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RPC (RES) Q2 Earnings & Revenues Miss Estimates, Improve Y/Y

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RPC, Inc. (RES - Free Report) reported second-quarter 2018 earnings of 28 cents per share, lagging the Zacks Consensus Estimate of 29 cents. However, the bottom line improved from the year-ago quarter’s 20 cents. 

Total revenues of $467.9 million missed the Zacks Consensus Estimate of $507 million. However, the top line improved from the year-ago figure of $398.1 million.

The rise in supplies and materials costs can be attributed to the lower-than-expected results. However, the results improved from the year-ago period, thanks to the moderate improvement in oilfield activities.

RPC, Inc. Price, Consensus and EPS Surprise

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

Segmental Performance

Per the company, average domestic rig count in the reported quarter increased 16.1% year over year to 1,039, which aided both the segments (Technical Services and Support Services) of the company to improve from the year-ago quarter. In other words, higher count of rigs following recovery in oil prices primarily led to the moderate improvement in oilfield activities like drilling and completion works. However, bottleneck issues in the Permian Basin offset the degree of improvement. Due to the transportation capacity constraint in the Permian Basin, the company has prepared itself to reposition its equipment to other basins, if needed.

Technical Services: Operating profit of the segment came in at $75.6 million, higher than the year-ago period’s $70.9 million. However, due to increased competition among the oilfield service companies, near-term improvement in pricing is nowhere in sight. Thus, the company decided not to order further pressure pumping equipment in the near future.  

Support Services: Operating profit from the segment came in at $1.2 million, showing a significant improvement from the year-ago period’s loss of $3.3 million. Apart from the rise in activity levels, pricing in the rental tool service line attributed to the improvement.

Cost and Expenses

Cost of revenues surged from $254 million in the second quarter of 2017 to $312.1 million in second-quarter 2018, due to increasing supplies and materials costs, as well as expenses related to the rise in employment. Cost of revenues, as a percentage of sales, came in at 66.7% compared with 63.7% in the year-ago quarter.

Share Repurchase

During the second quarter of 2018, the company bought back 559,869 shares. The move was in line with the company’s strong commitment to return cash back to the stockholders.

Balance Sheet

As of Jun 30, 2018, the company had cash and cash equivalents of $94.2 million and no long-term debt.

Zacks Rank & Key Picks

Currently, Atlanta, GA-based RPC has a Zacks Rank #5 (Strong Sell). Investors interested in the Energy sector can opt for some better-ranked stocks like Canadian Natural Resources Limited (CNQ - Free Report) , ConocoPhillips (COP - Free Report) and Cheniere Energy, Inc. (LNG - Free Report) . While Canadian Natural Resources sports a Zacks Rank #1 (Strong Buy), ConocoPhillips and Cheniere Energy both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Calgary, Canada-based Canadian Natural Resources is an upstream energy company. The company’s top line for 2018 is anticipated to improve 35.3% year over year, while its bottom line is expected to increase more than 170%.

Houston, TX-based ConocoPhillips is an integrated energy company. The company’s top line for 2018 is likely to improve 18.4% year over year. In the last four reported quarters, the company delivered an average positive earnings surprise of 27.6%.

Houston, TX-based Cheniere Energy mainly focuses on liquefied natural gas-related businesses. The company’s top line for 2018 is anticipated to improve 25.9% year over year, while its bottom line is expected to increase more than 225%.

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