Exhibit 99
RPC, Inc. Reports 2004 Third Quarter Results
* Revenues for the Third Quarter Increased 28.1 Percent over Prior Year
* Diluted EPS for the Third Quarter Increased to $0.35 from $0.09 in the
Prior Year
ATLANTA, Oct. 27 /PRNewswire-FirstCall/ -- RPC, Incorporated (NYSE: RES)
announced its unaudited results for the third quarter ended September 30,
2004. 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 September 30, 2004, revenues increased 28.1 percent
to $88,721,000 compared to $69,244,000 last year. Net income was $10,237,000,
or $0.35 diluted earnings per share, compared to $2,577,000 or $0.09 diluted
earnings per share last year. Operating profit for the quarter was
$12,971,000 compared to $3,937,000 in the prior year.
Cost of services rendered and goods sold was $50,233,000, or 56.6 percent
of revenues, during the third quarter of 2004, compared to $43,482,000, or
62.8 percent of revenues, in the prior year. The increase in these costs was
due to the variable nature of many of these expenses, including compensation,
equipment rental expense, maintenance and repairs, materials and supplies and
fuel costs. 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 25.9 percent in the
third quarter of 2004 to $16,921,000 from $13,438,000 in the prior year. This
increase was due to an increase in salaries and wages expense, an increase in
bad debt expense, and an increase in incentive compensation consistent with
improved profitability. These costs decreased as a percentage of revenues to
19.1 percent in 2004 compared to 19.4 percent last year. Depreciation and
amortization were $8,596,000 during the quarter, 2.5 percent higher than last
year.
Net income for the quarter ended September 30, 2004 was $10,237,000,
compared to $2,577,000 in the prior year. Net income increased due to higher
revenues and other income, and a lower effective tax rate, partially offset by
higher costs of services rendered and goods sold and selling, general and
administrative expenses. The effective tax rate during the quarter was
29.4 percent compared to 38.0 percent in the prior year and the first six
months of the current year. The decrease in the effective tax rate was due to
higher estimated full year foreign tax credit utilization and other
adjustments recorded in the third quarter. The effective tax rate estimate
change and adjustments increased third quarter net income by $1,241,000 or
$0.04 diluted earnings per share.
For the nine months ended September 30, 2004, revenues increased
26.6 percent to $254,149,000 compared to $200,808,000 last year. Net income
was $23,512,000, or $0.82 diluted earnings per share compared to net income of
$7,587,000, or $0.26 diluted earnings per share last year.
"RPC's third quarter results reflect continued high activity levels, an
increase in pricing, growth in our capacity, and the benefit of our
international business development efforts," stated Richard A. Hubbell, RPC's
President and Chief Executive Officer. "The average domestic rig count during
the third quarter was 1,228, 13 percent higher than the same period in 2003.
Our revenues grew at a higher rate than the rig count because of our
continuing investment in our operating capacity, and our relatively stronger
presence in the domestic mid-continent markets rather than the Gulf of Mexico,
which remains weak. Our revenues also increased compared to the prior year
due to strong activity in our West African operations, our new fishing tools
service line, and our Kuwait business which began earlier this year. We
invested over $11,000,000 in capital expenditures during the quarter to
improve our existing fleet of equipment and purchase new equipment.
Hubbell continued, "The third quarter of 2004 was marked by a series of
strong hurricanes in the Gulf of Mexico, which severely curtailed oilfield
drilling and production activity in that market. Because of our exposure to
the Gulf of Mexico, we estimate that our revenues during the quarter were
negatively impacted by these hurricanes in the range of three to five percent,
and our bottom line earnings per share were negatively impacted in the range
of five to 10 percent. We believe that the eventual recovery of activity in
the Gulf of Mexico will provide temporary opportunities for us as our
customers repair and enhance production in wells damaged by the storms. While
we are pursuing these potential opportunities, we are uncertain about the
timing and potential impact that they might have on our future results."
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 pressure pumping, snubbing, coiled tubing, nitrogen,
wireline, well control, downhole tools, 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 rental of 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 36.9 percent for the quarter compared to the
prior year, driven by higher activity levels and pricing increases in most of
its service lines. Support Services revenues rose by 16.6 percent during the
quarter compared to the prior year. This increase was driven by increased
utilization and some pricing increases in rental tool revenues, which is the
largest service line within Support Services, partially offset by lower
utilization and pricing of marine liftboats. Other revenues were immaterial
this quarter due to the sale of the non-oilfield business unit that comprises
the majority of the revenues in this segment, which occurred during the second
quarter of 2004. The impact of the sale of this business unit on operating
and other income during the third quarter of 2004 was immaterial.
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
(in thousands)
Revenues:
Technical services $73,404 $53,603 $209,523 $159,494
Support services 15,302 13,125 40,848 33,493
Other 15 2,516 3,778 7,821
Total revenues $88,721 $69,244 $254,149 $200,808
Operating profit (loss):
Technical services $13,024 $3,969 $35,706 $15,154
Support services 2,378 2,376 4,629 3,073
Other (382) (419) (803) (1,200)
Corporate expenses (2,049) (1,989) (5,861) (5,400)
Total operating profit $12,971 $3,937 $33,671 $11,627
Other income, net 1,555 264 2,324 747
Interest expense, net 17 45 75 137
Income before income taxes $14,509 $4,156 $35,920 $12,237
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 http://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 and the possibility of
increased business opportunities in the Gulf of Mexico. 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, including the Gulf of Mexico, 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 will host a conference call to review the Company's financial and
operating results on Wednesday, October 27, 2004 at 8 a.m. Eastern Time.
Individuals wishing to participate in the conference call should call (888)
744-3690 or (706) 643-1513 for international callers. For interested
individuals unable to join the call, a replay will be available until midnight
on November 3, 2004 by dialing (800) 642-1687 or (706) 645-9291, conference ID
1365299. This call also will be broadcast and archived on the company's
investor Web site at http://www.rpc.net. Interested parties are encouraged
to click on the webcast link 10-15 minutes prior to the start of the
conference call.
For information about RPC, Inc., please contact:
BEN M. PALMER
Chief Financial Officer
404.321.2140
irdept@rpc.net
JIM LANDERS
Corporate Finance
404.321.2162
RPC INCORPORATED AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (In thousands except per share data)
Periods ended September 30, (Unaudited)
Third Quarter % BETTER
2004 2003 (WORSE)
REVENUES $88,721 $69,244 28.1 %
COSTS AND EXPENSES:
Cost of services rendered and goods sold 50,233 43,482 (15.5)
Selling, general and administrative expenses 16,921 13,438 (25.9)
Depreciation and amortization 8,596 8,387 (2.5)
Operating profit 12,971 3,937 N/M
Interest expense, net 17 45 62.2
Other income, net 1,555 264 N/M
Income before income taxes 14,509 4,156 N/M
Income tax provision 4,272 1,579 (170.6)
NET INCOME $10,237 $2,577 N/M %
EARNINGS PER SHARE
Basic $0.36 $0.09 N/M %
Diluted $0.35 $0.09 N/M %
AVERAGE SHARES OUTSTANDING
Basic 28,321 28,446
Diluted 28,914 28,877
RPC INCORPORATED AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (In thousands except per share data)
Periods ended September 30, (Unaudited)
Nine Months % BETTER
2004 2003 (WORSE)
REVENUES $254,149 $200,808 26.6 %
COSTS AND EXPENSES:
Cost of services rendered and goods
sold 146,529 125,798 (16.5)
Selling, general and administrative
expenses 48,213 38,599 (24.9)
Depreciation and amortization 25,736 24,784 (3.8)
Operating profit 33,671 11,627 189.6
Interest expense, net 75 137 45.3
Other income, net 2,324 747 N/M
Income before income taxes 35,920 12,237 193.5
Income tax provision 12,408 4,650 (166.8)
NET INCOME $23,512 $7,587 N/M %
EARNINGS PER SHARE
Basic $0.83 $0.27 N/M %
Diluted $0.82 $0.26 N/M %
AVERAGE SHARES OUTSTANDING
Basic 28,296 28,380
Diluted 28,792 28,794
RPC INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
At September 30, (Unaudited) (In thousands)
2004 2003
ASSETS
Cash and cash equivalents $16,101 $20,972
Accounts receivable, net 73,403 48,587
Inventories 10,161 9,538
Deferred income taxes 5,905 8,313
Income taxes receivable 4,047 2,993
Prepaid expenses and other current assets 1,370 1,777
Total current assets 110,987 92,180
Property, plant and equipment, net 117,039 108,008
Intangibles, net 15,932 12,663
Other assets 2,415 1,775
Total assets $246,373 $214,626
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $21,846 $15,606
Accrued payroll and related expenses 9,447 7,898
Accrued insurance expenses 4,041 3,008
Accrued state, local and other taxes 1,721 1,500
Current portion of long-term debt 2,700 1,110
Other accrued expenses 708 511
Total current liabilities 40,463 29,633
Accrued insurance expenses 6,458 6,414
Long-term debt 2,100 4,800
Pension liabilities 10,013 8,388
Deferred income taxes 13,638 11,137
Other long-term liabilities 2,610 2,338
Total liabilities 75,282 62,710
Common stock 2,876 2,873
Capital in excess of par value 28,348 27,810
Retained earnings 149,778 126,237
Deferred compensation (3,643) (1,137)
Accumulated other comprehensive loss (6,268) (3,867)
Total stockholders' equity 171,091 151,916
Total liabilities and stockholders' equity $246,373 $214,626
Certain prior year balances have been reclassified to conform with the
current year presentation.
RPC INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, (Unaudited) (In thousands)
2004 2003
Operating Activities:
Net income $23,512 $7,587
Depreciation, amortization and
other non-cash charges 26,074 24,857
Other net changes in operating activities (15,919) 6,036
Net cash provided by operating
activities 33,667 38,480
Investing Activities:
Capital expenditures (36,594) (20,711)
Other investing activities 1,934 (4,883)
Net cash used for investing activities (34,660) (25,594)
Financing Activities:
Payment of dividends (2,558) (2,155)
Cash paid for common stock purchased and
retired (1,963) (836)
Other financing activities (687) (456)
Net cash used for financing activities (5,208) (3,447)
Net (decrease) increase in cash and
cash equivalents (6,201) 9,439
Cash and cash equivalents at beginning of
period 22,302 11,533
Cash and cash equivalents at end of period $16,101 $20,972
SOURCE RPC, Incorporated
-0- 10/27/2004
/CONTACT: Ben M. Palmer, Chief Financial Officer, +1-404-321-2140, or
irdept@rpc.net, 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 CCA MAV