RPC, Inc. Reports Third Quarter 2021 Financial Results

Rhea-AI Summary

RPC, Inc. (NYSE: RES) reported its Q3 2021 results, showing revenues of $225.3 million, a 93.3% increase from $116.6 million in Q3 2020, driven by higher service activity and improved pricing. The operating profit was $8.0 million compared to a loss of $31.8 million the previous year. Net income for the quarter was $5.3 million, or $0.02 per diluted share, compared to a net loss of $16.4 million in Q3 2020. EBITDA rose to $26.5 million from a negative $12.3 million year-over-year. Cost of revenues declined as a percentage of sales, reflecting enhanced operational efficiency.

Positive

• 93.3% revenue increase to $225.3 million from Q3 2020
• Operating profit of $8.0 million compared to a loss of $31.8 million in Q3 2020
• EBITDA improved to $26.5 million from negative $12.3 million year-over-year
• Cost of revenues decreased to 75.7% of revenues from 86.5% in Q3 2020

Negative

• Net loss of $5.1 million for the nine months ended September 30, 2021, although improved from a loss of $201.9 million in the previous year
• Selling, general and administrative expenses increased by $2 million compared to the prior quarter

ATLANTA, Oct. 27, 2021 /PRNewswire/ -- RPC, Inc. (NYSE: RES) today announced its unaudited results for the third quarter ended September 30, 2021. 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, 2021, RPC generated revenues of $225.3 million, an increase of 93.3 percent compared to $116.6 million in the third quarter of 2020 due primarily to higher activity levels in all service lines as well as pricing improvements. Operating profit for the third quarter of 2021 was $8.0 million compared to an operating loss of $31.8 million in the third quarter of the prior year. Net income for the third quarter of 2021 was $5.3 million, or $0.02 diluted earnings per share, compared to a net loss of $16.4 million, or $0.08 loss per share in the third quarter of the prior year.  The adjusted net loss in the third quarter of 2020 was $20.0 million, or $0.09 adjusted loss per share.¹ Earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter of 2021 was $26.5 million, compared to EBITDA of negative $12.3 million in the same period of the prior year.² 

Cost of revenues during the third quarter of 2021 was $170.6 million, or 75.7 percent of revenues, compared to $100.9 million, or 86.5 percent of revenues during the third quarter of 2020. Cost of revenues increased primarily due to increases in expenses consistent with higher activity levels, such as materials and supplies expenses, employment costs and fuel costs. Cost of revenues as a percentage of revenues decreased primarily due to the leverage of higher revenues over direct employment costs. 

Selling, general and administrative expenses were $31.4 million in the third quarter of 2021 compared to $32.4 million in the third quarter of 2020. Selling, general and administrative expenses decreased from 27.8 percent of revenues in the third quarter of 2020 to 14.0 percent of revenues in the third quarter of 2021 due to leverage of higher revenues over costs that are relatively fixed during the short term. Depreciation and amortization was $18.1 million in the third quarter of 2021 compared to $18.7 million in the third quarter of the prior year. Interest expense of $1.3 million during the third quarter of 2021 is primarily comprised of interest related to the resolution of a long-term contractual dispute with a vendor.

For the nine months ended September 30, 2021, revenues increased 32.7 percent to $596.7 million compared to $449.7 million for the same period last year. Net loss for the nine months ended September 30, 2021 was $5.1 million, or $0.02 loss per share, compared to a net loss of $201.9 million, or $0.95 loss per share in the same period last year. The adjusted net loss for the nine months ended September 30, 2020 was $51.2 million, or $0.24 adjusted loss per share.¹

Discussion of Sequential Quarterly Financial Results

RPC's revenues for the quarter ended September 30, 2021 increased by $36.6 million, or 19.4 percent, compared to the prior quarter due to activity increases in all of our service lines as well as a slight net pricing increase in several of our larger service lines. Cost of revenues during the third quarter of 2021 increased by $24.8 million. As a percentage of revenues, cost of revenues decreased to 75.7 percent in the third quarter of 2021 from 77.2 percent in the second quarter of 2021. Selling, general and administrative expenses increased by $2.0 million in the third quarter of 2021 compared to the prior quarter. RPC's operating profit in the third quarter of 2021 was $8.0 million, compared to an operating loss of $1.2 million in the second quarter of 2021. EBITDA for the third quarter of 2021 was $26.5 million compared to EBITDA of $17.3 million in the second quarter of 2021.²

The average U.S. domestic rig count during the third quarter of 2021 was 500, a 96.9 percent increase compared to the same period in 2020, and a 10.4 percent increase compared to the second quarter of 2021. The average price of oil during the third quarter of 2021 was $70.53 per barrel, a 72.7 percent increase compared to the same period in 2020, and a 14.5 percent increase compared to the second quarter of 2021. The average price of natural gas during the third quarter of 2021 was $4.39 per Mcf, a 119.5 percent increase compared to the same period in 2020, and a 47.3 percent increase compared to the second quarter of 2021.

Management Commentary

"RPC's third quarter revenues improved as drilling and completions increased and our customers' optimism regarding higher commodity prices continued to grow," stated Richard A. Hubbell, RPC's President and Chief Executive Officer. "During the quarter, we also saw signs of net pricing improvements due to an improving operating environment.

"Late in the third quarter we placed into service a new Tier IV dual-fuel pressure pumping fleet, which immediately went to work for a high-utilization customer in the Permian Basin. Although pressure pumping remains highly competitive due to the supply of idle equipment, many customers show a preference for ESG-friendly equipment with superior performance characteristics. In the coming quarters we will continue to focus on managing increasing costs, supply chain constraints, and customer pricing," 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, 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 increased by 93.9 percent compared to the same period of the prior year due to significantly higher activity levels and slightly improved pricing. On a sequential basis, Technical Services revenues increased by 20.3 percent compared to the prior quarter. Technical Services generated an operating profit of $8.3 million in the third quarter of 2021 due to higher activity levels and leverage of higher revenues over costs that are relatively fixed during the short term, compared to an operating profit of $1.4 million in the second quarter of 2021. Support Services revenues increased by 84.2 percent during the third quarter compared to the same period of the prior year. On a sequential basis, Support Services revenues increased by 6.6 percent compared to the prior quarter due to modest revenue increases in most of the service lines which comprise this segment.

(in thousands)		Three Months Ended							Nine Months Ended
		September 30,		June 30,		September 30,			September 30,		September 30,
		2021		2021		2020			2021		2020
Revenues:
Technical Services	$	211,842	$	176,119	$	109,278		$	560,602	$	417,511
Support Services		13,468		12,638		7,310			36,075		32,154
Total revenues	$	225,310	$	188,757	$	116,588		$	596,677	$	449,665
Operating profit (loss):
Technical Services	$	8,272	$	1,429	$	(24,941)		$	3,938	$	(71,248)
Support Services		(55)		(2,402)		(3,840)			(5,353)		(4,139)
Corporate expenses		(3,080)		(3,358)		(6,534)			(9,760)		(13,003)
Impairment and other charges		-		-		-			-		(207,175)
Gain on disposition of assets, net		2,837		3,111		3,563			7,408		7,576
Total operating profit (loss)	$	7,974	$	(1,220)	$	(31,752)		$	(3,767)	$	(287,989)
Interest expense		(1,280)		(103)		(73)			(1,763)		(257)
Interest income		15		14		29			47		431
Other income (expense), net		448		616		769			1,571		(1,020)
Income (Loss) before income taxes	$	7,157	$	(693)	$	(31,027)		$	(3,912)	$	(288,835)

 

RPC, Inc. will hold a conference call today, October 27, 2021 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 8648998.  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 our belief that several of our completion-oriented service lines have been able to achieve pricing improvement due to other competitors ceasing operations, that there is a clear preference for ESG-friendly pressure pumping equipment with superior performance characteristics, and that we will be able to manage increasing costs, supply chain constraints, and customer pricing in order to optimize our efficiency and profitability in the coming quarters.  Such risks include changes in general global business and economic conditions, including 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+, 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, 2020.

1 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 A to this press release.

2 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 measure, is disclosed in Appendix B 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
irdept@rpc.net	jlanders@rpc.net

 

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, 2021			June 30, 2021			September 30, 2020			2021			2020
REVENUES		$	225,310		$	188,757		$	116,588		$	596,677		$	449,665
COSTS AND EXPENSES:
Cost of revenues			170,621			145,789			100,872			462,633			362,853
Selling, general and administrative expenses			31,446			29,403			32,376			91,444			97,681
Impairment and other charges			-			-			-			-			207,175
Depreciation and amortization			18,106			17,896			18,655			53,775			77,521
Gain on disposition of assets, net			(2,837)			(3,111)			(3,563)			(7,408)			(7,576)
Operating profit (loss)			7,974			(1,220)			(31,752)			(3,767)			(287,989)
Interest expense			(1,280)			(103)			(73)			(1,763)			(257)
Interest income			15			14			29			47			431
Other income (expense), net			448			616			769			1,571			(1,020)
Income (Loss) before income taxes			7,157			(693)			(31,027)			(3,912)			(288,835)
Income tax provision (benefit)			1,891			33			(14,590)			1,210			(86,882)
NET INCOME (LOSS)		$	5,266		$	(726)		$	(16,437)		$	(5,122)		$	(201,953)
EARNINGS (LOSS) PER SHARE
Basic		$	0.02		$	0.00		$	(0.08)		$	(0.02)		$	(0.95)
Diluted		$	0.02		$	0.00		$	(0.08)		$	(0.02)		$	(0.95)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic			215,677			213,009			212,544			212,983			212,391
Diluted			215,677			213,009			212,544			212,983			212,391

 

 

RPC INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE  SHEETS
At September 30, (Unaudited)		(In thousands)
		2021			2020
ASSETS
Cash and cash equivalents	$	80,835		$	145,619
Accounts receivable, net		238,192			123,157
Inventories		79,881			84,566
Income taxes receivable		51,021			64,308
Prepaid expenses		4,371			4,149
Assets held for sale		692			5,385
Other current assets		2,863			3,144
Total current assets		457,855			430,328
Property, plant and equipment, net		253,095			275,124
Operating lease right-of-use assets		21,408			28,269
Finance lease right-of-use assets		21,415			-
Goodwill		32,150			32,150
Other assets		40,717			35,006
Total assets	$	826,640		$	800,877
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	60,862		$	46,713
Accrued payroll and related expenses		17,146			17,915
Accrued insurance expenses		6,555			6,955
Accrued state, local and other taxes		4,603			5,607
Income taxes payable		689			2,967
Current portion of operating lease liabilities		7,197			9,574
Current portion of finance lease liabilities		21,382			-
Other accrued expenses		2,287			3,531
Total current liabilities		120,721			93,262
Long-term accrued insurance expenses		13,652			14,177
Long-term pension liabilities		30,945			31,619
Long-term operating lease liabilities		16,066			22,429
Other long-term liabilities		5,374			49
Deferred income taxes		9,099			1,786
Total liabilities		195,857			163,322
Common stock		21,564			21,507
Capital in excess of par value		-			-
Retained earnings		626,501			638,590
Accumulated other comprehensive loss		(17,282)			(22,542)
Total stockholders' equity		630,783			637,555
Total liabilities and stockholders' equity	$	826,640		$	800,877

 

Appendix A

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 Income (Loss) to Adjusted Net Income (Loss) and the Reconciliation of Earnings (Loss) Per Share to Adjusted Earnings (Loss) Per Share is shown below:

Periods ended, (Unaudited)			Three Months Ended								Nine Months Ended
(In thousands)			September 30, 2021			June 30, 2021			September 30, 2 020			September 30, 2021			September 30, 2020
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)
Net Income (Loss)		$	5,266		$	(726)		$	(16,437)		$	(5,122)		$	(201,953)
Add:
Discrete tax adjustments			-			-			(3,564)			-			21,303
Impairment and other charges, net of tax			-			-			-			-			129,412
Total Impact of Discrete tax adjustments
and Impairment and other charges			-			-			(3,564)			-			150,715
Adjusted Net Income (Loss)		$	5,266		$	(726)		$	(20,001)		$	(5,122)		$	(51,238)
Reconciliation of Earnings (Loss) Per Share to Adjusted Earnings (Loss) Per Share
Earnings (Loss) Per Share		$	0.02		$	0.00		$	(0.08)		$	(0.02)		$	(0.95)
Total Impact of Discrete tax adjustments
and Impairment and other charges		$	0.00		$	0.00		$	(0.02)		$	0.00		$	0.71
Adjusted Net Income (Loss) Per Share(a)		$	0.02		$	0.00		$	(0.09)		$	(0.02)		$	(0.24)
Weighted Average Shares Outstanding			215,677			213,009			212,544			212,983			212,391
(a) Adjusted Net Income (Loss) per Share including the Total Impact of Discrete tax adjustment and Impairment and other charges in the Three Months Ended
September 30, 2020 does not sum because of rounding.

 

Appendix B

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 Income (Loss) to EBITDA and Adjusted EBITDA is shown below:

Periods ended, (Unaudited)			Three Months Ended								Nine Months Ended
(In thousands)			September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Reconciliation of Net Income (Loss)  to EBITDA and Adjusted EBITDA
Net Income (Loss)		$	5,266		$	(726)		$	(16,437)		$	(5,122)		$	(201,953)
Add:
Income tax provision (benefit)			1,891			33			(14,590)			1,210			(86,882)
Interest expense			1,280			103			73			1,763			257
Depreciation and amortization			18,106			17,896			18,655			53,775			77,521
Less:
Interest income			15			14			29			47			431
EBITDA		$	26,528		$	17,292		$	(12,328)		$	51,579		$	(211,488)
Add:
Impairment and other charges			-			-			-			-			207,175
Adjusted EBITDA		$	26,528		$	17,292		$	(12,328)		$	51,579		$	(4,313)

 

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SOURCE RPC, Inc.

FAQ

What were RPC's revenues for Q3 2021?

RPC reported revenues of $225.3 million for Q3 2021, a 93.3% increase from $116.6 million in Q3 2020.

What is RPC's net income for the third quarter of 2021?

RPC's net income for Q3 2021 was $5.3 million, or $0.02 per diluted share.

How did RPC's EBITDA perform in Q3 2021?

RPC's EBITDA for Q3 2021 was $26.5 million, significantly up from negative $12.3 million in Q3 2020.

What impact did the oil price have on RPC's performance in Q3 2021?

The average price of oil during Q3 2021 was $70.53 per barrel, a 72.7% increase compared to the same period in 2020, positively impacting RPC's revenues.

What are the key highlights from RPC's financial results for the nine months ended September 30, 2021?

For the nine months ended September 30, 2021, RPC reported revenues of $596.7 million, a 32.7% increase year-over-year, though the net loss was $5.1 million.