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