RPC, Inc. Aktie

You You Good morning, and thank you for joining us for RPC Inc's second quarter 2026 earnings conference call. Today's call will be hosted by Ben Palmer, President and CEO, and Mike Schmidt, Chief Financial Officer. At this time, all participants are in listen-only mode. Thank you. 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. We'll now turn the call over to Mr.

Schmidt. 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 10K and other public filings that outline 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.

Thank you, Mike, and thank you for joining our call this morning. Before turning to our second quarter results, I want to briefly address the CES succession announcement we made in June. As we announced, I plan to retire as President and CEO and step down from the board by the end of 2026, following 30 years with RPC. The board has initiated a search for my successor, which is expected to conclude before year end, and I will remain in an advisory capacity to support a smooth leadership transition. It's been the privilege of my professional life to spend the past three decades at RPC. Together with our talented team, we've built a diversified platform underpinned by strong brands, low leverage balance sheet and a disciplined focus on full cycle returns. I'm committed to working closely with the board to ensure continuity for our employees, customers and shareholders.

And in the meantime, our focus remains on discipline execution, prudent capital allocation, and delivering long-term shareholder value. With that, let's turn to our second quarter results, and I'll provide you with a few operational highlights. While industry activity levels remained relatively subdued, RPC delivered sequential revenue growth and meaningful margin expansion driven by strong execution, improved job mix, technology adoption, and contributions from targeted investments. Within technical services through tubing solutions, downhole tools revenues increased 10% sequentially. We saw broad-based strength with our Rocky Mountain region growing more than 20% sequentially. ThruTubing Solutions is a market leader in downhole completion tools with a portfolio of products supported by proprietary technologies and our patent portfolio. Over the last several years, we have introduced new motor sizes, new motor components, split string tools, surface tools, and stage isolation products, just to name a few.

These products have been well received and allow us to continue our market leadership. Retrieving Solutions has introduced new sizes of its metal on metal power section called Metal Max, along with expanding availability across districts. This has resulted in increased addressable market and improved Metal Max penetration. MetalMax's performance and design characteristics are enabling entry into new markets and applications previously served by traditional power section components. The product reduces the number of trips an operator has to make out of the hole, reducing non-productive time. Our ThruTubing Solutions team completed multiple horseshoe wells in the Permian, exceeding 27,000 feet over the last several weeks. In addition to long lateral sections, these wells have added friction and complexities due to the turns.

We collaborate with operators to package a solution that will drill out the well in the most efficient and reliable way. Through Teeming Solutions Unplugged technology, which replaces traditional drill bridge plugs, continues to have success during In the quarter, we had several additional customers trial this product. Overall, our downhole tools business is benefiting from more complex and longer laterals that are well-suited for our technology solutions. Also within technology services, Cut Pressure Control's revenues were up 8% sequentially, led by coil tubing, snubbing, and well control. Cut Pressure Control's snubbing business was up 14% sequentially. We received a big bore snubbing unit during the quarter and began work in early June. The unit has since mobilized to a multi-project job.

The Big Boar's design features make it ideally suited for cavern gas storage inspections, which is regulatory driven. This is part of our effort to continue diversifying beyond well completions. Coil tubing, our largest service line within Cub Pressure Control, was up 6% sequentially. Coil tubing had the strongest growth in Elk City, which serves multiple basins. as well as growth in Pennsylvania and Michigan. We saw increased utilization across all of our larger diameter units with the two and seven H unit fully utilized. As part of our multi-year quality of the strategy, we have accelerated our investments here. expect a total of three 2-8 7th capable units by year end with two coming from real trailer upgrades to previously modernized units and one from the previously delivered Trailblazer unit. These upgrades provide additional large-sampler capabilities to be deployed to the highest-return markets.

While the wireline market conditions remain highly competitive, we have remained disciplined on pricing and continue to maintain a strong position with key customers. Intel wireline revenues were down 16% sequentially. Revenues were impacted by customer activity reductions and lost crews due to aggressive competitor pricing. Cut Energy Services pressure pumping business saw a 1% sequential revenue decrease. Revenues benefited from slightly improved pricing but was also offset by slightly lower pump hours. Job mix impacted revenues as we saw less fuel and M&S costs and revenues but benefited our profit margin. Our focus remains on continuing to earn an appropriate return on our equipment over a cycle, but without significant activity changes, we do not see meaningful increases in pricing.

Generally we have no plans to reactivate fleets at current levels. However, we are encouraged by easing gas takeaway constraints and the potential for 27 EMP budgets to reflect a more supportive commodity price environment. Current oil prices are more supportive of activity levels. However, the volatility from geopolitical events creates a less certain environment for customer investment decisions. We believe operators are being cautious due to uncertainty around the duration and ultimate levels of commodity prices. We do not expect a significant change in activity near term, but we acknowledge the dynamic nature of the market and are in a position to respond. Our focus is on controllable factors, strong full cycle returns, and cash flow generation.

With that, I'll now have Mike discuss the quarter's financial results. Thanks, Ben.

Our second quarter financial results with sequential comparisons to the first quarter of 2026 are as follows. REVENUES INCREASED 1% TO $461 MILLION. Breaking down our operating segments, technical services, which represented 95% of our total second quarter revenues, were up 1%. support services which represented five percent of revenues were up 11 percent The following is a breakdown of the second quarter revenues for our largest service lines. Pressure pumping, 30.3%. Downhole tools, 25.3%. wireline 19.2%, coil tubing 8.8%. CEMENTING, 6.2%. RENTAL TOOLS, 3.6%. Together, these service lines accounted for 94% of our total revenues. Cost of revenues excluding depreciation and amortization was $346 million compared to $356 million in the prior quarter. This decrease was primarily related to job mix as we provided lower levels of materials and supplies and fuel for customers during the quarter.

SG&A expenses were $52 million, up from $48 million in the prior quarter. increase due to some incentive comp, higher bad debt expense, and some other consulting expenses. As a percent of revenue, SG&A increased 60 basis points to 11.2%. Depreciation and amortization was $43 million, slightly up from the previous quarter. The effective tax rate was lower compared to the previous quarter, primarily due to smaller impact of the permanent adjustments on increased pre-tax income. ADJUSTED DELUDED EPS WAS $0.08 PER SHARE IN THE SECOND QUARTER. ADJUSTMENTS TOLD $0.03 PER SHARE AND RELATED TO THE ACQUISITION-RELATED EMPLOYMENT COSTS. Adjusted EBITDA was $66 million, up from $53.5 million.

Adjusted EBITDA margins increased 250 basis points sequentially to 14.3%. EBITDA margin benefited by modest pricing improvements, better job mix, operational leverage from higher revenues at several locations, and AND A SALES TAX REFUND. NET CASH PROVIDED BY OPERATING ACTIVITIES YEAR TO DATE is $75 million. And after CapEx of $71 million, free cash flow is $4 million. Working capital has been impacted by higher revenues and the timing of customer payments. AT QUARTER N, WE HAD APPROXIMATELY $180 MILLION IN CASH, $30 MILLION NOTES PAYABLE, AND NO BORROWINGS ON OUR $100 MILLION REVOLVING CREDIT FACILITY, WHICH WE AMENDED AND EXTENDED DURING THE QUARTER THROUGH JUNE 2031. Our regular cash dividend remains unchanged at 4 cents per share.

Dividend payments totaled $17.7 million today. We expect 2026 capital expenditures in the range of 170 to 190 million dollars. We raised the range due to targeted growth investments where we see strong full cycle returns, particularly in the areas that can further differentiate our service offerings. Given the timing and lead times, some of the spend may ultimately occur in 2027. we will continue to adjust our spend based on project returns and opportunity.

I'll now turn it back over to Ben for some closing remarks. BEN BEDERSON, Okay. Thank you, Mike. While we remain cautious regarding the pace of broader industry improvement, we believe RPC is well positioned with differentiated technologies, a strong balance sheet, and the financial flexibility to pursue attractive opportunities while continuing to generate cash and deliver strong returns. and strong full cycle returns. I want to thank all of our employees who put in tremendous work to provide high levels of service value to our customers every day. Thank you for joining us this morning, and at this time, we're happy to address any questions.

We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. Withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. please stand by while we compile the Q&A roster. If you would like to ask a question, please press star 1 to raise your hand. Your first question comes from the line of John Daniel with Daniel Energy Partners.

John, your line is open. Please go ahead.

Thank you. Good morning, guys. Morning, John. Ben, first of all, I just want to thank you for the support over the years and wish you a great retirement. Hopefully you'll come to Midland for the Barber Club in November. So, I only really have one question. I have two. Thank you. On the coil tubing, the upgrades, are you seeing... Are they staying in one basin or do you see the opportunities to take them across the U.S.? And just your thoughts on where that could go over the next couple of years.

years in terms of need for more of those units. Um, yes, it.

Yes, we've done a lot in South Texas, the VidCon, and the Permian. That's where our focus has been, but obviously they are mobile, and particular customer relationships will have a big bearing on where we send those. Yes. I would see at this point in time, those particular basins are the ones that we would probably be focused on. We don't see any big shifts at this point in time in that.

Okay, and then I think that I'm going to squeeze one more just on your on the frac side of the business I know you don't I don't think you're going to disclose how many fleets you get running a day But just just some thoughts on Do you see opportunities for incremental horsepower deployments?.

In terms of increased, I would say no. What we are doing, though, we are supporting the business, we are making selective, you call them upgrades or whatever you know as equipment uh obviously something you manage over over time in terms of uh older units or those refurbed or replaced obviously we're upgrading those to the newer technology obviously leaning more and more uh into uh the the equipment that is either entirely or the DGB type of equipment. So that's ongoing. that process of doing those upgrades. I would say again, we're trying to remain disciplined as we have over time. We're not aggressively trying to upgrade. We're trying to be prudent. use what we have that's available, that we can generate decent returns with, but we're able to, you know, the business is able to... you know, fund those needs that we're willing to put back into the business.

Okay, well thank you very much and again congratulations. Thank you John, appreciate that very much.

If you would like to ask a question, please press star 1 to raise your hand. We have reached the end of the Q&A session. I will now turn the call back to Mr. Ben Palmer for closing remarks.

Okay, thank you, operator, and thank you for listening in. We appreciate it. Hope you have a good rest of the day and look forward to checking in. Take care.

This concludes today's call. A reminder that the conference call will be replayed on www.rpc.net within two hours following the completion of the call. Thank you for attending. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good morning, and thank you for joining us for the RPC, Inc. First Quarter 2026 Earnings Conference Call. Today's call will be hosted by Ben Palmer, President and CEO; and Mike Schmit, Chief Financial Officer. [Operator Instructions] I would like to invite everyone at this conference 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 10-K and other public filings that outline those risks, all of which that 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.

Thank you, Mike, and thank you for joining our call this morning. Today, we'll talk about our first quarter results and provide you with a few operational highlights. First quarter results reflect a sequential revenue increase across the majority of our service lines despite the winter storms early in the quarter. Demand strengthened as the quarter progressed. Within Technical Services, Thru Tubing Solutions, downhole tools revenues increased 11% sequentially. We saw broad-based strength with most geographic regions growing double digits. .

Thru Tubing Solutions is a market leader in downhole completion tools with a portfolio of products supported by proprietary technologies. We have introduced a number of new products in recent years that have helped expand our market leadership position. Thru Tubing Solutions continues to roll out of its new metal-on-metal power section, Metal Max. Adoption is accelerating with growth across both geographic markets and motor size offerings as inventory availability expands.

Metal Max's performance and design characteristics are enabling entry into new markets and applications previously served by traditional power section components. Over the past 6 months, Metal Max has strategically displaced conventional power sections, but still only represents 15% of our power section utilization. We continue to see meaningful opportunities for further displacement as customers increasingly recognize the product's performance and value. Thru Tubing Solutions on [ Plug ] Technology, which replaces traditional bridge plugs is picking up momentum with several operators opting to utilize the technology as their primary stage isolation method. We are also seeing success with our new surface laboratory technology, particularly in longer laterals. Overall, our downhole tools business is benefiting from longer laterals and the need for technologies to deal with the related completion challenges.

Also within Technical Services, Cudd Pressure Control revenues were down 7% sequentially, led by weakness in the Rockies region and tough comparables and well control as the fourth quarter had multiple large well control events. This was partially offset by nitrogen, which was up 13% and snubbing, which was up 8% as equipment was well utilized during the quarter.

Cudd Pressure Control snubbing business is expected to receive and begin testing the big bore snubbing unit later this month. This unit was specifically designed for cavern gas storage work and was built to support a long-term customer with its storage well maintenance schedule. This work is regulatory driven and as part of our efforts to continue diversifying into other markets. [ Coiled tubing ] our largest service line within Cudd Pressure Control was down 7% sequentially.

Coiled tubing using based tough comparables in the Rockies and Northeast regions. Our new 278 unit continues to be well utilized. And we are upgrading an existing unit to handle the larger 2 7/8-inch tube. Pintail Completions, the largest wireline provider in the Permian Basin generated revenues that were relatively flat sequentially. Given our leading market position, we expect Pintail's business to trend closely with large Permian operator activity. Cudd Energy Services pressure pumping business saw a 20% sequential revenue increase due to job mix, primarily from operators, and we provided materials and supplies, along with fuel during the quarter.

We have no plans to react fleets at current pricing levels, but we are cautiously optimistic based on higher oil prices and less calendar white space. However, natural gas takeaway capacity, particularly in the Mexico good limit improvement in customer activity. Overall, we see recent geopolitical developments as incrementally positive as pricing pressures appear to be subsiding and current activity is being supported by higher commodity prices. However, we believe operators are cautious and concerned about the duration of higher crude prices and the perception of capital budget increases in the equity market.

As such, we have only seen modest responses by customers since the Middle East events began. Our focus remains on full cycle returns, but our balance sheet affords us the optionality of leaning into certain markets where we see additional upside. We will continue to evaluate these opportunities with our focus being on cash flow generation and maximizing value over the long term. And with that, Mike will now discuss the quarter's financial results.

Thanks, Ben. Our first quarter financial results were sequential comparisons to the fourth quarter of 2025 are as follows: revenues increased 7% to $455 million compared to Q4 '25. Breaking down our operating segments, Technical Services, which represented 95% of our first quarter revenues was up 7%. Support Services, which represented 5% of revenues was flat. The following is a breakdown of our first quarter revenues for our largest service lines. Pressure pumping was 31%. Downhole tools was 23.3%, wireline 22.7%; coiled tubing 8.5% cementing, 5.8% and rental tools 3%. .

Together, these service lines accounted for 94% of our total revenues. Cost of revenues, excluding depreciation and amortization was $356 million compared to $330 million in the previous quarter. This increase was primarily related to job mix as we provided higher levels of materials and supplies and fuel for customers during the quarter. In addition, the prior period also reflected the impact of transitioning of wireline cables accounting to expensing. SG&A expenses were $48 million, up slightly from the prior quarter.

As a percent of revenues, SG&A decreased 60 basis points to 10.6%, primarily due to only a modest increase in SG&A with the increase in revenues. Depreciation and amortization was $43 million, up from $39 million in the prior quarter. Fourth quarter D&A reflected a $3 million reduction related to the change in wireline cable accounting. The effective tax rate was unusually high during the quarter due to the disproportionate impact of permanent nondeductible items, mainly acquisition-related employment costs on a relatively low pretax income.

Adjusted diluted EPS was $0.03 in the first quarter, adjusted totaled $0.03 per share and related to acquisition-related employment costs, adjusted EBITDA was $53.5 million down from $55.1 million. Adjusted EBITDA margin decreased 110 basis points sequentially to 11.8%. The decrease was due to several factors, including higher materials and supplies, higher fuel costs and lower other income. Operating cash flow year-to-date was $31 million and CapEx of $32 million. Free cash flow was negative $1 million.

Operating cash flow was negatively impacted by increased revenues that resulted in higher working capital, specifically higher accounts receivable being a meaningful use of cash along with unearned revenue that we benefited from in the fourth quarter, partially offset by higher accounts payable. At quarter end, we had approximately $201 million in cash, a $50 million seller finance note payable and no borrowing on a $100 million revolving credit facility.

Our regular cash dividend remains unchanged at $0.04 per share. Dividend payments totaled $8.9 million. We expect 2026 capital expenditures in the range of $160 million to $180 million. We raised the low end of the range versus the prior quarter due to opportunistic asset purchases that we were able to deploy. Recall our 2026 range includes approximately $15 million delayed from late 2025. We will adjust our spend based on project returns and opportunity.

I'll now turn it back over to Ben for some closing remarks.

Thank you, Mike. We are cautiously optimistic about the rest of the year as commodity prices are more supportive of activity than they were entering 2026. Much will depend on operators' ability to hedge at higher prices, the duration of higher commodity prices and service companies discipline in a more supportive market. .

I want to thank all of our employees who have put in tremendous work to provide 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] Our question comes from the line of Don Crist with Johnson Right.

Obviously, things are moving pretty quick with the conflict overseas and oil pricing where it is today. Ben, just your thoughts around the spot market here and pricing in the spot market. Obviously, compared to your competitors, you have more spot working market exposure, generally speaking. Just curious as to what you're seeing and hearing from your customers out there.

Thanks for the question, Don. We as part of what we tried to relay in our comments there is -- certainly, this environment with the prices is supportive. I'll say that we have seen some firming up, we have seen emphasis of some firming. I wouldn't say it is not broad-based yet at this point. So I would say it's incrementally positive, but like I said, it's not really broad based yet at this point. .

Don, Sorry, just to point out too, spot really impact -- you're referring to pressure pumping, and that's really only 31% of our overall revenue.

Well, I was just wanting to say it's not across all kind of product lines, right? Because I would assume that crude tubing and coil which is the fastest kind of return dollars from an operator's perspective would see some firming as well?

Some, but they have a lot of larger customers. So really, I mean, spot is not a big part of their business as it is for pumping.

Okay. And then obviously, you stacked a few fleets over the past couple of quarters, and I don't know what state those fleets are in, but I would assume that they could be brought back fairly quickly if that call arises. Just any thoughts around the yards to bring back equipment or upgrade equipment here and the potential cost to bring back a fleet, I would assume that it's $3 million just for fluid and stuff like that, but any thoughts around the reactivation cost for a fleet?

There hasn't been a lot of discussion about that because like I said, they really haven't been broad-based opportunities to really look at that seriously. I mean, at the current pricing levels, no, we would not reactivate a fleet. There are some discussions going on that could result in us perhaps looking at that, but we would need some visibility into, obviously, the pricing and the duration of the work and the volume of the work that was going to occur.

In terms of time, the fleets that you prefer to that we have stacked, those are no longer staffed. So it would take some time and some planning to be able to restaff those. And you're right, the comps that we were to reactivate that they would be not necessarily all of them, we need to have fluid ends we placed. So the cost really depends. But historically, you're right. If you needed to replace a full fleet worth of fluid ends, that's probably a reasonable estimate. But I think it's still at this moment, it's still a little bit early. It's a good question, a reasonable question, but it's a little bit early. We're really not talking about leaning into reactivating fleets. I think the first thing we would try to do is take advantage of higher prices and with the fleets that we already have deployed.

And Don, just point out those fleets are both our Tier 2 diesel fleets, which aren't as customers are more focused on, obviously, dual fuel and lower cost. Diesel is pretty expensive right now. So that's the other factor there.

I appreciate the color. If I could sneak in one more on the labor side. Are you able to get people today if you tried? Or do you think that, that would be more difficult given the current environment and people leaving to go to Amazon or other places?

Well, we haven't been hiring a tremendous amount and not trying to increase the staffing. So we don't know for sure. But that could present a challenge, yes. That hopefully would play into the ability to firm up pricing as well, right?

[Operator Instructions] Our next question comes from the line of John Daniel with Daniel Energy Partners.

I listened a lot of the E&P calls as I read the press releases, it's essentially flattish with a couple of one-offs, I think Don alluded to in terms of incremental rigs, you listen to the land drillers, they're all kind of calling for higher activity in Q2 and with prospects for more work going on in the back half. I'm just curious, what do you think the disconnect is? And for some of your product lines that might be tied more to the drilling side, are they seeing a similar rise of activities, maybe what the land driller ship [indiscernible] any color on there.

I mean I think that -- we hope that, obviously, as drilling improves, then that will improve some of our businesses, as you alluded to. And the pricing still hasn't caught up. I mean there is -- there has an upward momentum, but I think the disconnect is we haven't -- and I think other someone haven't really seen the increase in pricing yet to really push us to start moving. So we still have kind of supply demand. And so until it actually starts and we start getting a fair price making it worthwhile. You'll probably see more activity -- it's just -- hopefully, we read your note this week, hopefully, that factor, we see 50 new rigs come on that will help drive pricing activity.

John, our business, our rentals business is a relatively small percentage of our total revenue, and it's a nice business, has good margins, a lot of OpEx costs, therefore, increased revenue can really drop to the bottom line. So it has been a little bit -- had a little bit of a challenge in the last couple of quarters, but they're seeing some improvement. I don't know that because it's small and have particular regions where they are particularly active. They're seeing a little bit of improvement, but again, I wouldn't say that we're seeing anything that's broad-based yet. .

Fair enough. I hope the forecast is right. I hate looking too stupid. Yes, the next question I've got is just -- and I don't know if this might be too granular and you might not even have the data in front of you, but I'm curious as your guide, the businesses talk about quoting activity, if you had to hazard a guess, the inquiries that are coming in, what proportion of them would you characterize as being from the public operators versus private. Again, you might not have that handy, but if you do, it would be interesting to hear.

The inquiries and questions.

People reaching out to -- more about availability, equipment, et cetera. .

Yes, probably more of the products. I would say. .

[Operator Instructions] With no further questions in queue, I will now hand the call back over to Mr. Ben Palmer for closing remarks.

Well, thank you for joining this morning. We appreciate it. Appreciate your interest, and hope you have a great rest of the day. Take care. .

And once again, I would like to remind everyone that the replay on today's call will be available at www.rpc.net within 2 hours following today's completion of the call. This does conclude today's conference call. You may now disconnect.

Good morning, and thank you for joining us for RPC, Inc.'s Fourth Quarter 2025 Earnings Conference Call. Today's call will be hosted by Ben Palmer, President and CEO; and Mike Schmit, Chief Financial Officer. [Operator Instructions]

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 10-K and other public filings that outline 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 our 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. Today, we'll talk about our fourth quarter results and provide you with a few operational highlights. Fourth quarter results reflect a sequential revenue decline across the majority of our service lines. While October and November were consistent with third quarter monthly activity, we saw weakness in December, particularly later in the month.

During the quarter, service lines other than pressure pumping represented 7% of total revenues and saw a 4% sequential decrease compared to the third quarter of 2025. Although we did see revenues increase at Spinnaker Group's cementing business, [ Patterson's ] services, storage and inspection business and cut pressure control, snubbing and well control businesses.

Within Technical Services, Thru Tubing Solutions downhole tools revenues decreased 9% sequentially. We saw growth in our Southeast and Northeast regions, our largest region the Western MidCon, which includes El City and Odessa locations, was flat sequentially. Weakness was experienced in the international and the Rocky Mountain regions. Thru Tubing Solutions is a market leader in downhole completion tools and includes a portfolio of products and advanced technologies.

We have seen success building since our late 2024 rollout of the [ A10 ] downhole motor. The new motor is positioned in the completions market to specifically address today's longer laterals and higher flow rates. We believe this tool technology provides customers with unmatched performance and has resulted in incremental share gains. Thru Tubing Solutions continues to expand the rollout of its new metal on metal power section component called Metalmax. The product allows for shorter motor design, higher torque output, reduce downtime and improve performance and demanding downhole environments. This improved technology allows us to expand into new markets due to these advantages. We initially prototyped the Metalmax motor in a few key geographic areas and have recently expanded into other regions.

Thru Tubing Solutions continues to actively market and develop its unplug technology. This innovative product reduces and it can sometimes eliminate the need for bridge plugs during the completion of a well and delivers faster drill-out times while achieving highly effective stage isolation. While the product is early in its life cycle, adoption has steadily increased.

Also within Technical Services, Pressure Controls, revenues were up 1% sequentially led by increases in well control activity and snubbing, which was up 13% as this equipment was well utilized during the quarter. At Pressure Control snubbing business expects to take delivery of a big bore snubbing unit in 2026 that is specifically designed for cavern gas storage work. This unit was built to support a long-term customer, their storage well maintenance schedule over the next several years. This work is regulatory driven and as part of our effort to continue diversifying into other markets.

Coil tubing, our largest service line within cut Pressure Control was down 2% sequentially after a really strong third quarter. Our new 2 and [ 78 ] unit continues to be well utilized. We are upgrading an existing coil unit to handle the larger 2 7/8-inch tubing and is expected to be in service by the middle of 2026. [ Bentel ] completions, the largest wireline provider in the Permian Basin experienced a decline in revenues of 3% during the quarter. Given our market position, we expect 2026 to trend closely with large Permian operator activity.

Cut Energy Services press pumping business saw a 6% sequential decrease. This decline largely related to holiday shutdowns and a fleet we idled in October. We do not expect to reactivate any fleets until returns improve. Many of our businesses have been impacted by recent quarter storms early in the first quarter. While activity is expected to continue as conditions improve, these lost operating days are not fully recoverable and the associated costs incurred will impact near-term profitability.

RPC's focus remains on leveraging our strong balance sheet and maximizing long-term shareholder returns. We continue to strategically grow our less capital-intensive service lines, both on organically and through acquisitions. With that, Mike will now discuss the quarter's financial results.

Thanks, Ben. Our fourth quarter financial results were sequential comparisons to the third quarter of 2025 are as follows: revenues decreased 5% to $426 million compared to Q3. Breaking down our operating segments, Technical Services, which represented 95% of our total fourth quarter revenues was down 4%. Support Services, which represented 5% of our revenues, was down 18%. The following is a breakdown of the fourth quarter revenues for our largest service lines, pressure pumping 27.6%, wireline, 24.1%; downhole tools, 22.4%; coiled tubing, 9.7%; cementing 5.9%; and rental tools, 3.4%. Together, these service lines accounted for 93% of our total revenues.

As disclosed in this morning's press release, we made the decision to expense wireline cables that were previously being capitalized beginning in the fourth quarter. This was due to a change in our useful lives because of increased activity and change in work type. The impact is seen primarily through an increase in cost of revenues and a reduction in capital expenditures, but also a modest decrease in depreciation and amortization.

Cost of revenues, excluding depreciation and amortization, was $337 million compared to $335 million in the previous quarter. This increase was primarily related to expensing wireline cables and other materials and supply documents related to job mix.

SG&A expenses were $48 million, up slightly from $45 million. As a percent of revenue, SG&A increased 120 basis points to 11.2%, primarily due to employee incentives and higher other related implanted costs. The effective tax rate was unusually high during the quarter. The higher rate was primarily due to the liquidation of our company-owned life insurance policies that are part of the previously announced dissolution of the company's nonqualified supplemental retirement income plan, coupled with the nondeductible portion of the acquisition-related deployment costs.

Adjusted diluted EPS was $0.04 in the fourth quarter. Adjustments totaled $0.06 and related to the [indiscernible] of wireline cables purchased and capitalized from previous quarters, acquisition-related employment costs and a significant increase in tax expense related to taxable gains on the sale of the company-owned life insurance policies and other investments related to the liquidation of the company's nonqualified supplemental retirement income plan.

Adjusted EBITDA was $55.1 million, down from $67.8 million due to the broad-based declines across the majority of the businesses. Adjusted EBITDA margin decreased 230 basis points sequentially to 12.9%. The adjustments made to EBITDA were made to make future periods more comparable. Operating cash flow to date was $201.3 million, and after CapEx of $148.4 million, free cash flow was $52.9 million. The change to expensing wireline cables reduced both operating cash flow and CapEx, but resulted in no change to free cash flow.

At quarter end, we had approximately $210 million in cash. a $50 million seller-financed note payable and no borrowings from our $100 million revolving credit facility. Payment of dividends totaled $35.1 million year-to-date through Q4 '25. During the quarter, we paid $8.8 million in dividends.

Full year 2025 capital expenditures were $148 million primarily related to maintenance CapEx and inclusive of opportunistic asset purchases as well as our ERP and other IT system upgrades. Capital expenditures were $12 million lower due to wireline cables being expensed rather than capitalized in the fourth quarter. Additionally, we saw approximately $15 million in anticipated capital expenditures delayed in 2026. Due to this delay, we expect 2026 capital expenditures in the range of $150 million to $180 million. We'll adjust our spend based on activity levels.

I'll now turn it back over to Ben for some closing remarks.

Thank you, Mike. 2025 was a challenging year with year-end oil prices reaching its lowest level since COVID. While we have seen recent improvement in oil and gas natural gas prices, we need further increases in dispersed significant customer activity levels. Our management teams have experienced many cycles over the years, and we will continue to focus on costs returns and maintaining financial flexibility. This flexibility allows us to take advantage of opportunities that arise and to pursue growth opportunities through selective investment for organic growth, investment in new technologies and M&A within our existing markets and the broader energy sector.

I want to thank all of our employees who put in tremendous work throughout high levels of service and value to our customers. Thank you for joining us this morning. And at this time, we're happy to address any questions you might have.

[Operator Instructions] Your first question comes from the line of Don Crist with Johnson Rice.

My first question, and Ben, I don't want to pin you down to any kind of guidance for the first quarter. But given the weather impacts for the first, call it, 2 weeks of the year, do you think it kind of shakes out similar to the fourth quarter directionally? And again, I'm not looking for specific numbers here.

To be honest with you, Don, it's a great question. We're still trying to analyze the impact. We do have -- we're quite geographically diversified, but we are concentrated in the Permian and in the MidCon, Oklahoma and both of those areas were hit pretty hard. So a reasonable question. I understand why you're asking, but we don't know yet. But certainly, it's not insignificant. Put it that way.

Right. I understand it's hard to quantify given we still got a lot of winter left. So my second question would be, we've seen a lot of your competitors have challenges in outside of pressure pumping and the other business lines that you all operate in. And a lot of that equipment start to move overseas, the Middle East and other places for unconventional type development. Are you seeing that other business lines, Thru Tubing and coil and wireline start to normalize or some of your competitors go away and have a little bit less competition there as that equipment moves overseas?

Maybe a little bit of that. I don't know that it's a tremendous amount yet. But certainly, every little bit can help. There have been -- we've heard of some competitors and some of those other service lines that are obviously, reorganizing or being sold absorbed by other competitors. So perhaps that is an indication that the market stress is getting to some of the less well-capitalized companies. And hopefully, that will invert our benefit as we move forward.

Okay. And just one last question for me. Obviously, you've been very prudent with the balance sheet over the years and selectively done M&A, but you've got a pretty large cash hoard right now. Any indication that we could see some stock buybacks? Or are you going to just keep that for M&A in the near term?

We're always evaluating the various uses of our capital and buybacks are certainly one of those choices and we'll have to a reasonable question. I wouldn't see us necessarily in the near term doing anything dramatically different, but that's in the tool chest, and we're looking at it.

Your next question comes from the line of John Daniel with Daniel Energy Partners.

You mentioned that the rig was idle in -- is there anything

[Technical Difficulty]

John, a little bit difficult.

Can you hear me okay?

Yes, cut out.

How about now? How about now?

Much better.

Sorry, just driving the Midland. My question is, with the fleet that was idled in October, I know you said October at least in the fourth quarter, is there anything today which would success that you think that fleet comes back this year? And is -- with the reactivation is it function of price? Or would it be a function of if you had a sufficient amount of work even at current pricing? Just how do you think about that?

It's a good question. I would have to -- I mean, we're always looking and evaluating opportunities where, I would say, the probability as we would need to be really comfortable that it's incrementally better pricing. We're not looking for the same pricing at the prior activity levels, right? And as we've always talked over the years, some of the given -- I mean, we do have some customers that we do have nice steady programs with. So it's always a combination of our confidence in how -- say the activity can be at a certain pricing and so forth. So I think we're not in a panic to try to put that fleet back to work. We want to make sure we're comfortable it's going to be generating probably better cash flow than we've recently been experiencing not just for that fleet. But just overall, we would want to present a pretty high profitability that we would have an incremental benefit from bringing the back in service.

Okay. Fair enough. The second question is about M&A. Obviously, you guys have the balance sheet to prosecute deals should you wish to. When you think -- step back and think about just the market, you've got some of your peers that are chasing power, others will be more focused on international. It would seem that the universe realistic buyers of traditional land equipment is kind of diminishing. I don't know if it's -- I think that's a reasonably fair statement. Is that -- would you agree with that? And does it argue you take be very careful. I mean just take your time. There's no rush to do deals if there's limited buyers. Just if you could kind of bloviate on that.

I think that's a good way to set it up. Yes, there -- I'm not [indiscernible] in the entire market. But yes, I don't think there's a whole lot of competition out there for people seeking to buy traditional oilfield services companies, but there are some good companies out there that could be of ones that would either add to some of our existing service lines. It could be a really good strategic fit. But all of it depending on, of course, the trajectory of their business and the price and all of those sorts of things.

So yes, we're not in panic. We traditionally don't lend -- lean into highly competitive bidding situations. And to the entire point, there's probably not going to be situations where there's multiple bidders aggressively going after a particular target. So I think that's a nice position to be in that we can be patient. We do have the balance sheet, not only the capital capacity, but the cash gives us a lot of flexibility and so OFS is something we're looking at. But we do want to be -- we want to open up the aperture of what's the possible. We've been doing some things that are on the edges of other parts of energy, like some of the gas storage work, we don't have any yet that's a significant amount, but we like that diversification. And so we have enough factor to look at even more broadly than we may have in the past.

[Operator Instructions] And your next question comes from the line of Derek Podhaizer with Piper Sandler.

Maybe we could just start with some additional insight -- just some additional insight and maybe some history into the updated wireline accounting treatment. Maybe just why now and not when the deal occurred last year, I think you mentioned a change in work type with the wireline. Just trying to understand better really what happened that caused this change?

Sure. Derek, thanks for the question. Previously, they had an audit. And previously, they were capitalized in wireline, but their business has started changing about the time that we had the acquisition. It's more simul-frac, travel frac and just working more. So it's something we kept our eyes on and that we wanted to make sure we were comfortable with by the end of the year. We were only depreciating them over 18 months previously, which was kind of where they historically have been. But we knew that the type of work was changing. And so we were just monitoring over the last couple of quarters, how much spend we were having on wireline cables. And we were more comfortable that it's closer to under a year. And so rather than letting them build over time and be aggressive, we thought the right thing to do was within our first accounting window, we have enough evidence to at this point before year-end to go ahead and make the switch.

And we focus on free cash flow here, and it doesn't have a ton of -- it has 0 free cash flow impact. So for us, we just thought it was the correct accounting treatment as we looked at kind of how quickly we were using up the cables, which has really changed and started changing as the work changed.

Derek, as you know, too, I mean, we and the pumping industry went through this with fluid -- in a number of years ago. So it's not dissimilar -- as giving dissimilar in that regard. So appreciate the question.

Right. Yes. No, that was very helpful. I appreciate the color. And you did remind me of the fluid issue years ago. I guess maybe a question on Thru Tubing Solutions. You talked about international regions and your footprint there. Maybe can you expand on that, maybe educate us on the location and the type of technology you're deploying there? And how you really see that business growing over the next couple of years?

Yes. Well, with respect to the color on international, we have pared back significantly our international business from where we were a number of years ago. Thru Tubing Solutions has the largest presence internationally of our service lines. The Middle East is where we have the most activity and that's the area that experienced the weakness that we were referred to.

In Canada is the area where we do some work historically and have center work in Canada consistently.

Got it. Is there any renewed focus as far as the Middle East and the buildout of unconventionals and through being a potential growth trajectory for you, maybe reigniting just given the unconventional build out of the Middle East? Or is that not the correct read through?

It's possible. We've kind of several years to kind of change our business model there. So we had less of a physical presence, we're making the tools and the technology available. So yes. I mean I think our tools certainly can perform very well in those environments like we do here in the state. So I would expect and hope that we would have some improvement there. But like I said, we're not directly the ourselves. So we're working through other groups and making our tools available to them. So we'll have to say hopefully they can be successful and we can increase some revenues there. So it's not anything that we're counting on in any of our current forecast, but we hope it does come to fruition.

Got it. Okay. That's helpful. And then maybe just a third question, a quick state of the union on the current spot market in pressure pumping. How is the competition and it's always been oversupplied, but you stack the fleet, and I'm sure some of your competitors have stacked fleet. I'm not sure if any of the smaller mom-and-pop privates have gone away just given where pricing and activity has gone to. Obviously, we have accelerating attrition as well. So maybe could you help us further understand the state of the market today? Do you see competition reducing any sort of secular fundamental improvement that we could potentially see in the spot market as we work through the year?

We're not seeing anything dramatic yet at this point. Of course, some there's -- some of the consolidation that was occurring over the last couple of years has resulted in us selling off some of the some of the properties and things like that, and that brings in some of the customers that are more spotty looking, if you will. So it could create some opportunities. But it's really more of the same.

I think discipline we're trying to be disciplined and begin with our pricing. Again, one of the reasons we idled the fleet, we've trended a little bit of headcount. So we're trying to do what we can to make the best of the situation. We are certainly continuing to maintain the business, but the returns just improved, and we're hopeful that competitors, there are some mom-and-pops out there that are difficult to compete with. But we continue to support pressure pumping, but we're focused on some of the other service lines that are less capital-intensive and we'll see where all that takes us.

Your next question comes from the line of Chuck Minervino with Susquehanna.

I was just wondering if you could talk a little bit about that 2026 CapEx. It sounds like you had some deferred spend from 2025. But then also, I guess, the wireline cable now comes out of the CapEx. Maybe they were offsetting each other. But if they are you still going to have CapEx up in 2026. So was just curious if you can kind of touch on that a little bit and if there's maybe room for that to come down if you're looking to generate a little bit more free cash flow during the year.

Well, I think we put out there, I think it's a "conservative number" and that it's maybe larger, we could have said something smaller, but we're trying to be realistic with respecting our near term and longer-term plans. I mean, we've always -- certainly, if things move dramatically in one way or the other, so there's awful time long lead times on that. So sometimes you can't immediately cut it off. But we scrutinize our CapEx very, very carefully. Certainly, there's opportunities to reduce it if conditions warrant, the way we run the business, our management teams, they look at their plans, they come up with their CapEx plans. But they know that in terms of unapproved or undelivered equipment, it's always subject to us together with them, making the decision that we're not going to spend that money. So it's not committed, if It's in the budget. That doesn't mean it can be spent.

So we scrutinize it very carefully. So there is an opportunity for that number to come down, and likewise, there could be opportunities for it go up slightly right or something if the opportunity comes along that we can pursue. We've got the balance sheet to be able to do that. So -- but yes, everybody understands that at the end of the day, the free cash flow is where the rubber meets the road and everybody buys into that and understands and just trying to do what's prudent to be able to support our businesses and selectively grow them, but obviously be very, very mindful and particular and selective about CapEx investments will continue to be it.

Got it. And then just one other. In Support Services, I know not a huge piece of the overall revenue pie, but the rental tool revenue down pretty sharply. It sounds like in the late in the year, I know there's always seasonality late in the year. Was that particularly kind of sharper than you've seen historically? And I was just kind of curious if there was any reason for it or any more color you can provide?

Yes. It is -- it was more acute. That business nice little business that's been really, really steady. So I won't say it was a surprise -- kind of thing can always happen in the fourth quarter. It's kind of a you can have 1 or 2 customers that slow down for whatever reason. And I think it too was impacted in the Rockies, similar to Thru Tubing Solutions that we talked about. So it's kind of 1 or 2 customer specific that impacted that.

So it's really just -- some of it was not permanent delays. I mean it's just, obviously, they're a rental tool company and drilling. So this was some delays on drilling some wells. But we leave so many delays. It was just delaying it slightly. So it's not a lost opportunity or anything like that. It was just a delay.

The other comment on that is they had a really great third quarter. But I mean that is pretty tough comparable.

There are no further questions at this time. I will now turn the call back over to Ben Palmer for closing remarks.

Thank you very much, operator. We appreciate everybody calling in and listening and look forward to talking to some of you perhaps later today, and hope you have a good rest of the day. Take care.

Today's call will be available for replay on www.rpc.net within 2 hours following the completion of the call. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, and thank you for joining us for RPC Inc.'s Third Quarter 2025 Earnings Conference Call. Today's call will be hosted by Ben Palmer, President and CEO; and Mike Schmit, Chief Financial Officer. [Operator Instructions] I would like to advise everyone that the 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 2024 10-K and other public filings that outline 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. Today, we'll talk about our third quarter results. In addition, we will share our views about the impacts we are seeing from increasing macro and geopolitical uncertainties, which were prevalent during and after the quarter. Third quarter results reflect a sequential revenue improvement due to increases across the majority of our companies.

We saw the largest increases in pressure pumping, coiled tubing and downhole tools. Service lines other than pressure pumping represented 72% of total revenues in the third quarter and generated a 3% sequential increase. In addition to revenue growth in downhole tools and coiled tubing, we also saw growth in rental tools and wireline. Thru-Tubing Solutions' downhole tools revenues increased 5% sequentially. We saw particular strength in our Rocky Mountain and Southeast regions, which is a testament to the company's broad geographic exposure.

Thru-Tubing Solutions is a market leader in downhole technologies. The company continues to gain traction with its new A10 downhole motor. The motor is proving highly effective, particularly longer laterals, which has translated to market share gain as [Technical Difficulty] motor called [ Metal Max, ] has completed more than 100 runs with major operators [Technical Difficulty] allows for a smaller [Technical Difficulty] output reduced [Technical Difficulty] improved performance demanding pressure, and just making it extremely versatile.

We continue to add units for -- Thru-Tubing Solutions continues to actively market and develop its unplugged technology. Recall, this is an innovative product that reduces and can sometimes eliminate the need for bridge plugs and delivers faster drill-out times while achieving highly effective stage isolation.

We're excited about these new products [Technical Difficulty] further in our industry leadership. Cudd Pressure Control [Technical Difficulty] Cudd Pressure [Technical Difficulty] for gas storage [Technical Difficulty] about its storage well maintenance schedule over the next several years. This work is regulatory driven and is part of our effort to continue diversifying our business.

Recently, Cudd Pressure Control collaborated with a leading industrial contractor to drill a geoexchange well at a major university. That's a multiyear [Technical Difficulty] this is one example of utilizing tools [Technical Difficulty] business increased revenues 1% during the quarter. The majority of our revenue comes from Pintail [Technical Difficulty] which is the largest wireline provider in the Permian Basin. While the Permian completion market remains challenged, we saw increased gun usage in the quarter.

Third quarter benefited from some customer completion accelerations and shifts to simul-frac operations. Cudd Energy's pressure pumping business saw an improvement in overall activity during the third quarter, bolstered by a reduction in third-party nonproductive time and reduced white space. Despite the revenue improvements, we elected to lay down a fleet in October and reduce staffing accordingly.

We will continue to evaluate fleets from a return-based framework. Our deployed fleets are largely supporting customers that we expect will continue completions activity over the next several months. With recent oil price volatility, we expect continued challenging conditions in the oilfield services market over the near term. Cudd Energy Services has received and is deploying a new 100% natural gas frac pump for testing and alternative technology evaluation.

We have an additional unit with a slightly different design on the way as well. Our focus has always been on shareholder returns and managing through cycles. We continue to strategically grow our less capital-intensive service lines, both organically and through acquisitions. We believe our balance sheet offers us optionality in challenging market conditions. With that, Mike will now discuss the quarter's financial results.

Thanks, Ben. Our third quarter financial results with sequential comparisons to the second quarter of 2025 are as follows: revenues increased 6% to $447.1 million compared to Q2. Breaking down our operating segments, Technical Services, which represented 94% of our total third quarter revenues was up 6%. Support Services, which represented 6% of our total third quarter revenues, was up 4%, led by rental tools.

The following is a breakdown of our third quarter revenues for our top service lines. Pressure pumping was 27.9%, wireline 23.5%, downhole tools also 23.5%, coiled tubing 9.5%, cementing 5.4% and rental tools 4.2%. Together, these service lines accounted for 94% of our total revenues. Cost of revenues, excluding depreciation and amortization was $335 million compared to $318 million in the previous quarter.

This increase was primarily due to expenses that vary with increased activity. SG&A expenses were $44.6 million, up from $40.8 million. As a percentage of revenue, these expenses increased 30 basis points to 10%, primarily due to employment incentive accrual adjustments and other payroll costs. Our third quarter's effective tax rate was 42.6%, which was slightly higher than our previous quarter's effective tax rate.

The effective tax rate was unusually high, primarily due to the nondeductible portion of acquisition-related employment costs and a provision to tax return adjustment in the quarter. We expect our effective tax rate to be impacted through the life of the acquisition-related employment costs due to differences between the accounting and tax treatments of these costs. Adjusted diluted EPS was $0.09 in the quarter.

Adjustments totaled $0.03 and were entirely related to the acquisition-related employment costs. Adjusted EBITDA was $72.3 million, up from $65.6 million due to the broad-based increases across the majority of our businesses. Adjusted EBITDA margins increased 60 basis points sequentially to 16.2%. Operating cash flow year-to-date was $139.5 million and after CapEx of $117.8 million, free cash flow was $21.7 million.

At the quarter end, we had over $163 million in cash, a $50 million seller finance note and no outstanding debt on our $100 million revolving credit facility. Payment of dividends totaled $26.3 million year-to-date and through the third quarter. During the quarter, we paid $8.8 million in dividends. Full year 2025 capital spending is expected to be between $170 million to $190 million, primarily related to maintenance and inclusive of opportunistic asset purchases as well as our ERP and other IT system upgrades.

In the fourth quarter, we are planning to liquidate our terminated supplemental executive retirement plan. Related to this, we expect to receive a net cash distribution of approximately $8 million, subject to market changes and to incur a onetime discrete increase in our effective tax rate. I'll now turn it back over to Ben for some closing remarks.

Thank you, Mike. Current oil prices and market uncertainty have contributed to additional near-term risks to the operating environment. Like we have in prior business cycles, we will manage the business prudently, focusing on costs, returns, capital allocation, utilizing our balance sheet to take advantage of opportunities.

We believe our more diversified product offerings and geographic exposure offer opportunities to better position ourselves when fundamentals improve. I want to thank all of our employees who work tirelessly to deliver high levels of service and value to our customers. Thank you 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 John Rice.

I wanted to start with kind of fourth quarter outlook. Obviously, there's a lot of uncertainty as we kind of move into December. Just kind of what are you thinking there? And do you think that activity could kind of snap back in the first part of the year, whether it be from budget exhaustion late in the fourth quarter or whatnot? And kind of what you're seeing from a kind of activity levels over the next 3 months, 4 months or so?

Don, it's Ben. Yes, reasonable question, something that we've all come to realize is a possibility in the fourth quarter. To be honest, at this very moment, we're comfortable with where things are for the fourth quarter, but certainly we'll not be surprised if customers announce some slowdowns for the holidays. So we're bracing for that. And how that impacts? Based on experience, the impacts coming out of that into the first quarter, just depends on how severe the slowdowns are in the fourth quarter.

So it's kind of a nonanswer. We're not certain, but we're trying to remain flexible and diligent and prepared to react to whatever we see out there. Again, reasonable questions, hard to say. But I would say right now, at this moment, we're feeling, I think, as good as possible about the fourth quarter and therefore, how things will hopefully then proceed fairly well and not have too much of a slow start to early next year.

I appreciate that color, and I get that it's difficult to predict. So I wanted to ask more of a kind of high-level kind of business question, and you may want to defer this answer as well. But pressure pumping has become a very big boy game for lack of a better term, with the top 3 or 4 companies having 30-plus fleets running, and you all are kind of on the smaller end of that. Given the performance of your other business lines that seem to be kind of outperforming the general market, does it kind of make sense to pivot to away from pressure pumping and just focus on the other business lines to kind of boost productivity?

Don, it's Ben. I think we've been talking about the fact that that's what we've been doing. Pressure pumping is a lower percentage of -- a much lower percentage of our total revenues than it has been in recent years. We still think we have some opportunities there. But as we've talked before, we're not investing aggressively within pressure pumping, but we're keeping it going.

And we're looking at -- and look and will look -- are looking at a variety of different options there. But yes, I would say that high level, that's what we're doing is focus on the less capital-intensive service lines and pressure pumping does continue to be capital intensive, but we want to be -- we're going to be prudent about how much and when we make significant investments there.

Okay. And just one last one for me. This A10 downhole motor that you all talked about, can you just give us a little bit more detail on how it's differentiated and why the customers are kind of migrating towards it?

It's -- from a performance standpoint, a drillout standpoint, it's much more effective with the longer laterals. And so that's the performance. I mean it's just -- it's a time and efficiency thing. And I think it's through its design and its size. It's something that we focus on constantly.

Thru-Tubing has unbelievable R&D team, engineering team that is constantly making new innovations and improving the performance, and this is yet another example. Again, it just gets the job done more reliably and quicker. And that translates, hopefully, into improved returns for us, additional work, but it also is beneficial to the customer as well.

[Operator Instructions] There are no further questions at this time. I will now turn the call back over to Ben Palmer for closing remarks.

Well, thank you for listening in this morning. We appreciate it very much, and I hope you have a good rest of the day. Appreciate it.

Today's call will be available for replay on www.rpc.net within 2 hours following the completion of the call. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.