It has been about a month since the last earnings report for RPC (RES). Shares have lost about 11.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is RPC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

RPC Q3 Earnings Lag Estimates, Revenues Fall Y/Y

RPC Inc. reported third-quarter adjusted earnings of 8 cents per share, which missed the Zacks Consensus Estimate of 24 cents. The bottom line also declined from the year-ago quarter’s level of 32 cents.

Total quarterly revenues declined to $330 million from $460 million recorded in the prior-year quarter. The top line also missed the Zacks Consensus Estimate of $378 million.

Weak quarterly results can be attributed to a year-over-year decline in average domestic rig count, coupled with lower oil and natural gas prices.

Segmental Performance

Operating profit at the Technical Services segment totaled $18.9 million, lower than the year-ago quarter’s level of $89.5 million. The sharp decline can be attributed to reduced revenues in the primary service line, which is pressure pumping.

Operating profit at the Support Services segment amounted to $6.9 million, higher than the year-ago quarter’s level of $5.3 million. The rise resulted from increased activities and improved pricing.

Total operating profit in the quarter was $22.7 million, down from $92.2 million reported in the year-ago quarter. The average domestic rig count was 649, marking a 14.7% decline from the year-ago quarter’s level. The average oil price in the quarter was $82.17 per barrel, down 11.5% from the year-ago quarter’s level. The average price of natural gas was $2.59 per thousand cubic feet, down 67.8% from that recorded in the corresponding period of 2022.

Costs and Expenses

In third-quarter 2023, the cost of revenues decreased from $309.8 million to $239.1 million. Selling, general and administrative expenses increased to $42 million from the year-ago quarter’s figure of $38.2 million.

Financials

RPC’s total capital expenditure for the September-end quarter of 2023 was $44.3 million.

As of Sep 30, RPC had cash and cash equivalents of $171.9 million, up sequentially from $100.5 million. Nonetheless, the company managed to maintain a debt-free balance sheet.

Outlook

For 2023, the company reiterated its capital expenditure guidance between $200 million and $250 million. The metric indicates an increase from $140 million reported in 2022.