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RPC (RES) Q3 Earnings Miss on Low Pressure Pumping Activities

Zacks Equity Research

RPC Inc’s RES third-quarter 2019 loss of 8 cents was wider than the Zacks Consensus Estimate of a loss of a cent. In the year-ago quarter, the company reported earnings of 19 cents per share.

Total revenues of $293.2 million missed the Zacks Consensus Estimate of $345 million. Moreover, the top line declined from the year-ago $440 million.

The weak third-quarter results can primarily be attributed to lower contributions from pressure pumping activities — the company’s biggest service line.

Segmental Performance

Operating loss at the Technical Services segment totaled $18.2 million against the year-ago profit level of $56.2 million. The underperformance was led by weak activities and pricing associated to pressure pumping operations.

Operating profit for the Support Services segment came in at $1.6 million, down from $1.8 million a year ago. Lower services and activities associated to the rental tool service line hurt the segment.

Cost and Expenses

Cost of revenues contracted from $300.9 million in third-quarter 2018 to $225.2 million due to a decline in expenses associated to materials and supplies.

Financials

RPC’s total capital expenditure in the September quarter of 2019 amounted to $77 million. As of Sep 30, the company had cash and cash equivalents of $49.5 million and no long-term debt.

Outlook

The slowdown in drilling activities in U.S. resources and persistent weakness in crude prices have hurt demand for oilfield services. The company expects the weakness to continue in the near term.

Zacks Rank & Stocks to Consider

RPC currently carries a Zacks Rank #5 (Strong Sell). Meanwhile, a few better-ranked players in the energy space are Crescent Point Energy Corp. CPG, Matrix Service Company MTRX and Pembina Pipeline Corporation PBA. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.      

Crescent beat the Zacks Consensus Estimate in three of the prior four quarters, the average positive earnings surprise being 235.1%.

Matrix Service has managed to beat the Zacks Consensus Estimate for earnings in three of the past four quarters.

Pembina Pipeline has an average positive earnings surprise of 28.1% for the past four quarters.

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Matrix Service Company (MTRX) : Free Stock Analysis Report
 
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RPC, Inc. (RES) : Free Stock Analysis Report
 
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