RES — RPC, Inc.

Summary of RPC, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Revenue: Increased 7% sequentially to $455 million.
• Adjusted Diluted EPS: $0.03, with adjustments related to acquisition-related costs.
• Adjusted EBITDA: $53.5 million, down from $55.1 million; EBITDA margin decreased to 11.8%.
• Cost of Revenues: Increased to $356 million from $330 million, driven by higher materials and supplies.
• SG&A Expenses: Slightly increased to $48 million, but as a percentage of revenue, decreased to 10.6%.
• Operating Cash Flow: Year-to-date at $31 million; free cash flow was negative $1 million.
• Capital Expenditures: $32 million for the quarter; full-year CapEx guidance raised to $160-$180 million.

2. Strategic Updates and Business Highlights:

• Technical Services Growth: Thru Tubing Solutions' downhole tools revenues rose 11% sequentially, driven by new product introductions and market leadership.
• Cudd Pressure Control: Experienced mixed results; nitrogen services up 13%, but overall revenues down 7% due to regional weakness.
• Pintail Completions: Revenue remained flat, expected to align with large Permian operator activity.
• Pressure Pumping: Saw a 20% revenue increase, attributed to job mix and market demand.

3. Forward Guidance and Outlook:

• Cautious Optimism: Management expressed optimism for the rest of 2026, contingent on commodity price stability and operator hedging capabilities.
• Market Conditions: Noted that geopolitical developments may support pricing, but operators remain cautious about capital budgets.
• Investment Strategy: Focus on cash flow generation and value maximization, with potential for opportunistic investments in favorable markets.

4. Challenges and Points of Concern:

• Weakness in Certain Segments: Cudd Pressure Control faced declines in specific regions, particularly the Rockies, impacting overall performance.
• High Operating Costs: Increased costs for materials and fuel affected margins.
• Labor Market Concerns: Potential difficulties in hiring and retaining staff due to competitive pressures from other industries.
• Market Volatility: Operators' hesitance to commit to increased activity due to uncertainty around commodity prices and capital budgets.

5. Notable Q&A Insights:

• Spot Market Pricing: Management noted some firming in the spot market, particularly for pressure pumping, but it remains limited.
• Fleet Reactivation: Discussions around reactivating stacked fleets are cautious, with no immediate plans unless market conditions improve significantly.
• Customer Inquiries: A higher proportion of inquiries are coming from private operators compared to public ones, indicating varied demand across segments.

Overall, RPC, Inc. demonstrated solid revenue growth in Q1 2026 but faced challenges in certain service lines and ongoing market volatility. The company remains focused on strategic investments and operational efficiency while navigating a cautious outlook for the remainder of the year.