What Does RPC's (RES) Q4 Earnings Beat Mean for Its Industry?

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RPC Inc. RES reported strong fourth-quarter 2021 results, owing to higher activity levels in all the service lines and improved pricing. This is encouraging for the oilfield service providers as the industry upcycling is creating a favorable space for the companies.

In the last few quarters, oilfield service providers incurred massive losses, courtesy of decreased upstream activities. However, the favorable commodity pricing scenario encouraged customers to continue drilling and completion activities, which might keep the demand for oilfield services high. As such, pricing improvements witnessed by RPC in the fourth quarter can be viewed as a major positive indicator for the upcoming quarters.

Q4 Results

RPC reported adjusted earnings of 6 cents per share for the fourth quarter, beating the Zacks Consensus Estimate of 3 cents. The bottom line compares favorably with the year-ago loss of 3 cents.

Total quarterly revenues of $268.3 million outpaced the Zacks Consensus Estimate of $241 million. The top line also significantly improved from the year-ago figure of $148.6 million.

RPC, Inc. Price, Consensus and EPS Surprise

RPC, Inc. Price, Consensus and EPS Surprise
RPC, Inc. Price, Consensus and EPS Surprise

RPC, Inc. price-consensus-eps-surprise-chart | RPC, Inc. Quote

Segmental Performance

Operating profit in the Technical Services segment totaled $20.5 million against a loss of $11.3 million in the year-ago quarter. The improvement can be attributed to higher activity levels in most service lines and improved pricing.

Operating loss in the Support Services segment was $373,000, narrower than the unit’s operating loss of $2.6 million in the year-ago quarter. The upside was caused by increased activities.

Total operating profit for the quarter was $20.1 million, significantly improving from the year-ago loss of $21.7 million. The average domestic rig count was 561 for the December-end quarter, reflecting an 80.4% increase from the year-ago level. The average oil price for the quarter was $77.27 per barrel. The same for natural gas was $4.73 per thousand cubic feet.

Cost and Expenses

Cost of revenues increased from $118 million in fourth-quarter 2020 to $200.6 million. Selling, general and administrative expenses increased to $32.1 million from the year-ago figure of $26 million.

The increased cost of revenues was mainly due to higher expenses related to increased activity levels, fuel costs and others.

Financials

RPC’s total capital expenditure for the December-end quarter of 2021 amounted to $22.7 million.

As of Dec 31, RPC had cash and cash equivalents of $82.4 million, up sequentially from $80.8 million. Nonetheless, the company managed to maintain a debt-free balance sheet.