Q1 2026 RPC Inc Earnings Call

May 7, 2026

Operator 2: Good morning, and thank you for joining us for the RPC, Inc.'s Q1 2026 earnings conference call. Today's call will be hosted by Ben Palmer, President and CEO, and Mike Schmidt, Chief Financial Officer. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. I would like to advise everyone that this conference is being recorded. I will now turn the call over to Mr. Schmidt.

Operator: Good morning, and thank you for joining us for the RPC, Incorporated Q1 2026 earnings conference call. Today's call will be hosted by Ben Palmer, President and CEO, and Mike Schmidt, Chief Financial Officer. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. I would like to advise everyone that this conference is being recorded. I will now turn the call over to Mr. Schmidt.

Speaker #3: At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions.

Speaker #3: I would like to advise everyone that this conference is being recorded. I will now turn the call over to Mr. Schmit. Thank you, and good morning.

Michael Schmit: Thank you. 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 10-K and other public filings that outline those risks. All of which that can be found on RPC's website at www.rpc.net. 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-GAAP 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. I'll now turn the call over to our President and CEO, Ben Palmer.

Mike Schmit: Thank you. 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 10-K and other public filings that outline those risks. All of which that can be found on RPC's website at www.rpc.net. 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-GAAP 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. I'll now turn the call over to our President and CEO, Ben Palmer.

Speaker #3: 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.

Speaker #3: And reflect a number of known and unknown risks. Please refer to our press release issued today along with our 10-K and other public filings that outline those risks.

Speaker #3: All of which can be found on RPC's website at www.rpc.net. In today's earnings release and conference call, we'll be referring to several non-GAAP measures of operating performance and liquidity.

Speaker #3: We believe these non-GAAP 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 #3: I'll now turn the call over to our President and CEO, Ben Palmer. Thank you, Mike. And thank you for joining our call this morning.

Ben Palmer: Thank you, Mike, thank you for joining our call this morning. Today, we'll talk about our Q1 results and provide you with a few operational highlights. Q1 results reflect a sequential revenue increase across the majority of our service lines, despite the winter storms early in the quarter. Demand strengthened as the quarter progressed. Within Technical Services, Thru Tubing Solutions, downhole tools revenues increased 11% sequentially. We saw broad-based strength with most geographic regions growing double digits. Thru Tubing Solutions is a market leader in downhole completion tools with a portfolio of products supported by proprietary technologies. We have introduced a number of new products in recent years that have helped expand our market leadership position. Thru Tubing Solutions continues the rollout of its new metal-on-metal power section, MetalMax.

Speaker #3: Today, we'll talk about our first quarter results and provide you with a few operational highlights. First quarter results reflect a sequential revenue increase across the majority of our service lines despite the winter storms early in the quarter.

Speaker #3: Demand strengthened as the quarter progressed. Within technical services through tubing solutions, downhole tools revenues increased 11% sequentially. We saw broad-based strength with most geographic regions growing double-digit.

Speaker #3: Through tubing solutions is a market leader in downhole completion tools with a portfolio of products supported by proprietary technologies. We have introduced a number of new products in recent years that have helped expand our market leadership position.

Speaker #3: Through tubing solution continues the rollout of its new metal-on-metal power section, MetalMax. Adoption is accelerating with growth across both geographic markets and motor size offerings as inventory availability expands.

Ben Palmer: Adoption is accelerating with growth across both geographic markets and motor size offerings as inventory availability expands. MetalMax's performance and design characteristics are enabling entry into new markets and applications previously served by traditional power section components. Over the past 6 months, MetalMax has strategically displaced conventional power sections but still only represents 15% of our power section utilization. We continue to see meaningful opportunities for further displacement as customers increasingly recognize the product's performance and value. Thru Tubing Solutions Unplug technology, which replaces traditional bridge plugs, is picking up momentum with several operators opting to utilize the technology as their primary stage isolation method. We're also seeing success with our new surface vibratory technology, particularly in longer laterals. Overall, our downhole tools business is benefiting from longer laterals and the need for technologies to deal with the related completion challenges.

Speaker #3: MetalMax's performance and design characteristics are enabling entry into new markets and applications previously served by traditional power section components. Over the past six months, MetalMax has strategically displaced conventional power sections but still only represents 15% of our power section utilization.

Speaker #3: We continue to see meaningful opportunities for further displacement as customers increasingly recognize the product's performance and value. Through tubing solutions unplug technology, which replaces traditional bridge plugs, is picking up momentum with several operators opting to utilize the technology as their primary stage isolation method.

Speaker #3: We're also seeing success with our new surface vibratory technology, particularly in longer laterals. Overall, our downhole tools business is benefiting from longer laterals and the need for technologies to deal with the related completion challenges.

Ben Palmer: Within technical services, Cudd Pressure Control revenues were down 7% sequentially, led by weakness in the Rockies region and tough comparables in well control as the Q4 had multiple large well control events. This was partially offset by nitrogen, which was up 13%, and snubbing, which was up 8% as equipment was well utilized during the quarter. Cudd Pressure Control snubbing business is expected to receive and begin testing a big bore snubbing unit later this month. This unit was specifically designed for cavern gas storage work and was built to support a long-term customer with its storage well maintenance schedule. This work is regulatory driven and is part of our effort to continue diversifying into other markets. Coiled tubing, our largest service line within Cudd Pressure Control, was down 7% sequentially. Coiled tubing faced tough comparables in the Rockies and Northeast regions.

Speaker #3: Also, within technical services, cut pressure controls revenues were down 7% sequentially. Led by weakness in the Rockies region and tough comparables in well control, as the fourth quarter had multiple large well control events.

Speaker #3: This was partially offset by nitrogen, which was up 13%, and snubbing, which was up 8% as equipment was well utilized during the quarter. Cut pressure control snubbing business is expected to receive and begin testing the big bore snubbing unit later this month.

Speaker #3: This unit was specifically designed for cavern gas storage work. And was built to support a long-term customer with its storage well maintenance schedule. This work is regulatory driven and is part of our effort to continue diversifying into other markets.

Speaker #3: Coil tubing, our largest service line within cut pressure control, was down 7% sequentially. Coil tubing faced tough comparables in the Rockies and Northeast regions.

Ben Palmer: Our new 2 and 7/8 unit continued to be well-utilized, and we are upgrading an existing unit to handle the larger 2 and 7/8 inch tubing. Pintail Completions, the largest wireline provider in the Permian Basin, generated revenues that were relatively flat sequentially. Given our leading market position, we expect Pintail's business to trend closely with large Permian operator activity. Cudd Energy Services pressure pumping business saw a 20% sequential revenue increase due to job mix, primarily from operators to whom we provided materials and supplies along with fuel during the quarter. We have no plans to reactivate fleets at current pricing levels, but we are cautiously optimistic based on higher oil prices and less calendar white space. Natural gas takeaway capacity, particularly in New Mexico, could limit a improvement in customer activity.

Speaker #3: Our new two and seven-eighths unit continued to be well utilized. And we are upgrading an existing unit to handle the larger two and seven-eighths inch tubing.

Speaker #3: Pentel completions, the largest wireline provider in the Permian Basin, generate revenues that were relatively flat sequentially. Given our leading market position, we expect Pentel's business to trend closely with large Permian operator activity.

Speaker #3: Cut energy services pressure pumping business saw a 20% sequential revenue increase due to job mix. Primarily from operators to whom we provided materials and supplies, along with fuel, during the quarter.

Speaker #3: We have no plans to react fleets at current pricing levels, but we are cautiously optimistic based on higher oil prices and less calendar white space.

Speaker #3: However, natural gas takeaway capacity, particularly in New Mexico, could limit improvement in customer activity. Overall, we see recent geopolitical developments as incrementally positive as pricing pressures appear to be subsiding, and current activity is being supported by higher commodity prices.

Ben Palmer: Overall, we see recent geopolitical developments as incrementally positive as pricing pressures appear to be subsiding and current activity is being supported by higher commodity prices. We believe operators are cautious and concerned about the duration of higher crude prices and the perception of capital budget increases in the equity market. We have only seen modest responses by customers since the Middle East events began. Our focus remains on full cycle returns, but our balance sheet affords us the optionality of leaning into certain markets where we see additional upside. We will continue to evaluate these opportunities with our focus being on cash flow generation and maximizing value over the long term. Mike will now discuss the quarter's financial results.

Speaker #3: However, we believe operators are cautious and concerned about the duration of higher crude prices, and the perception of capital budget increases in the equity market.

Speaker #3: As such, we have only seen modest responses by customers since the Middle East events began. Our focus remains on full-cycle returns, but our balance sheet affords us the optionality of leaning into certain markets where we see additional upside.

Speaker #3: We will continue to evaluate these opportunities with our focus being on cash flow generation and maximizing value over the long term. Now, with that, Michael will now discuss the quarter's financial results.

Michael Schmit: Thanks, Ben. Our Q1 financial results with sequential comparisons to Q4 2025 are as follows. Revenues increased 7% to $455 million compared to Q4 2025. Breaking down our operating segments, technical services, which represented 95% of our Q1 revenues, was up 7%. Support services, which represented 5% of revenues, was flat. The following is a breakdown of our Q1 revenues for our largest service lines. Pressure pumping was 31%. downhole tools was 23.3%. wireline, 22.7%. coiled tubing, 8.5%. cementing, 5.8%. Rental tools, 3%. Together, these service lines accounted for 94% of our total revenues. Cost of revenues, excluding depreciation and amortization, was $356 million, compared to $330 million in the previous quarter.

Mike Schmit: Thanks, Ben. Our Q1 financial results with sequential comparisons to Q4 2025 are as follows. Revenues increased 7% to $455 million compared to Q4 2025. Breaking down our operating segments, technical services, which represented 95% of our Q1 revenues, was up 7%. Support services, which represented 5% of revenues, was flat. The following is a breakdown of our Q1 revenues for our largest service lines. Pressure pumping was 31%. downhole tools was 23.3%. wireline, 22.7%. coiled tubing, 8.5%. cementing, 5.8%. Rental tools, 3%. Together, these service lines accounted for 94% of our total revenues. Cost of revenues, excluding depreciation and amortization, was $356 million, compared to $330 million in the previous quarter.

Speaker #3: Thanks, Ben. Our first quarter financial results with sequential comparisons to the fourth quarter of 2025 are as follows. Revenues increased 7% to $455 million.

Speaker #3: Compared to Q4 25. Breaking down our operating segments, technical services, which represented 95% of our first quarter revenues, was up 7%. Support services, which represented 5% of revenues, was flat.

Speaker #3: The following is a breakdown of our first quarter revenues for our largest service lines. Pressure pumping was 31%. Downhole tools was 23.3%. Wireline, 22.7%.

Speaker #3: Coiled tubing, 8.5%. Cementing, 5.8%. And rental tools, 3%. Together, these service lines accounted for 94% of our total revenues. Cost of revenues excluding depreciation and amortization was $356 million.

Speaker #3: Compared to $330 million in the previous quarter. This increase was primarily related to job mix as we provided higher levels of materials and supplies and fuel for customers during the quarter.

Michael Schmit: This increase was primarily related to job mix as we provided higher levels of materials and supplies and fuel for customers during the quarter. In addition, the prior period also reflected the impact of transitioning of wireline cables accounting to expensing. SG&A expenses were $48 million, up slightly from the prior quarter. As a percent of revenues, SG&A decreased 60 basis points to 10.6%, primarily due to only a modest increase in SG&A with the increase in revenues. Depreciation and amortization was $43 million, up from $39 million in the prior quarter. Q4 D&A reflected a $3 million reduction related to the change in wireline cable accounting. The effective tax rate was unusually high during the quarter due to the disproportionate impact of permanent non-deductible items, mainly acquisition-related employment costs on a relatively low pre-tax income.

Mike Schmit: This increase was primarily related to job mix as we provided higher levels of materials and supplies and fuel for customers during the quarter. In addition, the prior period also reflected the impact of transitioning of wireline cables accounting to expensing. SG&A expenses were $48 million, up slightly from the prior quarter. As a percent of revenues, SG&A decreased 60 basis points to 10.6%, primarily due to only a modest increase in SG&A with the increase in revenues. Depreciation and amortization was $43 million, up from $39 million in the prior quarter. Q4 D&A reflected a $3 million reduction related to the change in wireline cable accounting. The effective tax rate was unusually high during the quarter due to the disproportionate impact of permanent non-deductible items, mainly acquisition-related employment costs on a relatively low pre-tax income.

Speaker #3: In addition, the prior period also reflected the impact of transitioning of wireline cables accounting to expensing. SG&A expenses were $48 million. Up slightly from the prior quarter.

Speaker #3: As a percent of revenues, SG&A decreased 60 basis points to 10.6%, primarily due to only a modest increase in SG&A with the increase in revenues.

Speaker #3: Depreciation and amortization was $43 million. Up from $39 million in the prior quarter. Fourth quarter DNA reflected $3 million reduction related to the change in wireline line cable accounting.

Speaker #3: The effective tax rate was unusually high during the quarter due to the disproportionate impact of permanent non-deductible items, mainly acquisition-related employment costs, on a relatively low pre-tax income.

Michael Schmit: Adjusted diluted EPS was $0.03 in Q1. Adjustments totaled $0.03 per share and related to acquisition-related employment costs. Adjusted EBITDA was $53.5 million, down from $55.1 million. Adjusted EBITDA margin decreased 110 basis points sequentially to 11.8%. The decrease was due to several factors, including higher materials and supplies, higher fuel costs, and lower other income. Operating cash flow year to date was $31 million and CapEx of $32 million. Free cash flow was -$1 million. Operating cash flow was negatively impacted by increased revenues that resulted in higher working capital, specifically higher accounts receivable being a meaningful use of cash along with unearned revenue that we benefited from in Q4, partially offset by higher accounts payable.

Mike Schmit: Adjusted diluted EPS was $0.03 in Q1. Adjustments totaled $0.03 per share and related to acquisition-related employment costs. Adjusted EBITDA was $53.5 million, down from $55.1 million. Adjusted EBITDA margin decreased 110 basis points sequentially to 11.8%. The decrease was due to several factors, including higher materials and supplies, higher fuel costs, and lower other income. Operating cash flow year to date was $31 million and CapEx of $32 million. Free cash flow was -$1 million. Operating cash flow was negatively impacted by increased revenues that resulted in higher working capital, specifically higher accounts receivable being a meaningful use of cash along with unearned revenue that we benefited from in Q4, partially offset by higher accounts payable.

Speaker #3: Adjusted diluted EPS was $0.03 in the first quarter, adjustments totaled $0.03 per share, and related to acquisition-related employment costs, adjusted EBITDA was $53.5 million, down from $55.1 million.

Speaker #3: Adjusted EBITDA margin decreased $110 basis points sequentially to $11.8%. The decrease was due to several factors, including higher materials and supplies, higher fuel costs, and lower other income.

Speaker #3: Operating cash flow year to date was $31 million, and CapEx of $32 million. Free cash flow was negative $1 million. Operating cash flow was negatively impacted by increased revenues that resulted in higher working capital, specifically higher accounts receivable being a meaningful use of cash along with unearned revenue that we benefited from in the fourth quarter partially offset by higher accounts payable.

Michael Schmit: At quarter end, we had approximately $201 million in cash, a $50 million seller finance note payable and no borrowings on our $100 million revolving credit facility. Our regular cash dividend remains unchanged at $0.04 per share. Dividend payments totaled $8.9 million. We expect 2026 CapEx in the range of $160 to 180 million. We raised the low end of the range versus the prior quarter due to opportunistic asset purchases that we were able to deploy. Recall our 2026 range includes approximately $15 million delayed from late 2025. We will adjust our spend based on project returns and opportunity. I'll now turn it back over to Ben for some closing remarks.

Mike Schmit: At quarter end, we had approximately $201 million in cash, a $50 million seller finance note payable and no borrowings on our $100 million revolving credit facility. Our regular cash dividend remains unchanged at $0.04 per share. Dividend payments totaled $8.9 million. We expect 2026 CapEx in the range of $160 to 180 million. We raised the low end of the range versus the prior quarter due to opportunistic asset purchases that we were able to deploy. Recall our 2026 range includes approximately $15 million delayed from late 2025. We will adjust our spend based on project returns and opportunity. I'll now turn it back over to Ben for some closing remarks.

Speaker #3: At quarter end, we had approximately $201 million in cash, a $50 million seller finance no payable, and no borrowings on our $100 million revolving credit facility.

Speaker #3: Our regular cash dividend remains unchanged at $0.04 per share. Dividend payments totaled $8.9 million. We expect 2026 capital expenditures in the range of $160 to $180 million.

Speaker #3: We raised the low end of the range versus the prior quarter due to opportunistic asset purchases that we were able to deploy. Recall our 2026 range includes approximately $15 million delayed from late 2025.

Speaker #3: We will adjust our spend based on project returns and opportunity. I'll now turn it back over to Ben for some closing remarks.

Ben Palmer: Thank you, Mike. We are cautiously optimistic about the rest of the year as commodity prices are more supportive of activity than they were entering 2026. Much will depend on operators' ability to hedge at higher prices, the duration of higher commodity prices, and service companies' discipline in a more supportive market. I wanna thank all of our employees who have put in tremendous work to provide high levels of service and value to our customers. Thank you for joining us this morning, at this time, we're happy to address any questions.

Speaker #2: Thank you, Mike. We are cautiously optimistic about the rest of the year as commodity prices are more supportive of activity than they were entering 2026.

Speaker #2: Much will depend on operators' ability to hedge at higher prices, the duration of higher commodity prices, and service companies' discipline in a more supportive market.

Speaker #2: I want to thank all of our employees who have put in tremendous work to provide high levels of service and value to our customers.

Speaker #2: Thank you for joining us this morning. At this time, we're happy to address any questions.

Operator 2: We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Don Crist with Johnson Rice. Please go ahead.

Speaker #3: To ask a question, simply press star one on your telephone keypad. Again, that is star one to ask a question. And we'll pause for just a moment to compile the Q&A roster.

Operator: We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Don Crist with Johnson Rice. Please go ahead.

Speaker #3: Our first question comes from the line of Don Christ with Johnson Rice. Please go ahead.

Don Crist: Morning, guys. Thanks for letting me in.

Speaker #4: Good morning, guys. Thanks for letting me in. Hopefully, y'all are doing well.

Ben Palmer: Hi, Don.

Don Crist: Hopefully, you all are doing well.

Ben Palmer: Hi, Don. Yes, thanks.

Don Crist: Obviously, things are moving pretty quick with the conflict overseas and oil pricing where it is today. Just your thoughts around the spot market here and pricing in the spot market? You know, obviously, compared to your competitors, you have more spot market exposure, generally speaking. Just curious as to what you're seeing and hearing from your customers out there?

Speaker #2: Yes, thanks.

Speaker #4: Obviously, things are moving pretty quick with the conflict overseas and oil pricing where it is today. But just your thoughts around the spot market here and pricing in the spot market.

Speaker #4: Obviously, compared to your competitors, you have more spot market exposure, generally speaking. Just curious as to what you're seeing and hearing from your customers out there.

Ben Palmer: Okay. Thanks for the question, Don. We Kind of as part of what we, you know, tried to relay in our comments there is certainly this environment with the prices is supportive. I'll say that we have seen some firming, we have seen instances of some firming. I wouldn't say it is not broad-based yet at this point. I would say it's incrementally positive, but like I said, it's not really broad-based yet at this point.

Speaker #2: Okay. Thanks for the question, Don. Kind of as part of what we tried to relay in our comments there is certainly this environment with the prices is supportive.

Speaker #2: I'll say that we have seen some farming we have seen instances of some farming. I wouldn't say it is not broad-based yet at this point.

Speaker #2: So I would say it's incrementally positive, but like I said, it's not really broad-based yet at this point.

Michael Schmit: Don, sorry to interrupt. Just to point out, too, you know, you're referring to pressure pumping, and, you know, that's really only 31% of our overall revenue.

Mike Schmit: Don, sorry to interrupt. Just to point out, too, you know, you're referring to pressure pumping, and, you know, that's really only 31% of our overall revenue.

Speaker #4: Hey, and Don, just to sorry to interrupt. Just to point out too, spot really impacts you're referring to pressure pumping and that's really only 31% of our overall revenue.

Don Crist: Well.

Michael Schmit: Just pointing that out.

Mike Schmit: Just pointing that out.

Speaker #2: Well, I was just going to say, is that across all kind of product lines, right? Because I would assume that through tubing and coil, which is the fastest kind of return dollars from an operator's perspective, would see some farming as well.

Don Crist: I was gonna say is that across all kind of product lines, right? I would assume that thru tubing and coil, which is the fastest kinda return dollars from a operator's perspective would see some firming as well.

Michael Schmit: Some, but, you know, they have a lot of larger customers. Really, I mean, the spot is not as big a part of their business as it is for pumping.

Mike Schmit: Some, but, you know, they have a lot of larger customers. Really, I mean, the spot is not as big a part of their business as it is for pumping.

Speaker #4: Some, but they have a lot of larger customers. So really, I mean, the spot is not as big a part of their business as it is for pumping.

Don Crist: Okay. Obviously, you stacked a few fleets over the, over the past couple quarters, and I don't know what state those fleets are in, but I would assume they, that they could be brought back fairly quickly if that call arises. Just any thoughts around, you know, the yards to bring back equipment or upgrade equipment here, and the potential cost to bring back a fleet? I would assume that it's, you know, $3 million just for fluid and stuff like that. Any thoughts around the reactivation cost for a fleet?

Speaker #2: Okay.

Speaker #4: And then obviously, you stacked a few fleets over the past couple of quarters, and I don't know what state those fleets are in, but I would assume that they could be brought back fairly quickly if that call arises.

Speaker #4: Just any thoughts around the yards to bring back equipment or upgrade equipment here? And the potential cost to bring back a fleet, I would assume that it's $3 million just for fluid and stuff like that.

Speaker #4: But any thoughts around the reactivation cost for a fleet?

Ben Palmer: There hadn't been a lot of discussion about that because like I said, there really hadn't been broad-based, you know, opportunities to really look at that seriously. I mean, at current pricing levels, no, we would not reactivate a fleet. There are some discussions going on that could result in us perhaps looking at that, but we would need some, you know, visibility into, obviously, the pricing and the duration of the work and the volume of the work that was gonna occur. In terms of time, you know, the fleets that you've referred to that we have stacked, those are no longer staffed, so it, you know, it would take some time and some planning to be able to restaff those.

Speaker #2: There hadn't been a lot of discussion about that because, like I said, there really hadn't been broad-based opportunities to really look at that seriously.

Speaker #2: I mean, at current pricing levels, no, we would not reactivate a fleet. There are some discussions going on that could result in us perhaps looking at that, but we would need some visibility into obviously the pricing and the duration of the work and the volume of the work that was going to occur.

Speaker #2: In terms of time, the fleets that you've referred to that we have stacked, those are no longer staffed. So it would take some time and some planning to be able to restaff those.

Ben Palmer: You're right, the pumps that we were to reactivate, you know, they would be, you know, not necessarily all of them would need to have fluid ends replaced, so the cost really depends. Historically, you're right. If you needed to replace a full fleet worth of fluid ends, that's probably a reasonable estimate. I think it's still, at this moment, it's still a little bit early. It's a good question, reasonable question, but it's a little bit early. We're really not talking about leaning into reactivating fleets. I think the first thing we would try to do is take advantage of higher prices and with the fleets that we already have deployed.

Speaker #2: And you're right, the pumps that we were to reactivate, they would be not necessarily all of them would need to have fluid ins replaced.

Speaker #2: So the cost really depends. But historically, you're right. If you needed to replace a full fleet worth of fluid ins, that's probably a reasonable estimate.

Speaker #2: But I think it's still at this moment, it's still a little bit early. It's a good question, reasonable question, but it's a little bit early.

Speaker #2: We're really not talking about leaning into reactivating fleets. I think the first thing we would try to do is take advantage of higher prices with the fleets that we already have deployed.

Michael Schmit: Don, just point out, those fleets are both, you know, are Tier 2 diesel fleets, which aren't, you know, as customers are more focused on, obviously, dual fuel and lower cost. Diesel's pretty expensive right now. That's, that's the other factor there.

Mike Schmit: Don, just point out, those fleets are both, you know, are Tier 2 diesel fleets, which aren't, you know, as customers are more focused on, obviously, dual fuel and lower cost. Diesel's pretty expensive right now. That's, that's the other factor there.

Speaker #4: And Don, just point out those fleets are both our tier-two diesel fleets, which aren't as customers are more focused on. Obviously, dual fuel and lower-cost diesel is pretty expensive right now.

Speaker #4: So that's the other factor there.

Don Crist: I appreciate the color. If I could sneak in one more. On the labor side, are you able to get people today if you tried? Do you think that that would be more difficult given the, you know, the current environment and people leaving to go to Amazon or other places?

Speaker #2: I appreciate the color. If I could sneak in one more on the labor side, are you able to get people today if you tried, or do you think that that would be more difficult given the current environment and people leaving to go to Amazon or other places?

Ben Palmer: Well, you know, we haven't, we haven't been hiring a tremendous amount and not trying to increase the staffing, so we don't know for sure. You know, that could present a challenge. Yes.

Speaker #4: Well, we haven't been hiring a tremendous amount and not trying to increase the staffing. So we don't know for sure. But that could present a challenge, yes.

Don Crist: Okay.

Ben Palmer: Which hopefully would play into the ability to, you know, firm up pricing as well, right? So.

Speaker #4: Which hopefully would play into again, that would hopefully would play into the ability to firm up pricing as well, right?

Don Crist: Right. Exactly. I'll turn it back. Thanks.

Speaker #2: Right. Exactly. I'll turn it back. Thanks.

Ben Palmer: Thank you, Don.

Speaker #4: Thank you, Don.

Operator 2: Our next question comes from the line of John Daniel with Daniel Energy Partners. Please go ahead.

Speaker #3: Once again, to ask a question, simply press star one on your telephone keypad. Our next question comes from the line of John Daniel with Daniel Energy Partners.

Operator: Our next question comes from the line of John Daniel with Daniel Energy Partners. Please go ahead.

Speaker #3: Please go ahead.

John Daniel: Hey, guys. Thanks for including me.

Speaker #5: Hey, guys. Thanks for inquiring. Good morning, John. So Mike, I mean, when you listed a lot of the EMP calls and read their press releases, it's essentially flattish with a couple of one-offs.

Michael Schmit: Yeah, John.

John Daniel: Mike, I mean, when you listen to a lot of the E&P calls and read their press releases, it's essentially, you know, flattish with a couple of one-offs I think Don alluded to in terms of incremental rigs. Yet you listen to the land drillers, they're all kind of calling for higher activity in Q2 and with prospects for more work going out in the back half. I'm just curious, what do you think the disconnect is? For some of your product lines that might be tied more to the drilling side, are they seeing a similar rise of, you know, activity as maybe what the land drillers have professed? Just any color on there.

Speaker #5: I think Don alluded to in terms of incremental rigs. But yet, when you listen to the land drillers, they're all kind of calling for higher activity in Q2.

Speaker #5: And with prospects for more work going out in the back half, I'm just curious, what do you think the disconnect is? And for some of your product lines that might be tied more to the drilling side, are they seeing a similar rise of activities maybe with the land drillers or professors?

Speaker #5: Just any color on there.

Michael Schmit: Yes, sure. I mean, I think that there's hope that obviously as drilling improves, then that will improve some of our business, as you alluded to. The pricing still hasn't caught up. I mean, there has been upward momentum, you know, I think the disconnect is we haven't and I think other OFS companies haven't really seen the increase in pricing yet.

Ben Palmer: Yes, sure.

Speaker #4: Yes, sir. I mean, I think that there's hope that obviously, as drilling improves, then that will improve some of our business as you alluded to.

Mike Schmit: I mean, I think that there's hope that obviously as drilling improves, then that will improve some of our business, as you alluded to. The pricing still hasn't caught up. I mean, there has been upward momentum, you know, I think the disconnect is we haven't and I think other OFS companies haven't really seen the increase in pricing yet.

Speaker #4: And the pricing still hasn't caught up. I mean, there is there has been upward momentum, but I think the disconnect is we haven't and I think other OFS companies haven't really seen the increase in pricing yet to really push us to start moving.

John Daniel: Right

Michael Schmit: push us to start moving. We still have kind of this supply demand. Until it actually starts, and we start, you know, getting a fair price, making it worthwhile, you'll probably see more activity. I think it, hopefully, we read your note this week. Hopefully that's accurate, and we see 50 new rigs come on. That'll help drive price and activity. Yeah. You know, John, our business, our rentals business is a relatively small percentage of our total revenue, and it's a nice business that has good margins. You know, high fixed costs, therefore, you know, increased revenue can really drop to the bottom line. It had been a little bit.

Mike Schmit: push us to start moving. We still have kind of this supply demand. Until it actually starts, and we start, you know, getting a fair price, making it worthwhile, you'll probably see more activity. I think it, hopefully, we read your note this week. Hopefully that's accurate, and we see 50 new rigs come on. That'll help drive price and activity.

Speaker #4: So we still have kind of the supply-demand. And so until it actually starts and we start getting a fair price-making it worthwhile, you'll probably see more activity, y, I think.

Speaker #4: It's just hopefully, we read your note this week. Hopefully, that's accurate and we see 50 new rigs come on. That'll help drive price and activity, so.

Ben Palmer: Yeah. You know, John, our business, our rentals business is a relatively small percentage of our total revenue, and it's a nice business that has good margins. You know, high fixed costs, therefore, you know, increased revenue can really drop to the bottom line. It had been a little bit.

Speaker #2: Yeah. John, our business, our rentals business is a relatively small percentage of our total revenue, and it's a nice business. It has good margins.

Speaker #2: A lot of high fixed costs. Therefore, increased revenue can really drop to the bottom line. So it had been a little bit had a little bit of a challenge in the last couple of quarters.

John Daniel: Right

Michael Schmit: Had a little bit of a challenge in the last couple of quarters. They're seeing some improvement. I don't know that because it's small and, you know, they have particular regions where they're particularly active. They're seeing a little bit of improvement.

Ben Palmer: Had a little bit of a challenge in the last couple of quarters. They're seeing some improvement. I don't know that because it's small and, you know, they have particular regions where they're particularly active. They're seeing a little bit of improvement.

Speaker #2: But they're seeing some improvement. I don't know that, because it's small and they have particular regions where they're particularly active. They're seeing a little bit of improvement, but again, I wouldn't say that we're seeing anything that's broad-based yet.

John Daniel: Right

Michael Schmit: again, wouldn't say that we're seeing anything that's broad-based yet.

Ben Palmer: again, wouldn't say that we're seeing anything that's broad-based yet.

John Daniel: Fair enough. Well, yeah, I hope the forecast is right. I hate looking too stupid.

Speaker #5: Fair enough. Well, yeah, I hope the forecast is right. I hate looking too stupid.

Michael Schmit: We hope it is too.

Mike Schmit: We hope it is too.

Speaker #4: We hope it is too.

John Daniel: Yeah. The next question I've got is just I don't know if this might be too granular, and you might not even have the data in front of you. I'm curious, as your guys, the businesses, talk about quoting activity, if you had to hazard a guess, the inquiries that are coming in, what proportion of them would you characterize as being from the public operators versus private? Again, you might not have that handy, but if you do, it'd be interesting to hear.

Speaker #5: Yeah. The next question I've got is just and I don't know if this this might be too granular and you might not even have the data in front of you, but I'm curious, as your guys, the businesses talk about quoting activity, if you had to hazard a guess, the inquiries that are coming in, what proportion of them would you characterize as being from the public operators versus private?

Speaker #5: And again, you might not have that handy, but if you do, it'd be interesting to hear.

Michael Schmit: The inquiries and question time?

Ben Palmer: The inquiries and question time?

Speaker #2: The inquiries and questions coming in?

John Daniel: Yeah. I mean.

Michael Schmit: Yeah.

Ben Palmer: Yeah.

John Daniel: Just people reaching out.

Speaker #5: Yeah. Just people reaching out asking about availability equipment, etc.

Michael Schmit: More-

Ben Palmer: More-

John Daniel: About availability, equipment, et cetera.

Michael Schmit: Yeah. No, more the privates.

Ben Palmer: Yeah. No, more the privates.

Speaker #2: Yeah. Now, probably more the privates. I would say.

John Daniel: Okay.

Michael Schmit: I would say.

Ben Palmer: I would say.

John Daniel: All right. Well, thanks for including me, guys.

Speaker #5: All right. Well, thanks for including me, guys.

Michael Schmit: Sure. Thank you, John.

Ben Palmer: Sure. Thank you, John.

Speaker #4: Sure. Thank you, John.

Operator 2: Once again, to ask a question, simply press star one. With no further questions in queue, I will now hand the call back over to Mr. Ben Palmer for closing remarks.

Operator: Once again, to ask a question, simply press star one. With no further questions in queue, I will now hand the call back over to Mr. Ben Palmer for closing remarks.

Speaker #3: And once again, to ask a question, simply press star one. With no further questions in queue, I will now hand the call back over to Mr. Ben Palmer for closing remarks.

Ben Palmer: All right. Well, thank you for joining this morning. We appreciate it. Appreciate your interest, and hope you have a great rest of the day. Take care.

Speaker #4: All right. Well, thank you for joining this morning. We appreciate it. Appreciate your interest. And hope you have a great rest of the day.

Speaker #4: Take care.

Operator 2: Okay. Once again, I would like to remind everyone that the replay on today's call will be available at www.rpc.net within two hours following today's completion of the call. This does conclude today's conference call. You may now disconnect.

Operator: Okay. Once again, I would like to remind everyone that the replay on today's call will be available at www.rpc.net within two hours following today's completion of the call. This does conclude today's conference call. You may now disconnect.

Speaker #3: Okay. And once again, I would like to remind everyone that the replay on today's call will be available at www.rpc.net within two hours following today's completion of the call.