ATLANTA, April 26, 2017 /PRNewswire/ -- RPC, Inc.
(NYSE: RES) today announced its unaudited results for the first
quarter ended March 31, 2017.
RPC provides a broad range of specialized oilfield services
and equipment primarily to independent and major oilfield companies
engaged in the exploration, production and development of oil and
gas properties throughout the United
States and in selected international markets. RPC
manages two operating segments - Technical Services and Support
Services.
For the quarter ended March 31,
2017, revenues increased 57.7 percent to $298.1 million compared to $189.1 million in the first quarter of last
year. Revenues increased compared to the prior year due to
higher activity levels, improved pricing and increasing service
intensity in our Technical Services segment and more specifically
our pressure pumping and downhole tools services. Operating
profit for the quarter was $1.6
million compared to an operating loss of $75.1 million in the prior year. Net income
for the quarter was $3.6 million or
$0.02 diluted earnings per share,
compared to net loss of $32.5 million
or $0.15 loss per share last
year. Earnings before interest, taxes, depreciation and
amortization (EBITDA) for the quarter was $46.4 million compared to a loss of $14.1 million in the prior year. 1
Cost of revenues during the first quarter of 2017 was
$216.2 million, or 72.5 percent of
revenues compared to $161.3 million,
or 85.3 percent of revenues during the first quarter of last
year. Cost of revenues increased primarily because of higher
materials and supplies, maintenance and repair expenses which
increased due to higher activity levels and greater service
intensity. As a percentage of revenues, cost of revenues
decreased due to improved pricing for our services and efficiencies
resulting from higher activity levels primarily within Technical
Services.
Selling, general and administrative expenses were $37.2 million in the first quarter of 2017,
compared to $43.5 million in the
first quarter of 2016. These expenses decreased during the
first quarter as compared to the prior year due to lower bad debt
expense and employment costs. As a percentage of revenues, these
costs decreased to 12.5 percent in the first quarter of 2017
compared to 23.0 percent in the first quarter of 2016, due to lower
expenses and improved leverage of higher revenues over fixed
costs. Depreciation and amortization expenses decreased to
$44.7 million during the quarter
compared to $60.6 million in the
first quarter of the prior year due to lower capital
expenditures. Interest expense during the first quarter of
2017 was $103 thousand, a decrease of
68.3 percent compared to $325
thousand in the first quarter of the prior year.
RPC recorded an income tax benefit of $1.8 million during the first quarter of
2017. The 2017 provision reflects a beneficial discrete
adjustment of $2.5 million, or
$0.01 per diluted share, related to
the required adoption of an accounting pronouncement in the
quarter. The amendments in the pronouncement require
excess tax benefits and deficiencies relating to share-based
payment awards to be recognized as a component of income tax
expense rather than stockholders' equity as in prior periods. The
2016 benefit included a one-time beneficial impact of a resolution
of a state income tax matter of approximately $15.7 million.
Discussion of Sequential Quarterly Financial Results
RPC's revenues for the quarter ended March 31, 2017 increased by $77.1 million, or 34.9 percent, compared to the
fourth quarter of 2016. Revenues increased due to higher
overall activity levels, increased service intensity, and improved
pricing primarily in Technical Services and pressure pumping
in particular. Cost of revenues during the first quarter of
2017 increased by $43.2 million or
25.0 percent due to higher materials and supplies costs,
maintenance and repair expenses and fuel costs resulting from
higher activity levels. As a percentage of revenues, however, these
costs decreased from 78.3 percent in the fourth quarter of 2016 to
72.5 percent in the first quarter due to improved leverage of
higher revenues over fixed costs resulting from higher activity
levels coupled with pricing improvement in pressure pumping.
Selling, general and administrative expenses during the first
quarter of 2017 increased slightly compared to the fourth quarter
of 2016. RPC's operating profit during the first quarter of
2017 was $1.6 million, compared to an
operating loss of $32.2 million in
the fourth quarter of 2016. Net income increased to
$3.6 million in the first quarter of
2017, compared to a net loss of $21.1
million in the fourth quarter of 2016 due to the improved
operating environment. For the first quarterly reporting
period since the first quarter of 2015, RPC generated positive
diluted earnings per share of $0.02
compared to a loss per share of $0.10
in the fourth quarter of 2016. First quarter 2017 EBITDA
increased by $30.8 million compared
to the fourth quarter of 2016.
Management Commentary
"Industry activity accelerated during the first quarter of
2017," stated Richard A. Hubbell,
RPC's President and Chief Executive Officer. "The average
U.S. domestic rig count during the first quarter of 2017 was 744,
an increase of 37.0 percent compared to the same period in 2016,
and a 26.3 percent increase compared to the fourth quarter of
2016. The average price of natural gas during the first
quarter was $3.01 per Mcf, an
increase of 54.4 percent compared to the prior year but a slight
decrease compared to the fourth quarter of 2016. The average price
of oil during the first quarter was $51.69 per barrel, a 17.9 percent increase
compared to the prior year and a 4.9 percent increase compared to
the fourth quarter of 2016. At the end of the first quarter
of 2017, the U.S. domestic rig count had increased by more than 100
percent during the 10 months since the rig count's historical low,
which represents the fastest pace of industry recovery in U.S.
history.
"RPC generated strong financial results in the first quarter of
2017 because we were able to meet increased demand with
well-maintained equipment, staffed with trained crews, and
supported by strong logistical processes. In particular, the
continued trend of increasing service intensity of completion
activities generated strong demand this quarter especially in our
Technical Services segment and pressure pumping in
particular. Because of continued indications of high demand
and improved pricing during the near term, we began to
reactivate idle pressure pumping equipment at the end of the first
quarter. We will continue to reactivate our idle pressure
pumping fleet based on customer demand. The financial performance
of Support Services and our other Technical Services lagged that of
pressure pumping during the first quarter, due in part to continued
high supply of service equipment, as well as completion delays
caused by shortages of skilled personnel.
"We ended the first quarter of 2017 in a strong financial
position with $104.5 million in
cash. The decline in our cash balance during the quarter
resulted from increased working capital requirements of higher
activity levels and $11.7 million in
capital expenditures, directed towards routine maintenance of
existing equipment. We currently forecast modest capital
expenditures during the remainder of 2017, and believe that our
existing cash balance and projected operating cash flows will be
adequate for our cash needs during the remainder of this year,"
concluded Hubbell.
Summary of Segment Operating Performance
RPC's business segments are Technical Services and Support
Services.
Technical Services includes RPC's oilfield service lines that
utilize people and equipment to perform value-added completion,
production and maintenance services directly to a customer's
well. These services are generally directed toward improving
the flow of oil and natural gas from producing formations or to
address well control issues. The Technical Services segment
includes pressure pumping, coiled tubing, hydraulic workover
services, nitrogen, downhole tools, surface pressure control
equipment, well control and fishing tool operations.
Support Services include all of the services that provide (i)
equipment for customers' use on the well site without RPC personnel
and (ii) services that are provided in support of customer
operations off the well site. The equipment and services
offered include rental of drill pipe and related tools, pipe
handling, inspection and storage services, and oilfield training
services.
Technical Services revenues increased by 63.1 percent for the
quarter compared to the prior year, due to higher activity levels
and improved pricing within pressure pumping and downhole tools as
compared to the prior year. Support Services revenues
decreased by 12.5 percent during the quarter compared to the prior
year due principally to lower activity levels in rental tools and
pipe inspection. Utilization of our rental tool fleet continues to
be challenged by a low U.S. domestic rig count and continued
intense competition. Technical Services reported operating
profit of $9.2 million for the
quarter compared to an operating loss of $63.3 million in the prior year due to higher
activity levels, improved pricing, and lower bad debt
expense. Support Services continued to report a slightly
lower operating loss due to continued low levels of revenues,
partially offset by successful cost control efforts. RPC
corporate expenses declined during the first quarter of 2017
compared to the prior year due to contingent professional fees of
approximately $2.0 million recorded
in the first quarter of 2016.
(in
thousands)
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Revenues:
|
|
|
|
|
Technical Services
|
$
|
286,198
|
$
|
175,472
|
Support
Services
|
|
11,921
|
|
13,623
|
Total
revenues
|
$
|
298,119
|
$
|
189,095
|
Operating profit
(loss):
|
|
|
|
|
Technical Services
|
$
|
9,205
|
$
|
(63,264)
|
Support
Services
|
|
(5,221)
|
|
(6,636)
|
Corporate expenses
|
|
(3,927)
|
|
(6,443)
|
Gain on
disposition of assets, net
|
|
1,517
|
|
1,256
|
Total operating
profit (loss)
|
$
|
1,574
|
$
|
(75,087)
|
Interest
expense
|
|
(103)
|
|
(325)
|
Interest
income
|
|
129
|
|
23
|
Other income,
net
|
|
212
|
|
342
|
|
|
|
|
|
Income (loss)
before income taxes
|
$
|
1,812
|
$
|
(75,047)
|
|
|
|
|
|
RPC, Inc. will hold a conference call today, April 26, 2017 at 9:00
a.m. ET to discuss the results for the first quarter.
Interested parties may listen in by accessing a live webcast in the
investor relations section of RPC, Inc.'s website at
www.rpc.net. The live conference call can also be accessed by
calling (888) 401-4668 or (719) 457-2603 and using the access code
#9131952. For those not able to attend the live conference
call, a replay will be available in the investor relations section
of RPC, Inc.'s website (www.rpc.net) beginning approximately two
hours after the call.
RPC provides a broad range of specialized oilfield services and
equipment primarily to independent and major oilfield companies
engaged in the exploration, production and development of oil and
gas properties throughout the United
States, including the Gulf of
Mexico, mid-continent, southwest, Appalachian and Rocky
Mountain regions, and in selected international markets.
RPC's investor website can be found at www.rpc.net.
Certain statements and information included in this press
release constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995, including
all statements that look forward in time or express management's
beliefs, expectations or hopes. In particular, such statements
include, without limitation, our belief that market demand
justifies the re-activation of our idle equipment, our intention to
have our entire pressure pumping fleet in service by the end of the
third quarter, the belief that capital expenditures during the
remainder of 2017 will be modest, and that our existing cash
balance and projected operating cash flows will be sufficient to
meet our cash needs during the remainder of the year.
Additional discussion of factors that could cause the actual
results to differ materially from management's projections,
forecasts, estimates and expectations is contained in RPC's Form
10-K filed with the Securities and Exchange Commission for the year
ended December 31, 2016.
For information about
RPC, Inc., please contact:
|
Ben M. Palmer
|
Jim
Landers
|
Chief Financial
Officer
|
Vice President,
Corporate Finance
|
(404) 321-2140
|
(404)
321-2162
|
irdept@rpc.net
|
jlanders@rpc.net
|
RPC INCORPORATED
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands except per
share data)
|
|
|
|
Periods ended,
(Unaudited)
|
|
|
Three Months Ended
|
|
|
|
March
31,
2017
|
|
|
December 31,
2016
|
|
|
March 31,
2016
|
REVENUES
|
|
$
|
298,119
|
|
$
|
220,997
|
|
$
|
189,095
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
216,242
|
|
|
173,020
|
|
|
161,256
|
Selling, general and
administrative expenses
|
|
37,157
|
|
|
35,827
|
|
|
43,546
|
Depreciation and
amortization
|
|
|
44,663
|
|
|
48,367
|
|
|
60,636
|
Gain on disposition
of assets, net
|
|
|
(1,517)
|
|
|
(4,001)
|
|
|
(1,256)
|
Operating profit
(loss)
|
|
|
1,574
|
|
|
(32,216)
|
|
|
(75,087)
|
Interest
expense
|
|
|
(103)
|
|
|
(115)
|
|
|
(325)
|
Interest
income
|
|
|
129
|
|
|
171
|
|
|
23
|
Other income
(expense), net
|
|
|
212
|
|
|
(478)
|
|
|
342
|
Income (loss) before
income taxes
|
|
|
1,812
|
|
|
(32,638)
|
|
|
(75,047)
|
Income tax
benefit
|
|
|
(1,822)
|
|
|
(11,531)
|
|
|
(42,536)
|
NET INCOME
(LOSS)
|
|
$
|
3,634
|
|
$
|
(21,107)
|
|
$
|
(32,511)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS)
PER SHARE
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.02
|
|
$
|
(0.10)
|
|
$
|
(0.15)
|
Diluted
|
|
$
|
0.02
|
|
$
|
(0.10)
|
|
$
|
(0.15)
|
|
|
|
|
|
|
|
|
|
|
AVERAGE SHARES
OUTSTANDING
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
217,713
|
|
|
214,270
|
|
|
214,111
|
Diluted
|
|
|
217,713
|
|
|
214,270
|
|
|
214,111
|
|
|
|
|
|
|
|
|
|
|
RPC INCORPORATED
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
At March 31,
(Unaudited)
|
|
(In
thousands)
|
|
|
2017
|
|
|
2016
|
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
104,498
|
|
$
|
108,309
|
Accounts receivable,
net
|
|
246,583
|
|
|
175,554
|
Inventories
|
|
111,945
|
|
|
125,089
|
Income taxes
receivable
|
|
48,461
|
|
|
41,294
|
Prepaid
expenses
|
|
6,897
|
|
|
7,384
|
Other current
assets
|
|
6,269
|
|
|
5,832
|
Total current
assets
|
|
524,653
|
|
|
463,462
|
Property, plant and
equipment, net
|
|
465,249
|
|
|
635,307
|
Goodwill
|
|
32,150
|
|
|
32,150
|
Other
assets
|
|
27,002
|
|
|
24,277
|
Total
assets
|
$
|
1,049,054
|
|
$
|
1,155,196
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Accounts
payable
|
$
|
92,270
|
|
$
|
45,884
|
Accrued payroll and
related expenses
|
|
17,528
|
|
|
16,077
|
Accrued insurance
expenses
|
|
4,681
|
|
|
4,964
|
Accrued state, local
and other taxes
|
|
4,746
|
|
|
3,978
|
Income taxes
payable
|
|
3,805
|
|
|
8,704
|
Other accrued
expenses
|
|
1,740
|
|
|
2,294
|
Total current
liabilities
|
|
124,770
|
|
|
81,901
|
Long-term accrued
insurance expenses
|
|
9,882
|
|
|
10,249
|
Long-term pension
liabilities
|
|
33,637
|
|
|
32,077
|
Other long-term
liabilities
|
|
3,288
|
|
|
3,377
|
Deferred income
taxes
|
|
69,869
|
|
|
107,769
|
Total
liabilities
|
|
241,446
|
|
|
235,373
|
Common
stock
|
|
21,778
|
|
|
21,761
|
Capital in excess of
par value
|
|
-
|
|
|
-
|
Retained
earnings
|
|
803,770
|
|
|
915,221
|
Accumulated other
comprehensive loss
|
|
(17,940)
|
|
|
(17,159)
|
Total
stockholders' equity
|
|
807,608
|
|
|
919,823
|
Total
liabilities and stockholders' equity
|
$
|
1,049,054
|
|
$
|
1,155,196
|
|
|
|
|
|
|
Appendix A
RPC has used the non-GAAP financial measure of earnings before
interest, taxes, depreciation and amortization (EBITDA) in today's
earnings release, and anticipates using EBITDA in today's earnings
conference call. EBITDA should not be considered in isolation
or as a substitute for operating income, net income or other
performance measures prepared in accordance with U.S. GAAP.
RPC uses EBITDA as a measure of operating performance because it
allows us to compare performance consistently over various periods
without regard to changes in our capital structure. We are also
required to use EBITDA to report compliance with financial
covenants under our revolving credit facility. A non-GAAP financial
measure is a numerical measure of financial performance, financial
position, or cash flows that either 1) excludes amounts, or is
subject to adjustments that have the effect of excluding amounts,
that are included in the most directly comparable measure
calculated and presented in accordance with GAAP in the statement
of operations, balance sheet or statement of cash flows, or 2)
includes amounts, or is subject to adjustments that have the effect
of including amounts, that are excluded from the most directly
comparable measure so calculated and presented. Set forth below is
a reconciliation of EBITDA with Net Income, the most comparable
GAAP measure. This reconciliation also appears on RPC's
investor website, which can be found on the Internet at
www.rpc.net.
|
|
|
|
|
|
|
|
|
|
Periods ended,
(Unaudited)
|
|
|
Three Months
Ended
|
(in thousands
except per share data)
|
|
|
March
31,
2017
|
|
|
December
31,
2016
|
|
|
March 31,
2016
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income (Loss) to EBITDA
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
$
|
3,634
|
|
$
|
(21,107)
|
|
$
|
(32,511)
|
Add:
|
|
|
|
|
|
|
|
|
|
Income tax
benefit
|
|
|
(1,822)
|
|
|
(11,531)
|
|
|
(42,536)
|
Interest expense
|
|
|
103
|
|
|
115
|
|
|
325
|
Depreciation and
amortization
|
|
|
44,663
|
|
|
48,367
|
|
|
60,636
|
Less:
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
129
|
|
|
171
|
|
|
23
|
EBITDA
|
|
$
|
46,449
|
|
$
|
15,673
|
|
$
|
(14,109)
|
|
|
|
|
|
|
|
|
|
|
1 EBITDA is a financial measure which does not
conform to generally accepted accounting principles (GAAP).
Additional disclosure regarding this non-GAAP financial measure is
disclosed in Appendix A to this press release.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/rpc-inc-reports-first-quarter-2017-financial-results-300445708.html
SOURCE RPC, Inc.