RES - Earnings call transcript Q3 2024

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Operator

Good morning, and thank you for joining us for RPC, Inc.'s Third 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 to Before we of this of issued you today, our some at reflect to found RPC's could which unknown XX-K can I our along all outline statements that www.rpc.net. want release filings website a and the nature on forward-looking remind known public will and be other that press be those risks. refer that in begin, of be with XXXX call Please and made risks, all on

and In measures. referring to today's these of believe of and we'll compare Today's GAAP earnings release to our measures us directly and non-GAAP release comparable over We -- be conference operating website most to call, be consistently contain these liquidity. allow periods. performance measures reconciliations several measures the to non-GAAP non-GAAP various performance press

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

Ben Palmer

joining activity results challenges we thank into morning, limited our to the visibility Thanks, This you heading OFS the oil winter with of reflect Mike, that highly prices. limited market. It near-term increase as exhaustion face for and and current budget competitive call. incentive customers remains quarter amidst the season third reported continuing

as seeking with capacity headwinds to Consistent facing supply be semi-dedicated of and utilization. our with service peers many business lines. spot our to horsepower relatively maintain pumping deployed, than remaining is performance, recent pressure more The other seem ample pressure under our market of motivated pricing has

base, while more revenues our illustrate larger X our pumping other just total contrast, were a diversified indicative were resilient, businesses in the modest of includes posting lines down pressure down X%. sequential Tier were customer decline, aggregate across of this basins. other XX%, more spread Our revenue all more customers To service in which

them than market to calendar and We've assets disciplined rather without space downward remains with opting remained highly there's idle spot white bias frac the adequate competitive, burn returns. a pricing definitely in market. The

we demand see our difference have solid visibility see better our demand assets DGBs, in a customers. do within frac and for dedicated We where Tier X with

commitments have cases, out We of through these for several in XXXX. and, some the quarters end fleets

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

time remain utilized to demand those assets other aggressively fuel ability these fleets as challenged capacity to to the to natural well-supplied On to higher advantage low-priced legacy upgrading committed equipment them not hand, as even priced We of our marketplace. out is already diesel be an calendar. fill like service fleet older if more we equipment our add the costs compensate more fuel. take the gas with Thus, must to want of over for and so pulling

also We the release mentioned consolidation. our E&P of the impact in

you this in can the be As we win beginning know, negative lose quarter, feel some, to a third a impact. But some tangible more scenario. began

meaningful us we incumbent they over the was company's pressure pumping will and frac be that one customer had the informed business. acquired, Specifically, supplier taking acquiring

an backfilling relationship worked continue outstanding replace these to this delivered out hard an was and of customer have and our case make While We've with business being hands. and service, of we to revenues their this pipeline. progress unfortunate excellent it our

demand. were bring to cost catalyst to without near-term These we for mostly these reductions headcount more expected align our near-term and clear a and additional conditions quarter. actions during with and current structure down cost the response In rebound, challenging took

evaluate prudent, felt as we these to actions and overreact slowdowns While and market, will don't further capitalize to ability hurt want turns to in the market our on appropriate. positive were actions we quick we

flat, the top while we with Cementing slightly. their revenue Looking Downhole was were relative and lines, not but Rental encouraged at service on were Tools our non-pressure resilience satisfied Tools down pumping line.

While and not tubular nitrogen services. nice in businesses, large we gains snubbing, saw

about lower we're newly-launched gaining and traction, for demand is this motor pressure, X.X-inch high downhole Our optimistic rate motor.

reliance We a coming on plugs. bridge reduce are innovative to new also solution to market with

Our cost the perforation, proprietary a can that their pods are bridge unique many are each release efficiency this the and forced as pressure plugs of newly-developed with well plug each using substitute of they advantage technology and There ceiling to technology. individual openings into perforation. and benefits

has have been market forward rolling technology its broadly it more we customers. look to recent proven to and we're to beginning to out impressive, quarters. the effectiveness, We this our Response and in coming trials

California perform technology, forward though an had work. quarter. project opportunity abandonment to not a prove the We and in plug completed quarter In emerging discussed to the last we did similar third revenues to the in looking coiled repeat specialized out tubing, Texas in we're that

We year. ramp-up sequential proprietary scaling to this would are next in expect a driving service lumpy, tubing that in a for coiled this customer large be forward looking California decline but and technology

diverse non-pressure aggregate pool. volatility operations. believe a base, player OFS with servicing the and a as these many and help non-pumping less frac mentioned, across significantly these service lines customer service to our diversified service E&P E&Ps and balance lines us in our positioning basins pumping extensive have many As small customer We capabilities ways than large business,

now discuss quarter's will the Mike results. financial

Michael Schmit

lower to results second decreased primarily X% to sequential quarter financial comparisons Shifting activity. driven pumping with the Ben. million, the of quarter $XXX XXXX. pressure by Thanks, Revenues for third

Breaking up Services, pumping. decreased third primarily of revenues, down represents pressure our driven of total our by total and represented were quarter quarter which Services X%, Technical operating X% third Support X% segments. our XX% revenues.

of service Downhole our XX%. X%. And XX.X%. X.X%. tubing, these Cementing, third of was XX% Coiled is tools, Together, rental quarter tools, X.X%. X our accounted lines. for following by The a X revenues revenues. top pumping Pressure total breakdown

We -- of revenues to employment amortization, Cost locations. quarter due other costs small $XXX.X equipment decreased million revenue expenses and maintenance reduced this Cost repair of The revenues decrease, supplies, during reflecting decline. primarily and of from lower costs. levels. lower less also lower point and depreciation or sorry, by than a and revenues, activity and and excluding million closed $XX.X headcount lower location to a operating decreased third pumping stemmed materials of cost lower X% a the and the the

with SG&A expenses slightly our to XXX was million, XX.X%. largely EPS the from functions. cost There margins third sequentially adjustments $XX.X from basis EBITDA million, quarter, second $X.XX were million, down Diluted reflecting points up of the from in figures. in was were support quarter. decreasing $XX.X to no $XX.X million, fixed non-GAAP the $XX.X either EBITDA EPS down $X.XX

$XX.X after in cash within robust. to $XXX million. still trailing to flow challenging. capital at a the told, flow of CapEx million. For and quarter, expense some cash operating $XXX.X flow be benefits, environment, We We as of that timing CapEx guided that the flow despite working is There million, lower year year. while year-to-date cash conditions flow the full average were was a was note XXXX $XXX.X after our year's been free our strong of for CapEx basis, quite was cash operating still $XX.X would million, million. free be flow cash from have million. more tough And X-year $XX.X XXXX cash down All $XXX million this free range finish industry expect CapEx especially On of our And year million. and and free this we cash will was year-to-date flow expect boosted that last $XX still

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

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

Ben Palmer

Mike. you, Thank

strong to and us just reiterate I as financial want wrap investments generation potential cash allocation strategic and afford equipment acquisitions. upgrades our specifically business. things opportunity investments, we Historically, up, the the So long-term on capital to discipline potential make and views in

and the in to service of financial we impacted companies returns. along and the good in are business, generating primarily We growing a rebalancing more track non-pressure at start service our We path, of and diverse by our fleet Spinnaker and a there frac on we and time. be swings M&A solid deliver new to time look and loans. supporting returns attractive our products look portfolio services more building customer market in high-quality rebalancing forward ultimately forward for ample and and to to record introductions oilfield our that investments base a and pumping over focused are consistent targets marketplace the will driven broad believe organic aggressively are for opportunities and and looking integrating Beyond set results less over investors. a frac potential that by the was acquiring think transactions execute across future

deliver high stability all to also employees an that on our of I'll in our and want our service volatile long-term focus with often close thank consistent tirelessly and discipline a who worked to remains by customers. of financial returns. I shareholder market, to value levels reiterating

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

Operator

from with of line [Operator Instructions] Don question And comes your the Crist Johnson Rice. first

Donald Crist

to I California can and opportunity can about advances specifically what what in next color Ben, reports making heard you that. pretty technology. provide know wanted the around that? Any kind I've revolutionary some kind of didn't of year? forward downhole it's expand field going of could you're provide that on kind that ask if And in you into

Ben Palmer

shifts. plug some where California coiled have been some wells opportunity been with work, is that the abandonment seismic there's by with Don, tubing and impacted

tool some takes that with -- of So steerable technology advantage of working our tubing. coiled our

those much talked a lot about way we've and used believe effective up create these an we The that's in how very and pods We straightforward that is that's on to with out deliver we're pods improvement more do actually and again technology, on we The downhole. customers a plugs. that number of have in encouraged for going sure with customers comfortable particular at briefly. quite market, are opportunity come are today to Oklahoma. that. test benefits going frac about to that big There's a a the it. are believe We've that I'm made just be successfully going to and technology it's downhole that past pretty with Newcastle, they bridge have other facility to tool And number nice. a our We you're if aware, it's of and displace a recently

Donald Crist

of M&A know the Okay. And X last a small operators to how is on the from is have months I if long there know going? for so. didn't time that the spread bid/ask there's front, and X out the around narrowing versus mom-and-pop appreciate pressure that. spread been that or Because lot a I bid/ask

Ben Palmer

the that about in past. talked It's relative. We've all Yes.

or everybody I fact settling that a realize in valuations, recognize companies public do higher at. or privates for I people is just pay others and than and the think can't see multiple private that substantially can to higher trading at think they're looking

and sample a can't with gotten far have could know, we've quantify honestly, has I narrowed. bit. say spreads that to -- that at what compressed large think that that don't is quite I able the say be I really definitively on enough I along might looked to enough they're but So targets a be. it that narrowing,

Donald Crist

I color. some let appreciate that ask back questions and in hop I'll queue. somebody

Operator

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

John Daniel

all questions along follow Don's to if going I'm that's right.

On what's take the is to cash? what willingness And acquisition sellers use what's stock? -- potential to your willingness opportunities, of the the

Ben Palmer

either of Discussion range lucky parties. go that balance years, a way. a people enough stock look sheet. stock of a things and is -- cash strong is over believe right, the experienced that to both has It seller time, our to I decent over number think at have with and balance a us. just it works We're typically, nice We that there's gives sellers be things flexibility us a something to valuable to

So let we prudent to go not much at that of be tend low and too price. a too try

We be varies. oftentimes there are or sellers private stock cash It a other varies. more fit. just it but are can the natural for where preference, So opportunities

both So we have of those.

John Daniel

has don't on I perspective? volatility and frac -- a stable the back, seasonality what's that you but year for CapEx XX willing little or a completion any marketed regular and in you know the ago. from But everything to say, then of for else. the Because say? fleet normal like be because bit stuff. you'd obviously market And to you The could ask I'll color side on guys just or have think X, a XX Is fleets there of QX stays that year anyways. answer, size I implications optimal U.S. a business, Okay. all A if right?

Ben Palmer

than and lower many stable, XX, It marketed now. to know, where say remains Yes. that be now. obviously we is how where it being We're and all that. It's being -- are to as and or XX you are define going that's and trying

be of sort mix, lower. more it's to anything the to then and right? to I portfolio, than know as less never trying trying the to about, going what's you to continue prudent to we and to you're just If the it's But hard We're corner. we've happen our think frac market, give all, around be committed a rebalance and talked be guide. going It's

now. do probably there's we industry. to efficiencies upgrade volatility, a of lower because us. that's going help actually, we our ask nice are the of for question fleet, next guess know of year it's continued net-net, going just plans. upgrade lower lower with but it's us, think better -- discipline our committed to at right? process over can trying overall, up the I a that And prudently But would we're think was than that for probably end to in continue I We're to the but if long-term everybody. planning But And it could be time. remain, we It'd looking be and, through are course, the lower. the our overall If I number place,

So we're a question. question. good contemplating It's still that

John Daniel

Okay. speak are trying opportunities acquisitions, to of general investments? have of Or out is of firms to of I back else? in? this, that and if more the you to you something Or get say by got it you in all finally lot their to are The PE distressed where step these can above? you alluded Or one terms those characterized but I I a And Would -- opportunities. going may. more know

Ben Palmer

I say would yes, of a a combination. just through combination. kind the thinking combination, backlog, A

John Daniel

is theme I clear a not I'm what So guess saying.

Ben Palmer

right. Right,

Operator

comes line Gengaro question next Stifel. the from with Your of Stephen

Stephen Gengaro

And apologize things last kind and So the little of of small bring around over I and I missed kind something is oil years, last side, kind bit X seen lack I'll a maybe the I it we've for up of XX, on over the but the from the me, M&A stay interest this. service But if clearly of of in buying XX-plus the larger was because investors versus kind some balance about the players. very and smaller businesses of of in one of consolidation, a of success you some those how little more you I'm sure or couple critical of commoditized, businesses. think differentiated a a But when being could driver kind of about in making that but maybe businesses consolidation unique key create creating thinking you buy be about do mass that's or way. something maybe of reason sort the

Ben Palmer

a... And about you're talking

Stephen Gengaro

guess create by or kind businesses I I'm you And up asking, you how what think of that? And not? do value rolling of more about kind commoditized can some

Ben Palmer

be do first or try That businesses, want to to choice wouldn't our to be very it'd service whether Clearly, not. that. good find "commoditized" a we

think I positioned, for I that, think, think I good would And that's think to key to we're somewhat we're that that's sort more I of be of our focus. -- purchaser. be in the particular market, as us, this alluding and uniquely

parties are they home. consideration that John's the know they to earlier check and next that they boxes about where and find And receive the out into, think culture exit we the come I on lot of a for environment looking their and we companies are about that they -- think there care there care and they land. about they question, some I care those

leverage get just correctly, That's your are as but your if course, that to to -- some of well. bigger try want do. scale we and done very I scale to we answer some know that bigger. do and can something question, investment generate I is want investment that cost -- don't we operational positioned to get to address question. understand scale, scale So to think And important.

will what a our we're has what We'll But discussed for And see transactions So of that's time. pursue. trying strategy. that change really, long to services a see. that. we'll pick Consolidation hasn't happens. there perhaps, oilfield that's been But up to those been and We're a trying yet. bit, lot for

Stephen Gengaro

so you Great. kind -- your are know but of on how thinking 'XX And of do side. I back mentioned view is pricing -- heard dynamic? kind about Are about if the helpful. you just the your frac you question enough, That's think then we've of don't how other kind evolves kind of what's competitors earlier year? of far. some from you next But how mix of pricing the

Ben Palmer

significant do As to we spend and pricing today, now a or sit to it things into improve here right going we're not go amount. expecting

to take prudent trying ourselves trying we're So position advantage but do be well. things to if as to improve,

We've reduced going -- like be that, in feels same. like it's do marketed discipline. reducing idled If that just things it to of and We've others headcount. more help that. some there's the fleets some Hopefully, assets. would our So fleet

'XX. in on The market better certainly help, improvement bit, might in So that we're not like the not pricing any maybe be we're gas but about counting it. discussion to that possibility. could of counting sort improvement There's the on help a natural

Operator

Your the Crist next with question Johnson Instructions] comes of from [Operator Don line Rice.

Donald Crist

if that another another to wanted decision of upgrade X entail? kind And point take DGB long were to Ben, fleet, Tier you kind fleet? what you of would add that would if how going

Ben Palmer

to X or -- And all a hand us, variety Tier We're looking commitment a There's probably the next variety different lot a Chances for at we're another X at in full that's but in still component we're are of at technologies. firm Don, things. technologies a directly things. would manufacturers We're available. about are to but of OEMs. talking a looking be of fleet things. smaller that fleet some alternative looking it's so some of variety place. some of of We're get talking to the probably months

little but have think we a I of a time. just so And bit months out, few

Donald Crist

you do would like of Or or something a do contract it to require spot the would And market? that? more in kind X-year you

Ben Palmer

We for equipment, place fleet the and our type we long-term and just -- order require to of and would I point, fleet, are we this at replace that the not because of contract. that to be that. evolution when yes, a where things we need an in mean our would maintain like

and we to certainly probably would wouldn't we anything at -- at to pursue certainly a a that. Certainly, this in would something decision. contract. we like time, -- certainly, contract talking would least would point be team, we try nice So that the But support that X-year multi-month require

Operator

no over turn to will this Palmer further Ben back Mr. at closing now the are time. questions conference I There for remarks.

Ben Palmer

thank We for in. you right. Well, of rest All the care. listening you, everybody, a hope have it, appreciate and day. good Take

Operator

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

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RPC (RES) 24 Oct 242024 Q3 Earnings call transcript