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Rpc Inc (RES) SEC Filing 8-K Material Event for the period ending Wednesday, October 27, 2021

Rpc Inc

CIK: 742278 Ticker: RES

Exhibit 99

 

 

 

RPC, Inc. Reports Third Quarter 2021 Financial Results

 

ATLANTA, October 27, 2021 - 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

 

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.

 

 

 

 

Page 2

Third Quarter 2021 Earnings Release

 

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.

 

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.

 

 

 

 

Page 3

Third Quarter 2021 Earnings Release

 

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.

 

   Three Months Ended   Nine Months Ended 
   September 30,   June 30,   September 30,   September 30,   September 30, 
(in thousands)  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)

 

 

 

 

 

Page 4

Third Quarter 2021 Earnings Release

 

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.

 

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

 

 

 

 

Page 5

Third Quarter 2021 Earnings Release

 

RPC INCORPORATED AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands except per share data)

 

   Three Months Ended   Nine Months Ended 
Periods ended, (Unaudited)  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 

 

 

 

 

Page 6

Third Quarter 2021 Earnings Release

 

RPC INCORPORATED AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS 

 

   (In thousands) 
At September 30, (Unaudited)  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 

 

 

 

 

Page 7

Third Quarter 2021 Earnings Release

 

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,
2020
   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.

 

 

 

 

Page 8

Third Quarter 2021 Earnings Release

 

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)

 

 

 

0000742278 false 0000742278 2021-10-27 2021-10-27 iso4217:USD xbrli:shares iso4217:USD xbrli:shares

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

washington, d.c. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): October 27, 2021

 

RPC, INC.

(Exact name of registrant as specified in its charter)

 

Delaware 1-8726 58-1550825
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)

(IRS Employer

Identification No.)

 

2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329

(Address of principal executive office) (zip code)

 

Registrant's telephone number, including area code: (404) 321-2140

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, $0.10 par value   RES   New York Stock Exchange

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On October 27, 2021, RPC, Inc. issued a press release titled "RPC, Inc. Reports Third Quarter 2021 Financial Results," announcing the financial results for the third quarter ended September 30, 2021.

 

Item 9.01 Financial Statements and Exhibits.

 

(d)       Exhibits.

 

Exhibit 99 - Press Release dated October 27, 2021

 

104 - Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, RPC, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  RPC, Inc.
   
Date: October 27, 2021 /s/ Ben M. Palmer
  Ben M. Palmer
  Vice President and Chief Financial Officer

 

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Ticker: RES
CIK: 742278
Form Type: 8-K Corporate News
Accession Number: 0001104659-21-130270
Submitted to the SEC: Wed Oct 27 2021 6:50:39 AM EST
Accepted by the SEC: Wed Oct 27 2021
Period: Wednesday, October 27, 2021
Industry: Oil And Gas Field Services
Events:
  1. Earnings Release
  2. Financial Exhibit

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