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RPC (RES) Stock Slips 19.2% Despite Reporting Q1 Earnings Meet

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RPC Inc. RES has declined 19.2% since the first-quarter earnings announcement on Apr 27.

The company’s stock price slipped despite reporting a strong bottom-line number in the first quarter. The stock movement could be attributed to significantly higher year-over-year expenses, resulting from increased activity levels and inflationary effects.

Q1 Results

RPC reported adjusted earnings of 7 cents per share for the first quarter, in line with the Zacks Consensus Estimate. The bottom line compares favorably with the year-ago quarter’s loss of 5 cents.

Total quarterly revenues of $284.6 million missed the Zacks Consensus Estimate of $291 million. However, the top line significantly improved from the year-ago figure of $182.6 million.

The in-line quarterly earnings were backed by higher activity levels in all the service lines and improved pricing.

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 $21.8 million against a loss of $5.8 million in the year-ago quarter. The improvement can be attributed to higher activity levels in most service lines and improved pricing.

Operating profit in the Support Services segment was $2.8 million, turning around from a year-ago loss of $2.9 million in the year-ago quarter. The upside was caused by increased activities.

Total operating profit for the quarter was $23 million, significantly improving from the year-ago loss of $10.5 million. The average domestic rig count was 636 for the March-end quarter, reflecting a 60.6% increase from the year-ago level. The average oil price for the quarter was $95.06 per barrel. The same for natural gas was $4.68 per thousand cubic feet.

Cost and Expenses

In first-quarter 2022, the cost of revenues increased from $146.2 million to $208.8 million. Selling, general and administrative expenses increased to $36.2 million from the year-ago figure of $30.6 million.

The increased cost of revenues was mainly due to higher expenses related to increased activity levels, fuel costs and others.

Financials

RPC’s total capital expenditure for the March-end quarter of 2022 amounted to $19.1 million.

As of Mar 31, RPC had cash and cash equivalents of $73.2 million, down sequentially from $82.4 million. Nonetheless, the company managed to maintain a debt-free balance sheet.

Outlook

For 2022, the Zack Rank #3 (Hold) company expects a capital expenditure of $115 million, indicating a significant increase from $67.6 million reported last year.

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

Other Players’ Q1 Results

Shell plc SHEL reported first-quarter earnings per ADS on a current cost of supplies basis, excluding items, of $2.38. The bottom line surpassed the Zacks Consensus Estimate of $2.12, owing to higher commodity prices.

As of Mar 31, 2022, Shell had $38.4 billion in cash and $86 billion in debt (including short-term debt). In the quarter, Shell generated cash flow from operations of $14.8 billion, returned $2 billion to its shareholders through dividends and spent $4.2 billion cash on capital projects.

BP plc BP reported first-quarter 2022 adjusted earnings of $1.92 per American Depositary Share (“ADS”) on a replacement-cost basis, excluding non-operating items. The bottom line beat the Zacks Consensus Estimate of earnings of $1.41 per share, owing to higher realizations of commodity prices.

BP announced plans to execute a $2.5-billion share buyback, which is expected to complete before reporting the second-quarter results. The company anticipates buying back $1 billion worth of shares every quarter, considering the Brent crude price at $60 per barrel.

Chevron Corporation CVX reported adjusted first-quarter earnings per share of $3.36, missing the Zacks Consensus Estimate of $3.44 on a weaker-than-expected performance from the downstream segment.

As of Mar 31, Chevron had $11.7 billion in cash and cash equivalents, and total debt of $29.3 billion, with a debt-to-total capitalization of 16.7%. CVX paid out $2.7 billion in dividends and bought back $1.3 billion worth of its shares.


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