RPC(US:RES)2020-10-28 20:14Financial Data and Key Metrics Changes - RPC's Q3 2020 revenues decreased to $116.6 million from $293.2 million in Q3 2019, reflecting a decline due to lower activity levels and pricing [12] - Operating loss for Q3 2020 was $31.8 million compared to an adjusted operating loss of $21 million in Q3 2019 [13] - EBITDA for Q3 2020 was negative $12.3 million compared to adjusted EBITDA of $22.8 million in the same period of the prior year [13] - Adjusted loss per share was $0.09 in Q3 2020, compared to $0.08 in Q3 2019 [14] - Cost of revenues was $100.9 million, or 86.5% of revenues, compared to $225.2 million, or 76.8% of revenues in Q3 2019 [14][15] - Selling, general, and administrative expenses decreased to $32.4 million from $42.6 million in Q3 2019 [16] - Depreciation and amortization decreased to $18.7 million from $44.7 million in Q3 2019 [17] Business Line Data and Key Metrics Changes - Technical Services segment revenues decreased by 60.2% compared to Q3 2019, with an operating loss of $24.9 million compared to $18.2 million in the prior year [18] - Support Services segment revenues decreased by 61% compared to Q3 2019, with an operating loss of $3.8 million compared to an operating profit of $1.6 million in the prior year [19] - Technical Services segment revenues increased by 35.7% sequentially to $109.3 million in Q3 2020 [23] - Support Services segment revenues decreased by 16.6% sequentially to $7.3 million in Q3 2020 [24] Market Data and Key Metrics Changes - RPC's cash balance at the end of Q3 2020 was $145.6 million, and the company remains debt-free [30] - RPC operated as many as five horizontal pressure pumping fleets during Q3 2020, with pressure pumping capacity at approximately 728,000 hydraulic horsepower [24] Company Strategy and Development Direction - The company aims to achieve free cash flow positivity in 2021 and will focus on expense management and limiting capital investments until demand for services grows substantially [29][30] - RPC is upgrading equipment to dual fuel capability and implementing initiatives to reduce non-productive time and increase fuel efficiency [52][53] - The company is cautious about speculative investments due to insufficient pricing and financial returns in the current oilfield services market [54] Management's Comments on Operating Environment and Future Outlook - Management noted that while there has been an uptick in activity, it is insufficient to generate sustainable financial returns [28] - The company is not counting on a strong recovery in 2021 and is in a wait-and-see mode regarding future investments and hiring [88] - Management expressed hope for gradual improvement in activity levels but emphasized the need for industry-wide pricing discipline [44][88] Other Important Information - Capital expenditures for Q3 2020 were $13.7 million, with full-year estimates between $60 million to $70 million primarily for maintenance and upgrades [25] - The company is exploring opportunities for consolidation in non-pressure pumping product lines but has no immediate plans [91] Q&A Session Summary Question: How has consolidation in the industry affected RPC's strategy? - Management acknowledged that consolidation presents headwinds but has not significantly changed their strategic priorities [35] Question: Has pricing for services stabilized? - Management believes pricing has bottomed and is not expected to decline further, but competition remains high [42][141] Question: What is the outlook for Thru Tubing Solutions? - Management indicated that Thru Tubing Solutions has been affected by lower activity in Oklahoma but expects improvements as rig counts rise [111] Question: How does RPC plan to balance cash preservation with necessary investments? - Management stated that while they have the cash to invest, they will remain selective and focus on financial returns [54] Question: What are the expectations for free cash flow in 2021? - Management aims to be free cash flow positive in 2021, contingent on a sustained improvement in activity levels [102]