ATLANTA, Oct. 25, 2017 /PRNewswire/ -- RPC, Inc.
(NYSE: RES) today announced its unaudited results for the third
quarter ended September 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 September 30,
2017, revenues increased by 167.8 percent to $471.0 million compared to $175.9 million in the third 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 continued activation of previously idled
revenue-producing equipment. Operating profit for the quarter
was $97.4 million compared to an
operating loss of $56.4 million in
the prior year. Net income for the quarter was $57.3 million, or $0.26 diluted earnings per share, compared to net
loss of $38.9 million or $0.18 loss per share last year. Earnings
before interest, taxes, depreciation and amortization (EBITDA) for
the quarter was $137.5 million
compared to a loss of $4.4 million in
the prior year.1 For the nine months ended
September 30, 2017, revenues
increased to $1.2 billion compared to
$508.0 million last year. Net
income for the nine-month period was $104.8
million, or $0.48 diluted
earnings per share, compared to net loss of $120.1 million, or $0.56 loss per share last year.
Cost of revenues during the third quarter of 2017 was
$294.8 million, or 62.6 percent of
revenues, compared to $146.6 million,
or 83.4 percent of revenues, during the third 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
employment costs.
Selling, general and administrative expenses were $39.7 million in the third quarter of 2017
compared to $34.9 million in the
third quarter of 2016. These expenses increased due to higher
compensation costs, primarily incentive compensation, as well as
other expenses consistent with higher activity levels.
As a percentage of revenues, these costs decreased to 8.4 percent
in the third quarter of 2017 compared to 19.8 percent in the third
quarter of 2016, due to the leverage of higher revenues over
primarily fixed expenses. Depreciation and amortization
decreased to $39.6 million compared
to $52.0 million in the third quarter
of the prior year due to lower capital expenditures over the
previous two years.
Discussion of Sequential Quarterly Financial Results
RPC's revenues for the quarter ended September 30, 2017 increased by $72.2 million, or 18.1 percent, compared to the
second quarter of 2017. Revenues increased due to higher
activity levels and improved pricing for our services, as well as
activation of previously idled revenue-producing equipment.
Cost of revenues during the third quarter of 2017 increased by
$40.8 million, or 16.1 percent, due
to higher materials and supplies expenses and employment costs
related to increased headcount. Selling, general and
administrative expenses during the third quarter decreased by
1.4 percent. RPC's operating profit during the third
quarter was $97.4 million, an
increase of $30.4 million, or 45.3
percent, compared to the second quarter operating profit of
$67.0 million. EBITDA for the
third quarter increased by $27.2
million, or 24.7 percent, compared to the prior
quarter. Net income increased from $43.8 million, or $0.20 diluted earnings per share in the second
quarter of 2017 to $57.3 million, or
$0.26 diluted earnings per share in
the third quarter. Earnings per share were negatively
impacted by approximately $0.02 due
to tax provision adjustments recorded in the third
quarter.
Management Commentary
"The U.S. domestic rig count increased again during the third
quarter of 2017, though at a much lower sequential rate than in the
previous four quarters," stated Richard A.
Hubbell, RPC's President and Chief Executive Officer.
"The average U.S. domestic rig count during the third quarter of
2017 was 946, an increase of 95.1 percent compared to the same
period in 2016, and an increase of 5.7 percent compared to the
second quarter of 2017. The average price of natural gas
during the third quarter was $2.95
per Mcf, a 2.4 percent increase compared to the prior year, and a
4.2 percent decrease compared to the second quarter of 2017. The
average price of oil during the third quarter was $48.09 per barrel, a 7.0 percent increase
compared to the prior year and relatively unchanged compared to the
second quarter of 2017. RPC's revenues increased at a rate
greater than the change in these industry metrics because of our
customers' continued high demand for oilfield service providers
capable of operating in highly service-intensive environments.
"We are very pleased with the current operating environment and
prospects. Although the increase in the drilling rig count
has moderated, we have indications of strong customer activities
for the remainder of 2017 and into the beginning of 2018.
During the third quarter RPC began to experience increased labor
cost and raw material inflation, but have managed these cost
increases in order to minimize the impact on our profitability. As
we discussed during the third quarter, we have ordered additional
pressure pumping equipment as well as activated substantially all
of our previously idled equipment. We finished the third
quarter with $136.9 million in cash
with no outstanding debt. Capital expenditures during the
quarter were $44.4 million, directed
toward both maintenance of our equipment and initial payments on
new revenue-producing equipment. In addition, we returned
capital to our shareholders by repurchasing 726,889 RPC common
shares on the open market during the quarter, bringing the total
amount of shares repurchased during the first nine months of 2017
to 1,074,889," 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 179.0 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. Support Services revenues
increased by 21.7 percent during the quarter compared to the prior
year due primarily to improved activity levels 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 third
quarters of 2017 and 2016. RPC's corporate expenses increased
during the third quarter of 2017 as compared to the prior year due
to expenses which vary with higher activity levels and
profitability, such as incentive compensation.
(in
thousands)
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Technical Services
|
$
|
455,719
|
$
|
163,331
|
|
$
|
1,127,379
|
$
|
470,020
|
Support
Services
|
|
15,280
|
|
12,553
|
|
|
40,549
|
|
37,957
|
Total
revenues
|
$
|
470,999
|
$
|
175,884
|
|
$
|
1,167,928
|
$
|
507,977
|
Operating profit
(loss):
|
|
|
|
|
|
|
|
|
|
Technical Services
|
$
|
104,349
|
$
|
(48,627)
|
|
$
|
184,455
|
$
|
(177,581)
|
Support
Services
|
|
(2,062)
|
|
(5,541)
|
|
|
(10,622)
|
|
(19,340)
|
Corporate expenses
|
|
(5,433)
|
|
(3,397)
|
|
|
(13,679)
|
|
(13,724)
|
Gain on
disposition of assets, net
|
|
503
|
|
1,148
|
|
|
5,779
|
|
3,919
|
Total operating
profit (loss)
|
$
|
97,357
|
$
|
(56,417)
|
|
$
|
165,933
|
$
|
(206,726)
|
Interest
expense
|
|
(105)
|
|
(115)
|
|
|
(322)
|
|
(566)
|
Interest
income
|
|
488
|
|
169
|
|
|
1,028
|
|
296
|
Other income,
net
|
|
564
|
|
86
|
|
|
2,786
|
|
274
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
$
|
98,304
|
$
|
(56,277)
|
|
$
|
169,425
|
$
|
(206,722)
|
RPC, Inc. will hold a conference call today, October 25, 2017 at 9:00
a.m. ET to discuss the results for the third 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 and using the access code
#4661195. 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, that we are pleased with our prospects
for the immediate future, and that we have indications of strong
customer activity through the beginning of 2018. 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
|
|
Nine Months
Ended
|
|
|
|
September
30,
2017
|
|
|
June 30,
2017
|
|
|
September 30,
2016
|
|
|
2017
|
|
|
2016
|
REVENUES
|
|
$
|
470,999
|
|
$
|
398,810
|
|
$
|
175,884
|
|
$
|
1,167,928
|
|
$
|
507,977
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
294,820
|
|
|
254,016
|
|
|
146,615
|
|
|
765,078
|
|
|
434,868
|
Selling, general and
administrative expenses
|
|
39,738
|
|
|
40,288
|
|
|
34,859
|
|
|
117,183
|
|
|
114,863
|
Depreciation and
amortization
|
|
|
39,587
|
|
|
41,263
|
|
|
51,975
|
|
|
125,513
|
|
|
168,891
|
Gain on disposition
of assets, net
|
|
|
(503)
|
|
|
(3,759)
|
|
|
(1,148)
|
|
|
(5,779)
|
|
|
(3,919)
|
Operating profit
(loss)
|
|
|
97,357
|
|
|
67,002
|
|
|
(56,417)
|
|
|
165,933
|
|
|
(206,726)
|
Interest
expense
|
|
|
(105)
|
|
|
(114)
|
|
|
(115)
|
|
|
(322)
|
|
|
(566)
|
Interest
income
|
|
|
488
|
|
|
411
|
|
|
169
|
|
|
1,028
|
|
|
296
|
Other income,
net
|
|
|
564
|
|
|
2,010
|
|
|
86
|
|
|
2,786
|
|
|
274
|
Income (loss) before
income taxes
|
|
|
98,304
|
|
|
69,309
|
|
|
(56,277)
|
|
|
169,425
|
|
|
(206,722)
|
Income tax provision
(benefit)
|
|
|
40,970
|
|
|
25,469
|
|
|
(17,335)
|
|
|
64,617
|
|
|
(86,583)
|
NET INCOME
(LOSS)
|
|
$
|
57,334
|
|
$
|
43,840
|
|
$
|
(38,942)
|
|
$
|
104,808
|
|
$
|
(120,139)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS)
PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.26
|
|
$
|
0.20
|
|
$
|
(0.18)
|
|
$
|
0.48
|
|
$
|
(0.56)
|
Diluted
|
|
$
|
0.26
|
|
$
|
0.20
|
|
$
|
(0.18)
|
|
$
|
0.48
|
|
$
|
(0.56)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE SHARES
OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
216,958
|
|
|
217,530
|
|
|
214,266
|
|
|
217,401
|
|
|
214,213
|
Diluted
|
|
|
216,958
|
|
|
217,530
|
|
|
214,266
|
|
|
217,401
|
|
|
214,213
|
RPC INCORPORATED
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
At September 30,
(Unaudited)
|
|
(In
thousands)
|
|
|
2017
|
|
|
2016
|
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
136,892
|
|
$
|
139,087
|
Accounts receivable,
net
|
|
375,418
|
|
|
144,785
|
Inventories
|
|
113,359
|
|
|
110,868
|
Income taxes
receivable
|
|
3,141
|
|
|
50,264
|
Prepaid
expenses
|
|
5,587
|
|
|
4,528
|
Other current
assets
|
|
8,043
|
|
|
6,274
|
Total current
assets
|
|
642,440
|
|
|
455,806
|
Property, plant and
equipment, net
|
|
444,662
|
|
|
539,270
|
Goodwill
|
|
32,150
|
|
|
32,150
|
Other
assets
|
|
29,374
|
|
|
25,666
|
Total
assets
|
$
|
1,148,626
|
|
$
|
1,052,892
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Accounts
payable
|
$
|
121,880
|
|
$
|
54,822
|
Accrued payroll and
related expenses
|
|
25,254
|
|
|
14,606
|
Accrued insurance
expenses
|
|
4,224
|
|
|
4,932
|
Accrued state, local
and other taxes
|
|
7,706
|
|
|
6,992
|
Income taxes
payable
|
|
4,201
|
|
|
4,026
|
Other accrued
expenses
|
|
1,098
|
|
|
1,706
|
Total current
liabilities
|
|
164,363
|
|
|
87,084
|
Long-term accrued
insurance expenses
|
|
10,320
|
|
|
9,706
|
Long-term pension
liabilities
|
|
34,934
|
|
|
30,289
|
Other long-term
liabilities
|
|
3,627
|
|
|
3,338
|
Deferred income
taxes
|
|
53,529
|
|
|
84,665
|
Total
liabilities
|
|
266,773
|
|
|
215,082
|
Common
stock
|
|
21,659
|
|
|
21,752
|
Capital in excess of
par value
|
|
-
|
|
|
-
|
Retained
earnings
|
|
877,320
|
|
|
832,937
|
Accumulated other
comprehensive loss
|
|
(17,126)
|
|
|
(16,879)
|
Total
stockholders' equity
|
|
881,853
|
|
|
837,810
|
Total
liabilities and stockholders' equity
|
$
|
1,148,626
|
|
$
|
1,052,892
|
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
|
|
Nine Months
Ended
|
(in thousands
except per share data)
|
|
|
September
30,
2017
|
|
|
June 30,
2017
|
|
|
September
30,
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income (Loss) to EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
$
|
57,334
|
|
$
|
43,840
|
|
$
|
(38,942)
|
|
$
|
104,808
|
|
$
|
(120,139)
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
(benefit)
|
|
|
40,970
|
|
|
25,469
|
|
|
(17,335)
|
|
|
64,617
|
|
|
(86,583)
|
Interest expense
|
|
|
105
|
|
|
114
|
|
|
115
|
|
|
322
|
|
|
566
|
Depreciation and
amortization
|
|
|
39,587
|
|
|
41,263
|
|
|
51,975
|
|
|
125,513
|
|
|
168,891
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
488
|
|
|
411
|
|
|
169
|
|
|
1,028
|
|
|
296
|
EBITDA
|
|
$
|
137,508
|
|
$
|
110,275
|
|
$
|
(4,356)
|
|
$
|
294,232
|
|
$
|
(37,561)
|
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-third-quarter-2017-financial-results-300542662.html
SOURCE RPC, Inc.