RPC(US:RES)2020-05-10 17:11Financial Data and Key Metrics Changes - For Q1 2020, RPC reported revenues of $243.8 million, a decrease from $334.7 million in the prior year, reflecting lower activity levels and pricing [14] - Adjusted operating loss for Q1 was $13.2 million, compared to an operating loss of $2.2 million in the same period last year [14] - Adjusted EBITDA for Q1 was $25.8 million, down from $40.8 million in the prior year [15] - The adjusted loss per share was $0.04, compared to no earnings per share in the prior year [15] - Cost of revenues was $181.9 million, or 74.6% of revenues, compared to $252.4 million, or 75.4% of revenues in Q1 2019 [15][16] Business Line Data and Key Metrics Changes - Technical Services segment revenues decreased by 27.5% compared to the prior year, with an operating loss of $12.2 million, up from a loss of $4.5 million in the prior year [18] - Support Services segment revenues decreased by 21.9% compared to the prior year, with operating profit of $1.5 million, down from $3.1 million in the prior year [19] - Sequentially, RPC's revenues increased by 3.3% from $236 million in the prior quarter to $243.8 million in Q1 2020 [19] Market Data and Key Metrics Changes - The domestic rig count began to decline rapidly by the end of Q1 2020, with significant capital expenditure reductions announced by oilfield operators for the remainder of 2020 [12] - The company operated up to 10 pressure pumping fleets during Q1, with a total hydraulic horsepower of approximately 728,000 at the end of the quarter [24] Company Strategy and Development Direction - RPC aims to maintain capital discipline and optimize return on invested capital while limiting financial risk [28] - The company has reduced salaries and wages by an annualized $60 million through layoffs and furloughs, focusing on maintaining operational efficiency [25] - RPC plans to continue taking necessary steps to endure the downturn and emerge as a survivor in the industry [29] Management's Comments on Operating Environment and Future Outlook - Management expressed that oilfield activity is expected to continue declining at a historically high rate due to both increased oil production and decreased demand [27] - The company maintains a debt-free balance sheet and ended the quarter with $82.6 million in cash, indicating a strong liquidity position [29] Other Important Information - RPC recorded impairment and other charges of $205.5 million, primarily non-cash, related to the fair value of several service lines [13] - Capital expenditures for Q1 were $25 million, with an estimated total of $50 million for 2020, approximately 40% lower than previously announced [24] Q&A Session Summary Question: Efficiency Gains in the Industry - Management indicated that further efficiency gains may be limited due to the necessity of high utilization for effective processes and equipment [36] Question: Working Capital in Q1 - Working capital contributed about $30 million during the quarter, aided by a large tax refund from the CARES Act [40] Question: Active Crew Count and Future Trends - The company operated 10 fleets during Q1, with current staffing limited to those fleets actively working [46] Question: Revenue Breakdown by Business - Pressure pumping comprised 39.7% of revenues, Thru Tubing Solutions 34.5%, coiled tubing 6.7%, rental tools 4.3%, and nitrogen 4.1% [53] Question: Cost Management and EBITDA Breakeven - Management is focused on reducing SG&A costs and adjusting operations based on activity levels, with a goal to manage towards EBITDA breakeven [57][59] Question: CapEx Guidance - The $50 million CapEx guidance could be conservative, with maintenance capital expenditures for pressure pumping fleets estimated to be within the $10 million range [75] Question: M&A Opportunities - While M&A is always considered, the current focus is on restructuring the existing business rather than pursuing acquisitions [86]