RPC, Inc. (NYSE: RES) today announced its unaudited results for the fourth quarter and year ended December 31, 2020. RPC provides a broad range of specialized oilfield services and equipment primarily to independent and major oilfield companies engaged in the exploration, production and development of oil and gas properties throughout the United States and in selected international markets.
For the quarter ended December 31, 2020, revenues were $148.6 million, a decrease of 37.0 percent compared to $236.0 million in the fourth quarter of 2019. Operating loss for the fourth quarter of 2020 was $21.6 million compared to an operating loss of $27.9 million in the same period of the prior year. Adjusted operating loss for the fourth quarter of 2020 was $11.3 million compared to an adjusted operating loss of $17.3 million in the same period of the prior year.1 Net loss for the fourth quarter of 2020 was $10.2 million, or $0.05 loss per share, compared to a net loss of $23.4 million, or $0.11 loss per share, in the fourth quarter of 2019. Adjusted net loss for the fourth quarter of 2020 was $6.8 million, or $0.03 adjusted loss per share, compared to an adjusted net loss of $13.9 million, or $0.07 adjusted loss per share, in the fourth quarter of 2019.2 Earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter of 2020 was negative $2.5 million, compared to EBITDA of $12.6 million in the same period of the prior year.3 Adjusted EBITDA for the fourth quarter of 2020 was $7.8 million compared to adjusted EBITDA of $23.2 million in the same period of the prior year.3
For the 12 months ended December 31, 2020, revenues decreased to $598.3 million compared to $1.22 billion last year. Net loss for the 12 months ended December 31, 2020 was $212.2 million, or $1.00 loss per share, compared to a net loss of $87.1 million, or $0.41 loss per share last year. Adjusted net loss for the 12 months ended December 31, 2020 was $58.1 million, or $0.27 loss per share, compared to an adjusted net loss for the 12 months ended December 31, 2019 of $26.5 million, or $0.12 adjusted loss per share. 2
Cost of revenues during the fourth quarter of 2020 was $117.9 million, or 79.3 percent of revenues, compared to $176.9 million, or 75.0 percent of revenues, during the fourth quarter of 2019. Cost of revenues declined primarily due to decreases in expenses consistent with lower activity levels and RPC's cost reduction initiatives. Cost of revenues as a percentage of revenues increased primarily due to lower pricing for our services and labor inefficiencies resulting from lower activity levels in the fourth quarter as compared to the prior year.
Selling, general and administrative expenses were $26.0 million in the fourth quarter of 2020 compared to $36.8 million in the fourth quarter of 2019. These expenses decreased due to lower employment costs, primarily the result of cost reduction initiatives during previous quarters. Depreciation and amortization was $18.0 million in the fourth quarter of 2020 compared to $40.3 million in the fourth quarter of 2019. The depreciation and amortization decline was primarily due to asset impairment charges recorded in previous quarters which decreased RPC's depreciable property, plant and equipment, as well as lower capital expenditures. RPC also recorded impairment and other charges of $10.3 million during the quarter. These charges included a non-cash pension settlement loss of $4.6 million and costs to finalize the disposal of our former sand facility.
Discussion of Sequential Quarterly Financial Results
RPC's revenues for the quarter ended December 31, 2020 increased by $32.0 million compared to the prior quarter, or 27.5 percent, due to activity increases in most of our service lines. Cost of revenues during the fourth quarter of 2020 increased by $17.0 million, or 16.9 percent, due to expenses which increase with higher activity levels such as materials and supplies and employment expenses. As a percentage of revenues, cost of revenues decreased from 86.5 percent in the third quarter of 2020 to 79.3 percent in the fourth quarter due to more efficient labor utilization and the leverage of higher revenues over direct costs, which are relatively fixed during the short term. RPC's operating loss in the fourth quarter of 2020 was $21.6 million, compared with an operating loss of $31.8 million in the third quarter. RPC's adjusted operating loss for the fourth quarter of 2020 was $11.3 million.1 Adjusted EBITDA for the fourth quarter of 2020 was $7.8 million compared to negative adjusted EBITDA of $12.3 million in the third quarter of 2020.3
The average U.S. domestic rig count during the fourth quarter of 2020 was 311, a 62.1 percent decrease compared to the same period in 2019, but a 22.4 percent increase compared to the third quarter of 2020. The average price of oil during the fourth quarter was $42.62 per barrel, a 24.9 percent decrease compared to the same period in 2019, but a 4.4 percent increase compared to the third quarter of 2020. The average price of natural gas during the fourth quarter was $2.50 per Mcf, a 3.7 percent increase compared to the same period in 2019, and a 25.0 percent increase compared to the third quarter of 2020.
Management Commentary
"Our fourth quarter activity levels improved sequentially for the first time since 2016, consistent with several key oilfield metrics," stated Richard A. Hubbell, RPC's President and Chief Executive Officer. "The holiday slowdown this year was less pronounced as customers emphasized completing drilled but uncompleted wells before the end of the year.
"As 2021 begins, we have greater visibility into near term activity levels than in the recent past and expect activity levels to continue to improve as the year progresses. Yet, we remain cautious with respect to capital expenditures until financial returns improve. Our operating plans for 2021 include low capital spending, continued expense management, and improved profitability. We finished the year with $84.5 million in cash, an increase of $34.5 million compared to $50.0 million at the end of the prior year," concluded Hubbell.
Summary of Segment Operating Performance
RPC manages two operating segments - Technical Services and Support Services.
Technical Services includes RPC's oilfield service lines that utilize people and equipment to perform value-added completion, production and maintenance services directly to a customer's well. These services are generally directed toward improving the flow of oil and natural gas from producing formations or to address well control issues. The Technical Services segment includes pressure pumping, downhole tools and services, coiled tubing, hydraulic workover services, nitrogen, surface pressure control equipment, well control, and fishing tool operations.
Support Services includes RPC's oilfield service lines that provide equipment for customer use or services to assist customer operations. The equipment and services offered include rental of tubulars and related tools, pipe handling, inspection and storage services, and oilfield training services.
Technical Services quarterly revenues decreased by 36.5 percent compared to the same period of the prior year due to significantly lower activity and pricing. On a sequential basis, Technical Services revenues increased by 27.2 percent compared to the prior quarter due to increased activity levels in most of the segment's service lines as a result of higher completion activity. Support Services revenues decreased by 43.6 percent during the quarter compared to the same period of the prior year. On a sequential basis, Support Services revenues increased by 32.1 percent compared to the prior quarter due to higher drilling activity. Both operating segments narrowed their operating losses during the fourth quarter of 2020 compared to the third quarter due to higher activity levels.
RPC, Inc. will hold a conference call today, January 27, 2021 at 9:00 a.m. ET to discuss the results for the quarter. Interested parties may listen in by accessing a live webcast in the investor relations section of RPC, Inc.'s website at rpc.net. The live conference call can also be accessed by calling (833) 579-0910 or (778) 560-2620 for international callers, and use conference ID number 4396386. For those not able to attend the live conference call, a replay will be available in the investor relations section of RPC, Inc.'s website beginning approximately two hours after the call and for a period of 90 days.
RPC provides a broad range of specialized oilfield services and equipment primarily to independent and major oilfield companies engaged in the exploration, production and development of oil and gas properties throughout the United States, including the Gulf of Mexico, mid-continent, southwest, Appalachian and Rocky Mountain regions, and in selected international markets. RPC's investor website can be found at rpc.net.
