RPC, Inc.

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 this morning. Today, we will talk about our second quarter results, which incorporate a full quarter of the recent Pentail acquisition. In addition, we will share our views about the impacts we are seeing from increasing macro and geopolitical uncertainties, which were prevalent during the quarter. Second quarter results reflect a sequential improvement due to the full quarter impact of our Pentail acquisition. While many of our legacy service lines saw modest revenue increases, Pressure pumping continued to experience a challenging environment. Pressure pumping was negatively impacted by lower industry activity overall, but also by weather, third-party non-productive time, and customer calendar delays. We saw more than a 200% increase in third-party non-productive time, which was most pronounced in June. This combined with customer delays resulted in operational inefficiencies. Pressure pumping is now primarily deployed with dedicated customers. This customer shift has increased our mix of simulfrac and twinfrac operations, which generally requires additional equipment and less cut supply materials. The market overall remains very competitive, and we are cautious regarding the second half of the year, given the reduction in rig activity over the last several weeks. Our 2025 plans include the testing of 100% natural gas pressure pumping units as part of our strategy to evaluate alternative technologies. Our first unit is expected to be deployed in the third quarter. Non-pressure pumping service lines represented 74% of total revenues during the second quarter. Revenues without the contribution of Pentel were up 7%. We saw revenue growth in downhole tools, oil tubing, rental tools, and our tubular services. Downhole tools revenues were up 6% sequentially. We saw particular strength in our northeast and Rocky Mountain regions, which is a testament to ThruTubing Solutions' broad geographic exposure. ThruTubing Solutions' A10 motor and unplugged products continue to gain early traction in the market. We believe the new A10 motor has resulted in incremental share gains to our already robust market position. The A10 motor is gaining a lot of traction and has been utilized by more than 50 customers to date. The product really demonstrates its value on longer laterals and wells that need higher flow rates. Turning to our unplugged technology, we had multiple demonstrations during the quarter with customer use expanding. We are still very much in the early adopter and testing phase of this product's life cycle, but we are pleased with its performance and feedback we've received thus far. Recall, this product reduces the need for bridge plugs and drill out time in a well and achieves highly effective stage isolation. Coal tubing was up 12% sequentially, and in late June, we took delivery of the largest coal tubing unit in the U.S., which began promptly working in July. 2-7H unit is uniquely suited for large pad customers who drill long laterals and has had multiple customers expressing a strong interest. Over the last couple of years, we've made investments in cut pressure control that provide additional opportunities for coil tubing and snubbing in late 2025 and into 2026. Cut pressure control has been able to partner with other RPC service lines with new applications to generate additional revenue. Mitting revenues were roughly flat sequentially, and we saw rental tool revenues increase 17% versus the prior quarter, partly due to weather impacts last quarter. Wireline, including our much smaller legacy business, increased substantially quarter-over-quarter due to the Pentel acquisition. Pentel is the largest wireline provider in the Permian Basin, an operational leader with a well-regarded management team and a blue chip customer base. The acquisition further diversifies our portfolio, increases our scale through M&A, improves our cash flow profile, and strengthens our customer mix. Our portfolio of various services and products with strong brands and operational leadership has provided resiliency throughout the years. Pentel revenues contributed approximately $99 million in the second quarter, or 23% of total revenues. Given Pentel's share position, we expect revenues to trend with the overall market and have historically experienced limited seasonality due to its focus on dedicated 24-7 customers. In our SEC filings following the transaction, additional financial data was provided. The wireline market, too, remains challenging, with pricing pressure intensifying during the quarter, as smaller competitors and less consistent work with less consistent work attempted to increase their utilization. We saw relatively consistent gun usage during the quarter, however, competitive pricing leads us to expect slightly lower EBITDA margins than previously communicated, but still strong operating cash flow. From a strategic standpoint, we believe bolstering these less capital-intensive service lines with organic investments and selective acquisitions will help drive growth, improve our customer mix, and reduce volatility in our financial results. We believe our balance sheet provides us optionality, including executing selective acquisitions. were well-positioned as these companies participated in markets we had familiarity with, but provided us a leading brand and leadership to significantly scale up in the respective service lines. While relatively small, we also have been able to deploy cash to purchase assets in the existing service lines to enhance and expand our offerings. With that, Mike will now discuss the quarter's financial results as well as some notes on the Pentail Trends Act.

Thanks, Ben. Our second quarter financial results with sequential comparisons to the first quarter of 2025 are as follows. Revenues increased 26% to $421 million. Excluding pintail revenues, revenues were down 3%. Breaking down our operating segments, technical services, which represented 94% of our total second quarter revenues, was up 27%. Support services, which represented 6% of our total second quarter revenues, was up 14%. The following is a breakdown of the second quarter revenues for our largest service lines. Pressure pumping was 25.9%. Wireline was 24.7%. Downhole tools was 23.7%. Coiled tubing was 8.5%, cementing was 6.6%, and rental tools was 4.3%. Together, these service lines accounted for 94% of our total revenues. Cost of revenues excluding depreciation and amortization was $318 million compared to $245 million in the previous quarter. This increase was primarily due to the addition of pintail as our cost of revenues excluding pintail declined 3% sequentially. The lower cost of revenues from our legacy businesses was primarily attributable to lower materials and supplies, which saw declines in pressure pumping due to lower activity and job mix changes during the quarter. We also saw modest declines in employment-related costs. SG&A expenses were $40.8 million, down from $42.5 million. As a percentage of revenue, these expenses decreased 310 basis points to 9.7%, reflecting minimal additional SG&A from the Pintail acquisition, leveraging our SG&A costs over higher revenues. as well as the capitalization of some costs associated with our IT system upgrades and ERP implementation. Our second quarter's effective tax rate was 41.3%, which was significantly higher than our previous quarter's effective tax rate. The effective tax rate was unusually high this quarter, primarily due to the acquisition-related employment costs associated with the pintail acquisition. which contributed to lower pre-tax net income and which, sorry, lower pre-tax income and which are largely non-deductible for tax purposes. We expect our effective tax rate to be negatively impacted to the life of the acquisition related employment costs due to their accounting treatment, which differs from their tax treatment. We expect our full year 2025 effective tax rate percentage to be in the mid-30s. Adjusted diluted EPS was $0.08 in the quarter. Adjustments totaling $0.03 were entirely related to the acquisition's related employment costs. Adjusted EBITDA was $65.6 million, up from $48.9 million, with the margin increasing 90 basis points sequentially to 15.6%. Operating cash flow was $92.9 million, and after CapEx of $75.3 million, free cash flow was $17.6 million. Free cash flow year-to-date reflected a negative working capital impact related to a large customer prepayment received in the fourth quarter of 2024. At quarter end, we had $162 million in cash, a $50 million seller financed, no payable, and nothing outstanding on our $100 million revolving credit facility. During the quarter, we paid $8.8 million in dividends. 2025 capital spending is expected to be between $165 and $215 million, inclusive of pintail for nine months, mostly related to maintenance, and opportunistic asset purchases, as well as our IT system upgrades and ERP implementation. I'll now give a few comments on our recent acquisition of Pentail Completions. As previously stated, we expect the acquisition to be accretive in 2025. The acquisition-related employment costs are non-cash for the quarter and are expected to continue at a similar quarterly amount over three years. Our second quarter results reflect the additional shares issued in conjunction with the transaction. These results also reflect lower interest income from the lower cash balance and higher interest expense due to the seller note when comparing results to last year. The preliminary purchase price allocation details can be found in our second quarter 10Q. Going forward, we will not be providing specific guidance on pintails. I'll now turn it back over to Ben for some closing remarks.