RPC, Inc. Reports Fourth Quarter and Year-End 2012 Financial Results

     RPC, Inc. Reports Fourth Quarter and Year-End 2012 Financial Results

PR Newswire

ATLANTA, Jan. 23, 2013

ATLANTA, Jan. 23, 2013 /PRNewswire/ --RPC, Inc. (NYSE: RES) today announced
its unaudited results for the fourth quarter and year ended December 31, 2012.
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, 2012, revenues decreased 2.7 percent to
$469.9 million compared to $482.8 million in the fourth quarter last year.
Revenues decreased due to lower activity levels and increasingly competitive
pricing in most of our service lines, partially offset by a larger fleet of
revenue-producing equipment primarily in our pressure pumping service line.
Operating profit for the quarter was $89.3 million compared to $122.0 million
in the prior year. Net income for the quarter was $55.4 million or $0.26
diluted earnings per share compared to $74.6 million or $0.34 diluted earnings
per share last year. Earnings before interest, taxes, depreciation and
amortization (EBITDA) decreased by 15.2 percent to $145.6 million compared to
$171.8 million in the prior year. ^1

Cost of revenues was $279.4 million, or 59.5 percent of revenues, during the
fourth quarter of 2012, compared to $268.5 million, or 55.6 percent of
revenues, in the prior year. Cost of revenues as a percentage of revenues
increased primarily due to higher raw materials costs resulting from more
service-intensive work performed during the quarter compared to the prior
year, as well as competitive pricing.

Selling, general and administrative expenses were $44.7 million in the fourth
quarter of 2012, a 6.2 percent increase compared to $42.1 million in the prior
year. This increase was primarily due to increases in total employment costs.
As a percentage of revenues, these costs increased to 9.5 percent in 2012
compared to 8.7 percent last year. Depreciation and amortization increased by
12.9 percent to $55.3 million during the quarter compared to $49.0 million
last year due to assets that have been placed in service during the last
twelve months.

Interest expense for the quarter decreased from $489,000 last year to $289,000
in 2012 due to a lower average balance on our bank credit facility.

For the twelve months ended December 31, 2012, revenues increased 7.5 percent
to $1.95 billion compared to $1.81 billion last year. Net income decreased to
$274.4 million or $1.27 earnings per diluted share, compared to net income of
$296.4 million or $1.35 earnings per diluted share last year. EBITDA
decreased by less than one percent, from $662.2 million in 2011 to $659.5
million in 2012. ^1

"During the fourth quarter of 2012 RPC experienced a challenging operating
environment in the U.S. domestic market," stated Richard A. Hubbell, RPC's
President and Chief Executive Officer. "A declining rig count, the impact of
holiday downtime and equipment relocations, and continuing competitive
pressures contributed to slightly declining revenue and lower profitability.
Spot market pricing for all of our major services declined, and utilization
in a number of service lines was lower as well. We moved several pressure
pumping fleets from a dry gas basin in which a contractual relationship
expired to areas with higher customer activity levels. Although these fleets
generated revenue during the fourth quarter, their movement created
operational inefficiencies in this service line. We anticipate that their
utilization in the spot market will not generate the same financial returns in
the current competitive environment as in a typical high-utilization
contractual relationship.

"The average U.S. domestic rig count during the fourth quarter was 1,809, a
10.0 percent decrease compared to the same period in 2011. The average price
of natural gas was $3.36 per Mcf, an increase of 4.0 percent compared to the
prior year, while the average price of oil was $88.08 per barrel, a 6.8
percent decrease compared to the prior year. The average price of benchmark
natural gas liquids was $0.90 per gallon during the fourth quarter of 2012, a
35.7 percent decrease compared to the end of 2011. RPC's revenues decreased
at a lower rate than the change in the rig count and commodity prices because
of a larger fleet of revenue-producing equipment, strong relationships with
active customers, and our growing presence in oil-directed domestic basins.

"In addition to our regular quarterly dividend, RPC paid a special year-end
cash dividend of $0.20 in December. Our capital expenditures during the
quarter were $55.1 million, and in spite of these uses of cash, the balance on
our revolving credit facility at the end of the quarter was $107.0 million, a
decrease of $96.3 million compared to the end of 2011. We are pleased to
maintain this conservative capital structure, as we remain cautious regarding
the near-term outlook for our customers' activity levels and the demand for
our services," concluded Hubbell.

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 segment includes
pressure pumping, coiled tubing, hydraulic workover services, nitrogen,
downhole tools, surface pressure control equipment, well control, 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.

Technical Services revenues decreased 2.1 percent for the quarter compared to
the prior year due to lower pricing for our services and lower activity
levels, partially offset by an increase in the fleet of revenue-producing
equipment in this segment. Support Services revenues decreased by 9.4 percent
during the quarter compared to the prior year due principally to lower
utilization and pricing in the rental tool service line, which is the largest
service line within this segment. Operating profit in both Technical and
Support Services declined due to lower pricing and utilization in these
segments.



                      Three Month Ended December   12 Months Ended December 31
                      31
                      2012            2011         2012            2011
                      (in thousands)
Revenues:
 Technical        $ 434,795    $    443,970    $ 1,794,015   $   1,663,793
services
 Support services   35,147          38,812       151,008         146,014
Total revenues      $ 469,942    $    482,782    $ 1,945,023   $   1,809,807
Operating Profit:
 Technical        $ 85,621     $    113,957    $ 420,231     $   451,259
services
 Support services   9,380           14,462       45,912          51,672
 Corporate          (4,454)         (5,244)      (17,654)        (17,019)
expenses
 (Loss) on
disposition of        (1,240)         (1,141)      (6,099)         (3,831)
assets, net
Total operating     $ 89,307     $    122,034    $ 442,390     $   482,081
profit
Other Income, net     1,031           751          2,175           169
Interest Expense      (289)           (489)        (1,976)         (3,453)
Interest Income       5               2            30              18
Income before       $ 90,054     $    122,298    $ 442,619     $   478,815
income taxes



RPC, Inc. will hold a conference call today, January 23, 2013 at 9:00 a.m. ET
to discuss the results of the fourth quarter. Interested parties may listen
in by accessing a live webcast in the investor relations section of RPC,
Inc.'s website at www.rpc.net. The live conference call can also be accessed
by calling (888) 523-1228 or (719) 457-2689 and using the access code
#4392657. For those not able to attend the live conference call, a replay of
the conference call will be available in the investor relations section of
RPC, Inc.'s website (www.rpc.net) beginning approximately two hours after the
call.

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,
Appalachian 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 our
belief that utilization of our pressure pumping fleet in the spot market will
not generate the same financial returns in the current competitive environment
as in a typical high-utilization contractual relationship; and the effect of
industry trends on the near-term outlook for customer activity and demand for
our services. 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 changes in general global business and economic
conditions; drilling activity and rig count; risks of reduced availability or
increased costs of both labor and raw materials used in providing our
services; the impact on our operations if we are unable to comply with
regulatory and environmental laws; turmoil in the financial markets and the
potential difficulty to fund our capital needs; the potentially high cost of
capital required to fund our capital needs; the possibility that the recent
growth in unconventional exploration and production activities may cease or
change in nature so as to reduce 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; an
inability to implement price increases; 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, 2011.

^1 EBITDA is a financial measure which does not conform to generally accepted
accounting principles (GAAP). Additional disclosure regarding this non-GAAP
financial measure is disclosed in Appendix A to this press release.

For information about RPC, Inc., please contact:

Ben M. Palmer
Chief Financial Officer
(404) 321-2140
irdept@rpc.net

Jim Landers
Vice President, Corporate Finance
(404) 321-2162
jlanders@rpc.net

RPC INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands except per share data)
Periods ended                        Twelve
December 31,     Fourth Quarter                   Months
(Unaudited)
                                     %                                    %
                 2012       2011     BETTER       2012         2011       BETTER
                                     (WORSE)                              (WORSE)
REVENUES       $ 469,942  $ 482,782  (2.7)   %  $ 1,945,023  $ 1,809,807  7.5     %
COSTS AND
EXPENSES:
Cost of          279,407    268,525  (4.1)        1,105,886    992,704    (11.4)
revenues
Selling,
general and      44,691     42,083   (6.2)        175,749      151,286    (16.2)
administrative
expenses
Depreciation
and              55,297     48,999   (12.9)       214,899      179,905    (19.5)
amortization
Loss on
disposition      1,240      1,141    (8.7)        6,099        3,831      (59.2)
of assets,
net
Operating        89,307     122,034  (26.8)       442,390      482,081    (8.2)
profit
Interest         (289)      (489)    40.9         (1,976)      (3,453)    42.8
expense
Interest         5          2        150.0        30           18         66.7
income
Other income,    1,031      751      37.3         2,175        169        N/M
net
Income before    90,054     122,298  (26.4)       442,619      478,815    (7.6)
income taxes
Income tax       34,673     47,717   27.3         168,183      182,434    7.8
provision
NET INCOME    $ 55,381   $ 74,581   (25.7)  %  $ 274,436    $ 296,381    (7.4)   %
EARNINGS PER
SHARE
 Basic       $ 0.26     $ 0.34     (23.5)  %  $ 1.28       $ 1.36       (5.9)   %
 Diluted     $ 0.26     $ 0.34     (23.5)  %  $ 1.27       $ 1.35       (5.9)   %
AVERAGE SHARES
OUTSTANDING
 Basic      215,328    217,493               215,241      217,683
 Diluted    216,662    219,651               216,796      220,250





RPC INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
At December 31, (Unaudited)                     (In thousands)
                                                2012         2011
ASSETS
Cash and cash equivalents                     $ 14,163     $ 7,393
Accounts receivable, net                        387,530      461,272
Inventories                                     140,867      100,438
Deferred income taxes                           5,777        7,183
Income taxes receivable                         4,234        10,805
Prepaid expenses                               10,762       8,478
Other current assets                            4,494        30,986
 Total current assets                          567,827      626,555
Property, plant and equipment, net              756,326      675,360
Goodwill                                       24,093       24,093
Other assets                                    18,917       12,203
 Total assets                                $ 1,367,163  $ 1,338,211
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable                              $ 109,846    $ 122,987
Accrued payroll and related expenses            32,053       33,680
Accrued insurance expenses                      6,152        5,744
Accrued state, local and other taxes            7,326        5,066
Income taxes payable                            6,428        10,705
Other accrued expenses                          2,706        1,284
 Total current liabilities                     164,511      179,466
Long-term accrued insurance expenses            10,400       9,000
Notes payable to banks                          107,000      203,300
Long-term pension liabilities                   26,543       24,445
Other long-term liabilities                     4,470        3,480
Deferred income taxes                           155,007      155,928
 Total liabilities                             467,931      575,619
Common stock                                   22,014       22,119
Capital in excess of par value                  -            -
Retained earnings                               891,464      753,119
Accumulated other comprehensive loss            (14,246)     (12,646)
 Total stockholders' equity                    899,232      762,592
 Total liabilities and stockholders' equity $ 1,367,163  $ 1,338,211



Appendix A

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. EBITDA should
not be considered in isolation or as a substitute for operating income, net
income or other performance measures prepared in accordance with GAAP. 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. 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 operations, 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. Set forth below is a
reconciliation of EBITDA with Net Income, the most comparable GAAP measure.
This reconciliation also appears on RPC's investor website, which can be found
on the Internet at www.rpc.net.

Periods ended          %                   %
December 31,     Fourth Quarter      BETTER       Twelve Months       BETTER
(Unaudited)
                 2012       2011     (WORSE)      2012       2011     (WORSE)
Reconciliation
of Net Income
to EBITDA
Net Income    $ 55,381   $ 74,581   (25.7)  %  $ 274,436  $ 296,381  (7.4)   %
Add:
 Income
tax              34,673     47,717   27.3         168,183    182,434  7.8
provision
 Interest    289        489      40.9         1,976      3,453    42.8
expense

Depreciation     55,297     48,999   (12.9)       214,899    179,905  (19.5)
and
amortization
Less:
 Interest    5          2        150.0        30         18       66.7
income
EBITDA         $ 145,635  $ 171,784  (15.2)  %  $ 659,464  $ 662,155  (0.4)   %
EBITDA PER
SHARE
 Basic    $ 0.68     $ 0.79     (13.9)  %  $ 3.06     $ 3.04     0.7     %
 Diluted  $ 0.67     $ 0.78     (14.1)  %  $ 3.04     $ 3.01     1.0     %

SOURCE RPC, Inc.

Website: http://www.rpc.net
 
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