Good morning and thank you for joining us for RPC, Inc.'s Fourth Quarter and Year End 2024 Conference Call. Today's call will be hosted by Ben Palmer, President and CEO; and Mike Schmit, Chief Financial Officer. At this time, all participants are in 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. I would like to advise everyone that this conference call is being recorded. I will now turn the call over to Mr. Schmit.

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 all 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, we reported results that continue to reflect the challenges of the OFS market, though we did have some bright spots in the fourth quarter and some positive developments heading into 2025. The environment overall remains highly competitive, and seasonal slowdown certainly impacted parts of our business as customers faced typical fourth quarter seasonal issues related to budget exhaustion, holiday downtime, and unpredictable weather. While recent quarters showed more weakness in pressure pumping with outperformance in other service lines, fourth quarter results in pumping showed some signs of improvement after a difficult third quarter. Pressure pumping generated higher revenues, while our non-pumping services tracked more with the industry activity declines. Market dynamics remain largely unchanged with the spot and semi-dedicated market amply supplied with horsepower capacity and pricing remaining under pressure as OFS companies compete to maximize utilization. Bottom-line, pressure pumping in the fourth quarter was up 3% sequentially, while all other service lines in aggregate declined 3%. For the full year, however, pumping was off by 24%, while other service lines declined only 2%. We believe bolstering our other less capital-intensive service lines over time with organic investments and potential acquisitions will help drive growth and reduce volatility in our financial results. We are encouraged by the general optimism around the energy industry with the new presidential administration and the opportunities that may present themselves in the coming years for our customers. However, many aspects of energy supply and demand remain unclear. While activity increases could provide tailwinds for OFS providers, significant increases in oil and gas supplies might pressure energy prices and have negative consequences on completion activity. At the end of the day, we have limited visibility on actual policy and regulatory changes and the impact those…

Thanks Ben. Shifting to the fourth quarter financial results with sequential comparisons to the third quarter of 2024, revenues decreased 1% to $335 million, driven primarily by lower non-pressure pumping activity, specifically downhole tools and rental tools, which offset growth in pressure pumping. Breaking down our operating segments, Technical Services, which represented 94% of our total revenues in the quarter, was essentially unchanged. Support Services were down 14% and represented 6% of our total fourth quarter revenues. The following is a breakdown of our fourth quarter revenues for our top five service lines; pressure pumping, 40%; downhole tools, 27.9%; coiled tubing, 9.9%; cementing, 8.3%; rental tools, 4.3%. Together, these service lines accounted for 90% of our total revenues. Cost of revenues, excluding depreciation and amortization during the fourth quarter, increased by $2.7 million to $250.2 million or a 1% increase. The higher cost of revenues is primarily due to higher insurance costs related to our operations. We also incurred higher employee costs, primarily related to health care benefits, which can fluctuate throughout the year. These cost increases were partially offset by lower maintenance and repair expenses. As you may recall, our pumping operations were particularly soft in the third quarter. Thus, we use that downtime to perform more maintenance work on our assets. Given the sequentially higher utilization in the fourth quarter, we performed less of this maintenance work toward the end of the year. SG&A expenses were $41.2 million, up from $37.7 million, largely reflecting the fixed cost of our Support Service functions as well as timing of year-end incentive amounts. Our fourth quarter effective tax rate was 9.1%, which was below the company's typical tax rate, primarily due to the implementation of certain tax strategies and interest received on some tax refunds. Diluted EPS was $0.06 for the…

Thank you, Mike. Coming out of 2024, I'd like to reiterate several themes as we enter the new year and articulate a few strategic operational and capital allocation themes, so you have a firm understanding of our operating philosophy and intentions. Our corporate objective is to create long-term shareholder value by delivering world-class oilfield services to our customers with a conservative financial management approach. We believe RPC has a well-established track record of profitability and free cash flow, despite the many ups and downs of the oilfield services industry. And within this cyclical backdrop, we have exercised financial discipline, which has afforded us the ability to invest in our operations as well as support consistent dividends and periodic share buybacks. We believe the company is fairly diversified with an attractive mix of service offerings, customers, and geographic presences, consider ourselves well-positioned financially to further invest and grow the business. We see several strategic imperatives to executing on our goals, improve margins and execution and optimize our assets, increase operational scale through M&A, rebalance our portfolio with a focus on high cash flow service offerings, and strengthen our customer mix by increasing our focus on blue-chip E&Ps, given industry consolidation. As we plan for 2025 and beyond, we have some action plans aligned with these strategic themes, which we believe together will help drive profitable growth, financial strength, and long-term value. As discussed, we continue to invest in innovation, bringing proprietary and novel services and products to market to distinguish ourselves from our competition. We are also diligently monitoring costs, capacity and headcount, and we'll continue to take actions to align with demand and maximize margins. Furthermore, we have information technology projects underway to support improved data collection and analysis, which we believe will lead to optimized decision-making and improved efficiencies. And lastly, we constantly evaluate sales of noncore assets to sharpen our focus on core operations and monetize any nonstrategic assets. Lastly, with respect to M&A, we continue to evaluate opportunities and feel the environment remains favorable for a potential acquisition. We are focused on high cash flow operations with quality management teams, strong customer service, and value propositions and synergy opportunities. We believe we are a buyer of choice, given our reputation in the market, for supporting companies we bring under the RPC umbrella and look forward to sharing M&A developments when they materialize. In an often volatile market, our discipline remains consistent with a focus on financial stability and long-term shareholder returns. I want to thank all of our employees who work tirelessly to deliver high levels of service and value to our customers. Thanks for joining us this morning. And at this time, we're happy to address any questions.

[Operator Instructions] Your first question comes from the line of Don Crist with Johnson Rice. Your line is now open, please go ahead.

Morning guys. Hope you all are doing well. I wanted to start with the Technical Services segment. I mean, obviously, margins compressed a little bit in the fourth quarter there. Was there something in there on the cost side? Because it looks like it was more on the cost side than on the revenue side, like maybe repositioning of fleet for work or something else that we can't readily point to that maybe compress those margins. And do you think those kind of rebound as we move into the first quarter?

Yes. Hi Don, this is Mike. We had some higher-than-normal insurance costs during the quarter. We reset our insurance deductibles near the end of the year and actuaries do their thing, and we had some pretty significant increases there. So, that really impacted us during the quarter. So, it was less operational and kind of more -- it was insurance-related operations, but just kind of an unusual event, and we don't anticipate that will be recurring.

Okay. And obviously, there's been a lot of reports that as pressure pumping weakened in the fourth quarter during the RFP season, it was kind of bad timing from that standpoint. But as you kind of look to 2025, do you anticipate any kind of reductions there, particularly on the pressure pumping side, due to increased competition as we kind of move through 2025? I know you're more in the spot market than contracted market, but are you seeing that as well?

Don, this is Ben. We -- it's very difficult to predict. Again, we did see some improvement there in the fourth quarter. Many of the customers we work for in the -- during the fourth quarter, we have opportunities with well into 2025. So, at this point in time, we don't we're not currently anticipating any or see on the horizon any particular softness arising. Likewise, we certainly can't say that we are highly optimistic that our revenues there will continue to progress, but we feel pretty good about who we're working for right now and the level of activity we have currently.

Hey Don, one -- just when the year started, we had a lot of weather issues across the country. So, that impacted everybody. So, that's -- as we started Q1, things started a little slower, but that's less about customers, more just about weather and we think that's really going to impact everybody in Q1.

Right. Okay. And I think I asked this every quarter, but given your cash hoard on the balance sheet and your propensity to do M&A, how is that market looking today? I mean, obviously, deals kind of slowed down as we moved through 2024 as the bid and ask kind of widened some. But are the bid/ask spreads coming closer into parity or where you think that it's a value to actually deploy some of that capital and grow into some of the other business lines?

Yes. We're certainly -- Don, this is Ben. We're certainly interested in trying to create some growth with some accretive acquisitions with respect to the bid/ask spreads and where those are heading or where they've been, I can't -- I mean, we have a number of things we've looked at. I'm not sure we could say that we've got a large enough universe of opportunities to specifically say we're seeing those spreads change. I don't know that we could speak to that directly. Maybe an investment banker seeing many more opportunities could speak to that. But obviously, there's been a lot of volatility, right? The OFS market did see some increase in share prices within the last few weeks, but we've also recently seen some weakness. So, it's variable, difficult to predict, but we'll just have to see. And obviously, that's part of the process to try to reach a deal, reach an agreement that hopefully is a win-win situation and can be accretive to our results. That's clearly what we're looking to achieve.

Appreciate all the color. I'll turn it back. Thanks.

Thanks Don.

Thanks Don.

Your next question comes from the line of Stephen Gengaro with Stifel. Please go ahead.

Thanks. Good morning gentlemen. I apologize if this was asked. Did you give the product line breakdowns for the quarter?

I did, but I'm happy to do it again.

I can -- I'll look at the transcript. You don't have to say it again. It's fine.

Okay.

Can you -- you mentioned in the press release the insurance settlement. And did you give -- or the insurance -- elevated insurance costs, did you give a magnitude of that? I'm trying to kind of calibrate the impact that had on the margins and the EBITDA in the quarter.

Yes, I don't think we gave an exact number. It was a few million dollars, and it was less of a settlement and more we have some changes in our deductibles and everybody's insurance costs are going up and ours kind of reset in the fourth quarter. So, the actuaries do their magic, and we are a bit surprised by the amount of the impact, but it definitely impacted our margins.

Okay, great. Thanks. That is helpful. And then just a final one. When you talk to customers on the pressure pumping side, and I know the dynamics are fluid and there's been some pricing pressures as others have talked about, but what are the conversations like as far as kind of contract term and -- I believe you guys have talked a little bit about over the last year trying to get maybe a little bit more -- and a little less spot market work, where does that kind of situation stand right now?

Steve, for us, we still don't have any long-term firm contracts. These are all just sort of customer agreements. We are pleased with the direction of the mix of our business. We do have -- we've come into in the last several months, some opportunities that we would call more semi-dedicated. They're not necessarily -- there's not line of sight for the next year plus, but we do have kind of a multi-month view. So, that's good. We're pleased with where it is today. and we'll continue to work on that and try to improve that mix, maintain that and hopefully improve it a bit.

Great. The final question I had was you've talked on the dual-fuel fleet side, and I'm pretty sure to date, you haven't done anything on the electric side. We've heard that operators kind of prefer the flexibility of dual-fuel in a lot of cases. What do you see in the market? And are e-fleets something that you're considering? Or do you think you'll stick with sort of the dual-fuel approach?

Yes, it varies from customer-to-customer, and dual-fuel does have some flexibility that electric doesn't. That is a true statement. We said before and continue to say we're not going to address or right or wrong lack of electric fleet capability. We're not going to lean into that and begin to invest in that over a multiyear prospect. We'll -- is it an issue? I mean it's a segment of the market that we're currently not competing in, and we're not going to compete in that from an organic perspective. So, we'll continue to lean in. There's -- the technology continues to evolve and change. Customers like to have the latest and greatest technology. There are some new technologies that are on the horizon. So, we'll just see. We'll continue to monitor it. We do like the flexibility of the Tier 4 dual-fuel. And so we'll see where it goes from there. But we're -- again, we're not going to lean into an electric offering from an organic perspective.

Great. Okay. Thank you for the color gentlemen.

Thank you.

Thank you.

Your next question comes from the line of [Indiscernible] with Gabelli. Your line is now open.

Hi guys. Thank you for taking my question. Morning. How are you?

Good.

Yes, I guess most of mine got asked. But just in terms on your CapEx guidance for 2025, I know you said $50 million range between it. So, that's kind of pricing in, I guess, one fleet. So, I was just wondering your outlook and whether you think the chances that you're going to get another fleet and what the lead-time for that might be?

Well, actually, that range, I think we said that, that does not include a new Tier 4 DGB in that range that we communicated. We're going to watch it. If we can get some firm commitments enough from a customer, we'll certainly move up that decision. But in terms of the timeline, it's probably -- it hasn't changed a whole lot in terms of what we know or what we're told. It's probably a six to nine-month process to get a full fleet ordered and delivered. So, that's kind of where we are. We're playing it that way at this point in time. We'll see. Again, we've got some good customer relationships, semi-dedicated, pretty well keeping us busy. So, we'll see. That will be a decision a little bit down the road. But we'll keep you guys apprised.

Okay, awesome. Thank you. Thanks for the update. I'll turn it back.

Thank you.

[Operator Instructions] There are no further questions at this time. That concludes our Q&A session. I will now turn the conference back over to Mr. Ben Palmer for closing remarks.

Thank you very much, everybody. Appreciate you joining us this morning and appreciate your questions and your interest. Hope you have a good rest of the day and look forward to touching base. Take care.

Ladies and gentlemen, that concludes today's call. Please be reminded that the conference call will be replayed on rpc.net within two hours following the completion of the call. You may now disconnect. Thank you all for joining.