Exhibit 99.1
[LOGO]RPC
FOR IMMEDIATE RELEASE
RPC, Inc. Reports 2005 Fourth Quarter and Annual Results
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o Revenues for the Fourth Quarter were $117.6 million, an increase of
37.3 Percent over Prior Year
o Including a $0.05 per share Income Tax Credit, Diluted EPS for the
Fourth Quarter Increased to $0.33
ATLANTA, February 15, 2006 -- RPC, Incorporated (NYSE: RES) announced its
unaudited results for the fourth quarter and twelve months ended December 31,
2005. 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, 2005, revenues increased 37.3 percent to
$117,567,000 compared to $85,643,000 last year. Operating profit for the quarter
was $27,350,000 compared to $15,474,000 in the prior year. Operating profit in
the fourth quarter of 2004 included a net gain on disposition of assets of
$3,307,000, or $0.03 per diluted share. Net income was $21,540,000, or $0.33
diluted earnings per share, compared to $11,261,000 or $0.17 diluted earnings
per share last year. Net income for the fourth quarter of 2005 included an
income tax credit of $0.05 per diluted share.
For the twelve months ended December 31, 2005, revenues increased 25.9 percent
to $427,643,000, compared to $339,792,000 last year. Operating profit for the
twelve months ending December 31, 2005 was $97,713,000 compared to $51,340,000
last year. The gain on disposition of assets, net was $12,169,000, compared to
$5,551,000 last year. This increase was due primarily to a net gain on
disposition of assets of $10,718,000, or $0.10 per diluted share, relating to
the sale during the third quarter of 2005 of the operating assets of RPC's
hammer, casing, laydown and casing torque-turn services. The gain on disposition
of assets in 2004 was due primarily to the gain on the sale of RPC's domestic
liftboat fleet, which occurred during the fourth quarter of that year. Net
income was $66,484,000 or $1.01 diluted earnings per share, an increase from
$34,773,000, or $0.53 diluted earnings per share last year.
Cost of services rendered and goods sold during the fourth quarter of 2005 was
$59,911,000, or 51.0 percent of revenues, compared to $47,130,000, or 55.0
percent of revenues, in the prior year. The increase in these costs was due to
the variable nature of many of these expenses, including materials and supplies,
employment costs, and maintenance and repair expenses. As a percentage of
revenues, however, these costs decreased because of improved pricing and higher
equipment and personnel utilization. In addition, insurance expense was lower
during the fourth quarter of 2005 than in the prior year. Selling, general and
administrative expenses increased by 12.6 percent in the fourth quarter of 2005
to $19,884,000 from $17,658,000 in the prior year, due to higher salary and wage
expenses and bad debt expense consistent with higher activity levels. These
costs decreased as a percentage of revenues to 16.9 percent in 2005 compared to
20.6 percent last year because of our success in leveraging these costs over
higher revenues. Depreciation and amortization were $10,379,000 during the
quarter, 18.8 percent higher than last year, due to increased capital
expenditures made during 2005.
Net income for the quarter compared to the prior year increased due to higher
revenues, higher gain on disposition of assets, and a lower effective tax rate,
partially offset by the higher costs of services rendered and good sold and
higher selling, general and administrative expenses. The effective tax rate
during the quarter was 23.9 percent compared to 34.8 percent in the prior year.
The decrease in the effective tax rate was primarily due to receipt of tax
refunds related
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4th Quarter and Annual 2005 Press Release
to successful resolution of certain tax matters during the fourth quarter of
2005, which had a positive impact of $0.05 diluted earnings per share.
"RPC's fourth quarter results reflect continued high activity levels, an
increase in pricing, and growth in our capacity," stated Richard A. Hubbell,
RPC's President and Chief Executive Officer. "The average domestic rig count
during the fourth quarter was 1,478, 18 percent higher than the same period in
2004. Our domestic revenues grew at a higher rate than the rig count because of
a price increase during the third quarter and continued investment in operating
capacity. In addition, our international business grew in the fourth quarter of
2005 compared to the prior year, principally due to increases in West Africa,
South America, and the Middle East.
Hubbell continued, "We have invested over $17 million in capital expenditures
during the quarter, compared to approximately $13 million in the fourth quarter
of last year. We have increased our capital expenditures in order to take
advantage of the favorable operating environment. The majority of these capital
expenditures have been used to grow our largest service lines. This was an
exceptional year for RPC, marked by a strong domestic market and a continued
focus on areas in which we have already had proven success.
"RPC experienced a strong year in 2005, especially in the fourth quarter. In a
continued favorable environment, we plan to continue to focus on our largest
service lines in 2006, increasing our capacity in the domestic market while
continuing to expand our opportunities in the international markets. Assuming
that the environment for our services continues to remain strong, we plan to
increase the level of our capital expenditures for new equipment in 2006. The
industry environment continues to look promising, but we will remain aware of
the volatility in this industry and be prepared to take necessary action in
response to changing conditions."
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, 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 and oilfield training services.
Both Technical Services and Support Services experienced stronger results during
the fourth quarter of 2005 due to the increased drilling rig count and related
customer activity. Technical Services revenues rose 44.0 percent for the quarter
compared to the prior year, driven by pricing increases, additional capacity,
and higher activity levels in all of its service lines. This increase was
partially offset by the elimination of revenues from the sale during the third
quarter of 2005 of the operating assets of the hammer, casing, laydown and
casing torque-turn services, which were included in this segment. Support
Services revenues rose by 8.2 percent during the quarter compared to the prior
year. This increase was driven by increased capacity in the rental tool
division, which is the largest service line within Support Services. The growth
in this segment compared to the prior year was lower than in Technical Services
and lower than the
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4th Quarter and Annual 2005 Press Release
increase in the rig count, however, due to this segment's exposure to the Gulf
of Mexico, where activity has been weak since the hurricanes in the third
quarter of 2005.
For the 12 months ending December 31, 2005, Technical Services' operating profit
included a $10,718,000 pre-tax gain on disposition of assets from the sale of
the operating assets of the hammer, casing, laydown and casing torque-turn
services. For the 12 months ended December 31, 2004, Support Services' operating
profit included a $3,307,000 pre-tax gain on disposition of assets of the
domestic liftboat fleet.
Three Months Twelve Months
Ended December 31 Ended December 31
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2005 2004 2005 2004
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(in thousands)
REVENUES
Technical Services $100,176 $69,547 $363,139 $279,070
Support services 17,391 16,069 64,487 56,917
Other 0 27 17 3,805
- ------------------------------ -------- ------- -------- --------
Total revenues 117,567 85,643 427,643 339,792
- ------------------------------ -------- ------- -------- --------
Operating profit (loss)
Technical Services $ 27,019 $11,321 $ 84,048 $ 47,027
Support services 3,253 3,658 11,990 8,287
Other 27 (172) (273) (975)
Corporate expenses (2,906) (2,689) (10,221) (8,550)
(Loss) gain on disposition
of assets, net (43) 3,356 12,169 5,551
- ------------------------------ -------- ------- -------- --------
Total operating profit $ 27,350 $15,474 $ 97,713 $ 51,340
- ------------------------------ -------- ------- -------- --------
Interest income (expense), net 649 7 950 (68)
Other income, net 295 1,802 2,077 1,931
- ------------------------------ -------- ------- -------- --------
Income before income taxes $ 28,294 $17,283 $100,740 $ 53,203
============================== ======== ======= ======== ========
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 expected activity and performance in the future, such
as the planned level of capital expenditures for new equipment in 2006, and
efforts to expand international operations. 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, 2004, its
Form 10-Q for the quarter ending September 30, 2005, and its other SEC filings.
For information about RPC, Inc., please contact:
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4th Quarter and Annual 2005 Press Release
BEN M. PALMER
Chief Financial Officer
404.321.2140
irdept@rpc.net
JIM LANDERS
Corporate Finance
404.321.2162
jlanders@rpc.net
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4th Quarter and Annual 2005 Press Release
RPC INCORPORATED AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data)
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Periods ended December 31, (Unaudited) Fourth Quarter Twelve Months
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% BETTER % BETTER
2005 2004 (WORSE) 2005 2004 (WORSE)
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REVENUES $ 117,567 $ 85,643 37.3% $ 427,643 $ 339,792 25.9%
COSTS AND EXPENSES:
Cost of services rendered and goods sold 59,911 47,130 (27.1) 227,492 193,659 (17.5)
Selling, general and administrative expenses 19,884 17,658 (12.6) 75,478 65,871 (14.6)
Depreciation and amortization 10,379 8,737 (18.8) 39,129 34,473 (13.5)
(Loss) gain on disposition of assets, net (43) 3,356 N/M 12,169 5,551 N/M
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Operating profit 27,350 15,474 76.7 97,713 51,340 90.3
Interest income (expense), net 649 7 N/M 950 (68) NM
Other income, net 295 1,802 (83.6) 2,077 1,931 7.6
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Income before income taxes 28,294 17,283 63.7 100,740 53,203 89.4
Income tax provision 6754 6,022 (12.2) 34256 18,430 (85.9)
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NET INCOME $ 21,540 $ 11,261 91.3% $ 66,484 $ 34,773 91.2%
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EARNINGS PER SHARE
Basic $ 0.34 $ 0.18 88.9% $ 1.05 $ 0.55 90.9%
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Diluted $ 0.33 $ 0.17 94.1% $ 1.01 $ 0.53 90.6%
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AVERAGE SHARES OUTSTANDING
Basic 63,162 63,790 63,368 63,696
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Diluted 65,658 65,769 65,673 65,144
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4th Quarter and Annual 2005 Press Release
RPC INCORPORATED AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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At December 31, (Unaudited) (In thousands)
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2,005 2,004
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ASSETS
Cash and cash equivalents $ 12,809 $ 29,636
Accounts receivable, net 107,428 75,793
Inventories 13,298 10,587
Deferred income taxes 5,304 6,144
Prepaid expenses and other current assets 4,004 3,638
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Total current assets 142,843 125,798
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Property, plant and equipment, net 141,218 114,222
Goodwill and other intangibles, net 24,114 20,183
Other assets 3,610 2,739
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Total assets $ 311,785 $ 262,942
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 30,437 $ 23,389
Accrued payroll and related expenses 11,903 10,842
Accrued insurance expenses 3,695 3,875
Accrued state, local and other taxes 2,585 2,183
Income taxes payable 791 113
Current portion of long-term debt -- 2,700
Other accrued expenses 544 5,187
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Total current liabilities 49,955 48,289
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Accrued insurance expenses 6,168 6,451
Long-term debt -- 2,100
Pension liabilities 13,614 11,379
Deferred income taxes 8,758 11,945
Other long-term liabilities 789 1,355
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Total liabilities 79,284 81,519
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Common stock 6,445 6,482
Capital in excess of par value 19,235 25,165
Retained earnings 219,907 160,189
Deferred compensation (5,391) (3,527)
Accumulated other comprehensive loss (7,695) (6,886)
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Total stockholders' equity 232,501 181,423
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Total liabilities and stockholders' equity $ 311,785 $ 262,942
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4th Quarter and Annual 2005 Press Release
RPC INCORPORATED AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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Twelve months ended December 31, (Unaudited) (In thousands)
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2005 2,004
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Operating Activities:
Net income $ 66,484 $ 34,773
Depreciation, amortization and other non-cash charges 40,390 35,054
Other net changes in operating activities (40,512) (19,453)
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Net cash provided by operating activities 66,362 50,374
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Investing Activities:
Capital expenditures (72,808) (49,869)
Other investing activities 10,393 12,654
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Net cash used for investing activities (62,415) (37,215)
Financing Activities:
Payment of dividends (6,766) (3,408)
Payments on debt (4,800) (1,110)
Cash paid for common stock purchased and retired (10,268) (1,728)
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Proceeds from exercise of stock options 1,060 421
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Net cash used for financing activities (20,774) (5,825)
Net (decrease) increase in cash and cash equivalents (16,827) 7,334
Cash and cash equivalents at beginning of period 29,636 22,302
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Cash and cash equivalents at end of period $ 12,809 $ 29,636
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