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Rpc Inc (RES) SEC Filing 10-K Annual report for the fiscal year ending Tuesday, December 31, 2013

Rpc Inc

CIK: 742278 Ticker: RES


Exhibit 99
 
(GRAPHIC)
 
 
RPC, Inc. Reports Fourth Quarter and Year-End 2013 Financial Results
 
 

ATLANTA, January 29, 2014 - RPC, Inc. (NYSE: RES) today announced its unaudited results for the fourth quarter and year ended December 31, 2013.

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 December 31, 2013, revenues increased 3.6 percent to $487.0 million compared to $469.9 million in the fourth quarter of 2012. Revenues increased compared to the prior year due to higher activity levels in several of our major service lines, greater service intensity, and a larger fleet of revenue-producing equipment, partially offset by lower pricing for our services as compared to the prior year. Operating profit for the fourth quarter decreased to $64.5 million compared to operating profit of $89.3 million in the same period for the prior year, principally because of lower pricing for our services. Net income was $37.6 million or $0.17 diluted earnings per share, compared to $55.4 million or $0.26 diluted earnings per share in the same period of 2012. Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by 18.0 percent to $119.4 million compared to $145.6 million in the prior year. 1

 

Cost of revenues during the fourth quarter of 2013 was $318.9 million, or 65.5 percent of revenues, compared to $279.4 million, or 59.5 percent of revenues, in the prior year. Cost of revenues increased primarily due to higher materials and supplies expenses and employment costs associated with higher activity levels. Cost of revenues as a percentage of revenues increased primarily due to competitive pricing for our services.

 

Selling, general and administrative expenses were $45.5 million in the fourth quarter of 2013, compared to $44.7 million in the same period of the prior year, and were approximately equal percentages of revenue each year. Depreciation and amortization decreased slightly to $54.3 million during the quarter compared to $55.3 million in the fourth quarter of 2012.

 

For the twelve months ended December 31, 2013, revenues decreased 4.3 percent to $1.86 billion compared to $1.95 billion last year. Net income decreased to $166.9 million or $0.77 earnings per diluted share, compared to net income of $274.4 million or $1.27 earnings per diluted share in 2012. EBITDA decreased 25.6 percent, from $659.5 million in 2012 to $490.8 million in 2013. 1

 


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.

 

 
 
 
 

 

 
Page 2
4th Quarter and Year-End 2013 Earnings Release
 

“RPC’s financial results during the fourth quarter of 2013 reflect continued high activity levels and growing service intensity in many of the domestic oilfield basins in which we operate,” stated Richard A. Hubbell, RPC’s President and Chief Executive Officer. “Our higher activity levels generated a modest revenue improvement compared to the fourth quarter of last year and strong sequential revenue performance, given the fourth quarter’s weather and holiday impacts. The average U.S. domestic rig count during the fourth quarter was 1,757, a 2.9 percent decrease compared to the same period in 2012, and a decrease of less than one percent compared to the third quarter of 2013. The average price of natural gas during the fourth quarter was $3.83 per Mcf, a 14.0 percent increase compared to the prior year, and an 8.2 percent increase compared to the third quarter of 2013. The average price of oil during the quarter was $97.39 per barrel, a 10.6 percent increase compared to the prior year and an 8.4 percent decrease compared to the third quarter of 2013. The average price of benchmark natural gas liquids was $1.19 per gallon during the fourth quarter of 2013, a 34.1 percent increase compared to the fourth quarter of 2012, and a 16.1 percent increase compared to the third quarter of this year. The unconventional rig count, an important indicator of the demand for RPC’s services, increased by 3.5 percent compared to the prior year, and during the fourth quarter of 2013 represented 76.7 percent of U.S. domestic drilling activity. Our revenues trended in line with these overall industry indicators, and we were pleased that the market prices of natural gas and natural gas liquids increased during the fourth quarter.

 

“RPC continues to benefit from higher completion service intensity. On a sequential basis, our revenues declined by less than one percent in spite of holidays and winter weather which negatively impacted our revenues by approximately three percent. However, continued competitive pricing and the transition from our remaining contractual work to the spot market served to depress our operating margin compared to the prior quarter and prior year. The current conditions in the U.S. domestic market continue to be characterized by a large number of service companies competing for long-duration, service-intensive completion work. The efficient nature of these projects can also exacerbate the equipment oversupply situation in our industry, which negatively impacted us during the quarter as well.

 

“During the fourth quarter, we invested $41.8 million in maintenance and growth capital expenditures. Our total capital expenditures during 2013 were $201.7 million, a decline of $127.2 million or 38.7 percent compared to $328.9 million during 2012. The balance on our syndicated credit facility at the end of the quarter was $53.3 million, a slight increase compared to $51.4 million at the end of the third quarter but a decline of $53.7 million or 50.2 percent compared to the end of the fourth quarter of 2012. We continue to scrutinize our near-term financial returns in light of the competitive environment and our inconsistent profitability. As always, we are dedicated to maintaining our financial strength through the domestic oilfield cycles,” 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.

 
 
 

 

 
Page 3
4th Quarter and Year-End 2013 Earnings Release
 

Technical Services revenues increased 4.3 percent for the quarter compared to the prior year due to a job mix characterized by higher service intensity and increased use of raw materials in pressure pumping, the largest service line within this segment. Support Services revenues decreased 4.8 percent during the quarter compared to the prior year principally due to lower pricing in the rental tool service line, which is the largest service line within this segment. Operating profit in both Technical and Support Services declined due to more competitive pricing. In Technical Services, operating profit also declined due to higher materials and supplies expenses.

 
 
(in thousands)
 
Three Months Ended December 31
   
Twelve Months Ended December 31
 
   
2013
   
2012
   
2013
   
2012
 
                         
Revenues:
                       
Technical services
  $ 453,523     $ 434,795     $ 1,729,732     $ 1,794,015  
Support services
    33,458       35,147       131,757       151,008  
Total revenues
  $ 486,981     $ 469,942     $ 1,861,489     $ 1,945,023  
Operating Profit:
                               
Technical services
  $ 65,439     $ 85,621     $ 276,246     $ 420,231  
Support services
    6,862       9,380       26,223       45,912  
Corporate expenses
    (4,093 )     (4,454 )     (17,685 )     (17,654 )
Loss on disposition of assets, net
    (3,706 )     (1,240 )     (9,371 )     (6,099 )
Total operating profit
  $ 64,502     $ 89,307     $ 275,413     $ 442,390  
Interest Expense
    (257 )     (289 )     (1,822 )     (1,976 )
Interest Income
    346       5       419       30  
Other Income, net
    617       1,031       2,260       2,175  
                                 
Income before income taxes
  $ 65,208     $ 90,054     $ 276,270     $ 442,619  
 
 

RPC, Inc. will hold a conference call today, January 29, 2014 at 9:00 a.m. ET to discuss the results of the fourth 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) 430-8691 or (719) 325-2435 and using the access code #1860661. For those not able to attend the live conference call, a replay of the conference call 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.

 
 
 

 

 
Page 4
4th Quarter and Year-End 2013 Earnings Release
 

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, our plans to maintain our financial strength during the challenging competitive environment and through the cycles in the domestic oilfield. 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; 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 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, 2012.

 
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
 
 
 

 

 
Page 5
4th Quarter and Year-End 2013 Earnings Release
 
RPC INCORPORATED AND SUBSIDIARIES                      
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data)
                     
Periods ended December 31, (Unaudited)
  Fourth Quarter            
Twelve Months
       
               
%
                 
%
 
   
2013
   
2012
   
BETTER
     
2013
   
2012
   
BETTER
 
               
(WORSE)
                 
(WORSE)
 
REVENUES
  $ 486,981     $ 469,942       3.6 %     $ 1,861,489     $ 1,945,023       (4.3 ) %
COSTS AND EXPENSES:
                                                 
Cost of revenues
    318,900       279,407       (14.1 )       1,178,412       1,105,886       (6.6 )
Selling, general and administrative expenses
    45,544       44,691       (1.9 )       185,165       175,749       (5.4 )
Depreciation and amortization
    54,329       55,297       1.8         213,128       214,899       0.8  
Loss on disposition of assets, net
    3,706       1,240       (198.9 )       9,371       6,099       (53.6 )
Operating profit
    64,502       89,307       (27.8 )       275,413       442,390       (37.7 )
Interest expense
    (257 )     (289 )     11.1         (1,822 )     (1,976 )     7.8  
Interest income
    346       5       N/M         419       30       N/M  
Other income, net
    617       1,031       (40.2 )       2,260       2,175       3.9  
Income before income taxes
    65,208       90,054       (27.6 )       276,270       442,619       (37.6 )
Income tax provision
    27,565       34,673       20.5         109,375       168,183       35.0  
NET INCOME
  $ 37,643     $ 55,381       (32.0 ) %     $ 166,895     $ 274,436       (39.2 ) %
                                                   
                                                   
EARNINGS PER SHARE
                                                 
Basic
  $ 0.18     $ 0.26       (30.8 ) %     $ 0.77     $ 1.28       (39.8 ) %
Diluted
  $ 0.17     $ 0.26       (34.6 ) %     $ 0.77     $ 1.27       (39.4 ) %
                                                   
AVERAGE SHARES OUTSTANDING
                                                 
Basic
    214,871       215,328                 215,504       215,241          
Diluted
    216,269       216,662                 216,733       216,796          
 
 
 

 

 
Page 6
4th Quarter and Year-End 2013 Earnings Release
 
RPC INCORPORATED AND SUBSIDIARIES            
CONSOLIDATED BALANCE SHEETS
           
At December 31, (Unaudited)
 
(In thousands)
 
   
2013
   
2012
 
ASSETS
           
Cash and cash equivalents
  $ 8,700     $ 14,163  
Accounts receivable, net
    437,132       387,530  
Inventories
    126,604       140,867  
Deferred income taxes
    14,185       5,777  
Income taxes receivable
    5,720       4,234  
Prepaid expenses
    9,143       10,762  
Other current assets
    3,441       4,494  
Total current assets
    604,925       567,827  
Property, plant and equipment, net
    726,307       756,326  
Goodwill
    31,861       24,093  
Other assets
    20,767       18,917  
Total assets
  $ 1,383,860     $ 1,367,163  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Accounts payable
  $ 119,170     $ 109,846  
Accrued payroll and related expenses
    36,638       32,053  
Accrued insurance expenses
    6,072       6,152  
Accrued state, local and other taxes
    5,002       7,326  
Income taxes payable
    -       6,428  
Other accrued expenses
    1,170       2,706  
Total current liabilities
    168,052       164,511  
Long-term accrued insurance expenses
    10,225       10,400  
Notes payable to banks
    53,300       107,000  
Long-term pension liabilities
    21,966       26,543  
Other long-term liabilities
    8,439       4,470  
Deferred income taxes
    153,176       155,007  
Total liabilities
    415,158       467,931  
Common stock
    21,899       22,014  
Capital in excess of par value
    -       -  
Retained earnings
    956,918       891,464  
Accumulated other comprehensive loss
    (10,115 )     (14,246 )
Total stockholders' equity
    968,702       899,232  
Total liabilities and stockholders equity
  $ 1,383,860     $ 1,367,163  
 
 
 

 

 
Page 7
4th Quarter and Year-End 2013 Earnings Release
 
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 December 31, (Unaudited)
       
Fourth Quarter
   
%
           
Twelve Months
   
%
 
               
BETTER
                 
BETTER
 
   
2013
   
2012
   
(WORSE)
     
2013
   
2012
   
(WORSE)
 
                                       
Reconciliation of Net Income to EBITDA
                                     
Net Income
  $ 37,643     $ 55,381       (32.0 )%     $ 166,895     $ 274,436       (39.2 )%
Add:
                                                 
Income tax provision
    27,565       34,673       20.5         109,375       168,183       35.0  
Interest expense
    257       289       11.1         1,822       1,976       7.8  
Depreciation and amortization
    54,329       55,297       1.8         213,128       214,899       0.8  
Less:
                                                 
Interest income
    346       5       N/M         419       30       N/M  
EBITDA
  $ 119,448     $ 145,635       (18.0 )%     $ 490,801     $ 659,464       (25.6 )%
                                                   
EBITDA PER SHARE
                                                 
Basic
  $ 0.56     $ 0.68       (17.6 )%     $ 2.28     $ 3.06       (25.5 )%
Diluted
  $ 0.55     $ 0.67       (17.9 )%     $ 2.26     $ 3.04        (25.7 )%
 
 

 


The following information was filed by Rpc Inc (RES) on Wednesday, January 29, 2014 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Ticker: RES
CIK: 742278
Form Type: 10-K Annual Report
Accession Number: 0001188112-14-000518
Submitted to the SEC: Fri Feb 28 2014 1:58:49 PM EST
Accepted by the SEC: Fri Feb 28 2014
Period: Tuesday, December 31, 2013
Industry: Oil And Gas Field Services

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