ATLANTA, July 29 /PRNewswire-FirstCall/ -- RPC, Inc. (NYSE:RES)
today announced its unaudited results for the second quarter ended
June 30, 2009. 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, 2009,
revenues decreased 40.8 percent to $127,018,000 compared to
$214,689,000 in the second quarter last year. Revenues decreased
compared to the prior year due primarily to dramatically lower
pricing for our services coupled with modestly lower utilization of
our equipment and personnel. Operating loss for the quarter was
$19,498,000 compared to operating profit of $37,800,000 in the
prior year. Net loss was $11,624,000 or $0.12 per diluted share,
compared to net income of $22,458,000 or $0.23 diluted earnings per
share last year. Earnings before interest, taxes, depreciation and
amortization (EBITDA) declined by 79.9 percent to $13,486,000
compared to $67,082,000 in the prior year. (1) Cost of revenues was
$91,080,000, or 71.7 percent of revenues, during the second quarter
of 2009, compared to $120,175,000, or 56.0 percent of revenues, in
the prior year. The decrease in these costs was due to the variable
nature of most of these expenses as well as the impact of expense
reduction measures taken during 2009, including employment cost
reductions and greater efficiencies in the purchase of materials
and supplies. As a percentage of revenues, cost of revenues
increased because of lower pricing for our services, higher
materials requirements for more service-intensive work and negative
leverage from direct personnel costs. Selling, general and
administrative expenses decreased by 19.4 percent in the second
quarter of 2009 to $23,372,000 from $29,010,000 in the prior year.
This decrease was due to lower employment costs and other expenses
resulting from expense reduction efforts instituted during the
first six months of 2009. As a percentage of revenues, however,
these costs increased to 18.4 percent in 2009 compared to 13.5
percent last year. Depreciation and amortization increased slightly
to $32,376,000 during the quarter, compared to $29,177,000 last
year, due to capital expenditures made during the last year.
Interest expense decreased from $1,250,000 last year to $527,000 in
2009 due to reduced interest rates and a lower average balance on
RPC's revolving credit facility. For the six months ended June 30,
2009, revenues decreased 26.4 percent to $303,289,000 compared to
$411,916,000 last year. Net loss was $7,158,000 or $0.07 per
diluted share, compared to net income of $37,215,000 or $0.38 per
diluted share last year. "The steep decline in domestic drilling
activity, which began in the third quarter of 2008, continued
during the second quarter of 2009," stated Richard A. Hubbell,
RPC's President and Chief Executive Officer. "The average domestic
rig count during the second quarter was 934, a 49.9 percent
decrease compared to the same period in 2008. RPC's revenues
decreased by less than this industry benchmark, due to the relative
strength in several of our specialized service lines and our
relatively more significant participation in several domestic
unconventional oilfield basins. Approximately 60 percent of
drilling activity during the second quarter of 2009 was
unconventional, compared to approximately 48 percent during the
same period last year, which indicates that these markets have been
relatively stronger. Although there were some signs of stability in
drilling activity during the quarter, the rig count fell to levels
not seen since 2003. The price of natural gas decreased 67.4
percent, and the price of oil decreased 52.0 percent during this
period compared to the prior year. These commodity price declines,
as well as the deep and ongoing global recession, have caused the
steepest annualized decline in domestic oilfield activity in
history. This industry decline and the large amount of oilfield
service assets operating in North America have combined to decrease
our pricing and equipment utilization drastically. We have reduced
headcount, employment costs and discretionary expenses, and
continue to evaluate these opportunities as the domestic oilfield
market remains depressed. "We continue to focus on maintaining a
conservative balance sheet, and this focus serves us well in the
current environment. Our capital expenditures during the quarter
were $23.7 million, and we reduced the balance on our revolving
credit facility during the quarter by $8.9 million to $123.6
million. Also, as we announced this morning, our Board of Directors
voted to reduce our quarterly dividend from $0.07 per share to
$0.04 per share. We believe that this step will strengthen our
capital structure, allowing us to reduce our debt further in the
near term. We are somewhat encouraged at this point that several of
our comparable or smaller peers with more aggressive capital
structures are struggling to remain viable, and the options they
are facing will ultimately result in an improved operating
environment for us. This, along with some signs that drilling
activity may have reached a trough, give us reason to believe that
the worst of this downturn may be behind us, although signs of
increased activity and improved pricing have not yet emerged,"
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 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 declined 40.6 percent for the
quarter compared to the prior year, impacted by competitive pricing
and lower equipment utilization. Support Services revenues
decreased by 42.1 percent during the quarter compared to the prior
year because of decreased activity in the rental tool service line,
which is the largest service line within Support Services.
Operating losses in Technical and Support Services segments were
realized due to lower revenues and higher costs and expenses as a
percentage of revenues. Three Months Six Months Ended June 30 Ended
June 30 -------------- -------------- 2009 2008 2009 2008 ---- ----
---- ---- (in thousands) Revenues: Technical services $109,987
$185,284 $261,066 $354,515 Support services 17,031 29,405 42,223
57,401 ------ ------ ------ ------ Total revenues $127,018 $214,689
$303,289 $411,916 -------- -------- -------- -------- Operating
(loss) profit: Technical services $(15,212) $31,958 $(9,064)
$52,644 Support services (1,616) 6,764 2,090 12,622 Corporate
expenses (2,982) (2,395) (6,161) (5,025) Gain on disposition of
assets, net (312) (1,473) (2,034) (3,000) ---- ------ ------ ------
Total operating (loss) profit $(19,498) $37,800 $(11,101) $63,241
-------- ------- -------- ------- Other Income, net 608 105 751 98
Interest Expense (527) (1,250) (1,121) (2,721) Interest Income 52
24 85 46 -------- ------- -------- ------- (Loss) Income before
income taxes $(19,365) $36,679 $(11,386) $60,664 -------- -------
-------- ------- RPC, Inc. will hold a conference call today, July
29, 2009 at 9:00 a.m. EDT to discuss the results of the second
quarter. Interested parties may listen in by accessing a live
webcast in the investor relations section of RPC, Inc.'s Web site
at http://www.rpc.net/. The live conference call can also be
accessed by calling (888) 744-3690 or (706) 643-1513 and using the
access code #18949582. A replay of the conference call will be
available in the investor relations section of RPC, Inc.'s Web site
(http://www.rpc.net/) beginning approximately two hours after the
call. The rebroadcast will also be available until August 5, 2009
via telephone by calling (800) 642-1687 or (706) 645-9291 and using
the same access code. 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 and Rocky
Mountain regions, and in selected international markets. RPC's
investor website can be found at http://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. Such
forward-looking statements include our statements regarding the
impact of the steep decline in drilling activity during the second
quarter of 2009, the relative strength of our specialized service
lines and our work in unconventional oilfield basins; our ability
to continue to reduce headcount, employment costs and discretionary
expenses, our belief that drilling activity stabilized at the end
of the second quarter of 2009; the impact of the industry decline
and the large amount of oilfield equipment operating in the U.S.
domestic market; our encouragement regarding the viability of our
peers with more aggressive capital structures which may result in
an improved operating environment for RPC; and our belief that the
worst of the industry downturn may be behind us. 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; drilling activity and rig count;
unanticipated demands on our liquidity or difficulties in
collecting trade accounts receivable; 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 possibility that recent unconventional exploration and
production activities may cease or change in nature so as to reduce
demand for our services; the possibility of further declines in the
price of oil and natural gas, which tend to result in a decrease in
drilling activity and therefore a decline in the 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-producing regions of the world, which could impact drilling
activity; adverse weather conditions in oil or gas producing
regions, including the Gulf of Mexico; competition in the oil and
gas industry; an inability to implement price increases; and risks
of international operations. 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, 2008. 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 RPC INCORPORATED AND SUBSIDIARIES
--------------------------------- CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands except per share data)
-------------------------------------- Periods ended June 30,
(Unaudited) Second Quarter ----------------------- % BETTER 2009
2008 (WORSE) ---- ---- -------- REVENUES $127,018 $214,689 (40.8)%
COSTS AND EXPENSES: Cost of revenues 91,080 120,175 24.2 Selling,
general and administrative expenses 23,372 29,010 19.4 Depreciation
and amortization 32,376 29,177 (11.0) Gain on disposition of
assets, net (312) (1,473) (78.8) ------------------------------
---- ------ ----- Operating (loss) profit (19,498) 37,800 NM
Interest expense (527) (1,250) 57.8 Interest income 52 24 116.7
Other income, net 608 105 N/M ----------------- --- --- --- (Loss)
income before income taxes (19,365) 36,679 NM Income tax (benefit)
provision (7,741) 14,221 NM ------------------------------- ------
------ -- NET (LOSS) INCOME $(11,624) $22,458 NM %
================== ======== ======= == (LOSS) EARNINGS PER SHARE
Basic $(0.12) $0.23 N/M % ====== ===== === Diluted $(0.12) $0.23
N/M % ====== ===== === AVERAGE SHARES OUTSTANDING Basic 96,317
96,778 ====== ====== Diluted 96,317 98,120 ====== ====== Six Months
----------------------- % BETTER 2009 2008 (WORSE) ---- ----
-------- REVENUES $303,289 $411,916 (26.4)% COSTS AND EXPENSES:
Cost of revenues 201,050 237,845 15.5 Selling, general and
administrative expenses 50,978 57,327 11.1 Depreciation and
amortization 64,396 56,503 (14.0) Gain on disposition of assets,
net (2,034) (3,000) (32.2) ------------------------------ ------
------ ----- Operating (loss) profit (11,101) 63,241 NM Interest
expense (1,121) (2,721) 58.8 Interest income 85 46 84.8 Other
income, net 751 98 N/M ----------------- --- -- --- (Loss) income
before income taxes (11,386) 60,664 NM Income tax (benefit)
provision (4,228) 23,449 NM ------------------------------- ------
------ -- NET (LOSS) INCOME $(7,158) $37,215 NM %
================== ======= ======= == (LOSS) EARNINGS PER SHARE
Basic $(0.07) $0.39 N/M % ====== ===== === Diluted $(0.07) $0.38
N/M % ====== ===== === AVERAGE SHARES OUTSTANDING Basic 96,247
96,603 ====== ====== Diluted 96,247 98,124 ====== ====== RPC
INCORPORATED AND SUBSIDIARIES ---------------------------------
CONSOLIDATED BALANCE SHEETS --------------------------- At June 30,
(Unaudited) (In thousands) ----------------------- --------------
2009 2008 ---- ---- ASSETS Cash and cash equivalents $2,812 $9,028
Accounts receivable, net 121,276 193,334 Inventories 54,044 35,707
Deferred income taxes 5,634 4,601 Income taxes receivable 18,377
248 Prepaid expenses and other current assets 3,594 5,273
-------------------------- ----- ----- Total current assets 205,737
248,191 ---------------------- ------- ------- Property, plant and
equipment, net 444,856 471,168 Goodwill 24,093 24,093 Other assets
7,966 9,702 ------------ ----- ----- Total assets $682,652 $753,154
============== ======== ======== LIABILITIES AND STOCKHOLDERS'
EQUITY Accounts payable $36,061 $63,385 Accrued payroll and related
expenses 9,662 16,154 Accrued insurance expenses 4,746 5,161
Accrued state, local and other taxes 2,999 3,014 Income taxes
payable 927 3,000 Other accrued expenses 255 468
---------------------- --- --- Total current liabilities 54,650
91,182 --------------------------- ------ ------ Long-term accrued
insurance expenses 9,008 8,696 Notes payable to banks 123,550
182,550 Long-term pension liabilities 12,872 5,326 Other long-term
liabilities 1,668 2,030 Deferred income taxes 50,542 31,029
--------------------- ------ ------ Total liabilities 252,290
320,813 ------------------- ------- ------- Common stock 9,840
9,859 Capital in excess of par value 5,290 13,612 Retained earnings
424,588 410,854 Accumulated other comprehensive loss (9,356)
(1,984) ------------------------------- ------ ------ Total
stockholders' equity 430,362 432,341 ----------------------------
------- ------- Total liabilities and stockholders' equity $682,652
$753,154 ======================== ======== ======== 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 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 (Loss) Income, the most
comparable GAAP measure. This reconciliation also appears on RPC's
investor website, which can be found on the Internet at
http://www.rpc.net/. Periods ended June 30, (Unaudited) Second
Quarter % Six Months % 2009 2008 BETTER 2009 2008 BETTER (WORSE)
(WORSE) Reconciliation of Net (Loss) Income to EBITDA Net (Loss)
income (11,624) $22,458 N/M % $(7,158) $37,215 N/M % Add: Income
tax (benefit) provision (7,741) 14,221 N/M (4,228) 23,449 N/M
Interest expense 527 1,250 57.8 1,121 2,721 58.8 Depreciation and
amortization 32,376 29,177 (11.0) 64,396 56,503 (14.0) Less:
Interest income 52 24 116.7 85 46 84.8 -- -- ----- -- -- ----
EBITDA 13,486 $67,082 (79.9)% $54,046 $119,842 (54.9)% ======
======= ===== ======= ======== ===== EBITDA PER SHARE Basic 0.14
$0.69 (79.7)% $0.56 $1.24 (54.8)% ==== ===== ===== ===== =====
===== Diluted 0.14 $0.68 (79.4)% $0.56 $1.22 (54.1)% ==== =====
===== ===== ===== ===== (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.
DATASOURCE: RPC Incorporated CONTACT: Ben M. Palmer, Chief
Financial Officer, +1-404-321-2140, , Jim Landers, Vice President,
Corporate Finance, +1-404-321-2162, , both of RPC, Inc. Web Site:
http://www.rpc.net/
Copyright