RPC Inc. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>RPC Inc. reported a slight revenue dip and increased SG&A expenses in its Q1 2024 10-Q filing, while continuing share repurchases.</b>

AI Summary

RPC INC (RES) filed a Quarterly Report (10-Q) with the SEC on April 25, 2024. RPC Inc. reported revenue of $211,691,000 for Q1 2024, a slight decrease from $213,649,000 in Q1 2023. Selling, general, and administrative expenses were $214,347,063 for Q1 2024, up from $215,026,458 in Q1 2023. The company repurchased shares under its stock buyback program during Q1 2024 and Q1 2023. RPC Inc. had $1,300,000 in common stock and $1,300,000 in additional paid-in capital as of March 31, 2024. Key service segments include Technical Services (e.g., Pressure Pumping, Cementing) and Support Services (e.g., Rental Tools).

Why It Matters

For investors and stakeholders tracking RPC INC, this filing contains several important signals. The filing provides detailed segment revenue information, crucial for understanding the performance drivers within RPC Inc.'s oil and gas services operations. Disclosure of share buyback activity and changes in equity accounts offers insight into the company's capital allocation strategy and financial health.

Risk Assessment

Risk Level: medium — RPC INC shows moderate risk based on this filing. The company's revenue has seen a slight decline year-over-year, and operating expenses remain high, indicating potential pressure on profitability.

Analyst Insight

Monitor RPC Inc.'s ability to reverse the recent revenue decline and manage its operating expenses in upcoming quarters.

Revenue Breakdown

Key Numbers

• 211,691,000 — Revenue (Q1 2024)
• 213,649,000 — Revenue (Q1 2023)
• 214,347,063 — Selling, General, and Administrative Expense (Q1 2024)
• 215,026,458 — Selling, General, and Administrative Expense (Q1 2023)
• 1,300,000 — Common Stock (As of March 31, 2024)
• 1,300,000 — Additional Paid-In Capital (As of March 31, 2024)

Key Players & Entities

• RPC INC (company) — FILER
• 2024-03-31 (date) — CONFORMED PERIOD OF REPORT
• 2024-04-25 (date) — FILED AS OF DATE
• 2801 BUFORD HIGHWAY NE, SUITE 300 (address) — BUSINESS ADDRESS
• ATLANTA (location) — BUSINESS ADDRESS CITY
• GA (state) — BUSINESS ADDRESS STATE
• 30329 (zip_code) — BUSINESS ADDRESS ZIP
• 404-321-2140 (phone_number) — BUSINESS PHONE

FAQ

Risk Factors

• Industry Conditions [high — market]: The company's financial performance is significantly influenced by the cyclical nature of the oil and gas industry, including fluctuations in commodity prices and drilling activity.
• Operational Risks [medium — operational]: Risks related to the operation of specialized equipment and the provision of technical services in demanding environments.

Key Financial Figures

• $0.10 — ch registered: Common stock, par value $0.10 RES New York Stock Exchange Indic

Filing Documents

• res-20240331x10q.htm (10-Q) — 1291KB
• res-20240331xex31d1.htm (EX-31.1) — 13KB
• res-20240331xex31d2.htm (EX-31.2) — 12KB
• res-20240331xex32d1.htm (EX-32.1) — 8KB
• 0001558370-24-005756.txt (&nbsp;) — 6572KB
• res-20240331.xsd (EX-101.SCH) — 45KB
• res-20240331_cal.xml (EX-101.CAL) — 50KB
• res-20240331_def.xml (EX-101.DEF) — 172KB
• res-20240331_lab.xml (EX-101.LAB) — 364KB
• res-20240331_pre.xml (EX-101.PRE) — 317KB
• res-20240331x10q_htm.xml (XML) — 1162KB

Financial Information

Part I. Financial Information Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) Consolidated Balance Sheets –As of March 31, 2024 and December 31, 2023 3 Consolidated Statements of Operations – For the three months ended March 31, 2024 and 2023 4 Consolidated Statements of Comprehensive Income – For the three months ended March 31, 2024 and 2023 5 Consolidated Statements of Stockholders' Equity – For the three months ended March 31, 2024 and 2023 6 Consolidated Statements of Cash Flows – For the three months ended March 31, 2024 and 2023 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 21 – 27 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 27 Item 4.

Controls and Procedures

Controls and Procedures 28

Other Information

Part II. Other Information Item 1.

Legal Proceedings

Legal Proceedings 28 Item 1A.

Risk Factors

Risk Factors 28 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities 28 Item 3. Defaults upon Senior Securities 29 Item 4. Mine Safety Disclosures 29 Item 5. Other Information 29 Item 6. Exhibits 29

Signatures

Signatures 30 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS RPC, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2024, AND DECEMBER 31, 2023 (In thousands, except share and par value data) March 31, December 31, 2024 2023 ASSETS (Unaudited) Note 1 Cash and cash equivalents $ 212,199 $ 223,310 Accounts receivable, net of allowance for credit losses of $ 5,634 in 2024 and $ 7,109 in 2023 329,654 324,915 Inventories 112,306 110,904 Income taxes receivable 46,269 52,269 Prepaid expenses 10,371 12,907 Other current assets 2,535 2,768 Total current assets 713,334 727,073 Property, plant and equipment, less accumulated depreciation of $ 826,048 in 2024 and $ 810,933 in 2023 457,751 435,139 Operating lease right-of-use assets 25,402 24,537 Finance lease right-of-use assets 972 1,036 Goodwill 50,824 50,824 Other intangibles, net 12,302 12,825 Retirement plan assets 28,011 26,772 Other assets 8,637 8,639 Total assets $ 1,297,233 $ 1,286,845 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Accounts payable $ 106,836 $ 85,036 Accrued payroll and related expenses 20,780 30,956 Accrued insurance expenses 5,710 5,340 Accrued state, local and other taxes 4,198 4,461 Income taxes payable 1,610 275 Unearned revenue 572 15,743 Current portion of operating lease liabilities 7,741 7,367 Current portion of finance lease liabilities and finance obligations 253 375 Accrued expenses and other liabilities 2,336 2,304 Total current liabilities 150,036 151,857 Long-term accrued insurance expenses 10,602 10,202 Retirement plan liabilities 24,037 23,724 Deferred income taxes 52,020 51,290 Long-term operating lease liabilities 18,518 18,600 Long-term finance lease liabilities 756 819 Other long-term liabilities 7,974 7,840 Total liabilities 263,943 264,332 Commitments and contingencies (Note 12) STOCKHOLDERS' EQUITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. GENERAL The accompanying unaudited consolidated financial statements include the accounts of RPC, Inc. and its wholly-owned subsidiaries (RPC or the Company) and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These consolidated financial statements have been prepared in accordance with Accounting Standards Codification (ASC) Topic 810, "Consolidation" and Rule 3A-02(a) of Regulation S-X. In accordance with ASC Topic 810 and Rule 3A-02 (a) of Regulation S-X, the Company's policy is to consolidate all subsidiaries and investees where it has voting control. In the opinion of management, all adjustments (all of which consisted of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the year ending December 31, 2024. The balance sheet at December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2023. A group that includes Gary W. Rollins, Pamela R. Rollins, Amy Rollins Kreisler and Timothy C. Rollins, each of whom is a director of the Company, and certain companies under their control, controls in excess of fifty per

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. BUSINESS ACQUISITION Effective July 1, 2023 (Effective Date), the Company completed its acquisition of all of the outstanding equity interests in Spinnaker Oilwell Services, LLC (Spinnaker), pursuant to a Merger Agreement (Merger Agreement) with Catapult Energy Services Group, LLC, as the representative of the Sellers. Spinnaker, headquartered in Oklahoma City, Oklahoma, is a leading provider of oilfield cementing services in the Permian and Mid-Continent basins. Spinnaker operates two facilities located in El Reno, Oklahoma and Hobbs, New Mexico and maintains 18 full-service cementing spreads. This acquisition significantly expanded RPC's cementing business from its presence in South Texas to basins in which it currently provides other services. Spinnaker is included in our Technical Services Segment. As part of the acquisition, the Company recorded goodwill of $ 18.7 million and intangible assets of $ 13.2 million consisting of customer relationships and trade names and trademarks. The supplemental pro forma financial information presented below has been prepared using the acquisition method of accounting and is based on the historical financial information of Spinnaker and RPC. This proforma financial information does not necessarily represent what the combined company's revenues or results of operations would have been had the acquisition been completed on January 1, 2023, nor do they intend to be a projection of future operating results of the combined company. It also does not reflect any operating efficiencies or potential cost savings that might be achieved from synergies of combining Spinnaker and RPC. The following table provides unaudited supplemental pro forma financial information as if the acquisition had occurred on January 1, 2023. Three months ended March 31, (in thousands) 2024 2023 Revenues $ 377,833 $ 501,468 Net income 27,467 76,084 4. REVENUES Accounting Po

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Technical Services Includes pressure pumping, downhole tools services, coiled tubing, nitrogen, snubbing and other oilfield related services including wireline, well control, fishing, pump down services and cementing. Support Services Rental tools – RPC rents tools to its customers for use with onshore and offshore oil and gas well drilling, completion and workover activities. Other support services include oilfield pipe inspection services, pipe management and pipe storage, well control training and consulting. Payment terms: RPC's contracts with customers state the final terms of the sales, including the description, quantity, and price of each service to be delivered. The Company's contracts are generally short-term in nature and in most situations, RPC provides services ahead of payment - i.e., RPC has fulfilled the performance obligation prior to submitting a customer invoice. RPC invoices the customer upon completion of the specified services and collection is generally expected between 30 to 60 days after invoicing. As the Company enters into contracts with its customers, it generally expects there to be no significant timing difference between the date the services are provided to the customer (satisfaction of the performance obligation) and the date cash consideration is received. Accordingly, there is no financing component to our arrangements with customers. Significant judgments: RPC believes the output method is a reasonable measure of progress for the satisfaction of our performance obligations, which are satisfied over time, as it provides a faithful depiction of (1) our performance toward complete satisfaction of the performance obligation under the contract and (2) the value transferred to the customer of the services performed under the contract. RPC has elected the right to invoice practical expedient for recognizing revenue related to its performance obligations. Disaggregation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 5. DEPRECIATION AND AMORTIZATION Depreciation and amortization disclosed in the Consolidated Statements of Operations related to the following components: Three months ended March 31, (in thousands) 2024 2023 Cost of revenues $ 27,320 $ 21,780 Selling, general and administrative expenses 2,684 2,345 Total 30,004 24,125 6. EARNINGS PER SHARE Basic and diluted earnings per share are computed by dividing net income by the weighted average number of shares outstanding during the respective periods. In addition, the Company has periodically issued share-based payment awards that contain non-forfeitable rights to dividends and are therefore considered participating securities. The following table shows the restricted shares of common stock (participating securities) outstanding and a reconciliation of outstanding weighted average shares: Three months ended March 31, (in thousands) 2024 2023 Net income available for stockholders $ 27,467 $ 71,524 Less: Adjustments for earnings attributable to participating securities ( 423 ) ( 1,136 ) Net income used in calculating earnings per share $ 27,044 $ 70,388 Weighted average shares outstanding (including participating securities) 215,001 217,152 Adjustment for participating securities ( 3,310 ) ( 3,503 ) Shares used in calculating basic and diluted earnings per share 211,691 213,649 7. STOCK-BASED COMPENSATION The Company has issued various forms of stock incentives, including, incentive and non-qualified stock options, time-lapse restricted shares and performance share unit awards under its Stock Incentive Plans to officers, selected employees and non-employee directors. In the first quarter of 2024, the Company issued time-lapse restricted shares to some of the selected employees that will vest ratably over a period of three years . The officers and remaining selected employees of the Company

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Stock-based employee compensation for both the time-lapse restricted shares and performance share awards, was as follows: Three months ended March 31, (in thousands) 2024 2023 Pre-tax expense $ 1,926 $ 1,802 After tax expense $ 1,477 $ 1,382 The following is a summary of the changes in non-vested restricted shares for the three months ended March 31, 2024: Weighted Average Shares Grant-Date Fair Value Non-vested shares at January 1, 2024 3,532,185 $ 7.35 Granted 739,200 6.64 Vested ( 1,011,633 ) 8.15 Forfeited ( 85,325 ) 6.76 Non-vested shares at March 31, 2024 3,174,427 $ 6.94 The total fair value of shares vested was $ 7.4 million during both the three months ended March 31, 2024, and the three months ended March 31, 2023. Excess tax benefits (beneficial) or deficits (detrimental) realized from tax compensation deductions in excess of, or lower than, compensation expense are recorded as discrete income tax adjustments. For the three months ended March 31, 2024, $ 163 thousand related to stock-based compensation awards was recorded as a beneficial discrete tax adjustment and classified within Net cash provided by operating activities in the accompanying Consolidated Statements of Cash Flows compared to $ 133 thousand of beneficial discrete tax adjustment for the three months ended March 31, 2023. The table above does not include any of the activity related to performance share unit awards since they are not currently issued or vested. 8. BUSINESS SEGMENT INFORMATION RPC's reportable segments are the same as its operating segments. RPC manages its business under Technical Services and Support Services. Technical Services is comprised of service lines that generate revenue based on equipment, personnel or materials at the well site and are closely aligned with completion and production activities of the customers. Support Services is comprised

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Segment Revenues: RPC's operating segment revenues by major service lines are shown in the following table: Three months ended March 31, (in thousands) 2024 2023 Technical Services: Pressure Pumping $ 176,256 $ 264,801 Downhole Tools 93,794 107,404 Coiled Tubing 33,168 40,066 Cementing 27,751 6,245 Nitrogen 9,550 12,097 Snubbing 4,856 7,091 All other 11,019 14,287 Total Technical Services 356,394 451,991 Support Services: Rental Tools 15,974 17,676 All other 5,465 7,001 Total Support Services 21,439 24,6

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