When it comes to making money, it turns out that oil and water do more than mix — they bathe together.

Not one, but two of the Top 10 Georgia 100 companies sit behind the same scratched wooden door inside an unassuming DeKalb County office building.

BEN GRAY/Staff (ENLARGE)
Richard Hubbell is president and CEO of two companies: RPC and Marine Products.
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RPC provides services for oil and gas rigs from Louisiana to Oklahoma to China. Its officemate, Marine Products Corp., makes recreational power boats, which sell for $20,000 to more than $240,000.

The companies share the same board of directors, chairman, chief executive and chief financial officer. They rely on the same law firm and outside auditor — even the same printer for annual reports. And they are controlled by the same family: brothers Gary and R. Randall Rollins, who also control Rollins Inc., the owner of Orkin, one of the nation's biggest pest control companies.

Think it's a challenge to operate one successful company in a potentially volatile industry? Try two.

"I'd love to take the credit," said Richard Hubbell, who keeps separate business cards listing him as president and chief executive of RPC and of Marine Products.

But Hubbell, who ran cable TV systems for a Rollins company, has never built a boat himself and never worked on an oil rig. Instead, he relies on his companies' field leaders to operate the businesses and to draft strategic plans. Hubbell said he looks over the strategy with them, but "I'm not sure I add much in that, other than as a resource to talk to."

"We don't lead the companies from here," Hubbell said from his office near North Druid Hills Road and I-85.

The senior management team acts more like leaders of a holding company, concentrating on handling the nitty-gritty affairs of a publicly traded firm, such as tax issues and financial reporting.

"It takes a lot of trust, trusting the guys in the field that they are watching what they should be watching," Chief Financial Officer Ben Palmer said.

One spinoff begets another

The Rollins family spun off its oil field business as a separate company — one it continued to control — during an earlier downturn in the industry. With lots of cash but mired in an industry with not enough work, RPC branched out to buy boat maker Chaparral. Four years ago, RPC spun off the boat business as Marine Products, hoping to attract investors who had been wary of a diversified company.

Both RPC and Marine Products have made it to the top ranks of the Georgia 100 before but never in the same year. They benefited last year from the good fortunes of their industries and their ability, as small companies, to grow earnings and market share rapidly, Hubbell said.

With detached senior managers who are conservative and debt-resistant, RPC and Marine Products may be slower to take action than competitors, Hubbell said. "We are a little bit more plodding in our approach."

But he reasons that careful approach also limits the company's chances of finding itself overextended when markets sour.

Marine Products

Higher gas prices and pumped-up interest rates have yet to put a crack in the hull of the boat industry, though about 85 percent of new boat sales nationwide are financed. Retail revenue for many boating categories is up, according to the National Marine Manufacturers Association, which reported an 8 percent increase in retail boating sales in 2004, compared with 2003. One possible driver: booming sales of second homes, including some on waterfronts.

With 1,200 employees, Marine Products is largely an assembler of boat products, though it makes some pieces, including hulls, at two plants in South Georgia.

The company sells to dealers, mostly independents with one shop.

With its Chaparral line, Marine Products focuses on 18-foot to 35-foot sterndrive boats — boats with what are similar to inboard motors, except that the engines and the propellers are close together.

This year, executives are contemplating increasing the company's million-square-foot Nashville plant by about 100,000 square feet. And Hubbell foresees building larger boats — perhaps in the 40-foot range — to serve existing customers who want to step up the marine chain.

The company probably lost some potential sales last year because it didn't build boats fast enough, said Palmer, the CFO.

The thinly traded stock has sunk some this year.

Hubbell said he suspects a recent three-for-two split caused some investors to sell a portion of their holdings, while other shareholders came to believe the stock was overvalued.

Also, inventories for the company's dealers rose compared with the year earlier. Still, Hubbell said, the company is "not in a bad position" for the second quarter, its biggest selling period.

Industry players expect overall sales to level off this year, but Marine Products executives predict they can continue to take sales from competitors, such as Brunswick Corp., which makes boats under several names, including Sea Ray and Bayliner.

Hubbell said the company missed a central goal it set for last year: acquiring another boat maker.

"It's disappointing," he said, but other makers were willing to pay more for acquisition targets. He said the company remains interested in an acquisition.

RPC

Rising prices at the gasoline pumps are far down the pipeline from where RPC does business. Still, the higher prices have been good for the company.

RPC's customers are oil and gas producers that base decisions on what they think the market will be like in several months.

Expectations for continued high prices have convinced them to drill more wells. RPC, competing with giants such as Halliburton, provides a hodgepodge of services, from renting specialized oil field equipment to putting out well fires and increasing the flow from wells.

As oil prices rose last year, so did RPC's fortunes. A small player with just 1,600 employees, it picked up jobs passed up by bigger competitors, said Rob MacKenzie, a research analyst who follows the oil field services and drilling business for Friedman Billings Ramsey & Co.

RPC's stock price shot up 129 percent in 2004.

"That is the top performance of the oil services companies that I cover," MacKenzie said.

But RPC's stock has fallen about 15 percent since then. "The worst performance in the group," he said.

There were Internet chatroom rumors that RPC would be sold, which has yet to bear out, MacKenzie said. And some investors might have been disappointed that RPC couldn't maintain its torrid pace of growth from 2004, when earnings per share more than tripled. But MacKenzie said he expects the company to continue growing "fairly rapidly."

Oil prices are expected to remain high, but even with modest dips RPC's business is likely to stay strong. With prices now around $50 or more a barrel, producers have plenty of room to remain profitable. Their U.S. break-even point is considered to be $20 to $25 a barrel.

RPC is preparing to get bigger in the United States by spending more than it did last year to add equipment and by charging more for its services.

RPC Chief Executive Hubbell said his biggest disappointment last year was that the company didn't expand significantly abroad.

International markets account for less than 10 percent of the company's business. Hubbell said RPC's small size constrained it overseas, where the company is less known.

One market the company has declined to work in is Iraq, said James Landers, RPC's director of corporate finance. "It's too dangerous."