RES
$13.89
RPC
($.53)
(3.68%)
Earnings Details
3rd Quarter September 2018
Wednesday, October 24, 2018 6:45:00 AM
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Summary

RPC Misses

RPC (RES) reported 3rd Quarter September 2018 earnings of $0.19 per share on revenue of $440.0 million. The consensus earnings estimate was $0.23 per share on revenue of $458.0 million. The Earnings Whisper number was $0.24 per share. Revenue fell 6.6% compared to the same quarter a year ago.

RPC Inc provides oilfield services and equipment primarily to oil and gas companies engaged in the exploration, production and development of oil and gas properties throughout the United States.

Results
Reported Earnings
$0.19
Earnings Whisper
$0.24
Consensus Estimate
$0.23
Reported Revenue
$440.0 Mil
Revenue Estimate
$458.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

RPC, Inc. Reports Third Quarter 2018 Financial Results

ATLANTA, Oct. 24, 2018 /PRNewswire/ -- RPC, Inc. (NYSE: RES) today announced its unaudited results for the third quarter ended September 30, 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.

RPCBlueLogo

For the quarter ended September 30, 2018, revenues were $440.0 million, a decrease of 6.6 percent, compared to $471.0 million in the third quarter of last year. Revenues decreased compared to the same period of the prior year due to lower activity levels and slightly lower pricing, primarily within RPC's pressure pumping service line. Operating profit for the quarter was $54.6 million, a decrease of 44.0 percent, compared to operating profit of $97.4 million in the same period of the prior year. Net income for the third quarter was $50.0 million or $0.23 diluted earnings per share, including a $0.04 per share favorable discrete tax adjustment, compared to net income of $57.3 million or $0.26 diluted earnings per share in the third quarter of 2017. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter were $97.8 million, a decrease of 28.9 percent, compared to $137.5 million in the prior year.1 

For the nine months ended September 30, 2018, revenues increased to $1.34 billion compared to $1.17 billion last year.  Net income for the nine-month period was $162.0 million, or $0.75 diluted earnings per share, compared to $104.8 million, or $0.48 diluted earnings per share in the same period last year.

Cost of revenues during the third quarter of 2018 was $300.9 million, or 68.4 percent of revenues, compared to $294.8 million, or 62.6 percent of revenues, during the third quarter of last year. Cost of revenues increased primarily due to higher employment costs, partially offset by lower materials and supplies expenses, which declined due to lower activity levels, particularly within our pressure pumping service line. Cost of revenues as a percentage of revenues increased due to inefficiencies caused by inconsistent activity levels and higher employment costs.

Selling, general and administrative expenses were $41.8 million in the third quarter of 2018 compared to $39.7 million in the third quarter of 2017. As a percentage of revenues, these expenses increased to 9.5 percent in the third quarter of 2018 compared to 8.4 percent of revenues in the third quarter of 2017, due to relatively fixed nature of these expenses during the short term. Depreciation and amortization increased to $43.0 million compared to $39.6 million in the third quarter of the prior year due to capital expenditures made during the previous four quarters.

Discussion of Sequential Quarterly Financial Results

RPC's revenues for the quarter ended September 30, 2018 decreased by $27.9 million, or 6.0 percent, compared to the second quarter of 2018. Cost of revenues during the third quarter of 2018 decreased by $11.1 million, or 3.6 percent, due to lower materials and supplies expenses  and lower maintenance and repairs expense partially offset by higher employment costs. As a percentage of revenues, cost of revenues increased from 66.7 percent in the second quarter of 2018 to 68.4 percent in the third quarter of 2018. RPC's operating profit during the third quarter was $54.6 million, a decrease of $20.5 million, or 27.3 percent, compared to operating profit of $75.0 million in the second quarter of 2018. EBITDA for the third quarter of 2018 decreased by $21.4 million compared to the prior quarter.

Management Commentary

"The average U.S. domestic rig count during the third quarter of 2018 was 1,051, an 11.1 percent increase compared to the same period in 2017, and a 1.2 percent increase compared to the second quarter of 2018," stated Richard A. Hubbell, RPC's President and Chief Executive Officer. "The average price of natural gas during the third quarter was $2.93 per Mcf, a 0.7 percent decrease compared to the prior year, and a 2.8 percent increase compared to the second quarter of 2018. The average price of oil during the third quarter was $69.73 per barrel, a 45.0 percent increase compared to the prior year and a 2.5 percent increase compared to the second quarter of 2018.

"Oilfield completion activity increased slightly during the third quarter, as stable oil prices supported our customers' activities. However, we began to experience weakness in the pricing for our pressure pumping services as additional horsepower continued to enter the market. In addition, pressure pumping fleet efficiencies continued to improve, which has contributed to the overcapacity for this oilfield services market segment. Labor shortages also continue to be a significant issue in our industry. We have not yet experienced any direct impact from Permian Basin takeaway capacity constraints.

"During the third quarter, we continued our commitment to RPC's shareholders through our dividends. Including this use of cash, as well as $49.9 million of capital expenditures, we finished the third quarter with $128.4 million in cash," 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, downhole tools, coiled tubing, hydraulic workover services, nitrogen, 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 tubulars and related tools, pipe handling, inspection and storage services, and oilfield training services.

Technical Services revenues decreased by 7.6 percent for the quarter compared to the prior year due to lower activity levels in several of the larger service lines within this segment, as well as slightly lower pricing within our pressure pumping service line, which is the largest service line within Technical Services. On a sequential basis, Technical Services revenues decreased by 6.4 percent during the third quarter of 2018 compared to the prior quarter due to these lower activity levels. Support Services revenues increased by 22.5 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 3.6 percent during the third quarter of 2018 compared to the prior quarter. Technical Services generated lower operating profit in the third quarter of 2018 than in both the prior quarter and the third quarter of last year. Support Services generated an operating profit in the third quarter of 2018 and in the prior quarter compared to a loss in the third quarter of 2017. 

(in thousands)


Three Months Ended



Nine Months Ended September 30,



September 30,


June 30,


September 30,








2018


2018


2017



2018


2017













Revenues:












   Technical Services

$

421,271

$

449,852

$

455,719


$

1,290,186

$

1,127,379

   Support Services


18,723


18,074


15,280



54,068


40,549

Total revenues

$

439,994

$

467,926

$

470,999


$

1,344,254

$

1,167,928

Operating profit (loss):












   Technical Services

$

56,209

$

75,624

$

104,349


$

196,838

$

184,455

   Support Services


1,787


1,193


(2,062)



2,075


(10,622)

   Corporate expenses


(3,729)


(3,598)


(5,433)



(11,992)


(13,679)

   Gain on disposition of assets, net


286


1,810


503



3,459


5,779

Total operating profit 

$

54,553

$

75,029

$

97,357


$

190,380

$

165,933

Interest expense


(150)


(113)


(105)



(368)


(322)

Interest income


783


458


488



1,643


1,028

Other income, net


287


4,104


564



9,786


2,786













Income before income taxes

$

55,473

$

79,478

$

98,304


$

201,441

$

169,425

RPC, Inc. will hold a conference call today, October 24, 2018 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 (888) 599-8686, or (323) 994-2093 for international callers, and using conference ID number 1606007.  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 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. 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.

 

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
2018



June 30
2018



September 30
2017



2018



2017

REVENUES


$

439,994


$

467,926


$

470,999


$

1,344,254


$

1,167,928

COSTS AND EXPENSES:
















Cost of revenues



300,947



312,079



294,820



908,631



765,078

Selling, general and administrative expenses


41,787



42,534



39,738



128,135



117,183

Depreciation and amortization



42,993



40,094



39,587



120,567



125,513

Gain on disposition of assets, net



(286)



(1,810)



(503)



(3,459)



(5,779)

Operating profit 



54,553



75,029



97,357



190,380



165,933

Interest expense



(150)



(113)



(105)



(368)



(322)

Interest income



783



458



488



1,643



1,028

Other income, net



287



4,104



564



9,786



2,786

Income before income taxes



55,473



79,478



98,304



201,441



169,425

Income tax provision 



5,506



19,535



40,970



39,401



64,617

NET INCOME 


$

49,967


$

59,943


$

57,334


$

162,040


$

104,808

































EARNINGS PER SHARE 
















   Basic


$

0.23


$

0.28


$

0.26


$

0.75


$

0.48

   Diluted


$

0.23


$

0.28


$

0.26


$

0.75


$

0.48

















AVERAGE SHARES OUTSTANDING
















     Basic 



214,807



215,194



216,958



215,362



217,401

     Diluted 



214,807



215,194



216,958



215,362



217,401

 

 

RPC INCORPORATED AND SUBSIDIARIES












CONSOLIDATED BALANCE  SHEETS






At September 30, (Unaudited)


(In thousands)



2018



2017

ASSETS






Cash and cash equivalents

$

128,373


$

136,892

Accounts receivable, net


382,755



375,418

Inventories


128,957



113,359

Income taxes receivable


11,578



3,141

Prepaid expenses 


6,344



5,587

Other current assets


5,583



8,043

  Total current assets


663,590



642,440

Property, plant and equipment, net


515,805



444,662

Goodwill 


32,150



32,150

Other assets


34,117



29,374

  Total assets

$

1,245,662


$

1,148,626







LIABILITIES AND STOCKHOLDERS' EQUITY






Accounts payable

$

127,161


$

121,880

Accrued payroll and related expenses


32,140



25,254

Accrued insurance expenses


5,903



4,224

Accrued state, local and other taxes


7,110



7,706

Income taxes payable


4,999



4,201

Other accrued expenses


272



1,098

  Total current liabilities


177,585



164,363

Long-term accrued insurance expenses


11,435



10,320

Long-term pension liabilities


30,294



34,934

Other long-term liabilities


3,834



3,627

Deferred income taxes


45,913



53,529

  Total liabilities


269,061



266,773

Common stock 


21,480



21,658

Capital in excess of par value


-



-

Retained earnings


971,382



877,320

Accumulated other comprehensive loss


(16,261)



(17,125)

  Total stockholders' equity


976,601



881,853

  Total liabilities and stockholders' equity 

$

1,245,662


$

1,148,626

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
2018



June 30
2018



September 30
2017



2018



2017

















Reconciliation of Net Income to EBITDA
















Net Income 


$

49,967


$

59,943


$

57,334


$

162,040


$

104,808

Add:
















     Income tax provision 



5,506



19,535



40,970



39,401



64,617

     Interest expense



150



113



105



368



322

     Depreciation and amortization



42,993



40,094



39,587



120,567



125,513

Less:
















     Interest income



783



458



488



1,643



1,028

EBITDA


$

97,833


$

119,227


$

137,508


$

320,733


$

294,232

 

 

Cision View original content:http://www.prnewswire.com/news-releases/rpc-inc-reports-third-quarter-2018-financial-results-300736560.html

SOURCE RPC, Inc.