EX-99 3 e17033ex99.txt PRESS RELEASE Exhibit 99 RPC, Inc. Reports 2003 Fourth Quarter and Full Year Results * Revenues for the Fourth Quarter Increased 26.6 Percent over Prior Year * Diluted EPS for the Fourth Quarter Increased to Earnings of $0.11 from a Loss of $0.04 in the Prior Year * 20 Percent Increase in Quarterly Dividend and Increase of 1.5 million shares in Stock Repurchase Program announced January 27, 2004 ATLANTA, Feb. 17 /PRNewswire-FirstCall/ -- RPC Incorporated (NYSE: RES) announced its unaudited results for the fourth quarter and twelve months ended December 31, 2003. For the quarter ended December 31, 2003, revenues increased 26.6 percent to $69,719,000 compared to $55,073,000 last year. Net income was $3,306,000, or $0.11 diluted earnings per share, compared to a net loss of $1,100,000 or $0.04 diluted loss per share last year. Operating income for the quarter was $4,772,000, compared to an operating loss of $1,550,000 in the prior year. Earnings before interest, taxes, depreciation and amortization were $13,678,000, compared to $6,352,000 in 2002, an increase of 115.3 percent. For the twelve months ended December 31, 2003, revenues increased 29.4 percent to $270,527,000, compared to $209,030,000 last year. Net income was $10,893,000, or $0.38 diluted earnings per share, an increase from a net loss of $5,260,000, or $0.19 diluted loss per share last year. Operating income for the twelve months ending December 31, 2003 was $16,399,000 compared to an operating loss of $10,426,000 last year. Earnings before interest, taxes, depreciation and amortization was $50,905,000, compared to $23,262,000 in 2002, an increase of 118.8 percent. Cost of services rendered and goods sold was $42,698,000 during the fourth quarter of 2003, a 12.7 percent increase over the prior year. This increase was due to increases in direct employment costs and certain operational expenses, especially fuel costs, both of which vary with activity levels. Self-insured casualty claims costs were higher during the quarter as well. As a percentage of revenues, however, the cost of services rendered and goods sold decreased to 61.6 percent compared to 69.2 percent in 2002 because of improved pricing and higher equipment and personnel utilization. Selling, general and administrative expenses increased by 27.3 percent in the fourth quarter of 2003 to $13,669,000 compared to $10,739,000 in the prior year. This increase was due to higher personnel and incentive compensation expense consistent with increased activity levels and profitability, and increased pension expense relating to RPC's pension plan obligation. These costs were 19.5 percent of revenues in 2002 and 19.6 percent this year. Depreciation and amortization was $8,310,000 during the quarter, 7.1 percent higher than last year, due to increased capital expenditures made during 2003. "RPC's fourth quarter results reflect the continuation of higher activity levels than we experienced at this time last year," stated Richard A. Hubbell, RPC's President and Chief Executive Officer. "Our overall domestic activity has increased due to higher customer drilling activity and the impact of the Bronco Oilfield Services acquisition completed at the beginning of the second quarter. The average domestic rig count during the fourth quarter was 1,108, 31 percent higher than the same period in 2002. Our revenues grew at a slightly lower rate than the rig count because of the types of wells that are being drilled. Our customers are focusing on shallower land wells rather than the deeper land and offshore wells where we are positioned geographically and our services are generally in higher demand. Also, the average natural gas price was $5.09 this quarter, 20 percent higher than the fourth quarter of last year. This had a positive impact on our results, because we believe that our activity levels are affected more by natural gas prices than by the price of oil. Colder weather this winter has pushed prices of gas and oil higher this quarter. "Our revenue increases compared to the prior year were driven by higher overall activity and pricing levels in most of our service lines. Despite high commodity prices, which historically would result in robust activity levels, our customers are more focused on capital preservation. We have seen activity levels beginning to recover in many of our service lines from their lower level in the third quarter. We are also continuing to experience weakness in the Gulf of Mexico market, where overall activity levels have decreased compared to the fourth quarter of last year. Hubbell continued, "We continued to make selective capital expenditures during the quarter to position ourselves to take advantage of relatively stable industry conditions. As always, however, we continued to focus on a strong balance sheet and we maintained our cash balance during the quarter, in spite of making approximately $10 million in capital expenditures. We believe that the international market represents an excellent growth opportunity for RPC. Late this quarter, we shipped equipment to Kuwait to begin work on a snubbing contract there in the first quarter of 2004. Domestically or internationally, we only pursue opportunities that we believe can provide acceptable expected returns on investment and diversify our operations into other markets and services. As we announced on January 27, our Board of Directors approved a 20 percent increase in our quarterly cash dividend, and the expansion of our stock repurchase program. This is a tangible benefit to our shareholders of our strong balance sheet and conservative management policies, and the extension of the stock repurchase program will allow us to continue to purchase stock during periods of low valuation." 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 include snubbing, coiled tubing, pressure pumping, nitrogen, well control, downhole tools, wire line, fluid pumping, surface production equipment, and casing installation services. 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 drill pipe and related tools, pipe handling, inspection and storage services, work platform vessels, and oilfield training services. Both Technical Services and Support Services experienced stronger results due to the increased drilling rig count and related customer activity. Technical Services revenues rose 31.2 percent for the quarter compared to the prior year, driven by higher overall pricing and activity levels, and the impact of the Bronco Oilfield Services acquisition. Support Services revenues rose by 8.7 percent during the quarter compared to the prior year. This relatively lower increase was due to the end of a project involving our work platform vessels in the fourth quarter, and on the weaker activity levels for rental tools in and around the Gulf of Mexico, offset slightly by an increase in pricing and land rig activity levels in our rental tools service line. Corporate expenses increased compared to the prior year due to higher pension plan expenses, which was caused by decreases in discount rates used to calculate liabilities and other actuarial changes, higher incentive compensation due to improved financial performance during the year, and higher expenses associated with public company compliance. Three Months Ended Twelve Months Ended Dec 31, Dec 31, 2003 2002 2003 2002 (in thousands) Revenues: Technical services $56,827 $43,320 $216,321 $163,593 Support services 10,416 9,584 43,909 35,784 Other 2,476 2,169 10,297 9,653 Total revenues $69,719 $55,073 $270,527 $209,030 Operating profit (loss): Technical services $7,279 $(302) $22,433 $(1,162) Support services (432) 101 2,641 (3,154) Other (155) (278) (1,355) (1,603) Corporate expenses (1,920) (1,071) (7,320) (4,507) Total operating profit (loss) $4,772 $(1,550) $16,399 $(10,426) Interest expense, net (16) (12) (153) (74) Other income, net 577 118 1,324 2,346 Income (loss) before income taxes $5,333 $(1,444) $17,570 $(8,154) 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 and Rocky Mountain regions, and in selected international markets. RPC's investor website can be found at www.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. Such forward-looking statements include statements regarding RPC's future performance. 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 the possibility of declines in the price of oil and natural gas, which tend to result in a decrease in drilling activity and therefore a decline in the 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, competition in the oil and gas industry, and risks of international operations. 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, 2002. 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. 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 income, 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. The attached schedule shows a reconciliation between EBITDA and Net Income, the most comparable GAAP measure. This reconciliation also appears on RPC's investor website. For information contact: BEN M. PALMER JIM LANDERS Chief Financial Officer Corporate Finance 404-321-2140 404-321-2162 RPC INCORPORATED AND SUBSIDIARIES STATEMENTS OF OPERATIONS (In thousands except per share data) Periods ended December 31, (Unaudited) Fourth Quarter % 2003 2002 BETTER (WORSE) REVENUES $69,719 $55,073 26.6 % COSTS AND EXPENSES: Cost of services rendered and goods sold 42,968 38,126 (12.7) Selling, general and administrative expenses 13,669 10,739 (27.3) Depreciation and amortization 8,310 7,758 (7.1) Operating profit (loss) 4,772 (1,550) NM Interest expense, net (16) (12) (33.3) Other income, net 577 118 NM Income (loss) before income taxes 5,333 (1,444) NM Income tax provision (benefit) 2,027 (344) NM NET INCOME (LOSS) $3,306 $(1,100) NM % EARNINGS (LOSS) PER SHARE Basic $0.12 $(0.04) NM % Diluted $0.11 $(0.04) NM % AVERAGE SHARES OUTSTANDING Basic 28,340 28,259 Diluted 28,775 28,259 RPC INCORPORATED AND SUBSIDIARIES STATEMENTS OF OPERATIONS (In thousands except per share data) Periods ended December 31, (Unaudited) Twelve Months % 2003 2002 BETTER (WORSE) REVENUES $270,527 $209,030 29.4 % COSTS AND EXPENSES: Cost of services rendered and goods sold 168,766 143,362 (17.7) Selling, general and administrative expenses 52,268 44,852 (16.5) Depreciation and amortization 33,094 31,242 (5.9) Operating profit (loss) 16,399 (10,426) NM Interest expense, net (153) (74) (106.8) Other income, net 1,324 2,346 (43.6) Income (loss) before income taxes 17,570 (8,154) NM Income tax provision (benefit) 6,677 (2,894) NM NET INCOME (LOSS) $10,893 $(5,260) NM % EARNINGS (LOSS) PER SHARE Basic $0.38 $(0.19) NM % Diluted $0.38 $(0.19) NM % AVERAGE SHARES OUTSTANDING Basic 28,370 28,262 Diluted 28,786 28,262 RECONCILIATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) Periods ended December 31, (Unaudited) Fourth Quarter NET INCOME (LOSS) $3,306 $(1,100) NM % Income tax provision (benefit) 2,027 (344) NM Total depreciation and amortization (a) 8,329 7,784 7.0 Interest expense, net (16) (12) (33.3) EBITDA $13,678 $6,352 115.3 % RECONCILIATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) Periods ended December 31, (Unaudited) Twelve Months NET INCOME (LOSS) $10,893 $(5,260) NM % Income tax provision (benefit) 6,677 (2,894) NM Total depreciation and amortization (a) 33,182 31,342 5.9 Interest expense, net (153) (74) 106.8 EBITDA $50,905 $23,262 118.8 % (a) Depreciation and amortization was derived from the statements of cash flows. This amount differs from depreciation and amortization presented on the statements of operations due to depreciation related to the manufacturing of goods which is included in cost of services rendered and goods sold. RPC INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS At December 31, (Unaudited) (In thousands) 2003 2002 ASSETS Cash and cash equivalents $22,302 $11,533 Accounts receivable, net 53,719 40,168 Inventories 10,057 9,206 Deferred income taxes 6,394 5,873 Income taxes receivable 4,149 8,817 Prepaid expenses and other current assets 3,614 3,478 Total current assets 100,235 79,075 Property, plant and equipment, net 109,163 105,338 Intangibles, net 15,488 9,609 Other assets 1,864 1,932 Total assets $226,750 $195,954 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $19,603 $12,280 Accrued payroll and related expenses 8,526 7,641 Accrued insurance expenses 2,852 2,800 Accrued state, local and other taxes 1,549 1,659 Short-term debt 1,110 552 Other accrued expenses 3,369 1,497 Total current liabilities 37,009 26,429 Accrued insurance expenses 5,856 4,898 Long-term debt 4,800 2,410 Pension liabilities 12,972 6,931 Deferred income taxes 13,296 8,888 Other long-term liabilities 1,711 1,317 Total liabilities 75,644 50,873 Common stock 2,862 2,861 Capital in excess of par value 26,796 26,431 Retained earnings 128,824 120,805 Deferred compensation (1,076) (1,186) Accumulated other comprehensive loss (6,300) (3,830) Total stockholders' equity 151,106 145,081 Total liabilities and stockholders' equity $226,750 $195,954 Certain prior year balances have been reclassified to conform with current year presentation. RPC INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Twelve months ended December 31, (unaudited) (In Thousands) 2003 2002 Operating Activities: Net income (loss) $10,893 $(5,260) Depreciation and amortization 33,182 31,342 Other non-cash charges to earnings 5,365 7,840 Other net changes in operating activities 1,191 (6,366) Net cash provided by operating activities 50,631 27,556 Investing Activities: Capital expenditures (30,356) (22,481) Other investing activities (4,314) 650 Net cash used for investing activities (34,670) (21,831) Financing Activities: Dividends (2,874) (2,867) Cash paid for common stock purchased and retired (1,870) (882) Other financing activities (448) (1,178) Net cash used for financing activities (5,192) (4,927) Net increase in cash and cash equivalents 10,769 798 Cash and cash equivalents at beginning of period 11,533 10,735 Cash and cash equivalents at end of period $22,302 $11,533 SOURCE RPC Incorporated -0- 02/17/2004 /CONTACT: Ben M. Palmer, Chief Financial Officer, +1-404-321-2140, or Jim Landers, Corporate Finance, +1-404-321-2162, both of RPC Incorporated/ /Web site: http://www.rpc.net/ (RES) CO: RPC Incorporated ST: Georgia IN: OIL SU: ERN