Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to fin ...

Core Viewpoint - The article emphasizes the importance of value investing and highlights RPC (RES) as a strong value stock based on its financial metrics and Zacks Rank [1][2][7]. Company Analysis - RPC (RES) currently holds a Zacks Rank of 2 (Buy) and has a Value grade of A, indicating strong potential for value investors [4]. - The Forward P/E ratio for RES is 10.97, which is lower than the industry average of 11.94. Over the past 12 months, RES's Forward P/E has fluctuated between 6.43 and 20.62, with a median of 10.97 [4]. - The P/B ratio for RES is 1.01, which is attractive compared to the industry's average P/B of 1.78. The P/B ratio has ranged from 0.88 to 1.52 over the past year, with a median of 1.24 [5]. - RES has a P/CF ratio of 4.99, which is also lower than the industry average of 6.37. This ratio has varied between 4.33 and 6.73 in the last 52 weeks, with a median of 5.48 [6]. - The financial metrics suggest that RPC is likely undervalued, making it stand out as one of the strongest value stocks in the market [7].

Group 1 - RPC shows a noticeable improvement in earnings outlook, making it an attractive investment pick [1] - Analysts are optimistic about RPC's earnings prospects, reflected in the upward trend of estimate revisions [2][3] - The Zacks Rank system indicates RPC has a Zacks Rank 2 (Buy), suggesting strong potential for outperformance [8] Group 2 - Current-quarter earnings estimate is $0.09 per share, a 40% decrease from the previous year, but has seen a 12.5% increase in the last 30 days [6] - For the full year, the earnings estimate is $0.38 per share, an 11.63% decrease from last year, yet the trend remains positive with no negative revisions [7] - RPC's stock has gained 16.2% over the past four weeks, driven by solid estimate revisions and positive earnings growth prospects [9]

Core Insights - The Zacks Rank system emphasizes earnings estimates and revisions to identify winning stocks, while also considering trends in value, growth, and momentum for strong stock picks [1][2] Company Analysis - RPC (RES) is highlighted as a stock to monitor, currently holding a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [3] - RES has a Price-to-Book (P/B) ratio of 1, which is favorable compared to the industry average of 1.74. The P/B ratio for RES has fluctuated between 0.86 and 1.67 over the past year, with a median of 1.26 [4] - The Price-to-Cash Flow (P/CF) ratio for RES stands at 4.77, which is attractive relative to the industry average of 5.90. The P/CF ratio has ranged from 4.13 to 6.73 in the past year, with a median of 5.50 [5] - Overall, the metrics suggest that RES is likely undervalued, and when considering its earnings outlook, it appears to be an impressive value stock at this time [6]

Core Insights - RPC Inc. reported first-quarter 2025 adjusted earnings of 6 cents per share, missing the Zacks Consensus Estimate of 7 cents, and down from 13 cents in the previous year [1] - Total quarterly revenues were $332.9 million, a decrease from $377.8 million year-over-year, but exceeded the Zacks Consensus Estimate of $332 million [1] Financial Performance - The weak quarterly earnings were attributed to flat pressure pumping revenues and a slight decline in performance across other service lines [2] - Total operating profit for the quarter was $12.4 million, down from $32.3 million in the year-ago quarter [4] - Operating profit in the Technical Services segment was $14 million, significantly lower than $31.9 million in the previous year [3] - Operating profit in the Support Services segment was $2.7 million, down from $3.6 million year-over-year [3] Market Conditions - The average domestic rig count was 588, reflecting a 5.6% decrease year-over-year [4] - The average oil price in the quarter was $71.93 per barrel, down 7.1% from the previous year [4] - The average price of natural gas was $4.14 per thousand cubic feet, up 92.6% compared to the same period in 2024 [4] Costs & Expenses - Cost of revenues decreased to $243.9 million from $250.2 million in the prior-year period [5] - Selling, general and administrative expenses rose to $42.5 million, compared to $41.2 million in the year-ago quarter [5] Financial Position - RPC's total capital expenditure was $32.3 million [6] - As of March 31, the company had cash and cash equivalents of $326.7 million and maintained a debt-free balance sheet [6]

Financial Performance - Total revenues for Q1 2025 were $332.9 million, a decrease of $45.0 million or 11.9% compared to Q1 2024[105] - Net income for Q1 2025 was $12.0 million, or $0.06 diluted earnings per share, down from $27.5 million, or $0.13 diluted earnings per share in Q1 2024[106] - EBITDA for Q1 2025 was $48.9 million, with an EBITDA margin of 14.7%, compared to $63.1 million and 16.7% in Q1 2024[129] - Cash provided by operating activities decreased to $39.9 million in Q1 2025 from $56.6 million in Q1 2024[130] - Cost of revenues decreased by 11.8% to $243.9 million in Q1 2025, in line with the decrease in revenues[121] - Selling, general and administrative expenses increased to $42.5 million in Q1 2025, primarily due to ERP system implementation costs[122] Cash Flow and Capital Expenditures - Free cash flow increased to $7.6 million in Q1 2025, up from $3.8 million in Q1 2024, primarily due to lower capital expenditures[130] - Cash used for investing activities decreased by $21.6 million to $27.4 million for the three months ended March 31, 2025, primarily due to a reduction in capital expenditures from $52.8 million in 2024 to $32.3 million in 2025[140] - Cash used for financing activities decreased by $7.0 million to $11.7 million for the three months ended March 31, 2025, mainly due to fewer repurchases of common shares[141] - The company expects capital expenditures, including recently acquired Pintail, to be between $165 million and $215 million in 2025, with $32.3 million already spent as of March 31, 2025[149] Revenue Segments and Market Conditions - The Technical Services segment revenues decreased by 12.5% in Q1 2025, primarily due to lower pressure pumping revenues[117] - The average price of natural gas increased by 70.4% in Q1 2025 compared to the same period in the prior year[116] - International revenues represented 2.4% of total revenues in Q1 2025, slightly down from 2.6% in Q1 2024[115] - The company believes that international revenues will continue to be less than 10% of consolidated revenues in the foreseeable future[175] - The company projects that long-term demand for oil and natural gas should drive increased activity in most operating basins[174] - The company acknowledges that the recent decline in oil prices could lead customers to delay completion activities[172] Future Outlook and Strategic Plans - The company is currently evaluating future investments and options to upgrade equipment across the business[149] - The company continues to monitor the supply and demand for its services, with a focus on increasing customer preferences for lower emission and more efficient equipment[160] - The company expects to continue paying cash dividends to common stockholders, subject to industry conditions and financial performance[175] - The company has ongoing sales and use tax audits that could result in unfavorable outcomes, but the exposure has been recorded to the extent it is estimable[150] - The company filed a shelf registration statement on April 23, 2025, allowing for the offering of securities up to $300 million, subject to market conditions[148] Liquidity and Financial Health - The company anticipates that the liquidity provided by existing cash and cash equivalents will be sufficient to meet requirements for at least the next twelve months[175] - The company has a $100.0 million revolving credit facility with $83.9 million available as of March 31, 2025, and no outstanding borrowings[144] - The company is subject to interest rate risk exposure through borrowings, but as of March 31, 2025, there were no outstanding interest-bearing advances on its credit facility[176] Dividends and Shareholder Returns - A regular quarterly cash dividend of $0.04 per share was declared, payable on June 10, 2025, to common stockholders of record on May 9, 2025[154]

RPC, Inc. (NYSE:RES) Q1 2025 Earnings Conference Call April 24, 2025 9:00 AM ET Company Participants Ben Palmer - President and CEO Michael Schmit - Chief Financial Officer Conference Call Participants Stephen Gengaro - Stifel Don Crist - Johnson Rice John Daniel - Daniel Energy Partners Operator Good morning, and thank you for joining us for RPC, Inc. First Quarter twenty twenty five Earnings Conference Call. Today's call will be hosted by Ben Palmer, President and CEO and Mike Schmidt, Chief Financial Off ...

Financial Data and Key Metrics Changes - Revenues decreased by 1% to $333 million in the first quarter compared to the previous quarter [17] - EBITDA increased to $48.9 million from $46.1 million, with EBITDA margin rising by 100 basis points to 14.7% [21] - Diluted EPS remained flat at $0.06 [21] - Operating cash flow was $39.9 million, with free cash flow of $7.6 million after capital expenditures of $32.3 million [21] Business Line Data and Key Metrics Changes - Pressure pumping revenues accounted for 40.1% of total revenues, while downhole tools represented 28.2%, coiled tubing 9.6%, cementing 8.3%, and rental tools 4.6% [17] - Pressure pumping revenues were flat sequentially, while other service lines collectively declined by 1% [6][17] - Rental tools saw a notable gain of approximately 7% [10] Market Data and Key Metrics Changes - The company noted challenges in demand and utilization for Tier two diesel equipment, with a highly competitive pricing environment in the spot and semi-dedicated frac market [7] - The acquisition of Pentel is expected to increase the company's concentration in the Permian Basin to approximately 60% of total revenues [15] Company Strategy and Development Direction - The company aims to bolster less capital-intensive service lines through organic investments and acquisitions to drive growth and reduce volatility [10] - The strategic rationale for the Pentel acquisition includes improving margins, increasing operational scale, and focusing on high cash flow-generating service lines [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about macro uncertainties driven by tariffs and their potential impact on inflation and equipment prices [25] - The company remains confident in its strong balance sheet and liquidity to navigate volatility and capitalize on opportunities [27] Other Important Information - The company has filed an S-3 registration statement with the SEC regarding the Rollins family control group shares, which is viewed as good corporate housekeeping [24] - The management team remains focused on maintaining operational stability and long-term shareholder returns [28] Q&A Session Summary Question: What are the current pricing conversations in the pressure pumping market? - Management indicated that while discussions are similar to prior periods, the current circumstances may impact these discussions due to lower oil prices and customer responses [35][37] Question: What are the capital allocation priorities following the Pentel acquisition? - The focus is on accretive transactions, exposure to larger customers, and service lines with good free cash flow potential [38][39] Question: What is the expected revenue for the Pentel business? - Pentel generated approximately $400 million in revenue in 2024, with each quarter around $100 million [40] Question: Are there shifts in customer activity towards lower CapEx projects? - Management noted it is early to determine any significant shifts but acknowledged that such trends have occurred in prior cycles [45] Question: What is the visibility on job timelines for fracking? - Visibility varies by customer type, with semi-dedicated customers providing several months of visibility, while spot market customers offer much less [46][48] Question: Is the company considering selling any assets? - Management stated they monitor equipment closely and prefer to reallocate assets rather than sell them, ensuring they do not re-enter the competitive market [55][57] Question: What would trigger an acceleration in capital expenditures? - Capital expenditures will be based on market conditions and the need to maintain equipment, with potential for increased spending if accretive opportunities arise [58][60] Question: Is the company focused on consolidating the Permian market or open to other basins? - Management is open to opportunities in various basins, not just the Permian, and is exploring potential acquisitions in natural gas basins as well [62][63]

Financial Data and Key Metrics Changes - Revenues decreased by 1% to $333 million in the first quarter compared to the fourth quarter of 2024 [18] - EBITDA increased to $48.9 million from $46.1 million, with EBITDA margin rising by 100 basis points to 14.7% [22] - Diluted EPS remained flat at $0.06 [22] - Operating cash flow was $39.9 million, with free cash flow of $7.6 million after capital expenditures of $32.3 million [22] Business Line Data and Key Metrics Changes - Pressure pumping revenues accounted for 40.1% of total revenues, while downhole tools represented 28.2%, coiled tubing 9.6%, cementing 8.3%, and rental tools 4.6% [19] - Pressure pumping revenues were flat sequentially, while other service lines collectively declined by 1% [6][18] - Rental tools saw a notable gain of approximately 7% [11] Market Data and Key Metrics Changes - The company noted challenges in demand and utilization for Tier two diesel equipment, with a highly competitive pricing environment in the spot and semi-dedicated frac market [7] - The acquisition of Pentel is expected to increase the company's concentration in the Permian Basin to approximately 60% of total revenues [16] Company Strategy and Development Direction - The company aims to bolster less capital-intensive service lines through organic investments and acquisitions to drive growth and reduce volatility [11] - The strategic rationale for the Pentel acquisition includes improving margins, optimizing assets, and increasing operational scale through M&A [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about macro uncertainties driven by tariffs, which could impact equipment prices and overall industry capital spending [27] - Despite the challenges, the company maintains a strong balance sheet and ample liquidity to navigate volatility and pursue opportunities [28] Other Important Information - The company has filed an S-3 registration statement with the SEC for the Rollins family control group shares, which is viewed as good corporate housekeeping [25] - Steve Lewis has been elected to the Board of Directors, while Gary Rollins and Pam Rollins have retired [29] Q&A Session Summary Question: What are the current pricing conversations in the pressure pumping market? - Management noted that while each cycle is different, customers are responding to lower oil prices, leading to discussions that are somewhat similar to prior periods of market softness [37][38] Question: What are the capital allocation priorities following the Pentel acquisition? - The focus is on accretive transactions, exposure to larger customers, and service lines with good free cash flow potential [39][40] Question: What is the expected revenue contribution from the Pentel business? - Pentel generated approximately $400 million in revenue in 2024, with quarterly revenues around $100 million [41] Question: Are there shifts in customer activity towards lower CapEx projects? - Management indicated it is too early to determine any significant shifts but acknowledged that such trends have occurred in prior cycles [46] Question: What is the visibility on job timelines for fracking? - Visibility varies by customer type, with semi-dedicated customers providing several months of visibility, while spot market customers offer much less [48] Question: Is there an uptick in gas-directed activity? - Management believes any increase in gas-directed activity is likely further down the road, although there are some early signs [51] Question: What are the company's thoughts on older equipment being sold by competitors? - The company has seen opportunities but prefers not to invest in used equipment, focusing instead on reallocating assets within its service lines [58] Question: What would trigger an acceleration in capital expenditures? - Capital expenditures will be based on market conditions and the need to maintain equipment, with potential for increased spending if accretive opportunities arise [60][62] Question: Is the company focused on consolidating the Permian market or open to other basins? - Management is open to opportunities in other basins, not solely focused on the Permian, and is exploring various potential acquisitions [64][65]

Group 1: Earnings Performance - RPC reported quarterly earnings of $0.06 per share, missing the Zacks Consensus Estimate of $0.07 per share, and down from $0.13 per share a year ago, representing an earnings surprise of -14.29% [1] - The company posted revenues of $332.88 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.23%, but down from year-ago revenues of $377.83 million [2] - Over the last four quarters, RPC has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2] Group 2: Stock Performance and Outlook - RPC shares have lost about 17% since the beginning of the year, compared to the S&P 500's decline of -8.6% [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimate for the coming quarter at $0.08 on revenues of $345.3 million, and $0.31 on revenues of $1.37 billion for the current fiscal year [7] - The estimate revisions trend for RPC is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Group 3: Industry Context - The Oil and Gas - Field Services industry, to which RPC belongs, is currently in the bottom 40% of the Zacks industry rankings, which can materially impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that tracking these revisions is important for investors [5]