RPC, Inc. (NYSE:RES) This fall 2022 Earnings Name Transcript

RPC, Inc. (NYSE:RES) This fall 2022 Earnings Name Transcript January 25, 2023

Operator: Good morning and thanks for becoming a member of us for RPC Inc.’s fourth quarter and year-end 2022 monetary earnings convention name. At the moment’s name shall be hosted by Ben Palmer, President and CEO, and Mike Schmit, Chief Monetary Officer. Additionally internet hosting is Jim Landers, Vice President of Company Companies. Right now, all members are in listen-only mode. Following the presentation, we are going to conduct a query and reply session. Directions shall be offered at the moment so that you can queue up for questions. I wish to advise everybody that this convention name is being recorded. Jim will get us began by studying the forward-looking disclaimer.

Jim Landers: Thanks and good morning. Earlier than we start our name as we speak, I wish to remind you that with a view to discuss our firm, we’ll point out a couple of issues that aren’t historic information. A few of the statements that shall be made on this name might be forward-looking in nature and replicate a lot of recognized and unknown dangers. I would wish to refer you to our press launch issued as we speak together with our 2021 10-Okay and different public filings that define these dangers, all of which might be discovered on RPC’s web site at www.rpc.internet. In as we speak’s earnings launch and convention name, we’ll be referring to EBITDA, which is a non-GAAP measure of working efficiency. RPC makes use of EBITDA as a measure of working efficiency as a result of it permits us to check efficiency constantly over numerous intervals with out regard to modifications in our capital construction.

We’re additionally required to make use of EBITDA to report compliance with monetary covenants underneath our revolving credit score facility. Our press launch as we speak and our web site present a reconciliation of EBITDA to internet earnings, which is the closest GAAP monetary measure. Please evaluate that disclosure if you happen to’re all for seeing the way it’s calculated. When you’ve got not obtained a press launch for any purpose, please go to our web site at rpc.internet for a duplicate. I’ll now flip the decision over to our President and CEO, Ben Palmer.

Ben Palmer: Thanks Jim, and thanks for becoming a member of our name this morning. 2022 was an distinctive 12 months, and we completed the 12 months with very robust ends in the fourth quarter. I wish to begin by thanking our workers for an excellent 2022. Their laborious work and dedication in overcoming many challenges made our success potential. We stay up for constructing on our achievements and anticipate continued success in 2023. RPC’s fourth quarter monetary outcomes confirmed little or no affect from weather-related or vacation downtime. Moreover, our prospects continued to work all through the fourth quarter with no proof of finances exhaustion. Though oil costs have just lately moderated from their highs, they continue to be above ranges enough to inspire our prospects to drill and full new wells.

Photograph by Patrick Hendry on Unsplash

Whereas stress pumping is actually a core enterprise for RPC, we’re way more than only a pure play stress pumper; in actual fact, we’re one of many only a few corporations that may present practically all the providers required to finish oil or gasoline wells. This diversification represents a aggressive benefit for RPC and provides worth as a number one supplier of completion providers for our prospects. Our CFO, Mike Schmit will focus on this and different monetary ends in extra element, after which I’ll present some closing feedback.

Mike Schmit: Thanks Ben. I am going to begin with the fourth quarter 2022 sequential monetary overview. Fourth quarter revenues elevated by 4.9% to $482 million from $459.6 million within the prior quarter attributable to improved pricing in most of our service traces and better gear utilization, supported by a full quarter of operations for our most just lately reactivated stress pumping fleet. Value of revenues through the fourth quarter decreased barely to $308.6 million from $309.8 million within the prior quarter. As a proportion of revenues, price of revenues improved to 64% from 67.4% within the prior quarter attributable to improved job combine and continued robust pricing for our providers. Promoting, common and administrative bills had been $38.2 million in each the fourth and third quarters of 2022.

Throughout the fourth quarter of 2022, RPC additionally recorded a $2.9 million outlined profit pension plan cost associated to a lump sum settlement supplied to plan members. Throughout Q1 2023, we anticipate to report a settlement cost of roughly $22.5 million related to the ultimate termination of this plan. Additionally in reference to the switch of the plan legal responsibility to a 3rd social gathering, RPC expects to make an roughly $10 million money contribution additionally within the first quarter of ’23. Working revenue through the fourth quarter elevated by 21.9% to $112.3 million from $92.2 million within the prior quarter. EBITDA elevated by 19.8% to $135.5 million from $113 million within the prior quarter. Our technical providers section revenues elevated by 5.1% to $458.1 million.

This section generated $110.5 million of working revenue in comparison with $89.5 million within the prior quarter. The advance in working outcomes had been pushed by greater buyer exercise ranges, improved pricing, and a bigger lively fleet of revenue-producing gear. Help providers revenues had been unchanged through the fourth quarter of 2022 in comparison with the prior quarter. Working revenue, although, was $6.7 million in comparison with $5.3 million within the prior quarter. Now I am going to focus on our present year–sorry, our present quarter outcomes in comparison with the identical quarter within the prior 12 months. Revenues elevated to $482 million from $268.3 million. Working revenue elevated to $112.3 million from $20.1 million. EBITDA elevated to $135.5 million from $39.4 million.

These will increase had been pushed by greater buyer exercise ranges and improved pricing, leading to our diluted earnings per share bettering to $0.40 in comparison with $0.06 in the identical quarter of the prior 12 months. Our technical service section revenues elevated 80.1% to $458.1 million, and section working revenue elevated to $110.5 million from $20.5 million in the identical quarter of the prior 12 months. Our assist providers section revenues elevated 73.1% to $23.9 million and section working revenue elevated to $6.7 million from an working lack of $373,000 in the identical quarter of the prior 12 months. Now I am going to briefly focus on our capital expenditures and horizontal stress pumping fleet depend. Capital expenditures had been $49.3 million within the fourth quarter.

We at the moment estimate full 12 months 2023 capital expenditures to be roughly $250 million to $300 million, together with a brand new Tier 4 twin gas fleet we plan to position into service through the second quarter, at which period we anticipate to take down an current fleet for refurbishment. Throughout the fourth quarter, we operated 10 extremely utilized horizontal stress pumping fleets. We anticipate to proceed working 10 horizontal fleets all through 2023. I’ll now flip it again over to Ben for some closing remarks.

Ben Palmer: Thanks Mike. Our confidence within the present {industry} outlook together with our view of how that ought to translate to our financials has inspired us to make investments in our completion-oriented companies. Earlier up-cycles have resulted in our {industry} including important capability, inevitably outpacing demand. In distinction, our present focus is on long-term investments to take care of and selectively enhance our present productive capability, additionally to generate main industry-leading returns on invested capital and leverage expertise to carry out our providers in an environmentally pleasant method. By a mix of dividends and open market share repurchases, RPC has returned over $536 million to shareholders over the past decade.

As proof of our confidence within the energy of the present cycle and dedication to our shareholders, we introduced this morning a rise in our common quarterly money dividend from $0.02 to $0.04 per share. Thanks for becoming a member of us this morning, and presently, we’re pleased to handle any questions you might have.

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To proceed studying the Q&A session, please click here.

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