RPC Inc. (NYSE:RES) Q3 2018 Earnings Conference Call Transcript
Oct 24, 2018 • 09:00 am ET
Good morning, and thank you for joining us for RPC, Inc.'s Third Quarter 2018 Financial Earnings Conference Call. Today's call will be hosted by Rick Hubbell, President and CEO; and Ben Palmer, CFO. Also present is Jim Landers, VP of Corporate Finance. At this time all participants are in a listen-only mode. (Operator Instructions) I would like to advise everyone that this conference is being recorded. And Jim will now get us started by reading the forward-looking disclaimer.
Thank you, Riley, and good morning, everybody.
(Forward-Looking Cautionary Statements)
In today's earnings release and conference call, we'll be referring to EBITDA, which is a non-GAAP measure of operating performance. RPC uses EBITDA as a measure of operating performance because it allows us to compare performance consistently over various periods without regard to changes in our capital structure. We are also required to use EBITDA to report compliance with financial covenants under our revolving credit facility. Our press release today and our website provide a reconciliation of EBITDA to net income, which is the nearest GAAP financial measure. Please review that disclosure if you're interested in seeing how it's calculated. If you've not received our press release and would like one, please visit our website again at www.rpc.net for a copy.
I will now turn the call over to our President and CEO, Rick Hubbell.
Thank you, Jim. This morning we issued our earnings press release for RPC's third quarter of 2018. The average US domestic rig count during the third quarter of 2018 was 1,051, an 11.1% increase compared to the same period in 2017 and a 1.2% increase compared to the second quarter of 2018. In contrast to the improvements in these industry metrics, RPC's third quarter 2018 revenues decreased due to lower activity levels and slightly lower pricing for our services. We began to experience weakness in the pricing for our pressure pumping services as additional horsepower continued to enter the market. In addition, pressure pumping efficiencies at the wellsite continued to improve, which has further contributed to overcapacity.
Our CFO, Ben Palmer, will review our financial results in more detail. And after which, I will have the few closing comments.
Thank you, Rick. For the third quarter, revenues decreased to $440 million compared to $471 million in the prior year. Revenues decreased compared to the same period of the prior year due to lower activity levels and slightly lower pricing, primarily within our pressure pumping service line. EBITDA for the third quarter was $97.8 million compared to $137.5 million for the same period last year. Operating profit for the quarter decreased to $54.6 million compared to $97.4 million in the prior year. Our diluted earnings per share were $0.23, including a $0.04 per share favorable discrete tax adjustment, compared to $0.26 in the prior year.
Cost of revenues during the third quarter was $300.9 million or 68.4% of revenues compared to $294.8 million or 62.6% of revenues during the same period last year. Cost of revenues increased primarily due