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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

washington, d.c. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): October 25, 2023

 

RPC, INC.

(Exact name of registrant as specified in its charter)

 

Delaware 1-8726 58-1550825
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)

(IRS Employer

Identification No.)

 

2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329

(Address of principal executive office) (zip code)

 

Registrant's telephone number, including area code: (404) 321-2140

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, $0.10 par value   RES   New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On October 25, 2023, RPC, Inc. issued a press release titled "RPC, Inc. Reports Third Quarter 2023 Financial Results," announcing the financial results for the third quarter ended September 30, 2023.

 

Item 9.01 Financial Statements and Exhibits.

 

  99.1 Press Release dated October 25, 2023
  104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

-2-

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, RPC, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  RPC, Inc.
   
Date: October 25, 2023 /s/ Michael L. Schmit
  Michael L. Schmit
  Vice President and Chief Financial Officer

 

-3-

 

 

Exhibit 99.1

 

 

RPC, Inc. Reports Third Quarter 2023 Financial Results

 

ATLANTA, October 25, 2023 - RPC, Inc. (NYSE: RES) today announced its unaudited results for the third quarter and nine months ended September 30, 2023. 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.

 

“RPC’s third quarter 2023 operating results for the majority of our service lines were relatively stable sequentially except for the even weaker than expected decline in pressure pumping,” stated Ben M. Palmer, RPC’s President and Chief Executive Officer. “We believed this pressure pumping weakness would prove temporary and made the decision to maintain our pricing discipline and service readiness. This decision resulted in carrying costs during the quarter in anticipation of a busy fourth quarter calendar working at acceptable terms. A highlight for the quarter was the recently acquired Spinnaker cementing business. The integration has proceeded smoothly and the business positively contributed to our financial results,” concluded Palmer.

 

Consolidated Financial Results

 

For the quarter ended September 30, 2023, RPC generated revenues of $330.4 million, a decrease compared to $415.9 million in the second quarter. Revenues fell primarily due to declines in RPC’s pressure pumping business due to lower customer activity, partially offset by a full quarter of financial results from our recent cementing acquisition. Operating profit for the third quarter of 2023 was $22.7 million compared to $82.4 million in the second quarter. Net income for the third quarter of 2023 was $18.3 million, or $0.08 diluted earnings per share, compared to net income of $65.0 million, or $0.30 diluted earnings per share, in the second quarter.

 

Adjusted operating profit1 for the third quarter of 2023 was $22.7 million compared to $83.3 million in the second quarter of 2023. Adjusted net income2 for the third quarter of 2023 was $18.3 million, or $0.08 adjusted diluted earnings per share2, compared to adjusted net income of $65.7 million, or $0.30 adjusted diluted earnings per share, in the second quarter. Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA)3 for the third quarter of 2023, for which there was no adjustment, was $51.9 million, a decrease compared to $110.1 million in the second quarter.

 

 

1Adjusted operating profit is a financial measure which does not conform to GAAP. Additional disclosure regarding this non-GAAP financial measure and its reconciliation to operating profit, the nearest GAAP financial measure, is disclosed in Appendix A to this press release.

 

2Adjusted net income and adjusted diluted earnings per share are financial measures which do not conform to GAAP. Additional disclosure regarding these non-GAAP financial measures and their reconciliation to net income and income per share, the nearest GAAP financial measures, are disclosed in Appendix B to this press release.

 

3Adjusted EBITDA and EBITDA are financial measures which do not conform to GAAP. Additional disclosure regarding these non-GAAP financial measures and their reconciliation to net income, the nearest GAAP financial measure, are disclosed in Appendix C to this press release.

 

 

 

 

Page 2

Third Quarter 2023 Earnings Release

 

Cost of revenues, which excludes depreciation and amortization, during the third quarter of 2023 was $239.1 million compared to $265.8 million in the second quarter. These costs as a percentage of revenues were 72.4 percent in the third quarter of 2023, an increase compared to 63.9 percent of revenues in the second quarter because of lower revenues and the relatively fixed nature of direct employment costs. Selling, general and administrative expenses were $42.0 million in the third quarter of 2023 compared to $43.6 million in the second quarter of 2023. Depreciation and amortization was $28.4 million in the third quarter of 2023 compared to $26.2 million in the second quarter of 2023.

 

RPC’s revenues for the quarter ended September 30, 2023 decreased by $129.2 million, or 28.1 percent, compared to the third quarter of the prior year due to lower activity levels and more competitive pricing. Cost of revenues, which excludes depreciation and amortization, during the third quarter of 2023 decreased by $70.7 million compared to the third quarter of 2022. As a percentage of revenues, cost of revenues increased to 72.4 percent in the third quarter of 2023 from 67.4 percent in the third quarter of 2022.

 

Selling, general and administrative expenses increased by $3.8 million in the third quarter of 2023 compared to the third quarter of the prior year. RPC’s operating profit in the third quarter of 2023 was $22.7 million, compared to $92.2 million in the third quarter of 2022. Net income for the third quarter of 2023 was $18.3 million compared to $69.3 million in the third quarter of 2022. EBITDA3, in the third quarter of 2023 was $51.9 million compared to $113.0 million in the third quarter of 2022.

 

For the nine months ended September 30, 2023, revenues increased 9.2 percent to $1.2 billion compared to $1.1 billion for the same period last year. Net income for the nine-month period was $154.9 million, or $0.71 diluted earnings per share, compared to net income of $131.4 million, or $0.61 diluted earnings per share, in the same period last year.

 

Rig Count and Commodity Price Statistics

 

The average U.S. domestic rig count during the third quarter of 2023 was 649, a 9.7 percent decrease compared to the second quarter of 2023, and a 14.7 percent decrease compared to the third quarter of 2022. The average price of oil during the third quarter of 2023 was $82.17 per barrel, an 11.7 percent increase compared to the second quarter of 2023, but an 11.5 percent decrease compared to the third quarter of 2022. The average price of natural gas during the third quarter of 2023 was $2.59 per Mcf, an increase of 19.9 percent compared to the second quarter of 2023, but a 67.8 percent decrease compared to the third quarter of the prior year.

 

 

 

 

Page 3

Third Quarter 2023 Earnings Release

 

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 and services, coiled tubing, cementing, nitrogen, hydraulic workover services, 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 inspection and storage services, and oilfield training services.

 

Technical Services third quarter 2023 revenues decreased by 22.3 percent compared to the prior quarter and decreased by 30.5 percent compared to the same period of the prior year. Technical Services generated an operating profit of $18.9 million in the third quarter of 2023 compared to $77.0 million in the prior quarter and an operating profit of $89.5 million in the third quarter of the prior year. The year-over-year declines in Technical Services operating results were driven by lower pressure pumping revenues, the largest service line within Technical Services.

 

Support Services revenues increased by 5.8 percent during the third quarter of 2023 compared to the prior quarter and increased by 14.8 percent compared to the same period of the prior year. The increases in revenues were due to higher activity levels in rental tools as compared to both comparable periods. Support Services generated an operating profit of $6.9 million in the third quarter of 2023 and $7.9 million in the second quarter of 2023. Third quarter 2023 Support Services operating profit increased by $1.6 million compared to the third quarter of the prior year due to higher activity levels and leverage of higher revenues over costs that are fixed during the short term.

 

 

 

 

Page 4

Third Quarter 2023 Earnings Release

 

(In thousands)  Three Months Ended   Nine Months Ended 
(Unaudited)  September 30,   June 30,   September 30,   September 30, 
   2023   2023   2022   2023   2022 
Revenues:                         
Technical Services  $303,069   $390,018   $435,775   $1,145,078   $1,058,227 
Support Services   27,348    25,840    23,826    77,865    61,505 
Total revenues  $330,417   $415,858   $459,601   $1,222,943   $1,119,732 
Operating profit:                         
Technical Services  $18,912   $77,017   $89,455   $199,462   $171,093 
Support Services   6,861    7,920    5,278    21,425    11,392 
Corporate expenses   (4,840)   (4,672)   (4,106)   (14,593)   (13,160)
Pension settlement charges   -    (911)   -    (18,286)   - 
Gain on disposition of assets, net   1,778    3,015    1,543    7,729    6,295 
Total operating profit  $22,711   $82,369   $92,170   $195,737   $175,620 
Interest expense   (101)   (73)   (143)   (246)   (543)
Interest income   1,450    2,698    329    6,003    472 
Other income (expense), net   804    631    (67)   2,196    516 
Income before income taxes  $24,864   $85,625   $92,289   $203,690   $176,065 

 

RPC, Inc. will hold a conference call today, October 25, 2023 at 9:00 a.m. ET to discuss the results for the quarter. Interested parties may listen in by accessing a live webcast in the investor relations section of RPC, Inc.’s website at rpc.net. The live conference call can also be accessed by calling (888) 440-5966, or (646) 960-0125 for international callers, and use conference ID number 9842359. 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 and for a period of 90 days.

 

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 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 statements that look forward in time or express management’s beliefs, expectations or hopes. In particular, such statements include, without limitation, our expectations regarding a busy calendar in the fourth quarter working at acceptable terms. 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 for the year ended December 31, 2022.

 

 

 

 

Page 5

Third Quarter 2023 Earnings Release

 

For information about RPC, Inc., please contact:

 

Michael L. Schmit, Chief Financial Officer

(404) 321-2140

irdept@rpc.net

 

Jim Landers, Vice President Corporate Services

(404) 321-2162

JLanders@rpc.net

 

 

 

 

Page 6

Third Quarter 2023 Earnings Release

 

RPC INCORPORATED AND SUBSIDIARIES                    
                     
CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands except per share data)            
             
   Three Months Ended   Nine Months Ended 
Periods ended, (Unaudited)  September 30,
2023
   June 30,
2023
   September 30,
2022
   September 30,
2023
   September 30,
2022
 
REVENUES  $330,417   $415,858   $459,601   $1,222,943   $1,119,732 
COSTS AND EXPENSES:                         
Cost of revenues (exclusive of depreciation and amortization shown separately below)   239,084    265,786    309,790    810,120    779,544 
Selling, general and administrative expenses   42,012    43,604    38,243    127,813    110,362 
Pension settlement charges   -    911    -    18,286    - 
Depreciation and amortization   28,388    26,203    20,941    78,716    60,501 
Gain on disposition of assets, net   (1,778)   (3,015)   (1,543)   (7,729)   (6,295)
Operating profit   22,711    82,369    92,170    195,737    175,620 
Interest expense   (101)   (73)   (143)   (246)   (543)
Interest income   1,450    2,698    329    6,003    472 
Other income (expense), net   804    631    (67)   2,196    516 
Income before income taxes   24,864    85,625    92,289    203,690    176,065 
Income tax provision   6,547    20,612    22,949    48,836    44,707 
NET INCOME  $18,317   $65,013   $69,340   $154,854   $131,358 
                          
EARNINGS PER SHARE                         
Basic  $0.08   $0.30   $0.32   $0.71   $0.61 
Diluted  $0.08   $0.30   $0.32   $0.71   $0.61 
                          
WEIGHTED AVERAGE SHARES OUTSTANDING                         
Basic   216,333    216,398    216,647    216,631    216,485 
Diluted   216,333    216,398    216,647    216,631    216,485 

 

 

 

 

Page 7

Third Quarter 2023 Earnings Release

 

RPC INCORPORATED AND SUBSIDIARIES        
         
CONSOLIDATED BALANCE SHEETS        
         
   (In thousands) 
   September 30,
2023
   December 31,
2022
 
   (Unaudited)     
ASSETS          
Cash and cash equivalents  $171,874   $126,424 
Accounts receivable, net   326,778    416,568 
Inventories   109,969    97,107 
Income taxes receivable   62,889    42,403 
Prepaid expenses   11,701    17,753 
Other current assets   3,228    3,086 
Total current assets   686,439    703,341 
Property, plant and equipment, net   436,336    333,093 
Operating lease right-of-use assets   25,567    28,864 
Finance lease right-of-use assets   1,101    - 
Goodwill   50,824    32,150 
Other intangibles, net   13,354    1,084 
Other assets   33,752    30,481 
Total assets  $1,247,373   $1,129,013 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Accounts payable  $88,389   $115,213 
Accrued payroll and related expenses   27,909    33,161 
Accrued insurance expenses   6,760    3,232 
Accrued state, local and other taxes   6,196    4,296 
Income taxes payable   259    499 
Pension liabilities   -    9,610 
Current portion of operating lease liabilities   7,959    10,728 
Accrued expenses and other liabilities   2,640    1,864 
Total current liabilities   140,112    178,603 
Long-term accrued insurance expenses   9,489    7,149 
Long-term retirement plan liabilities   21,898    23,106 
Deferred income taxes   50,472    37,473 
Long-term operating lease liabilities   19,040    19,517 
Long-term finance lease liabilities   882    - 
Other long-term liabilities   7,724    5,430 
Total liabilities   249,617    271,278 
Common stock   21,623    21,661 
Capital in excess of par value   -    - 
Retained earnings   978,496    856,013 
Accumulated other comprehensive loss   (2,363)   (19,939)
Total stockholders' equity   997,756    857,735 
Total liabilities and stockholders' equity  $1,247,373   $1,129,013 

 

 

 

 

Page 8

Third Quarter 2023 Earnings Release

 

Appendix A

 

RPC, Inc. has used the non-GAAP financial measure of adjusted operating profit in today's earnings release and anticipates using this non-GAAP financial measure in today's earnings conference call. This measure should not be considered in isolation or as a substitute for operating profit, or other performance measures prepared in accordance with GAAP.

 

Management believes that presenting the financial measure of adjusted operating profit 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 directly comparable GAAP measure. This reconciliation also appears on RPC, Inc.'s investor website, which can be found on the Internet at rpc.net.

 

The Reconciliation of Operating Profit to Adjusted Operating Profit is shown below:

 

Periods ended, (Unaudited)  Three Months Ended   Nine Months Ended 
(In thousands)  September 30,
2023
   June 30,
2023
   September 30,
2022
   September 30,
2023
   September 30,
2022
 
Reconciliation of Operating Profit to Adjusted Operating Profit                         
                          
Operating Profit  $22,711   $82,369   $92,170   $195,737   $175,620 
Add:                         
Pension settlement charges   -    911    -    18,286    - 
Adjusted Operating Profit  $22,711   $83,280   $92,170   $214,023   $175,620 

 

 

 

 

Page 9

Third Quarter 2023 Earnings Release

 

Appendix B

 

RPC, Inc. has used the non-GAAP financial measures of adjusted net income and adjusted diluted earnings per share 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, income per share, or other performance measures prepared in accordance with GAAP.

 

Management believes that presenting the financial measures of adjusted net income and adjusted income per share, enable 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 these non-GAAP measures with their most directly comparable GAAP measures. This reconciliation also appears on RPC, Inc.'s investor website, which can be found on the Internet at rpc.net.

 

 

 

 

Page 10

Third Quarter 2023 Earnings Release

 

The Reconciliation of Net Income to Adjusted Net Income and the Reconciliation of Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share is shown below:

 

Periods ended, (Unaudited)  Three Months Ended   Nine Months Ended 
(In thousands)  September 30,
2023
   June 30,
2023
   September 30,
2022
   September 30,
2023
   September 30,
2022
 
Reconciliation of Net Income to Adjusted Net Income                         
                          
Net Income  $18,317   $65,013   $69,340   $154,854   $131,358 
Adjustments:                         
Pension settlement charges, before taxes   -    911    -    18,286    - 
Tax effect of pension settlement charges *   -    (220)   -    (4,389)   - 
Total adjustments, net of tax   -    691    -    13,897    - 
                          
Adjusted Net Income  $18,317   $65,704   $69,340   $168,751   $131,358 
                          
*  The sum of adjustments for the three-month periods presented may differ from the amounts for the six month period due to the differences in effective tax rate for each period.
                          
Reconciliation of Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share                         
                          
Diluted Earnings Per Share  $0.08   $0.30   $0.32   $0.71   $0.61 
Add:                         
Pension settlement charges, net of tax  $0.00   $0.00   $0.00   $0.07   $0.00 
                          
Adjusted Diluted Earnings Per Share  $0.08   $0.30   $0.32   $0.78   $0.61 
                          
Weighted Average Shares Outstanding   216,333    216,398    216,647    216,631    216,485 

 

Appendix C

 

RPC has used the non-GAAP financial measures of earnings before interest, taxes, depreciation, and amortization (EBITDA) and adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) in today's earnings release and anticipates using EBITDA and adjusted EBITDA in today's earnings conference call. EBITDA and adjusted EBITDA should not be considered in isolation or as a substitute for net income or other performance measures prepared in accordance with GAAP.

 

RPC uses EBITDA and adjusted EBITDA as measures of operating performance because they allow us to compare performance consistently over various periods without regard to changes in our capital structure. Adjusted EBITDA is useful to compare operating performance net of unusual or non-recurring charges. 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 net income, the most directly comparable GAAP measure, to EBITDA and adjusted EBITDA. This reconciliation also appears on RPC's investor website, which can be found on the Internet at rpc.net.

 

 

 

 

Page 11

Third Quarter 2023 Earnings Release

 

The Reconciliation of Net Income to EBITDA and Adjusted EBITDA is shown below:

 

   Three Months Ended   Nine Months Ended 
(In thousands)  September 30,
2023
   June 30,
2023
   September 30,
2022
   September 30,
2023
   September 30,
2022
 
Reconciliation of Net Income to EBITDA and Adjusted EBITDA                         
Net Income  $18,317   $65,013   $69,340   $154,854   $131,358 
Add:                         
Income tax provision   6,547    20,612    22,949    48,836    44,707 
Interest expense   101    73    143    246    543 
Depreciation and amortization   28,388    26,203    20,941    78,716    60,501 
Less:                         
Interest income   1,450    2,698    329    6,003    472 
EBITDA  $51,903   $109,203   $113,044   $276,649   $236,637 
Add:                         
Pension settlement charges   -    911    -    18,286    - 
Adjusted EBITDA  $51,903   $110,114   $113,044   $294,935   $236,637 

 

 

 

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Oct. 25, 2023
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Entity File Number 1-8726
Entity Registrant Name RPC, INC.
Entity Central Index Key 0000742278
Entity Tax Identification Number 58-1550825
Entity Incorporation, State or Country Code DE
Entity Address, Address Line One 2801 Buford Highway NE
Entity Address, Address Line Two Suite 300
Entity Address, City or Town Atlanta
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Title of 12(b) Security Common Stock, $0.10 par value
Trading Symbol RES
Security Exchange Name NYSE
Entity Emerging Growth Company false

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