EX-99.1 2 tm234301d2_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

RPC, Inc. Reports

Fourth Quarter and Full Year 2022 Financial Results

 

·Net income of $87.0 million compared to $69.3 million in the third quarter of 2022
·Diluted earnings per share of $0.40 compared to $0.32 in the third quarter of 2022
·EBITDA1 of $135.5 million compared to $113.0 million in the third quarter of 2022

 

ATLANTA, January 25, 2023 - RPC, Inc. (NYSE: RES) today announced its unaudited results for the fourth quarter and year ended December 31, 2022. 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, 2022, RPC generated revenues of $482.0 million, an increase of 4.9 percent compared to $459.6 million in the third quarter of 2022. The improvement in revenues was driven by improved pricing in most of our service lines and higher equipment utilization supported by a full quarter of operation for our most recently reactivated pressure pumping fleet. Operating profit for the fourth quarter of 2022 was $112.3 million compared to operating profit of $92.2 million in the third quarter of 2022. Net income for the fourth quarter of 2022 was $87.0 million, or $0.40 diluted earnings per share, compared to net income of $69.3 million, or $0.32 diluted earnings per share, in the third quarter of 2022. Earnings before interest, taxes, depreciation, and amortization (EBITDA)1 for the fourth quarter of 2022 was $135.5 million, compared to $113.0 million in the third quarter of 2022, an increase of 19.8 percent.

 

Cost of revenues during the fourth quarter of 2022 was $308.6 million, or 64.0 percent of revenues, compared to $309.8 million, or 67.4 percent of revenues in the third quarter of 2022. Cost of revenues as a percentage of revenues decreased during the quarter due to improved job mix and continued strong pricing for our services.

 

Selling, general and administrative expenses were $38.2 million in both the fourth and third quarters of 2022. Depreciation and amortization was $22.5 million in the fourth quarter of 2022 compared to $20.9 million in the third quarter of 2022.

 

During the fourth quarter of 2022 RPC also recorded a $2.9 million pension settlement charge. Adjusted net income during the fourth quarter was $89.2 million and adjusted diluted earnings per share was $0.41.2 We expect to finalize the termination of the pension plan in the first quarter of 2023.

 

1 EBITDA and adjusted EBITDA are financial measures which do not conform to GAAP. Additional disclosure regarding these non-GAAP financial measures and their reconciliation to net income, the nearest GAAP financial measures, are disclosed in Appendix A to this press release.

2 Adjusted net income and adjusted diluted earnings per share are financial measures which do not conform to GAAP. Additional disclosure regarding these non-GAAP financial measures and their reconciliation to net income and diluted earnings per share, the nearest GAAP financial measures, are disclosed in Appendix B to this press release.

 

 

 

 

Page 2

Fourth Quarter 2022 Earnings Release 

 

For the twelve months ended December 31, 2022, revenues increased 85.2 percent to $1.6 billion compared to $864.9 million for 2021. Net income for the twelve-month period was $218.4 million, or $1.01 diluted earnings per share, compared to $7.2 million, or $0.03 diluted earnings per share, for 2021.

 

RPC’s revenues for the quarter ended December 31, 2022 increased by $213.8 million, or 79.7 percent, compared to the fourth quarter of the prior year due to improved pricing, higher customer activity levels and a larger active fleet of revenue-producing equipment. Cost of revenues during the fourth quarter of 2022 increased by $107.9 million compared to the fourth quarter of 2021. As a percentage of revenues, cost of revenues decreased to 64.0 percent in the fourth quarter of 2022 from 74.8 percent in the fourth quarter of 2021 because of improved pricing for our services and leverage of direct employment costs.

 

Selling, general and administrative expenses increased by $6.1 million in the fourth quarter of 2022 compared to the fourth quarter of the prior year. RPC’s operating profit in the fourth quarter of 2022 was $112.3 million, compared to an operating profit of $20.1 million in the fourth quarter of 2021. Net income for the fourth quarter of 2022 was $87.0 million compared to net income of $12.3 million in the fourth quarter of 2021. EBITDA2 for the fourth quarter of 2022 was $135.5 million compared to $39.4 million in the fourth quarter of 2021.

 

Rig Count and Commodity Price Statistics

 

The average U.S. domestic rig count during the fourth quarter of 2022 was 776, a 2.0 percent increase compared to the third quarter of 2022 and a 38.3 percent increase compared to the same period in 2021. The average price of oil during the fourth quarter of 2022 was $82.67 per barrel, an 11.0 percent decrease compared to the third quarter of 2022, but a 26.8 percent increase compared to the same period in 2021. The average price of natural gas during the fourth quarter of 2022 was $5.55 per Mcf, an increase of 17.3 percent compared to the third quarter of 2022, and a one percent increase compared to the same period in 2021.

 

Management Commentary

 

“RPC’s fourth quarter financial results reflect a continued strong oilfield operating environment, which led to a sequential revenue increase during a quarter that is traditionally impacted by holidays, inclement weather and customer budgets. Our customers were eager to continue their operations throughout the quarter. Most of our service lines realized higher revenues during the fourth quarter due to strong activity and pricing improvements,” stated Ben M. Palmer, RPC’s President and Chief Executive Officer. “As we begin the first quarter of 2023, we expect continued robust drilling and completion activities based on indications from most customers.

 

“I am pleased to report that our cash balance increased by $90.5 million during the fourth quarter to $126.4 million. Our cash balance improved significantly despite increasing activity and capital expenditures of $49.3 million during the quarter. Our strong capital position at the end of 2022 and expectations for 2023 will allow us to continue to invest in our businesses and return capital to our shareholders. Yesterday RPC’s Board of Directors doubled our quarterly dividend to $0.04 per share from $0.02 per share in the prior quarter,” concluded Palmer.

 

 

 

 

Page 3

Fourth Quarter 2022 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, nitrogen, hydraulic workover services, 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 inspection and storage services, and oilfield training services.

 

Technical Services fourth quarter 2022 revenues increased 5.1 percent compared to the prior quarter and by 80.1 percent compared to the same period of the prior year. Technical Services generated an operating profit of $110.5 million in the fourth quarter of 2022 compared to an operating profit of $89.5 million in the prior quarter, and an operating profit of $20.5 million in the fourth quarter of the prior year. The sequential and year-over-year improvements in Technical Services operating results were driven by higher customer activity levels and improved pricing and a larger active fleet of revenue-producing equipment.

 

Support Services revenues were unchanged during the fourth quarter of 2022 compared to the prior quarter but increased 73.1 percent compared to the same period of the prior year. The revenue increase compared to the fourth quarter of 2021 was due to higher activity levels and improved pricing within rental tools. Support Services generated an operating profit of $6.7 million in the fourth quarter of 2022 compared to an operating profit of $5.3 million in the prior quarter, and an operating loss of $373 thousand in the same period of the prior year.

 

   Three Months Ended  

Twelve Months Ended

December 31,

 
   December 31,   September 30,   December 31,         
(in thousands)  2022   2022   2021   2022   2021 
Revenues:                         
Technical Services  $458,135   $435,775   $254,444   $1,516,363   $815,046 
Support Services   23,895    23,826    13,808    85,399    49,883 
Total revenues  $482,030   $459,601   $268,252   $1,601,762   $864,929 
Operating profit (loss):                         
Technical Services  $110,529   $89,455   $20,496   $281,622   $24,434 
Support Services   6,703    5,278    (373)   18,095    (5,725)
Corporate expenses   (4,500)   (4,106)   (3,539)   (17,660)   (13,300)
Pension settlement charges   (2,921)   -    -    (2,921)   - 
Gain on disposition of assets, net   2,509    1,543    3,474    8,804    10,882 
Total operating profit  $112,320   $92,170   $20,058   $287,940   $16,291 
Interest expense   (71)   (143)   (166)   (614)   (1,929)
Interest income   699    329    12    1,171    59 
Other income (expense), net   619    (67)   456    1,135    2,027 
                          
Income before income taxes  $113,567   $92,289   $20,360   $289,632   $16,448 

 

 

 

 

Page 4

Fourth Quarter 2022 Earnings Release 

 

RPC, Inc. will hold a conference call today, January 25, 2023 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 (888) 440-5966 or (646) 960-0125 for international callers and use conference ID number 9842359. 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 statements regarding (i) our belief that most customers plan to continue robust drilling and completion activities during the first quarter of 2023 plans to continue to invest in our business and return capital to our shareholders. 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, 2021.

 

For information about RPC, Inc., please contact:

 

Michael L. Schmit, Chief Financial Officer

(404) 321-2140

irdept@rpc.net

 

Jim Landers, Vice President Corporate Services

(404) 321-2162

JLanders@rpc.net

 

 

 

 

Page 5

Fourth Quarter 2022 Earnings Release 

 

RPC INCORPORATED AND SUBSIDIARIES

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

 

   Three Months Ended   Twelve Months Ended 
Periods ended, (Unaudited)  December 31,
2022		   September 30,
2022		   December 31,
2021		   December 31,
2022		   December 31,
2021		 
REVENUES  $482,030   $459,601   $268,252   $1,601,762   $864,929 
COSTS AND EXPENSES:                         
Cost of revenues   308,571    309,790    200,629    1,088,115    663,262 
Selling, general and administrative expenses   38,211    38,243    32,128    148,573    123,572 
Pension settlement charges   2,921    -    -    2,921    - 
Depreciation and amortization   22,516    20,941    18,911    83,017    72,686 
Gain on disposition of assets, net   (2,509)   (1,543)   (3,474)   (8,804)   (10,882)
Operating profit   112,320    92,170    20,058    287,940    16,291 
Interest expense   (71)   (143)   (166)   (614)   (1,929)
Interest income   699    329    12    1,171    59 
Other income (expense), net   619    (67)   456    1,135    2,027 
Income before income taxes   113,567    92,289    20,360    289,632    16,448 
Income tax provision   26,562    22,949    8,021    71,269    9,231 
NET INCOME  $87,005   $69,340   $12,339   $218,363   $7,217 
                          
                          
EARNINGS PER SHARE                         
Basic  $0.40   $0.32   $0.06   $1.01   $0.03 
Diluted  $0.40   $0.32   $0.06   $1.01   $0.03 
                          
WEIGHTED AVERAGE SHARES OUTSTANDING                         
Basic   216,618    216,647    215,640    216,518    215,646 
Diluted   216,618    216,647    215,640    216,518    215,646 

 

 

 

 

Page 6

Fourth Quarter 2022 Earnings Release 

 

RPC INCORPORATED AND SUBSIDIARIES  

CONSOLIDATED BALANCE SHEETS

 

   (In thousands) 
   December 31,
2022		   December 31,
2021		 
   (Unaudited)     
ASSETS        
Cash and cash equivalents  $126,424   $82,433 
Accounts receivable, net   416,568    258,635 
Inventories   97,107    78,983 
Income taxes receivable   42,403    58,504 
Prepaid expenses   17,753    9,773 
Other current assets   3,086    3,682 
Total current assets   703,341    492,010 
Property, plant and equipment, net   333,093    254,408 
Operating lease right-of-use assets   28,864    24,572 
Finance lease right-of-use assets   -    20,327 
Goodwill   32,150    32,150 
Other assets   31,565    40,898 
Total assets  $1,129,013   $864,365 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Accounts payable  $115,213   $74,404 
Accrued payroll and related expenses   33,161    15,350 
Accrued insurance expenses   3,232    10,129 
Accrued state, local and other taxes   4,296    1,905 
Income taxes payable   499    656 
Pension liabilities   9,610    - 
Current portion of operating lease liabilities   10,728    6,387 
Current portion of finance lease liabilities   -    20,194 
Other accrued expenses   1,864    1,824 
Total current liabilities   178,603    130,849 
Long-term accrued insurance expenses   7,149    11,770 
Long-term pension and retirement plans liabilities   23,106    35,376 
Long-term operating lease liabilities   19,517    19,719 
Other long-term liabilities   5,430    7,111 
Deferred income taxes   37,473    17,749 
Total liabilities   271,278    222,574 
Common stock   21,661    21,563 
Capital in excess of par value   -    - 
Retained earnings   856,013    640,936 
Accumulated other comprehensive loss   (19,939)   (20,708)
Total stockholders' equity   857,735    641,791 
Total liabilities and stockholders' equity  $1,129,013   $864,365 

 

 

 

 

Page 7

Fourth Quarter 2022 Earnings Release 

 

Appendix A

 

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 to EBITDA and Adjusted EBITDA is shown below:

 

   Three Months Ended   Twelve Months Ended 
Periods ended, (Unaudited)
(In thousands)		  December 31,
2022		   September 30,
2022		   December 31,
2021		   December 31,
2022		   December 31,
2021		 
Reconciliation of Net Income to EBITDA and Adjusted EBITDA                
Net Income  $87,005   $69,340   $12,339   $218,363   $7,217 
Add:                         
Income tax provision   26,562    22,949    8,021    71,269    9,231 
Interest expense   71    143    166    614    1,929 
Depreciation and amortization   22,516    20,941    18,911    83,017    72,686 
Less:                         
Interest income   699    329    12    1,171    59 
EBITDA  $135,455   $113,044   $39,425   $372,092   $91,004 
Add:                         
Pension settlement charges   2,921    -    -    2,921    - 
Adjusted EBITDA  $138,376   $113,044   $39,425   $375,013   $91,004 

 

 

 

 

Page 8

Fourth Quarter 2022 Earnings Release 

 

Appendix B

 

RPC, Inc. has used the non-GAAP financial measures of adjusted net income and adjusted diluted earnings 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 to Adjusted Net Income and the Reconciliation of Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share is shown below:

 

   Three Months Ended   Twelve Months Ended 
Periods ended, (Unaudited)
(In thousands)		  December 31,
2022		   September 30,
2022		   December 31,
2021		   December 31,
2022		   December 31,
2021		 
Reconciliation of Net Income to Adjusted Net Income                
                     
Net Income  $87,005   $69,340   $12,339   $218,363   $7,217 
Add:                         
Pension settlement charges, net of tax   2,202    -    -    2,202    - 
Adjusted Net Income  $89,207   $69,340   $12,339   $220,565   $7,217 
                          
                          
Reconciliation of Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share                
                          
Diluted Earnings Per Share  $0.40   $0.32   $0.06   $1.01   $0.03 
Add:                         
Pension settlement charges, net of tax  $0.01   $0.00   $0.00   $0.01   $0.00 
                          
Adjusted Diluted Earnings Per Share  $0.41   $0.32   $0.06   $1.02   $0.03 
                          
Weighted Average Shares Outstanding   216,618    216,647    215,640    216,518    215,646