RPC(US:RES)2024-04-25 22:53Financial Data and Key Metrics Changes - Revenues decreased by 4% to $378 million, attributed to lower industry activity and competitive pricing concessions [14] - Diluted EPS fell to $0.13 from $0.19 in the previous quarter, with adjusted EBITDA down to $63.1 million from $79.5 million, resulting in a margin decrease of 340 basis points to 16.7% [6][7] - SG&A expenses increased to $40.1 million from $38.1 million, primarily due to total employment costs [6] Business Line Data and Key Metrics Changes - Technical Services revenues, which account for 94% of total revenues, decreased by 4%, driven by a decline in pressure pumping [14] - Support Services revenues fell by 9%, representing 6% of total revenues [14] - The top five service lines accounted for 92% of total revenues, with pressure pumping at 46.6%, downhole tools at 24.8%, coiled tubing at 8.8%, cementing at 7.3%, and rental tools at 4.2% [86] Market Data and Key Metrics Changes - The frac market remains highly competitive, with fleets moving into the Permian from gas plays, adding capacity to an already crowded basin [76] - Oil prices have recently increased, with WTI reaching above $80 a barrel, which may encourage smaller private EMPs to increase activity [13] - The company noted that ongoing operating efficiency gains have created additional pump hour capacity, impacting industry pricing [76] Company Strategy and Development Direction - The company plans to continue investing in fleet upgrades, particularly focusing on Tier 4 dual fuel assets, while maintaining a debt-free balance sheet with a strong cash position of $212 million [4][7] - The company is looking for attractive acquisition opportunities to increase scale and broaden customer relationships, remaining patient in its approach [8] - The management emphasized the importance of maintaining discipline in pricing and asset utilization to avoid burning out equipment [38] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the potential for increased activity from smaller EMPs as M&A activity in the larger EMP space continues [37] - The company is monitoring the market for electric fleets but is currently focusing on dual fuel assets due to evolving technology and demand [33] - Management acknowledged the volatility in the market but remains committed to financial stability and long-term shareholder returns [77] Other Important Information - The company received a $52 million tax refund from the IRS, which will support its financial position [7] - Operating cash flow was $56.6 million, with free cash flow at $3.8 million after capital expenditures of $52.8 million [35] Q&A Session Summary Question: Can you discuss the overall pressure pumping market and competitive landscape? - Management noted that there has been some degradation in pricing compared to a year ago, but they are exercising discipline in bidding and not burning out equipment [38] Question: Are you seeing any growth in the second quarter? - Management indicated that visibility remains limited, but there are signs of modest growth as the market stabilizes [39] Question: Can you provide insights on the pricing situation in frac? - Management stated that the pricing environment is still competitive, and they are hopeful that it may be reaching a bottom [52] Question: What are the expectations for consolidation opportunities in the service space? - Management confirmed that they are actively looking for opportunities but are cautious about seller expectations on valuation [59] Question: How does consolidation among larger players impact the company? - Management believes that consolidation may create opportunities for smaller players to become more active, benefiting the company in the long run [50]