RPC Inc. (NYSE:RES) Q2 2018 Earnings Conference Call - Final Transcript

Jul 25, 2018 • 09:00 am ET

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RPC Inc. (NYSE:RES) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Ben M. Palmer

Our diluted earnings per share were $0.28, compared to $0.20 last year.

Cost of revenues during the second quarter was $312.1 million or 66.7% of revenues, compared to $254 million, or 63.7% of revenue during the same period last year. Cost of revenues increased primarily due to higher employment costs, materials and supplies expenses, and other expenses which vary with activity levels. As a percentage of revenues, cost of revenues increased due to job mix and higher fuel prices.

Selling, general and administrative expenses were $42.5 million in the second quarter compared to $40.3 million last year. As a percentage of revenues, these cost decreased from 10.1% in the prior year to 9.1% due to leverage of higher revenues over primarily fixed cost. Depreciation and amortization was $40.1 million during the second quarter of 2018, a decrease of 2.8% compared to $41.3 million in the prior year.

Technical Services segment revenues for the quarter increased 16.7% compared to the second quarter of the prior year, due to higher activity levels, improved pricing for our services and a larger fleet of active revenue-producing equipment. Operating profit increased to $75.6 million compared to $70.9 million in the prior year.

Our Support Services segment revenues for the quarter increased by 35.4%, while operating profit was $1.3 million, which compares to an operating loss of $3.3 in the same period last year. On a sequential basis, our second quarter revenues increased again to $467.9 million from $436.3 million in the prior quarter. Revenues increased due to larger fleet of revenue-producing equipment, and slightly higher activity levels.

RPC's operating profit during the second quarter was $75 million compared to $60.8 million in the prior quarter. Cost of revenues during the second quarter of 2018 increased by $16.5 million, or 5.6%, due primarily to higher materials and supplies, expenses associated with higher activity levels. As a percentage of revenues, cost of revenues remained relatively unchanged. Selling, general and administrative expenses during the second quarter decreased by $1.3 million, or 2.9%, compared to the prior quarter.

RPC's EBITDA increased from $103.7 million in the prior quarter to $119.2 million in the current quarter. Our Technical Services segment revenues increased by $30.8 million, or 7.3% to $449.9 million in the second quarter. Operating profit was $75.6 million compared to $65 million in the prior quarter. Our Support Services segment generated revenues in the second quarter of $18.1 million, or 4.6% higher than revenues of $17.3 million in the prior quarter. Operating profit was $1.2 million in the second quarter compared to an operating loss of $900,000 in the prior quarter.

RPC's pressure pumping fleet increased during the second quarter by approximately 100,000 hydraulic horsepower to 1,50,000. This additional horsepower was used to supplement our existing fleets. We have no outstanding orders to expand our pressure pumping fleet but we continuously evaluate the size and makeup of our fleet to meet our customers' requirements.

Second quarter 2018 capital expenditures were $99.2 million. And we expect full-year 2018 capital expenditures