Rpc, Inc. (NYSE:RES)

For the quarter ended June 30, 2011, revenues increased 75.2 percent to $443,029,000 compared to $252,896,000 in the second quarter last year. Revenues increased compared to the prior year due to higher activity levels, a larger fleet of revenue-producing equipment, the expansion of customer relationships, and improved pricing, particularly within our technical services segment. Operating profit for the quarter was $119,267,000 compared to $52,089,000 in the prior year. Net income for the quarter was $73,165,000 or $0.50 diluted earnings per share, compared to $31,602,000 or $0.21 diluted earnings per share last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 92.7 percent to $164,150,000 compared to $85,185,000 in the prior year.

Cost of revenues was $242,991,000, or 54.8 percent of revenues, during the second quarter of 2011, compared to $139,478,000, or 55.2 percent of revenues, in the prior year. Cost of revenues increased due to the variable nature of these expenses. Cost of revenues as a percentage of revenues during the quarter did not change significantly because the leverage of fixed employment costs over higher revenues was offset by job mix and the increase in the costs of materials and supplies used in providing our services.

Selling, general and administrative expenses were $35,956,000 in the second quarter of 2011, a 22.0 percent increase compared to $29,478,000 in the prior year. This increase was primarily due to increases in total employment costs including increased incentive compensation consistent with improved operating results. As a percentage of revenues, however, these costs decreased to 8.1 percent in 2011 compared to 11.7 percent last year due to the fixed nature of many of these expenses and our ability to leverage these costs over higher revenues. Depreciation and amortization increased by 34.5 percent to $44,893,000 during the quarter compared to $33,384,000 last year due to assets that have been placed in service during the last year.

Interest expense increased from $502,000 last year to $998,000 in 2011 due to a higher average balance and higher interest rates under RPC's re-financed syndicated revolving credit facility during the quarter as compared to the prior year.

For the six months ended June 30, 2011, revenues increased 77.0 percent to $824,790,000 compared to $466,040,000 last year. Net income was $138,689,000 or $0.94 earnings per diluted share, compared to $45,002,000 or $0.31 earnings per diluted share last year.

"RPC is pleased to report strong financial results during the second quarter of 2011," stated Richard A. Hubbell, RPC's President and Chief Executive Officer. "We continue to operate in a robust operating environment characterized by strong demand for many of our services. The average U.S. domestic rig count during the second quarter was 1,835, a 21.3 percent increase compared to the same period in 2010 and a 6.9 percent increase compared to the first quarter of this year. The average price of natural gas was $4.35 per Mcf, a decrease of less than one percent compared to the prior year, while the average price of oil was $101.86 per barrel, a 32.3 percent increase compared to the prior year. The unconventional rig count, which has become a more important indicator of the demand for RPC's services, remained high during the quarter, representing 69.3 percent of U.S. domestic drilling activity. We also note that the amount of U.S. domestic drilling activity targeted to oil production continues to increase, and represented 51.5 percent of U.S. domestic drilling activity during the second quarter of 2011. RPC performed better than these overall industry statistics due to additions to our fleet of revenue-producing equipment, improved pricing for our services, and greater utilization of our equipment, especially in unconventional shale plays and in several domestic basins in which oil drilling and production has expanded rapidly. As a result of our improved operating results and strong financial condition, our Board of Directors yesterday approved an increase in our quarterly cash dividend from $0.07 last quarter to $0.08 this quarter.

"We received our planned deliveries of revenue-producing equipment on schedule and successfully placed this additional equipment in service under a new committed customer relationship late in the quarter. However, during the second quarter we experienced operational delays with a major pressure pumping contractual customer, as well as customer job mix changes. These issues, along with increased costs of raw materials, impacted our sequential revenue growth and profitability improvement. The operational and commodity price increase issues have been addressed and we believe that their impact will be mitigated in the future," concluded Hubbell.

For the quarter ended March 31, 2011, revenues increased 79.1 percent to $381,761,000 compared to $213,144,000 in the first quarter last year

• Operating profit for the quarter was $106,326,000 compared to operating profit of $22,568,000 in the prior year.  
• Net income was $65,524,000 or $0.45 diluted earnings per share, compared to net income of $13,400,000 or $0.09 diluted earnings per share last year

"A number of industry and company-specific factors combined to generate record quarterly financial results for RPC during the first quarter of 2011," stated Richard A. Hubbell, RPC's President and Chief Executive Officer. "From an industry perspective, the average domestic rig count during the first quarter was 1,716, a 27.6 percent increase compared to the same period in 2010 and a 2.7 percent increase compared to the fourth quarter of 2010. The average price of natural gas was $4.13 per Mcf, an 18.9 percent decrease compared to the prior year, while the average price of oil was $93.99 per barrel, a 20.5 percent increase compared to the prior year. The unconventional rig count, which in recent years has become a more important indicator of the demand for RPC's services, increased by 36.2 percent compared to the prior year, and during the first quarter of 2011 represented 70.1 percent of U.S. domestic drilling activity.  

ATLANTA, April 5, 2011 /PRNewswire/ -- RPC, Inc. announced today that during the quarter ended March 31, 2011 it purchased 810,377 shares under its share repurchase program.

On October 27, 2010, we took a short-term trading position in RES @ $16.48 (split adjusted).  The stock is currently trading at $20.34 and reached a high of $22.58.

On October 27, 2010, we took a short-term trading position in RES @ $24.72 ($16.48 split adjusted) 

• Beats analyst estimates
• Has a great one year chart
  
  
  
  
• Demand for its products should increase as the U.S. economy improves
• 2011 EPS are expected to grow over 50%
• Analyst estimates indicate that EPS is expected to grow at least 70.0% for the next three quarters.
• Has a P/E of 10.27 on 2011 EPS estimates $2.21
• Announced a 3 for 2 stock split
• Increases dividend

The stock has pulled back since the release of earnings on October 27, 2010.  We are willing to hang on a little bit longer. We believe the news of the stock split will give the stock some support. We have added to our position at lower prices.