ATLANTA, April 23, 2014 /PRNewswire/ -- RPC, Inc. (NYSE:
RES) today announced its unaudited results for the first quarter
ended March 31, 2014. 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,
2014, revenues increased 17.8 percent to $501.7 million compared to $425.8 million in the first quarter of
2013. Revenues increased compared to the prior year due to
higher activity levels in several of our large service lines,
greater service intensity, and a larger fleet of revenue-producing
equipment, partially offset by lower pricing for our services.
Operating profit for the first quarter increased by 14.0 percent to
$65.2 million compared to operating
profit of $57.2 million in the same
period for the prior year due to higher revenues. Net income
was $39.4 million or $0.18 diluted earnings per share, compared to
$35.1 million or $0.16 diluted earnings per share in the same
period of 2013. Earnings before interest, taxes, depreciation
and amortization (EBITDA) increased by 9.2 percent to $120.8 million compared to $110.6 million in the prior year.1
Cost of revenues during the first quarter of 2014 was
$330.0 million, or 65.8 percent of
revenues, compared to $268.2 million,
or 63.0 percent of revenues, in the prior year. Cost of
revenues increased primarily due to higher materials and supplies
expenses associated with increased activity levels and service
intensity, and higher employment costs associated with increased
activity levels. Cost of revenues as a percentage of revenues
increased primarily due to competitive pricing for our
services.
Selling, general and administrative expenses were $48.7 million in the first quarter of 2014,
compared to $44.9 million in the same
period of the prior year. Selling, general and administrative
expenses increased due to higher activity levels but decreased as a
percentage of revenues compared to the prior year due to the
leverage of fixed costs over higher revenues. Depreciation
and amortization increased to $55.5
million during the quarter compared to $52.8 million in the first quarter of 2013.
"RPC's financial results during the first quarter of 2014
compared to the prior year reflect higher activity levels and
greater service intensity in our largest service lines," stated
Richard A. Hubbell, RPC's President
and Chief Executive Officer. "In addition, our financial results
benefited from the slight growth in the size of our pressure
pumping fleet, which operated in oil and liquids-rich basins, as
well as some activity increases in selected markets due to the
higher price of natural gas during the first quarter of 2014.
These positive developments were partially offset by the impact of
prolonged winter weather during the first quarter as well as
continued competitive pricing for our services. We estimate
that severe weather in several of our U.S. domestic markets,
particularly during January and February, reduced RPC's first
quarter revenues by approximately five percent. From an
industry perspective, the average U.S. domestic rig count during
the first quarter was 1,779, a 1.2 percent increase compared to the
same period in 2013, and a 1.3 percent increase compared to the
fourth quarter of 2013. The average price of natural gas
during the first quarter was $4.86
per Mcf, a 38.9 percent increase compared to the prior year, and a
26.9 percent increase compared to the fourth quarter of 2013.
The average price of oil during the quarter was $98.70 per barrel, a 4.6 percent increase
compared to the prior year and a 1.3 percent increase compared to
the fourth quarter of 2013. The average price of benchmark
natural gas liquids was $1.30 per
gallon during the first quarter of 2014, a 50.7 percent increase
compared to the first quarter of 2013, and a 9.5 percent increase
compared to the fourth quarter of 2013. The unconventional
rig count, an important indicator of the demand for RPC's services,
increased by 5.7 percent compared to the prior year, and during the
first quarter of 2014 represented 78.2 percent of U.S. domestic
drilling activity. Our geographical concentration in markets
with higher activity levels continues to benefit our financial
results, and facilitated revenue growth that exceeded the changes
in these industry metrics.
"RPC also continues to benefit from higher completion service
intensity and improved drilling efficiencies. The efficiency
of the average U.S. domestic drilling rig increased by three
percent during the first quarter of 2014 compared to the prior
year, which supplemented the growth in the overall rig count.
In the Permian Basin, where the largest single concentration of our
pressure pumping fleet operates, the drilling rig count has risen
at a greater rate than the rest of the U.S. domestic market, and is
increasingly comprised of unconventional drilling and completion
operations. During the quarter, we experienced steady
increases in our revenues and profitability as customer activities
resumed from the holidays and winter weather became less of an
issue. However, the continued growing service intensity of
our work increased the logistical requirements related to raw
materials. During the first quarter, we experienced very high
demand for proppant in certain markets and had to use more costly
transportation methods to meet our customers' needs. These efforts
reduced our efficiencies and increased our costs, which negatively
impacted our operating margin. We are now seeing indications
that the costs of raw materials used in providing services to our
customers may increase. These factors, coupled with continued
strong competition and qualified labor scarcity, continue to
pressure our profitability.
"During the first quarter, we invested $37.9 million in maintenance and growth capital
expenditures. The balance on our syndicated credit facility
at the end of the quarter was $80.8
million, an increase compared to $53.3 million at the end of 2013. However,
our balance sheet showed $44.3
million in cash at the end of the first quarter, a higher
than normal balance which was due to the timing of cash
receipts. Our balance sheet continues to be well-capitalized
and allows us to take advantage of any strategic opportunities that
may arise," 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 increased 18.5 percent for the
quarter compared to the prior year due to higher activity levels in
most of the service lines within this segment, as well as greater
service intensity and raw material usage in pressure pumping, the
largest service line within this segment. Support Services
revenues increased 9.2 percent during the quarter compared to the
prior year principally due to higher activity levels in the rental
tool service line, which is the largest service line within this
segment. Operating profit in both Technical and Support
Services increased due to higher activity levels. In
Technical Services, operating profit also increased due to greater
service intensity in pressure pumping.
(in
thousands)
|
|
Three Months Ended
March 31
|
|
|
2014
|
|
2013
|
|
|
|
|
|
Revenues:
|
|
|
|
|
Technical services
|
$
|
466,970
|
$
|
394,011
|
Support
services
|
|
34,722
|
|
31,810
|
Total
revenues
|
$
|
501,692
|
$
|
425,821
|
Operating
Profit:
|
|
|
|
|
Technical services
|
$
|
64,896
|
$
|
58,501
|
Support
services
|
|
7,457
|
|
6,258
|
Corporate expenses
|
|
(4,889)
|
|
(4,900)
|
Loss on
disposition of assets, net
|
|
(2,232)
|
|
(2,640)
|
Total operating
profit
|
$
|
65,232
|
$
|
57,219
|
Interest
Expense
|
|
(337)
|
|
(340)
|
Interest
Income
|
|
4
|
|
5
|
Other Income,
net
|
|
80
|
|
555
|
|
|
|
|
|
Income before
income taxes
|
$
|
64,979
|
$
|
57,439
|
RPC, Inc. will hold a conference call today, April 23, 2014 at 9:00
a.m. ET to discuss the results of 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 (888) 329-8893 or (719) 325-2469 and using the access code
#2865781. For those not able to attend the live conference
call, a replay of the conference call 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 our balance
sheet allows us to take advantage of any strategic opportunities
that may arise. 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; 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 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 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; 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, 2013.
For information about RPC, Inc., please contact:
Ben M. Palmer
Chief Financial Officer
(404) 321-2140
irdept@rpc.net
Jim Landers
Vice President, Corporate Finance
(404) 321-2162
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 March
31, (Unaudited)
|
|
|
First
Quarter
|
|
|
|
|
|
|
2014
|
|
|
2013
|
|
% BETTER
(WORSE)
|
|
REVENUES
|
|
$
|
501,692
|
|
$
|
425,821
|
|
17.8
|
%
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
330,015
|
|
|
268,227
|
|
(23.0)
|
|
Selling, general and
administrative expenses
|
|
48,708
|
|
|
44,914
|
|
(8.4)
|
|
Depreciation and
amortization
|
|
|
55,505
|
|
|
52,821
|
|
(5.1)
|
|
Loss on disposition
of assets, net
|
|
|
2,232
|
|
|
2,640
|
|
15.5
|
|
Operating
profit
|
|
|
65,232
|
|
|
57,219
|
|
14.0
|
|
Interest
expense
|
|
|
(337)
|
|
|
(340)
|
|
0.9
|
|
Interest
income
|
|
|
4
|
|
|
5
|
|
(20.0)
|
|
Other income,
net
|
|
|
80
|
|
|
555
|
|
(85.6)
|
|
Income before income
taxes
|
|
|
64,979
|
|
|
57,439
|
|
13.1
|
|
Income tax
provision
|
|
|
25,591
|
|
|
22,363
|
|
(14.4)
|
|
NET
INCOME
|
|
$
|
39,388
|
|
$
|
35,076
|
|
12.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.18
|
|
$
|
0.16
|
|
12.5
|
%
|
Diluted
|
|
$
|
0.18
|
|
$
|
0.16
|
|
12.5
|
%
|
|
|
|
|
|
|
|
|
|
|
AVERAGE SHARES
OUTSTANDING
|
|
|
|
|
|
|
|
|
Basic
|
|
|
215,175
|
|
|
216,194
|
|
|
|
Diluted
|
|
|
216,214
|
|
|
217,525
|
|
|
|
RPC INCORPORATED
AND SUBSIDIARIES
|
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
At March 31,
(Unaudited)
|
|
(In
thousands)
|
|
|
2014
|
|
|
2013
|
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
44,293
|
|
$
|
10,283
|
Accounts receivable,
net
|
|
467,978
|
|
|
375,126
|
Inventories
|
|
135,727
|
|
|
132,682
|
Deferred income
taxes
|
|
12,502
|
|
|
5,952
|
Income taxes
receivable
|
|
2,099
|
|
|
11,996
|
Prepaid
expenses
|
|
8,538
|
|
|
10,516
|
Other current
assets
|
|
1,691
|
|
|
4,110
|
Total
current assets
|
|
672,828
|
|
|
550,665
|
Property, plant and
equipment, net
|
|
707,774
|
|
|
758,587
|
Goodwill
|
|
32,150
|
|
|
24,093
|
Other
assets
|
|
21,543
|
|
|
19,231
|
Total
assets
|
$
|
1,434,295
|
|
$
|
1,352,576
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Accounts
payable
|
$
|
141,398
|
|
$
|
122,797
|
Accrued payroll and
related expenses
|
|
30,439
|
|
|
24,976
|
Accrued insurance
expenses
|
|
6,374
|
|
|
6,404
|
Accrued state, local
and other taxes
|
|
6,505
|
|
|
5,026
|
Income taxes
payable
|
|
6,593
|
|
|
777
|
Other accrued
expenses
|
|
1,230
|
|
|
1,397
|
Total
current liabilities
|
|
192,539
|
|
|
161,377
|
Long-term accrued
insurance expenses
|
|
11,183
|
|
|
10,714
|
Notes payable to
banks
|
|
80,800
|
|
|
87,600
|
Long-term pension
liabilities
|
|
22,229
|
|
|
27,798
|
Other long-term
liabilities
|
|
7,902
|
|
|
2,388
|
Deferred income
taxes
|
|
141,330
|
|
|
150,210
|
Total
liabilities
|
|
455,983
|
|
|
440,087
|
Common
stock
|
|
21,884
|
|
|
22,056
|
Capital in excess of
par value
|
|
-
|
|
|
-
|
Retained
earnings
|
|
966,966
|
|
|
904,860
|
Accumulated other
comprehensive loss
|
|
(10,538)
|
|
|
(14,427)
|
Total
stockholders' equity
|
|
978,312
|
|
|
912,489
|
Total
liabilities and stockholders' equity
|
$
|
1,434,295
|
|
$
|
1,352,576
|
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 March
31, (Unaudited)
|
|
|
First
Quarter
|
|
% BETTER
(WORSE)
|
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income to EBITDA
|
|
|
|
|
|
|
|
|
Net
Income
|
|
$
|
39,388
|
|
$
|
35,076
|
|
12.3
|
%
|
Add:
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
|
|
25,591
|
|
|
22,363
|
|
(14.4)
|
|
Interest expense
|
|
|
337
|
|
|
340
|
|
0.9
|
|
Depreciation and
amortization
|
|
|
55,505
|
|
|
52,821
|
|
(5.1)
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
4
|
|
|
5
|
|
(20.0)
|
|
EBITDA
|
|
$
|
120,817
|
|
$
|
110,595
|
|
9.2
|
%
|
|
|
|
|
|
|
|
|
|
|
EBITDA PER
SHARE
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.56
|
|
$
|
0.51
|
|
9.8
|
%
|
Diluted
|
|
$
|
0.56
|
|
$
|
0.51
|
|
9.8
|
%
|
SOURCE RPC, Inc.