ATLANTA, April 25, 2018 /PRNewswire/ -- RPC, Inc.
(NYSE: RES) today announced its unaudited results for the first
quarter ended March 31, 2018. 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 March 31,
2018, revenues increased by 46.4 percent to $436.3 million compared to $298.1 million in the first quarter of last year.
Revenues increased compared to the prior year due to higher
activity levels and improved pricing for our services, higher
service intensity, and activation of previously idled
revenue-producing equipment. Operating profit for the quarter was
$60.8 million compared to operating
profit of $1.6 million in the prior
year. Net income for the first quarter was $52.1 million or $0.24 diluted earnings per share, compared to net
income of $3.6 million or
$0.02 per share in the first quarter
of 2017. Earnings before interest, taxes, depreciation and
amortization (EBITDA) for the quarter was $103.7 million compared to $46.4 million in the prior year.1
Cost of revenues during the first quarter of 2018 was
$295.6 million, or 67.7 percent of
revenues, compared to $216.2 million,
or 72.5 percent of revenues, during the first quarter of last year.
Cost of revenues increased primarily due to higher employment costs
and materials and supplies expenses, both of which were driven by
higher activity levels. As a percentage of revenues, cost of
revenues decreased due to improved pricing for our services and
leverage of higher revenues over direct employment costs.
Selling, general and administrative expenses were $43.8 million in the first quarter of 2018
compared to $37.2 million in the
first quarter of 2017. These expenses increased due to higher
employment costs consistent with higher activity levels. As a
percentage of revenues, these expenses decreased to 10.0 percent in
the first quarter of 2018 due to the leverage of higher revenues
over primarily fixed expenses, compared to 12.5 percent of revenues
in the first quarter of 2017. Depreciation and amortization
decreased to $37.5 million compared
to $44.7 million in the first quarter
of the prior year.
Discussion of Sequential Quarterly Financial Results
RPC's revenues for the quarter ended March 31, 2018 increased by $9.0 million, or 2.1 percent, compared to the
fourth quarter of 2017. Cost of revenues during the first quarter
of 2018 increased by $9.9 million, or
3.5 percent, due to higher maintenance and repair expenses. As a
percentage of revenues, cost of revenues increased slightly from
66.9 percent in the fourth quarter of 2017 to 67.7 percent in the
first quarter of 2018. RPC's operating profit during the first
quarter was $60.8 million, compared
to operating profit of $60.3 million
in the fourth quarter of 2017. EBITDA for the first quarter of 2018
increased slightly compared to the prior quarter.
During the fourth quarter of 2017, RPC recorded a net discrete
tax benefit of $19.3 million as a
component of tax expense as a result of the "Tax Cuts and Jobs Act
("Tax Reform")." Net income for the first quarter of 2018 was
$52.1 million or $0.24 diluted earnings per share, an increase of
$13.8 million or $0.06 diluted earnings per share compared to net
income, excluding the impact of Tax Reform, of $38.4 million or $0.18 diluted earnings per share in the fourth
quarter of 2017.2 The first quarter 2018 effective tax rate
of 21.6 percent includes a discrete tax benefit for restricted
share vesting, while the full year 2018 effective tax rate is
estimated to be 24 percent.
Management Commentary
"The average U.S. domestic rig count during the first quarter of
2018 was 966, a 29.8 percent increase compared to the same period
in 2017, and a 4.9 percent increase compared to the fourth quarter
of 2017," stated Richard A. Hubbell,
RPC's President and Chief Executive Officer. "The average price of
natural gas during the first quarter was $3.16 per Mcf, a 4.6 percent increase compared to
the prior year, and a 9.0 percent increase compared to the fourth
quarter of 2017. The average price of oil during the first quarter
was $62.92 per barrel, a 21.7 percent
increase compared to the prior year and a 13.6 percent increase
compared to the fourth quarter of 2017. Compared to the prior year,
RPC's first quarter 2018 revenues increased at a rate greater than
the change in these industry metrics because of high demand for
oilfield service providers capable of operating in highly
service-intensive environments. On a sequential basis, the change
in our revenues was comparable to the change in the U.S. domestic
rig count.
"Oilfield activity continued to be strong in the first quarter
after a slow start due to extended holidays and winter weather.
Additionally, we faced increased competition in many of our
markets. We remain focused on providing value to our customers,
controlling costs, improving operational efficiencies and
maintaining our conservative capital structure.
"During the first quarter, we continued our commitment to RPC's
shareholders with one of the largest quarterly share repurchases in
our history and by the payment of an increased regular quarterly
dividend. Including these uses of cash, as well as using
$50.5 million to fund capital
expenditures, we finished the first quarter with $101.0 million in cash, an increase of more than
10 percent compared to $91.1 million
in cash at the end of 2017," 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 46.4 percent for the
quarter compared to the prior year due to improved pricing, higher
activity levels and a larger active fleet of revenue-producing
equipment as compared to the prior year, particularly within our
pressure pumping service line which is the largest service line
within Technical Services. On a sequential basis, Technical
Services revenues increased by 2.0 percent during the first quarter
of 2018 compared to the fourth quarter of 2017. Support Services
revenues increased by 44.9 percent during the quarter compared to
the prior year due primarily to improved activity levels and
pricing in the rental tool service line which is the largest
service line within this segment. On a sequential basis, Support
Services revenues increased by 5.8 percent during the first quarter
of 2018 compared to the fourth quarter of 2017. Technical Services
generated slightly lower operating profit in the first quarter of
2018 than in the fourth quarter of 2017, but significantly higher
operating profit than in the first quarter of 2017. Support
Services reported a smaller operating loss for the first quarter of
2018 as compared to both the fourth and first quarters of the prior
year.
(in
thousands)
|
|
Three Months
Ended
|
|
|
March
31,
|
|
Dec 31,
|
|
March 31,
|
|
|
2018
|
|
2017
|
|
2017
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
Technical Services
|
$
|
419,063
|
$
|
410,972
|
|
286,198
|
Support
Services
|
|
17,271
|
|
16,327
|
|
11,921
|
Total
revenues
|
$
|
436,334
|
$
|
427,299
|
|
298,119
|
Operating profit
(loss):
|
|
|
|
|
|
|
Technical Services
|
$
|
65,005
|
$
|
67,021
|
|
9,205
|
Support
Services
|
|
(905)
|
|
(1,606)
|
|
(5,221)
|
Corporate expenses
|
|
(4,665)
|
|
(3,882)
|
|
(3,927)
|
Gain
(loss) on disposition of assets, net
|
|
1,363
|
|
(1,249)
|
|
1,517
|
Total operating
profit
|
$
|
60,798
|
$
|
60,284
|
|
1,574
|
Interest
expense
|
|
(105)
|
|
(104)
|
|
(103)
|
Interest
income
|
|
402
|
|
466
|
|
129
|
Other income,
net
|
|
5,395
|
|
2,745
|
|
212
|
|
|
|
|
|
|
|
Income before
income taxes
|
$
|
66,490
|
$
|
63,391
|
|
1,812
|
RPC, Inc. will hold a conference call today, April 25, 2018 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 (866)
548-4713 or (323) 794-2093 for international callers, and use
conference ID number 1505266. 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 we will be focused on
our strategies, including providing value to our customers,
controlling costs, improving operational efficiencies and
maintaining our conservative capital structure. 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, 2017.
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
|
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.
2 Net income excluding the impact of Tax Reform 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 B to this
press release.
RPC INCORPORATED
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands except
per share data)
|
|
|
|
Periods ended,
(Unaudited)
|
|
|
Three Months Ended
|
|
|
|
March
31,
2018
|
|
|
December
31,
2017
|
|
|
March 31,
2017
|
REVENUES
|
|
$
|
436,334
|
|
$
|
427,299
|
|
$
|
298,119
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
295,605
|
|
|
285,731
|
|
|
216,242
|
Selling, general and
administrative expenses
|
|
43,814
|
|
|
42,011
|
|
|
37,157
|
Depreciation and
amortization
|
|
|
37,480
|
|
|
38,024
|
|
|
44,663
|
(Gain) loss on
disposition of assets, net
|
|
|
(1,363)
|
|
|
1,249
|
|
|
(1,517)
|
Operating
profit
|
|
|
60,798
|
|
|
60,284
|
|
|
1,574
|
Interest
expense
|
|
|
(105)
|
|
|
(104)
|
|
|
(103)
|
Interest
income
|
|
|
402
|
|
|
466
|
|
|
129
|
Other income,
net
|
|
|
5,395
|
|
|
2,745
|
|
|
212
|
Income before income
taxes
|
|
|
66,490
|
|
|
63,391
|
|
|
1,812
|
Income tax provision
(benefit)
|
|
|
14,360
|
|
|
5,688
|
|
|
(1,822)
|
NET
INCOME
|
|
$
|
52,130
|
|
$
|
57,703
|
|
$
|
3,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.24
|
|
$
|
0.27
|
|
$
|
0.02
|
Diluted
|
|
$
|
0.24
|
|
$
|
0.27
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
AVERAGE SHARES
OUTSTANDING
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
215,876
|
|
|
216,574
|
|
|
217,713
|
Diluted
|
|
|
215,876
|
|
|
216,574
|
|
|
217,713
|
|
|
|
|
|
|
|
|
|
|
RPC INCORPORATED
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
At March 31,
(Unaudited)
|
|
(In
thousands)
|
|
|
2018
|
|
|
2017
|
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
100,983
|
|
$
|
104,498
|
Accounts receivable,
net
|
|
384,702
|
|
|
246,583
|
Inventories
|
|
120,944
|
|
|
111,945
|
Income taxes
receivable
|
|
29,942
|
|
|
48,461
|
Prepaid
expenses
|
|
6,953
|
|
|
6,897
|
Other current
assets
|
|
8,558
|
|
|
6,269
|
Total current
assets
|
|
652,082
|
|
|
524,653
|
Property, plant and
equipment, net
|
|
466,076
|
|
|
465,249
|
Goodwill
|
|
32,150
|
|
|
32,150
|
Other
assets
|
|
30,709
|
|
|
27,002
|
Total
assets
|
$
|
1,181,017
|
|
$
|
1,049,054
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Accounts
payable
|
$
|
127,171
|
|
$
|
92,270
|
Accrued payroll and
related expenses
|
|
26,728
|
|
|
17,528
|
Accrued insurance
expenses
|
|
5,673
|
|
|
4,681
|
Accrued state, local
and other taxes
|
|
9,625
|
|
|
4,746
|
Income taxes
payable
|
|
8,010
|
|
|
3,805
|
Other accrued
expenses
|
|
1,304
|
|
|
1,740
|
Total current
liabilities
|
|
178,511
|
|
|
124,770
|
Long-term accrued
insurance expenses
|
|
11,311
|
|
|
9,882
|
Long-term pension
liabilities
|
|
34,818
|
|
|
33,637
|
Other long-term
liabilities
|
|
4,210
|
|
|
3,288
|
Deferred income
taxes
|
|
38,460
|
|
|
69,869
|
Total
liabilities
|
|
267,310
|
|
|
241,446
|
Common
stock
|
|
21,547
|
|
|
21,778
|
Capital in excess of
par value
|
|
-
|
|
|
-
|
Retained
earnings
|
|
909,185
|
|
|
803,770
|
Accumulated other
comprehensive loss
|
|
(17,025)
|
|
|
(17,940)
|
Total
stockholders' equity
|
|
913,707
|
|
|
807,608
|
Total
liabilities and stockholders' equity
|
$
|
1,181,017
|
|
$
|
1,049,054
|
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,
2018
|
|
|
December
31,
2017
|
|
|
March
31,
2017
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income to EBITDA
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
$
|
52,130
|
|
$
|
57,703
|
|
$
|
3,634
|
Add:
|
|
|
|
|
|
|
|
|
|
Income tax provision
(benefit)
|
|
|
14,360
|
|
|
5,688
|
|
|
(1,822)
|
Interest expense
|
|
|
105
|
|
|
104
|
|
|
103
|
Depreciation and
amortization
|
|
|
37,480
|
|
|
38,024
|
|
|
44,663
|
Less:
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
402
|
|
|
466
|
|
|
129
|
EBITDA
|
|
$
|
103,673
|
|
$
|
101,053
|
|
$
|
46,449
|
Appendix B
RPC, Inc. has used the non-GAAP financial measures of net income
and diluted earnings per share excluding the impact of Tax Reform
in today's earnings release, and anticipates using these non-GAAP
financial measures in today's earnings conference call. These
measures should not be considered in isolation or as a substitute
for net income, earnings per share, or other performance measures
prepared in accordance with GAAP.
Management believes that presenting the operating results
without the impact of Tax Reform enables us to compare our
operating performance consistently over various time periods.
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 this non-GAAP measure
with its most comparable GAAP measures. This reconciliation
also appears on RPC, Inc.'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,
2018
|
December
31,
2017
|
March 31,
2017
|
|
|
|
|
Net
Income
|
$
52,130
|
$
57,703
|
$
3,634
|
Impact of Tax
Reform
|
-
|
(19,342)
|
-
|
Net income excluding
the impact of Tax Reform
|
$
52,130
|
$
38,361
|
$
3,634
|
|
|
|
|
Diluted Earnings Per
Share
|
$
0.24
|
$
0.27
|
$
0.02
|
Impact of Tax
Reform
|
-
|
(0.09)
|
-
|
Diluted Earnings Per
Share excluding the impact of Tax Reform
|
$
0.24
|
$
0.18
|
$
0.02
|
|
|
|
|
Diluted Average
Shares Outstanding
|
215,876
|
216,574
|
217,713
|
View original
content:http://www.prnewswire.com/news-releases/rpc-inc-reports-first-quarter-2018-financial-results-300635901.html
SOURCE RPC, Inc.