EX-99 2 e18585ex99.txt PRESS RELEASE Exhibit 99 RPC, Inc. Reports 2004 Second Quarter Results - Revenues for the Second Quarter Increased 20.5 Percent over Prior Year - Diluted EPS for the Second Quarter Increased 62.5 Percent to $0.26 from $0.16 in the Prior Year ATLANTA, July 28 /PRNewswire-FirstCall/ -- RPC Incorporated (NYSE: RES) announced its unaudited results for the second quarter ended June 30, 2004. For the quarter ended June 30, 2004, revenues increased 20.5 percent to $85,426,000 compared to $70,864,000 last year. Net income was $7,474,000, or $0.26 diluted earnings per share, compared to $4,705,000 or $0.16 diluted earnings per share last year. Operating profit for the quarter was $11,467,000 compared to $6,865,000 in the prior year. Cost of services rendered and goods sold was $49,189,000, or 57.6 percent of revenues, during the second quarter of 2004, compared to $42,390,000, or 59.8 percent of revenues, in the prior year. This increase was due to the variable nature of many of these expenses, including compensation, materials and supplies, primarily in the pressure pumping service line, and fuel costs. In addition, casualty insurance claim costs were higher in the second quarter of 2004 than in the prior year. As a percentage of revenues, however, these costs decreased because of improved pricing and higher equipment and personnel utilization. Selling, general and administrative expenses increased by 22.4 percent in the second quarter of 2004 to $16,166,000 from $13,208,000 in the prior year. This increase was due to an increase in personnel, an increase in bad debt expense, and an increase in incentive compensation consistent with profitability increases. These costs were 18.9 percent of revenues in 2004 and 18.6 percent last year. Depreciation and amortization were $8,604,000 during the quarter, 2.4 percent higher than last year. For the six months ended June 30, 2004, revenues increased 25.7 percent to $165,428,000 compared to $131,564,000 last year. Net income was $13,275,000, or $0.46 diluted earnings per share compared to net income of $5,010,000, or $0.17 diluted earnings per share last year. "RPC's second quarter results reflect the continuation of strong activity levels," stated Richard A. Hubbell, RPC's President and Chief Executive Officer. "Our overall domestic revenues increased due to higher customer activity, some pricing increases, and a shift in the mix of pressure pumping work towards higher-revenue jobs. Our revenues also increased during the quarter due to the continuation of our operations in Kuwait, although this revenue was lower than in the first quarter, and includes revenue from our fishing tool service line which we started in the first quarter of 2004. The average domestic rig count during the second quarter was 1,163, 13 percent higher than the same period in 2003. Our revenues grew at a higher rate than the rig count because of the factors mentioned above, slightly offset by continued weakness in the Gulf of Mexico and the sale of one of our non- oilfield businesses which occurred at the end of April. At the end of the second quarter, the Gulf of Mexico rig count was approximately 11 percent lower than in 2003, which indicates that this geographic market continues to be weak relative to the rest of the domestic oilfield. Hubbell continued, "We are making capital expenditures to position ourselves to take advantage of favorable industry conditions, including making more than $16 million in capital expenditures during the second quarter. We continued to maintain a strong balance sheet, and finished the period with approximately $12 million in cash and cash equivalents. The proceeds from the sale of our non-oilfield business unit yielded approximately $4 million, which we intend to re-invest in oilfield assets which we believe will produce better returns." 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, wireline, fluid pumping, surface production equipment, casing installation services, 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 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 21.6 percent for the quarter compared to the prior year, driven by higher activity levels, some pricing increases, and a favorable job mix shift in pressure pumping. Support Services revenues rose by 29.8 percent during the quarter compared to the prior year. This relatively higher increase was due to significantly higher utilization and slightly higher pricing in rental tools, which is the largest service line within Support Services. Other revenues declined 55.4 percent due to the sale of the non-oilfield business unit that comprises the majority of the revenue in this segment, which occurred during the quarter. The impact of the sale of this business unit on operating and other income was immaterial. Three Months Ended June 30, Six Months Ended June 30, 2004 2003 2004 2003 (in thousands) Revenues: Technical services $70,633 $58,073 $136,119 $105,891 Support services 13,846 10,670 25,546 20,368 Other 947 2,121 3,763 5,305 Total revenues $85,426 $70,864 $165,428 $131,564 Operating profit (loss): Technical services $11,532 $8,440 $22,682 $11,185 Support services 2,112 750 2,251 697 Other (210) (543) (421) (781) Corporate (1,967) (1,782) (3,812) (3,411) Total operating profit $11,467 $6,865 $20,700 $7,690 Other income, net 620 801 769 483 Interest expense, net 33 77 58 92 Income before income taxes $12,054 $7,589 $21,411 $8,081 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 actions of the OPEC cartel, 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, 2003. RPC INCORPORATED AND SUBSIDIARIES STATEMENTS OF OPERATIONS (In thousands except per share data) Periods ended June 30, (Unaudited) Second Quarter % BETTER 2004 2003 (WORSE) REVENUES $85,426 $70,864 20.5 % COSTS AND EXPENSES: Cost of services rendered and goods sold 49,189 42,390 (16.0) Selling, general and administrative expenses 16,166 13,208 (22.4) Depreciation and amortization 8,604 8,401 (2.4) Operating profit 11,467 6,865 67.0 Interest expense, net 33 77 57.1 Other income, net 620 801 (22.6) Income before income taxes 12,054 7,589 58.8 Income tax provision 4,580 2,884 (58.8) NET INCOME $7,474 $4,705 58.8 % EARNINGS PER SHARE Basic $0.26 $0.17 52.9 % Diluted $0.26 $0.16 62.5 % AVERAGE SHARES OUTSTANDING Basic 28,300 28,439 Diluted 28,812 28,851 RPC INCORPORATED AND SUBSIDIARIES STATEMENTS OF OPERATIONS (In thousands except per share data) Periods ended June 30, (Unaudited) Six Months % BETTER 2004 2003 (WORSE) REVENUES $165,428 $131,564 25.7 % COSTS AND EXPENSES: Cost of services rendered and goods sold 96,296 82,316 (17.0) Selling, general and administrative expenses 31,292 25,161 (24.4) Depreciation and amortization 17,140 16,397 (4.5) Operating profit 20,700 7,690 169.2 Interest expense, net 58 92 37.0 Other income, net 769 483 59.2 Income before income taxes 21,411 8,081 165.0 Income tax provision 8,136 3,071 (165.0) NET INCOME $13,275 $5,010 165.0 % EARNINGS PER SHARE Basic $0.47 $0.18 161.1 % Diluted $0.46 $0.17 170.6 % AVERAGE SHARES OUTSTANDING Basic 28,283 28,348 Diluted 28,736 28,754 RPC INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS At June 30, (Unaudited) (In thousands) 2004 2003 ASSETS Cash and cash equivalents $12,495 $10,182 Accounts receivable, net 69,037 52,388 Inventories 9,133 9,629 Deferred income taxes 4,982 6,548 Income taxes receivable 4,902 1,176 Prepaid expenses and other current assets 2,677 2,774 Total current assets 103,226 82,697 Property, plant and equipment, net 114,683 110,802 Intangibles, net 15,942 12,657 Other assets 2,577 1,627 Total assets $236,428 $207,783 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $21,746 $14,151 Accrued payroll and related expenses 8,524 6,440 Accrued insurance expenses 3,869 4,507 Accrued state, local and other taxes 2,289 2,075 Income taxes payable - 909 Current portion of long-term debt 700 1,133 Other accrued expenses 493 526 Total current liabilities 37,621 29,741 Accrued insurance expenses 6,123 4,137 Long-term debt 4,100 4,800 Pension liabilities 9,614 7,891 Deferred income taxes 15,439 8,873 Other long-term liabilities 1,820 1,551 Total liabilities 74,717 56,993 Common stock 2,876 2,881 Capital in excess of par value 28,572 28,581 Retained earnings 140,390 124,380 Deferred compensation (3,820) (1,197) Accumulated other comprehensive loss (6,307) (3,855) Total stockholders' equity 161,711 150,790 Total liabilities and stockholders' equity $236,428 $207,783 Certain prior year balances have been reclassified to conform with the current year presentation RPC INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended June 30, (Unaudited) (In thousands) 2004 2003 Operating Activities: Net income $13,275 $5,010 Depreciation, amortization and other non-cash charges 17,301 16,450 Other net changes in operating activities (10,948) (794) Net cash provided by operating activities 19,628 20,666 Investing Activities: Capital expenditures (25,151) (14,584) Other investing activities 108 (5,508) Net cash used for investing activities (25,043) (20,092) Financing Activities: Payment of dividends (1,708) (1,435) Cash paid for common stock purchased and retired (1,922) (14) Other financing activities (762) (476) Net cash used for financing activities (4,392) (1,925) Net decrease in cash and cash equivalents (9,807) (1,351) Cash and cash equivalents at beginning of period 22,302 11,533 Cash and cash equivalents at end of period $12,495 $10,182 For information contact: BEN M. PALMER JIM LANDERS Chief Financial Officer Corporate Finance 404.321.2140 404.321.2162 irdept@rpc.net SOURCE RPC, Inc. -0- 07/28/2004 /CONTACT: Ben M. Palmer, Chief Financial Officer, +1-404-321-2140, or Jim Landers, Corporate Finance, +1-404-321-2162, or irdept@rpc.net , both of RPC, Inc./ /Web site: http://www.rpc.net / (RES) CO: RPC, Inc. ST: Georgia IN: OIL SU: ERN