RPC(US:RES)2021-10-27 17:22Financial Data and Key Metrics Changes - Revenues for Q3 2021 increased to $225.3 million from $116.6 million in Q3 2020, primarily due to higher activity levels and improved pricing [11] - Operating profit for Q3 2021 was $8 million compared to an operating loss of $31.8 million in the same quarter of the prior year [11] - EBITDA for Q3 2021 was $26.5 million, a significant improvement from negative $12.3 million in Q3 2020 [12] - Diluted earnings per share for Q3 2021 were $0.02, compared to a loss of $0.08 per share in the same quarter of the prior year [12] - Cost of revenues was $170.6 million or 75.7% of revenues in Q3 2021, down from 86.5% in Q3 2020 [13] Business Line Data and Key Metrics Changes - Technical Services segment revenues for Q3 2021 were $211.8 million, up from $109.3 million in the same quarter last year, with an operating profit of $8.3 million compared to a $24.9 million operating loss in Q3 2020 [16] - Support Services segment revenues increased to $13.5 million from $7.3 million in the same quarter last year, with an operating loss of $55,000 compared to a $3.8 million loss in Q3 2020 [17] Market Data and Key Metrics Changes - RPC's revenues increased 19.4% sequentially from $188.8 million in the prior quarter to $225.3 million in Q3 2021, driven by activity increases across all service lines [18] - Cost of revenues increased 17% sequentially to $170.6 million from $145.8 million in the prior quarter, with a slight decrease in the cost of revenues as a percentage of revenues from 77.2% to 75.7% [19] Company Strategy and Development Direction - The company is focusing on enhancing its pressure pumping fleet and has added a Tier 4 dual fuel fleet, aiming to optimize fuel burn and minimize emissions [23] - RPC is strategically positioning itself to capitalize on the improving market conditions and is optimistic about the fourth quarter and 2022 despite potential supply chain constraints [27][28] Management's Comments on Operating Environment and Future Outlook - Management noted that exploration and production companies are responding positively to higher commodity prices, leading to increased demand for RPC's services [7] - The company is monitoring challenges such as supply chain issues and cost increases but remains optimistic about its financial strength and competitive position [29] Other Important Information - Capital expenditures for Q3 2021 were $19 million, with an estimated total of approximately $65 million for the full year, focusing on maintenance and growth opportunities [25] - RPC ended Q3 2021 with a cash balance of approximately $81 million and remains debt-free [29] Q&A Session Summary Question: Insights on pressure pumping side and 2022 outlook - Management is seeing improvements in pressure pumping and is in the bidding season, hoping for pricing improvements and strong activity levels in 2022 [31][32] Question: Utilization and pricing trends for Tier 4 DGB fleet - There is a bifurcation in customer preferences for ESG-friendly equipment, and both older and newer equipment will have a market [33] Question: Product line revenue breakdown - Pressure pumping accounted for 42.8% of consolidated revenue, followed by downhole tools at 27.5%, and coiled tubing at 11.9% [34] Question: Plans for additional Tier 4 fleets - The company expects to have 8 active fleets in Q4 but has no current plans for additional orders [37][38] Question: Market dynamics and competitive bidding - There are fewer companies bidding, but idle equipment remains, keeping the competitive nature of pricing intact [41] Question: Leasing arrangement for the new fleet - The balloon payment for the new fleet is approximately $17 million after a year, and the leasing arrangement is not expected to become a trend in the industry [44] Question: Pricing negotiations and contract renewals - Pricing increases are being negotiated for both immediate and upcoming contracts, with expectations for more adjustments in January [49] Question: Incremental margins outlook for 2022 - Management anticipates that incremental margins will improve in 2022 compared to 2021, but cost increases may impact expectations [51] Question: Investment justification for new assets - There is currently no clear vision for returns on new investments, but the company is working on a roadmap to establish targets [52][55] Question: Upgrades to Tier 4 DGB - Upgrades to Tier 4 DGB are being evaluated as part of the company's roadmap, with potential for future investments [60]