RPC, Inc. Reports First Quarter 2022 Financial Results
RPC, Inc. (NYSE: RES) reported a strong financial performance for Q1 2022, with revenues reaching $284.6 million, a 55.9% increase from Q1 2021. The company experienced an operating profit of $23 million compared to an operating loss of $10.5 million in the prior year, and net income of $15.1 million, or $0.07 earnings per share. Cost of revenues decreased as a percentage of revenues, driven by improved pricing and higher utilization. The firm also noted robust market dynamics and increased customer demand following geopolitical events affecting energy prices.
- Revenues increased by 55.9% year-over-year to $284.6 million.
- Operating profit improved to $23 million from a loss of $10.5 million in Q1 2021.
- Net income was $15.1 million, showing a significant turnaround from a loss of $9.7 million in the prior year.
- EBITDA rose to $43 million from $7.8 million year-over-year.
- Cost of revenues as a percentage of revenues decreased to 73.4% from 80.1% due to improved pricing and operations.
- Selling, general and administrative expenses rose to $36.2 million from $30.6 million year-over-year.
ATLANTA, April 27, 2022 /PRNewswire/ -- RPC, Inc. (NYSE: RES) today announced its unaudited results for the first quarter ended March 31, 2022. 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, 2022, RPC generated revenues of
Cost of revenues during the first quarter of 2022 was
Selling, general and administrative expenses increased to
Discussion of Sequential Quarterly Financial Results
RPC's revenues for the quarter ended March 31, 2022 increased by
The average U.S. domestic rig count during the first quarter of 2022 was 636, a 13.4 percent increase compared to the fourth quarter of 2021 and a 60.6 percent increase compared to the same period in 2021. The average price of oil during the first quarter of 2022 was
Management Commentary
"RPC's first quarter financial results continued to improve as strong commodity prices and market dynamics drove activity and pricing improvements in the oilfield. Early in the quarter, we experienced some delays due to materials and personnel shortages and customer-related operational issues. While these issues occurred during the quarter, customer activity levels improved and our equipment utilization increased significantly," stated Richard A. Hubbell, RPC's President and Chief Executive Officer.
"The global energy markets underwent significant upheaval in February, as Russia's invasion of Ukraine tightened global oil and natural gas markets, causing significant price increases and uncertainty for both commodities. The demand for our services increased and customers became less price sensitive. We finished the quarter with a full calendar and increasingly favorable market dynamics. Given current and projected commodity prices and customer indications regarding their plans, we are optimistic about our near-term operating environment. We are not planning aggressive growth capital expenditures, but have plans to activate idle equipment and expand our service capacity," 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 and services, coiled tubing, 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 first quarter 2022 revenues increased by 54.3 percent compared to the same period of the prior year and by 4.7 percent compared to the prior quarter. Technical Services generated an operating profit of
(in thousands) | Three Months Ended | |||||
March 31, | December 31, | March 31, | ||||
2022 | 2021 | 2021 | ||||
Revenues: | ||||||
Technical Services | $ | 266,349 | $ | 254,444 | $ | 172,641 |
Support Services | 18,275 | 13,808 | 9,969 | |||
Total revenues | $ | 284,624 | $ | 268,252 | $ | 182,610 |
Operating profit (loss): | ||||||
Technical Services | $ | 21,811 | $ | 20,496 | $ | (5,762) |
Support Services | 2,780 | (373) | (2,896) | |||
Corporate expenses | (4,510) | (3,539) | (3,323) | |||
Gain on disposition of assets, net | 2,954 | 3,474 | 1,460 | |||
Total operating profit (loss) | $ | 23,035 | $ | 20,058 | $ | (10,521) |
Interest expense | (178) | (166) | (380) | |||
Interest income | 15 | 12 | 18 | |||
Other income, net | 504 | 456 | 507 | |||
Income (Loss) before income taxes | $ | 23,376 | $ | 20,360 | $ | (10,376) |
RPC, Inc. will hold a conference call today, April 27, 2022 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 (833) 579-0910 or (778) 560-2620 for international callers and use conference ID number 5965842. 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, 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, including (i) our beliefs that Russia's invasion of Ukraine has tightened global oil and natural gas markets, causing significant prices increases and uncertainty for both commodities, (ii) our beliefs that demand for our services increased and customers became less price sensitive, (iii) statements regarding current and projected commodity prices and customer indications regarding their plans, we are increasingly optimistic about our near-term operating environment, (iv) our current plans to not have aggressive growth capital expenditures, and (v) statements regarding our plans to activate idle equipment and expand our service capacity. Such risks include changes in general global business and economic conditions, including the continued economic impact caused by the COVID-19 pandemic and fluctuations in prices of oil and natural gas; 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 due to changes in regulatory and environmental laws; turmoil in the financial markets and the potential difficulty to fund our capital needs; the actions of OPEC+ and the status of the war in Ukraine, which could impact drilling activity; adverse weather conditions in oil and gas producing regions; competition in the oil and gas industry; an inability to implement price increases; risks of international operations; and 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 for the year ended December 31, 2021.
1 EBITDA is a financial measure which does not conform to GAAP. Additional disclosure regarding this non-GAAP financial measure and its reconciliation to net income or net loss, the nearest GAAP financial measures, are disclosed in Appendix A to this press release. |
For information about RPC, Inc., please contact: | |
Ben M. Palmer | Jim Landers |
Chief Financial Officer | Vice President Corporate Services |
(404) 321-2140 | 404) 321-2162 |
RPC INCORPORATED AND SUBSIDIARIES | |||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) | |||||||||
Periods ended, (Unaudited) | Three Months Ended | ||||||||
March 31, | December 31, | March 31, | |||||||
REVENUES | $ | 284,624 | $ | 268,252 | $ | 182,610 | |||
COSTS AND EXPENSES: | |||||||||
Cost of revenues | 208,837 | 200,629 | 146,223 | ||||||
Selling, general and administrative expenses | 36,240 | 32,128 | 30,595 | ||||||
Depreciation and amortization | 19,466 | 18,911 | 17,773 | ||||||
Gain on disposition of assets, net | (2,954) | (3,474) | (1,460) | ||||||
Operating profit (loss) | 23,035 | 20,058 | (10,521) | ||||||
Interest expense | (178) | (166) | (380) | ||||||
Interest income | 15 | 12 | 18 | ||||||
Other income, net | 504 | 456 | 507 | ||||||
Income (Loss) before income taxes | 23,376 | 20,360 | (10,376) | ||||||
Income tax provision (benefit) | 8,297 | 8,021 | (714) | ||||||
NET INCOME (LOSS) | $ | 15,079 | $ | 12,339 | $ | (9,662) | |||
EARNINGS (LOSS) PER SHARE | |||||||||
Basic | $ | 0.07 | $ | 0.06 | $ | (0.05) | |||
Diluted | $ | 0.07 | $ | 0.06 | $ | (0.05) | |||
WEIGHTED AVERAGE SHARES OUTSTANDING | |||||||||
Basic | 216,242 | 215,640 | 212,959 | ||||||
Diluted | 216,242 | 215,640 | 212,959 | ||||||
RPC INCORPORATED AND SUBSIDIARIES | |||||
CONSOLIDATED BALANCE SHEETS | |||||
At March 31, (Unaudited) | (In thousands) | ||||
2022 | 2021 | ||||
ASSETS | |||||
Cash and cash equivalents | $ | 73,189 | $ | 85,421 | |
Accounts receivable, net | 285,517 | 186,891 | |||
Inventories | 84,381 | 80,165 | |||
Income taxes receivable | 57,448 | 82,612 | |||
Prepaid expenses | 13,545 | 8,027 | |||
Assets held for sale | 692 | 4,032 | |||
Other current assets | 2,430 | 2,493 | |||
Total current assets | 517,202 | 449,641 | |||
Property, plant and equipment, net | 257,137 | 257,309 | |||
Operating lease right-of-use assets | 23,741 | 25,400 | |||
Finance lease right-of-use assets | 22,922 | - | |||
Goodwill | 32,150 | 32,150 | |||
Other assets | 38,016 | 35,573 | |||
Total assets | $ | 891,168 | $ | 800,073 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Accounts payable | $ | 76,974 | $ | 60,649 | |
Accrued payroll and related expenses | 21,888 | 23,074 | |||
Accrued insurance expenses | 5,380 | 4,443 | |||
Accrued state, local and other taxes | 2,996 | 4,539 | |||
Income taxes payable | 982 | 1,302 | |||
Current portion of operating lease liabilities | 6,655 | 8,594 | |||
Current portion of finance lease liabilities | 22,694 | - | |||
Other accrued expenses | 1,663 | 946 | |||
Total current liabilities | 139,232 | 103,547 | |||
Long-term accrued insurance expenses | 10,628 | 10,543 | |||
Long-term pension liabilities | 32,570 | 31,088 | |||
Long-term operating lease liabilities | 18,562 | 19,088 | |||
Other long-term liabilities | 7,621 | - | |||
Deferred income taxes | 24,787 | 12,631 | |||
Total liabilities | 233,400 | 176,897 | |||
Common stock | 21,648 | 21,574 | |||
Capital in excess of par value | - | - | |||
Retained earnings | 656,517 | 619,019 | |||
Accumulated other comprehensive loss | (20,397) | (17,417) | |||
Total stockholders' equity | 657,768 | 623,176 | |||
Total liabilities and stockholders' equity | $ | 891,168 | $ | 800,073 | |
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 net income (loss) 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 or non-recurring items. 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 (loss) to EBITDA, the most comparable GAAP measure. This reconciliation also appears on RPC's investor website, which can be found on the Internet at rpc.net.
The Reconciliation of Net Income (Loss) to EBITDA is shown below:
Periods ended, (Unaudited) | Three Months Ended | ||||||||
(In thousands) | March 31, | December 31, | March 31, | ||||||
Reconciliation of Net Income (Loss) to EBITDA | |||||||||
Net Income (Loss) | $ | 15,079 | $ | 12,339 | $ | (9,662) | |||
Add: | |||||||||
Income tax provision (benefit) | 8,297 | 8,021 | (714) | ||||||
Interest expense | 178 | 166 | 380 | ||||||
Depreciation and amortization | 19,466 | 18,911 | 17,773 | ||||||
Less: | |||||||||
Interest income | 15 | 12 | 18 | ||||||
EBITDA | $ | 43,005 | $ | 39,425 | $ | 7,759 | |||
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SOURCE RPC, Inc.
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