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RPC (RES) Misses on Q1 Earnings, Reiterates 2023 Capex View

RPC Inc. RES shares have declined 5.3% since it reported lower-than-expected first-quarter 2023 earnings on Apr 26.

RPC posted first-quarter adjusted earnings of 39 cents per share, missing the Zacks Consensus Estimate of 41 cents. However, the bottom line significantly increased from the year-ago quarter’s 7 cents.

Total quarterly revenues of $476.7 million missed the Zacks Consensus Estimate of $495 million. The top line significantly improved from the year-ago figure of $284.6 million.

Lower-than-expected quarterly earnings resulted from higher cost of revenues, as well as selling, general and administrative expenses. The negatives were partially offset by rising activity levels in all service lines.

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 $103.5 million, higher than the year-ago quarter’s profit of $21.8 million. The upside was caused by increased customer activities, along with higher pricing and a larger active fleet of revenue-producing equipment.

Operating profit in the Support Services segment was $6.6 million, higher than the year-ago quarter’s profit of $2.8 million. The improvement was due to increased activities and improved pricing.

Total operating profit in the quarter was $90.7 million, skyrocketing from $23 million. The average domestic rig count was 760, reflecting a 19.5% increase from the year-ago level. The average oil price in the quarter was $75.97 per barrel. The same for natural gas was $2.66 per thousand cubic feet.

Costs and Expenses

In first-quarter 2023, the cost of revenues increased from $208.8 million to $305.3 million. Selling, general and administrative expenses increased to $42.2 million from the year-ago figure of $36.2 million.

Financials

RPC’s total capital expenditure for the March-end quarter of 2023 amounted to $65.3 million.

As of Mar 31, RPC had cash and cash equivalents of $177.9 million, up sequentially from $126.4 million. Nonetheless, the company managed to maintain a debt-free balance sheet.

Outlook

For 2023, the Zack Rank #3 (Hold) company expects capital expenditure of $250-$300 million, indicating an increase from the $140 million reported in 2022.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Q4 Results of Other Downstream Companies

Halliburton Company HAL reported first-quarter 2023 net income per share of 72 cents, surpassing the Zacks Consensus Estimate of 67 cents. The outperformance reflects stronger-than-expected profit from both its divisions.

With controlled capital spending and strong demand for its products/services, Halliburton expects to generate strong free cash flows going forward. Nevertheless, we are being conservative with our projections and provide a margin of safety due to the unpredictability of commodity prices. We expect free cash flows to be more than $2.7 billion in 2023, rising to $3.2 billion in 2024.

SLB SLB reported first-quarter 2023 earnings of 63 cents per share (excluding charges and credits), beating the Zacks Consensus Estimate of 61 cents. The strong quarterly results were primarily driven by higher stimulation services across all onshore and offshore areas.

SLB foresees strong activities across the globe this year. In the Northern Hemisphere, SLB expects a seasonal recovery in the second quarter, with capital expansion developments in the Middle East.

Baker Hughes Company BKR reported first-quarter 2023 adjusted earnings of 28 cents per share, beating the Zacks Consensus Estimate of 26 cents. The quarterly results were driven by higher contributions from the Oilfield Services and Equipment, and Industrial & Energy Technology business units.

Baker Hughes generated a free cash flow of $197 million in the reported quarter against a negative free cash flow of $105 million in the year-ago period.

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