Q2 2025 RPC Inc Earnings Call
Operator: Thank you for joining us for RPC Inc.'s second quarter 2025 earnings conference call.
Operator: Today's call will be hosted by Ben Palmer, President and CEO, and Mike Schmit, Chief Financial Officer. At this time, all participants are in a listen-only mode.
Good morning, and thank you for joining us for RPC inc's. Second quarter 2025 earnings conference call.
Today's call will be hosted by Ben Palmer, president and CEO and Mike Schmidt Chief Financial Officer.
Operator: Following the presentation, we will conduct a question and answer session. Instructions will be provided at the time for you to queue up for questions.
Operator: I would like to advise everyone that this conference call is being recorded.
At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session, instructions will be provided at the time for you to queue up for questions.
Michael Schmit: I will now turn the call over to Mr. Schmit. Thank you and good morning. Before we begin, I want to remind you that some of the statements that will be made on this call could be forward looking in nature and reflect a number of known and unknown risks. Please refer to our press release issued today, along with our 2024 10-K and other public filings that outline those risks. all of which can be found on RPC's website at www.rpc.net.
Speaker Change: I would like to advise everyone that this conference call is being recorded. I will now turn the call over to Mr. Schmidt.
Schmidt: Thank you and good morning.
Speaker Change: Before we begin, I want to remind you that some of the statements that will be made on this. Call could be forward-looking in nature and reflect the number of known and unknown risks.
Speaker Change: Please refer to our press release issued today along with our 2024, 10K and other public filings that outline those risks.
Michael Schmit: In today's earnings release and conference call, we'll be referring to several non-GAAP measures of operating performance and liquidity. We believe these non-gap measures allow us to compare performance consistently over various periods. Our press release and our website contain reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.
Speaker Change: All of which can be found on rpc's website at www.rpc.net.
Speaker Change: In today's earnings release and conference call will be referring to several non-gaap measures of operating performance and liquidity.
Speaker Change: We believe these non-gaap measures allow us to compare performance consistently over various periods.
Ben Palmer: I'll now turn the call over to our President and CEO, Ben Palmer. Thanks, Mike, and thank you for joining our call this morning. Today we will talk about our second quarter results, which incorporate a full quarter of the recent Pentel acquisition. In addition, we will share our views about the impacts we are seeing from increasing macro and geopolitical uncertainty. prevalent during the course of his life. Second quarter results reflect a sequential improvement due to the full quarter impact of our Pentel acquisition, while many of our legacy service lines saw modest revenue increases. Pressure pumping continued to experience a challenging Pressure pumping was negatively impacted by lower industry activity overall, overall, but also by weather, third party nonproductive time and customer calendar delay.
Speaker Change: Our press release and our website contain, reconciliations of these non-gaap measures to the most directly comparable, gaap measures.
Speaker Change: I'll now turn the call over to our president and CEO. Ben Palmer.
Ben Palmer: Mike and uh, thank you for joining our call this morning.
Ben Palmer: Today we will talk about our second quarter results which incorporate a full quarter of the recent Pentel acquisition in addition, we will share our views about the impacts. We are seeing from increasing macro and geopolitical uncertainties which were prevalent during the quarter.
Ben Palmer: Second, quarter results, reflect the sequential Improvement due to full quarter impact of our Pentel acquisition. While many of our Legacy service lines. Saw modest Revenue increases pressure, pump can continue to experience a challenging environment.
Ben Palmer: Pressure pumping was negatively impacted by lower industry activity over overall, but also by weather.
Ben Palmer: We saw more than a 200% increase in third-party non-productive. That's just the most pronounced. This combined with customer delays result in not resulted in operational Pressure pumping is now primarily deployed with dedicated customers. This customer shift has increased our mix of simul-frac and twin-frac operations, which generally requires additional equipment and less cut supply of material. The market overall remains very competitive, and we are cautious regarding the second half of the year, given the reduction in rig activity over the last several weeks. 2025 plans include the testing of 100% natural gas pressure pumping units as part of our strategy to evaluate alternative technology.
Ben Palmer: Third party non-productive time and customer calendar delays.
Ben Palmer: We saw more than a 200% increase in third-party non-productive time, which was most pronounced in June.
Ben Palmer: This combined with customer delays result in not resulted in operational, inefficiencies.
Ben Palmer: Pressure pumping is now primarily deployed with dedicated customers.
Ben Palmer: This customer shifts, his increase our mix of simal, Frac and twin Frac operations, which generally requires additional equipment and less Cuts, Splat materials.
Ben Palmer: The market overall remains very competitive and we are cautious regarding the second half of the Year, given the reduction in rig activity over the last several weeks.
Ben Palmer: That first unit is expected to be deployed in the third. Non-pressure pumping service lines represented 74% of total revenues during the second quarter. Revenues without the contribution of Pentel were up seven. We saw revenue growth in downhole tools, oil tubing, rental tools, and our tubular circuits. Downhole Tools revenues were up 6%. saw particular strength in our northeast and Rocky Mountain regions, which is a testament to ThruTubing Solutions' broad geographic exposure. Receiving solutions, a 10 motor and unplugged products continue to gain early traction in the market. We believe the new a 10 motor has resulted in incremental share gains to our already robust market position.
Ben Palmer: Our 2025 plans include the testing of 100% natural gas pressure, pumping units as part of our strategies to evaluate alternative Technologies. Our first unit is expected to be deployed in the third quarter.
Ben Palmer: Non-pressure pumping service lines represented 74% of total revenues during the second quarter.
Ben Palmer: Revenues, without the contribution of Pentel were up 7%.
Ben Palmer: We saw Revenue growth and downhole tools oil, tubing rental tools, and our tubular services.
Ben Palmer: Downhole tools revenues were up. 6% sequentially.
Ben Palmer: We saw a particular strength in our Northeast and rocky mountain regions, which is a testament to through tubing solutions, broad Geographic exposure.
Ben Palmer: A10 motor is gaining a lot of traction and has been utilized by more than 50 customers today. The product really demonstrates its value on longer laterals and wells that need higher flow rates. Turning to our unplugged technology we have we had multiple demonstrations during the quarter with customer use expanding. We are still very much in the early adopter and testing phase of this product's life cycle, but we are pleased with its performance and feedback we've received thus far. Recall this product reduces the need for bridge plugs and drill out time in a well and achieves highly effective stage isolation.
Ben Palmer: Gains through our already robust Market position.
Ben Palmer: The A10 motor is gaining a lot of traction that has been utilized by more than 50 customers today.
Ben Palmer: The product really demonstrates its value on longer laterals. Wells that need higher flow rates.
Ben Palmer: according to our unplugged technology, we have we had multiple demonstrations during the quarter with customer use expanding
Ben Palmer: We are still very much in the early adopter and testing phase of this products like cycle. But we are pleased with this performance and feedback we've received thus far
Ben Palmer: Coal tubing was up 12% sequentially, and in late June we took delivery of the largest coal tubing unit in the U.S., which began promptly working in July. Two and seven eighths unit is uniquely suited for large pad customers who drill long lateral We've just had multiple customers expressing a strong Over the last couple of years, we've made investments in cut pressure control that provide additional opportunities for coil tubing and snubbing in late 2025 and into 2026. has been able to partner with other RPC service lines Many revenues were roughly flat sequentially, and we saw rental tool revenues increase 17% versus the prior quarter.
Speaker Change: Recall. This product reduces the need for Brits plugs and drill out time in a well and achieves, highly effective stage isolation
Ben Palmer: Was up, 12%, sequentially. And in late June, we took delivery of the largest quilting unit in the US which began promptly working in July
Ben Palmer: Students, 78 unit is uniquely suited for large pad. Customers who drove long laterals and has had multiple customers expressing a strong interest.
Ben Palmer: Over the last couple of years we've made investments in Cut pressure control that provide additional opportunities for Coil Tubing and snubbing in late 2025 and into 2026.
Ben Palmer: Got pressure control has been able to partner with other RPC service lines with new applicate, new applications to generate additional Revenue.
Ben Palmer: started the prior quarter, partly due to weather impacts. Wireline, including our much smaller legacy business, increased substantially quarter over quarter due to the Pentel acquisition. Fintel is the largest wireline provider in the Permian Basin. operational leader with a well-regarded management team and a blue chip customer. acquisition further diversifies our portfolio, increases our scale through M&A. improves our cash flow profile and strengthens our customers. Our portfolio of various services and products with strong brands and operational leadership has provided resiliency throughout. Intel revenues contributed approximately $99 million in the second quarter, or 23% of total revenue. Given Pentel's share position, we expect revenues to trend with the overall market.
Ben Palmer: Many revenues were roughly flat sequentially and we saw rental tool revenues increased 17% versus the prior quarterly. I'm sorry the prior quarter partly due to weather impacts.
Ben Palmer: Last quarter.
Ben Palmer: for our line, including our much smaller Legacy business, increased substantially quarter over quarter due to the Pentel acquisition
Speaker Change: Intel is the largest wireless provider in the Parian basin.
Speaker Change: Operational leader with a well, regarded management team and a blue chip customer base.
Speaker Change: Acquisition further, diversifies our portfolio increases our scale through m&a.
Speaker Change: Approves our cash flow profile and strengthens our customer mix.
Speaker Change: Our portfolio various services and products with strong Brands and operational leadership has provided resiliency throughout the years.
Speaker Change: Intel revenues contributed approximately 99 million in the second quarter or 23% of total revenues.
Ben Palmer: have historically experienced limited seasonality due to its focus on dedicated 24-7 customers. In our SEC filings following the transaction, additional financial data was provided. The wireline market, too, remains challenging, with pricing pressure intensifying during the quarter, as smaller competitors with less consistent work attempted to increase their utilization. We saw relatively consistent gun usage during the quarter, however competitive pricing leads us to expect slightly lower EBITDA margins than previously communicated, but still strong operating capital. From a strategic standpoint, we believe bolstering these less capital-intensive service lines with organic investments and selective acquisitions will help drive growth, improve our customer mix and reduce volatility in our financial We believe our balance sheet provides us optionality, including executing selective activities.
Speaker Change: Given to given Pentel share position, we expect revenues to Trend with the overall Market.
Speaker Change: Historically experienced limited seasonality due to its focus on dedicated 247 customers.
Speaker Change: In our SEC filings following the transaction. Additional financial data was provided
Speaker Change: The W line Market to remains challenging with pricing pressure, intensifying during the quarter as smaller competitors, and less consistent work. With lesser consistent work attempted to increase their utilization.
Speaker Change: We saw relatively consistent gun useage during the quarter. However, competitive pricing leads us to expect slightly lower eidon, margins than previously communicated, but still strong operating cash flow.
Speaker Change: From a street from a strategic standpoint. We believe bolstering these less Capital intensive service lines with Organic Investments and selective Acquisitions will help Drive.
Speaker Change: Growth improve our customer, mix and reduce volatility in our financial results.
Ben Palmer: Beneker and Pentel were well positioned as these companies participated in markets we had familiarity with. provided us a leading brand and leadership to significant. significantly scale up in the respective services. While relatively small, we also have been able to deploy cash to purchase assets in the existing service lines to enhance and expand our offer.
Speaker Change: We believe our balance sheet provides this optionality including executing selective acquisitions.
Speaker Change: venner and pentail where
Speaker Change: positions that these as these companies participate in markets, we had familiarity with
Speaker Change: But provided us a leading brand and Leadership to significant significantly scale up in the respective service lines.
Michael Schmit: With that, Mike will now discuss the quarter's financial results as well as some notes on the content. Thanks Ben. Our second quarter financial results with sequential comparisons to the first quarter of 2025 are as follows. Revenues increased 26% to $421 million. excluding pintail revenues, revenues were down 3%. Breaking down our operating segments, technical services, which represented 94% of our total second quarter revenues, was up 27%. Support services, which represented 6% of our total second quarter revenues, was up 14%.
Speaker Change: While relatively small, we also have been able to deploy cash to purchase assets and existing service lines to enhance and expand our offerings.
Speaker Change: With that Mike will now discuss the quarter Financial results as well as some notes on the Pentel transaction.
Mike Schmidt: Thanks Ben.
Mike Schmidt: Our second quarter Financial results was sequential comparisons. The first quarter of 2025 are as follows.
Mike Schmidt: Revenues increased 26% to 421 million.
Mike Schmidt: Excluding pintail revenues revenues were down, 3%.
Mike Schmidt: Breaking down our operating segments. Technical Services which represented 94% of our total second quarter revenues.
Mike Schmidt: Was up, 27%.
Michael Schmit: The following is a breakdown of the second quarter revenues for our largest service line. Pressure pumping was 25.9%. Wireline was 24.7%. Downhole tools was 23.7 percent. Coiled tubing was 8.5 percent. Cementing was 6.6%, and rental tools was 4.3%. Together, these service lines accounted for 94% of our total revenue. Cost of revenues, excluding depreciation and amortization, was $318 million, compared to $245 million in the previous quarter. This increase was primarily due to the addition of Pintail, as our cost of revenues excluding Pintail declined 3% sequentially. The lower cost of revenues from our legacy businesses was primarily attributable to lower materials and supplies, which saw declines in pressure pumping due to lower activity and job exchanges during the quarter.
Mike Schmidt: Support Services, which represented 6% of our total second quarter revenues was up 14%.
Mike Schmidt: The following is a breakdown of the second quarter revenues for our largest service lines.
Mike Schmidt: Pressure pumping was 25.9%.
Mike Schmidt: Wider line was 24.7%.
Mike Schmidt: %.
Mike Schmidt: Coil Tubing was 8.5%.
Mike Schmidt: Cementing with 6.6%.
Mike Schmidt: And Rental Tools was 4.3%.
Mike Schmidt: Together these service lines. Accounted for 94% of our total revenues.
Mike Schmidt: Cost of revenues excluding depreciation and amortization was 318 million compared to 245 million in the previous quarter.
Mike Schmidt: This increase was primarily due to the addition of pintail. As our cost of Revenue, is excluding pintail declined, 3%, sequentially.
Michael Schmit: We also saw modest declines in employment related costs. SG&A expenses were $40.8 million down from $42.5 million. As a percentage of revenue, these expenses decreased 310 basis points to 9.7%, reflecting minimal additional SG&A from the Pintail acquisition. leveraging our SG&A costs over higher revenues. as well as the capitalization of some costs associated with our IT system upgrades and ERP implementation.
Mike Schmidt: The lower cost of revenues from our Legacy businesses was primarily attributable to lower materials and supplies which saw declines in pressure pumping due to lower activity and job mix changes during the quarter.
Mike Schmidt: We also saw modest declines in employment related costs.
Mike Schmidt: Sgna expenses were 40.8% 42.5 million.
Mike Schmidt: As a percentage of Revenue, these expenses decreased 310 basis points to 9.7%, reflecting minimal additional sgna.
Mike Schmidt: From the pin tail acquisition.
Mike Schmidt: Leveraging, our sgna costs over higher revenues.
Michael Schmit: Our second quarter's effective tax rate was 41.3%, which was significantly higher than our previous quarter's effective tax rate. The effective tax rate was unusually high this quarter, primarily due to the acquisition-related employment costs associated with the Pentail Act. which contributed to lower pre-tax net income. and which, sorry, lower pre-tax income and which are largely non-deductible for tax. tax purpose. We expect our effective tax rate to be negatively impacted through the life of the acquisition related employment costs due to their accounting treatment, which differs from their tax treatment. We expect our full year 2025 effective tax rate percentage to be in the mid 30s.
Mike Schmidt: As well as the capitalization of some costs associated with our, it system upgrades and Erp implementation.
Mike Schmidt: Our second quarters effective, tax rate was 41.3%, which was significantly higher than our previous quarters effective tax rate.
Mike Schmidt: The effective tax rate was unusually high this quarter primarily due to the acquisition related employment costs associated with the pintail acquisition.
Mike Schmidt: Which contributed to lower pre-tax? Net income.
Mike Schmidt: And which sorry lower pre-tax income and which are largely non-deductible for taxes.
Mike Schmidt: Tax purposes.
Mike Schmidt: We expect our effective tax rate to be negatively impacted through the life of the acquisition related employment costs due to their accounting treatment, which differs from their tax treatment.
Michael Schmit: Adjusted diluted EPS was eight cents in the quarter. Adjustments totaling three cents were entirely related to the acquisitions related employment. adjusted EBITDA with $65.6 million up from $48.9 million with the margin increasing 90 basis points sequentially to 15.6 percent. Operating cash flow was $92.9 million, and after CapEx of $75.3 million, free cash flow was $17.6 million. free cash flow year to date reflected negative a negative working capital impact related to a large customer prepayment received in the fourth quarter of 2024. At quarter end, we had $162 million in cash, a $50 million seller financed, no payable, and nothing outstanding on our $100 million revolving credit facility.
Mike Schmidt: we expect our full year, 2025 effective tax rate percentage to be in the mid-30s
Mike Schmidt: Adjusted diluted EPS was 8 cents in the quarter.
Mike Schmidt: Adjustments totaling 3, cents were entirely related to the Acquisitions related employment costs.
Mike Schmidt: Adjusted ibido was 65.6 Million.
Mike Schmidt: Up from 48.9 million with the margin. Increasing 90 basis points, sequentially to 15.6%,
Mike Schmidt: Operating cash flow was 92.9 million and after capex of 75.3 million. Free cash flow was 17.6 million.
Mike Schmidt: 3 cash, flow year to date.
Mike Schmidt: Reflected negative, a negative working capital impact related to a large customer prepayment received in the fourth quarter of 2024.
Michael Schmit: During the quarter, we paid $8.8 million in dividends. 2025 capital spending is expected to be between $165 and $215 million, inclusive of pentail for nine months.
Mike Schmidt: At quarter end, we had 162 million in cash, a $50 million, seller finance note payable and nothing outstanding on our hundred million dollars revolving credit facility.
Mike Schmidt: During the quarter. We paid 8.8 million in dividends.
Michael Schmit: Mostly related to maintenance and opportunistic asset purchases as well as our IT system upgrades and the ERP implementation I'll now give a few comments on our recent acquisition of Pintail Completion.
Mike Schmidt: 2025, Capital spending, is expected to be between 165 and 215 million inclusive, a pintail for 9 months.
Mike Schmidt: Mostly related to maintenance and opportunistic asset purchases as well as our it system upgrades and the Erp implementation.
Michael Schmit: As previously stated, we expect the acquisition to be accretive in 2025. The acquisitions related employment costs are non-cash for the quarter and are expected to continue at a similar quarterly amount over three years. Our second quarter results reflect the additional shares issued in conjunction with the transaction. These results also reflect lower interest income from the lower cash balance and higher interest expense due to the seller note when comparing results to last year.
Mike Schmidt: I'll now give a few comments on our recent acquisition of pintail completions.
Mike Schmidt: As previously stated we expect the acquisition to be accretive in 2025.
Mike Schmidt: The acquisition related employment costs are non-cash for the quarter and are expected to continue at a similar quarterly amount over 3 years.
Mike Schmidt: Our second quarter results, reflect the additional shares issued in conjunction with the transaction.
Mike Schmidt: These results also reflect lower interest income from the lower cash, balance and higher interest expense due to the seller note, when comparing results to last year
Michael Schmit: The preliminary purchase price allocation details can be found in our second quarter 10Q.
Mike Schmidt: The preliminary purchase price, allocation details can be found in our second quarter, 10 Q.
Michael Schmit: Going forward, we will not be providing specific guidance on Pentail.
Ben Palmer: I'll now turn it back over to Ben for some closing remarks. Certainly around the economy, tariffs and commodity markets have created a challenging operating environment. have begun seeing tariff impacts and are taking steps to either mitigate or factor these cost increases into action. Lastly, the current oil prices are likely to stimulate significant activity increases in the near term within the overall. RPC is no stranger to business cycles in uncertain demand environments. We will continue to manage our business by focusing on prudent capital investment.
Mike Schmidt: Going forward, we will not be providing specific guidance on pintails.
Mike Schmidt: Uh, thank you, Mike.
Mike Schmidt: Uncertainty around the economy.
Mike Schmidt: Tariffs and commodity markets, have created a challenging operating environment.
Mike Schmidt: We've begun seeing tariff impacts for the taking steps to either mitigate or factor these cost increases into our pricing.
Mike Schmidt: Lastly the current oil prices are unlikely to stimulate significant activity increases in the near term within the overall industry.
Ben Palmer: Capital Allocation Decision. Our mix of service lines, customers, and basin exposures provide beneficial diversity.
Mike Schmidt: RPC is no stranger to business cycles and uncertain demand environments. We will continue to manage our business by focusing on prudent, Capital Investments and capital allocation decisions.
Mike Schmidt: Control costs and utilize our balance sheet and liquidity to take advantage of opportunities as they arise.
Ben Palmer: I want to thank all our employees who work tirelessly to deliver high levels of service and value to our community.
Mike Schmidt: Our mix of service lines customers and facing exposures provide beneficial diversification.
Operator: for joining us this morning and at this time we'd be happy to address any questions. If you would like to ask a question... please press star 1 on your telephone keypad. We will pause for a moment to compile the Q&A raw.
Mike Schmidt: I want to thank all our employees who work tirelessly to deliver high levels of service and value to our customers.
Mike Schmidt: Thank you for joining us this morning. And at this time, we'd be happy to address any questions you might have.
Mike Schmidt: If you would like to ask a question,
Mike Schmidt: Please press star 1 on your telephone keypad.
Mike Schmidt: We will pause for a moment to compile the Q&A roster.
John Daniel: And your first question comes from John Daniel with Daniel Energy Partners. Please go ahead. Hey guys, thanks for having me. Ben, you still have an enviable cash position and balance sheet.
Speaker Change: And your first question comes from John, Daniel with Daniel Energy Partners, please go ahead.
John Daniel: Hey guys, thanks for having me. Um, Ben, you still have a
Ben Palmer: And I'm just curious if you could elaborate a bit on the go forward acquisition strategy and to help frame what I'm looking for is really your preference for consolidation opportunities to drive more scale in a particular service or region, or whether you think the best opportunity is to try to expand into other services and or other geographic marks. That's part one. I'll let you touch on that. Okay, thank you, John. Um, yes, that's still our strategy, you know, over time, obviously, with, you know, in the last couple quarters with some of the volatility and uncertainty around future activity levels, you know, it makes a...
John Daniel: an enviable cash, position and balance sheet, and I'm just curious. If you could elaborate a bit on the go forward, acquisition strategy and
John Daniel: To help frame. What I'm looking for is, is really your preference for
John Daniel: consolidation opportunities to drive more scale in a particular service or region or whether you think the best opportunity is to try to expand into
John Daniel: Other services and or other Geographic markets? That's part 1, I'll let you touch on that.
John Daniel: Okay. Thank you John. Um, yes, uh, that's still our strategy. Uh, you know over time obviously with uh you know, the last couple of quarters with
Ben Palmer: The evaluation of current oil field, domestic oil field opportunities is a little bit more difficult to analyze and price and that kind of thing, but we're certainly looking. I think scale for us and some of our existing service lines is certainly a possibility, but we're going to be, in the current environment, we'll be selective and we'll be, again, mindful of the difficulty in trying to determine. appropriate valuations. But with respect to, you know, I think, as historically we've done, we're much more, you know, opportunistic. There are, you know, certainly on the lookout on some of our existing opportunities around some of our existing service lines.
John Daniel: some of the the volatility and uncertainty around future activity levels. You know, it makes uh
John Daniel: You know, the evaluation of current, you know, oil field, domestic oil field opportunities, a little bit more difficult to, you know, analyze and and price and uh, that kind of thing. But, uh, but we're certainly looking, uh,
John Daniel: You know, I I think, you know, scale for us and some of our existing service lines is c a possibility. But, you know, we're going to be in the current environment. We'll we'll be, uh, we'll be selective. And we'll be, uh, you know, again mindful of, you know, the the difficulty in trying to determine
John Daniel: Appropriate valuations but uh, with respect to um, you know, I I think as, as historically, we've done, we're we're much more, you know.
Ben Palmer: And, you know, the ability to diversify, you know, outside the oil field is something that we look at as well. But, you know, not necessarily focused on particular regions, but as I indicated in Mark's, you know, we like, we feel like we've benefited historically from the diversification and through tubing solutions in particular. has a strong position in several basins around throughout the U.S. If and when natural gas activity picks up, we're very well-positioned to take it.
John Daniel: Opportunistic. There are uh, you know, certainly on the lookout on some of our existing cert opportunities around some of our existing service lines. Uh, uh and you know, the ability to diversify uh uh, you know, outside the oil field is something that we look at as well. Uh, but you know, not necessarily focused on particular regions, but as I indicated in our Parks, you know, we like we we feel like we've benefited historically from the diversification and, uh, through tubing solutions in particular, uh,
John Daniel: Okay. Well, thank you.
John Daniel: Has a strong position in several basins around uh throughout the us. So you know if and when natural gas activity picks up. We're we're very well positioned to take advantage of that.
John Daniel: A follow up, if I may, on the M&A strategy. At least within a couple of the service lines, and you touched on it a little bit, there's a bit of a... continued pricing pressures, predatory pricing, if you will. And then you have the backdrop, presumably of a Q4 slowdown, just as we if the trend is consistent with prior years. I'm curious if it would seem that For some of your peers, it's about to get worse, and so how does that play into just hitting the pause on M&A, and maybe there's better opportunities to surface, call it first half of next year?
Speaker Change: Okay, um well, thank you a follow-up. If I may on the on the m&a strategy but
Speaker Change: At least within a couple of the service lines. Uh, any tests on a little bit, there's a bit of, uh,
Speaker Change: Continued pricing pressures. Predatory pricing if you will.
Speaker Change: And then you have the backdrop uh presumably of a Q4 slowdown just as we if the trend is consistent with prior years.
Speaker Change: I'm curious if it would seem that.
Speaker Change: For some of your peers, it's about to get worse. And so, how does that play into just hitting the pause on m&a? And maybe there's better opportunities surface. Call it first, half of next year,
Ben Palmer: I kind of touched on that, I think. We can say we've put a pause on, but certainly we're. not leaning into the wind quite as much as we have been. Okay. And it very well could be, you're right, I think. And when things are shaking out, that could create some different type of opportunities and situations. be ready to take...
Speaker Change: Just treat that, I'll let you know.
Speaker Change: Yeah, yeah yeah, yeah. I kind of touched on that. I think uh yeah we wouldn't say we put a pause on but uh, but certainly we're
Speaker Change: Not not uh, leaning into the wind quite as much as uh as we as we have been.
Speaker Change: And it very well could be you're right. I think, uh, you know, if and when things are checking out that could create some different type of opportunities and, and situations that
John Daniel: Okay, and I got an easier one for you now. The addition of that two and seven ace is obviously an impressive unit. I'm curious, and you've only had a few weeks, but you mentioned good customer interest so far. I'm curious if you've...
Speaker Change: Will be uh ready to take advantage of.
Speaker Change: Okay, and I I I got an easier 1 for you. Now, the, the addition of that 2 and 7, Aces obviously, an impressive unit. Um, I'm curious and you've only had a few weeks, but
Ben Palmer: If you have any field results from it yet that you can speak to in whether or not you believe at this stage there's enough interest to warrant a possible second unit, if you could just provide some color would be helpful. Yeah, the results so far have been very good, very impressive, we're really pleased with that and it's staying very, very busy. and the rest of us.
Speaker Change: You mentioned, good customer interests so far. I'm I'm curious if you've
Speaker Change: If you have any field results from it yet that you can speak to and whether or not you believe at this stage, there's enough interest to Warrant a possible second unit. If you could just provide some color would be helpful,
John Daniel: Thank you.
Speaker Change: Uh, yeah, the results so far. Have been very good, very impressive. We're, we're really pleased with that. Um, and it, and it's staying very, very busy. Um,
Speaker Change: thus far, um,
Ben Palmer: We haven't entertained that yet. I think that, uh... We certainly haven't placed any additional orders at this point in time, so it's more of a wait-and-see. We're trying to be very... Selected with our investments, you can see that our, you know, is down versus the prior year despite some of these additions that we've been able to make. So we're being. They're very careful about that.
Speaker Change: And in terms of the second unit, uh, we we have an entertained that yet. Uh,
Speaker Change: Okay, all right. I I think that uh,
Speaker Change: you know, we certainly haven't placed any additional orders at this point in time. So it's more of a, a wait and see. We're trying to be very
Speaker Change: Selective with our investments. So you can see that our, you know, capex. Uh, you know, is down versus the prior year uh despite some of these additions that we've been able to make. So we're being
John Daniel: Okay, thank you for including me.
Speaker Change: Very uh, careful about that.
Operator: Thank you, John. Thanks, John.
Speaker Change: Okay, thank you for including me.
Operator: Appreciate it.
Charles Minervino: Your next question comes from the line of Chuck Minervino with Susquehanna. Please go ahead. Hi, good morning. Morning.
Thank you, John.
Speaker Change: Your next question comes from the line of Chuck minervino with sahana.
Speaker Change: Please go ahead.
Hi, good morning.
Charles Minervino: I just was wondering if you could touch on the segment outlook a little bit in the second half of the year here. I think your comments about the frac market, I think cautious in the second half of the I know it was down quite a bit in 2Q. I don't know if now the market has kind of settled there or if you kind of anticipate a little bit of another leg down in the pressure pumping piece as you kind of work into 3Q here. I guess that's my first one, if you can address that.
Ben Palmer: Well, pressure pumping in particular, those of you who are familiar with our historical results, pressure pumping has had kind of a challenging quarter in each of the last two years and that was the third quarter of the last two years. This year, second quarter. We are seeing, as I indicated, we are much more aligned with more highly dedicated customers. That began during the second quarter and continues into the third quarter. So we see a lot more activity and a lot more certainty around our calendar heading into the third quarter and hopefully into the fourth quarter with some of these dedicated customers who typically...
Speaker Change: Morning. Just was wondering if you could touch on the segment Outlook a little bit. Um, in the second half of the Year here. I think you're your comments uh, about the Frac Market. Um, I think cautious in the second half of the year. I know it was down quite a bit in 2q, I don't know if now the market has kind of settled there, or if you kind of anticipate a little bit of another leg down and and, and the pressure pumping piece as you kind of work into 3Q here. Um, but I guess that's my first 1, if you can address that.
Speaker Change: Well, uh, fresh pumping in particular, um, you know, you know, those of you who are familiar with our historical results pressure pumping, you said, kind of a, a challenging quarter in each of the last 2 years. And that was the third quarter of the last 2 years. Uh, this year,
Ben Palmer: you know, don't have as much of a seasonal slowdown, we hope and expect that, you know, that's going to minimize the otherwise normal seasonality that tell us around it. There's been an unexpected white space and excessive nonproductive time and things like that. So we're hopeful again, with the customer lineup for pressure pumping that we have at this point in time. We'll actually see a sequence. an opportunity to have some improvement. The mix, as we indicated too, the mix of the work has less materials and supplies so the the revenue change may be a little bit different, right?
Speaker Change: It's the second quarter we are seeing as I indicated, as we are, uh, much more aligned with, uh, more highly dedicated customers. Uh, that began during the second quarter, uh, and continues into the third quarter. So we see, uh, a lot more activity and a lot more certainty around, uh, our calendar, uh, heading into the third quarter and hopefully into the fourth quarter with some of these dedicated customers who typically uh you know don't have as much of a seasonal slowdown. We we we expect hope and expect that uh you know that's going to minimize the otherwise normal.
Ben Palmer: Obviously more materials and supplies increases your your revenues so we may have revenues that are lower than they would otherwise be but but we expect we'll we'll be staying a lot more.
Seasonality, uh, that that occasionally gets, uh, hits the fourth quarter, you know, the fourth quarter of the last 2 years have been actually better than the third quarter of the last 2 years for the, for, for the reason I indicated just there's been unexpected, white space and non, you know, excessive non-production productive time and things like that. So, uh, so we're hopeful again with the customer, uh, lineup for pressure pumping that we have at this point in time that uh we we will actually see uh, a sequential uh, an opportunity to have some improvement. Uh the mix as we indicated to the mix of the work has less materials and supplies so the the the revenue, uh, change may be a little bit different, right? Obviously more materials and supplies increases your, your your revenues. So we may have
Speaker Change: Revenues that are lower than they would otherwise be but but we expect we'll we'll be staying a lot more busy.
Charles Minervino: And then I was wondering if you could just touch a little bit on free cash flow outlook for the second half of the year. I would first say, you know, we noted in our comments about the first half recash flow was impacted by a We are a group of about 150 to 250 direct tax companies that Mozart is one of in the Associates department. We don't know whether we'll receive another prepayment or not, but we're not counting on that with respect to, you know, planning for and, you know, analyzing our expectations around pre-cash flow. But with the level of CapEx we have that we've signaled, we think we'll have decent pre-cash flow for this.
Speaker Change: And then, um, I was wondering if you could just touch a little bit on, uh, free cash flow outlook for the second half of the year.
Speaker Change: Causing our expectations around free cash flow. Uh, but with the level of capex, we have that we signal. We think we'll have uh decent free cash flow for the second half.
Charles Minervino: Okay, and then just one more for me. I think you mentioned pricing and wireline getting a little bit more aggressive. Just wondering how you think that plays out a little bit in kind of the results in 3Q and 4Q. Is that kind of tied to Pintail a little bit, and is that how we should be thinking about it? Sure. Yeah. Um... definitely Pintel. One other thought, you know, on free cash flow, we only had Pintel for one quarter in the first half of the year and we'll have them for both quarters in the second half of the year.
Speaker Change: Okay, and then just 1 more for me, I think you mentioned, um, pricing and wire line, getting a little bit more aggressive. Um, just wondering how that, how you think that plays out a little bit in kind of the the results in 3, q and 4 q. I i does that is that kind of tied to pin tail a little bit and and is that how we should be thinking about it?
Speaker Change: Sure. Yeah. Um,
Michael Schmit: So that should help us because as we said, we expect them to be accretive for the year. But yeah, I mean, our existing wireline business was very small. So you can think about that. It is pretty much Pintel there. But they're also heavily in the Permian, which has had You know, some of the biggest struggle in the last in the most recent quarter. So that impacts pin tail as well as our pressure pumping business more than our other businesses. And you can kind of see that, you know, and the revenue increases and results. So that that would have an impact there, but.
Definitely pin to 1. 1 other thought you know on free cash flow. We we only had pintail for 1 quarter in the first half of the year and we'll have them for both quarters in the second half of the year so that should should help us because as we said, we expect them to be accretive for the year. Um, but yeah, I mean, our our existing Wireless was very small. Um, so so you can think, think about that. It is pretty much Pentel and there but they also um, heavily in the Parian which has had
Michael Schmit: You know, as we've said, it's still accretive. You know, the numbers are available in the AKA that we had a couple, about a month back, that were, you know, extremely good in recent previous years. And they're just impacted like everyone in the Permian. But as Ben indicated. We have a really strong position with Pintail, you know, they're as busy or more busy than anyone else in the Permian and have great customer relationships and all the reasons we bought them. So, you know, we're not we're, you know, still cautiously optimistic. Yeah, we think, you know, the management team is is working really hard on costs where they can in response to the pandemic.
Speaker Change: You know, some of the biggest struggle in the last in the most recent quarters. So, um, that impacts pintail as well as our pressure pumping business, more than our other businesses. And you can kind of see that, you know, in the revenue increases and results. So, um, that that would have an impact there. But, you know, as as we've said, it's it still
Creative. Um, you know, the numbers are available in the AKA that we had a couple, um, about a month back that were, you know, extremely good in recent previous years and they're just impacted like everyone in the peryam. But as been indicated,
Speaker Change: We have a really strong position with pin tail, you know, they're um, as busy or more busy than anyone else in the Permian and have great customer relationships and all the reasons we brought bought them. So,
Speaker Change: You know, we're not.
Speaker Change: uh,
Speaker Change: We're, you know, still cautiously optimistic.
Speaker Change: yeah, we think you know the the management team is
Michael Schmit: more challenging environment, certainly the uncertainty around that that came about because of Liberation Day and the impact again on the overall market. customers appetite for increasing activity levels, obviously, and decreasing some of their activity levels. The Pentel's still well positioned and they'll be a nice contributor.
Speaker Change: Uh is working really hard on uh, you know, costs where they can uh in response to the to the the more challenging environment. Uh certainly uh the uncertainty around that that came about because of Liberation day and impact again on the overall market and
Speaker Change: Customers, uh, appetite for, uh, uh, increasing increasing activity levels obviously, and and decreasing some of their activity levels, but the Pentel still, well positioned, and, uh, they'll they'll be a nice contributor.
Speaker Change: Thank you.
Operator: There are no further questions at this time.
Ben Palmer: I will now turn the call back over to Mr. Ben Palmer for closing remarks. Thank you everybody, appreciate you listening in and look forward to catching up later and hope you have a good rest of the day.
Speaker Change: Thank you. Sure. There are no further questions at this time. I'll now turn the call back over to Mr. Benn Palmer for closing remarks.
Speaker Change: Thank you, everybody. Appreciate you, uh, listening in and uh, look forward to catching up later and hope you have a good rest of the day.
Operator: This concludes today's call.
Operator: A replay of today's events will be available at www.rpc.net within two hours following the completion of the call. Thank you all for joining.
Speaker Change: this concludes
Operator: You may now disconnect.
Speaker Change: will be available at www.rpc.net within 2 hours following the completion of the call. Thank you all for joining. You may now disconnect