Financial Data and Key Metrics Changes - In Q2 2021, revenues increased to $188.8 million from $89.3 million in Q2 2020, primarily due to higher activity levels and improved pricing [10] - EBITDA for Q2 2021 was $17.3 million compared to an adjusted EBITDA of negative $17.8 million in the same period of the prior year [11] - Adjusted loss per share improved to near breakeven in Q2 2021 from an adjusted loss per share of $0.10 in Q2 2020 [11] Business Line Data and Key Metrics Changes - Technical services segment revenues increased by 118.7% compared to the same quarter in the prior year, driven by significantly higher activity and pricing improvements [14] - Support services segment revenues increased by 44.1% year-over-year, but the operating loss widened to $2.4 million from $1.9 million in the prior year [15] - Sequentially, revenues increased by 3.4% from $182.6 million in the prior quarter, with cost of revenues as a percentage of revenues decreasing from 80.1% to 77.2% [16][12] Market Data and Key Metrics Changes - The company noted increased demand for services and a full calendar for most of Q3, indicating a positive market outlook [8] - Customer activity was impacted in June due to job delays and heavy rains in the Permian, but July showed signs of improvement [8] Company Strategy and Development Direction - The company is optimistic about achieving net pricing improvements as market conditions tighten and activity increases [22] - The focus remains on ESG-friendly equipment, which is in high demand, and the company expects to see pricing power in this area first [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the third quarter's performance, with indications of increased drilling and completion plans from customers [22] - The company remains cautious but hopeful about pricing improvements by the end of the year [27] Other Important Information - Capital expenditures for Q2 2021 were $14.1 million, with an estimated full-year capital expenditure of approximately $65 million [20] - The company ended Q2 2021 with a cash balance of $121 million and remains debt-free [23] Q&A Session Summary Question: Is third quarter top line book up double-digits? - Management indicated that it is very much a possibility [25] Question: What was the Cares Act benefit for Q2 margins? - The overall benefit was just under $4 million, with about $3.4 million in technical services [26] Question: Will net pricing improvement be seen by the end of this year? - Management is hopeful for pricing improvement as the market tightens [27] Question: Can you break down the revenue within technical services? - Pressure pumping accounts for 38.2% of consolidated revenues, followed by through tubing solutions at 31.2% [31] Question: What is the margin profile with the deployment of an additional fleet? - The additional fleet will enhance the bottom line, but margin percent is harder to predict [32] Question: What are the concerns regarding labor and COVID? - The company has a plan in place to manage labor and COVID-related issues, which has been effective so far [41][44] Question: What operational delays impacted pressure pumping in Q2? - Delays were due to heavy rain and job pushes, leading to lower utilization [50] Question: How is pricing for different assets within pressure pumping? - ESG-friendly equipment can achieve decent utilization at current pricing, but premium pricing is not yet available [62]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents RPC, Inc.'s unaudited consolidated financial statements for Q1 2021, with comparative figures, detailing the company's financial position and performance [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheet shows total assets increased to **$800.1 million** as of March 31, 2021, driven by higher accounts receivable, while liabilities also rose Consolidated Balance Sheet Summary (in thousands USD) | | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total current assets** | $449,641 | $428,359 | | **Total assets** | **$800,073** | **$790,505** | | **Total current liabilities** | $103,547 | $79,565 | | **Total liabilities** | $176,897 | $158,938 | | **Total stockholders' equity** | $623,176 | $631,567 | | **Total liabilities and stockholders' equity** | **$800,073** | **$790,505** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) RPC reported Q1 2021 revenues of **$182.6 million**, a decrease from Q1 2020, but a significantly improved net loss of **$9.7 million** due to the absence of prior-year impairment charges Consolidated Statements of Operations Summary (in thousands USD, except per share data) | | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | **Revenues** | $182,610 | $243,777 | | **Operating loss** | $(10,521) | $(218,707) | | **Impairment and other charges** | $0 | $205,536 | | **Net loss** | **$(9,662)** | **$(160,423)** | | **Diluted loss per share** | **$(0.05)** | **$(0.76)** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations declined to **$9.3 million** in Q1 2021 due to lower revenues, while investing cash outflows decreased, with cash and equivalents ending at **$85.4 million** Consolidated Statements of Cash Flows Summary (in thousands USD) | | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $9,264 | $54,839 | | **Net cash used for investing activities** | $(7,782) | $(21,424) | | **Net cash used for financing activities** | $(557) | $(792) | | **Net increase in cash and cash equivalents** | $925 | $32,623 | | **Cash and cash equivalents at end of period** | $85,421 | $82,646 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, revenue recognition, segment performance, and credit loss allowances, noting the adoption of ASU No. 2019-12 with no material impact - The company adopted ASU No. 2019-12, simplifying income tax accounting, in the first quarter of 2021 with no material impact on its financial statements[20](index=20&type=chunk) - All of the company's **$182.6 million** in revenue for Q1 2021 was recognized over time, consistent with the nature of its oilfield services[31](index=31&type=chunk) - No impairment charges were recorded in Q1 2021, compared to **$205.5 million** in Q1 2020, which was related to the Technical Services segment[33](index=33&type=chunk) Segment Revenues by Service Line (in thousands USD) | Service Line | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | **Total Technical Services** | **$172,641** | **$227,700** | | Pressure Pumping | $74,900 | $96,765 | | Downhole Tools | $56,377 | $85,908 | | **Total Support Services** | **$9,969** | **$16,077** | | Rental Tools | $6,032 | $10,404 | | **Total Revenues** | **$182,610** | **$243,777** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2021 financial results, noting a **25.1%** revenue decline due to lower activity, ongoing cost reduction efforts, and a cautious outlook despite rising commodity prices [Overview](index=19&type=section&id=Overview) RPC's Q1 2021 revenues decreased **25.1%** to **$182.6 million** due to lower activity and pricing, reflecting the continued impact of the 2020 industry disruption - Q1 2021 revenues decreased by **$61.2 million (25.1%)** compared to Q1 2020, driven by lower activity levels and pricing[85](index=85&type=chunk) - International revenues fell **39.0%** to **$9.7 million** in Q1 2021 compared to the prior year[85](index=85&type=chunk) - Capital expenditures in Q1 2021 totaled **$11.8 million**, primarily for maintenance of existing equipment[83](index=83&type=chunk) [Outlook](index=20&type=section&id=Outlook) The company's outlook remains cautious, with drilling and completion activity still weak despite rising commodity prices, and no plans for significant fleet capacity increases until justified returns - The company expects 2021 capital expenditures to be approximately **$55 million**, mainly for maintenance and upgrading selected pressure pumping equipment for dual-fuel capability[91](index=91&type=chunk) - Management believes U.S. oilfield well completion activity will remain weak in the near term, despite a rise in oil prices and completions in Q1 2021[92](index=92&type=chunk) - The company does not expect to significantly increase its fleet capacity until projected financial returns are justified[96](index=96&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Q1 2021 revenues decreased **25.1%** to **$182.6 million**, with both Technical and Support Services declining, and cost of revenues increasing as a percentage of revenue due to inefficiencies Q1 2021 vs Q1 2020 Performance (in thousands USD, except rig count and oil price) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | **Consolidated revenues** | $182,610 | $243,777 | | **Consolidated operating loss** | $(10,521) | $(218,707) | | **Technical Services revenue** | $172,641 | $227,700 | | **Support Services revenue** | $9,969 | $16,077 | | **Average U.S. domestic rig count** | 396 | 785 | | **Average oil price (per barrel)** | $58.13 | $47.23 | - Cost of revenues decreased **19.6%** to **$146.2 million** but increased as a percentage of revenues to **80.1%** from **74.6%** in the prior year, due to inefficiencies and higher fuel costs[106](index=106&type=chunk) - Depreciation and amortization decreased **54.8%** to **$17.8 million**, primarily due to asset impairment charges recorded in previous quarters[108](index=108&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong financial position with **$85.4 million** in cash and no credit facility borrowings, despite a decrease in operating cash flow, and projects **$55 million** in 2021 capital expenditures - Cash provided by operating activities decreased by **$45.6 million** year-over-year, primarily due to lower revenues and a smaller favorable change in working capital[114](index=114&type=chunk) - As of March 31, 2021, the company had no outstanding borrowings under its **$100 million** revolving credit facility, with **$81.8 million** available[119](index=119&type=chunk) - The company expects 2021 capital expenditures to be approximately **$55 million** No shares were repurchased on the open market in Q1 2021[120](index=120&type=chunk)[123](index=123&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces interest rate and foreign exchange risks, but with no credit facility borrowings and primarily USD transactions, neither is expected to materially impact financial results - The company has no outstanding interest-bearing advances on its credit facility as of March 31, 2021[139](index=139&type=chunk) - Risk from changes in foreign exchange rates is not expected to be material as the majority of transactions are in U.S. dollars[140](index=140&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2021, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[142](index=142&type=chunk) - No material changes to the company's internal control over financial reporting were identified during the first quarter of 2021[143](index=143&type=chunk) [Part II. Other Information](index=27&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course litigation, but management does not expect any current proceedings to materially affect its financial position or results - RPC does not expect ongoing litigation to have a material adverse effect on its financial position or results of operations[146](index=146&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) This section refers to risk factors previously detailed in the company's Annual Report on Form 10-K for December 31, 2020, with no new risks presented - For a description of risk factors, the report refers to the Company's annual report on Form 10-K for the year ended December 31, 2020[147](index=147&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2021, the company repurchased **139,519** shares at **$4.00** each for tax-related vesting, with **8.2 million** shares remaining available under the buyback program Share Repurchases in Q1 2021 (Shares and USD) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 1 - Jan 31, 2021 | 139,519 | $4.00 | | Feb 1 - Feb 28, 2021 | 0 | - | | Mar 1 - Mar 31, 2021 | 0 | - | | **Totals** | **139,519** | **$4.00** | - The repurchased shares were related to taxes from the vesting of restricted shares, not open market purchases[150](index=150&type=chunk) - As of March 31, 2021, **8,248,184** shares remain available for repurchase under the company's stock buyback program[149](index=149&type=chunk) [Defaults upon Senior Securities](index=27&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - None[151](index=151&type=chunk) [Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[152](index=152&type=chunk) [Other Information](index=27&type=section&id=Item%205.%20Other%20Information) No other information is reported for this period - None[153](index=153&type=chunk) [Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, credit agreement amendments, and CEO/CFO certifications - The exhibits filed with this report include corporate governance documents, the latest credit agreement amendment, and required CEO/CFO certifications (Sections 302 and 906)[155](index=155&type=chunk)

Financial Data and Key Metrics Changes - For Q1 2021, revenues decreased to $182.6 million from $243.8 million in Q1 2020, a decline of $61.2 million [9] - Operating loss for Q1 2021 was $10.5 million compared to an adjusted operating loss of $13.2 million in Q1 2020 [9] - EBITDA for Q1 2021 was $7.8 million, down from adjusted EBITDA of $25.8 million in the same period last year [9] - Loss per share was $0.05 in Q1 2021, compared to an adjusted loss per share of $0.04 in Q1 2020 [9] Business Line Data and Key Metrics Changes - Technical Services segment revenues decreased by 24.2% compared to the same quarter last year, with an operating loss of $5.8 million [12] - Support Services segment revenues decreased by 38% year-over-year, resulting in an operating loss of $2.9 million compared to a profit of $1.5 million in the prior year [12] - Sequentially, Technical Services revenues increased by 24.2% to $172.6 million due to increased activity levels [15] Market Data and Key Metrics Changes - The company noted a modest recovery in hydrocarbon demand and a reduction in oil inventory to near its five-year average, positively impacting the outlook for oil and gas prices [7] - The first quarter was negatively impacted by severe cold weather, which reduced EBITDA by approximately $5 million [7] Company Strategy and Development Direction - The company remains committed to capital discipline and will not add incremental capacity until economic returns justify the investment [19] - RPC is adapting operations to reduce emissions and is upgrading fleets to dual fuel capability, with two-thirds of deployed capacity becoming ESG friendly [19] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the start of 2021, with activity levels and pricing tracking expectations [19] - The company emphasized the importance of pricing discipline to achieve profitable revenue growth rather than growth for growth's sake [27] Other Important Information - Capital expenditures for Q1 2021 were $11.8 million, with an estimated full-year capital expenditure of approximately $55 million [17] - RPC ended Q1 2021 with a cash balance of $85.4 million and remains debt-free [20] Q&A Session Summary Question: Revenue breakdown for different segments and pricing trajectory - Management provided a revenue breakdown: Pressure pumping at 41.0%, through tubing solutions at 30.9%, coiling tubing at 8.1%, nitrogen at 6.1%, and rental tool services at 3.3% [23] - Pricing remains competitive, with some cost increases passed along, but net pricing improvement is still awaited [24] Question: Normalization of incremental stone fell - Management believes incrementals will normalize back to historical levels without significant noise expected in upcoming quarters [26] Question: Pricing discipline and revenue growth - Management emphasized the need for pricing discipline to generate normal incrementals and focus on profitable revenue growth [27]

☒ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2020 Commission File No. 1-8726 RPC, INC. Delaware (State of Incorporation) UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) 58-1550825 (I.R.S. Employer Identification No.) 2801 BUFORD HIGHWAY NE, SUITE 300 ATLANTA, GEORGIA 30329 (404) 321-2140 | Secu ...

Financial Data and Key Metrics Changes - For Q4 2020, revenues decreased to $148.6 million from $236 million in Q4 2019, attributed to lower activity levels and pricing [11] - Adjusted loss for Q4 was $11.3 million compared to an adjusted operating loss of $17.3 million in the same quarter last year [12] - Adjusted EBITDA for Q4 was $7.8 million, down from $23.2 million in Q4 2019 [12] - Cost of revenues was $117.9 million, representing 79.3% of revenues, compared to 75% in Q4 2019 [13] - Selling, general and administrative expenses decreased to $26 million from $36.8 million in the prior year [14] - Depreciation and amortization decreased to $18 million from $40.3 million in Q4 2019 [15] Business Line Data and Key Metrics Changes - Technical Services segment revenues decreased by 36.5% compared to the same quarter last year, with an operating loss of $11.3 million [16] - Support Services segment revenues decreased by 43.6% year-over-year, resulting in an operating loss of $2.6 million compared to a profit of $1.2 million in Q4 2019 [17] - Sequentially, Technical Services revenues increased by 27.2% to $139 million due to increased activity levels [22] - Support Services revenues increased by 32.1% to $9.7 million sequentially [23] Market Data and Key Metrics Changes - RPC operated 5 horizontal pressure pumping fleets in Q4 2020, maintaining the same number as in Q3 but with improved utilization [24] - The cash balance at the end of Q4 was $84.5 million, and the company remains debt-free [28] Company Strategy and Development Direction - The company aims to maintain capital discipline and will not increase equipment fleets until there is clarity on economic returns [26] - Operating plans for 2021 include low capital spending and continued expense management [27] - The company is focused on maintaining a strong cash balance while managing working capital growth [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving business conditions due to COVID vaccine distribution and a potential upcycle in the industry [9][10] - There is greater visibility into near-term activity levels, with expectations for continued improvement in 2021 [26] - Management noted that while they expect activity levels to improve, they remain cautious about pricing increases in the industry [35][36] Other Important Information - The company recorded impairment and other charges of $10.3 million during the quarter, including a non-cash pension settlement loss [20] - Capital expenditures for Q4 2020 were $12.8 million, with an estimated $55 million for 2021 focused on maintenance and selected growth opportunities [24] Q&A Session Summary Question: Insights on working capital build and expectations for 2021 - Management explained that the working capital build was influenced by the sale of the sand mine facility, which generated tax benefits and increased cash receivables [32][33] Question: Growth expectations and pricing improvements - Management indicated that growth will come from various customers, including public and private E&Ps, with some anecdotal evidence of pricing improvements [35][36] Question: Segment revenue breakdown and incremental margin performance - Management provided segment revenue percentages and indicated that typical incremental EBITDA margin improvements range from 20% to 40% in a normal revenue environment [43][44] Question: First quarter expectations and activity growth - Management expects Q1 to show high single-digit revenue growth, with continued improvement anticipated [50][51] Question: Capital discipline and fleet reactivation - Management emphasized that additional fleets will not be reactivated until there is sufficient work that contributes positively to financial results [65][66] Question: Input costs and pricing power - Management acknowledged rising input costs and indicated that they are historically good at passing these costs onto customers [80][81] Question: Maintenance CapEx and fleet age - Management stated that maintenance CapEx is currently low due to newer equipment and efficient operations, but it may increase with activity levels [109][112]

PART I. FINANCIAL INFORMATION This part presents the unaudited consolidated financial statements and management's discussion and analysis of RPC, Inc. for the periods ended September 30, 2020 [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements of RPC, Inc. and its subsidiaries for the periods ended September 30, 2020, and December 31, 2019, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, recent standards, revenue recognition, impairment charges, segment information, and other financial disclosures [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section presents the consolidated balance sheets, detailing assets, liabilities, and stockholders' equity as of September 30, 2020, and December 31, 2019 | (In thousands) | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $ 145,619 | $ 50,023 | | Accounts receivable, net | 123,157 | 242,574 | | Inventories | 84,566 | 100,947 | | Total current assets | 430,328 | 436,858 | | Property, plant and equipment, net | 275,124 | 516,727 | | Total assets | $ 800,877 | $ 1,053,218 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable | $ 46,713 | $ 53,147 | | Total current liabilities | 93,262 | 101,402 | | Total liabilities | 163,322 | 222,885 | | Total stockholders' equity | 637,555 | 830,333 | | Total liabilities and stockholders' equity | $ 800,877 | $ 1,053,218 | - Total assets decreased by **$252.3 million** (23.96%) from **$1,053.2 million** at December 31, 2019, to **$800.9 million** at September 30, 2020, primarily driven by a **$241.6 million** decrease in Property, plant and equipment, net, and a **$119.4 million** decrease in Accounts receivable, net[7](index=7&type=chunk) - Total liabilities decreased by **$59.56 million** (26.72%) from **$222.9 million** at December 31, 2019, to **$163.3 million** at September 30, 2020, and total stockholders' equity also decreased by **$192.78 million** (23.22%) over the same period[8](index=8&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents the consolidated statements of operations, detailing revenues, operating loss, and net loss for the three and nine months ended September 30, 2020 and 2019 | (In thousands except per share data) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $ 116,588 | $ 293,240 | $ 449,665 | $ 986,412 | | Operating loss | $ (31,752) | $ (92,639) | $ (287,989) | $ (86,413) | | Net loss | $ (16,437) | $ (69,181) | $ (201,953) | $ (63,749) | | Basic loss per share | $ (0.08) | $ (0.33) | $ (0.95) | $ (0.30) | | Diluted loss per share | $ (0.08) | $ (0.33) | $ (0.95) | $ (0.30) | - Revenues for the three months ended September 30, 2020, decreased by **60.2%** YoY to **$116.6 million**, and for the nine months ended September 30, 2020, decreased by **54.4%** YoY to **$449.7 million**, reflecting significantly lower activity levels and pricing[10](index=10&type=chunk) - Net loss for the three months ended September 30, 2020, improved to **$(16.4) million** from **$(69.2) million** in the prior year, while for the nine months, it widened to **$(202.0) million** from **$(63.7) million**, primarily due to higher impairment charges in 2020[10](index=10&type=chunk) [Consolidated Statements of Comprehensive (Loss) Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income) This section presents the consolidated statements of comprehensive loss, including net loss and other comprehensive income (loss) for the three and nine months ended September 30, 2020 and 2019 | (In thousands) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $ (16,437) | $ (69,181) | $ (201,953) | $ (63,749) | | Other comprehensive income (loss): | | | | | | Pension adjustment and reclassification adjustment, net of taxes | 186 | 173 | 1,104 | 520 | | Foreign currency translation | (25) | 82 | (423) | 513 | | Comprehensive loss | $ (16,276) | $ (68,926) | $ (201,272) | $ (62,716) | - Comprehensive loss for the three months ended September 30, 2020, was **$(16.3) million**, a significant improvement from **$(68.9) million** in the prior year, while for the nine months, comprehensive loss widened to **$(201.3) million** from **$(62.7) million**, primarily reflecting the increased net loss[14](index=14&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section presents the consolidated statements of stockholders' equity, detailing changes from December 31, 2019, to September 30, 2020, including net loss and stock repurchases | (In thousands) | Balance, Dec 31, 2019 | Net loss (9 months) | Stock purchased and retired (9 months) | Balance, Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total stockholders' equity | $ 830,333 | $ (160,423) (Q1) + (25,093) (Q2) + (16,437) (Q3) = (201,953) | $ (792) (Q1) + (6) (Q2) + (29) (Q3) = (827) | $ 637,555 | - Total stockholders' equity decreased from **$830.3 million** at December 31, 2019, to **$637.6 million** at September 30, 2020, primarily due to a net loss of **$201.95 million** for the nine months ended September 30, 2020[16](index=16&type=chunk) - The company repurchased and retired common stock totaling **$827 thousand** during the nine months ended September 30, 2020, contributing to the decrease in equity[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the consolidated statements of cash flows, detailing operating, investing, and financing activities for the nine months ended September 30, 2020 and 2019 | (In thousands) | Nine Months ended Sep 30, 2020 | Nine Months ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $ 131,364 | $ 169,713 | | Net cash used for investing activities | (34,941) | (196,869) | | Net cash used for financing activities | (827) | (39,583) | | Net increase (decrease) in cash and cash equivalents | 95,596 | (66,739) | | Cash and cash equivalents at end of period | $ 145,619 | $ 49,523 | - Net cash provided by operating activities decreased by **$38.3 million** (22.6%) to **$131.4 million** for the nine months ended September 30, 2020, compared to the prior year, primarily due to lower net income, partially offset by favorable changes in working capital and non-cash impairment charges[18](index=18&type=chunk)[139](index=139&type=chunk) - Net cash used for investing activities significantly decreased by **$161.9 million** (82.2%) to **$(34.9) million**, driven by a substantial reduction in capital expenditures and increased proceeds from asset sales[18](index=18&type=chunk)[140](index=140&type=chunk) - Cash and cash equivalents increased by **$95.6 million**, reaching **$145.6 million** at September 30, 2020, compared to a decrease of **$66.7 million** in the prior year, indicating improved liquidity despite operational challenges[18](index=18&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the consolidated financial statements, covering accounting policies, recent accounting standard adoptions, revenue recognition, significant impairment charges, earnings per share calculations, stock-based compensation, business segment performance, credit loss allowances, inventory, employee benefit plans, credit facility details, income taxes, fair value measurements, and accumulated other comprehensive loss [1. GENERAL](index=9&type=section&id=1.%20GENERAL) This note outlines the basis of presentation for the unaudited interim financial statements and key control aspects of the Company - The unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, including all necessary recurring accruals for fair presentation[20](index=20&type=chunk)[21](index=21&type=chunk) - Operating results for the three and nine months ended September 30, 2020, are not necessarily indicative of the full year's results[21](index=21&type=chunk) - A group including the Company's Chairman, Gary W. Rollins, controls over **50%** of the Company's voting power[23](index=23&type=chunk) [2. RECENT ACCOUNTING STANDARDS](index=9&type=section&id=2.%20RECENT%20ACCOUNTING%20STANDARDS) This note details the adoption of recent accounting standards, including CECL, goodwill impairment simplification, and cloud computing costs - The Company adopted ASU No. 2016-13 (CECL model) in Q1 2020, resulting in an immaterial cumulative-effect adjustment to retained earnings, requiring earlier recognition of credit losses[24](index=24&type=chunk) - ASU No. 2017-04, simplifying goodwill impairment testing by eliminating Step 2, was adopted prospectively in Q1 2020[24](index=24&type=chunk) - ASU No. 2018-15, aligning accounting for cloud computing implementation costs with internal-use software, was adopted in Q1 2020 with no material impact[24](index=24&type=chunk)[25](index=25&type=chunk) - ASU No. 2019-12, simplifying income tax accounting, is effective in Q1 2021, and the Company is currently evaluating its impact[26](index=26&type=chunk) [3. REVENUES](index=11&type=section&id=3.%20REVENUES) This note describes the Company's revenue recognition policies, contract types, and disaggregated revenue data for oilfield services - RPC generates contract revenues primarily from specialized oilfield services, with pricing based on agreed rates for equipment, labor, and consumables, and performance obligations satisfied over time[27](index=27&type=chunk) - Services are categorized into Technical Services (well site equipment/personnel) and Support Services (off-well site services/tools)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) | (in thousands) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Oilfield services transferred over time | $ 116,588 | $ 293,240 | $ 449,665 | $ 986,412 | | Total revenues | $ 116,588 | $ 293,240 | $ 449,665 | $ 986,412 | - Unbilled trade receivables, representing contract assets, decreased from **$52.05 million** at December 31, 2019, to **$28.31 million** at September 30, 2020[36](index=36&type=chunk) [4. IMPAIRMENT AND OTHER CHARGES](index=12&type=section&id=4.%20IMPAIRMENT%20AND%20OTHER%20CHARGES) This note details significant impairment and other charges recorded, primarily due to declines in oilfield activity and market conditions - The Company recorded **$207.18 million** in pre-tax impairment and other charges for the nine months ended September 30, 2020, primarily due to long-lived asset impairments (**$204.77 million**) in the Technical Services segment[40](index=40&type=chunk) - These charges were triggered by drastic declines in oilfield drilling and completions, low oil prices, and a substantial deterioration of market capitalization caused by the COVID-19 pandemic and geopolitical tensions[37](index=37&type=chunk)[38](index=38&type=chunk) - No impairment charges were recorded for the three months ended September 30, 2020, compared to **$71.65 million** in the same period of 2019[40](index=40&type=chunk) - Goodwill was deemed not impaired as the fair value of each reporting unit exceeded its net book value[39](index=39&type=chunk) [5. EARNINGS PER SHARE](index=15&type=section&id=5.%20EARNINGS%20PER%20SHARE) This note provides the calculation of basic and diluted earnings per share, reflecting net loss and weighted-average shares outstanding | (In thousands) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net loss used in calculating EPS | $ (16,437) | $ (69,181) | $ (201,953) | $ (64,083) | | Shares used in calculating basic and diluted EPS | 212,544 | 212,025 | 212,391 | 212,285 | - Basic and diluted loss per share for the three months ended September 30, 2020, was **$(0.08)**, an improvement from **$(0.33)** in the prior year, while for the nine months, it was **$(0.95)** compared to **$(0.30)** in the prior year[10](index=10&type=chunk) [6. STOCK-BASED COMPENSATION](index=15&type=section&id=6.%20STOCK-BASED%20COMPENSATION) This note details stock-based compensation expenses, available shares for grant, and unrecognized compensation costs - The 2014 Stock Incentive Plan had **3,905,000** shares available for grant as of September 30, 2020[45](index=45&type=chunk) - Pre-tax stock-based compensation expense for the nine months ended September 30, 2020, was **$9.32 million**, up from **$7.32 million** in the prior year[47](index=47&type=chunk) - During Q3 2020, **$3.3 million** of accumulated amortization of restricted stock was recorded due to the passing of RPC's chairman[46](index=46&type=chunk) - Total unrecognized compensation cost related to non-vested restricted shares was **$40.31 million** as of September 30, 2020, expected to be recognized over a weighted-average period of **4.0 years**[49](index=49&type=chunk) [7. BUSINESS SEGMENT INFORMATION](index=17&type=section&id=7.%20BUSINESS%20SEGMENT%20INFORMATION) This note provides financial information by business segment, Technical Services and Support Services, including revenues and operating results - RPC operates in two reportable segments: Technical Services (well site activities like pressure pumping, downhole tools) and Support Services (off-well site services like rental tools, pipe inspection)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) | (in thousands) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Segment Revenues:** | | | | | | Technical Services | $ 109,278 | $ 274,483 | $ 417,511 | $ 926,596 | | Support Services | 7,310 | 18,757 | 32,154 | 59,816 | | Total revenues | $ 116,588 | $ 293,240 | $ 449,665 | $ 986,412 | | **Operating (loss) gain:** | | | | | | Technical Services | $ (24,941) | $ (18,174) | $ (71,248) | $ (15,782) | | Support Services | (3,840) | 1,632 | (4,139) | 8,787 | | Corporate Expenses | (6,534) | (2,720) | (13,003) | (10,678) | | Impairment and Other Charges | — | (71,650) | (207,175) | (71,650) | | Total operating loss | $ (31,752) | $ (92,639) | $ (287,989) | $ (86,413) | - Both Technical Services and Support Services experienced significant revenue declines for both the three and nine months ended September 30, 2020, compared to 2019, leading to increased operating losses in both segments[54](index=54&type=chunk)[57](index=57&type=chunk) - United States revenues decreased by **60.0%** and **54.9%** for the three and nine months ended September 30, 2020, respectively, while international revenues decreased by **67.0%** and **46.4%** over the same periods[56](index=56&type=chunk) [8. CURRENT EXPECTED CREDIT LOSSES](index=19&type=section&id=8.%20CURRENT%20EXPECTED%20CREDIT%20LOSSES) This note explains the adoption of the CECL model and the methodology for calculating the allowance for credit losses on accounts receivable - The Company adopted ASU No. 2016-13 (CECL model) on January 1, 2020, with an immaterial cumulative-effect adjustment to retained earnings[61](index=61&type=chunk) - The allowance for credit losses for accounts receivable is based on historical collection experience, current/future economic conditions, and customer financial status[61](index=61&type=chunk) | (in thousands) | 2020 | | :--- | :--- | | Beginning Balance, January 1 | $ 5,181 | | Provision (benefit) for current expected credit losses | (448) | | Write-offs | (315) | | Recoveries collected (net of expenses) | (8) | | Balance as of September 30 | $ 4,410 | [9. INVENTORIES](index=19&type=section&id=9.%20INVENTORIES) This note details the composition and changes in inventory balances, primarily raw materials, parts, and supplies - Inventories, consisting of raw materials, parts, and supplies, decreased from **$100.95 million** at December 31, 2019, to **$84.57 million** at September 30, 2020[63](index=63&type=chunk) [10. EMPLOYEE BENEFIT PLAN](index=19&type=section&id=10.%20EMPLOYEE%20BENEFIT%20PLAN) This note provides information on net periodic benefit costs, plan contributions, and amendments to the Retirement Income Plan | (in thousands) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net periodic benefit cost | $ 262 | $ 70 | $ 787 | $ 210 | - The Company made a **$4.45 million** contribution to its Retirement Income Plan during the nine months ended September 30, 2020, with no contribution in the prior year[65](index=65&type=chunk) - In October 2020, the Retirement Income Plan was amended to offer a limited lump-sum payment window, expected to trigger settlement accounting in Q4 2020[66](index=66&type=chunk) - Trading gains, net, related to Supplemental Retirement Plan (SERP) assets were **$1.14 million** for the three months ended September 30, 2020, and **$178 thousand** for the nine months ended September 30, 2020[67](index=67&type=chunk) [11. NOTES PAYABLE TO BANKS](index=21&type=section&id=11.%20NOTES%20PAYABLE%20TO%20BANKS) This note details the Company's revolving credit facility, including its terms, amendments, and compliance with covenants - The Company has a revolving Credit Agreement with a **$100 million** line of credit, maturing July 26, 2023[68](index=68&type=chunk)[70](index=70&type=chunk) - An amendment on September 25, 2020, reduced the maximum borrowing amount from **$125 million** to **$100 million**, decreased the minimum tangible net worth covenant from **$600 million** to **$400 million**, and increased margin spreads and commitment fees[70](index=70&type=chunk) - As of September 30, 2020, RPC had no outstanding borrowings and **$80.2 million** available under the facility, remaining in compliance with all covenants[72](index=72&type=chunk)[75](index=75&type=chunk) [12. INCOME TAXES](index=23&type=section&id=12.%20INCOME%20TAXES) This note explains the effective income tax benefit rates and significant discrete tax adjustments for the reported periods - The effective income tax benefit rate for the three months ended September 30, 2020, was **47.0%**, up from **25.9%** in the prior year, reflecting **$3.6 million** in net beneficial discrete tax adjustments[77](index=77&type=chunk) - For the nine months ended September 30, 2020, the effective tax benefit rate was **30.1%**, up from **25.6%** in the prior year, including a **$21.3 million** net discrete provision primarily related to revaluation of deferred items and beneficial revaluation of 2019 operating loss carryback under the CARES Act[77](index=77&type=chunk) [13. FAIR VALUE DISCLOSURES](index=23&type=section&id=13.%20FAIR%20VALUE%20DISCLOSURES) This note describes the Company's fair value measurement hierarchy and the valuation of financial instruments and assets held for sale - The Company uses a three-level hierarchy for fair value measurements, distinguishing between observable and unobservable inputs[78](index=78&type=chunk)[84](index=84&type=chunk) | (in thousands) | Total (Sep 30, 2020) | Level 1 (Sep 30, 2020) | Total (Dec 31, 2019) | Level 1 (Dec 31, 2019) | | :--- | :--- | :--- | :--- | :--- | | Equity securities | $ 78 | $ 78 | $ 237 | $ 237 | | Investments measured at net asset value | $ 28,657 | N/A | $ 28,476 | N/A | - Assets held for sale were valued at **$5.39 million** using Level 2 observable market data (estimated values per square foot of comparable properties)[84](index=84&type=chunk)[85](index=85&type=chunk) [14. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME](index=26&type=section&id=14.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20(LOSS)%20INCOME) This note details the components of accumulated other comprehensive loss, including pension adjustments and foreign currency translation | (in thousands) | Pension Adjustment | Foreign Currency Translation | Total | | :--- | :--- | :--- | :--- | | Balance at December 31, 2019 | $ (20,908) | $ (2,315) | $ (23,223) | | Total activity for the period (9 months ended Sep 30, 2020) | 1,104 | (423) | 681 | | Balance at September 30, 2020 | $ (19,804) | $ (2,738) | $ (22,542) | - Accumulated other comprehensive loss improved slightly from **$(23.22) million** at December 31, 2019, to **$(22.54) million** at September 30, 2020, primarily due to a positive pension adjustment[86](index=86&type=chunk) - In Q1 2019, the Company reclassified approximately **$2.7 million** of stranded tax effects related to its pension plan from AOCI to retained earnings due to the Tax Cuts and Jobs Act[89](index=89&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance and condition, highlighting the severe impact of the COVID-19 pandemic and OPEC disputes on oilfield activity, revenues, and profitability. It details the results for the three and nine months ended September 30, 2020, compared to 2019, discusses the outlook for the industry, and outlines the Company's liquidity, capital resources, and risk factors [Overview](index=27&type=section&id=Overview) This section provides an overview of RPC's business, the impact of market disruptions, and initial responses to challenging industry conditions - RPC provides specialized oilfield services primarily in the U.S. and selected international markets, with revenues and profits tied to customer drilling and production activities[92](index=92&type=chunk) - The oil and gas industry experienced unprecedented disruption in 2020 due to the COVID-19 pandemic and OPEC disputes, leading to substantial declines in global oil demand and low activity levels[94](index=94&type=chunk)[95](index=95&type=chunk) - In response, RPC reduced headcount, furloughed employees, and implemented compensation reductions to adjust its cost structure[95](index=95&type=chunk) - Capital expenditures for the nine months ended September 30, 2020, totaled **$52.3 million**, primarily for new revenue-producing equipment and maintenance[93](index=93&type=chunk) [Outlook](index=29&type=section&id=Outlook) This section discusses the near-term outlook for U.S. oilfield activity, rig counts, oil prices, and market efficiency - U.S. oilfield well completion activity is expected to remain weak in the near term due to continued low oil prices and depressed industry activity[103](index=103&type=chunk) - The average U.S. domestic drilling rig count fell to the lowest level ever recorded in Q3 2020, decreasing by approximately **74%** compared to Q3 2019[103](index=103&type=chunk) - Oil prices decreased by over **80%** early in Q1 2020, reaching levels not seen since 1986 (inflation-adjusted), with continued uncertainty from the COVID-19 pandemic[104](index=104&type=chunk) - Increased efficiency in oilfield completion services has led to an oversupplied market, negatively impacting pricing, equipment utilization, and financial results in the near term[106](index=106&type=chunk) - Lower activity levels have reduced the cost and increased the availability of skilled labor and certain raw materials, partially offsetting negative implications from low oil prices and competition[111](index=111&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) This section presents a summary table of key financial metrics and operational data for the three and nine months ended September 30, 2020 and 2019 | | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Consolidated revenues [in thousands] | $ 116,588 | $ 293,240 | $ 449,665 | $ 986,412 | | Consolidated operating loss [in thousands] | $ (31,752) | $ (92,639) | $(287,989) | $ (86,413) | | Percentage cost of revenues to revenues | 86.5 % | 76.8 % | 80.7 % | 75.3 % | | Percentage selling, general & administrative expenses to revenues | 27.8 % | 14.5 % | 21.7 % | 13.3 % | | Average U.S. domestic rig count | 254 | 920 | 477 | 984 | | Average oil price (per barrel) | $ 40.83 | $ 56.39 | $ 38.46 | $ 57.00 | [THREE MONTHS ENDED SEPTEMBER 30, 2020 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2019](index=31&type=section&id=THREE%20MONTHS%20ENDED%20SEPTEMBER%2030,%202020%20COMPARED%20TO%20THREE%20MONTHS%20ENDED%20SEPTEMBER%2030,%202019) This section analyzes the Company's financial performance for the three months ended September 30, 2020, compared to the prior year, highlighting revenue and expense changes - Revenues decreased by **60.2%** to **$116.6 million**, driven by lower activity and pricing, with domestic revenues down **60.0%** and international revenues down **67.0%**[115](index=115&type=chunk) - Technical Services revenues decreased by **60.2%**, and Support Services revenues decreased by **61.0%**, both due to significantly lower activity and pricing[118](index=118&type=chunk) - Operating loss for Technical Services widened to **$(24.9) million** from **$(18.2) million**, and Support Services shifted to an operating loss of **$(3.9) million** from a profit of **$1.6 million**[118](index=118&type=chunk) - Cost of revenues decreased by **55.2%** but increased as a percentage of revenues (**86.5%** vs. **76.8%**) due to negative leverage over significantly lower revenues[119](index=119&type=chunk) - Selling, general and administrative expenses decreased to **$32.4 million** but increased as a percentage of revenues (**27.8%** vs. **14.5%**) due to the revenue decline, partially offset by cost reduction initiatives and accelerated amortization of restricted stock[120](index=120&type=chunk) - Depreciation and amortization decreased by **58.3%** to **$18.7 million** due to prior asset impairment charges[121](index=121&type=chunk) - The Company recorded a gain on disposition of assets of **$3.6 million**, compared to a loss of **$1.7 million** in the prior year[123](index=123&type=chunk) - Income tax benefit was **$14.6 million**, with an effective tax rate of **47.0%**, reflecting beneficial discrete tax adjustments[125](index=125&type=chunk) [NINE MONTHS ENDED SEPTEMBER 30, 2020 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2019](index=34&type=section&id=NINE%20MONTHS%20ENDED%20SEPTEMBER%2030,%202020%20COMPARED%20TO%20NINE%20MONTHS%20ENDED%20SEPTEMBER%2030,%202019) This section analyzes the Company's financial performance for the nine months ended September 30, 2020, compared to the prior year, focusing on revenue, expenses, and impairment charges - Revenues decreased by **54.4%** to **$449.7 million**, primarily due to lower activity levels and pricing across most service lines[127](index=127&type=chunk) - Technical Services revenues decreased by **54.9%**, and Support Services revenues decreased by **46.2%**[129](index=129&type=chunk) - Technical Services operating loss widened to **$(71.2) million** from **$(15.8) million**, and Support Services shifted to an operating loss of **$(4.1) million** from a profit of **$8.8 million**[129](index=129&type=chunk) - Cost of revenues decreased by **51.1%** but increased as a percentage of revenues (**80.7%** vs. **75.3%**) due to negative leverage[130](index=130&type=chunk) - Selling, general and administrative expenses decreased to **$97.7 million** but increased as a percentage of revenues (**21.7%** vs. **13.3%**) due to the revenue decline[131](index=131&type=chunk) - Depreciation and amortization decreased by **40.4%** to **$77.5 million** due to prior asset impairment charges[132](index=132&type=chunk) - Impairment and other charges were **$207.2 million**, significantly higher than **$71.7 million** in the prior year, primarily from long-lived asset impairments and severance costs[133](index=133&type=chunk) - Gain on disposition of assets, net, increased to **$7.6 million** from **$2.9 million**[134](index=134&type=chunk) - Income tax benefit was **$86.9 million**, with an effective tax rate of **30.1%**, reflecting a net discrete provision related to deferred tax assets/liabilities and the CARES Act[138](index=138&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's cash position, cash flow activities, credit facility, capital expenditure plans, and dividend policy - Cash and cash equivalents increased to **$145.6 million** as of September 30, 2020, from **$50.0 million** at the beginning of the year[139](index=139&type=chunk) - Net cash provided by operating activities decreased by **$38.3 million** to **$131.4 million**, while net cash used for investing activities decreased significantly by **$161.9 million** to **$(34.9) million**, primarily due to reduced capital expenditures[139](index=139&type=chunk)[140](index=140&type=chunk) - Net cash used for financing activities decreased by **$38.8 million**, mainly due to lower dividends paid and reduced share repurchases[141](index=141&type=chunk) - The Company's financial condition remains strong, with sufficient liquidity from existing cash and capitalization to meet requirements for at least the next twelve months, without needing the revolving credit facility[142](index=142&type=chunk) - The **$100 million** revolving credit facility had **$80.2 million** available as of September 30, 2020, and the Company was in compliance with all covenants[145](index=145&type=chunk) - Expected capital expenditures for 2020 are **$60-$70 million**, with **$52.3 million** spent by September 30, 2020, focusing on maintenance and dual-fuel upgrades[146](index=146&type=chunk) - The stock buyback program has **8,248,184** shares remaining available, but no open market purchases were made in 2020[149](index=149&type=chunk) - The Board suspended common stock dividends on October 22, 2019, with no timetable for resumption[150](index=150&type=chunk) [Inflation](index=37&type=section&id=Inflation) This section addresses the potential impact of inflation on costs and how declining oilfield activity has influenced labor and material prices - Increased inflation could raise costs for equipment, materials, and labor, however, declining oilfield activity in 2019-2020 led to reduced labor costs and lower prices for certain raw materials[151](index=151&type=chunk) [Off Balance Sheet Arrangements](index=39&type=section&id=Off%20Balance%20Sheet%20Arrangements) This section confirms the absence of any material off-balance sheet arrangements - The Company does not have any material off-balance sheet arrangements[153](index=153&type=chunk) [Related Party Transactions](index=39&type=section&id=Related%20Party%20Transactions) This section details transactions with related parties, including administrative services and purchases from affiliated suppliers - RPC charged Marine Products Corporation **$646 thousand** for administrative services during the nine months ended September 30, 2020, a slight decrease from **$656 thousand** in the prior year[154](index=154&type=chunk) - The Company paid **$710 thousand** for products/services from suppliers owned by officers or significant stockholders for the nine months ended September 30, 2020, down from **$1.068 million** in the prior year[155](index=155&type=chunk) - Charges from Rollins, Inc. (an affiliate) for administrative services and office rent totaled **$78 thousand** for the nine months ended September 30, 2020, compared to **$86 thousand** in the prior year[156](index=156&type=chunk) [Critical Accounting Policies](index=39&type=section&id=Critical%20Accounting%20Policies) This section states that there have been no significant changes to critical accounting policies since the prior fiscal year - There have been no significant changes in critical accounting policies since the fiscal year ended December 31, 2019[157](index=157&type=chunk) [Impact of Recent Accounting Standards](index=39&type=section&id=Impact%20of%20Recent%20Accounting%20Standards) This section refers to Note 2 for details on the impact of recently adopted accounting standards - Refer to Note 2 of the Notes to Consolidated Financial Statements for details on recent accounting standards, adoption dates, and estimated effects[158](index=158&type=chunk) [Seasonality](index=39&type=section&id=Seasonality) This section clarifies that the Company's business is not materially seasonal but is highly dependent on oil and natural gas prices - The Company's business is highly dependent on oil and natural gas prices and customer capital expenditures, which are not seasonal to any material degree[159](index=159&type=chunk) [Forward-Looking Statements](index=40&type=section&id=Forward-Looking%20Statements) This section highlights the forward-looking nature of certain statements and the inherent risks and uncertainties involved - The report contains forward-looking statements regarding future oilfield activity, international growth, capital expenditures, well completion activity, oil/gas prices, competition, and liquidity[161](index=161&type=chunk) - These statements are subject to known and unknown risks, uncertainties, and other factors, including the combined impact of OPEC disputes and COVID-19, declines in oil/gas prices, geopolitical unrest, adverse weather, and industry competition[162](index=162&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section addresses the Company's exposure to market risks, specifically interest rate risk and foreign exchange rate risk. It notes that there were no outstanding interest-bearing advances on the credit facility as of September 30, 2020, and foreign exchange risk is not expected to be material due to the majority of transactions occurring in U.S. currency - The Company is exposed to interest rate risk through borrowings on its credit facility, but had no outstanding interest-bearing advances as of September 30, 2020[163](index=163&type=chunk) - Market risk from changes in foreign exchange rates is not expected to have a material effect, as most transactions are in U.S. currency[164](index=164&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the Company's evaluation of its disclosure controls and procedures, concluding that they were effective at a reasonable assurance level as of September 30, 2020. It also states that no material changes in internal control over financial reporting occurred during the most recent fiscal quarter - The Company's disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of September 30, 2020[167](index=167&type=chunk)[168](index=168&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[169](index=169&type=chunk) PART II. OTHER INFORMATION This part provides additional information including legal proceedings, risk factors, equity sales, and other required disclosures [ITEM 1. LEGAL PROCEEDINGS](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in routine litigation but does not anticipate that the outcomes will have a material adverse effect on its financial position or results of operations - RPC is involved in litigation in the ordinary course of business, but does not believe the outcome will have a material adverse effect on its financial position or results of operations[172](index=172&type=chunk) [ITEM 1A. RISK FACTORS](index=43&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors previously described in the Company's annual report on Form 10-K for the year ended December 31, 2019, and its quarterly report on Form 10-Q for the quarter ended March 31, 2020 - Risk factors are incorporated by reference from the Company's annual report on Form 10-K for 2019 and quarterly report on Form 10-Q for Q1 2020[173](index=173&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the shares repurchased by the Company during the third quarter of 2020, which were primarily in connection with taxes related to the vesting of restricted shares, rather than open market purchases. It also notes the remaining authorization under the stock buyback program | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Number of Shares that May Yet Be Purchased Under Programs | | :--- | :--- | :--- | :--- | | July 1, 2020 to July 31, 2020 | 811 | $ 3.18 | 8,248,184 | | August 1, 2020 to August 31, 2020 | 754 | $ 3.02 | 8,248,184 | | September 1, 2020 to September 30, 2020 | 155 | $ 3.08 | 8,248,184 | | Totals | 1,720 | $ 3.10 | 8,248,184 | - Shares repurchased during Q3 2020 were in connection with taxes related to the vesting of restricted shares, not open market purchases[176](index=176&type=chunk) - As of September 30, 2020, **8,248,184** shares remained available for repurchase under the Company's stock buyback program, which has no predetermined expiration date[175](index=175&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=43&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The Company reported no defaults upon senior securities - There were no defaults upon senior securities[177](index=177&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that the required mine safety disclosures are included in Exhibit 95.1 to this Form 10-Q - Mine Safety Disclosures are provided in Exhibit 95.1 to this Form 10-Q[178](index=178&type=chunk) [ITEM 5. OTHER INFORMATION](index=43&type=section&id=Item%205.%20Other%20Information) The Company reported no other information - No other information is reported[179](index=179&type=chunk) [ITEM 6. EXHIBITS](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate organizational documents, a recent amendment to the credit agreement, Section 302 and 906 certifications, mine safety disclosures, and XBRL-related documents - Exhibit 10.1 includes Amendment No. 5 to the Credit Agreement dated September 25, 2020[181](index=181&type=chunk) - Includes Section 302 certifications for the Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2) and Section 906 certifications (Exhibit 32.1)[181](index=181&type=chunk) - XBRL Instance Document and Taxonomy Extension Documents are provided as Exhibits 101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, and 101.DEF[181](index=181&type=chunk) [Signatures](index=45&type=section&id=Signatures) This section contains the signatures of the authorized officers, Richard A. Hubbell (President and CEO) and Ben M. Palmer (VP, CFO, and Corporate Secretary), certifying the report on October 30, 2020 - The report is signed by Richard A. Hubbell, President and Chief Executive Officer, and Ben M. Palmer, Vice President, Chief Financial Officer and Corporate Secretary, on October 30, 2020[185](index=185&type=chunk)

Financial Data and Key Metrics Changes - RPC's Q3 2020 revenues decreased to $116.6 million from $293.2 million in Q3 2019, reflecting a decline due to lower activity levels and pricing [12] - Operating loss for Q3 2020 was $31.8 million compared to an adjusted operating loss of $21 million in Q3 2019 [13] - EBITDA for Q3 2020 was negative $12.3 million compared to adjusted EBITDA of $22.8 million in the same period of the prior year [13] - Adjusted loss per share was $0.09 in Q3 2020, compared to $0.08 in Q3 2019 [14] - Cost of revenues was $100.9 million, or 86.5% of revenues, compared to $225.2 million, or 76.8% of revenues in Q3 2019 [14][15] - Selling, general, and administrative expenses decreased to $32.4 million from $42.6 million in Q3 2019 [16] - Depreciation and amortization decreased to $18.7 million from $44.7 million in Q3 2019 [17] Business Line Data and Key Metrics Changes - Technical Services segment revenues decreased by 60.2% compared to Q3 2019, with an operating loss of $24.9 million compared to $18.2 million in the prior year [18] - Support Services segment revenues decreased by 61% compared to Q3 2019, with an operating loss of $3.8 million compared to an operating profit of $1.6 million in the prior year [19] - Technical Services segment revenues increased by 35.7% sequentially to $109.3 million in Q3 2020 [23] - Support Services segment revenues decreased by 16.6% sequentially to $7.3 million in Q3 2020 [24] Market Data and Key Metrics Changes - RPC's cash balance at the end of Q3 2020 was $145.6 million, and the company remains debt-free [30] - RPC operated as many as five horizontal pressure pumping fleets during Q3 2020, with pressure pumping capacity at approximately 728,000 hydraulic horsepower [24] Company Strategy and Development Direction - The company aims to achieve free cash flow positivity in 2021 and will focus on expense management and limiting capital investments until demand for services grows substantially [29][30] - RPC is upgrading equipment to dual fuel capability and implementing initiatives to reduce non-productive time and increase fuel efficiency [52][53] - The company is cautious about speculative investments due to insufficient pricing and financial returns in the current oilfield services market [54] Management's Comments on Operating Environment and Future Outlook - Management noted that while there has been an uptick in activity, it is insufficient to generate sustainable financial returns [28] - The company is not counting on a strong recovery in 2021 and is in a wait-and-see mode regarding future investments and hiring [88] - Management expressed hope for gradual improvement in activity levels but emphasized the need for industry-wide pricing discipline [44][88] Other Important Information - Capital expenditures for Q3 2020 were $13.7 million, with full-year estimates between $60 million to $70 million primarily for maintenance and upgrades [25] - The company is exploring opportunities for consolidation in non-pressure pumping product lines but has no immediate plans [91] Q&A Session Summary Question: How has consolidation in the industry affected RPC's strategy? - Management acknowledged that consolidation presents headwinds but has not significantly changed their strategic priorities [35] Question: Has pricing for services stabilized? - Management believes pricing has bottomed and is not expected to decline further, but competition remains high [42][141] Question: What is the outlook for Thru Tubing Solutions? - Management indicated that Thru Tubing Solutions has been affected by lower activity in Oklahoma but expects improvements as rig counts rise [111] Question: How does RPC plan to balance cash preservation with necessary investments? - Management stated that while they have the cash to invest, they will remain selective and focus on financial returns [54] Question: What are the expectations for free cash flow in 2021? - Management aims to be free cash flow positive in 2021, contingent on a sustained improvement in activity levels [102]

[Filing Information](index=1&type=section&id=Filing%20Information) This report is a Form 10-Q filed by RPC, INC, an accelerated filer, for the quarter ended June 30, 2020 - The document is a **Quarterly Report (Form 10-Q)** filed by RPC, INC for the quarterly period ended **June 30, 2020**[1](index=1&type=chunk)[2](index=2&type=chunk) - RPC, INC is classified as an **accelerated filer**[3](index=3&type=chunk) - As of July 24, 2020, RPC, Inc had **215,123,252 shares** of common stock outstanding[3](index=3&type=chunk) [Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) This part presents the company's unaudited financial statements and management's analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited consolidated financial statements and accompanying notes for the period ended June 30, 2020 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) A snapshot of the company's assets, liabilities, and equity at the end of the reporting period Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $145,405 | $50,023 | | Accounts receivable, net | $109,183 | $242,574 | | Inventories | $93,392 | $100,947 | | Property, plant and equipment, less accumulated depreciation | $278,358 | $516,727 | | Total assets | $782,868 | $1,053,218 | | Total current liabilities | $58,814 | $101,402 | | Total liabilities | $134,215 | $222,885 | | Total stockholders' equity | $648,653 | $830,333 | - Total assets decreased by approximately **25.6%** from December 31, 2019, to June 30, 2020, primarily due to reductions in accounts receivable and property, plant, and equipment[7](index=7&type=chunk) - Cash and cash equivalents significantly increased by **190.7%** from **$50,023 thousand** at December 31, 2019, to **$145,405 thousand** at June 30, 2020[7](index=7&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net income or loss over the reporting period Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three months ended June 30, 2020 | Three months ended June 30, 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $89,300 | $358,516 | $333,077 | $693,172 | | Operating (loss) income | $(37,530) | $8,387 | $(256,237) | $6,226 | | Net (loss) income | $(25,093) | $6,171 | $(185,516) | $5,432 | | Basic (Loss) Earnings per share | $(0.12) | $0.03 | $(0.87) | $0.02 | | Diluted (Loss) Earnings per share | $(0.12) | $0.03 | $(0.87) | $0.02 | | Dividends per share | $0.00 | $0.05 | $0.00 | $0.15 | - Revenues for the three months ended June 30, 2020, decreased by **75.1%** year-over-year, and for the six months, decreased by **51.9%** year-over-year[8](index=8&type=chunk) - The company reported significant operating losses and net losses for both the three and six months ended June 30, 2020, primarily due to **impairment and other charges of $207,175 thousand** for the six-month period[8](index=8&type=chunk) [Consolidated Statements of Comprehensive (Loss) Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income) Reports net income alongside other comprehensive income items, such as currency translation adjustments Consolidated Statements of Comprehensive (Loss) Income (in thousands) | Metric | Three months ended June 30, 2020 | Three months ended June 30, 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(25,093) | $6,171 | $(185,516) | $5,432 | | Other comprehensive income (loss) | $500 | $507 | $520 | $778 | | Comprehensive (loss) income | $(24,593) | $6,678 | $(184,996) | $6,210 | - The company reported a comprehensive loss of **$(184,996) thousand** for the six months ended June 30, 2020, a significant decline from comprehensive income of **$6,210 thousand** in the prior year[11](index=11&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Shows changes in the company's equity accounts over the reporting period Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | December 31, 2019 | June 30, 2020 | | :--- | :--- | :--- | | Total Stockholders' Equity | $830,333 | $648,653 | | Retained Earnings | $832,113 | $649,844 | | Net loss (six months ended June 30, 2020) | N/A | $(160,423) | | Stock issued for stock incentive plans, net (six months ended June 30, 2020) | N/A | $2,097 | | Stock purchased and retired (six months ended June 30, 2020) | N/A | $(792) | - Total stockholders' equity decreased by **$181,680 thousand** from December 31, 2019, to June 30, 2020, primarily due to the net loss incurred[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $122,099 | $93,430 | | Net cash used for investing activities | $(25,919) | $(122,477) | | Net cash used for financing activities | $(798) | $(39,573) | | Net increase (decrease) in cash and cash equivalents | $95,382 | $(68,620) | | Cash and cash equivalents at end of period | $145,405 | $47,642 | - Net cash provided by operating activities increased by **$28,669 thousand (30.7%)** for the six months ended June 30, 2020, compared to the prior year, despite a net loss, driven by favorable changes in working capital[15](index=15&type=chunk) - Capital expenditures decreased significantly from **$132,253 thousand** in 2019 to **$38,659 thousand** in 2020[15](index=15&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed disclosures and explanations for the figures presented in the financial statements [Note 1. General](index=9&type=section&id=Note%201.%20General) Outlines the basis of presentation for the unaudited interim financial statements - The unaudited consolidated financial statements are prepared in accordance with **GAAP** for interim financial information and include all necessary adjustments[17](index=17&type=chunk)[18](index=18&type=chunk) - A group including the Company's Chairman and his brother controls **over fifty percent** of the Company's voting power[20](index=20&type=chunk) [Note 2. Recent Accounting Standards](index=9&type=section&id=Note%202.%20Recent%20Accounting%20Standards) Discusses the adoption and potential impact of new accounting pronouncements - The Company adopted **ASU No. 2016-13 (CECL)** in Q1 2020, resulting in an immaterial cumulative-effect adjustment to retained earnings, and plans to continue recording an allowance on trade receivables based on aging and economic conditions[21](index=21&type=chunk) - **ASU No. 2017-04**, simplifying the goodwill impairment test, was adopted prospectively in Q1 2020[21](index=21&type=chunk) - **ASU No. 2019-12**, simplifying income tax accounting, is effective in Q1 2021, and the Company is evaluating its impact[24](index=24&type=chunk) [Note 3. Revenues](index=11&type=section&id=Note%203.%20Revenues) Details the company's revenue recognition policies and disaggregated revenue data - RPC's contract revenues are primarily generated from specialized oilfield services, with performance obligations satisfied **over time** as services are performed[25](index=25&type=chunk)[31](index=31&type=chunk) Timing of Revenue Recognition (in thousands) | Type | Three months ended June 30, 2020 | Three months ended June 30, 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Oilfield services transferred over time | $89,300 | $358,516 | $333,077 | $693,172 | | Total revenues | $89,300 | $358,516 | $333,077 | $693,172 | - Unbilled trade receivables (contract assets) decreased from **$52,052 thousand** at December 31, 2019, to **$21,578 thousand** at June 30, 2020[34](index=34&type=chunk) [Note 4. Impairment and Other Charges](index=13&type=section&id=Note%204.%20Impairment%20and%20Other%20Charges) Explains significant non-recurring charges related to asset impairments - The Company recorded **$207,175 thousand** in pre-tax impairment and other charges for the six months ended June 30, 2020, primarily due to long-lived asset impairments in the **Technical Services segment**[39](index=39&type=chunk) - These charges were triggered by drastic declines in oilfield drilling and completions, substantial decline in global oil demand due to **COVID-19**, and geopolitical tensions[35](index=35&type=chunk)[36](index=36&type=chunk) - Goodwill was deemed **not impaired** as the fair value of each reporting unit exceeded its net book value[38](index=38&type=chunk) [Note 5. Earnings Per Share](index=15&type=section&id=Note%205.%20Earnings%20Per%20Share) Provides the calculation of basic and diluted earnings per share Net (Loss) Income and Shares Used in EPS Calculation (Six Months Ended June 30, in thousands) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net (loss) income available for stockholders | $(185,516) | $5,432 | | Net (loss) income used in calculating earnings per share | $(185,516) | $5,098 | | Shares used in calculating basic and diluted earnings per share | 212,360 | 212,415 | [Note 6. Stock-Based Compensation](index=16&type=section&id=Note%206.%20Stock-Based%20Compensation) Details expenses and unrecognized costs related to stock incentive plans - As of June 30, 2020, there were **3,850,000 shares** available for grant under the 2014 Stock Incentive Plan[43](index=43&type=chunk) Stock-Based Compensation Expense (Pre-tax, in thousands) | Period | 2020 | 2019 | | :--- | :--- | :--- | | Three months ended June 30 | $2,017 | $2,436 | | Six months ended June 30 | $4,114 | $4,888 | - Total unrecognized compensation cost related to non-vested restricted shares was **$45,512 thousand** as of June 30, 2020, expected to be recognized over a weighted-average period of **4.2 years**[46](index=46&type=chunk) [Note 7. Business Segment Information](index=17&type=section&id=Note%207.%20Business%20Segment%20Information) Presents financial data for the company's reportable operating segments - RPC manages its business under two reportable segments: **Technical Services** (well-site equipment and personnel) and **Support Services** (off-well-site services and tools)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) Segment Revenues (Six Months Ended June 30, in thousands) | Segment | 2020 | 2019 | | :--- | :--- | :--- | | Technical Services | $308,232 | $652,113 | | Support Services | $24,845 | $41,059 | | Total revenues | $333,077 | $693,172 | Segment Operating (Loss) Income (Six Months Ended June 30, in thousands) | Segment | 2020 | 2019 | | :--- | :--- | :--- | | Technical Services | $(46,307) | $2,392 | | Support Services | $(299) | $7,155 | | Corporate Expenses | $(6,469) | $(7,958) | | Impairment and Other Charges | $(207,175) | $0 | | Total operating (loss) income | $(256,237) | $6,226 | [Note 8. Current Expected Credit Losses](index=19&type=section&id=Note%208.%20Current%20Expected%20Credit%20Losses) Describes the methodology and impact of the new credit loss accounting standard - The Company adopted **ASU No. 2016-13 (CECL)** on January 1, 2020, with an immaterial cumulative-effect adjustment to retained earnings[57](index=57&type=chunk) Allowance for Credit Losses Roll-Forward (2020, in thousands) | Metric | Amount | | :--- | :--- | | Beginning Balance, January 1 | $5,181 | | Provision (benefit) for current expected credit losses | $(828) | | Write-offs | $(302) | | Balance as of June 30 | $4,051 | - The estimate of current expected credit losses was **not significantly impacted** by the current and expected future economic and market conditions surrounding the COVID-19 pandemic[57](index=57&type=chunk) [Note 9. Inventories](index=19&type=section&id=Note%209.%20Inventories) Reports the value of inventories held by the company at the end of the period Inventories (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2020 | $93,392 | | December 31, 2019 | $100,947 | [Note 10. Employee Benefit Plan](index=19&type=section&id=Note%2010.%20Employee%20Benefit%20Plan) Discloses information about the company's retirement and supplemental benefit plans Net Periodic Benefit Cost (Six Months Ended June 30, in thousands) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net periodic benefit cost | $525 | $140 | - The Company did not make contributions to its Retirement Income Plan during the six months ended June 30, 2020 or 2019[60](index=60&type=chunk) Supplemental Retirement Plan (SERP) Trading Gains (Losses), Net (Six Months Ended June 30, in thousands) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Trading gains (losses), net | $(958) | $3,636 | [Note 11. Notes Payable to Banks](index=21&type=section&id=Note%2011.%20Notes%20Payable%20to%20Banks) Details the terms, availability, and covenant compliance of the company's credit facility - The Company has a **$125 million** revolving credit facility maturing on July 26, 2023[64](index=64&type=chunk)[65](index=65&type=chunk) - As of June 30, 2020, there were **no outstanding borrowings** under the facility, and **$105.2 million** was available after accounting for letters of credit[68](index=68&type=chunk)[70](index=70&type=chunk) - The Company was **in compliance** with financial covenants as of June 30, 2020, but acknowledges a risk of breaching them under current industry conditions[65](index=65&type=chunk) [Note 12. Income Taxes](index=23&type=section&id=Note%2012.%20Income%20Taxes) Explains the company's effective tax rate and the impact of recent tax legislation Effective Tax Rate | Period | 2020 | 2019 | | :--- | :--- | :--- | | Three months ended June 30 | 35.7% benefit | 29.6% provision | | Six months ended June 30 | 28.0% benefit | 30.0% provision | - The Company recognized a discrete tax benefit of **$13.1 million** in Q1 2020 due to the **CARES Act**, allowing a five-year carryback of 2019 net operating losses to a 35% tax rate year[73](index=73&type=chunk) - A net discrete tax provision of **$35.8 million** was recorded for the six months ended June 30, 2020, related to the revaluation of certain deferred tax assets and liabilities[73](index=73&type=chunk) [Note 13. Fair Value Disclosures](index=23&type=section&id=Note%2013.%20Fair%20Value%20Disclosures) Provides fair value measurements for financial and non-financial assets using a three-level hierarchy - The Company uses a **three-level hierarchy** for fair value measurements, distinguishing between observable and unobservable inputs[74](index=74&type=chunk) Fair Value Measurements at June 30, 2020 (in thousands) | Asset Type | Total | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Equity securities | $101 | $101 | $0 | $0 | | Investments measured at net asset value | $27,520 | N/A | N/A | N/A | | Assets held for sale (non-recurring) | $5,385 | $0 | $5,385 | $0 | - **No significant transfers** between fair value levels occurred for the period ended June 30, 2020[75](index=75&type=chunk) [Note 14. Accumulated Other Comprehensive (Loss) Income](index=25&type=section&id=Note%2014.%20Accumulated%20Other%20Comprehensive%20(Loss)%20Income) Details the components and changes in accumulated other comprehensive income (AOCI) Accumulated Other Comprehensive (Loss) Income (in thousands) | Component | December 31, 2019 | June 30, 2020 | | :--- | :--- | :--- | | Pension Adjustment | $(20,908) | $(19,990) | | Foreign Currency Translation | $(2,315) | $(2,713) | | Total | $(23,223) | $(22,703) | - In Q1 2019, the Company reclassified approximately **$2.7 million** of stranded tax effects related to its pension plan from AOCI to retained earnings due to the Tax Cuts and Jobs Act[83](index=83&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on financial performance, liquidity, and market outlook amid industry challenges [Overview](index=26&type=section&id=Overview) Highlights the severe industry disruption and its impact on Q2 2020 financial results - The oil and gas industry experienced an **unprecedented disruption** in Q2 2020 due to the COVID-19 pandemic and OPEC disputes, leading to drastic declines in oilfield drilling and completions[89](index=89&type=chunk)[90](index=90&type=chunk) Key Financial and Operational Changes (Q2 2020 vs Q2 2019) | Metric | Q2 2020 | Q2 2019 | Change | | :--- | :--- | :--- | :--- | | Revenues | $89.3M | $358.5M | -75.1% | | International revenues | $6.8M | $14.8M | -54.0% | | Loss before income taxes | $(39.0)M | $8.8M | N/A | | Diluted loss per share | $(0.12) | $0.03 | N/A | - The Company implemented **headcount reductions, employee furloughs, and compensation cuts** to adjust its cost structure in response to expected low revenue levels[90](index=90&type=chunk) [Outlook](index=28&type=section&id=Outlook) Discusses near-term expectations for the oilfield services market and key industry metrics - U.S oilfield well completion activity is expected to remain **weak** in the near term due to continued low oil prices and depressed industry activity, with the domestic drilling rig count falling to the **lowest level ever recorded** in Q2 2020[98](index=98&type=chunk) Average Prices and Rig Count (Q2 2020 vs Q2 2019) | Metric | Q2 2020 | Q2 2019 | Change | | :--- | :--- | :--- | :--- | | Average oil price (per barrel) | $27.32 | $59.89 | -54.4% | | Average natural gas price (per mcf) | $1.71 | $2.57 | -33.4% | | Average U.S. domestic rig count | 392 | 989 | -60.4% | - The market for several oilfield completion services, including pressure pumping, has become **oversupplied** due to increased efficiency, leading to negative consequences for pricing and equipment utilization[101](index=101&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Provides a detailed analysis of revenue and expense fluctuations by segment Consolidated Financial Performance (Three Months Ended June 30, in thousands) | Metric | 2020 | 2019 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenues | $89,300 | $358,516 | -75.1% | | Operating (loss) income | $(37,530) | $8,387 | N/A | | Cost of revenues (% of revenues) | 89.6% | 73.9% | +15.7 pp | | SG&A expenses (% of revenues) | 32.2% | 12.1% | +20.1 pp | | Depreciation and amortization (% of revenues) | 21.9% | 12.0% | +9.9 pp | Consolidated Financial Performance (Six Months Ended June 30, in thousands) | Metric | 2020 | 2019 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenues | $333,077 | $693,172 | -51.9% | | Operating (loss) income | $(256,237) | $6,226 | N/A | | Cost of revenues (% of revenues) | 78.7% | 74.7% | +4.0 pp | | SG&A expenses (% of revenues) | 19.6% | 12.8% | +6.8 pp | | Depreciation and amortization (% of revenues) | 17.7% | 12.3% | +5.4 pp | - **Technical Services** segment reported an operating loss of **$34.1 million** in Q2 2020 (vs $6.9 million profit in Q2 2019), and **Support Services** reported an operating loss of **$1.8 million** (vs $4.0 million profit in Q2 2019), both due to lower pricing and activity levels[113](index=113&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's cash position, cash flows, and capital expenditure plans - Cash and cash equivalents totaled **$145.4 million** as of June 30, 2020, and the Company believes its liquidity will be sufficient for at least the next twelve months without needing its revolving credit facility[134](index=134&type=chunk)[137](index=137&type=chunk) Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $122,099 | $93,430 | | Net cash used for investing activities | $(25,919) | $(122,477) | | Net cash used for financing activities | $(798) | $(39,573) | - Capital expenditures for 2020 are expected to be approximately **$50 to $60 million**, primarily for maintenance of existing equipment, with **$38.7 million** spent as of June 30, 2020[139](index=139&type=chunk) - The Board of Directors **suspended** RPC's dividend to common stockholders on July 22, 2019, with no timetable for resumption[145](index=145&type=chunk) [Inflation](index=37&type=section&id=Inflation) Discusses the impact of inflation and oilfield activity on operating costs - The Company's costs for equipment, materials, and labor are influenced by general economic inflation and oilfield activity levels[146](index=146&type=chunk) - Labor costs and prices for certain raw materials **declined** throughout 2019 and into Q2 2020 due to declining oilfield activity[146](index=146&type=chunk) [Off Balance Sheet Arrangements](index=37&type=section&id=Off%20Balance%20Sheet%20Arrangements) Confirms the absence of material off-balance sheet arrangements - The Company does not have any **material** off-balance sheet arrangements[147](index=147&type=chunk) [Related Party Transactions](index=37&type=section&id=Related%20Party%20Transactions) Discloses transactions with affiliated companies and other related parties - RPC charged Marine Products Corporation **$433,000** for administrative services during the six months ended June 30, 2020[148](index=148&type=chunk) - The Company paid **$610,000** to affiliated parties for products or services during the six months ended June 30, 2020[149](index=149&type=chunk) - Charges to the Company from Rollins, Inc for administrative services and rent aggregated **$52,000** for the six months ended June 30, 2020[152](index=152&type=chunk) [Critical Accounting Policies](index=39&type=section&id=Critical%20Accounting%20Policies) States there have been no significant changes to critical accounting policies - There have been **no significant changes** in the Company's critical accounting policies since the fiscal year ended December 31, 2019[153](index=153&type=chunk) [Impact of Recent Accounting Standards](index=39&type=section&id=Impact%20of%20Recent%20Accounting%20Standards) References the financial statement notes for details on new accounting standards - Refer to **Note 2** of the Notes to Consolidated Financial Statements for a description of recent accounting standards, including expected adoption dates and estimated effects[154](index=154&type=chunk) [Seasonality](index=39&type=section&id=Seasonality) Explains that business demand is driven by market prices rather than seasonality - The Company's business demand is primarily influenced by oil and natural gas prices and customer capital expenditures, rather than being **materially seasonal**[155](index=155&type=chunk) [Forward-Looking Statements](index=39&type=section&id=Forward-Looking%20Statements) Cautions readers about the risks and uncertainties inherent in forward-looking statements - The report contains forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors, which may cause actual results to **differ materially**[156](index=156&type=chunk)[159](index=159&type=chunk) - Key risk factors include the combined impact of **OPEC disputes and the COVID-19 pandemic**, declines in oil and natural gas prices, political unrest, adverse weather, and competition[159](index=159&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Details the company's exposure to interest rate and foreign exchange rate risks - The Company is subject to interest rate risk through borrowings on its credit facility, but had **no outstanding interest-bearing advances** as of June 30, 2020[160](index=160&type=chunk) - Foreign exchange rate risk is **not expected to have a material effect** on consolidated results or financial condition, as the majority of transactions occur in U.S currency[161](index=161&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and internal control over financial reporting - The Company's disclosure controls and procedures were evaluated and deemed **effective** at a reasonable assurance level as of June 30, 2020[162](index=162&type=chunk)[163](index=163&type=chunk) - **No changes** in internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[164](index=164&type=chunk) [Part II. Other Information](index=42&type=section&id=Part%20II.%20Other%20Information) This part contains other required disclosures, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) Discloses the status of legal proceedings and their potential financial impact - RPC is involved in litigation from time to time in the **ordinary course of its business**[166](index=166&type=chunk) - The Company does not believe that the outcome of such litigation will have a **material adverse effect** on its financial position or results of operations[166](index=166&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) Updates on material risks, focusing on the impacts of the COVID-19 pandemic and OPEC disputes - No material changes from previously disclosed risk factors, except for those related to the combined impacts of **OPEC disputes and the COVID-19 pandemic**[167](index=167&type=chunk) - These impacts have resulted in an abrupt and steep decline in economic activity, strained U.S oil storage infrastructure, and **historically volatile oil prices**[167](index=167&type=chunk) - In response to the downturn, the Company has **reduced its workforce**, instituted compensation adjustments, and reduced its expense structure and capital expenditures[168](index=168&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports on the company's stock repurchase activities during the quarter Shares Repurchased in Q2 2020 | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 1, 2020 to April 30, 2020 | 455 | $2.50 | | May 1, 2020 to May 31, 2020 | 202 | $3.37 | | June 1, 2020 to June 30, 2020 | 1,332 | $3.24 | | Totals | 1,989 | $3.08 | - The repurchased shares represent shares bought back in connection with taxes related to the vesting of certain restricted shares, **not open market purchases**[171](index=171&type=chunk) - As of June 30, 2020, **8,248,184 shares** remain available to be repurchased under the current authorization, which does not have a predetermined expiration date[170](index=170&type=chunk) [Item 3. Defaults upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) Confirms no defaults on senior securities occurred during the reporting period - **No defaults** upon senior securities were reported[172](index=172&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) References the exhibit containing required mine safety disclosure information - Mine Safety Disclosures are included in **Exhibit 95.1** to this Form 10-Q[173](index=173&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) Indicates no other material information is required to be reported for the period - **No other information** is reported in this section[175](index=175&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed as part of the quarterly report - The exhibits include corporate governance documents (Restated Certificate of Incorporation, Amended and Restated Bylaws), **Section 302 and 906 certifications**, Mine Safety Disclosures, and XBRL Instance and Taxonomy Extension Documents[176](index=176&type=chunk) [Signatures](index=44&type=section&id=Signatures) Provides the official sign-offs by the company's executive officers - The report was signed on **July 31, 2020**, by Richard A Hubbell, President and Chief Executive Officer, and Ben M Palmer, Vice President, Chief Financial Officer and Corporate Secretary[180](index=180&type=chunk)

RPC, Inc. (NYSE:RES) Q2 2020 Earnings Conference Call July 29, 2020 9:00 AM ET Company Participants Rick Hubbell - President and CEO Ben Palmer - Chief Financial Officer James Landers - Vice President of Corporate Finance Conference Call Participants John Daniel - Daniel Energy Partner Cameron Lochridge - Stephens, Inc. Chase Molehill - Bank of America Ian MacPherson - Simmons Jacob Lundberg - Credit Suisse Vebs Vaishnav - Scotia Howard Weil George O'Leary - TPH & Company Chris Voie - Wells Fargo Connor L ...

Financial Data and Key Metrics Changes - For Q1 2020, RPC reported revenues of $243.8 million, a decrease from $334.7 million in the prior year, reflecting lower activity levels and pricing [14] - Adjusted operating loss for Q1 was $13.2 million, compared to an operating loss of $2.2 million in the same period last year [14] - Adjusted EBITDA for Q1 was $25.8 million, down from $40.8 million in the prior year [15] - The adjusted loss per share was $0.04, compared to no earnings per share in the prior year [15] - Cost of revenues was $181.9 million, or 74.6% of revenues, compared to $252.4 million, or 75.4% of revenues in Q1 2019 [15][16] Business Line Data and Key Metrics Changes - Technical Services segment revenues decreased by 27.5% compared to the prior year, with an operating loss of $12.2 million, up from a loss of $4.5 million in the prior year [18] - Support Services segment revenues decreased by 21.9% compared to the prior year, with operating profit of $1.5 million, down from $3.1 million in the prior year [19] - Sequentially, RPC's revenues increased by 3.3% from $236 million in the prior quarter to $243.8 million in Q1 2020 [19] Market Data and Key Metrics Changes - The domestic rig count began to decline rapidly by the end of Q1 2020, with significant capital expenditure reductions announced by oilfield operators for the remainder of 2020 [12] - The company operated up to 10 pressure pumping fleets during Q1, with a total hydraulic horsepower of approximately 728,000 at the end of the quarter [24] Company Strategy and Development Direction - RPC aims to maintain capital discipline and optimize return on invested capital while limiting financial risk [28] - The company has reduced salaries and wages by an annualized $60 million through layoffs and furloughs, focusing on maintaining operational efficiency [25] - RPC plans to continue taking necessary steps to endure the downturn and emerge as a survivor in the industry [29] Management's Comments on Operating Environment and Future Outlook - Management expressed that oilfield activity is expected to continue declining at a historically high rate due to both increased oil production and decreased demand [27] - The company maintains a debt-free balance sheet and ended the quarter with $82.6 million in cash, indicating a strong liquidity position [29] Other Important Information - RPC recorded impairment and other charges of $205.5 million, primarily non-cash, related to the fair value of several service lines [13] - Capital expenditures for Q1 were $25 million, with an estimated total of $50 million for 2020, approximately 40% lower than previously announced [24] Q&A Session Summary Question: Efficiency Gains in the Industry - Management indicated that further efficiency gains may be limited due to the necessity of high utilization for effective processes and equipment [36] Question: Working Capital in Q1 - Working capital contributed about $30 million during the quarter, aided by a large tax refund from the CARES Act [40] Question: Active Crew Count and Future Trends - The company operated 10 fleets during Q1, with current staffing limited to those fleets actively working [46] Question: Revenue Breakdown by Business - Pressure pumping comprised 39.7% of revenues, Thru Tubing Solutions 34.5%, coiled tubing 6.7%, rental tools 4.3%, and nitrogen 4.1% [53] Question: Cost Management and EBITDA Breakeven - Management is focused on reducing SG&A costs and adjusting operations based on activity levels, with a goal to manage towards EBITDA breakeven [57][59] Question: CapEx Guidance - The $50 million CapEx guidance could be conservative, with maintenance capital expenditures for pressure pumping fleets estimated to be within the $10 million range [75] Question: M&A Opportunities - While M&A is always considered, the current focus is on restructuring the existing business rather than pursuing acquisitions [86]