ATLANTA, Oct. 28 /PRNewswire-FirstCall/ -- RPC, Inc. (NYSE:RES)
today announced its unaudited results for the third quarter ended
September 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
September 30, 2009, revenues decreased 44.3 percent to $132,159,000
compared to $237,217,000 in the third quarter last year. Revenues
decreased compared to the prior year due primarily to dramatically
lower pricing for our services coupled with lower utilization of
our equipment and personnel. Operating loss for the quarter was
$14,907,000 compared to operating profit of $44,232,000 in the
prior year. Net loss was $10,385,000 or $0.11 per diluted share,
compared to net income of $25,780,000 or $0.26 diluted earnings per
share last year. Earnings before interest, taxes, depreciation and
amortization (EBITDA) declined by 74.5 percent to $18,984,000
compared to $74,321,000 in the prior year. (1) Cost of revenues was
$90,442,000, or 68.4 percent of revenues, during the third quarter
of 2009, compared to $134,878,000, or 56.9 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 well as lower fuel costs. As a percentage of
revenues, cost of revenues increased primarily because of lower
pricing for our services. Selling, general and administrative
expenses decreased by 23.0 percent in the third quarter of 2009 to
$22,843,000 from $29,660,000 in the prior year. This decrease was
due to lower employment costs and other expenses resulting from
expense reduction efforts instituted during 2009. As a percentage
of revenues, however, these costs increased to 17.3 percent in 2009
compared to 12.5 percent last year due to the fixed nature of many
of these expenses. Depreciation and amortization increased slightly
to $33,289,000 during the quarter, compared to $30,445,000 last
year, due to capital expenditures made during the last year.
Interest expense decreased from $1,241,000 last year to $533,000 in
2009 due to reduced interest rates and a lower average balance on
RPC's revolving credit facility. For the nine months ended
September 30, 2009, revenues decreased 32.9 percent to $435,448,000
compared to $649,133,000 last year. Net loss was $17,543,000 or
$0.18 per diluted share, compared to net income of $62,995,000 or
$0.64 per diluted share last year. "Although we believe that the
steep decline in domestic drilling activity over the past year
bottomed in the second quarter of 2009, this was still a difficult
quarter for our activity levels and pricing," stated Richard A.
Hubbell, RPC's President and Chief Executive Officer. "The average
domestic rig count during the third quarter was 970, a 51.0 percent
decrease compared to the same period in 2008. The average price of
natural gas was $3.13 per Mcf, a 65.2 percent decrease compared to
the prior year, and the average price of oil was $68.15 per barrel,
a 42.7 percent decrease compared to the prior year. The low rig
count and depressed commodity prices, coupled with high equipment
capacity in the domestic oilfield, continued to depress pricing for
our services and utilization of our equipment, which led to lower
revenues and continued operating losses during the quarter. Our
revenues declined at a lower rate than the domestic rig count due
to the timing of international project work that was active during
the quarter and the relatively stronger performance of several of
our specialized service lines. Although our cost control measures
are still in place and we continue to look for opportunities to
make our operations more efficient, our efforts have not been
sufficient to allow us to realize an operating profit during the
quarter. "During the third quarter we began to see signs of
increasing customer activity levels and some improvement in our own
personnel and equipment utilization consistent with the sequential
increases in the domestic rig count and the price of oil. This was
reflected in a 3.9 percent sequential increase in the rig count,
and a 4.0 increase in RPC's revenues, all due to higher activity
levels. RPC's operating loss during the third quarter narrowed as
compared to the second quarter, due to leverage of fixed costs over
higher revenues, as well as reductions in employment costs and
materials and supplies. While customer activity levels increased
slightly we remain in a difficult pricing environment. "We continue
to focus on maintaining a conservative balance sheet, and we are
pleased to report that the balance on our credit facility declined
to $101.9 million at the end of the third quarter, a $21.7 million
decrease compared to the end of the second quarter. Our capital
expenditures during the quarter were $15.5 million. We continue to
believe that our strong capital structure serves us well in the
current operating environment, and believe that the financial
pressure on our more aggressively capitalized peers continues,"
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 42.8 percent for the
quarter compared to the prior year, impacted by competitive pricing
and lower equipment utilization. Support Services revenues
decreased by 53.1 percent during the quarter compared to the prior
year because of decreased customer activity and lower pricing 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 which we could not
reduce as dramatically as the rate of pricing decline. Three Nine
Months Ended Months Ended September 30 September 30
---------------- ---------------- 2009 2008 2009 2008 ---- ----
---- ---- (in thousands) Revenues: Technical services $116,326
$203,462 $377,393 $557,977 Support services 15,833 33,755 58,055
91,156 ------ ------ ------ ------ Total revenues $132,159 $237,217
$435,448 $649,133 -------- -------- -------- -------- Operating
(Loss) Profit: Technical services $(9,540) $34,644 $(18,604)
$87,288 Support services (1,770) 10,333 320 22,955 Corporate
expenses (3,105) (2,743) (9,266) (7,768) Loss/(Gain) on disposition
of assets, net 492 (1,998) (1,542) (4,998) --- ------ ------ ------
Total operating (loss) profit $(14,907) $44,232 $(26,008) $107,473
-------- ------- -------- -------- Other Income/(Expense), net 602
(356) 1,353 (258) Interest (Expense) (533) (1,241) (1,654) (3,962)
Interest Income 41 17 126 63 -------- ------- -------- --------
(Loss) Income before income taxes $(14,797) $42,652 $(26,183)
$103,316 -------- ------- -------- -------- RPC, Inc. will hold a
conference call today, October 28, 2009 at 9:00 a.m. EDT to discuss
the results of the third 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) 576-4380 or (719)
325-2326 and using the confirmation code #4690787. 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 November 4, 2009 via telephone by calling (888)
203-1112 or (719) 457-0820 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 our belief that the steep decline in domestic drilling
activity over the past year bottomed in the second quarter of 2009;
our belief that during the third quarter we began to see signs of
increasing customer activity levels and some improvement in our own
personnel and equipment utilization; our belief that, while
customer activity levels have increased slightly, we remain in a
difficult pricing environment; our belief that our strong capital
structure serves us well in the current operating environment; and
our belief that the financial pressure on our more aggressively
capitalized peers will continue. 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 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 September 30,
(Unaudited) Third Quarter Nine Months ------------- ------------ %
BETTER % BETTER 2009 2008 (WORSE) 2009 2008 (WORSE) REVENUES
$132,159 $237,217 (44.3)% $435,448 $649,133 (32.9)% COSTS AND
EXPENSES: Cost of revenues 90,442 134,878 32.9 291,492 372,723 21.8
Selling, general and admin- istrative expenses 22,843 29,660 23.0
73,821 86,987 15.1 Depreciation and amortization 33,289 30,445
(9.3) 97,685 86,948 (12.3) Loss (gain) on disposition of assets,
net 492 (1,998) N/M (1,542) (4,998) (69.1) --- ------ --- ------
------ ----- Operating (loss) profit (14,907) 44,232 N/M (26,008)
107,473 N/M Interest expense (533) (1,241) 57.1 (1,654) (3,962)
58.3 Interest income 41 17 141.2 126 63 100.0 Other income
(expense), net 602 (356) N/M 1,353 (258) N/M --- ---- --- -----
---- --- (Loss) income before income taxes (14,797) 42,652 N/M
(26,183) 103,316 N/M Income tax (benefit) provision (4,412) 16,872
N/M (8,640) 40,321 N/M ------ ------ --- ------ ------ --- NET
(LOSS) INCOME $(10,385) $25,780 N/M % $(17,543) $62,995 N/M %
======== ======= === ======== ======= === (LOSS) EARNINGS PER SHARE
Basic $(0.11) $0.27 N/M % $(0.18) $0.65 N/M % ====== ===== ===
====== ===== === Diluted $(0.11) $0.26 N/M % $(0.18) $0.64 N/M %
====== ===== === ====== ===== === AVERAGE SHARES OUTSTANDING Basic
96,352 96,802 96,282 96,728 ====== ====== ====== ====== Diluted
96,352 98,232 96,282 98,202 ====== ====== ====== ====== RPC
INCORPORATED AND SUBSIDIARIES ---------------------------------
CONSOLIDATED BALANCE SHEETS ---------------------------- At
September 30, (Unaudited) (In thousands)
---------------------------- -------------- 2009 2008 ---- ----
ASSETS Cash and cash equivalents $3,325 $3,293 Accounts receivable,
net 118,072 218,616 Inventories 55,429 40,633 Deferred income taxes
5,017 5,293 Income taxes receivable 18,694 17,842 Prepaid expenses
and other current assets 2,677 4,063 --------------------------
----- ----- Total current assets 203,214 289,740
---------------------- ------- ------- Property, plant and
equipment, net 421,796 477,479 Goodwill 24,093 24,093 Other assets
8,964 9,743 ------------ ----- ----- Total assets $658,067 $801,055
============== ======== ======== LIABILITIES AND STOCKHOLDERS'
EQUITY Accounts payable $36,550 $72,350 Accrued payroll and related
expenses 10,826 21,879 Accrued insurance expenses 4,260 5,705
Accrued state, local and other taxes 3,681 4,026 Income taxes
payable 1,020 2,160 Other accrued expenses 271 411
---------------------- --- --- Total current liabilities 56,608
106,531 --------------------------- ------ ------- Long-term
accrued insurance expenses 8,423 8,601 Notes payable to banks
101,850 185,600 Long-term pension liabilities 13,818 5,174 Other
long-term liabilities 1,916 2,562 Deferred income taxes 58,036
48,036 --------------------- ------ ------ Total liabilities
240,651 356,504 ------------------- ------- ------- Common stock
9,838 9,810 Capital in excess of par value 6,392 6,496 Retained
earnings 410,186 430,778 Accumulated other comprehensive loss
(9,000) (2,533) ------------------------------- ------ ------ Total
stockholders' equity 417,416 444,551 ----------------------------
------- ------- Total liabilities and stockholders' equity $658,067
$801,055 ======================== ======== ======== 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 September 30, (Unaudited) Third
Quarter Nine Months ------------- ------------ % BETTER % BETTER
2009 2008 (WORSE) 2009 2008 (WORSE) Reconciliation of Net (Loss)
Income to EBITDA Net (Loss) income $(10,385) $25,780 N/M %
$(17,543) $62,995 N/M % Add: Income tax (benefit) provision (4,412)
16,872 N/M (8,640) 40,321 N/M Interest expense 533 1,241 57.1 1,654
3,962 58.3 Depreciation and amort- ization 33,289 30,445 (9.3)
97,685 86,948 (12.3) Less: Interest income 41 17 141.2 126 63 100.0
--- --- ----- --- --- ----- EBITDA $18,984 $74,321 (74.5)% $73,030
$194,163 (62.4)% ======= ======= ===== ======= ======== =====
EBITDA PER SHARE Basic $0.20 $0.77 (74.0)% $0.76 $2.01 (62.2)%
===== ===== ===== ===== ===== ===== Diluted $0.20 $0.76 (73.7)%
$0.76 $1.98 (61.6)% ===== ===== ===== ===== ===== ===== DATASOURCE:
RPC Incorporated CONTACT: Ben M. Palmer, Chief Financial Officer,
+1-404-321-2140, , Jim Landers, Vice President, Corporate Finance,
+1-404-321-2162, Web Site: http://www.rpc.net/
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