RPC, Inc.

question and answer session. Instructions will be provided at this time for you to queue up for questions. I would like to advise everyone that this conference call is being recorded. I will 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 2024 10-K and other public filings that outline those risks, all of which can be found on RPC's website at www.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 and our website contain reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. I'll now turn the call over to our President and CEO, Ben Palmer.

Thanks, Mike, and thank you for joining our call. Today we will talk about our first quarter results in the acquisition we just closed in early April. as well as share our views about the increasing tariff-driven macro uncertainties. We are encouraged by the start of the year with respect to our financial performance and excited to bring Pentel into the RPC portfolio. Further, we are confident that our strong balance sheet, even following the funding of the acquisition, provides a solid cushion in uncertain times while still affording us the ability to invest as attractive opportunities arise. First quarter results can be summarized as stable revenues with some EBITDA growth. Recall that our fourth quarter held up relatively well in a sluggish market, thus we weren't necessarily expecting a typical seasonal pickup heading into the first quarter. Nevertheless, we were pleased with our financial results, especially sequential EBITDA growth. As we look across the service lines for the quarter, pressure pumping revenues were essentially flat sequentially, and all of the service lines in aggregate declined 1%. We worked diligently to drive utilization, though it did come with some pricing concessions. We are balancing the pricing and utilization strategy to service our customers while not performing work at levels that generate inadequate returns. We still see higher utilization within our FRAC assets for our Tier 4 DGBs, where we have better visibility with dedicated customers and continue to deliver solid well-site performance. On the other hand, demand and utilization remains challenging for Tier 2 diesel equipment. The spot and semi-dedicated frac market are amply supplied with horsepower capacity, and pricing remains highly competitive as OFS companies compete to maximize utilization. In the current frac pricing environment, capital investments must be rigorously evaluated, and we suspect some smaller, less well-capitalized competitors may disproportionately struggle maintain asset quality and performance. Some may even exit the business. We are certainly hearing more about pumping equipment for sale at low prices. We believe these are mostly assets with limited useful lives, indicating that some providers are opting to monetize and exit rather than maintain and reinvest. We see this as a positive, potentially tightening practice supply and leading to firmer pricing, but this may take some time to play out. Our 2025 plans still do not include a new frac fleet, though if and when we invest in incremental frac equipment, we would expect to retire older fleets. Looking at our non-pressure pumping service lines, combined revenues were down 1% sequentially in the first quarter, with no individual service line up or down a significant amount. In short, it was a fairly stable quarter across most of the business. Downhole tools revenues were flat, Several of our regions delivered solid growth in the quarter, but were offset by some unusual weather disruptions in the Rocky Mountains and other regions. Our new drill and unplug products continue to gain early traction in the market, and we're pleased with the response. But these are still too small to move the needle on our overall financial results. We look forward to more progress, and we'll share updates on key milestones as appropriate. Coal tubing was down a few points in the quarter, cementing was flat, and rental tools had a nice gain of about 7%, as that business did see a noticeable bounce to begin the new year. From a strategic standpoint, we believe bolstering these less capital-intensive service lines with organic investments and acquisitions will help drive growth, improve our customer mix, and reduce volatility in our financial results. And with that, I'll segue into the Pentel Completions Acquisition. We have been talking Increasingly, in recent quarters, about our optimism for executing acquisitions, we have assessed several potential transactions since acquiring Spinnaker in 2023, and we were very pleased with our ultimate outcome, acquiring Pentail in an accretive transaction. The total purchase price was $245 million, comprised of $170 million in cash, a $50 million seller note, and $25 million of issued stock. While we had ample cash to fund the total purchase price, we believe the notes and stock provide increased alignment and incentives as we move forward together. Pentel is a leading wireline perforation services provider, offering some of the newest and most efficient, high-performance conventional and electric equipment in the industry, with more than 30 active fleets. It has a fairly concentrated customer base of blue-chip EMPs, and all of its operations serve the Permian Basin. The Pentel management team is well regarded in the industry, having established a reputation for delivering outstanding customer service in a safe and efficient way with low emissions. Pentel generated $409 million in revenues in 2024. We believe it has reached critical mass and expect revenues to trend with the overall market. Its customer retention is a testament to the strength of its relationships and consistent well-site performance. We note that quarterly revenue was in the $100 million range in each quarter last year, with no discernible seasonality or year-long directional trend in their top-line results. We have not disclosed specifically profitability measures. However, our general expectation is for EBITDA margins to continue to track at about 20%, plus or minus a few points. Pentel will maintain its operational approach and we expect a relatively light integration with most of our efforts focused on back office support and financial reporting. Its day-to-day operations will remain largely unchanged, and the management team will remain focused on serving its customers. With respect to the strategic rationale of the deal, you may recall that during our fourth quarter call, we highlighted several strategic imperatives to executing on our goals. Improve margins and execution and optimize our assets. Increase operational scale through M&A. We balance our portfolio with a focus on high cash flow generating service lines and strengthen our customer mix by increasing our focus on blue chip E&Ps given industry consolidation. Pentel is very well aligned with those imperatives. Adding over $400 million of revenue certainly adds operational scale and meaningful share in Wireline. Pentel is also a high cash flow producing business with relatively low capital intensity, and its exclusive focus on blue chip customers is something we find very appealing. This acquisition is a great fit with our strategic direction as we continue to expand our completion services capabilities and focus on overall company growth and free cash flow. Looking at our 24 revenues, pro forma with the addition of Pentel, pressure pumping was 32%, Wireline increased from 1% to 23%. Downhole tools was 21%. Coal tubing was 7%. And cementing was 6%. All other businesses together would represent approximately 11%. Furthermore, the Pentel transaction would move our Permian concentration up to approximately 60% of total revenues. With that, Mike will now discuss the quarter's financial results as well as some notes on the Pentel transaction.