Yahoo Finance RPC Inc (RES) (Q1 2024) Earnings Call Transcript Highlights: Navigating Market Challenges with ...
Revenue: $378 million, a decrease of 4% sequentially.
Net Income: Not explicitly mentioned, but diluted EPS provided.
Earnings Per Share (EPS): Diluted EPS of $0.13, down from $0.19 in the previous quarter.
Free Cash Flow: $3.8 million after CapEx of $52.8 million.
Adjusted EBITDA: $63.1 million, down from $79.5 million; margin decreased by 340 basis points to 16.7%.
Operating Cash Flow: $56.6 million.
Capital Expenditure (CapEx): $52.8 million for the quarter.
Market Capitalization: Not mentioned.
Gross Margin: Impacted by higher materials and supplies costs as a percentage of sales.
Same-Store Sales: Not applicable.
Store Locations: Not applicable.
Share Repurchases: Nearly $10 million spent, with $7.5 million under buyback program.
Dividends: $8.6 million paid in dividends.
Debt Position: Maintains a debt-free balance sheet.
Cash Position: Strong with $212 million at quarter end.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the current competitive landscape in the pressure pumping market, particularly regarding pricing and asset utilization? A: Benjamin Palmer, President and CEO of RPC Inc, noted a degradation in pricing compared to the previous year, impacting results. The company maintains pricing floors and remains disciplined, not bidding at floor levels on all opportunities to avoid burning out equipment. The market is volatile, with some competitors lowering prices to capture market share, but RPC is focused on maintaining discipline and efficiency.
Q: Are you observing any modest growth in activity levels going into the second quarter? A: Benjamin Palmer mentioned that the market remains highly volatile with no strong indications of significant changes in activity levels, describing it as "bumping along."
Q: How are RPC's non-pressure pumping activities performing compared to pressure pumping? A: Michael Schmit, CFO, explained that non-pressure pumping services were down by 3% on average, which is more aligned with overall industry performance. These services benefit from a diverse customer base and geographic spread, which provides some resilience compared to the more concentrated pressure pumping services.
Q: What is the outlook for M&A activity in the E&P space, and how might it impact RPC? A: Benjamin Palmer expressed optimism that M&A activity could lead to increased activity as assets are divested to smaller E&P companies, which are RPC's typical clientele. The company is also exploring acquisition opportunities to expand its service lines and customer base.
Q: Can you provide insights into the pricing dynamics in the frac market and expectations for fleet movements from gassy basins? A: Benjamin Palmer discussed the challenging pricing environment in frac services, hoping for stabilization. He noted that RPC is not willing to operate below a certain price threshold to preserve equipment and returns. Michael Schmit added that significant fleet movements from gassy basins are unlikely due to sustained low gas prices.
Q: What is the strategy regarding RPC's fleet management and capital expenditure in light of current market conditions? A: Michael Schmit indicated that all fleets were active in the quarter, though utilization rates varied. The company plans to manage its capital expenditure flexibly, focusing on strategic investments across various service lines. This approach aims to prepare RPC for future opportunities while maintaining financial health.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
