RPC, Inc. (RES) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates several negative aspects: a decline in coiled tubing revenue, decreased EBITDA and margins, and increased SG&A expenses. The Q&A section reveals uncertainties, such as weather impacts and a cautious approach to fleet reactivation and M&A. Management's vague responses and lack of clear guidance further contribute to negative sentiment. Despite some positive elements like increased cementing revenue and a strong balance sheet, these are overshadowed by broader concerns and uncertainties, suggesting a negative stock price movement in the short term.
Key Financial Performance
Revenues Decreased 5% to $426 million compared to Q3 2025. This decline was due to broad-based declines across the majority of the businesses.
Technical Services Revenue Down 4% sequentially, representing 95% of total fourth quarter revenues.
Support Services Revenue Down 18% sequentially, representing 5% of total fourth quarter revenues.
Pressure Pumping Revenue Decreased 6% sequentially, largely due to holiday shutdowns and a fleet idled in October.
Wireline Revenue Declined 3% sequentially.
Downhole Tools Revenue Decreased 9% sequentially.
Coiled Tubing Revenue Down 2% sequentially after a strong third quarter.
Cementing Revenue Increased sequentially.
Adjusted EBITDA Decreased to $55.1 million from $67.8 million, with a sequential margin decrease of 230 basis points to 12.9%. This was due to broad-based declines across the majority of the businesses.
Operating Cash Flow $201.3 million year-to-date.
Free Cash Flow $52.9 million after capital expenditures of $148.4 million.
SG&A Expenses Increased to $48 million from $45 million, with a 120 basis point increase to 11.2% of revenue. This was primarily due to employee incentives and higher employment costs.
Cost of Revenues (Excluding Depreciation and Amortization) Increased to $337 million from $335 million, primarily due to expensing wireline cables and other materials and supplies expenses related to job mix.
Dividends Paid $8.8 million in Q4 2025, totaling $35.1 million year-to-date.
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Operating Highlights
A-10 Downhole Motor: Positioned in the completions market to address longer laterals and higher flow rates. Resulted in incremental share gains since its late 2024 rollout.
Metal Max Power Section: Allows for shorter motor design, higher torque output, reduced downtime, and improved performance. Expanded into new markets after initial prototyping.
UnPlug Technology: Reduces or eliminates the need for bridge plugs during well completion. Adoption has steadily increased.
Geographic Expansion: Thru Tubing Solutions expanded Metal Max motor into new regions after initial prototyping.
Diversification into Cavern Gas Storage: Cudd Pressure Control to deliver a big bore snubbing unit in 2026 for cavern gas storage work, supporting a long-term customer.
Revenue Decline: Sequential revenue decline of 5% to $426 million in Q4 2025. Technical Services down 4%, Support Services down 18%.
Wireline Cables Expensing: Changed accounting treatment to expense wireline cables, impacting cost of revenues and reducing capital expenditures.
Cost Management: Focus on leveraging strong balance sheet and maximizing shareholder returns through cost control and strategic investments.
Selective Investments: Focus on organic growth, new technologies, and M&A within existing markets and the broader energy sector.
Capital Expenditure Adjustments: 2026 capital expenditures expected to range between $150 million to $180 million, adjusted based on activity levels.
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Risk or Challenges
Sequential revenue decline: Fourth quarter results reflect a sequential revenue decline across the majority of service lines, with a 5% overall decrease in revenues compared to the third quarter of 2025.
Weakness in December activity: While October and November were consistent with third quarter activity, December saw significant weakness, particularly later in the month, impacting overall performance.
Regional performance disparities: Weakness was experienced in the international and Rocky Mountain regions, while the Western Mid-Con region was flat sequentially. This uneven performance across regions poses operational challenges.
Pressure pumping revenue decline: Cudd Energy Services pressure pumping business saw a 6% sequential decrease, attributed to holiday shutdowns and the idling of a fleet in October. The company does not expect to reactivate any fleets until returns improve.
Impact of winter storms: Many businesses were impacted by recent winter storms early in the first quarter, leading to lost operating days that are not fully recoverable and will negatively impact near-term profitability.
Increased costs and SG&A expenses: Cost of revenues increased due to expensing wireline cables and other materials, while SG&A expenses rose due to employee incentives and higher employment costs, impacting margins.
High effective tax rate: The effective tax rate was unusually high due to the liquidation of company-owned life insurance policies and nondeductible acquisition-related employment costs, affecting net profitability.
Delayed capital expenditures: Approximately $15 million in anticipated capital expenditures were delayed into 2026, which could impact the timing of operational upgrades and growth initiatives.
Low oil and gas prices: Year-end oil prices reached their lowest level since COVID, and while there has been some improvement, further increases are needed to spur significant customer activity levels.
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Guidance & Outlook
Cudd Pressure Control snubbing business: Expects to take delivery of a big bore snubbing unit in 2026, designed for cavern gas storage work, supporting a long-term customer’s storage well maintenance schedule over the next several years.
Coiled tubing service line: Upgrading an existing coil unit to handle larger 2 7/8-inch tubing, expected to be in service by mid-2026.
Pintail Completions: Expects 2026 to trend closely with large Permian operator activity.
Capital expenditures: 2026 capital expenditures expected to range between $150 million and $180 million, adjusted based on activity levels.
Market conditions: Recent improvement in oil and natural gas prices noted, but further increases are needed to spur significant customer activity levels.
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Shareholder Return Plan
Dividend Payment: Payment of dividends totaled $35.1 million year-to-date through Q4 '25. During the quarter, we paid $8.8 million in dividends.
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Key Q&A
Q:Given the weather impacts for the first two weeks of the year, do you think the results will be similar to the fourth quarter directionally?
A:Ben Palmer stated that they are still analyzing the impact. While geographically diversified, their concentration in the Permian and Mid-Con regions, which were hit hard, makes it difficult to quantify. He acknowledged the impact is not insignificant but could not provide a definitive answer.
Q:Are you seeing normalization in other business lines like Thru Tubing, coil, and wireline as competitors move equipment overseas?
A:Ben Palmer mentioned that there might be a slight normalization, but not a significant amount yet. He noted that some competitors are reorganizing or being absorbed, which could indicate market stress and potentially benefit their company.
Q:With a large cash reserve, is there any indication of stock buybacks or plans for M&A in the near term?
A:Ben Palmer stated that they are evaluating various uses of capital, including buybacks, but do not foresee any dramatic changes in the near term. He emphasized that buybacks are an option in their 'tool chest'.
Q:Will the fleet idled in October return this year, and would reactivation depend on price or sufficient work?
A:Ben Palmer explained that reactivation would require confidence in better pricing and steady activity. They are not in a rush to reactivate the fleet and would only do so if it generates better cash flow and incremental benefits.
Q:Does the diminishing number of buyers for traditional land equipment argue for a cautious approach to M&A?
A:Ben Palmer agreed that the diminishing number of buyers allows them to be patient and selective. He noted that they are exploring opportunities in oilfield services and other energy-related areas, emphasizing their flexibility due to a strong balance sheet.
Q:Why was there an updated wireline accounting treatment now and not when the deal occurred last year?
A:Michael Schmit explained that the business changed with more simul-frac and tunnel frac work, leading to faster cable usage. They monitored the changes and decided to adjust the accounting treatment within the purchase accounting window to reflect the shorter lifespan of cables.
Q:Can you expand on the international footprint and growth potential of Thru Tubing Solutions?
A:Ben Palmer stated that Thru Tubing Solutions has the largest international presence, mainly in the Middle East and Canada. While they hope for growth in the Middle East due to unconventional buildouts, they are not directly present and rely on other groups to use their tools.
Q:What is the current state of the spot market in pressure pumping?
A:Ben Palmer noted no dramatic changes but highlighted ongoing competition, including from smaller companies. They are maintaining discipline in pricing and focusing on less capital-intensive service lines while supporting pressure pumping.
Q:Can you provide details on the 2026 CapEx and its potential impact on free cash flow?
A:Ben Palmer described the 2026 CapEx as a conservative estimate, subject to change based on opportunities or market conditions. He emphasized their focus on free cash flow and the flexibility to adjust CapEx as needed.
Q:Why was rental tool revenue down sharply late in the year?
A:Ben Palmer attributed the decline to customer-specific delays and weather impacts in the Rockies. He noted that the delays are temporary and not lost opportunities, and the business had a strong third quarter, making the fourth quarter a tough comparable.
Q:Review of Unclear Management Responses
A:Management avoided giving direct answers to several questions, including the impact of weather on first-quarter results, the potential for stock buybacks, and the reactivation of the idled fleet. Responses often lacked specific data or definitive commitments, relying on vague language like 'evaluating' or 'monitoring' without providing concrete details.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CFO
Control snubbing
Cudd Pressure
Pressure Control
Thru Tubing
Tubing Solutions
acquisition employment
capital expenditure
cementing
control
decline majority
decrease
flow change
inch
income plan
increase
insurance policy
life insurance
liquidation
metal
motor
region Thru
retirement income
rollout
storage
supplemental retirement
technology
tubing service
unit
wireline cable
RES Transcript
RPC, Inc. (RES) Q4 2025 Earnings Call Transcript
Unknown2-3
The earnings call summary indicates several negative aspects: a decline in coiled tubing revenue, decreased EBITDA and margins, and increased SG&A expenses. The Q&A section reveals uncertainties, such as weather impacts and a cautious approach to fleet reactivation and M&A. Management's vague responses and lack of clear guidance further contribute to negative sentiment. Despite some positive elements like increased cementing revenue and a strong balance sheet, these are overshadowed by broader concerns and uncertainties, suggesting a negative stock price movement in the short term.
RPC, Inc. (RES) Q3 2025 Earnings Call Transcript
Unknown10-30
The earnings call presents a mixed picture. Financial performance shows modest growth with a 6% revenue increase and improved EBITDA margins, but higher costs and a high effective tax rate dampen enthusiasm. The strategic plan includes cautious investments and exploration of alternative technologies, but market challenges and geopolitical uncertainties pose risks. The Q&A section reveals management's reluctance to provide clear guidance, adding to uncertainty. Overall, while some positive elements exist, they are balanced by risks and unclear guidance, leading to a neutral sentiment prediction.
RPC, Inc. (RES) Q2 2025 Earnings Call Transcript
Unknown7-24
The earnings call summary shows mixed signals. The acquisition of Pintail and the increase in revenues due to this acquisition are positive, but excluding Pintail, revenues were down. The effective tax rate increased, impacting net income. The Q&A section highlighted cautious M&A strategy and pricing pressures, but also showed potential for improvement in free cash flow. While the Pintail acquisition is expected to be accretive, market volatility and pricing pressures pose challenges. Overall, the sentiment is neutral due to balanced positives and negatives.
RPC, Inc. (RES) Q1 2025 Earnings Call Transcript
Unknown4-24
The earnings call summary reflects mixed signals: stable revenue with slight declines, increased competition, and macro uncertainties. The Pintail acquisition is a positive long-term factor, but immediate benefits are unclear. The Q&A revealed cautious capital allocation and market strategy, with management avoiding some direct answers. Despite a healthy cash position and no debt, competitive pressures and macro uncertainties weigh heavily. The sentiment is neutral, as positive long-term factors are offset by short-term challenges and uncertainties.
RES Report
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