RPC, Inc. Reports Third Quarter 2020 Financial Results
RPC, Inc. (NYSE: RES) reported Q3 2020 revenues of $116.6 million, down 60.2% from $293.2 million in Q3 2019. Operating loss improved to $31.8 million from $92.6 million. However, net loss was $16.4 million or $0.08 per share, compared to $69.2 million or $0.33 per share a year prior. Adjusted net loss was $20.0 million. Despite a 30.6% sequential revenue increase attributed to rising oilfield activity, management cautioned that current pricing levels remain insufficient for sustainable returns. RPC ended Q3 with $145.6 million cash, debt-free.
- Sequential quarterly revenue growth of 30.6% attributed to increased oilfield activity.
- Narrowed operating loss to $31.8 million from $37.5 million in Q2 2020.
- Year-over-year revenue decrease of 60.2% in Q3 2020.
- Net loss of $202 million for the first nine months of 2020, compared to $63.7 million in the same period last year.
- Adjusted net loss for the first nine months increased to $51.2 million compared to $12.5 million in 2019.
ATLANTA, Oct. 28, 2020 /PRNewswire/ -- RPC, Inc. (NYSE: RES) today announced its unaudited results for the third quarter ended September 30, 2020. 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, 2020, revenues were
For the nine months ended September 30, 2020, revenues decreased to
Cost of revenues during the third quarter of 2020 was
Selling, general and administrative expenses were
Discussion of Sequential Quarterly Financial Results
RPC's revenues for the quarter ended September 30, 2020 increased by
The average U.S. domestic rig count during the third quarter of 2020 was 254, a 72.4 percent decrease compared to the same period in 2019, and a 35.2 percent decrease compared to the second quarter of 2020. The average price of oil during the third quarter was
Management Commentary
"We are pleased U.S. oilfield activity has improved in recent months from the historic lows recorded in the second quarter," stated Richard A. Hubbell, RPC's President and Chief Executive Officer. "RPC capitalized on the increased activity with equipment and crews that were in place and prepared to work. Our operating losses narrowed due to higher revenue, increased utilization, and continued diligent expense management.
"However, even with the industry improvement experienced during the quarter, current activity and pricing are inadequate to generate sustainable financial returns. Until the oilfield market improves sufficiently, we will continue to focus on expense management and limit capital investment. At the end of the third quarter, RPC's cash balance of
"As we announced in August, R. Randall Rollins, our Chairman of the Board, passed away following a short illness. He held management and Board positions at RPC and its predecessor entities for almost 50 years, and we will miss his stewardship. Gary W. Rollins, a long-standing director, has assumed the role of Non-Executive Chairman, and we have added two independent directors to our Board," 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 downhole tools and services, pressure pumping, coiled tubing, hydraulic workover services, nitrogen, 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 handling, inspection and storage services, and oilfield training services.
Technical Services quarterly revenues decreased by 60.2 percent compared to the same period of the prior year due to significantly lower activity and pricing. On a sequential basis, Technical Services revenues grew by 35.7 percent compared to the prior quarter due to increased activity levels in several service lines as a result of higher completion activity. Support Services revenues decreased by 61.0 percent during the quarter compared to the same period of the prior year. On a sequential basis, Support Services revenues decreased by 16.6 percent compared to the prior quarter due to lower drilling activity during the quarter. Technical Services generated a narrower operating loss during the third quarter of 2020 compared to the prior quarter. Support Services generated a larger operating loss in the third quarter of 2020 than the prior quarter due to revenue declines.
(in thousands) | Three Months Ended | Nine Months Ended September 30, | |||||||||
September 30, | June 30, | September 30, | |||||||||
2020 | 2020 | 2019 | 2020 | 2019 | |||||||
Revenues: | |||||||||||
Technical Services | $ | 109,278 | $ | 80,532 | $ | 274,483 | $ | 417,511 | $ | 926,596 | |
Support Services | 7,310 | 8,768 | 18,757 | 32,154 | 59,816 | ||||||
Total revenues | $ | 116,588 | $ | 89,300 | $ | 293,240 | $ | 449,665 | $ | 986,412 | |
Operating (loss) profit: | |||||||||||
Technical Services | $ | (24,941) | $ | (34,100) | $ | (18,174) | $ | (71,248) | $ | (15,782) | |
Support Services | (3,840) | (1,846) | 1,632 | (4,139) | 8,787 | ||||||
Corporate expenses | (6,534) | (3,139) | (2,720) | (13,003) | (10,678) | ||||||
Impairment and other charges * | - | (1,639) | (71,650) | (207,175) | (71,650) | ||||||
Gain (loss) on disposition of assets, net | 3,563 | 3,194 | (1,727) | 7,576 | 2,910 | ||||||
Total operating loss | $ | (31,752) | $ | (37,530) | $ | (92,639) | $ | (287,989) | $ | (86,413) | |
Interest expense | (73) | (71) | (8) | (257) | (261) | ||||||
Interest income | 29 | 68 | 182 | 431 | 1,576 | ||||||
Other income (expense), net | 769 | (1,481) | (937) | (1,020) | (545) | ||||||
Loss before income taxes | $ | (31,027) | $ | (39,014) | $ | (93,402) | $ | (288,835) | $ | (85,643) | |
* June 2020 represents | |||||||||||
September 2019 represents | |||||||||||
RPC, Inc. will hold a conference call today, October 28, 2020 at 9:00 a.m. ET to discuss the results for the second 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 5646007. 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 the statement that we believe that recent activity improvements are not sufficient to generate sustainable financial returns. Such risks include changes in general global business and economic conditions, including the decline in prices of oil and natural gas; the combined impact of the OPEC disputes and the COVID-19 pandemic on our operations; 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 production regions of the world, which could impact drilling activity; adverse weather conditions in oil and 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 for the year ended December 31, 2019 and Form 10-Q for the quarter ended June 30, 2020 filed with the Securities and Exchange Commission.
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 |
1 Adjusted operating loss is a financial measure which does not conform to GAAP. Additional disclosure regarding this non-GAAP financial measure and its reconciliation to operating loss, the nearest GAAP financial measures, are disclosed in Appendix A to this press release. |
2 Adjusted net loss and adjusted loss per share are financial measures which do not conform to GAAP. Additional disclosure regarding these non-GAAP financial measures and their reconciliation to net loss and loss per share, the nearest GAAP financial measures, are disclosed in Appendix B to this press release. |
3 Adjusted 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 loss, the nearest GAAP financial measures, are disclosed in Appendix C to this press release. |
RPC INCORPORATED AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) | |||||||||||||||
Periods ended, (Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | June 30, | September 30, | 2020 | 2019 | |||||||||||
REVENUES | $ | 116,588 | $ | 89,300 | $ | 293,240 | $ | 449,665 | $ | 986,412 | |||||
COSTS AND EXPENSES: | |||||||||||||||
Cost of revenues | 100,872 | 80,037 | 225,230 | 362,853 | 742,713 | ||||||||||
Selling, general and administrative expenses | 32,376 | 28,775 | 42,571 | 97,681 | 131,285 | ||||||||||
Impairment and other charges | - | 1,639 | 71,650 | 207,175 | 71,650 | ||||||||||
Depreciation and amortization | 18,655 | 19,573 | 44,701 | 77,521 | 130,087 | ||||||||||
(Gain) loss on disposition of assets, net | (3,563) | (3,194) | 1,727 | (7,576) | (2,910) | ||||||||||
Operating loss | (31,752) | (37,530) | (92,639) | (287,989) | (86,413) | ||||||||||
Interest expense | (73) | (71) | (8) | (257) | (261) | ||||||||||
Interest income | 29 | 68 | 182 | 431 | 1,576 | ||||||||||
Other income (expense), net | 769 | (1,481) | (937) | (1,020) | (545) | ||||||||||
Loss before income taxes | (31,027) | (39,014) | (93,402) | (288,835) | (85,643) | ||||||||||
Income tax benefit | (14,590) | (13,921) | (24,221) | (86,882) | (21,894) | ||||||||||
NET LOSS | $ | (16,437) | $ | (25,093) | $ | (69,181) | $ | (201,953) | $ | (63,749) | |||||
LOSS PER SHARE | |||||||||||||||
Basic | $ | (0.08) | $ | (0.12) | $ | (0.33) | $ | (0.95) | $ | (0.30) | |||||
Diluted | $ | (0.08) | $ | (0.12) | $ | (0.33) | $ | (0.95) | $ | (0.30) | |||||
WEIGHTED AVERAGE SHARES OUTSTANDING | |||||||||||||||
Basic | 212,544 | 212,403 | 212,025 | 212,391 | 212,285 | ||||||||||
Diluted | 212,544 | 212,403 | 212,025 | 212,391 | 212,285 | ||||||||||
RPC INCORPORATED AND SUBSIDIARIES | |||||
CONSOLIDATED BALANCE SHEETS | |||||
At September 30, (Unaudited) | (In thousands) | ||||
2020 | 2019 | ||||
ASSETS | |||||
Cash and cash equivalents | $ | 145,619 | $ | 49,523 | |
Accounts receivable, net | 123,157 | 288,563 | |||
Inventories | 84,566 | 107,028 | |||
Income taxes receivable | 64,308 | 20,771 | |||
Prepaid expenses | 4,149 | 6,531 | |||
Assets held for sale | 5,385 | 5,385 | |||
Other current assets | 3,144 | 3,310 | |||
Total current assets | 430,328 | 481,111 | |||
Property, plant and equipment, net | 275,124 | 528,925 | |||
Operating lease right-of-use assets | 28,269 | 35,556 | |||
Goodwill | 32,150 | 32,150 | |||
Other assets | 35,006 | 32,121 | |||
Total assets | $ | 800,877 | $ | 1,109,863 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Accounts payable | $ | 46,713 | $ | 82,813 | |
Accrued payroll and related expenses | 17,915 | 24,022 | |||
Accrued insurance expenses | 6,955 | 6,489 | |||
Accrued state, local and other taxes | 5,607 | 7,368 | |||
Income taxes payable | 2,967 | 849 | |||
Current portion of operating lease liabilities | 9,574 | 11,066 | |||
Other accrued expenses | 3,531 | 3,613 | |||
Total current liabilities | 93,262 | 136,220 | |||
Long-term accrued insurance expenses | 14,177 | 13,543 | |||
Long-term pension liabilities | 31,619 | 33,575 | |||
Long-term operating lease liabilities | 22,429 | 30,165 | |||
Other long-term liabilities | 49 | 2,505 | |||
Deferred income taxes | 1,786 | 38,680 | |||
Total liabilities | 163,322 | 254,688 | |||
Common stock | 21,507 | 21,450 | |||
Capital in excess of par value | - | - | |||
Retained earnings | 638,590 | 854,170 | |||
Accumulated other comprehensive loss | (22,542) | (20,445) | |||
Total stockholders' equity | 637,555 | 855,175 | |||
Total liabilities and stockholders' equity | $ | 800,877 | $ | 1,109,863 | |
Appendix A
RPC, Inc. has used the non-GAAP financial measure of adjusted operating loss 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 loss, or other performance measures prepared in accordance with GAAP.
Management believes that presenting the financial measure of adjusted operating loss enables us to compare our operating performance consistently over various time periods without regard to non-recurring items.
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 comparable GAAP measures. This reconciliation also appears on RPC, Inc.'s investor website, which can be found on the Internet at rpc.net.
The Reconciliation of Operating Loss to Adjusted Operating Loss, the nearest performance measure prepared in accordance with GAAP, is shown below:
Periods ended, (Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||
(In thousands) | September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||
Reconciliation of Operating Loss to Adjusted Operating Loss | |||||||||||||||
Operating Loss | $ | (31,752) | $ | (37,530) | $ | (92,639) | $ | (287,989) | $ | (86,413) | |||||
Add: | |||||||||||||||
Impairment and other charges | - | 1,639 | 71,650 | 207,175 | 71,650 | ||||||||||
Adjusted Operating Loss | $ | (31,752) | $ | (35,891) | $ | (20,989) | $ | (80,814) | $ | (14,763) | |||||
Appendix B
RPC, Inc. has used the non-GAAP financial measures of adjusted net loss and adjusted loss 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 loss, loss per share, or other performance measures prepared in accordance with GAAP.
Management believes that presenting the financial measures of adjusted net loss and adjusted loss per share, enable us to compare our operating performance consistently over various time periods without regard to non-recurring items.
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 comparable GAAP measures. This reconciliation also appears on RPC, Inc.'s investor website, which can be found on the Internet at rpc.net.
The Reconciliation of Net Loss to Adjusted Net Loss and the Reconciliation of Loss Per Share to Adjusted Loss Per Share is shown below:
Periods ended, (Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||
(In thousands) | September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||
Reconciliation of Net Loss to Adjusted Net Loss | |||||||||||||||
Net Loss | $ | (16,437) | $ | (25,093) | $ | (69,181) | $ | (201,953) | $ | (63,749) | |||||
Add: | |||||||||||||||
Discrete tax adjustments | (3,564) | 2,061 | (6,744) | 21,303 | (6,744) | ||||||||||
Impairment and other charges, net of tax | - | 770 | 57,947 | 129,412 | 57,947 | ||||||||||
Total Impact of Discrete tax adjustments | |||||||||||||||
and Impairment and other charges | (3,564) | 2,831 | 51,203 | 150,715 | 51,203 | ||||||||||
Adjusted Net Loss | $ | (20,001) | $ | (22,262) | $ | (17,978) | $ | (51,238) | $ | (12,546) | |||||
Reconciliation of Loss Per Share to Adjusted Loss Per Share | |||||||||||||||
Loss Per Share | $ | (0.08) | $ | (0.12) | $ | (0.33) | $ | (0.95) | $ | (0.30) | |||||
Total Impact of Discrete tax adjustments | |||||||||||||||
and Impairment and other charges | $ | (0.02) | $ | 0.01 | $ | 0.24 | $ | 0.71 | $ | 0.24 | |||||
Adjusted Loss Per Share | $ | (0.09) | $ | (0.10) | $ | (0.08) | $ | (0.24) | $ | (0.06) | |||||
Weighted Average Shares Outstanding | 212,544 | 212,403 | 212,025 | 212,391 | 212,285 | ||||||||||
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 loss or other performance measures prepared in accordance with GAAP.
RPC uses EBITDA and adjusted 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 loss to EBITDA and adjusted EBITDA, the most comparable GAAP measures. This reconciliation also appears on RPC's investor website, which can be found on the Internet at rpc.net.
The Reconciliation of Net Loss to EBITDA and Adjusted EBITDA is shown below:
Periods ended, (Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||
(In thousands) | September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA | |||||||||||||||
Net Loss | $ | (16,437) | $ | (25,093) | $ | (69,181) | $ | (201,953) | $ | (63,749) | |||||
Add: | |||||||||||||||
Income tax benefit | (14,590) | (13,921) | (24,221) | (86,882) | (21,894) | ||||||||||
Interest expense | 73 | 71 | 8 | 257 | 261 | ||||||||||
Depreciation and amortization | 18,655 | 19,573 | 44,701 | 77,521 | 130,087 | ||||||||||
Less: | |||||||||||||||
Interest income | 29 | 68 | 182 | 431 | 1,576 | ||||||||||
EBITDA | $ | (12,328) | $ | (19,438) | $ | (48,875) | $ | (211,488) | $ | 43,129 | |||||
Add: | |||||||||||||||
Impairment and other charges | - | 1,639 | 71,650 | 207,175 | 71,650 | ||||||||||
Adjusted EBITDA | $ | (12,328) | $ | (17,799) | $ | 22,775 | $ | (4,313) | $ | 114,779 | |||||
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SOURCE RPC, Inc.
