RES - Earnings call transcript Q1 2024

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Operator

Good morning, and thank you for joining us for RPC, Inc.'s First Quarter 2024 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 will now turn the call over to Mr. Schmit.

Michael Schmit

morning. good and you, Thank

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

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

Ben Palmer

thank and our you joining Mike, Thanks, morning. call this for

I'd get news. sad to moment some share we take a like and Before unfortunate to started,

of many the he enough colleague. missed in I'm those listening us. Shifting Our all passed long-time cancer. weeks with was sure so and a XX great years, here Investor a company contributor Head ways. after was President with the a battle quarter. tremendous ago away courageous friend long truly at a and few work for He to I Services, Jim worked and more lucky to him than to be of years, who with Vice Corporate of closely RPC also Landers, the are by Jim of you will Relations over today and know he

what from As like quarter release, feels the our a in year was a you first oilfield muted soft market. start to services can the see earnings

the more stable guidance we EBITDA. give did first financial for we So not quarter, explicit did expect

to expectations. Unlike recent compared volatility the pumping down of revenue throughout The modestly generally the have results original more pumping we contributing compared XXXX. basis where on overall Our to a other some business. sequential in was quarters pressure consistent was pressure to performance our our lines, service fourth activity in level seen quarter below finishing

about in declined other down market down remains X%. The revenues pumping competitive. X% total and with service X% pressure aggregate, Our highly lines frac

into an We to already have fleets from seen capacity some Permian plays, moving crowded gassy basin. adding the

operating created pump ongoing addition, hour efficiency In capacity. gains have additional

fixed industry pricing, Regarding year absorbed ago cost keep compared impacted pricing utilized motivation to certainly levels. to assets and has

We as are working environment. be vigorously to possible competitive control costs in as this to

balancing with our not interest on also putting projects. to out our are assets work in We to burn our low-return preference them

after X serve generally DGB fleets customers. sought are Tier Our and highly semi-dedicated

bringing solid new remainder this await Regarding the on operational fuel Tier for existing performance Tier and assets XXXX. of expect into midyear utilization X our around fleet, for DGB service to been strong. those quite dual have assets highlight has fleet new We eagerly we our X that

the about to for our best past pumping gas our and these over We believe among efficiency metric few high-quality drive our above and an effectively customers. example, this quarters. sustained in XX% or demonstrates of substitution For has value operate the assets ability is average efficiency the industry

Tier months, reiterate, we in service before, a to in fleet out a DGB to be fleet we new will said invest fleet place X pulling To have we intend the of As X service. diesel continue upgrades. we Tier in when few

or parts parts equipment. add do those as to So our in assets and spare business them repurposing keeping of we Likely capacity. not industry other

continue to market monitor We for electric the fleets.

see and the potential some solutions. benefits ideal technology, While this we do technical around long-term see evolving the source also of power shifts we

have return fuel. favor. In the we in on a fleet this upgrading long risk focus to fuel We runway assets until we capital is Tier demand our focus strong view, a in fill in continue dual with direction profile and and will our to in X our investments on dual will invest further fleets efforts our electric

few but the next recent be, the we events, and many above while and is of quickly, economy. course, out, and playing semi-dedicated supported discuss that see the up a we private encouraged discipline. Mike level this we to financial also E&Ps can oil but quarter's WTI remains results. attributed expenditures by cautiously pumping $XX optimistic barrel to If U.S. reverse certainly limited, stick E&P recently. strong quarters are sustained, pressure visibility increase capital with part prices, how larger in market The steadily make which exercise a rally budgeted of Regarding reaching increase the unpredictable the in by now activity the are spot is smaller that will will geopolitical

Michael Schmit

quarter lower cementing Thanks, our Breaking Technical industry concessions. X pricing comparisons lines. Revenues discuss XXXX. operating activity pumping, represented X.X%. Pressure were segments, X% rental for XX.X%, competitive tools, X% of the pumping, service is Ben. some I'll and pressure down Technical first breakdown our decreased revenues. the revenues. The our X% X% quarter now moderately X.X% XX.X%, segment. decreased of service line revenues of results Services and services tools down with combination X.X%, represented that tubing, a Services XX% $XXX of and our by quarter largest following quarter sequential downhole fourth Support million driven within quarter a top total our coiled of to revenues our total by driven first first to

million, note, to these X sales, The increased the expenses total part from and quarter, to expenses employment and SG&A million $XXX.X decrease. increase which service were or timing down fourth quarter. was impacted and no materials adjusted adjusted Adjusted a Cost million EPS were million fourth there the decreased adjustments and XX% up also to quarter accept payments of sorry, compression. DGB to for Despite was margin delivery points There $X.XX these Tier a maintenance million lower another are $X.XX due these down EBITDA flat first in So revenues. accounted we as will were and was EPS was million, $X.X heavy of to made higher non-GAAP $X.X cash -- certain excluding slightly by and total million. $XXX.X was due $XX.X $XX.X employment in have million. million, quarter, from the measures costs sales were total CapEx fleet. to second We compared our from of $XX.X in during depreciation our decreasing costs X% adjustments with supplies lines together, new a cash EBITDA figures. revenues, after flow first flow the Diluted quarter to X On in XX.X%. Again, $XX.X free contributing that spend our percentage Operating $XX.X of margin basis mix, noted accruals. top XXX items. margins. SG&A of million for repairs unusual and make our $XX.X no from amortization final to of was slightly the

range in the CapEx million manage the remains $XXX in of conditions guided range half to year. of on second XXXX million $XXX lower market of unchanged, depending that the our While end we may

was $XX and our our shareholders million under capital $X.X we million more Thus, on dividend $XX share program. our returns During which than returned the nearly repurchases, between cash in $X.X we quarter, to million buyback paid and our dividends. we million spent buyback program, of of

of this end refund, the to the Ben received remarks. a some $XX the financial sheet for to and a subsequent of end. it related tax over that We're now position IRS We pleased turn proud week past quarter healthy to approach. also our a of debt-free million continue million balance We years. I'll disciplined closing to tax cash a back function at maintain with share quarter, from conservative of strong remain interest we to including $XXX our position, ongoing

Ben Palmer

Mike. Thanks,

So translate in would trends disciplined by looking in we ahead, be uptick the accompanied capacity into which by activity, an This for oil rig hopefully marketplace. optimistic encouraged improved should pumping management count. are and price

see activity M&A the of also space. wave smaller M&A the E&P -- as We from a E&Ps fallout for potential in by larger space increased

on asset the trend relationships. mergers moving our with divestitures possible we customers. into acreage acquisitions capitalize the As deep We be customer close, of hands to this and noncore our positioned would well given see

with and in our relationships have pumping, We excellent both pressure other lines but only large spot customers E&Ps. small are and semi-dedicated not with service strong,

the We grow provide confident continue will find sheet our to presented return scale, in lines, be solid a we time, of balance business. with course, opportunities to We're use bolster service our relationships on broaden to to and, acquisitions strong increase our customer capital. our that attractive

sheet believe If we buybacks. of are industry attractive we per the the said meantime, is patient balance share to capital quite likely a deliver at I consistent investors And returns. pace. In volatile you an on discipline reiterate a to an we're who service this accelerated remains questions. often of long-term customers. Thanks with shareholder to to our will dividend maintain return we acquisition position, stability cash want over financial our elevated In levels thank address this market, our targets. potential lining happy we and closing, last options at and share morning. employees As buyers any availability all strong. be current quarter, focus to to cash to to an worked high conditions and our our value would for quarterly time, time, tirelessly us and $X.XX assess additional opportunistic And reporting silver joining

Operator

Instructions]. [Operator

with Stifel. comes question Gengaro Your first from Stephen

Stephen Gengaro

me. couple a So for

the price evolves And -- far over how so overall either competitive I I pricing structure? just you think think just or -- you the can like about back also, thinking time talked assets And think assets environment. about pressure mean, holding the you the do at how current I'm you talk market as about competitive that landscape. first, marketing pumping as about pricing levels?

Ben Palmer

to exercise Good lot Ben. question. discipline, is We're this discipline. Stephen, of exercise going have a

compared tune people our of some to in that some a having of pricing, not we of disciplined. businesses. that affected a the some to going we an can little pressure the been clearly spot see take We're But capacity enemy market here a disciplined. Certainly, We're where remain of market ago, obviously place. There's there companies some We're not been activity. very we're being. of hard increased we're with lot in have I I the the have indication established. some can equipment. to results. we're "advantage get bit on those working with others have down bidding over something degradation team going worst we're market, burn our to I a to if but said, about as and today, at to to often. better, very and the have do to own talk But how trying service that going we've going opportunities, semi-dedicated customers. have is where We're to some that's with it's more realize agile, see clearly our We in pricing control think efficient There participating year has seeing -- volatility everything the floors in market." have out going to floors that to been remain absorbed rising that's our We really recently. of their it some know more a we're really, don't bit point So dropping taking demand We're stability. bit to our

to more But some -- prepared feel we other it. We're the right pressure revenue mean Our to a take over when through down translating think but about not right? that's now, work pumping we in to. lines, -- financial change XX fleet. in up or more to an -- significant not pressure a was again, better than I And into competitive is look results. that it's a the we we or was steps our -- efficiency need is our performance. measures this efficiency operating our mean consistent indication months, necessarily changes is contributor we'll is But normal similar. last any slightly I decline this talked And market, pumping highly considerably margin of if environment, It's in just market. directly the immediately think I unfortunately, everybody. outsized with in contributor not with service or unusual. the I We're back

relative talking fairly on we're a basis, a everybody change So small in about revenues.

as there's And expected, and decline. pressure mid-single-digit single, volatility in kind a group. some so fine, pressure their pumping would just revenue of in pumping with you [indiscernible] a

quarter. displeased not we're So the with

disappointed with that environment in stronger it quarter. a bit coming out think we're fourth more the little wasn't I the

Stephen Gengaro

you looking seeing on that? inefficiencies just kind quarter? any apologize from a year I sequentially, in Are off I space. And at late, -- feels jumped the perspective, level of on early like the maybe into little white and thoughts because it there's when modest an second commentary other growth same just of but activity Or coming XQ thing

Ben Palmer

wouldn't I indication highly time. It's it's down. -- again, sort It's up say bumping or any along this of seeing strong at we're volatile.

Operator

Rice. next Your comes Johnson with from question Don Crist

Donald Crist

held market pumping in, services downhole I obviously, wanted tools bit during pressure about is activities. little nonpressure the but pumping are seeing you ask pumping are than competitive I better a significantly But up pressure the quarter. to Permian, say, pressure basins. Obviously, you other in they your in as other know coil or competitive in as pumping. are a

curious about demand there. Just

Ben Palmer

Yes. Good, Don.

Let lines. have make downhole that It not comment, the pressure the the across Mike did and again, was can contribute want fairly to over. service tools reiterate decline consistent speak outsized I some and other then in board. I'll it take of pumping, to just EBITDA. Mike

Michael Schmit

pumping X% they were nonpressure lines. Yes. I on other average, our mean down

mix in as for So is different those well. little us customer the a

more There's in our -- overall also, you with So of out were the where kind Permian. kind they as industry. really is of the spread various more pressure the basins pumping in heavily we're in know, line

So we those little as which a that bit helps well. have diversity,

those, Ben they So also. as indicated, overall, but strong as slightly down the wasn't impact in were

Ben Palmer

sitting mid-single-digit quarter. the at Again, it again, -- we're in was back for revenues. performance and talking about It's really looking changes

again, so And The small with pricing creates strategically excited new of of bit We've the new do for with margins working and can out efficiencies some think, that a move customers. really determine and numbers lot change. tool come that we around can revenue that downhole we're a to our the now technology continuing a tools particular that about the well. for quite that to

So sort mixed -- a blessing. of it's a it's

forward results coming So to few we're looking at of the our some pricing in those next quarters. look through strategy and there

So the differences again, or lines. various not outsized service between changes

Michael Schmit

to too. all add is our service lines, I'll across spread spend Yes. CapEx our

those our -- for -- we off the just we in in year also, years. than as us and making DGB new other to are line fleet so So our we're expect service some in investments the other on goes pay future

Donald Crist

can some trying wells, oil a us not are neutral workover drill et you color. on much drive that any are new you pretty of kind on coil spec. are And you outs? kind appreciate pickup you just cetera? coil seeing of out necessarily Or I remind work side, to the in doing doing if I'm

Ben Palmer

which revenues business. [indiscernible] other to of [ have the that largest a component specialty tools California. using do very -- up of out happens We is to certainly -- P&A tubing is coiled in that business ] do our project, starting work soon We special in that our some be some some with of

would. coiled how but expand You maybe diversify do forward nice to it to or believe looking point for I to opportunity at not is this nice in question. that a to us business overall, there difficult be coiled time. and could in wouldn't some you Yes, and tubing revenue. There's tubing start work But very appropriate California add a incremental a otherwise, amount of other mean, significant out it's we're

Operator

from with Daniel Mitchell comes Sean question next Energy. Your

Unknown Analyst

saying we right down seem today drill? it guys down, in above key -- and saying acreage make the space. are a I consummated what XX. these spinners saying? have the like some guys. here? because at and private smaller -- as costs crude they these what the the XX to continuing wondering, get look are above is as think activity don't private by Is XX are Or up some you to [indiscernible] folks for Because come should And they the E&P smaller M&A like seems economics is that the assets these But Just it service guys of pick kind some alluded you it to you're get driver of at of coming to

Ben Palmer

Maybe with that Sean. the right? same some significant of But side, maybe won't To it oilfield I of discipline where I can kind if quite should the thing of it's on talked a cycles sufficient question, Hopefully, you in that's stability. have of you, show the it's everybody honest show to we're services result but more correct. discipline sort see these mixed mean overall be with Maybe whole guys. the to the I lot be price and downward from a on pressure Great not as will not can't lot personally environment. an severe. of uptick, everybody Hopefully, here. seeing just a blessing, going tell we're a translate into oil some operating the that basis, better

So I year, are and companies the everybody still look bit but look lot have hopefully but the is and working a we'll of in prices to get Many They're XXXX 'XX better to this divestitures little place to about on. all see And and shake think it's just maybe a to question. people forward don't a taken of for an starting how yet. and gas XXXX. little bit rest some great of I have talking haven't answer that, stronger you, we forward of new out. a these

So management They work calls get they of and ahead start some out getting a themselves, before those making of got right? teams those and first some RFPs. close of sending to phone and to transactions aren't probably lot integrate

Unknown Analyst

one Yes. more. then And maybe

in the opportunities in terms I consolidation you best the see space, the the for guys? space, do things E&P think service where today you looking guys as opportunities in of kind up are know of picking about for and are Just you consolidation opportunities there you

Michael Schmit

of opportunities good a a right definitely lot out some but finding opportunities right Mike. coming that and the in them successful be We're will we the of the It's looking at -- make at right are there. actively are desk. we we're there think across sense, We I price can always start. This just Yes. our one finding getting is and fit. opportunities We're looking. lot

don't to I if know, Ben, you So add... want

Ben Palmer

A had Yes. been presented. have discussions lot with several. We've

remain we think -- do right? like I I lined our not -- are they transactions, but you what I not to space results, be I still the to -- -- it look either. and to where others that seller We just think in if at haven't on results up, it's going valuation them so don't are the be. think see wanted and expectations are again, not transactions do especially, we're to disciplined, want to we'll but But think

are some privates companies. service seeing -- with some the So of and with private I the the our oilfield products, thing, same discussions think of

pressure. and feeling [indiscernible] way. But where for I they're open That that on nice other pumping, we companies. an our is get share pumping the come will I those environment And we're market little think -- I who lines service of that maybe some or to a we're will think whatever maybe the want you to be of focused think better. some some pressure or people pressure opportunity, our reasonable accommodative will our some more -- have smaller of finding

Sometimes equipment that the of be opportunities. multiple, multiple multiple, we're condition like seeing an the issue. can and But things

imagine You love would company merge into their our sheet. can people balance to

as [ that have ] be we to well. mindful So of

Operator

next comes Stifel. question Your from Stephen Gengaro with

Stephen Gengaro

think I at you active of were when just horizontal just in you in give expect Can anything you fleet fleets Or to was kind and call, this been now, the during short I you where you marketed wanted term? have of fleets Like fleet and the off taken look think the XQ? you they just earlier don't in XQ during follow said underutilized? to us be active where -- up kind have total. the count has XX and I the

Michael Schmit

Yes.

work fleets, we're more can active all kind this were time utilization give quarter. we utilized not than don't still percentage, as another exact a the some is want if lot get where the but other the We Xs as Tier typically the our of were we exactly it. But year, fully obviously, but newer them wasn't staffed, said, during would there, just staffed of that utilization they So the but last going. were we --

Tier Ben any this to a taken have when moment. said, the forward the plans down on quarter. on and add haven't take at later we capacity. no [indiscernible] So going We'll board. environment comes new we're We X Tier as [indiscernible] comes down not -- in X current that to X

Stephen Gengaro

of it right, we and of then there's been you? a E&Ps. When arrangements about think long-term When so And does be all and the implications with short- you? the one does an smaller seems assets players. your that probably think assets? think going turn players of you But of with how contracted the more term -- these ultimately Okay. of you kind and and better consolidation how other. bigger talk fleet about lot your when things long-term that kind the impact of advantage big impacts that about consolidation and level they some there's strategy, contracts we Like about lack to and mean, of should word, available for bigger how give players, after players some a I sort

Michael Schmit

belief. this Yes. we mean, stay haven't quarter, benefit smaller active and if is hope in we obviously, get so. and the where right that's then. half players more some I we'll our second it's We that our certainly that they hope privates the year, things of of But are the now -- in but seen will wouldn't that certainly see --

Ben Palmer

bit given exactly downside, may the there's little volatile right. might are results, some gives our I more Great more definitely customer But That's case. yes, mean, we question. We but think the opportunities others. upside, We be downside. No. and is to our than opportunities a us that's be certainly, -- little So that where a there base right?

Operator

Susquehanna. question next Minervino with Chuck Your from comes

Charles Minervino

provide was you wondering situation if color could pricing frac just the of right little in a bit on I more now. kind

kind to Or of stopped? fleets get as to it's where also mentioned will some kind we trying Or basins, sense that find do are kind it its you bottom? from in still And has tied expect of bottoming that well. frac to continue think you a is that? of in that, wanted try coming Just gas you Do pricing. of competitive some about talked You here? to

Ben Palmer

in bottom. all renatrough I are we're Chuck, mean, a we hopeful flux. for that it's

we've As I at bidding indicated, our everything work level. that not price price We're below. we stated at got which won't particular

some And point, dramatic But not So to hopeful will steps. the we're be monitoring have at winning bidding rational is are it, tell we we're you very level we're we'll all the of at If competitive. see. that can closely. competition it industry and take oilfield that appropriately compete -- rational. anything more which incredibly I the And at we all of industries services we'll in

customers an with show fact capitalism, Our And we're that if competitive, would the hopeful incredible can exploiting do disciplined, -- job it but -- help they It or have is this like that fleet be lots the others probably players the the wearing we they're more be point. bidding industry reaching that invest in that we're but of out able perhaps we discipline choices. understand is but but may some at who that. And they're to aggressively, of do, smaller their equipment low more end like to very the have market and us. to back the going some of capital don't

We generate position, to to in our So We nice up. very trying we're on want equipment don't be mindful. burn our investments. to a want return a obviously, be to

I intensifying e-fleet we're focus lot competition some believe have the well. a at going in of too improvement. There's down the to be So low, of market, investment a will lot, the hoping as on dip out, and things lot that a is shake going upper end there we're to but there'll market, of not obviously

big the that constantly. hearing quite is of we noted types at and could and market. is configuration it's solutions into is are with viable spending able the a lot we sources we're But of up as market of appropriate we feel and We're is our position the to on. and haven't, reasons exploit. evolving power and it Lots in changing It be of that so time, coming for an about changing, is are and because in this people focus ever-changing right? ability get innovative to ideal at And interesting, be point, at changing. that the which the that technology electric a the go to appropriate point, or in it equipment time hopefully, good this try what one is of we'll the And our way different, Technology evolving. monitoring comments, market new technology changing

Michael Schmit

or have I'll more your in potentially prices gassy fleets areas. been I Permian moving from for relation other add pretty while. gas low And to into mean, basins a about question

anticipate a don't think fleets left are don't movement lot gassy a there's not are of happen we [indiscernible] So could lot working. that that there basins we because in

this at to anticipate incremental there be there movement. price, we So don't

Stephen Gengaro

then one And more. it. just Got

there me little of be with the down little If the outlook you maybe through in well. could here. like just a EBITDA free a mentioned you talk Also, bit the sounds bit. bit moving a parts as CapEx It a might guess, the tax cash year flow for little number coming coming refund I and

Michael Schmit

receive actually. week did in the came tax we Well, that this refund

-- you as spend But invest so if strong the I we know, cash. money to continue have hopeful the with end I things businesses. We And $XXX slow, million So balance sheet. that's that have not flexibility we And good. to we was that we'll -- the good, obviously, we'll lower we're of definitely and guess, the things our There's there. said are We've range. a in case. in move spend, we point very got if would over mean the in

also we'll to one concerned the and -- our we And plenty of shareholders. cash still the year and of we all cash rest to to so think plan meet our return ability do the needs about currently to find CapEx and have for an not we right generate we're acquisition if our

on CapEx concerns for ensure need a lever pull of to continue generate the comment plans. to we to the that lot that's a we not can So cash we just is do that our --

Ben Palmer

what's some, tremendous appropriate but of think I'll a strategic a of amount down think investments we the if that itself, of kind We them, growth to year maintenance we're business obviously, our you But levels specific targeted and strategic this we different have are were capacity driving That call investments, the we number don't would loss manage capital parts going certainly off. include Our of come will. part in to if manage activity can down one would is naturally plans investments. That's making lot this year. pay of fall.

end "extra to there XXX stuff" has So the that upper incremental. that XXX some is of in

annual It'd not really this rate of closer that's activity. So something the the lower run of our to range. end level be

Operator

Palmer [Operator queue. call questions further Ben the the in turn Instructions]. will to for Seeing no back any I remarks. closing

Ben Palmer

this everybody, and up us for Thank to catching Take thank look joining you, care. again operator, we forward morning, you, and soon.

Operator

This Please replay today's will the available your conclude with call. participation. Thank of note, conference be a for on completion this following our of will marineproducorps.com hours X call you call.

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RPC (RES) 25 Apr 242024 Q1 Earnings call transcript