ATLANTA, July 26, 2017 /PRNewswire/ -- RPC, Inc.
(NYSE: RES) today announced its unaudited results for the second
quarter ended June 30, 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.
For the quarter ended June 30,
2017, revenues increased to $398.8
million compared to $143.0
million in the second quarter of last year. Revenues
increased compared to the prior year due to higher activity levels
and pricing for our services, higher service intensity, and a
slightly larger fleet of in-service revenue-producing
equipment. Operating profit for the quarter was $67.0 million compared to an operating loss of
$75.2 million in the prior
year. Net income for the quarter was $43.8 million or $0.20 diluted earnings per share, compared to net
loss of $48.7 million or $0.23 loss per share last year. Earnings
before interest, taxes, depreciation and amortization (EBITDA) was
$110.3 million compared to a loss of
$19.1 million in the prior
year.1 For the six months ended June 30, 2017, revenues increased to $696.9 million compared to $332.1 million last year. Net income for
the six-month period was $47.5
million, or $0.22 diluted
earnings per share, compared to net loss of $81.2 million, or $0.38 loss per share last year.
Cost of revenues during the second quarter of 2017 was
$254.0 million, or 63.7 percent of
revenues, compared to $127.0 million,
or 88.8 percent of revenues, during the second quarter of last
year. Cost of revenues increased primarily due to higher
activity levels and service intensity. As a percentage of
revenues, cost of revenues decreased due to improved pricing for
our services as well as leverage of higher revenues over direct
costs.
Selling, general and administrative expenses were $40.3 million in the second quarter of 2017
compared to $36.5 million in the
second quarter of 2016. These expenses increased due to
higher compensation costs, as well as other expenses consistent
with higher activity levels. As a percentage of
revenues, these costs decreased to 10.1 percent in the second
quarter of 2017 compared to 25.5 percent in the second quarter of
2016, due to the leverage of higher revenues over primarily fixed
expenses. Depreciation and amortization decreased to
$41.3 million compared to
$56.3 million in the second quarter
of the prior year.
RPC recorded a $3.8 million gain
on disposition of assets during the quarter, primarily due to the
sale of operating equipment related to its oilfield pipe inspection
business. Interest expense during the second quarter of 2017
was $114 thousand compared to
$126 thousand during the second
quarter of the prior year. Interest expense during the second
quarters of 2016 and 2017 consisted solely of loan facility fees
and costs. Interest income during the second quarter of 2017
was $411 thousand, an increase
compared to $104 thousand during the
second quarter of 2016.
Discussion of Sequential Quarterly Financial Results
RPC's revenues for the quarter ended June
30, 2017 increased by $100.7
million, or 33.8 percent, compared to the first quarter of
2017. Revenues increased due to higher activity levels and
improved pricing for our services, as well as a slightly larger
fleet of in-service revenue-producing equipment. Cost of
revenues during the second quarter of 2017 increased by
$37.8 million, or 17.5 percent, due
to higher materials and supplies expenses and employment costs.
Selling, general and administrative expenses during the second
quarter of 2017 increased by $3.1
million, or 8.4 percent, compared to the first quarter of
2017 due to increased costs consistent with higher activity levels
and improved profitability. RPC's operating profit during the
second quarter of 2017 was $67.0
million, an increase of $65.4
million, compared to the first quarter operating profit of
$1.6 million. Net income
increased from $3.6 million in the
first quarter of 2017 to $43.8
million in the second quarter of 2017. Diluted
earnings per share for the second quarter increased to $0.20 compared to $0.02 in the first quarter of 2017.
Management Commentary
"The U.S. domestic rig count increased for the fourth
consecutive quarter, and at a record rate from the historic low set
during the second quarter of last year," stated Richard A. Hubbell, RPC's President and Chief
Executive Officer. "Our customers increased their drilling
and completion activities, and this increase coupled with RPC's
well-maintained pressure pumping service capacity allowed us to
generate strong sequential revenue growth and incremental
profitability. The average U.S. domestic rig count during the
second quarter of 2017 was 895, an increase of 113.1 percent
compared to the same period in 2016, and an increase of 20.3
percent compared to the first quarter of 2017. The average
price of natural gas during the second quarter was $3.08 per Mcf, a 40.6 percent increase compared
to the prior year, and a 2.3 percent increase compared to the first
quarter of 2017. The average price of oil during the second quarter
was $48.19 per barrel, a 4.7 percent
increase compared to the prior year but a 6.8 percent decrease
compared to the first quarter of 2017. RPC's revenues
increased at a greater rate than the change in these industry
metrics because of our preparation over the last several years to
participate in improving market conditions, our strong market
presence in the Permian Basin, and the re-activation of some of the
Company's idle equipment.
"We currently have indications of strong customer demand through
the end of 2017. However, we are closely monitoring the
recent fluctuations in the price of oil and its potential impact on
our customer drilling and completion plans. We are very
pleased with the current operating environment and prospects for
the immediate future, but the current price of oil forces us to be
cautious about large capital commitments until we see an
environment conducive to sustained higher activity levels. We
finished the second quarter with $125.8
million in cash. Capital expenditures during the
quarter were $18.9 million directed
toward maintenance of our equipment and we returned capital to our
shareholders by repurchasing 348,000 shares of our stock. In
addition, as announced this morning, our Board of Directors
approved a $0.06 per share dividend
to be paid during the third quarter," concluded Hubbell.
Summary of Segment Operating Performance
RPC manages two operating segments - 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 includes RPC's oilfield service lines that
provide equipment for customer use or services to assist customer
operations. 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 almost 200 percent for
the quarter compared to the prior year due to improved pricing and
higher activity levels as compared to the prior year, particularly
within our pressure pumping service line, which is the largest
service line within Technical Services. Support Services
revenues increased by 13.3 percent during the quarter compared to
the prior year due principally to improved activity levels and
pricing in the rental tool service line, which is the largest
service line within this segment. Technical Services reported
an operating profit during the quarter compared to an operating
loss in the prior year, while Support Services reported operating
losses for the second quarters of 2017 and 2016.
(in
thousands)
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended June
30,
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Technical Services
|
$
|
385,462
|
$
|
131,217
|
|
$
|
671,660
|
$
|
306,689
|
Support
Services
|
|
13,348
|
|
11,781
|
|
|
25,269
|
|
25,404
|
Total
revenues
|
$
|
398,810
|
$
|
142,998
|
|
$
|
696,929
|
$
|
332,093
|
Operating profit
(loss):
|
|
|
|
|
|
|
|
|
|
Technical Services
|
$
|
70,901
|
$
|
(65,690)
|
|
$
|
80,106
|
$
|
(128,954)
|
Support
Services
|
|
(3,339)
|
|
(7,163)
|
|
|
(8,560)
|
|
(13,799)
|
Corporate expenses
|
|
(4,319)
|
|
(3,884)
|
|
|
(8,246)
|
|
(10,327)
|
Gain on
disposition of assets, net
|
|
3,759
|
|
1,515
|
|
|
5,276
|
|
2,771
|
Total operating
profit (loss)
|
$
|
67,002
|
$
|
(75,222)
|
|
$
|
68,576
|
$
|
(150,309)
|
Interest
expense
|
|
(114)
|
|
(126)
|
|
|
(217)
|
|
(451)
|
Interest
income
|
|
411
|
|
104
|
|
|
540
|
|
127
|
Other income
(expense), net
|
|
2,010
|
|
(154)
|
|
|
2,222
|
|
188
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
$
|
69,309
|
$
|
(75,398)
|
|
$
|
71,121
|
$
|
(150,445)
|
RPC, Inc. will hold a conference call today, July 26, 2017 at 9:00 a.m.
ET to discuss the results for the second 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) 337-8165 or (719) 457-2617 and using the access code
#9382220. 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 customer demand will
be strong through the end of 2017 and that fluctuations in the
price of oil force us to be cautious regarding large capital
commitments. These statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of RPC to be materially different from
any future results, performance or achievements expressed or
implied in such forward-looking statements. Such risks
include changes in general global business and economic conditions,
including volatility of oil and natural gas prices; credit risks
associated with collections of our accounts receivable from
customers experiencing challenging business conditions; drilling
activity and rig count; risks of reduced availability or increased
costs of both labor and raw materials used in providing our
services; the impact on our operations if we are unable to comply
with the regulatory and environmental laws; turmoil in the
financial markets and the potential difficulty to fund our capital
needs; the potentially high cost of capital required to fund our
capital needs; the impact of the level of unconventional
exploration and production activities may cease or change in nature
so as to reduce demand for our services; the actions of the OPEC
cartel; the ultimate impact of current and potential political
unrest and armed conflict in the oil production regions of the
world, which could impact drilling activity; adverse weather
conditions in oil and gas producing regions, including the
Gulf of Mexico; competition in the
oil and gas industry; an inability to implement price increases;
risks of international operations; and our reliance upon large
customers. 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
|
|
Six Months
Ended
|
|
|
|
June 30,
2017
|
|
|
March 31,
2017
|
|
|
June 30,
2016
|
|
|
2017
|
|
|
2016
|
REVENUES
|
|
$
|
398,810
|
|
$
|
298,119
|
|
$
|
142,998
|
|
$
|
696,929
|
|
$
|
332,093
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
254,016
|
|
|
216,242
|
|
|
126,997
|
|
|
470,258
|
|
|
288,253
|
Selling, general and
administrative expenses
|
|
40,288
|
|
|
37,157
|
|
|
36,458
|
|
|
77,445
|
|
|
80,004
|
Depreciation and
amortization
|
|
|
41,263
|
|
|
44,663
|
|
|
56,280
|
|
|
85,926
|
|
|
116,916
|
Gain on disposition
of assets, net
|
|
|
(3,759)
|
|
|
(1,517)
|
|
|
(1,515)
|
|
|
(5,276)
|
|
|
(2,771)
|
Operating profit
(loss)
|
|
|
67,002
|
|
|
1,574
|
|
|
(75,222)
|
|
|
68,576
|
|
|
(150,309)
|
Interest
expense
|
|
|
(114)
|
|
|
(103)
|
|
|
(126)
|
|
|
(217)
|
|
|
(451)
|
Interest
income
|
|
|
411
|
|
|
129
|
|
|
104
|
|
|
540
|
|
|
127
|
Other income
(expense), net
|
|
|
2,010
|
|
|
212
|
|
|
(154)
|
|
|
2,222
|
|
|
188
|
Income (loss) before
income taxes
|
|
|
69,309
|
|
|
1,812
|
|
|
(75,398)
|
|
|
71,121
|
|
|
(150,445)
|
Income tax provision
(benefit)
|
|
|
25,469
|
|
|
(1,822)
|
|
|
(26,712)
|
|
|
23,647
|
|
|
(69,248)
|
NET INCOME
(LOSS)
|
|
$
|
43,840
|
|
$
|
3,634
|
|
$
|
(48,686)
|
|
$
|
47,474
|
|
$
|
(81,197)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS)
PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.20
|
|
$
|
0.02
|
|
$
|
(0.23)
|
|
$
|
0.22
|
|
$
|
(0.38)
|
Diluted
|
|
$
|
0.20
|
|
$
|
0.02
|
|
$
|
(0.23)
|
|
$
|
0.22
|
|
$
|
(0.38)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE SHARES
OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
217,530
|
|
|
217,713
|
|
|
214,263
|
|
|
217,622
|
|
|
214,187
|
Diluted
|
|
|
217,530
|
|
|
217,713
|
|
|
214,263
|
|
|
217,622
|
|
|
214,187
|
RPC INCORPORATED
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
At June 30,
(Unaudited)
|
|
(In
thousands)
|
|
|
2017
|
|
|
2016
|
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
125,812
|
|
$
|
141,354
|
Accounts receivable,
net
|
|
343,299
|
|
|
130,903
|
Inventories
|
|
112,658
|
|
|
115,954
|
Income taxes
receivable
|
|
8,926
|
|
|
50,565
|
Prepaid
expenses
|
|
5,410
|
|
|
5,111
|
Other current
assets
|
|
5,573
|
|
|
5,650
|
Total current
assets
|
|
601,678
|
|
|
449,537
|
Property, plant and
equipment, net
|
|
443,555
|
|
|
584,963
|
Goodwill
|
|
32,150
|
|
|
32,150
|
Other
assets
|
|
28,502
|
|
|
24,627
|
Total
assets
|
$
|
1,105,885
|
|
$
|
1,091,277
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Accounts
payable
|
$
|
103,801
|
|
$
|
39,512
|
Accrued payroll and
related expenses
|
|
16,882
|
|
|
15,681
|
Accrued insurance
expenses
|
|
4,351
|
|
|
4,292
|
Accrued state, local
and other taxes
|
|
6,641
|
|
|
6,786
|
Income taxes
payable
|
|
15,206
|
|
|
8,167
|
Other accrued
expenses
|
|
1,463
|
|
|
1,608
|
Total current
liabilities
|
|
148,344
|
|
|
76,046
|
Long-term accrued
insurance expenses
|
|
9,926
|
|
|
10,085
|
Long-term pension
liabilities
|
|
34,918
|
|
|
32,520
|
Other long-term
liabilities
|
|
3,537
|
|
|
3,360
|
Deferred income
taxes
|
|
60,849
|
|
|
95,257
|
Total
liabilities
|
|
257,574
|
|
|
217,268
|
Common
stock
|
|
21,735
|
|
|
21,755
|
Capital in excess of
par value
|
|
-
|
|
|
-
|
Retained
earnings
|
|
844,198
|
|
|
869,122
|
Accumulated other
comprehensive loss
|
|
(17,622)
|
|
|
(16,868)
|
Total
stockholders' equity
|
|
848,311
|
|
|
874,009
|
Total
liabilities and stockholders' equity
|
$
|
1,105,885
|
|
$
|
1,091,277
|
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
|
|
Six Months
Ended
|
(in thousands
except per share data)
|
|
|
June 30,
2017
|
|
|
March 31,
2017
|
|
|
June 30,
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income (Loss) to EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
$
|
43,840
|
|
$
|
3,634
|
|
$
|
(48,686)
|
|
$
|
47,474
|
|
$
|
(81,197)
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
(benefit)
|
|
|
25,469
|
|
|
(1,822)
|
|
|
(26,712)
|
|
|
23,647
|
|
|
(69,248)
|
Interest expense
|
|
|
114
|
|
|
103
|
|
|
126
|
|
|
217
|
|
|
451
|
Depreciation and
amortization
|
|
|
41,263
|
|
|
44,663
|
|
|
56,280
|
|
|
85,926
|
|
|
116,916
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
411
|
|
|
129
|
|
|
104
|
|
|
540
|
|
|
127
|
EBITDA
|
|
$
|
110,275
|
|
$
|
46,450
|
|
$
|
(19,098)
|
|
$
|
156,724
|
|
$
|
(33,205)
|
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.
View original
content:http://www.prnewswire.com/news-releases/rpc-inc-reports-second-quarter-2017-financial-results-300493939.html
SOURCE RPC, Inc.