RPC, Inc. Q4 FY2025 earnings call

Key Points - Fourth quarter results had sequential revenue decline across most service lines; service lines other than pressure pumping were 70% of total revenues with 4% sequential decrease. - Thru Tubing Solutions saw downhole tools revenues decrease 9% sequentially but had success with A-10 downhole motor, Metal Max component, and UnPlug technology. - Cudd Pressure Controls revenues up 1% led by well control and snubbing; coiled tubing down 2% after strong Q3. - Pintail Completions revenues down 3%; Cudd Energy Services pressure pumping down 6% due to holiday shutdowns. - Winter storms in first quarter impacted operating days and near-term profitability. - RPC focuses on leveraging balance sheet and maximizing shareholder returns, strategically growing less capital-intensive service lines.

Fourth quarter revenues decreased 5% to $426 million compared to Q3. Technical Services, representing 95% of total fourth quarter revenues, was down 4%. Support Services, representing 5% of revenues, was down 18%. The largest service lines by revenue contribution were: Pressure pumping (27.6%), wireline (24.1%), downhole tools (22.4%), coiled tubing (9.7%), cementing (5.9%), and rental tools (3.4%), which together accounted for 93% of total revenues.

Guidance - 2026 capital expenditures expected in range of $150 million to $180 million, adjusting spend based on activity levels. - Change to expensing wireline cables reduced both operating cash flow and CapEx but had no change to free cash flow. - Full year 2025 capital expenditures were $148 million, with $12 million lower due to wireline cables being expensed and $15 million delayed into 2026.

Risks - Winter storms early in the first quarter led to lost operating days and impact on near-term profitability. - Competitive landscape with some competitors reorganizing or being absorbed, which could impact market dynamics.

Q: Given weather impacts in the first two weeks of the year, do you think it shakes out similar to the fourth quarter directionally?

A: It's a great question; we're still analyzing the impact, geographically diversified but concentrated in Permian and Mid-Con which were hit hard, so not able to quantify yet.

Q: Are other business lines like Thru Tubing and coil and wireline starting to normalize as competitors move equipment overseas?

A: Maybe a bit, some competitors reorganizing or being sold which may benefit us, but not a tremendous amount yet.

Q: Any indication of stock buybacks with a large cash hoard?

A: We're always evaluating capital uses, buybacks are an option, but no immediate plans to do anything dramatic.

Q: With the fleet idled in October, will it come back this year and is it a function of price?

A: Probability is we need incrementally better pricing, not looking for same pricing at prior activity levels, combination of confidence in activity steady at certain pricing.

Q: On M&A, universe of realistic buyers of traditional land equipment is diminishing, agree?

A: Yes, not a lot of competition for buying traditional oil field services companies, but there are good companies that could be strategic fits, we're patient with balance sheet flexibility.

Q: Why the updated wireline accounting treatment now?

A: Business changed with more simul-frac and work, previously depreciating over 18 months, but work type changed, so switched to expensing wireline cables as it's closer to under a year.

Q: Expand on Thru Tubing Solutions' international footprint and growth?

A: pared back international business, largest presence in Middle East, tools perform well there, hope for improvement but not counted in current forecast.

Q: State of the spot market in pressure pumping?

A: Not seeing dramatic changes yet, some consolidation, trying to be disciplined with pricing, focusing on less capital-intensive service lines.

Q: Talk about 2026 CapEx and rental tools?

A: 2026 CapEx range is conservative, scrutinize CapEx carefully, can be reduced if conditions warrant; rental tool revenue down late in year due to 1 or 2 customer-specific delays, not permanent.