RES - Earnings call transcript Q2 2024

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Operator

Good morning, and thank you for joining us for RPC, Inc.'s Second Quarter 2024 Conference Call. Today's call will be hosted by Ben Palmer, President and CEO; and Mike Schmidt, Chief Financial Officer. At this time all participants are in listen-only mode.

Following the presentation, we will conduct a question and answers session. [Operator Instructions] I'd like to advise everyone that this conference is being recorded. the to turn now will call Mr. over I Schmit.

Michael Schmit

you, and morning. good Thank

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

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

Ben Palmer

for and want understand sometimes our of customer is diversity and for we thank pressure service resilient we base. underscore reflected our morning, the of barometer that second-quarter Thanks, the of pressure we largest the to used reported pumping Mike, challenged. line This call. health that joining across as remains Though service business, results our lines, results pumping many our our while performance and you operations

sequentially. the solidly down overall areas only sequential pumping non-pressure sales out our growing in in with performed balancing lines, growth Due EBITDA modestly our service Our the quarter, results. many to were

but in certainly efficiencies we'll environment. continue a and encouraged results, by are We cost push to and growth these further with difficult profit not on we're controls, satisfied

activity declined been frac semi-dedicated remains general XX% X%, pressure pricing Our the The competitive. in lines other and spot aggregate, solid. total is market highly And stabilizing, market has up in our and X%. down while service pumping revenues with

space white sometimes levels below utilization short notice. is operating arising on calendar, in Our with ideal the

remain to With our rather redeploy and price Tier utilized to lower been we frac continue respect disciplined in assets have strong business. drive from utilization, economically fleets with semi-dedicated crews demand our DGB customers. to attempting While our approach assets, unattractive certain quickly X at highly than chase points to idle

have X As anticipated, we fleet new X deployed Tier a us total. DGB bringing in to

efficiency we Our best among that these in crews customers delivering industry, on-site with our rates believe and our are the substitution and gas assets. the are pleased are performance with

count. pumping our continue the we intention challenging efficiency ahead could continue smaller basins. to outlook, take gassy it fleet summarize keep less the adding frac these some supply, coupled may time feel to competitive in well-capitalized out players the gains crews with our force ongoing the Our is we demand. pressure believe pump reduce capacity previously operating that in that fashion. Permian upgrading were continue Ultimately, supply to To the frac in of hour of of Permian to conditions in but to fleet market, This without impact

not our of in soft maintain our growth our second-largest the initial motor, back equipment. have best this Pivoting range growth, quarters the a pressures high-quality forward plug we year look unit and to health costs, laterals. Tubing, solid be control diligently and that pressure network with quarter The next past next high momentum. in Thru remains and the well in abandonment near in are new directional XX%. additional of near traction count revenues. and and of drop, with We're We lines testing leader which our build especially with This non-pressure line high, coming count longer giving invest On to of and product picking million term in serve off quarter, rollout service these actions continue the and in evaluating rig demand of lines, we the while hopes service drill-outs putting in sheet we interest been navigate and efficiency grew us also top-line we quarterly and to downhole over and line, were working performance. success, service approach. disciplined pleased to tools our demand in coming in magnetic pumping is proprietary a this the service X% term drilling is very and larger improved In this lower M&R the flexibility area. specialized our rig us this some Customer with with to potentially plug ranging. up product an is up in should delivering downhole to performance large saw are we side, of we'll diversity financial is operating stabilizing environment, year. We increasingly recently until innovation and efficiencies, early a balance can optimistic nicely the $XXX continued positive using affected

have work E&P in and execution technology In results. our regions the this customers regulatory a with for an and created doing next positive timing While processes other other business we on to administrative tasks likely this been in similar P&A meantime, with large are work expand opportunity California obstacles, has year.

Each rental customer and improvement total the quarter's even strength customers, the the delivered that will portfolio quarter. margin X and performed highlighted service our sequentially solid we showed landscape tools key activities X%. Lastly, marked about in now discuss our lines The rental cementing quarters with takeaway of consolidation. financial results. and cementing non-pumping services quarter, during also both the of X% up Mike these by is tools well our the in demonstrating of diversity up of

Michael Schmit

Ben. Thanks,

function represented X% other XXXX pressure Support Technical XX.X%, pumping. up X The our Services, of key in for sequentially sequential no quarter, our EBITDA in of $XX.X EPS. service lines employment represented of first to amortization quarter either. to a $XX.X tools, million by to driven from with a for second-quarter were $XXX of comparisons coiled activity breakdown decline. revenue service decreased lower X% of million, follows: due there are This expenses measures top XX.X%. X.X%; activity lower costs, rental were the million lines. quarter. items than XX.X%; unusual were decrease, primarily sand. and XXX down $XX.X lower the lower revenues. operating and or our by lines our as driven XX% lower in as Breaking were segments, XX% these up results of non-GAAP decreased million, tubing, from million, $X.XX second total first were revenues, a is X% of services and was quarter. from the fuel XX.X%; which second-quarter to our during Pressure no adjustments There point including $XXX.X the customers, total to of higher X.X%. Cost from SG&A $XX.X downhole our of by decreased quarter incentive following quarter essentially second supplies, material as revenues pumping revenues. excluding basis X the down was The cost pass-throughs service top which margins pumping to total X% points revenues our EBITDA were increasing EPS for up and these X% revenues Second second quarter stemmed X%, was our are to cementing all primarily Diluted decrease made adjustments $XX.X million, also pressure up Again, and was such tools, costs, a revenues $X.XX Together, accounted depreciation our compensation. million. to the

X quarter, the CapEx million. CapEx second was $XX $XXX.X spend quarter For note that we final fleet. DGB of new operating our and and million, million, cash cash accepted had of a free the flow as We made flow delivery was payments $XX.X after large Tier

and year-to-date full-year CapEx was expected $XXX million $XXX million range of Our to million remains $XXX CapEx unchanged. our

strong cash quarter million sheet, including During the We of paid a $X.X dividends. position million quarter, balance we a $XXX.X maintained end. at in

received $XX last the tax As we related early quarter, shares. past in million refund to we a call, on tax mentioned second our

result resulted quarterly true-ups our These expect for turn it now than we tax a effective rate some tax refund, accruals. related with one-time which tax adjustments We XX.X% conjunction usual lower normal be the this a As will rate. for over quarter, trued of closing Ben in the tax our to up rate this I not to our do is back future in quarters. in remarks. low

Ben Palmer

Thank you, Great. Mike.

capital want just share wrap to on the views in and our we business. things potential allocation investments up, as So I

Tier or certain upgrades investments customers. of respect electric preference likely the evolve. say acquisitions. X from in equipment our investment cash and patient DGB make us And our For strong have fleets be heard will for We've fleet continue most future had frac has the customer us to ample generation starters, areas that and we technology you and significant with in as the will to given preferences to liquidity to deploy fleets capital flexibility and our dual before potential strategic invest X of business. given fuel likely and to discipline growing

can are our time, to confident of compete be fleets, we that electric assets we and some competitors successfully. already over acquire While will and offering that capabilities we are able similar

cementing. coil of including our such wireline, non-pressure tools, pumping The businesses tubing, service M&A, in investment as other area is and lines, potential downhole

which pleased our brought very other have to and increasingly purchase of are our out seeking operations. ago, scale new been Spinnaker customers integration regions cementing a year With We complete, we and with opportunities.

us another that the meaningful ourselves buyers a Our challenging opportunities allow for present investment and as such make attractive market might to in patient to out business. prove thesis

time, happy customers. address who deliver discipline value joining usual, long-term to in our shareholder And I'll morning. and questions. are an high of and I a any all our that financial to our service by employees us want at returns. with close for also Thanks we market, focus consistent stability As levels this thank to tirelessly on this often-volatile worked reiterating remains to

Operator

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

Stephen Gengaro

things So for me. a of couple

M&A not this market, your key first buying kind you're M&A parameters stock, of think what think how for that sure for the and versus but are is-- the to own ask just products of U.S. considering I financial exactly, you and/or either when you're the I'm even kind about when example? in looking

Ben Palmer

company. lines an think little have reasonable want from that and already Service that cash capitalized well perspective. over for are acquisitions already also some certainly, that from a identifying than a in that years, perspective getting free we're more they for in people accretive which companies that seem And creates areas, valuations We're that fundamentals. and could in looking Well, our that there nice valuation cash and we attractive are we're flow and earnings flow few, to are in. time of had are become previous opportunities talked think part been us a be we've like of to attracting we

come in think aspect, help transaction is M&A good a another could us of a company become key I and part that course, of along and forward. people can our move that with come the

other, balance. and see the really-- but it it's going balance. It's it's we're necessarily an you looking to at there So looking are expect-- to But versus that didn't We'll happen. one for looking be appropriate say be not we're And appealing. are whether successful. for they we'll a patient again, we're that continue some quite was,

Stephen Gengaro

that's similar Yet has seen the apologize I I pressure pricing missed consolidated you and better, periods customer this like think and in of pumping of of more about of you release from the about, there's to markets the a discussion? competitiveness when think the dynamics, mentioned to little about business it prior X-X And one, just where I competitiveness. to the you I low, the mean asking the press call, something gotten going in years. or feels current in market over but have talked bit downdraft us activity the you pressure be kind activity the I'm on What And and business is a gating if of it. so kind last conversation different pumping other

Ben Palmer

conversations and additional we added customer have right the putting being any even on combination And market, very and It's where basins looking a for different fiercely their equipment. markets competitive. is peers, out There and price. but be gassy operations right It's in are that there, that's peers oily people moving quality incrementally larger quotes our large in basins bringing more many compete, and the from into or services question. business or I reasonable for the capacity. of peers to we for don't of which competing fleetly that larger smaller frac know bids capacity

is at some capacity fleet more least again, don't is be it to of intention this so challenging. disciplined. with just board, short our in said, coming capacity try creating not to the We But to net-to-net, we've add market, We As market. on [indiscernible] the like it it capacity term, to be the in very to busy. work makes more

as have opportunities, we've have we we players that smaller than offered very and price. lost bidding at. work But I peers had to competitive to some that So had what in some willing believe we're are prices indicated, even on are always both lower come

us we'll appropriate market. as successfully and to to do continue to continue make as adjustments business to that So to well how compete to we segment be position disciplined, the the of figure to in can, try out

Stephen Gengaro

of When the think the bit tough. going one completion for is in drilling think clearly, of surprised by And and And been your some restart has need I activity the When in M&A things thought. we to to next oil if final a they been activity momentum like bit is what maybe you into get little or at that is that. think us market? U.S. than customers this get one year, and least me, do XXXX, about that part weaker one then we've see know you about we that a

Ben Palmer

terms well, basin are to-- guess, diversity. of speak I in we respect gassy with we let basins, Well, happy to, me that have the

gas So benefit from even pick market more if to the that. directly we'll up, were

to to They're remain gas and just to always, continuing fair their and at. of market. They've believe one they've respect a oil, look that's like want that service they that thing way So prices make at disciplined. oil about a can of they money guess, got providers. they right, got choice certainly I the are With production, looking

I more on can press short we're ever to additional can adding press all they're So even efficient mean be without be us in and and the a become to more term, that obviously, capacity pricing that to thing. continuing But equipment. learning us good create efficient.

begin So completion will to come if enough not I there's think production certainly, down. activity,

as activity. oil oil demand to that necessarily as and up remains And to expect if but is translate course, So pick do know with the activity in difficult. sufficiently well into E&Ps, things I you prices new point, begin out, of would should not do directly some predicting balance prices high, higher at discipline I the that more

balance decrease we'll got And and in they've difficult guess of I So timing industry-wide at some the other that, and or to supply the demand to that or activity, with to or see additional is increase one both pick up. of spurs course, activity But have it. they're predict. point, of watching

Operator

line Energy comes question Daniel John next of from Partners. Daniel Your the of

John Daniel

And the at just to rebuild to activity. ceased competitors look component given couple sheet their to the things on not DGB Tier a lot parts lot you When this it of and it price cetera, does talk given of market, the the be I could OEMs them stock balance like attractive and Just engines around at engines, for a your at of I'm your me are stocking where up. the an there's sounds make et a have ability sort up market curious, you reinvesting morning. X softness? in sense of opportunistic, some get like fabricators, as mean, we like fleets. least

Ben Palmer

supply is an proactive disruptions. that have there Yes, question. actually Good back chain opportunity. been when were We

and fabrication an than from engines, build And up that. pricing the margin, say trying have. so, on I But the frac otherwise we we those. had market opportunity thing that But unfortunately, same on more an on playing And certainly, down don't we're take the coming to But help incrementally engines would opportunity. wouldn't is advantage is significantly. we hearing it there fabricators. us. of We're to should see certainly, right,

John Daniel

answer the if are, on tuck-in you M&A. And that to you any just half? opportunities willing then elaborate look answer, second in touched you the could briefly to Just do transformative? desires And do if see extent or as the can't what you you would opportunities at you I'm them see great. opportunities, curious as actionable more be that, you're

Ben Palmer

Well, we've are It both. some looking open the even some transaction. I to both. constantly time on close been been closed that to we're there I Spinnaker. looking year last at. over takes a since mean We've mean, we

that. that open are don't a to expecting there's it, but are there we're I count We So mean, that's could this both. don't certainly And few we transformational, to year. hopeful we at. right? looking know. that that We're least certainly emphasize one on tuck-ins versus be at actionable But hard

John Daniel

I bit of of think like It Would priority? way? wrong a a does more sound is to that be it this

Ben Palmer

always timing sheet. think I mean, I think but may priority, our with balance are I be we an The priority, a company timing. just Well, the attractive right.

people we call in do some think Certainly, balance a sheet that transaction our do have along, of don't-- available part it, good that, if transformational can with to naturally not-- I there's there We doesn't are present situation. balance us sheet. because We that come an to down of another, clean leverage right, the were problematic to opportunity execute. right? funding

merger to-- be be well either positioned to way. think would I a able good we partner

Operator

line the from comes of question next Susquehanna. Minervino Chuck of Your

Charles Minervino

provide there's I should of technical margin on XQ of? being stable But here the I kind levels thoughts there see kind and the if aware second know curious a fairly wondering just a pretty of pretty some similar decline of kind and we anything you or services be was XQ if to flattish. of just XQ. your it there, in if you that outlook quarter in could had XQ

Michael Schmit

looking typically be given haven't significantly guidance, QX think Yes. I mean mean we but we're to different. I not is-- at it I

of a done our in we've to all mentioned, of pressure have pumping, do well and well. really service had lines bit other little we continue but disappointment As

So little see we the term, I Obviously, shift. any near a anyway, hoping similar. think right seeing is now pumping bit, returns but we're significant in don't very we're what looks pressure it

Charles Minervino

do in growth also count. put margin Support third quarter of segment, good expansion the the second kind despite then for that quarter? remainder of know kind of long that really the to weaker you quarter there can you us kind level that but you into tough in the context or rig there. that and kind pumping think the the non-pressure I line, you outgrow And you could are a Services count? Can of level just over a And rig Is thoughts business of kind still your that's kind year? of feel margin in do hold like kind of of just haul, second curious what for the

Ben Palmer

during is any relatively It's steady activity more into This steady outperformance, well-positioned. don't would a significant business. but the quarter more see it's did Yes. that of there, things couple of as Ben, thing there happened particular sort see I continued Chuck. good a We but translate directly We have well.

Operator

further no Ben the closing to turn session. With at will now for Q&A Palmer remarks. Mr. this the Instructions] conference questions I time, concludes [Operator this over

Ben Palmer

you everybody acquisition informed Thank call I much, in. listening I and appreciate operator. I announced very was this morning right. large a to All was I time got this slot. moved think understand there the that or

listen catching and a good of up those forward to you and you call day. called rest So in the we ask hope some with questions. to you and We of morning look the appreciate have it appreciate who this to

Operator

conference of of available A call will replay be completion call. following the on the call. This hours within concludes X this rpc.net today's conference

You disconnect. may now

RPC (RES) 25 Jul 242024 Q2 Earnings call transcript