RES - Earnings call 3 2023

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Operator

Good morning, and thank you for joining us for RPC, Inc.'s Third 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.

[Operator Instructions] I would like to advise everyone that this conference call is being recorded. Mike will get us started by reading the forward-looking disclaimer.

Michael Schmit

morning. good and you, Thank

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

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

adjusted call, measures operating adjusted earnings EBITDA today's release These per and are performance. profit, In adjusted referring income, to measures we'll of and diluted operating several non-GAAP conference share, non-GAAP earnings EBITDA. net be adjusted

are because -- over because these they performance non-GAAP periods. allow We measures consistently today compare various to we using us

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

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

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

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

Ben Palmer

Thanks, Mike. Thank joining you for morning. this call our

a start, for in to period the responded release, improvement earnings we business, significant was strong was a discipline off we our our our close and challenging in fourth in solid appropriate the quarter. EBITDA out pocket to expect We're quarter. increase year. a and from see see calendar frac sequential with it a currently can We you patience. and narrow in The third As softness the believe

In service lines service drove I resilient weakness, demonstrated performance. stable while largest pressure our line, highlight pumping, our would that addition, the other

and business more well, volatility pumping strategic with financial is to acquired a business, potential positioned their or a newly better cementing our we Spinnaker, performance. market diversified were And is integration pressure progressing other believe dynamics. Regarding long-term we in offset from pleased perspective,

As to our This the environment several last to during lower into assets. our of oil the caused soft pricing was was bias on we the face call second pressure, customers idle driven competitive which pricing of third indicated by in our delay completions. prices quarter, and

think there While near-term for this cost call. were idling we the absorption right impacts assets, was

spot Pricing ability conservatism financial in competitive deliver sustainable the we some primarily to participate, we concessions. and remains full cash and market, underpin energy Discipline our where given cycles. flows over have

However, pricing levels than to our quarter during low in attractive temporarily marketplace be the fourth the the more third expected is quarter.

at projects and push our and our return it July. now, particularly consistent the in again quarter, our looks fleet maintenance participating is our lifetime of life margins maximize extend out low can be comments the equipment, in of with the pricing which Bottom well not utilized in Further, fourth and assets. repairs as should line,

quarter. the some and early late removing second the third began We quarter in costs in

and might hire demand. in rebound visibility current on dynamics began quarter workforce We unable to decided reductions. Overcorrecting back fourth improved, to market to activity. capitalize the left meet to calendar as ourselves we on However, and service-ready position to us costs be employees limit have

subject holiday our caveat anticipated offer and to shifts quarter. by we look a quarter more I'll results. market you likely of light financial comment slowdown. quarter results are do We third unpredictable think provide Although which can like third than that that's is, that fourth minimal current currently of saying directional not in our to second quarter view, guidance, I course,

closing comments. the that, I'll Mike have discuss And results. financial Schmit, now few quarter's our CFO, a after will

Michael Schmit

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

is decreased revenues in $XXX.X been This of pressure $XXX.X The quarter pumping activity was the following in by as breakdown from to discussed. decrease prior the largely million a million driven quarter. downhole percentages our XX.X%, Pressure revenue X.X%, XX.X%, tools tools cementing XX.X%, coiled was for our top nitrogen lines: was was X.X%. was tubing the third for service was rental was pumping X.X% quarter and Third

Cost of quarter and the depreciation revenues, $XXX.X to amortization also third million million. during from $XXX.X excluding decreased

As quarter prior revenues compared of a in percentage third XX.X% XX.X% the of the revenues, in cost quarter. was to

Selling, in the $XX third decrease out at due was settlement QX, acquisition XXXX offset of some of Spinnaker. to of charge quarter. million This the the quarter administrative in million compared to expenses was incremental to the was million general beginning decreased a of and which by paid second $X.X from that $XX.X SG&A

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

revenues operating to decreased million, segment profit and Services Technical decreased $XX segment XX.X% from million $XX.X to Our $XXX.X million.

million Support decreased operating $X.X segment Our revenues million to to segment X.X% $X.X increased from and Services $XX.X profit million.

and capital I'll purchase third Spinnaker. Capital in million, expenditures now $XX.X were quarter. million We capital excluding year to currently the between $XXX full the remain discuss expenditures. expenditures $XXX XXXX of million estimate our

a we in U.S. first of approximately $XX federal reminder, the expecting million also XXXX. of quarter receive a tax are As to refund

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

Ben Palmer

Thanks, Mike.

the temporary business, idle To assets our boiled improved. driven to a by key quarter pricing decision to lull until our really pressure and conditions element, wrap up, pumping in down part activity in one

and capture is by by especially in As among improved privates, activity incremental are well pricing dynamics positioned we heightened supported fourth where the utilization. we Permian Basin, and expected to quarter view This stand are today, we encouraged demand. currently market

opportunities oil smaller remains a As E&Ps near-term we you favorable operating customers large our comfortably know, and should if among capital increasing discipline can create above And companies. environment. $XX, for have

allocation. to capital Shifting

Spinnaker. We with successfully strategic an business added healthy Our and year this optionality. of key debt-free cash to sheet flexibility maintaining acquisition balance is attractive financial the

approved per dividend. $X.XX of quarterly regular share Board Directors our Our just

capital conservative approach. respect would pumping will of investments trend With to newer disciplined we take I and say, technologies, and pressure again a

of customer a in interest alternative to of the will use equipment, we increasing is invest operate transition justified. there While when our in equipment prudently fuels

Furthermore, pumping not would to reiterate, to will to older an already do capacity pressure while add we marketplace. intend we replace like equipment, I competitive

While we operate market, will approach and and strategy with on our remain focus returns. long-term often shareholder stability involve a the and consistent financial

a thank for difficult Lastly, with transformation continued programs company. our we'd employees like of our environment, integration into on helping dedication, operating our focused Spinnaker working staying to during and digital their the

to And time, address joining us for this at questions. this Thanks morning. any be we'd happy

Operator

question of Daniel Energy Daniel Partners. take We'll first from our Instructions] John [Operator

John Daniel

have of a me. crew know, presume -- wouldn't 'XX? lot tighten next your including seeking market whom need in a for There them to frac a quickly are people -- for add operators micro you so obviously, you services. I guess work Permian, a of into you of just is spot from small -- -- demand dedicated -- run of QX they how Thank a think Just -- you guys way. some those by and And that in your then the to the I crews, rigs year? programs. eventually don't I as ton there's for rig ton I enough And could can see need knowing do the what short-term I them year? that these tax the guy, you for speak a many do next you operators call at just better, visibility and your said need then of but spot rise

Ben Palmer

to take you want this Ben. is that? do Jim, John,

James Landers

Yes. market a kind I mean let be Good play. me John. the to have try question, that's that the spot and idea would get They let don't because crew, operators these and working where question, smaller good dedicated to in of wherewithal start, start are the we we again.

a coming than Some purchased that together We of oil that's $XX get companies They've faster couple $XX easier past get in. to groups are got oil. year the the have of and management the examples. small and capital at back over know been

other that's side seen what rigs years, might it spot So of prior who we've there similar hesitant. in be incrementally. there, customer the people be trends, We only think might adding

But and players lack these have your question about probably really because a we plans quickly. visibility smaller Probably is rigs lack -- of add make visibility. of

good. coming up. work that's do XXXX, necessarily to us quickly, of it great it in some great doesn't that but so spot February have tell It's we're And going to

A this these at know, all operators, we lot point. of rig you know, as as only one about operate

of don't know anyway, So answer would part have want you what that's, and I I we today. Ben to perhaps of for add. think, most the

Ben Palmer

return spot or I talk somebody just add, full spot good a talk a market, when very and black who talk John. and for you for question. right? a spot a right? rig white, not fully It's rig lot -- It's I'll less work And people not year. market has people some a what don't and about we than about customers, about equivalent

working players to so And and for the those focus well we're the a we what and tend we work And comprise sign do they the the contract. to we're call the they Fewer for a are for folks, of willing of few of worked a spot lot for we our weeks. of year If are for for them, some but half customers them, then on business work players, typically are them most partially that months, or market a in some market of which come of right? larger customers, many. plus on lot positioned There that from there has we've several kind Permian working to dedicated we're right? players are and

like we're We're we And XX-plus And weeks, lot a alternatives for, market want that delivery a energy, significantly big operating that of terms of in ones a lot in for, work the a talking not rigs, in today for work few and that fuel, the of don't for technology being spot we there own and not few technology. We're about developing technology. work for players that investing things are lot can that lot they're that customers customers we are that. So of the months. people then a technology. of that and a

working the in and right? But work market, So the certainly market fourth players we'll that's very those quarter be half well have positioned we're there's with in XXXX. the that and in, into worked and half in

of there's work. a lot So

John Daniel

guy, that time I rate That's be but and you prepared the I to hate helpful. my in when revenue the And went remarks. missed through follow-up,

Ben Palmer

was case. I knew be going to the that

John Daniel

I my Well, I wasn't was Yes. ready it. coffee. for drinking

Michael Schmit

that. Sure. is you give tools Pressure X.X%. XX.X%, cementing rental coiled X.X%, tubing was was XX.X%, I was Mike. downhole nitrogen pumping This X.X% was and XX.X%, can John, was was tools

Operator

next Rice. at move Don Johnson to We'll Crist

Donald Crist

fourth think challenging were first asking back that what a you will the fleet Just kind count, XX, a the ] do kind look of from you ask, a mean than John that? demand you Obviously, you the quarter for does I it But there [ you you less the year. quarter. of on in obviously, the quarter? that just demand like about was what side. wanted Or get think to be to can got Do little out of all? close bit driving I at

Ben Palmer

ways about XX%. math a already characterize sure the that. have pumping of that Well, couple to down done pressure I'm people is

correlates, effective guess, much pretty of utilization that fleets. So our the to I

So back of the all with it staffed during all in and once think to early for we I fourth pleased fully us quarter have still into have are that work those on we we fleets but we the that it's were can to, quarter the to over, question is that appropriate the utilized XX moving and XX up fact we're of available fourth think held would XX-plus XXXX. don't fleets quarter, to the say know get and

quarter It Obviously, but was less work all ended. to utilized, the the quarter. going our -- second we on. we had So business well the we fourth to that needed capacity quarter. second as were in And the the than of with is fully utilized the to fleets more that service all be that quarter we indicated able like quarter third pretty look of to opportunity

Michael Schmit

a be Yes. And that -- all to say are they using frac closer we're of to lot those. caliber would going

So.

Donald Crist

doing of hearing equipment year-end? of the that into antidotes I some that out gas color. work been are of and gas Haynesville we've chasing back type appreciate basins. kind people of the you into some other Are moving Permian assets And that into moving any

Ben Palmer

At this not. in are point we time,

Donald Crist

final one just me. one And Okay. for

comments acquisition, On like integration starting contribute financials. that positively around already Any is is sounds the it Spinnaker to that how to going?

Ben Palmer

things activities it's post-closing -- with great as perspective integration a like up going capability. planning, very well that. Obviously, infrastructure from great very, a closing. got some lot Yes. We and lot did planned, and to But we've eventually, company system leading a and the of a of we otherwise,

nothing our it's complex company. about into bringing them And at all so

were As business. cementing already you we know, the in

So learn having the in not we it. basin or third and diversified a one now Permian. knew about Seeing we're benefits basin being from scratch business, more the now start to so into South to the being from some Mid-Con and Texas going

So to we're that's lot going -- think a opportunities. create we of

customer tremendous our be within able not but expect to that leverage other some -- hopefully has only we of service as Spinnaker cementing, lines well. relationships will within to

Michael Schmit

Yes. And cultural it's smoothest one been team the seen. the from finance integrations just that just I I'll and side, have add, just great even Spinnaker has operationally of on been a the

pleased. the doing So we're very

Operator

Stifel [Operator ]. Instructions]. Scheibelhoffer We'll Alec move next to of [

Unknown Analyst

provided could previously, the your spending to you on wanted if to kind think next the year for the million. still potentially wondering there's you be year, touch $XXX expected the million you any that? in sense, just had this $XXX to next near I If any shift I on high guidance if I year. said of case range strategy was CapEx, for there? that's provide of end or there's

Michael Schmit

that take one. can I

the of all of our now right we're expecting. year, end. about we thinking the the that and to next in of but need and kind same same depend what what probably that right our to will is finalized best haven't lot win. possibly demand A be probably But probably on the be that now, we'll is guess for higher we're what as we'll range We that budgeting in range order

Ben Palmer

And just year, what with occurred out our part to of we've down CapEx, that certainly with third the has that maybe particular activity. this managed being point in quarter, lower

-- won't maintenance have ramp as spend We to haven't and any that. see we and But like will be as spend much to spending to significant we things have in had growth. don't lower CapEx,

we're in the business. to grow indicated, not We'll to required our count. going As we be fleet to invest continue

that we'll out, As continue we continue refurbishments. our need then transition our economically to would investments where able DGB We'll of spend into it equipment older because And we'll existing equipment adequately to again, make and probably efficiently, to this when will to the transition no even money, equipment. economic more not becomes the our do wears appropriate some replace Tier need we'll perform is longer to to or And fleet. That be equipment or the to it certainly, buy X would and at wherever point. being ESG-friendly. justified

Unknown Analyst

that? side? your you sort of any of that versus if quality assets, on can on bit And I shift had we've there level. Great. out curiosity, redo Or Great. this question might kind is Tier the be be get intensity high higher there's of little of rock lower more maybe curious that's some operators on these spot pricing, just service goes acreage, just was some to quality and a But from wells up. X quality or if could kind supply that heard any of lower just demand standard away just

Ben Palmer

it supply Yes, demand. standard I is and think

is some of opportunities. they that an privates, regard. be pretty And a anecdotes are evolving we to think share to that market. But not move we're And the quickly. in earlier, we're expect lot can especially, I tightening discussed there'll they as necessarily of see The that seeing continuing permitting. we trend,

systems. here, about appropriate operations. players they can't of that need It's and it. don't And that we're for talking those They don't specialty fuel their particular not delivery type they afford

So we set are up right? quickly we too move ourselves, to --

to provide we're We purchase very those their expert handle procurement aren't operations and for our team, team, some teams quickly solution sand vendor own players sales leveraging them. able are who economically at for of relationships. and effective big their moving own our to there logistics a and sand, team, enough our can We're Our them. provide

of of again, work did over highly was It about think, to really sit work. and with third think -- we a And discounted unusual. when We talk away, sort people have around taken example we confluence quarter happened being some significantly the an it. mergers. cycles, that was of things We

with a timing push their few up delay our just, Some of the to of was inventory work they months. their building be of their it and decided completed, out to customers, it

just situation. was really it a So unusual

But us that gave too. time

at able be of still our up pricing, terms competitive with end back it the go were some for execute -- jobs, With to the worked supplies some still customers costs our we to come to our work low us. to helped to that and adjust and materials that and vendors vendors well of back and us used

Operator

have remarks. further conference at And Mike no the closing Schmit time, back like Instructions] to turn [Operator over I to questions. would we this for

Michael Schmit

Thank today. much. call. and it, appreciate Thank we'll We you our you call now the all close for joining very

Operator

will today's hours completion replay call. of participation. concludes this There X Thank you the within www.rpc.net call. for be the And conference your following a on

You may now disconnect.

RPC (RES) 25 Oct 232023 Q3 Earnings call transcript