RPC, Inc. Q2 FY2025 earnings call

• Second quarter results showed sequential improvement due to full quarter impact of Pintail acquisition. Pressure pumping faced challenges from lower industry activity, weather, etc. • Non-pressure pumping service lines made up 74% of total revenues, with revenues up 7%. Downhole tools up 6%, Coiled tubing up 12%, rental tools up 17%. • Pintail acquisition added $99M (23% of total revenues), diversifying the portfolio, increasing scale, improving cash flow, and strengthening customer mix. • Wireline market faced pricing pressure, but Pintail is a large player in the Permian Basin. • Strategic focus on less capital-intensive service lines via organic investments and selective acquisitions to drive growth and reduce volatility.

Revenues increased 26% to $421 million. Technical Services, representing 94% of total second quarter revenues, was up 27%. Support Services, at 6% of total revenues, was up 14%. Largest service lines: Pressure pumping was 25.9% of revenues, Wireline 24.7%, Downhole tools 23.7%, Coiled tubing 8.5%, Cementing 6.6%, rental tools 4.3%. Pintail revenues contributed approximately $99 million in the second quarter, accounting for 23% of total revenues.

• Expected full year 2025 effective tax rate in the mid-30s. • Pintail revenues expected to trend with overall market. • Second half of 2025 free cash flow expected to be better than the first half, not counting on another prepayment like in the first half. • Effective tax rate negatively impacted by acquisition-related employment costs due to differing accounting and tax treatment.

• Macro and geopolitical uncertainties impacting the operating environment. • Pricing pressure in wireline due to competitive landscape. • Challenging environment in pressure pumping with lower industry activity, weather, and customer delays. • Volatility in financial results due to market conditions and competition.

Q: Ben, could you elaborate on the go-forward acquisition strategy, preferring consolidation in existing service lines or expansion into other services/geographic markets?

A: Okay. Yes, that's still our strategy. We're selective in current environment, mindful of valuation difficulty. Looking at scale in existing service lines, but also opportunistic with diversification outside oilfield. Thru Tubing Solutions has strong position in several basins, well positioned for natural gas activity pickup.

Q: Follow-up on M&A strategy, pricing pressures and Q4 slowdown. Thoughts on better opportunities surfacing first half next year?

A: We wouldn't say pause on M&A, but not leaning in as much. If things shake out, could create different opportunities.

Q: Chuck Minervino asks about segment outlook for second half, free cash flow outlook, and wireline pricing impact.

A: Ben: Pressure pumping expects improvement with dedicated customers minimizing seasonality. Free cash flow back half better as no reliance on prepayment like first half. Mike: Wireline pricing pressure tied to Pintail, which is in Permian facing struggles, but Pintail is accretive and well positioned with strong customer relationships.