RPC reported higher revenue and adjusted profitability for the third quarter, but a large non-cash impairment charge tied to its Pintail wireline business pushed the company to a reported loss. The oilfield-services provider also declared its regular quarterly dividend of 4 cents per share.
Revenue and adjusted EBITDA rose from the prior quarter as several service lines strengthened. The quarter’s results also reflected ongoing cost pressure and weaker performance at Pintail, whose assets RPC wrote down by $74.5 million.
Operating results
- Revenue was $467.7 million, up 1% from the second quarter. Technical Services revenue rose by $6.1 million, led by double-digit growth in coiled tubing, nitrogen and snubbing. Lower wireline revenue partly offset those gains.
- Support Services revenue increased 3%, with rental tools revenue up 7%, led by Patterson Rental Tools.
- Adjusted net income was $22.8 million, or 10 cents per diluted share, compared with $17.8 million, or 8 cents per share, in the second quarter. Adjusted net income margin rose to 4.9% from 3.9%.
- Adjusted EBITDA increased 8% to $71.5 million. Its margin expanded to 15.3% from 14.3%.
- RPC reported a net loss of $41.9 million, or 20 cents per share, compared with net income of $12.1 million in the prior quarter. The loss included $74.5 million in non-cash impairment charges related to Pintail.
- The impairment reflected persistent pricing weakness, lower activity and cost pressure at Pintail. It consisted of $58.3 million in intangible-asset write-downs and $16.2 million in property and equipment.
- Cost of revenue, excluding depreciation and amortization, was $349.8 million, compared with $345.7 million in the prior quarter. Selling, general and administrative expenses were essentially unchanged at $50.8 million.
Cash, debt and dividend
- Cash and cash equivalents stood at $177.1 million at quarter-end, down $32.9 million from year-end. RPC attributed the decline mainly to working-capital needs as activity increased and a $20 million principal payment on a note payable made in the second quarter.
- Year to date through September, RPC generated $115.7 million in cash from operations and $5 million in free cash flow. Higher receivables, collection timing and purchases of strategically important inventory used cash.
- RPC had no borrowings outstanding under its $100 million revolving credit facility during the quarter. It paid $26.6 million in dividends year to date.
- The board declared a quarterly dividend of 4 cents per share, payable December 10 to shareholders of record on November 10.
Industry backdrop
- The average U.S. rig count was 589, up 6.3% from the second quarter and 9.1% from a year earlier.
- The average oil price was $86.07 a barrel, down 10.8% sequentially but up 30.7% year over year. The average natural gas price was $2.88 per Mcf, down 2% from the prior quarter and 5.3% from a year earlier.
- Management said customer activity improved in several service lines, while competition and inflation—particularly in labor, trucking and fuel—continued to pressure costs.
The quarter showed improving adjusted earnings and revenue, but the reported loss underscores the deterioration in Pintail’s business and the resulting asset write-down. RPC’s cash generation was positive year to date, though working-capital demands left free cash flow comparatively modest.