RPC(US:RES)2021-01-27 20:52Financial Data and Key Metrics Changes - For Q4 2020, revenues decreased to $148.6 million from $236 million in Q4 2019, attributed to lower activity levels and pricing [11] - Adjusted loss for Q4 was $11.3 million compared to an adjusted operating loss of $17.3 million in the same quarter last year [12] - Adjusted EBITDA for Q4 was $7.8 million, down from $23.2 million in Q4 2019 [12] - Cost of revenues was $117.9 million, representing 79.3% of revenues, compared to 75% in Q4 2019 [13] - Selling, general and administrative expenses decreased to $26 million from $36.8 million in the prior year [14] - Depreciation and amortization decreased to $18 million from $40.3 million in Q4 2019 [15] Business Line Data and Key Metrics Changes - Technical Services segment revenues decreased by 36.5% compared to the same quarter last year, with an operating loss of $11.3 million [16] - Support Services segment revenues decreased by 43.6% year-over-year, resulting in an operating loss of $2.6 million compared to a profit of $1.2 million in Q4 2019 [17] - Sequentially, Technical Services revenues increased by 27.2% to $139 million due to increased activity levels [22] - Support Services revenues increased by 32.1% to $9.7 million sequentially [23] Market Data and Key Metrics Changes - RPC operated 5 horizontal pressure pumping fleets in Q4 2020, maintaining the same number as in Q3 but with improved utilization [24] - The cash balance at the end of Q4 was $84.5 million, and the company remains debt-free [28] Company Strategy and Development Direction - The company aims to maintain capital discipline and will not increase equipment fleets until there is clarity on economic returns [26] - Operating plans for 2021 include low capital spending and continued expense management [27] - The company is focused on maintaining a strong cash balance while managing working capital growth [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving business conditions due to COVID vaccine distribution and a potential upcycle in the industry [9][10] - There is greater visibility into near-term activity levels, with expectations for continued improvement in 2021 [26] - Management noted that while they expect activity levels to improve, they remain cautious about pricing increases in the industry [35][36] Other Important Information - The company recorded impairment and other charges of $10.3 million during the quarter, including a non-cash pension settlement loss [20] - Capital expenditures for Q4 2020 were $12.8 million, with an estimated $55 million for 2021 focused on maintenance and selected growth opportunities [24] Q&A Session Summary Question: Insights on working capital build and expectations for 2021 - Management explained that the working capital build was influenced by the sale of the sand mine facility, which generated tax benefits and increased cash receivables [32][33] Question: Growth expectations and pricing improvements - Management indicated that growth will come from various customers, including public and private E&Ps, with some anecdotal evidence of pricing improvements [35][36] Question: Segment revenue breakdown and incremental margin performance - Management provided segment revenue percentages and indicated that typical incremental EBITDA margin improvements range from 20% to 40% in a normal revenue environment [43][44] Question: First quarter expectations and activity growth - Management expects Q1 to show high single-digit revenue growth, with continued improvement anticipated [50][51] Question: Capital discipline and fleet reactivation - Management emphasized that additional fleets will not be reactivated until there is sufficient work that contributes positively to financial results [65][66] Question: Input costs and pricing power - Management acknowledged rising input costs and indicated that they are historically good at passing these costs onto customers [80][81] Question: Maintenance CapEx and fleet age - Management stated that maintenance CapEx is currently low due to newer equipment and efficient operations, but it may increase with activity levels [109][112]