RES - Earnings call 4 2023

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Operator

Good morning, and thank you for joining us for RPC, Inc. Fourth Quarter 2023 Conference Call. Today's call will be hosted by Ben Palmer, President and CEO; and Mike Schmit, Chief Financial Officer. [Operator Instructions] I would like to advise everyone that this conference call is being recorded. I'll now turn the call over to Mr. Schmit.

Michael Schmit

morning. good and you, Thank

and number found Before along we conference outline liquidity. of risks, measures we'll this you operating some today's other all press on reflect to could Please be RPC's unknown performance compare refer public to those can our I statements In that XXXX of website want our a us and over that the nature on allow to issued forward-looking filings remind known will and be risks. today, earnings We that referring release various which release call, be measures non-GAAP several in begin, periods. www.rpc.net. at of of with to consistently believe non-GAAP be call these and and made XX-K performance

Our of issued Palmer. comparable call reconciliations CEO, President our these most website measures. I'll and non-GAAP over now press contain directly today the the turn our GAAP to release and to measures Ben

Ben Palmer

Thank quarter year, you, the of sequential And soft the you strong quarter. call adjusted our delivered free increases with year closed million. joining fourth morning. third for We $XXX $XXX and expected, this million following out EBITDA for as flow a Mike, EBITDA and cash we revenues and thank of

able We still the end to of business, to Spinnaker the debt and also year acquisition completed we strengthen and are our free. diversify

of investments later support strong, to a off fourth our have the we shareholders. To the We prices on in both and felt in further quarter, consistent but oil quarter. balance can that of impact elaborate sheet business the returns capital solid falling started

indications favorable XX [indiscernible] completion [ our have with quarter customers third our early had and ] that from below [ postponements anticipated. a originally be declined limited noted a downtime holiday that activity ] December, [ November we our in customers and XX below there above more for in At slowdown. that fell dip than we call, utilization. ], time, should oil early has During holiday XX oil would Obviously, and environment and we

show even While the fourth delivering the a quarter improvement higher from from December results soft quarter, prevented growth. [indiscernible] financial us very third a substantial did

pumping sharply still but pressure below third activities expectations. the from Our increased quarter, our

Regarding able at pricing the we discipline, attractive expected, certain we fourth secure opted in were to work quarter as the third more to quarter. opportunities during forgo pricing and

As for staffed. fleets XX our our workforce, remain our horizontal X fleets plus vertical

expanding cementing decision all contingent acquisition discuss on So we growing RPC, as appropriate. our are a softer will monitoring for implement excited we'll conditions and business, its actions about solid results. financial quarter's the relationships. are important an our cost increasing gone well, scale Integration closely future. Mike and strategic we Spinnaker environment. Performance was now and remained has despite customer fronts our

Michael Schmit

financial few I'll the Ben. quick about start detail Thanks, go more a year. the highlights fourth for and some then with into quarter.

year. were pension negative For EPS half billion, in of which settlement XXXX, Diluted year year. $X.XX costs the versus the last X% included a the full $X.XX, impact increasing revenues was from first $X.X

operating $XXX and to business million, free generated million CapEx of after flow $X.XX flat spent QX. and was cash acquire adjusted was EBITDA EPS million, early essentially $XXX cementing flow million. $XXX We $XX Recall, adjusted the flow free So strong was cash $XXX at Operating nearly in we was XXXX. in cash million. Spinnaker

on was we which buyback $XX of year, $XX through million repurchases spent share our For program. the million

our of paid capital more than million to $XX in thus million We also dividends, shareholders. returning $XX

in activities capital our while an organic potential our solid position cash providing Our continue business, also strong year-end at of returns M&A we'll further and a million shareholders, financial cash support investments as well as our buffer $XXX generation, future projected in uncertain to market. to

financial strong a continued conservative We ongoing position, approach. of proud and of our function our consistent discipline are

we revenues Now I'll we to Last growth increased Services in fourth by XXXX. XX% million, the to Revenues down Services and that Breaking driven our cover sequential revenues. our pumping strong of operating line a quarter driven experienced. of comparisons pressure signaled our fourth segment, a results, what increased in segment. revenues. service XX% sequential that's pressure represented $XXX Technical by quarter largest quarter, Technical pumping activity, XX% third total rebound with significant quarter our increase in

XX.X% of While was and our tools, fourth fourth quarter. million. service Supported our XX% breakdown X compensation. from quarter, figures. revenues downhole million, margin EPS following The The coiled revenues, increasing revenues, controls, cementing of fourth SG&A is on our our $XX.X were excluding EBITDA the labor due to particularly XX% pumping the those third were these accounted quarter X.X%, to XX% to adjusted our There to $XXX.X total from Diluted increased basis non-GAAP was during no amortization costs. variety from depreciation million for was or Services in in cost grew X% with a down in Adjusted operating the quarter. lines service and expenses top lines. Pressure revenues XX.X%. EPS discretionary X of increase. XXX quarter $XX.X segment XX.X%, the points were $X.XX up of represented a $X.XX quarter adjustments top of in or million a with revenues X.X% in revenues. the and of EBITDA $XXX.X Cost Together, tubing rental X.X%. tools, lower $XX incentive down see fixed expenses SG&A did to We coupled million. reduction leverage XX%

expected and discuss XXXX I'll spending. Now our capital XXXX

$XXX for $XXX of were XXXX, million. range expenditures capital mentioned, $XXX to million below million our expected As

managed latter were in and projects the capital the expenditures of completion half some Given that year, the evolved into XXXX. conditions we of early market delayed tightly

of to this A turn year, this to second the closing place coming be of $XXX $XXX expect we expenditures back element the remarks. it service Ben quarter. I'll For of range Tier by capital of now is million over some we new end again DGB to X fleet, in the to which million. a for in key plan the delivery project the

Ben Palmer

Thank you, Mike.

So from quarter rebounded we pocket. bottom third line, air sharply the

quarter budget for that bounce of a in getting year progresses. indications curved is, customer late course, we of the and prices general growth of limited signals challenge, exhausted been our from has near-term stability magnitude oil customers but falling the weather as back. Visibility potential are the January and However, and for

pumping As Mike and a Tier disciplined pumping emission adding and won't spending with XXXX for a Consistent fuel we capacity Tier approach include dual a will pressure referenced, pressure to to thus more attractive upgrading to replace DGB the fleet, lower our be we're patient diesel capital which fleet, plans taking X X marketplace. comments, previous assets equipment. new our

X With will X X X in total, have of plus DGB Tier the addition this Tier fleets fleet, and X DGB diesel fleets. Tier we X

are diesel vertical Tier we operating Additionally, fleets. X X

So the remain make X our we sidelines there until horizontal will business in total, economic respect for feel of customers. on to fleets, electric are ESG friendly. sense XX fleets with We be solutions, and our

complete, Spinnaker for with to acquisitions innovation Lastly, strategic business. strengthen looking additional essentially our we're

RPC wide and increase currently both a our of we large opportunities customer offers our E&Ps, While variety scale and relationships. see services broaden by small to required

of share share company believe current attractive industry resilience. sheet of employees strong, and to for buyers to supporting a availability will across our which lining quarterly silver the buybacks. I'd is and balance thank like be conditions patient dividend, dedication our the potential quite the just meantime, with our acquisition $X.XX are targets. per year In another opportunistic cash our together Board approved We

vibrant prestigious Oklahoma. We through XXXX This inclusive as and recognized are Top especially [ commitment company by a a downhole that proud tools environment. Workplace testament Solutions, our a our accolade Tubing ] to has fostering work been to is

will very want initiatives able an reiterate we our soon. In remains our closing, consistent. first I values You to more that other plan as in report to as issue volatile well to be sustainability RPC's about often read market, as discipline corporate

this long-term focus for financial questions. And happy this returns. shareholder we're any Our time, us to stability on address at morning. Thanks and joining

Operator

[Operator Instructions] line Stifel. question the comes Your first with Stephen of Gengaro from

Stephen Gengaro

So fleets pressure give on progresses? you the can start with for the evolving kind I pumping and as that in ran sense see how on a the me. average many how What is would a things you of frac horizontal of side, couple you us quarter for year

Ben Palmer

that as quarter, And become either I or they we'll Right of but field. make the more number keep we the reduce varies we're course. way appropriately that to all will we now, staffed way quarter decision the is did things would to of the the they in busy have in think maybe all Well, staffed. to it all those work fleets need some expect we first fleets the the evolve they indicated, with XXXX during were are Stephen, in going confident of we

it if and expect but time way. appropriate that's on, the action that doesn't the being, we for we'll so pan And we're take counting out what

Stephen Gengaro

does had incremental costs quarter. of which based know Okay. think was sounds give to go Technical forward. there my actually kind and the more actually given to than parameters right, of are your staff the how Services Services the the -- leads going can that we you sequentially like despite trajectory us it's And into that kind about question, you that But I as fleets of incremental margin play on on the performs having sort is on income -- place? And in costs line. et vary clearly out carrying revenue, how into think any I and/or margin But -- cetera. maybe it in Technical you doubled, and margins operating margin -- then other side, work whole

Ben Palmer

way Obviously, -- we're in base bit we the look starting starting incrementals gains of the why incremental percentage -- like. with revenue first XX%. crank I -- think down tremendous teens, quarter, reasonable to depends quarter is what's late not always And in off not slow on it But I to something But but typical. fourth that's fourth were see in and expect We okay. A But exactly, mix margins it little to going off back time things. don't know to up. that It's and to of increase and going reason when takes kind kind mean a of the job going different of for the because perhaps bit have a of people first it and like again, said, amount the of revenue, this we it forward. the increases, other slow. say, obviously, see little it's we question. I lot see a it's to would the is. would quarter, quarter with quarter of revenue quite the large expect mid-teens a clearly, many the would say

with deal to have we'll that. So

Stephen Gengaro

Is an to? comment time, you're over margin high the absolute an that margin Just to referring clarify, is maybe margin that or teens XXs. incremental

Ben Palmer

revenue of amount was I the growth. incremental. to depends actually Obviously, it referring on

not we're anything So unusual. or expecting outsized

Operator

next Your of question from comes Barclays. Podhaizer Derek with line the

Derek Podhaizer

Hoping services. types maybe expand the you can on of

You're outlook. looking to increase growth for scale our enhance and

You some potential acquisitions. mentioned

Just services get maybe to looking some you're of or more what color around into? products types

Ben Palmer

question. Good

obviously, our probably but We far have largest is in in service pumping, market pressure field. the oil largest it's the loan, by

there's downhole meaningful there that service other of to we of our have here, big the ones tubing market So out share larger go cementing. coiled we many a after. Many market lines, tools, referenced

where We regions operate. the have decent market share, especially with in cementing we

market We in and strong for Texas have a teaming We the been down bring to number South we we've achieve great relationships opportunity bear regions. up our share customer in Spinnaker's And Spinnaker same there. there's there operating of years. capabilities with those of market cementing hope where particular and to a some down think very in with to

opportunity they're some we couple last tools, the good tubing, there good business. have we've something That's share. And market along be a opportunities brought cementing. Coil a that's downhole of that to there. So expand years. might in an That's

expand that we're customers to the activity. part. I'm representing service have lot of Yes, are lines for looking particular So with of to of a the looking we're most some those that some larger

And expand on are to lines so service I've we in looking particular those that referenced.

have we on be ones primarily. where share focus the scale and those and one the good would now, will we So good market

Derek Podhaizer

that your convent, on like like that helpful. Got equipment frac nature. to of That's of bolster wireline, is And of ancillary around equipment pump then services looking the base pumping, more or power solutions, maybe just those proppant it. the logistics, more an things services

Ben Palmer

ones are directly I to to pressure referred tied not The pumping.

could those I peers beyond A be some of to the internally and some capabilities develop requirement acquired systems of and they our these of of capabilities commitment think larger have wireline. lot the

business. wireline small have We a

the share about we market for other to going something -- So some just it's service we'll that's our very talked think the with to of primary But wireline do but wireline. not just that's selective. certainly be with not for is because pretty open focus, a opportunities. we've of well. It's lines, small. completion different we're And good lot things, the used of We that these other be

that the a offer. customer wells and the out larger type of of the has customers a that many us of integrated fields type fully bring are larger right Our are type not some type of from peers to require there attention benefit breadth would the setup of getting that services customers, but of of with and tremendous number from who the ones of lot customers other now, plenty can other that every of we need than that -- capability. There to benefit that infrastructure

focus expect we'll for we're as up. relates where time That's So have and to historical that's I relationships, [indiscernible] our it being, we where that's we're where and the where set aligned, that's

Derek Podhaizer

sense. just across privates any what insights insight when helpful. there's from but in those smaller field, Tier been a Makes bid work follow-up anecdotes you equipment, of would to among guys from you in just about see them sure Maybe many I'm them and the then out great we landscape be bankruptcies don't that if or diesel Got players. [indiscernible] can The players. me. not the but it. competitive you those talk frac just of provide you've And seen get just that X come

Ben Palmer

players. one we it's lot it the Not those time everybody to pressure in smaller specific. and continue and equipment opportunities, see that to Right. sometimes that hear to pumping to and upgrade we a time Obviously, equipment whole can of be afford is to invest from them expensive, Obviously, might when miss do that. not

pumping. in that. have certainly up difficult in of We and players the a be we'll within had to and will Maybe of up a able -- smaller pressure is And as obviously, of when loosened that think tremendous the think maybe of I market We take second we're market regard. advantage to them be the set had first indicating, part will you're XXXX, shakeout financial the market results some tightened expand. further a hopefully, that challenge for So quarter the we bit. as always it improve, to it

So market don't the small we particular pumping, need hopefully, these that do overall, regions have well market And share a in in have pressure a relatively on. bit. we're within And North certainly, all massive but that improve that we focus will they the of market. and pretty America, we and again, customers infrastructure, well positioned in

Operator

question Gengaro next Your the from of Instructions] line [Operator Stifel. comes with Stephen

Stephen Gengaro

that older wanted I And the on arrangements. of between the of kind versus you just of assets lot comment to and spot for at on sort a pricing we've -- of about bifurcation pumping market between pricing follow in assets. kind difference low-emission committed heard or pressure sort also contracted up all? Can

Ben Palmer

something pumping it, be that you number equal, peers from our of as business site. to that a which to paid still is want some execute. service but because bring our a we'll appreciate, word, it the large appreciate, to we'll pumping all time difficult something well customers some of providers each to of higher infrastructure requires like investment, some investment, course, look on this lot right? monitor think, pricing watch we unbundle. we different service right? Customers We we and to have can Again, integrated, a -- I an those to various some services service have It's They're call service I to competitors. of to obviously try one we in Clearly, fleet, going their of who multitude the services that So -- bring, opportunity we various all It's about if happened. it's more being the we don't don't pressure a is don't able right? line, The offered. believe of bundle to trying are company. to, love to be our the more peel than to we're of best They're with lines be give not a that's not to particular you going time work services, services, have And fleet, of at pressure -- seems getting I There the our to are talk individually. that's fully per not very there lot more aspects that to that, all happen a never future. some focus but very of and for se, for it's complicated. whatever to is that lot of back service investment, of -- will, do per things you but their a So additional being getting to larger it's contract, the have the E&Ps

So we're equipment says following equipment, certainly will is equipment a our we're continuing but we're our that map out, improve road capabilities. and road map. It's our invest adjustable, have buy it wears we to going as has be to newer and that new certainly additional fleet

of is significant gas, are every today fleet We one can of natural a our our customers. to of and customers, percentage that our appealing not some burn

whatever and the those -- by when not we want that that decisions letting have And x a in -- we're So we're make of we're financial are along. the decisions dictate fleet, our in particular to we're we their percentage to point we our just to and want those market decisions. demand takes investments. to time. moving have making say it We're characteristic They're do a have customers

points Obviously, like said, along. again, -- it that's moves that X along consistent that ordering fleet the the terms road map. is we take with we that. new moving delivery pay that when the us on do for Tier term. for improving I exact That's fleet our we're And and but our of -- this path. and we're type of So that plan as equipment, but flexible in of executing long

Operator

of next Podhaizer from comes Barclays. line with the Derek Your question

Derek Podhaizer

couple pressure out Just the to a started and pushed here wanted the basins, came gas to I about and exposure the been these ones Mid-Con were gas to has mean of your capitulate most ask Ford. under lethargic that XXXX. basins primarily Eagle pretty to as Haynesville,

give what time can of us So and sense activity seeing some take basins with X and as as for conversations. customer a you maybe those far you're

Ben Palmer

Yes.

basis. X said Haynesville... You

Derek Podhaizer

Eagle Mid-Con Ford. Haynesville,

Ben Palmer

we pressure, Yes. in there Haynesville, for We've pressure Haynesville. high that sensitive have the not few in 'XX. very and years historically and Many downhole just particular, out Mid-Con. very, those pumping to our Oh we've probably Texas work, other not in intensive moved had been particular, 'XX, lines, it's very on tools, something is We've types years. since South pressures. not of in basins. the focused Haynesville, those that's of of as last many service

Mid-Con, we Mid-Con Texas. done We Haynesville have South in have business South Texas Texas, the do work the in some pressure still very and in pumping good a we've in South we that certainly the

you the operate in significant pumping, and we're where to is -- around will, we or significant for there. in looking the pumping. in basins we're right that But make basins pursued in market this cementing best the South our have down the have little if either have with at We Texas tools South reiterate, there more operation Texas opportunities U.S. pressure a now, focused, pressure been they on downhole us time, Haynesville some share, but a to company we're into point our positioned. But all move has not

Michael Schmit

-- of the the for tools of but to is bases need easily things we spread move and That's all that that that another can kind Rental service ], we lines out where are lot in [ a there is are equipment. activity one.

Ben mentioned, have because stuff out, need pressure definitely impacted as lines the if Permian, it So our more not spread is. can heavily but that service where really think move other we quickly pretty to more little others, you pumping, we're we that's but are

Derek Podhaizer

about Just see. independent you Got customers I how yet? wave it. work caps those have smaller mean, on the you guys shale. could gain had large your throughout some for E&P maybe Have impact maybe have any thoughts of looking acquired that the targets to we're that. of the mean And you starting I you services? to an you maybe seen that call are some mentioned some companies on how to just be that been then share color in thinking consolidation

Ben Palmer

a that contributing were impacted been with has Since the air impacted. pressure not not factor pumping -- somewhat was We to that we third quarter in have pumping time, pocket. pressure that

with place. several 'XX of some consolidation Here the last that's the in quarters taking

lines they'll that service we to other that seen we've and companies. impact benefit because actually have we other work hope E&P work for these Our service not that for many a expect active highly do from an and of large, be lines referenced consolidation, do --

working So both hope future. working for if X future. activity continue If we're already would them expect we the of the to for in to do them, to to high work we continue we're operators, for producers, that in

midsized may we the at third seen that than anyway. end, might would some the kind more and operators not we've other There's right? upper of a think some of consolidations it an of kind of -- impact directly they to further smaller the And more end, have pumpers of larger So us. impact right? coming pressure to any taking impacted be for is any of seen don't the we've that not recent the written than So negative people concentrated consolidation have which out any lot quarter, us, not

my take on that. that's So

Derek Podhaizer

that's Got last And one. you. No, helpful. just

slow earnings? start maybe first the Q&A the is flat Just given top see outlook how up you're just that weather flat about talking do to Or and the do thinking a top on your incrementals from the E&Ps? upside quarter to profitability expect for you you're this quarter, first just to you be or and the of about the line clarify at

Michael Schmit

the a to had end of think in described. have and the probably as I you the bit we of was could kind of flat it with guess of I Yes. to sort into weather year and slowed coming up but of a season good months. slow start. of a signs the couple some way January, positive it that's winter exactly about little We next a start lot

the we've heard couple what to similar the it's folks Yes. We're no flat similar of or some last announced of to sort other have days, currently. of So huge that expecting increase up, decrease.

Operator

At this questions. time, are no the there for further back Ben turn over now Palmer remarks. I'll closing to call

Ben Palmer

you, you, interest operator. for up. care. And Appreciate attention Take Thank and it. everybody, thank joining our and call. your I appreciate to catching forward

Operator

gentlemen, concludes now all your that Thank joining, disconnect you call. for and Ladies and today's may you lines.

RPC (RES) 25 Jan 242023 Q4 Earnings call transcript