mind customer about privates existing have want really So public We if we has on would they may as a one customer And whether changed of our have think I

the to So year. a the in it fourth compared changed really hasn't quarter lot last quarter first

Mike Schmit

Ben Yes. is The that's single to comment referring slightly as mentioned doing. we're the as to mix probably provided job different services what more every

of the and -- over depth have to wells And so and asked everything. do

jobs some and is more slightly job every So are profitable different, than others.

the of job. And the probably type It's more specific of of type more that's mix rather of so than the customer.

Jim Landers

And Derek, too. is jump in, Jim. this I'll

provide another is XX-hour maxed versus sand change how we That there. much revenue. our not didn't much customers variable really variable pretty QX; QX much Another is That XX-hour did how We're to either. out change provide. versus

doesn't. So macro a It as fuel to in Ben or any but There's versus i.e., bit, around public are perspective, mentioned, not lot. little nothing a private doing. else it meaningful it from has customers that's a what whole change moves

Derek Podhaizer

you. Got

markets like That's Okay. just And now. you're seeing before And market those seems percentage fleet’s much a there's versus I dedicated? two bit very right market bifurcation helpful. your differences maybe what dedicated. big between between versus of the how spot are two then that spot on those It on of the markets? guess,

comments So would around helpful. any be that

Ben Palmer

meant spot we dedicated From and nine-month types versus relationships. not two difference time XX/XX a six dedicated there's it discernible long means to between about it's our have commitments. those a doesn't lot ago. of of what It mean So perspective, that

Derek Podhaizer

Got it.

Okay. some That's peers. of helpful. my your And hearing question, last then and from we've just been

with that? on your -- Moving with Permian, have are -- you peer. seeing on the putting Haynesville customers pressure by and fleets threat displaced from is Are being pricing and larger that conversation the the any you the of just you your

fleet Permian around any movements into Haynesville Just the operations? color affecting the from your

Ben Palmer

the certainly the to may the reasonable think slow other about be there say I weakness to price of we not to completion think we some gas natural of contracts gas fleets. peers it's weakness, -- will completion, the the moving in pretty some heard drilling down the some that natural -- is going talk

diesel, It's natural not doing that work gas we anyway. were Haynesville in the

a Permian, not -- to to this evident tightness at itself not less it's the in more the just time. manifests Certainly, in but not place on first white like us, at a a that So it's calendars, space little maybe us the but little there's quarter. in margin, it's material

Mike Schmit

terrific will at to but respond that. team does fabulous job bit been around the think And point this date that space be not time and market. of of able there when volatility going little -- if a a in we be across begins to being job I a volatility has more we significant. changes the impact moving And those occur. that's Our is think up any to staying to to minimize white And

Derek Podhaizer

fleets it. you customers around the yet? had to Have Got Permian different some move to

Mike Schmit

bit doing Yes, we have We're done that. bit a little little that, a of in of yeah. the of process

Ben Palmer

correct. That's

always say we're year that great. not for want last think more I I or so. from us the significantly -- it's to normal than

Derek Podhaizer

time guys. it great. Okay, color back. the Really appreciate turn I'll and

Jim Landers

you. Thank

Ben Palmer

Derek. Thanks, All right.

Operator

Partners. Your Energy from next of is Please question go Daniel John ahead. Daniel

line Your is open.

John Daniel

Good you. Thank morning.

Jim Landers

Hi, John.

John Daniel

– hey like I'd just any Jim. --

you -- besides we other -- frac frac, Just Permian exposure today a for here, sources, ago? Because businesses just about numbers basins your of quick where the I'm six you other right? to question some versus can and focus through Permian, not but have the on three us except tend had you to but call in the to visibility the months the and it, other walk for what basins looking

Jim Landers

this asking questions something Jim. than is John, for other pressure Thanks about pumping.

weakness three little in there's the a look some at. they're presence. bit about really and and oneness a So presence, in Haynesville where good East market -- a have really in they They've the and has talked toting widespread good share thing Texas a to Pennsylvania, Northeast solutions market of

gas But to rate ready customer our same that's nothing with at which there's those weakness bit operational prices. little lower customer. time, this of quarter said, pumping natural as would places, noted reviews pressure that in to still in at expect and one the So that from we similar we've end getting move a thing around

John Daniel

Just been just another you guess, or would -- visibility type But the about you way Bakken, the the in you let's I has say of change, that, thinking as Permian? same is enjoy Mid-Con there do up it? discernible the of there a pick do

Jim Landers

this not time. enough in good not on far – point at to guess, question, discernible comment I enough its to but

John Daniel

how If market. and relief, crapped what a in prices go price request back question if when the you six is guess, there companies you to that Okay. enough. when out, happen and lot XX, from weeks fear do go were be in concessions, if Fair the E&P's was a if made There what I for that, the some question? you XX? recapture was to you if some oil some going ago oil of you prices the made through Is -- of et get that lot kind others seven we of My about process, discussion -- back quickly there is hey, to -- and -- some it. concessions was can cetera camp did

Ben Palmer

that I of sort less spot just mean, guess contracts in I'll competitors. I comment the of we're market make our long-term some a and heavier in

we to So respond higher prices. of more quickly kind can

impact we some of as were so And maybe the others. in

Jim Landers

I I that team think point, I with The very good pricing. was And to think been know I'm to. at being your John, appropriately sure alluded has don't aggressive

cut ready it the those job really good than less when make -- our think adjustments relative really we whatever necessary. more, hard we're worked made those in a we we made, price, may customers. maybe and changes expensive a And being customers the we're have So to spot distant change it to many make composition We with to right? of

their be providing example, then right. like fuel us we fuel a might what to for can do was rather providing it the than costs. more reduce that So And then

a demand you it ask. and again, and But that very impact the to generate -- do but able a need to mindful very, item, as customers' that sufficient understand continue to particular all certainly And in returns we meet us. question to through So we invest to always it be business have doesn't working big on appropriate our

John Daniel

Right.

Ben Palmer

John, anyway, but than about today. it sentiment we growing prices say today better saying, are lot it than lower oil lower better it was when probably and goes a were prices whole they where is

may have on the to some What but suppliers -- would helpers talk to you done to come ability cost We also maybe that we about to yet, signaled structure haven't of or side. our like we this that up? certainly them we that should need

John Daniel

enough. Fair

it. that thank you Appreciate again. Well, Okay. for managing

Ben Palmer

roadside maybe thought were some I for John, calling you assistance.

John Daniel

Well, I anyways, because the right. that's -- of like Is said Employee give all love Year them he award, that actually.

Ben Palmer

And a they go XX there, lot faster.

Jim Landers

okay. you’re Glad,

John Daniel

Thank Yes. you much. very

Okay. Take care.

Jim Landers

John. Okay,

Operator

at Instructions] questions no turn [Operator to Jim I Landers now remarks. There further call are this the time. will for over closing

Jim Landers

Thank who called to appreciate we Okay. talking and Have morning, everybody everybody this conversations. the you. appreciate good the look to questions day. and soon. We in to We listen forward a

Operator

will This within of following Thank the this call. replayed conference two conference on participation. call for be www.rpc.net concludes This you hours your today's completion call.

disconnect. now may You

RPC (RES) 26 Apr 232023 Q1 Earnings call transcript