Earnings Discussion Transcript for RPC during Q2 of 2025, unedited
RPC Inc's second quarter of 2025 financial performance saw a significant improvement, thanks to the acquisition of Pintail. The deal contributed approximately $99 million to total revenue, accounting for about 23% of the total, and drove a 26% sequential revenue increase to $421 million.
The acquisition expanded RPC's service portfolio, with non-pressure pumping services making up 74% of total revenues. Notable service lines that saw growth during the quarter include downhole tools, coiled tubing, rental tools, and tubular services.
Operational efficiency improvements are reflected in a 90 basis point rise in adjusted EBITDA margin to 15.6%, with adjusted EBITDA up 34% to $65.6 million and operating cash flow at $92.9 million. However, free cash flow was more modest at $17.6 million due to high capital expenditures.
RPC's Q2 EPS was $0.08, slightly below the forecasted $0.09, resulting in an 11.11% negative surprise that pressured the stock price, which fell 5% in pre-market trading following the earnings release. Net income was $10.1 million, down 16% sequentially, but adjusted net income rose 46% to $17.5 million, showing improved underlying profitability excluding certain items.
The effective tax rate was unusually high at 41.3%, due to non-deductible acquisition costs. However, a full-year effective tax rate is expected in the mid-thirties percent range.
Operational challenges remained in pressure pumping services due to weather and customer delays. Management has retained a cautious outlook for H2 2025 amid pricing pressures and macroeconomic uncertainties.
The Pintail acquisition also expanded RPC's blue-chip customer base and wireline revenue share. Pintail's specialized wireline/completions services complemented RPC's legacy lines.
RPC experienced a more than 200% increase in third-party nonproductive time in pressure pumping, leading to operational inefficiencies. However, other service lines such as downhole tools, coiled tubing, rental tools, and tubular services saw revenue growth during the quarter.
Looking ahead, RPC plans to test a 100% natural gas pressure pumping unit as part of its strategy to evaluate alternative technologies. The company also expects capital spending for 2025 to be between $165-$215 million, focused on maintenance and opportunistic purchases plus IT upgrades.
In summary, the Pintail acquisition materially increased RPC’s revenue and improved operational margins and cash flow metrics in Q2 2025, enhancing service diversity and customer base. However, earnings slightly missed expectations and operational challenges in some segments persist, leading to a prudent outlook for the rest of the year.
[1] RPC Inc Q2 2025 Earnings Release [2] RPC Inc Q2 2025 Earnings Call Transcript [3] RPC Inc 2025 Capital Spending Guidance [4] RPC Inc Q2 2025 Financial Presentation [5] RPC Inc Q2 2025 Investor Presentation
- The acquisition of Pintail not only boosted RPC Inc's earnings but also expanded their service portfolio, particularly in non-pressure pumping services such as downhole tools, coiled tubing, rental tools, and tubular services.
- The Pintail acquisition also added energy industry players to RPC's blue-chip customer base and increased wireline revenue share, complementing RPC's existing legacy lines with specialized wireline/completions services.
- In an effort to improve operational efficiency, RPC Inc plans to experiment with a 100% natural gas pressure pumping unit, reflecting their interest in evaluating alternative technologies.
- Looking to invest wisely, RPC Inc anticipates capital spending for 2025 to fall between $165-$215 million, with funds allocated to maintenance, opportunistic purchases, IT upgrades, and select oil-and-gas industry acquisitions.
