RPC Inc (RES) Q3 2023 Earnings: Revenue Drops but Cementing Business Shines
RPC Inc (NYSE:RES) reports Q3 2023 revenues of $330.4 million, a decrease from $415.9 million in Q2 2023.
Net income for Q3 2023 was $18.3 million, or $0.08 diluted earnings per share, compared to net income of $65.0 million, or $0.30 diluted earnings per share, in Q2 2023.
Operating profit for Q3 2023 was $22.7 million compared to $82.4 million in Q2 2023.
The Spinnaker cementing business, recently acquired, positively contributed to the financial results.
Released on October 25, 2023, RPC Inc (NYSE:RES) announced its unaudited results for the third quarter and nine months ended September 30, 2023. The company, which provides a broad range of specialized oilfield services and equipment, reported a decrease in revenues primarily due to declines in its pressure pumping business. However, the recently acquired Spinnaker cementing business positively contributed to the financial results.
Financial Performance
For Q3 2023, RPC generated revenues of $330.4 million, a decrease compared to $415.9 million in the second quarter. The decline in revenues was primarily due to lower customer activity in RPCs pressure pumping business, partially offset by a full quarter of financial results from the recent cementing acquisition. Operating profit for Q3 2023 was $22.7 million compared to $82.4 million in Q2 2023. Net income for Q3 2023 was $18.3 million, or $0.08 diluted earnings per share, compared to net income of $65.0 million, or $0.30 diluted earnings per share, in Q2 2023.
Company's Outlook
Despite the weaker than expected decline in pressure pumping, RPCs President and Chief Executive Officer, Ben M. Palmer, stated that the company believed this weakness would prove temporary. He said,
We made the decision to maintain our pricing discipline and service readiness. This decision resulted in carrying costs during the quarter in anticipation of a busy fourth quarter calendar working at acceptable terms."
Segment Performance
RPC manages two operating segments Technical Services and Support Services. Technical Services' Q3 2023 revenues decreased by 22.3% compared to the prior quarter and decreased by 30.5% compared to the same period of the prior year. On the other hand, Support Services revenues increased by 5.8% during Q3 2023 compared to the prior quarter and increased by 14.8% compared to the same period of the prior year.
Financial Tables
The company's consolidated balance sheet shows total assets of $1.2 billion as of September 30, 2023, compared to $1.1 billion as of December 31, 2022. The total liabilities and stockholders' equity also increased to $1.2 billion from $1.1 billion over the same period.
The consolidated statements of operations show a decrease in revenues from $459.6 million in Q3 2022 to $330.4 million in Q3 2023. However, the net income for the nine months ended September 30, 2023, increased to $154.9 million from $131.4 million for the same period last year.
Despite the challenges, RPC Inc (NYSE:RES) remains optimistic about its future performance, particularly with the positive contribution from the newly acquired Spinnaker cementing business.
This article first appeared on GuruFocus.
