RPC, Inc. Reports Fourth Quarter And Full Year 2023 Financial Results And Declares Regular Quarterly Cash Dividend
ATLANTA, Jan. 25, 2024 /PRNewswire/ -- RPC, Inc. (NYSE: RES) ("RPC" or "the Company"), a leading diversified oilfield services company, announced its unaudited results for the fourth quarter and full year ended December 31, 2023.
* Non-GAAP and adjusted measures, including adjusted operating income, adjusted net income, adjusted earnings per share (diluted), EBITDA and adjusted EBITDA, adjusted EBITDA margin, and free cash flow are reconciled to the most comparable GAAP measures in the appendices of this earnings release.
* Sequential comparisons are versus 3Q:23. The Company believes quarterly sequential comparisons are most useful in assessing industry trends and RPC's recent financial results. Both sequential and year-over-year comparisons are available in the tables at the end of this earnings release.
Fourth Quarter 2023 Highlights
-- Revenues increased 19% sequentially to $394.5 million
-- Net income was $40.3 million, up 120% sequentially, and diluted earnings
per share (EPS) was $0.19; net income margin increased 470 basis points
sequentially to 10.2%
-- Adjusted EBITDA was $79.5 million, up 53% sequentially; Adjusted EBITDA
margin increased 440 basis points sequentially to 20.1%
-- The strong sequential improvement in revenues and profitability resulted
from significantly higher pressure pumping fleet utilization compared to
the third quarter of 2023
Full Year 2023 Highlights
-- Revenues increased 1% year-over-year to $1.6 billion
-- Net income was $195.1 million and diluted EPS was $0.90; net income
margin was 12.1%
-- Adjusted EBITDA was $374.4 million, with Adjusted EBITDA margin of 23.1%
-- Net cash flow from operating activities was $394.8 million and free cash
flow was $213.8 million
-- The Company remained debt-free, paid $34.6 million in dividends and
repurchased $21.1 million of common stock in 2023 (including $8.6
million of buyback program repurchases during 4Q:23)
-- The Company acquired the Spinnaker cementing business effective July 1,
expanding RPC's existing cementing operations and customer relationships
Management Commentary
"We closed out 2023 with a strong sequential improvement in fourth quarter financial results," stated Ben M. Palmer, RPC's President and Chief Executive Officer. "As anticipated, the fourth quarter began with a solid increase in pressure pumping activity. However, as oil prices fell toward the end of the year, customer demand followed suit and we experienced a more significant holiday season slowdown than originally expected. Looking forward, we have a new Tier 4 dual-fuel fleet on order and anticipate placing it in service by the end of the second quarter of 2024, replacing a Tier 2 diesel fleet as we upgrade our asset base without adding to pressure pumping industry capacity.
"We have over $220 million in cash on the balance sheet, are highly liquid, debt-free, and capable of navigating an uncertain environment. This solid financial position also supports targeted organic investments, as well as continued capital returns to our shareholders through both dividends and opportunistic share buybacks. With the Spinnaker integration essentially complete, we are actively assessing additional acquisition opportunities to bolster selected service lines, increase our scale, and enhance our growth outlook," concluded Palmer.
Selected Industry Data
(Source: Baker Hughes, Inc., U.S. Energy Information Administration)
---
4Q:23 3Q:23 Change % Change 4Q:22 Change % Change
U.S. rig count (avg) 622 649 (27) (4.2) 776 (154) (19.8)
% %
Oil price ($/barrel) $
78.52 $
82.17 $
(3.65) (4.4) $
82.67 $
(4.15) (5.0)
% %
Natural gas ($/Mcf) $
2.74 $
2.59 $
0.15 5.8 $
5.55 $
(2.81) (50.6)
% %
4Q:23 Consolidated Financial Results (Sequential Comparisons versus 3Q:23)
Revenues were $394.5 million, up 19%. Revenues increased primarily due to a significant rebound in pressure pumping activity compared to 3Q:23. However, growth was constrained by lower-than-expected activity during the December holiday season, which may have been influenced by declining oil prices throughout the quarter.
Cost of revenues, which excludes depreciation and amortization, was $279.4 million, up from $239.1 million. These costs increased as a function of revenue growth during the quarter.
Selling, general and administrative expenses were $38.1 million, down from $42.0 million. The decrease in expenses is due in part to a reduction in incentive compensation and other cost control measures.
Gain on disposition of assets was $1.6 million, reflecting asset sales through the Company's normal course of operations.
Interest income totaled $2.6 million, reflecting higher cash balances.
Income tax provision was $12.3 million, or 23.4% of income before income taxes.
Net income and diluted EPS were $40.3 million and $0.19, respectively, up from $18.3 million and $0.08, respectively, in 3Q:23. Net income margin increased 470 basis points sequentially to 10.2%.
Adjusted EBITDA (adjusted earnings before interest, taxes, depreciation, and amortization) was $79.5 million, up from $51.9 million; adjusted EBITDA margin increased 440 basis points sequentially to 20.1%.
Non-GAAP adjustments: there were no adjustments to GAAP performance measures in 4Q:23, other than those necessary to calculate EBITDA. However, in the first and second quarters of 2023, the Company reported pension settlement charges totaling $18.3 million, or $0.07 of diluted EPS, which were excluded when calculating adjusted financial measures (see Appendices A, B and C).
Balance Sheet, Cash Flow and Capital Allocation
Cash and cash equivalents were $223.3 million at the end of 2023, with no outstanding borrowings under the Company's $100 million revolving credit facility.
Net cash provided by operating activities and free cash flow were $394.8 million and $213.8 million, respectively, for the full year 2023.
Payment of dividends totaled $34.6 million in 2023. The Board of Directors declared a regular quarterly cash dividend of $0.04 per share, payable March 11, 2024, to common stockholders of record at the close of business on February 9, 2024.
Share repurchases totaled $21.1 million in 2023. Buybacks under the Company's share repurchase program totaled $8.6 million during 4Q:23 (1,200,000 shares) and $18.7 million (2,469,056 shares) for the full year.
Segment Operations: Sequential Comparisons (versus 3Q:23)
Technical Services performs value-added completion, production and maintenance services directly to a customer's well. These services include pressure pumping, downhole tools and services, coiled tubing, cementing, and other offerings.
-- Revenues were $371.1 million, up 22%
-- Operating income was $46.4 million, up 146%
-- Results were driven primarily by higher pressure pumping revenues, the
largest service line within Technical Services, and the related leverage
of fixed personnel costs
Support Services provides equipment for customer use or services to assist customer operations, including rental of tubulars and related tools, pipe inspection and storage services, and oilfield training services.
-- Revenues were $23.5 million, down 14%
-- Operating income was $5.0 million, down 27%
-- Results were driven by lower activity in rental tools and the high
fixed-cost nature of these service lines
Three Months Ended Year Ended
December 31, September 30, December 31, December 31,
(In thousands) 2023 2023 2022 2023 2022
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Technical Services $
371,059 $
303,069 $
458,135 $
1,516,137 $
1,516,363
Support Services 23,472 27,348 23,895 101,337 85,399
Total revenues $
394,531 $
330,417 $
482,030 $
1,617,474 $
1,601,762
Operating income:
Technical Services $
46,442 $
18,912 $
110,529 $
245,904 $
281,622
Support Services 5,036 6,861 6,703 26,461 18,095
Corporate expenses (3,880) (4,840) (4,500) (18,473) (17,660)
Pension settlement charges (2,921) (18,286) (2,921)
Gain on disposition of assets, net 1,615 1,778 2,509 9,344 8,804
Total operating income $
49,213 $
22,711 $
112,320 $
244,950 $
287,940
Interest expense (95) (101) (71) (341) (614)
Interest income 2,596 1,450 699 8,599 1,171
Other income, net 839 804 619 3,035 1,135
Income before income taxes $
52,553 $
24,864 $
113,567 $
256,243 $
289,632
Conference Call Information
RPC, Inc. will hold a conference call today, January 25, 2024, 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 www.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.
About RPC
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.
Forward Looking Statements
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 that look forward in time or express management's beliefs, expectations or hopes. In particular, such statements include, without limitation: our expectation to place a new Tier 4 DGB pressure pumping fleet in service by the end of the second quarter of 2024; our capability to navigate an uncertain environment; our financial ability to support investments in the business and return capital to shareholders; and, our intention to assess acquisition opportunities to bolster selected service lines, increase our scale, and enhance our growth outlook. Risk factors that could cause such future events not to occur as expected include the following: the price of oil and natural gas and overall performance of the U.S. economy, both of which can impact capital spending by our customers and demand for our services; business interruptions due to adverse weather conditions; changes in the competitive environment of our industry; and our ability to identify and complete acquisitions. Additional factors that could cause the actual results to differ materially from management's projections, forecasts, estimates, and expectations are contained in RPC's Form 10-K for the year ended December 31, 2022.
For information about RPC, Inc., please contact:
Michael L. Schmit, Chief Financial Officer
(404) 321-2140
irdept@rpc.net
Mark Chekanow, CFA, Vice President Investor Relations
(404) 419-3809
mark.chekanow@rpc.net
RPC INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data)
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
2023 2023 2022 2023 2022
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUES $
394,531 $
330,417 $
482,030 $
1,617,474 $
1,601,762
COSTS AND EXPENSES:
Cost of revenues (exclusive of depreciation and amortization 279,399 239,084 308,571 1,089,519 1,088,115
shown separately below)
Selling, general and administrative expenses 38,127 42,012 38,211 165,940 148,573
Pension settlement charges 2,921 18,286 2,921
Depreciation and amortization 29,407 28,388 22,516 108,123 83,017
Gain on disposition of assets, net (1,615) (1,778) (2,509) (9,344) (8,804)
Operating income 49,213 22,711 112,320 244,950 287,940
Interest expense (95) (101) (71) (341) (614)
Interest income 2,596 1,450 699 8,599 1,171
Other income, net 839 804 619 3,035 1,135
Income before income taxes 52,553 24,864 113,567 256,243 289,632
Income tax provision 12,294 6,547 26,562 61,130 71,269
NET INCOME $
40,259 $
18,317 $
87,005 $
195,113 $
218,363
EARNINGS PER SHARE
Basic $
0.19 $
0.08 $
0.40 $
0.90 $
1.01
Diluted $
0.19 $
0.08 $
0.40 $
0.90 $
1.01
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 216,006 216,333 216,618 216,472 216,518
Diluted 216,006 216,333 216,618 216,472 216,518
RPC INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2023 2022
(Unaudited)
ASSETS
Cash and cash equivalents $
223,310 $
126,424
Accounts receivable, net 324,915 416,568
Inventories 110,904 97,107
Income taxes receivable 52,269 42,403
Prepaid expenses 12,907 17,753
Other current assets 2,768 3,086
Total current assets 727,073 703,341
Property, plant and equipment, net 435,139 333,093
Operating lease right-of-use assets 24,537 28,864
Finance lease right-of-use assets 1,036
Goodwill 50,824 32,150
Other intangibles, net 12,825 1,084
Other assets 35,411 30,481
Total assets $
1,286,845 $
1,129,013
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $
85,036 $
115,213
Accrued payroll and related expenses 30,956 33,161
Accrued insurance expenses 5,340 3,232
Accrued state, local and other taxes 4,461 4,296
Income taxes payable 275 499
Unearned revenue 15,743
Pension liabilities 9,610
Current portion of operating lease liabilities 7,367 10,728
Current portion of finance lease liabilities and finance obligations 375
Accrued expenses and other liabilities 2,304 1,864
Total current liabilities 151,857 178,603
Long-term accrued insurance expenses 10,202 7,149
Long-term retirement plan liabilities 23,724 23,106
Long-term operating lease liabilities 18,600 19,517
Long-term finance lease liabilities 819
Other long-term liabilities 7,840 5,430
Deferred income taxes 51,290 37,473
Total liabilities 264,332 271,278
Common stock 21,502 21,661
Capital in excess of par value
Retained earnings 1,003,380 856,013
Accumulated other comprehensive loss (2,369) (19,939)
Total stockholders' equity 1,022,513 857,735
Total liabilities and stockholders' equity $
1,286,845 $
1,129,013
RPC INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years ended December 31, 2023 2022
(Unaudited)
OPERATING ACTIVITIES
Net income $
195,113 $
218,363
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and other non-cash charges 108,249 83,664
Pension settlement charges 18,286 2,921
Working capital 57,810 (122,523)
Other operating activities 15,305 18,861
Net cash provided by operating activities 394,763 201,286
INVESTING ACTIVITIES
Capital expenditures (181,005) (139,552)
Proceeds from sale of assets 18,091 15,837
Purchase of business (78,798)
Net cash used for investing activities (241,712) (123,715)
FINANCING ACTIVITIES
Payment of dividends (34,562) (8,645)
Cash paid for common stock purchased and retired (21,088) (918)
Cash paid for finance lease and finance obligations (515) (24,017)
Net cash used for financing activities (56,165) (33,580)
Net increase in cash and cash equivalents 96,886 43,991
Cash and cash equivalents at beginning of period 126,424 82,433
Cash and cash equivalents at end of period $
223,310 $
126,424
Non-GAAP Measures
RPC, Inc. has used the non-GAAP financial measures of adjusted operating income, adjusted net income, adjusted diluted earnings per share, EBITDA, adjusted EBITDA, adjusted EBITDA margin, and free cash flow in today's earnings release. These measures should not be considered in isolation or as a substitute for performance or liquidity measures prepared in accordance with GAAP. Management believes that presenting these non-GAAP measures enables investors to compare our operating performance consistently over various time periods net of unusual or non-recurring charges, and in the case of adjusted EBITDA, without regard to changes in our capital structure.
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 in the appendices below are reconciliations of these non-GAAP measures with their most directly comparable GAAP measures. These reconciliations also appear on RPC, Inc.'s investor website, which can be found on the Internet at www.rpc.net.
Appendix A
(Unaudited)
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
(In thousands) 2023 2023 2022 2023 2022
Reconciliation of Operating Income to Adjusted
Operating Income
Operating income $
49,213 $
22,711 $
112,320 $
244,950 $
287,940
Add: Pension settlement charges 2,921 18,286 2,921
Adjusted operating income $
49,213 $
22,711 $
115,241 $
263,236 $
290,861
Appendix B
(Unaudited)
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
(In thousands) 2023 2023 2022 2023 2022
Reconciliation of Net Income to Adjusted Net Income
Net income $
40,259 $
18,317 $
87,005 $
195,113 $
218,363
Adjustments:
Add: Pension settlement charges, before taxes 2,921 18,286 2,921
Less: Tax effect of pension settlement charges (719) (4,370) (719)
Total adjustments, net of tax 2,202 13,916 2,202
Adjusted net income $
40,259 $
18,317 $
89,207 $
209,029 $
220,565
(Unaudited)
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
2023 2023 2022 2023 2022
Reconciliation of Diluted Earnings Per Share to Adjusted
Diluted Earnings Per Share
Diluted earnings per share $
0.19 $
0.08 $
0.40 $
0.90 $
1.01
Adjustments:
Add: Pension settlement charges, net of tax
$
$ $
0.01 $
0.09 $
0.01
Less: Tax effect of pension settlement charges (0.02)
Adjusted diluted earnings per share $
0.19 $
0.08 $
0.41 $
0.97 $
1.02
Weighted average shares outstanding (in thousands) 216,006 216,333 216,618 216,472 216,518
Appendix C
(Unaudited)
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
(In thousands) 2023 2023 2022 2023 2022
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA
Net income $
40,259 $
18,317 $
87,005 $
195,113 $
218,363
Adjustments:
Add: Income tax provision 12,294 6,547 26,562 61,130 71,269
Add: Interest expense 95 101 71 341 614
Add: Depreciation and amortization 29,407 28,388 22,516 108,123 83,017
Less: Interest income 2,596 1,450 699 8,599 1,171
EBITDA $
79,459 $
51,903 $
135,455 $
356,108 $
372,092
Add: Pension settlement charges 2,921 18,286 2,921
Adjusted EBITDA $
79,459 $
51,903 $
138,376 $
374,394 $
375,013
Net income margin 10.2 % 5.5 % 18.0 % 12.1 % 13.6 %
Adjusted EBITDA margin 20.1 % 15.7 % 28.7 % 23.1 % 23.4 %
Appendix D
(Unaudited)
Year Ended
(In thousands) 2023 2022
Reconciliation of Operating Cash Flow to Free Cash Flow
Net cash provided by operating activities $
394,763 $
201,286
Capital expenditures (181,005) (139,552)
Free cash flow $
213,758 $
61,734
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SOURCE RPC, Inc.
