RPC, Inc.

Good morning and thank you for joining us for RPC Inc's second quarter 2024 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 a 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. If you'd like to advise everyone that this conference is being recorded, I'll now turn the call over to Mr. Schmidt.

Thank you and 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 2023 10-K and other public filings that outline those risks, all of which can be found on RPC's website at 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 issued today and our website contain reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. I will now turn the call over to our president and CEO, Ben Palmer.

Thanks, Mike, and thank you for joining our call. This morning, we reported second quarter results that reflected resilient performance across many of our service lines, while pressure pumping results remains challenged. Though we understand that pressure pumping is our largest service line and sometimes used as the barometer for the health of our business, we want to underscore the diversity of our operations and customer base. Our non-pressure pumping areas performed solidly in the quarter, balancing out our results. Due to sequential growth in many service lines, our overall sales were only down modestly, with EBITDA growing sequentially. We are not satisfied with these results and will continue to push further on efficiencies and cost controls, but we're certainly encouraged by profit growth in a difficult environment. Our total revenues declined 4%, with pressure pumping down 17%, and other service lines in aggregate up 8%. The frac market remains highly competitive, and while our pricing is stabilizing, general activity in the spot and semi-dedicated market has been solved. Our utilization is below ideal operating levels, with white space arising in the calendar, sometimes on short notice. While attempting to quickly redeploy assets at lower price points to drive utilization, we remain disciplined in our approach and continue to idle certain crews rather than chase economically unattractive business. With respect to our FRAC assets, our Tier IV DGB fleets have been highly utilized with strong demand from semi-dedicated customers. As anticipated, we have deployed a new Tier IV DGB fleet, bringing us to three in total. Our crews are delivering gas substitution rates that we believe are among the best in the industry, and our customers are pleased with our efficiency and performance on site with these assets. Our intention is to continue upgrading our fleet without adding to our fleet count. To summarize the pressure pumping outlook, we continue to feel the competitive impact of frack crews in the Permian that were previously in gassy basins. This fracked supply, coupled with ongoing operating efficiency gains, continue to keep pump power capacity in the Permian ahead of demand. Ultimately, we believe these challenging conditions could force less well-capitalized smaller players out of the market, but it may take some time to reduce supply in that fashion. On the demand side, the rig count remains soft with hopes of stabilizing near term and rig count growth potentially not coming until next year. In this environment, we are working diligently to control costs, evaluating additional efficiency actions, and will maintain a disciplined operating and financial approach. The health of our balance sheet and diversity of our service lines should serve us well in the near term to navigate these pressures, while giving us the flexibility to invest in high-quality and demand equipment. In pivoting to our non-pressure pumping service lines, we were very pleased with top-line performance. We saw our best quarter over the past year in downhole tools, with solid 7% growth, putting that unit back in the range of $100 million in quarterly revenues. This is our second largest service line, and we continue to be an innovation leader in this area. We recently have been testing a new product with initial success, a larger downhole motor, which is delivering high performance in plug drill outs with lower pressure drop, improved M&R efficiency, and is especially effective in increasingly longer laterals. Customer interest is high, and we look forward to continued rollout of this product in the coming quarters, and are optimistic we can build off of this early positive momentum. Toilet tubing, our next largest service line, also grew nicely in the quarter, up 18%. We're picking up traction in some specialized plug and abandonment work using proprietary directional drilling and magnetic ranging. While regulatory processes and administrative tasks in California have been timing obstacles, Our technology and execution on this P&A work has created an opportunity to expand this business with a large E&P likely next year. In the meantime, we are doing similar work for other customers in other regions with positive results. Lastly, both cementing and rental tools delivered solid quarters, with cementing up 1% sequentially and rental tools up about 9%. Each of these four service lines we highlighted also showed margin improvement during the quarter. The key takeaway is that our non-pumping activities performed well in the quarter, demonstrating the strength of our total portfolio of services and diversity of our customers, even in a landscape marked by customer consolidation. Mike will now discuss the quarter's financial results.