RPC’s third-quarter revenue and adjusted earnings improved modestly from the prior quarter, but the oilfield-services company swung to a reported loss after recording a $74.5 million non-cash impairment tied to its Pintail wireline business. RPC also declared its regular quarterly dividend of 4 cents per share.
The results show contrasting trends across the business: several service lines grew, while Pintail continued to face weak pricing, lower activity and cost pressure. Adjusted profit and margins increased sequentially, even as higher working-capital needs weighed on year-to-date free cash flow.
Key details
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Revenue rose 1% sequentially to $467.7 million. Technical Services revenue increased 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 grew 3%, with Rental Tools up 7%.
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The company recorded a $41.9 million net loss, or 20 cents per share, compared with net income of $12.1 million, or 5 cents per diluted share, in the second quarter. The loss included a $74.5 million non-cash impairment charge related to Pintail.
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The impairment reflected deteriorating expectations for Pintail. RPC cited persistent pricing weakness, lower activity and cost pressure in concluding that the business’s carrying value was not fully recoverable. The charge consisted of $58.3 million for intangible assets and $16.2 million for property, plant and equipment.
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Adjusted net income increased to $22.8 million from $17.8 million, and adjusted diluted earnings per share rose to 10 cents from 8 cents. Adjusted net income margin improved to 4.9% from 3.9%.
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Adjusted EBITDA grew 8% to $71.5 million. Its margin rose to 15.3% from 14.3%, reflecting improved profitability across much of RPC’s service portfolio.
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Costs and industry conditions were mixed. Cost of revenues, excluding depreciation and amortization, increased to $349.8 million from $345.7 million, primarily alongside higher revenue. RPC said labor, trucking and fuel costs remained inflationary pressures. The average U.S. rig count rose 6.3% from the second quarter to 589, while the average oil price fell 10.8% to $86.07 a barrel.
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Cash was $177.1 million at quarter-end, down $32.9 million year to date. RPC attributed the decline mainly to working-capital needs as activity increased and to a $20 million principal payment on a note payable. The company had no borrowings under its $100 million revolving credit facility during the quarter.
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Year-to-date operating cash flow was $115.7 million, while free cash flow was $5.0 million. RPC said working capital used significant cash, largely because of higher receivables tied to customer activity and collection timing, as well as strategic purchases of inventory components in short supply. Dividend payments totaled $26.6 million year to date.
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The board declared a regular dividend of 4 cents per share. It is payable December 10 to shareholders of record at the close of business November 10.
Plain-English implications
The impairment sharply reduced reported earnings but was non-cash; adjusted net income and adjusted EBITDA both increased from the prior quarter. The charge also points to continuing pressure in Pintail’s wireline business, even as other service lines grew. RPC ended the quarter with cash on hand and no borrowings from its revolving credit facility, while working-capital demands kept year-to-date free cash flow modest.