Revenues Decreased In Q1: Quarter-over-quarter, RPC’s (RES) revenues decreased by 4.3% in Q1 due primarily to weaker oilfield services activity and continued pricing pressures. The Q1 result reflects a deterioration from a rise in revenues in the previous quarter. Despite the topline fall, Pumping industry capacity and pricing indicated a steady completion activity environment. RES’s management expects onshore activity to recover in 2H 2024 as its plans to place a new Tier 4 dual-fuel frac spread in service mid-year 2024 remained unchanged.

Net Income Dipped In Q1: RES’s net income decreased by 32% in Q1 2024 compared to a quarter ago. Its adjusted EBITDA margin contracted by 340 basis points during this period. Selling, general, and administrative expenses increased in Q1 due to higher employment costs. Lower revenues and higher SG&A resulted in the EBITDA margin contraction in Q1 and the fall in net income. The high share of fixed costs in its service lines adversely affected the net income. Read more about the company in our previous article here.

Balance Sheet Unchanged But Cash Flows Down: RES maintained a debt-free balance sheet as of March 31. This, along with a cash balance of $212 million and a $100 million revolving credit facility, would allow for share buybacks and continue with dividend payments ($0.04 per share). However, its free cash flows declined severely in Q1 compared to a healthy and positive FCF a year ago, which can be concerning for investors.

Thanks for reading the RES Take Three, designed to give you three critical takeaways from RES’s earnings report.  Soon, we will present a second update on RES earnings, highlighting its current strategy, news, and notes we extracted from our deeper dive.