ATLANTA, July 29, 2015 /PRNewswire/ -- RPC, Inc. (NYSE:
RES) today announced its unaudited results for the second quarter
ended June 30, 2015. 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,
2015, revenues decreased 48.9 percent to $297.6 million compared to $582.8 million in the second quarter of last
year. Revenues decreased compared to the prior year due to
lower activity levels and pricing in our major service lines.
Operating loss for the quarter was $52.5
million compared to operating profit of $103.0 million in the prior year. Net loss
for the quarter was $34.1 million or
$0.16 loss per share, compared to net
income of $63.3 million or
$0.29 diluted earnings per share last
year. Earnings before interest, taxes, depreciation and
amortization (EBITDA) decreased to $17.6
million compared to $160.4
million in the prior year.1 For the six
months ended June 30, 2015, revenues
decreased 35.1 percent to $703.8
million compared to $1.1
billion last year. Net loss for the six month period
was $26.5 million, or $0.12 per share, compared to net income of
$102.7 million, or $0.47 diluted earnings per share last year.
Cost of revenues during the second quarter of 2015 was
$241.6 million, or 81.2 percent of
revenues, compared to $374.3 million,
or 64.2 percent of revenues, during the second quarter of last
year. Cost of revenues decreased due to lower costs resulting
from lower activity levels, reduced personnel and incentive
compensation, and price reductions from suppliers, partially offset
by the impact of increasing service intensity. Additionally,
as a result of a change in accounting estimate, replacement parts
totaling approximately $11.5 million
were charged to cost of revenues rather than being
capitalized. As a percentage of revenues, cost of revenues
increased compared to the prior year due to significantly lower
pricing for our services and cost inefficiencies resulting from
lower activity levels.
Selling, general and administrative expenses were $40.4 million in the second quarter of 2015
compared to $47.6 million in the
second quarter of 2014. These expenses decreased due to lower
total employment costs, including primarily incentive compensation,
and other expenses which vary with activity levels. As a
percentage of revenues, these costs increased to 13.6 percent in
the second quarter of 2015 compared to 8.2 percent in the second
quarter of 2014 primarily due to the relatively fixed nature of
these costs during the short term. Depreciation and
amortization increased to $69.8
million during the quarter compared to $56.5 million in the second quarter of the prior
year due to capital equipment placed in service during the previous
four quarters.
RPC's gain on disposition of assets was $1.7 million during the second quarter of 2015,
compared to a loss of $1.4 million
during the second quarter of 2014. This shift resulted from a
change in accounting estimate implemented in 2015 in which the cost
of certain pressure pumping components was recorded as cost of
revenues upon installation, rather than being capitalized.
The net impact of this change on operating income during the
quarter was not material; however, loss on dispositions and
depreciation decreased due to this change in accounting
estimate. Interest expense during the second quarter of 2015
was $390 thousand, an increase
compared to $49 thousand during the
second quarter of the prior year. Interest expense during the
second quarter of this year was higher because interest expense
during the second quarter of 2014 included a credit related to the
favorable outcome of a sales tax audit.
Discussion of Sequential Quarterly Financial Results
RPC's revenues for the quarter ended June
30, 2015 decreased by $108.7
million or 26.8 percent compared to the first quarter of
2015. Revenues decreased due to lower activity levels and
pricing for our services, partially offset by increased service
intensity in pressure pumping and a larger fleet of equipment in
this service line. Cost of revenues during the second quarter
decreased by $50.8 million or 17.4
percent due to lower activity levels and RPC's ongoing cost
management efforts during the quarter, partially offset by
increased cost of component replacements. Cost of revenues as
a percentage of revenues increased from 72.0 percent in the first
quarter of 2015 to 81.2 percent in the second quarter due to
significantly lower pricing for our services. Selling,
general and administrative expenses during the second quarter of
2015 decreased by $2.2 million, or
5.3 percent, compared to the first quarter. Operating profit
decreased from $6.2 million in the
first quarter of 2015 to an operating loss of $52.5 million in the second quarter. Income
before income taxes declined from $11.3
million in the first quarter of 2015 to a loss of
$52.6 million in the second
quarter. Net income declined from $7.5
million in the first quarter of 2015 to a net loss of
$34.1 million in the second quarter,
and diluted earnings per share declined from $0.04 in the first quarter of 2015 to a loss per
share of $0.16 in the second quarter
of 2015.
Management Commentary
"RPC's financial results during the second quarter of 2015
reflect our industry's declining activity levels and competitive
pricing for our services," stated Richard
A. Hubbell, RPC's President and Chief Executive Officer.
"The average U.S. domestic rig count during the second quarter was
907, a decrease of 51.1 percent compared to the same period in
2014, and a decrease of 35.4 percent compared to the first quarter
of 2015. The average price of natural gas was $2.70 per Mcf, a 40.7 percent decrease compared
to the prior year, and a 4.3 percent decrease compared to the first
quarter of 2015. The unconventional rig count declined by 45.6
percent compared to the prior year and 33.1 percent
sequentially. The average price of oil during the quarter was
$57.53 per barrel, a 44.3 percent
decrease compared to the prior year but a 17.4 percent increase
compared to the first quarter of 2015. Our sequential revenue
decline was slightly less than overall industry declines because of
the increasing service intensity of pressure pumping, which is
RPC's largest service line.
"RPC continues to pursue prudent cost reduction measures to
manage our short-term financial results without sacrificing service
quality and our long-term operational capabilities. While we
were disappointed during the quarter by declining activity levels,
we see indications that U.S. domestic activity levels have troughed
and that excess service capacity is undergoing attrition.
Furthermore, we believe that the recent oil price weakness has
added an additional level of uncertainty to our visibility
regarding near-term activity levels. In an operating
environment in which financial strength is an important advantage,
we are pleased to report that the balance on our syndicated credit
facility once again declined during the second quarter. As of
June 30, 2015, the balance on this
facility was $54.9 million, a decline
of $100.7 million compared to the end
of the first quarter. At our Board of Directors' meeting
yesterday, our Board voted not to pay a dividend this
quarter. We are prioritizing our operational flexibility and
the enhancement of our long-term strategic capabilities during this
point in the cycle, and believe that a temporary suspension of
RPC's quarterly dividend is in the best long-term interests of our
shareholders," 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 decreased 49.3 percent for the
quarter compared to the prior year due to lower activity levels and
pricing as compared to the prior year, partially offset by
increasing service intensity and a larger fleet of equipment in our
pressure pumping service line, which is the largest service line
within Technical Services. Support Services revenues
decreased by 43.4 percent during the quarter compared to the prior
year due principally to lower pricing and activity levels in the
rental tool service line, which is the largest service line within
this segment. Both Technical and Support Services reported
operating losses due to lower revenues, partially offset by cost
control efforts undertaken in each service line.
(in
thousands)
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended June
30,
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Technical services
|
$
|
275,806
|
$
|
544,392
|
|
$
|
653,899
|
$
|
1,011,362
|
Support
services
|
|
21,754
|
|
38,439
|
|
|
49,931
|
|
73,161
|
Total
revenues
|
$
|
297,560
|
$
|
582,831
|
|
$
|
703,830
|
$
|
1,084,523
|
Operating (Loss)
Profit:
|
|
|
|
|
|
|
|
|
|
Technical services
|
$
|
(49,253)
|
$
|
99,717
|
|
$
|
(43,391)
|
$
|
164,613
|
Support
services
|
|
(1,458)
|
|
8,998
|
|
|
2,449
|
|
16,455
|
Corporate expenses
|
|
(3,544)
|
|
(4,279)
|
|
|
(8,101)
|
|
(9,168)
|
Gain
(loss) on disposition of assets, net
|
|
1,718
|
|
(1,405)
|
|
|
2,676
|
|
(3,637)
|
Total operating
(loss) profit
|
$
|
(52,537)
|
$
|
103,031
|
|
$
|
(46,367)
|
$
|
168,263
|
Interest
Expense
|
|
(390)
|
|
(49)
|
|
|
(1,081)
|
|
(386)
|
Interest
Income
|
|
9
|
|
6
|
|
|
15
|
|
10
|
Other Income,
net
|
|
332
|
|
831
|
|
|
6,121
|
|
911
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income
before income taxes
|
$
|
(52,586)
|
$
|
103,819
|
|
$
|
(41,312)
|
$
|
168,798
|
RPC, Inc. will hold a conference call today, July 29, 2015 at 9:00 a.m.
ET 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 website at
www.rpc.net. The live conference call can also be accessed by
calling (888) 430-8705 or (719) 325-2361 and using the access code
#8950167. 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 (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, RPC's plans to pursue prudent cost
reduction measures to manage its short-term financial results
without sacrificing service quality and long-term operational
capabilities; RPC's belief that U.S. domestic activity levels have
troughed and that excess service capacity is undergoing attrition;
and RPC's plans to prioritize operational flexibility and enhance
its long-term strategic capabilities during this point in the
industry cycle. 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;
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 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-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,
2014.
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
RPC INCORPORATED
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands except per share
data)
|
|
Periods ended,
(Unaudited)
|
|
Three Months Ended
|
|
Six Months
Ended
|
|
|
|
June 30,
2015
|
|
|
March 31,
2015
|
|
|
June 30,
2014
|
|
|
2015
|
|
|
2014
|
REVENUES
|
$
|
297,560
|
|
$
|
406,270
|
|
$
|
582,831
|
|
$
|
703,830
|
|
$
|
1,084,523
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
241,617
|
|
|
292,445
|
|
|
374,275
|
|
|
534,062
|
|
|
704,290
|
Selling, general and
administrative expenses
|
|
40,397
|
|
|
42,637
|
|
|
47,603
|
|
|
83,034
|
|
|
96,311
|
Depreciation and
amortization
|
|
69,801
|
|
|
65,976
|
|
|
56,517
|
|
|
135,777
|
|
|
112,022
|
(Gain) loss on
disposition of assets, net
|
|
(1,718)
|
|
|
(958)
|
|
|
1,405
|
|
|
(2,676)
|
|
|
3,637
|
Operating (loss)
profit
|
|
(52,537)
|
|
|
6,170
|
|
|
103,031
|
|
|
(46,367)
|
|
|
168,263
|
Interest
expense
|
|
(390)
|
|
|
(691)
|
|
|
(49)
|
|
|
(1,081)
|
|
|
(386)
|
Interest
income
|
|
9
|
|
|
6
|
|
|
6
|
|
|
15
|
|
|
10
|
Other income,
net
|
|
332
|
|
|
5,789
|
|
|
831
|
|
|
6,121
|
|
|
911
|
(Loss) income before
income taxes
|
|
(52,586)
|
|
|
11,274
|
|
|
103,819
|
|
|
(41,312)
|
|
|
168,798
|
Income tax (benefit)
provision
|
|
(18,531)
|
|
|
3,726
|
|
|
40,536
|
|
|
(14,805)
|
|
|
66,127
|
NET (LOSS)
INCOME
|
$
|
(34,055)
|
|
$
|
7,548
|
|
$
|
63,283
|
|
$
|
(26,507)
|
|
$
|
102,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) EARNINGS
PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.16)
|
|
$
|
0.04
|
|
$
|
0.29
|
|
$
|
(0.12)
|
|
$
|
0.48
|
Diluted
|
$
|
(0.16)
|
|
$
|
0.04
|
|
$
|
0.29
|
|
$
|
(0.12)
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE SHARES
OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
212,598
|
|
|
213,492
|
|
|
215,224
|
|
|
213,586
|
|
|
215,199
|
Diluted
|
|
212,598
|
|
|
213,585
|
|
|
216,238
|
|
|
213,586
|
|
|
216,280
|
RPC INCORPORATED
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
At June 30,
(Unaudited)
|
|
(In
thousands)
|
|
|
2015
|
|
|
2014
|
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
14,844
|
|
$
|
22,164
|
Accounts receivable,
net
|
|
299,550
|
|
|
565,940
|
Inventories
|
|
146,945
|
|
|
138,836
|
Deferred income
taxes
|
|
9,027
|
|
|
11,624
|
Income taxes
receivable
|
|
32,292
|
|
|
16,874
|
Prepaid
expenses
|
|
6,417
|
|
|
6,002
|
Other current
assets
|
|
2,530
|
|
|
6,787
|
Total current
assets
|
|
511,605
|
|
|
768,227
|
Property, plant and
equipment, net
|
|
813,993
|
|
|
708,598
|
Goodwill
|
|
32,150
|
|
|
32,150
|
Other
assets
|
|
26,034
|
|
|
21,886
|
Total
assets
|
$
|
1,383,782
|
|
$
|
1,530,861
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Accounts
payable
|
$
|
75,606
|
|
$
|
150,894
|
Accrued payroll and
related expenses
|
|
24,070
|
|
|
37,686
|
Accrued insurance
expenses
|
|
6,878
|
|
|
6,624
|
Accrued state, local
and other taxes
|
|
5,967
|
|
|
8,411
|
Income taxes
payable
|
|
4,051
|
|
|
535
|
Other accrued
expenses
|
|
157
|
|
|
1,310
|
Total current
liabilities
|
|
116,729
|
|
|
205,460
|
Long-term accrued
insurance expenses
|
|
11,324
|
|
|
11,412
|
Notes payable to
banks
|
|
54,900
|
|
|
131,400
|
Long-term pension
liabilities
|
|
35,014
|
|
|
22,867
|
Other long-term
liabilities
|
|
15,818
|
|
|
10,618
|
Deferred income
taxes
|
|
130,002
|
|
|
127,459
|
Total
liabilities
|
|
363,787
|
|
|
509,216
|
Common
stock
|
|
21,702
|
|
|
21,883
|
Capital in excess of
par value
|
|
-
|
|
|
-
|
Retained
earnings
|
|
1,016,754
|
|
|
1,009,711
|
Accumulated other
comprehensive loss
|
|
(18,461)
|
|
|
(9,949)
|
Total
stockholders' equity
|
|
1,019,995
|
|
|
1,021,645
|
Total
liabilities and stockholders' equity
|
$
|
1,383,782
|
|
$
|
1,530,861
|
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
|
|
Six Months
Ended
|
(in thousands
except per share data)
|
|
June
30,
2015
|
|
|
March 31,
2015
|
|
|
June 30,
2014
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income to EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss)
income
|
$
|
(34,055)
|
|
$
|
7,548
|
|
$
|
63,283
|
|
$
|
(26,507)
|
|
$
|
102,671
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
provision
|
|
(18,531)
|
|
|
3,726
|
|
|
40,536
|
|
|
(14,805)
|
|
|
66,127
|
Interest expense
|
|
390
|
|
|
691
|
|
|
49
|
|
|
1,081
|
|
|
386
|
Depreciation and
amortization
|
|
69,801
|
|
|
65,976
|
|
|
56,517
|
|
|
135,777
|
|
|
112,022
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
9
|
|
|
6
|
|
|
6
|
|
|
15
|
|
|
10
|
EBITDA
|
$
|
17,596
|
|
$
|
77,935
|
|
$
|
160,379
|
|
$
|
95,531
|
|
$
|
281,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA PER
SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.08
|
|
$
|
0.37
|
|
$
|
0.75
|
|
$
|
0.45
|
|
$
|
1.31
|
Diluted
|
$
|
0.08
|
|
$
|
0.36
|
|
$
|
0.74
|
|
$
|
0.45
|
|
$
|
1.30
|
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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/rpc-inc-reports-second-quarter-2015-financial-results-300120141.html
SOURCE RPC, Inc.