PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for the periods ended September 30, 2021, and December 31, 2020 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show an increase in total assets and liabilities from December 31, 2020, to September 30, 2021 Key Metrics | Metric | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | $826,640 | $790,505 | | **Total Liabilities** | $195,857 | $158,938 | | **Total Stockholders' Equity** | $630,783 | $631,567 | | Cash and cash equivalents | $80,835 | $84,496 | | Accounts receivable, net | $238,192 | $161,771 | | Total current assets | $457,855 | $428,359 | | Total current liabilities | $120,721 | $79,565 | | Current portion of finance lease liabilities | $21,382 | — | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) RPC, Inc reported a significant increase in revenues and a return to net income for the quarter ended September 30, 2021 Key Metrics | Metric (in thousands, except per share) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $225,310 | $116,588 | $596,677 | $449,665 | | **Operating income (loss)** | $7,974 | $(31,752) | $(3,767) | $(287,989) | | **Net income (loss)** | $5,266 | $(16,437) | $(5,122) | $(201,953) | | **Earnings (loss) per share - Basic** | $0.02 | $(0.08) | $(0.02) | $(0.95) | | **Income tax provision (benefit)** | $1,891 | $(14,590) | $1,210 | $(86,882) | [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income was positive for Q3 2021 due to improved net income, partially offset by foreign currency translation losses Key Metrics | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net income (loss)** | $5,266 | $(16,437) | $(5,122) | $(201,953) | | Pension adjustment, net of taxes | $152 | $186 | $458 | $1,104 | | Foreign currency translation | $(239) | $(25) | $(34) | $(423) | | **Comprehensive income (loss)** | $5,179 | $(16,276) | $(4,698) | $(201,272) | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity slightly decreased from December 31, 2020, influenced by net losses for the nine-month period Key Metrics | Metric (in thousands) | Balance, Dec 31, 2020 | Balance, Sep 30, 2021 | | :--- | :--- | :--- | | **Total Stockholders' Equity** | $631,567 | $630,783 | | Retained earnings | $627,778 | $626,501 | | Accumulated other comprehensive loss | $(17,706) | $(17,282) | | Net loss (9 months ended Sep 30, 2021) | N/A | $(5,122) | | Net income (3 months ended Sep 30, 2021) | N/A | $5,266 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly decreased for the nine months ended September 30, 2021, due to an unfavorable change in accounts receivable Key Metrics | Metric (in thousands) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $26,416 | $131,364 | | **Net cash used for investing activities** | $(29,114) | $(34,941) | | **Net cash used for financing activities** | $(963) | $(827) | | Net loss | $(5,122) | $(201,953) | | Accounts receivable (increase) decrease | $(71,702) | $119,272 | | Cash and cash equivalents at end of period | $80,835 | $145,619 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of RPC's accounting policies, segment performance, and other key financial disclosures [1. GENERAL](index=8&type=section&id=1.%20GENERAL) The unaudited interim financial statements are prepared per GAAP, and a group including the Chairman controls over 50% of voting power - The financial statements are unaudited and include normal recurring accruals, but **interim results are not necessarily indicative of full-year performance**[17](index=17&type=chunk)[18](index=18&type=chunk) - A group including the Chairman of the Board, Gary W Rollins, **controls over 50% of the Company's voting power**[20](index=20&type=chunk) [2. RECENT ACCOUNTING STANDARDS](index=8&type=section&id=2.%20RECENT%20ACCOUNTING%20STANDARDS) RPC adopted ASU No 2019-12 with no material impact and plans to adopt ASU No 2020-04 when LIBOR is discontinued - RPC adopted ASU No 2019-12 (Income Taxes) in the first quarter of 2021, which simplified accounting for income taxes, with **no material impact** on consolidated financial statements[21](index=21&type=chunk) - RPC will adopt ASU No 2020-04 (Reference Rate Reform) when LIBOR is discontinued, and **does not expect a material impact** on its consolidated financial statements[22](index=22&type=chunk) [3. REVENUES](index=10&type=section&id=3.%20REVENUES) RPC generates contract revenues from specialized oilfield services, categorized into Technical and Support Services, recognized over time - RPC's contract revenues are primarily from oilfield services, **recognized over time** as services are performed, based on mutually agreed pricing[23](index=23&type=chunk) - Services are categorized into **Technical Services** (e g, pressure pumping, coiled tubing) and **Support Services** (e g, rental tools, pipe inspection)[25](index=25&type=chunk)[26](index=26&type=chunk)[28](index=28&type=chunk) Revenue by Type | Revenue Type (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Oilfield services transferred over time | $225,310 | $116,588 | $596,677 | $449,665 | | Total revenues | $225,310 | $116,588 | $596,677 | $449,665 | Contract Balances | Contract Balance (in thousands) | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Unbilled trade receivables | $52,710 | $29,574 | [4. IMPAIRMENT AND OTHER CHARGES](index=11&type=section&id=4.%20IMPAIRMENT%20AND%20OTHER%20CHARGES) No impairment charges were recorded in 2021, unlike the significant charges for long-lived assets and severance in 2020 - Long-lived asset impairments in 2020 primarily related to **pressure pumping and coiled tubing assets** within the Technical Services segment[33](index=33&type=chunk) Impairment Details | Charge Type (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Long Lived Asset Impairments | $— | $— | $— | $204,765 | | Severance Costs | $— | $— | $— | $1,882 | | Other | $— | $— | $— | $528 | | **Total** | $— | $— | $— | $207,175 | [5. EARNINGS PER SHARE](index=12&type=section&id=5.%20EARNINGS%20PER%20SHARE) Basic and diluted EPS was $0.02 in Q3 2021, a significant improvement from a loss of $0.08 in Q3 2020 EPS Calculation | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) available for stockholders | $5,266 | $(16,437) | $(5,122) | $(201,953) | | Net income (loss) used in calculating EPS | $5,225 | $(16,437) | $(5,122) | $(201,953) | | Shares used in calculating basic and diluted EPS | 213,028 | 212,544 | 212,983 | 212,391 | [6. STOCK-BASED COMPENSATION](index=12&type=section&id=6.%20STOCK-BASED%20COMPENSATION) Stock-based compensation expense decreased in 2021, with $40.3 million in unrecognized cost remaining as of September 30, 2021 - As of September 30, 2021, **3,180,060 shares were available for grant** under the 2014 Stock Incentive Plan[36](index=36&type=chunk) - Total unrecognized compensation cost related to non-vested restricted shares was **$40,322,000** as of September 30, 2021, with a weighted-average recognition period of **4.1 years**[41](index=41&type=chunk) Compensation Expense | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Pre-tax expense | $1,471 | $5,207 | $4,481 | $9,321 | | After tax expense | $1,103 | $3,419 | $3,360 | $6,525 | [7. BUSINESS SEGMENT INFORMATION](index=14&type=section&id=7.%20BUSINESS%20SEGMENT%20INFORMATION) Both Technical and Support Services segments saw significant revenue increases in 2021, with Technical Services returning to operating income - **Technical Services** include pressure pumping, downhole tools, coiled tubing, snubbing, nitrogen, well control, wireline, and fishing, characterized by high capital and personnel intensity[43](index=43&type=chunk) - **Support Services** include drill pipe and related tools, pipe handling, inspection, storage, and oilfield training/consulting, influenced by customer drilling activity[44](index=44&type=chunk) Segment Revenues | Segment Revenues (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Technical Services | $211,842 | $109,278 | $560,602 | $417,511 | | Support Services | $13,468 | $7,310 | $36,075 | $32,154 | | **Total revenues** | $225,310 | $116,588 | $596,677 | $449,665 | Segment Operating Income (Loss) | Segment Operating Income (Loss) (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Technical Services | $8,272 | $(24,941) | $3,938 | $(71,248) | | Support Services | $(55) | $(3,840) | $(5,353) | $(4,139) | | Corporate Expenses | $(3,080) | $(6,534) | $(9,760) | $(13,003) | | **Total operating income (loss)** | $7,974 | $(31,752) | $(3,767) | $(287,989) | [8. CURRENT EXPECTED CREDIT LOSSES](index=17&type=section&id=8.%20CURRENT%20EXPECTED%20CREDIT%20LOSSES) The allowance for credit losses increased to $7.3 million at September 30, 2021, driven by a provision for expected losses - The Company's expected credit loss allowance for accounts receivable is based on **historical collection experience, current and future economic/market conditions, and customer financial status**[51](index=51&type=chunk) Allowance for Credit Losses | Metric (in thousands) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Beginning balance | $4,815 | $5,181 | | Provision (benefit) for current expected credit losses | $3,848 | $(448) | | Write-offs | $(1,330) | $(315) | | Recoveries collected (net of expenses) | $9 | $(8) | | **Ending balance** | $7,342 | $4,410 | [9. INVENTORIES](index=17&type=section&id=9.%20INVENTORIES) Total inventories, consisting of raw materials, supplies, and finished goods, slightly decreased to $79.9 million at September 30, 2021 - Inventories consist of raw materials, supplies, spare parts, and components for manufactured equipment, recorded at the **lower of cost or net realizable value**[53](index=53&type=chunk) Inventory Balances | Inventory Type (in thousands) | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Raw materials and supplies | $78,298 | $81,278 | | Finished goods | $1,583 | $1,640 | | **Ending balance** | $79,881 | $82,918 | [10. COMMITMENTS AND CONTINGENCIES](index=17&type=section&id=10.%20COMMITMENTS%20AND%20CONTINGENCIES) RPC recorded a $4.5 million liability for a contractual dispute in Q3 2021 and is evaluating a state tax assessment - RPC recorded an estimated liability of **$4.5 million in Q3 2021** for a long-term contractual dispute with a vendor, with $3.3 million included in cost of revenues and the remainder in interest expense[57](index=57&type=chunk)[58](index=58&type=chunk) - A state tax assessment received on July 12, 2021, is currently being evaluated, but the Company believes the **likelihood of a material loss is remote**[56](index=56&type=chunk) [11. EMPLOYEE BENEFIT PLAN](index=19&type=section&id=11.%20EMPLOYEE%20BENEFIT%20PLAN) Net periodic benefit cost for the Retirement Income Plan decreased, while trading gains on SERP assets increased significantly - The Company **did not make contributions** to the Retirement Income Plan during the nine months ended September 30, 2021 or 2020[59](index=59&type=chunk) - SERP assets totaled **$31.6 million** as of September 30, 2021, and SERP liabilities totaled **$29.3 million**[61](index=61&type=chunk)[62](index=62&type=chunk) Benefit Plan Metrics | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net periodic benefit cost | $71 | $262 | $215 | $787 | | Trading gains related to SERP assets | $407 | $1,100 | $2,500 | $178 | | Unrealized gains on SERP liabilities | $502 | $1,200 | $2,800 | $486 | [12. NOTES PAYABLE TO BANKS](index=19&type=section&id=12.%20NOTES%20PAYABLE%20TO%20BANKS) RPC's $100 million revolving credit facility remained undrawn as of September 30, 2021, and the company was in compliance with all covenants - RPC has a **$100 million revolving Credit Agreement** with a maturity date of July 26, 2023[63](index=63&type=chunk)[65](index=65&type=chunk) - As of September 30, 2021, RPC had **no outstanding borrowings** under the revolving credit facility, with **$82.3 million available** after accounting for letters of credit[69](index=69&type=chunk) Interest Metrics | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Interest incurred | $20 | $86 | $192 | $173 | | Interest paid | $42 | $40 | $124 | $120 | [13. INCOME TAXES](index=21&type=section&id=13.%20INCOME%20TAXES) RPC recorded an income tax provision in 2021, contrasting with a benefit in 2020, due to unfavorable permanent and discrete adjustments - The effective tax rate for the nine months ended September 30, 2021, reflects **unfavorable permanent adjustments** and detrimental discrete adjustments related to restricted stock vesting and approximately **$0.6 million from the employee retention credit**[71](index=71&type=chunk)[72](index=72&type=chunk) Tax Metrics | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Income tax provision (benefit) | $1,891 | $(14,590) | $1,210 | $(86,882) | | Effective tax rate | 26.4% (provision) | 47.0% (benefit) | 30.9% (provision) | 30.1% (benefit) | [14. FAIR VALUE DISCLOSURES](index=23&type=section&id=14.%20FAIR%20VALUE%20DISCLOSURES) RPC categorizes financial instruments into a three-level hierarchy, with equity securities as Level 1 and assets held for sale as Level 2 - Fair value hierarchy: **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), **Level 3** (unobservable inputs)[75](index=75&type=chunk) - Assets held for sale are valued using **observable market data** for comparable properties (Level 2 inputs)[76](index=76&type=chunk) Fair Value of Assets | Asset (in thousands) | Sep 30, 2021 Total | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Equity securities | $180 | $180 | $— | $— | | Investments measured at net asset value | $31,591 | N/A | N/A | N/A | | Assets held for sale | $692 | $— | $692 | $— | [15. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME](index=25&type=section&id=15.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20(LOSS)%20INCOME) Accumulated other comprehensive loss improved to $(17.3) million due to pension adjustment amortization AOCI Components | Component (in thousands) | Balance at Dec 31, 2020 | Change during period | Balance at Sep 30, 2021 | | :--- | :--- | :--- | :--- | | Pension Adjustment | $(15,181) | $458 | $(14,723) | | Foreign Currency Translation | $(2,525) | $(34) | $(2,559) | | **Total** | $(17,706) | $424 | $(17,282) | [16. LEASES](index=26&type=section&id=16.%20LEASES) RPC entered into two equipment rental agreements in Q3 2021, one classified as a finance lease and the other as a short-term operating lease - Agreement 1, for equipment rental, was classified as a **finance lease**, resulting in **$21.7 million** in finance lease right-of-use assets and short-term finance lease liabilities[80](index=80&type=chunk) - Agreement 2, for operating equipment, was accounted for as a **short-term lease** with variable payments, and no related right-of-use asset or lease liability was recognized[81](index=81&type=chunk) Lease Costs | Lease Costs (in thousands) | Amount | | :--- | :--- | | Amortization of leased assets (finance lease) | $363 | | Interest on lease liabilities (finance lease) | $29 | | Operating lease costs | $152 | [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 an overview of the business, industry outlook, and a detailed analysis of financial performance, liquidity, and capital resources [Overview](index=27&type=section&id=Overview) RPC's revenues significantly increased in Q3 2021 due to higher activity levels and slight pricing improvements - RPC provides specialized oilfield services primarily to independent and major oilfield companies in the U S and selected international markets[89](index=89&type=chunk) - Capital expenditures for the nine months ended September 30, 2021, totaled **$44.9 million**, primarily for capitalized maintenance and upgrades of existing equipment[90](index=90&type=chunk) - Q3 2021 revenues **increased by $108.7 million (93.3%)** to $225.3 million compared to Q3 2020, driven by activity increases across all service lines and slight pricing improvements[92](index=92&type=chunk) [Outlook](index=29&type=section&id=Outlook) Rising commodity prices and well completions signal an improved competitive market, with RPC investing in a new Tier IV dual-fuel fleet - Well completions for the nine months ended September 30, 2021, **increased by approximately 29%** compared to the same period in the prior year[99](index=99&type=chunk) - Average **oil prices rose over 72%** and **natural gas prices rose over 119%** in Q3 2021 compared to Q3 2020, encouraging increased drilling and completion activities[100](index=100&type=chunk) - RPC entered into an agreement for a **new Tier IV dual-fuel pressure pumping fleet** in Q3 2021, which began operations in Q4 2021[103](index=103&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) RPC's results show a strong recovery in 2021, with improved revenues and profitability driven by higher activity and commodity prices [THREE MONTHS ENDED SEPTEMBER 30, 2021 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2020](index=31&type=section&id=THREE%20MONTHS%20ENDED%20SEPTEMBER%2030%2C%202021%20COMPARED%20TO%20THREE%20MONTHS%20ENDED%20SEPTEMBER%2030%2C%202020) Q3 2021 revenues increased 93.3% to $225.3 million, driving a return to operating income as costs decreased as a percentage of revenues - Selling, general and administrative expenses for Q3 2020 included **$3.3 million of accelerated vesting** of restricted stock due to an officer's death[113](index=113&type=chunk) - Interest expense increased to **$1.3 million** in Q3 2021 from $73 thousand in Q3 2020, primarily due to a contractual dispute resolution[117](index=117&type=chunk) Q3 2021 vs Q3 2020 Performance | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Consolidated revenues (in thousands) | $225,310 | $116,588 | 93.3% | | Technical Services revenues (in thousands) | $211,842 | $109,278 | 93.9% | | Support Services revenues (in thousands) | $13,468 | $7,310 | 84.2% | | Technical Services operating income (loss) (in thousands) | $8,272 | $(24,941) | N/A | | Support Services operating loss (in thousands) | $(55) | $(3,840) | N/A | | Cost of revenues (in thousands) | $170,621 | $100,872 | 69.1% | | Cost of revenues as % of revenues | 75.7% | 86.5% | -10.8 pp | | Selling, general & administrative expenses (in thousands) | $31,446 | $32,376 | -2.9% | | SG&A as % of revenues | 14.0% | 27.8% | -13.8 pp | | Depreciation and amortization (in thousands) | $18,106 | $18,655 | -2.9% | | Average U S domestic rig count | 500 | 254 | 96.9% | | Average natural gas price (per mcf) | $4.39 | $2.00 | 119.5% | | Average oil price (per barrel) | $70.5 | $40.83 | 72.7% | [NINE MONTHS ENDED SEPTEMBER 30, 2021 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2020](index=33&type=section&id=NINE%20MONTHS%20ENDED%20SEPTEMBER%2030%2C%202021%20COMPARED%20TO%20NINE%20MONTHS%20ENDED%20SEPTEMBER%2030%2C%202020) Revenues for the nine months ended September 30, 2021, increased 32.7% to $596.7 million, with Technical Services returning to profitability - International revenues **decreased 13.5%** for the nine months ended September 30, 2021, compared to the same period in the prior year[119](index=119&type=chunk) - Interest expense increased to **$1.8 million** for the nine months ended September 30, 2021, primarily due to a contractual dispute resolution and a state well servicing tax audit[130](index=130&type=chunk) YTD 2021 vs YTD 2020 Performance | Metric | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Consolidated revenues (in thousands) | $596,677 | $449,665 | 32.7% | | Technical Services revenues (in thousands) | $560,602 | $417,511 | 34.3% | | Support Services revenues (in thousands) | $36,075 | $32,154 | 12.2% | | Technical Services operating income (loss) (in thousands) | $3,938 | $(71,248) | N/A | | Support Services operating loss (in thousands) | $(5,353) | $(4,139) | 29.3% | | Cost of revenues (in thousands) | $462,633 | $362,853 | 27.5% | | Cost of revenues as % of revenues | 77.5% | 80.7% | -3.2 pp | | Selling, general & administrative expenses (in thousands) | $91,444 | $97,681 | -6.5% | | SG&A as % of revenues | 15.3% | 21.7% | -6.4 pp | | Depreciation and amortization (in thousands) | $53,775 | $77,521 | -30.6% | | Impairment and other charges (in thousands) | $— | $207,175 | N/A | | Average U S domestic rig count | 425 | 477 | -10.9% | | Average natural gas price (per mcf) | $3.29 | $1.88 | 81.0% | | Average oil price (per barrel) | $62.4 | $38.46 | 67.3% | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) RPC maintains a strong financial condition and expects sufficient liquidity from existing cash, with its credit facility undrawn [Cash Flows](index=35&type=section&id=Cash%20Flows) Operating cash flow decreased significantly to $26.4 million due to an unfavorable change in accounts receivable - The decrease in operating cash flow was primarily due to an **unfavorable change in accounts receivable of $71.7 million**, partially offset by favorable changes in other working capital components[133](index=133&type=chunk) - Cash used for investing activities **decreased by $5.8 million**, mainly due to a reduction in capital expenditures[136](index=136&type=chunk) YTD Cash Flow Summary | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $26,416 | $131,364 | | Net cash used for investing activities | $(29,114) | $(34,941) | | Net cash used for financing activities | $(963) | $(827) | [Financial Condition and Liquidity](index=37&type=section&id=Financial%20Condition%20and%20Liquidity) RPC expects sufficient liquidity for the next twelve months from existing cash and has $82.3 million available under its credit facility - RPC expects its existing cash and strong capitalization to provide **sufficient liquidity for at least the next twelve months**[138](index=138&type=chunk) - As of September 30, 2021, RPC had **no outstanding borrowings** under its $100 million revolving credit facility, with **$82.3 million available**[139](index=139&type=chunk) - The Company was **in compliance with all credit facility financial covenants** as of September 30, 2021[139](index=139&type=chunk) [Cash Requirements](index=37&type=section&id=Cash%20Requirements) Expected 2021 capital expenditures are $65 million, while the stock buyback program continues and common stock dividends remain suspended - Expected capital expenditures for 2021 are approximately **$65 million**, directed mostly towards capitalized maintenance and selected growth opportunities[140](index=140&type=chunk) - RPC **does not expect to make any additional contributions** to its Retirement Income Plan for the remainder of 2021[142](index=142&type=chunk) - The stock buyback program has **8,248,184 shares remaining available** for repurchase, but the Company has **suspended cash dividends** to common stockholders with no timetable for resumption[143](index=143&type=chunk)[144](index=144&type=chunk) [INFLATION](index=39&type=section&id=INFLATION) RPC faces rising costs for equipment, materials, and labor, and is attempting to pass these increases on to customers - Costs for equipment, materials, and labor are increasing due to **rising oilfield activity and supply chain disruptions**[147](index=147&type=chunk) - Labor costs, which decreased in 2020, have begun to rise in Q4 2020 and the first nine months of 2021[147](index=147&type=chunk) - The Company is attempting to pass price increases to customers, but **success is not assured** due to the competitive nature of the oilfield services business[147](index=147&type=chunk) [OFF BALANCE SHEET ARRANGEMENTS](index=39&type=section&id=OFF%20BALANCE%20SHEET%20ARRANGEMENTS) The Company does not have any material off-balance sheet arrangements - RPC **does not have any material off-balance sheet arrangements**[148](index=148&type=chunk) [RELATED PARTY TRANSACTIONS](index=39&type=section&id=RELATED%20PARTY%20TRANSACTIONS) RPC engages in various transactions with related parties, including Marine Products Corporation and Rollins, Inc Summary of Transactions | Related Party Transaction | 9 Months Ended Sep 30, 2021 (in thousands) | 9 Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | | Charges to Marine Products Corporation | $670 | $646 | | Payments to affiliated suppliers | $751 | $710 | | Charges from Rollins, Inc (services & rent) | $78 | $78 | | Net operating costs for corporate aircraft (255 RC, LLC) | $150 | $150 | [CRITICAL ACCOUNTING POLICIES](index=39&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) There have been no significant changes in the Company's critical accounting policies since December 31, 2020 - **No significant changes** in critical accounting policies since the fiscal year ended December 31, 2020[153](index=153&type=chunk) [IMPACT OF RECENT ACCOUNTING STANDARDS](index=39&type=section&id=IMPACT%20OF%20RECENT%20ACCOUNTING%20STANDARDS) Information regarding recent accounting standards is detailed in Note 2 to the Consolidated Financial Statements - Refer to **Note 2** for details on recent accounting standards, adoption dates, and estimated effects[154](index=154&type=chunk) [SEASONALITY](index=41&type=section&id=SEASONALITY) Demand for RPC's services is primarily influenced by non-seasonal factors like commodity prices and customer capital expenditures - Demand for RPC's services is primarily affected by **oil and natural gas prices and customer capital expenditures**, which are not seasonal to any material degree[157](index=157&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) RPC is exposed to interest rate risk from its credit facility and foreign exchange risk, neither of which is expected to be material - RPC is subject to interest rate risk on its credit facility, which bears a floating rate, but had **no outstanding interest-bearing advances** as of September 30, 2021[160](index=160&type=chunk) - Foreign exchange rate risk is **not expected to have a material effect** on consolidated results, as most transactions occur in U S currency[161](index=161&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2021 - The Company's disclosure controls and procedures were **effective at a reasonable assurance level** as of September 30, 2021[165](index=165&type=chunk) - **No material changes** in internal control over financial reporting occurred during the most recent fiscal quarter[166](index=166&type=chunk) PART II. OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=44&type=section&id=Item%201.%20Legal%20Proceedings) RPC is involved in ordinary course litigation not expected to have a material adverse effect on its financial position - RPC does not believe that the outcome of its ordinary course litigation will have a **material adverse effect** on its financial position or results of operations[169](index=169&type=chunk) [ITEM 1A. RISK FACTORS](index=44&type=section&id=Item%201A.%20Risk%20Factors) Risk factors affecting RPC's business are detailed in the Company's annual report on Form 10-K for the year ended December 31, 2020 - Risk factors are detailed in the Company's **annual report on Form 10-K** for the fiscal year ended December 31, 2020[170](index=170&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - **No unregistered sales** of equity securities or use of proceeds to report[172](index=172&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=44&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - **No defaults** upon senior securities to report[173](index=173&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to RPC, Inc - Mine Safety Disclosures are **not applicable** to the Company[174](index=174&type=chunk) [ITEM 5. OTHER INFORMATION](index=44&type=section&id=Item%205.%20Other%20Information) The Board of Directors adopted amendments to the Company's Bylaws, effective October 26, 2021 - The Board of Directors adopted **amendments to the Company's Bylaws**, effective October 26, 2021, to clarify board meeting parameters, annual stockholder meetings, and board size[175](index=175&type=chunk) [ITEM 6. EXHIBITS](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL taxonomy documents - Exhibits include restated and amended certificates of incorporation, amended and restated bylaws, form of stock certificate, **Section 302 and 906 certifications**, and various XBRL documents[176](index=176&type=chunk) [SIGNATURES](index=46&type=section&id=Signatures) The report is duly signed by the company's CEO and CFO on October 29, 2021 - The report was signed by **Richard A Hubbell, President and CEO**, and **Ben M Palmer, VP, CFO, and Corporate Secretary**, on October 29, 2021[180](index=180&type=chunk)

Financial Data and Key Metrics Changes - Revenues for Q3 2021 increased to $225.3 million from $116.6 million in Q3 2020, primarily due to higher activity levels and improved pricing [11] - Operating profit for Q3 2021 was $8 million compared to an operating loss of $31.8 million in the same quarter of the prior year [11] - EBITDA for Q3 2021 was $26.5 million, a significant improvement from negative $12.3 million in Q3 2020 [12] - Diluted earnings per share for Q3 2021 were $0.02, compared to a loss of $0.08 per share in the same quarter of the prior year [12] - Cost of revenues was $170.6 million or 75.7% of revenues in Q3 2021, down from 86.5% in Q3 2020 [13] Business Line Data and Key Metrics Changes - Technical Services segment revenues for Q3 2021 were $211.8 million, up from $109.3 million in the same quarter last year, with an operating profit of $8.3 million compared to a $24.9 million operating loss in Q3 2020 [16] - Support Services segment revenues increased to $13.5 million from $7.3 million in the same quarter last year, with an operating loss of $55,000 compared to a $3.8 million loss in Q3 2020 [17] Market Data and Key Metrics Changes - RPC's revenues increased 19.4% sequentially from $188.8 million in the prior quarter to $225.3 million in Q3 2021, driven by activity increases across all service lines [18] - Cost of revenues increased 17% sequentially to $170.6 million from $145.8 million in the prior quarter, with a slight decrease in the cost of revenues as a percentage of revenues from 77.2% to 75.7% [19] Company Strategy and Development Direction - The company is focusing on enhancing its pressure pumping fleet and has added a Tier 4 dual fuel fleet, aiming to optimize fuel burn and minimize emissions [23] - RPC is strategically positioning itself to capitalize on the improving market conditions and is optimistic about the fourth quarter and 2022 despite potential supply chain constraints [27][28] Management's Comments on Operating Environment and Future Outlook - Management noted that exploration and production companies are responding positively to higher commodity prices, leading to increased demand for RPC's services [7] - The company is monitoring challenges such as supply chain issues and cost increases but remains optimistic about its financial strength and competitive position [29] Other Important Information - Capital expenditures for Q3 2021 were $19 million, with an estimated total of approximately $65 million for the full year, focusing on maintenance and growth opportunities [25] - RPC ended Q3 2021 with a cash balance of approximately $81 million and remains debt-free [29] Q&A Session Summary Question: Insights on pressure pumping side and 2022 outlook - Management is seeing improvements in pressure pumping and is in the bidding season, hoping for pricing improvements and strong activity levels in 2022 [31][32] Question: Utilization and pricing trends for Tier 4 DGB fleet - There is a bifurcation in customer preferences for ESG-friendly equipment, and both older and newer equipment will have a market [33] Question: Product line revenue breakdown - Pressure pumping accounted for 42.8% of consolidated revenue, followed by downhole tools at 27.5%, and coiled tubing at 11.9% [34] Question: Plans for additional Tier 4 fleets - The company expects to have 8 active fleets in Q4 but has no current plans for additional orders [37][38] Question: Market dynamics and competitive bidding - There are fewer companies bidding, but idle equipment remains, keeping the competitive nature of pricing intact [41] Question: Leasing arrangement for the new fleet - The balloon payment for the new fleet is approximately $17 million after a year, and the leasing arrangement is not expected to become a trend in the industry [44] Question: Pricing negotiations and contract renewals - Pricing increases are being negotiated for both immediate and upcoming contracts, with expectations for more adjustments in January [49] Question: Incremental margins outlook for 2022 - Management anticipates that incremental margins will improve in 2022 compared to 2021, but cost increases may impact expectations [51] Question: Investment justification for new assets - There is currently no clear vision for returns on new investments, but the company is working on a roadmap to establish targets [52][55] Question: Upgrades to Tier 4 DGB - Upgrades to Tier 4 DGB are being evaluated as part of the company's roadmap, with potential for future investments [60]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20Financial%20Information) This section provides RPC, Inc.'s unaudited consolidated financial statements and management's discussion and analysis for the periods ended June 30, 2021 [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents RPC, Inc.'s unaudited consolidated financial statements for the periods ended June 30, 2021, and December 31, 2020, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows. It also includes detailed notes explaining accounting policies, segment information, and other financial disclosures [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section presents RPC, Inc.'s consolidated balance sheets as of June 30, 2021, and December 31, 2020 | ASSETS (in thousands) | June 30, 2021 | December 31, 2020 | | :------------------------------------------------------------------------------------------------ | :------------ | :------------------ | | Cash and cash equivalents | $121,015 | $84,496 | | Accounts receivable, net | 180,674 | 161,771 | | Inventories | 81,198 | 82,918 | | Total current assets | 446,228 | 428,359 | | Property, plant and equipment, less accumulated depreciation | 251,396 | 264,411 | | Total assets | $790,206 | $790,505 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | | | | Accounts payable | $53,524 | $41,080 | | Total current liabilities | 96,223 | 79,565 | | Total liabilities | 166,072 | 158,938 | | Total stockholders' equity | 624,134 | 631,567 | | Total liabilities and stockholders' equity | $790,206 | $790,505 | - Total assets remained relatively stable at **$790.2 million** as of June 30, 2021, compared to **$790.5 million** at December 31, 2020. Cash and cash equivalents increased by **$36.5 million**, while property, plant and equipment decreased by **$13.0 million**[7](index=7&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents RPC, Inc.'s consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 | (in thousands except per share data) | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $188,757 | $89,300 | $371,367 | $333,077 | | Operating loss | $(1,220) | $(37,530) | $(11,741) | $(256,237) | | Net loss | $(726) | $(25,093) | $(10,388) | $(185,516) | | Basic loss per share | $0.00 | $(0.12) | $(0.05) | $(0.87) | | Diluted loss per share | $0.00 | $(0.12) | $(0.05) | $(0.87) | - Revenues for the three months ended June 30, 2021, significantly increased by **111.4% to $188.8 million** compared to **$89.3 million** in the prior year, leading to a substantial reduction in operating loss and net loss. For the six months, revenues increased by **11.5% to $371.4 million**, and net loss decreased significantly from **$185.5 million to $10.4 million**[9](index=9&type=chunk) [Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents RPC, Inc.'s consolidated statements of comprehensive loss for the three and six months ended June 30, 2021 and 2020 | (in thousands) | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(726) | $(25,093) | $(10,388) | $(185,516) | | Comprehensive loss | $(504) | $(24,593) | $(9,877) | $(184,996) | - Comprehensive loss significantly improved for both the three and six months ended June 30, 2021, primarily driven by the reduction in net loss. Other comprehensive income components, such as pension adjustments and foreign currency translation, had a minor positive impact[12](index=12&type=chunk) [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section presents RPC, Inc.'s consolidated statements of stockholders' equity for the six months ended June 30, 2021 | (in thousands) | Balance, Dec 31, 2020 | Stock issued for incentive plans, net | Stock purchased and retired | Net loss | Pension adjustment, net of taxes | Foreign currency translation | Balance, June 30, 2021 | | :------------- | :-------------------- | :------------------------------------ | :-------------------------- | :------- | :------------------------------- | :--------------------------- | :--------------------- | | Common Stock | $21,495 | $93 | $(14) | — | — | — | $21,573 | | Retained Earnings | $627,778 | — | $903 | $(9,662) | — | — | $619,756 | | Total Stockholders' Equity | $631,567 | $1,539 | $(557) | $(9,662) | $153 | $136 | $624,134 | - Total stockholders' equity decreased from **$631.6 million** at December 31, 2020, to **$624.1 million** at June 30, 2021, primarily due to the **$9.7 million net loss** incurred during the period, partially offset by stock issued for incentive plans and positive adjustments from pension and foreign currency translation[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents RPC, Inc.'s consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 | (in thousands) | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $54,866 | $122,099 | | Net cash used for investing activities | $(17,781) | $(25,919) | | Net cash used for financing activities | $(566) | $(798) | | Net increase in cash and cash equivalents | $36,519 | $95,382 | | Cash and cash equivalents at end of period | $121,015 | $145,405 | - Net cash provided by operating activities decreased significantly to **$54.9 million** for the six months ended June 30, 2021, from **$122.1 million** in the prior year, mainly due to a smaller favorable change in working capital. Cash used for investing activities decreased due to reduced capital expenditures[18](index=18&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining RPC, Inc.'s accounting policies, segment information, and other financial disclosures [1. GENERAL](index=8&type=section&id=1.%20GENERAL) This note outlines the basis of presentation for RPC, Inc.'s unaudited consolidated financial statements and key ownership information - The unaudited consolidated financial statements include RPC, Inc. and its wholly-owned subsidiaries, prepared in accordance with GAAP for interim financial information. Management believes all necessary adjustments have been included for fair presentation, but interim results are not indicative of full-year results. A group including the Chairman controls over **50% of the Company's voting power**[20](index=20&type=chunk)[21](index=21&type=chunk)[23](index=23&type=chunk) [2. RECENT ACCOUNTING STANDARDS](index=8&type=section&id=2.%20RECENT%20ACCOUNTING%20STANDARDS) This note details the adoption and expected impact of recent accounting pronouncements on RPC, Inc.'s financial statements - RPC adopted ASU No. 2019-12 (Income Taxes) in Q2 2021, which did not materially impact its financial statements. The company plans to adopt ASU No. 2020-04 (Reference Rate Reform) when LIBOR is discontinued, with no expected material impact[24](index=24&type=chunk)[25](index=25&type=chunk) [3. REVENUES](index=10&type=section&id=3.%20REVENUES) This note describes RPC, Inc.'s revenue recognition policies, primary sources of contract revenue, and related unbilled receivables - RPC generates contract revenues primarily from oilfield services, recognized over time as services are performed. Services are categorized into Technical Services (well site equipment/personnel) and Support Services (off-well site tools/services). Contracts are generally short-term, with payment typically received **30-60 days** after invoicing[26](index=26&type=chunk)[28](index=28&type=chunk)[31](index=31&type=chunk) | (in thousands) | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Oilfield services transferred over time | $188,757 | $89,300 | $371,367 | $333,077 | | Total revenues | $188,757 | $89,300 | $371,367 | $333,077 | - Unbilled trade receivables increased to **$45.2 million** at June 30, 2021, from **$29.6 million** at December 31, 2020, with substantially all expected to be invoiced in the following quarter[35](index=35&type=chunk) [4. IMPAIRMENT AND OTHER CHARGES](index=11&type=section&id=4.%20IMPAIRMENT%20AND%20OTHER%20CHARGES) This note details impairment and other charges recorded by RPC, Inc. for the periods presented | (in thousands) | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Long Lived Asset Impairments | $— | $— | $— | $204,765 | | Severance Costs | $— | $1,487 | $— | $1,882 | | Other | $— | $152 | $— | $528 | | Total | $— | $1,639 | $— | $207,175 | - No impairment or other charges were recorded for the three and six months ended June 30, 2021. In contrast, the prior year periods saw significant charges, including **$1.6 million** for Q2 2020 (primarily severance) and **$207.2 million** for H1 2020 (primarily long-lived asset impairments in Technical Services)[36](index=36&type=chunk)[86](index=86&type=chunk)[121](index=121&type=chunk) [5. EARNINGS PER SHARE](index=12&type=section&id=5.%20EARNINGS%20PER%20SHARE) This note provides the calculation of basic and diluted earnings per share for RPC, Inc. | (In thousands) | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss used in calculating earnings per share | $(726) | $(25,093) | $(10,388) | $(185,516) | | Shares used in calculating basic and diluted earnings per share | 213,009 | 212,402 | 212,970 | 212,360 | - Basic and diluted loss per share for the three months ended June 30, 2021, was **$0.00**, a significant improvement from **$(0.12)** in the prior year. For the six months, it improved to **$(0.05)** from **$(0.87)** in the prior year[9](index=9&type=chunk) [6. STOCK-BASED COMPENSATION](index=12&type=section&id=6.%20STOCK-BASED%20COMPENSATION) This note details RPC, Inc.'s stock-based compensation plans, related expenses, and unrecognized compensation costs - As of June 30, 2021, **3,097,340 shares** were available for grant under the 2014 Stock Incentive Plan. Pre-tax stock-based compensation expense decreased to **$1.47 million** for Q2 2021 (from **$2.02 million** in Q2 2020) and to **$3.01 million** for H1 2021 (from **$4.11 million** in H1 2020)[39](index=39&type=chunk)[40](index=40&type=chunk) | Non-vested restricted shares (in thousands) | Shares | Weighted Average Grant-Date Fair Value | | :------------------------------------------ | :-------- | :------------------------------------- | | Non-vested shares at December 31, 2020 | 2,235,179 | $6.81 | | Granted | 1,010,700 | $3.87 | | Vested | (434,208) | $14.96 | | Forfeited | (95,260) | $6.85 | | Non-vested shares at June 30, 2021 | 2,716,411 | $7.91 | - Total unrecognized compensation cost for non-vested restricted shares was **$41.8 million** as of June 30, 2021, expected to be recognized over a weighted-average period of **4.4 years**[42](index=42&type=chunk) [7. BUSINESS SEGMENT INFORMATION](index=14&type=section&id=7.%20BUSINESS%20SEGMENT%20INFORMATION) This note provides financial information for RPC, Inc.'s two reportable segments: Technical Services and Support Services - RPC operates through two reportable segments: Technical Services (well site equipment/personnel, high capital/personnel intensive) and Support Services (off-well site tools/services, drilling activity influenced). Corporate expenses include centralized support and regulatory compliance[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) | Segment Revenues (in thousands) | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Technical Services | $176,119 | $80,532 | $348,760 | $308,232 | | Support Services | $12,638 | $8,768 | $22,607 | $24,845 | | Total revenues | $188,757 | $89,300 | $371,367 | $333,077 | | Segment Operating Income (Loss) (in thousands) | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Technical Services | $1,428 | $(34,100) | $(4,334) | $(46,307) | | Support Services | $(2,402) | $(1,846) | $(5,298) | $(299) | | Corporate Expenses | $(3,357) | $(3,139) | $(6,680) | $(6,469) | | Total operating loss | $(1,220) | $(37,530) | $(11,741) | $(256,237) | - Technical Services revenues increased significantly by **118.7%** in Q2 2021 and **13.1%** in H1 2021, moving from an operating loss to a profit in Q2 2021 and substantially reducing its H1 2021 operating loss. Support Services revenues increased in Q2 2021 but decreased in H1 2021, with operating losses widening in both periods due to lower rental tool pricing and reduced activity[102](index=102&type=chunk)[114](index=114&type=chunk) [8. CURRENT EXPECTED CREDIT LOSSES](index=17&type=section&id=8.%20CURRENT%20EXPECTED%20CREDIT%20LOSSES) This note describes RPC, Inc.'s accounting policy for expected credit losses on accounts receivable and changes in the allowance for credit losses - The Company uses an expected credit loss model for accounts receivable, based on historical collection, economic conditions, and customer financial status. Specific allowances are established for high-default-probability customers[52](index=52&type=chunk) | Allowance for credit losses (in thousands) | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Beginning balance | $4,815 | $5,181 | | Provision (benefit) for current expected credit losses | $2,113 | $(828) | | Write-offs | $(530) | $(302) | | Recoveries collected (net of expenses) | $7 | $— | | Ending balance | $6,405 | $4,051 | - The allowance for credit losses increased to **$6.4 million** at June 30, 2021, from **$4.8 million** at the beginning of the period, primarily due to a **$2.1 million** provision for current expected credit losses[53](index=53&type=chunk) [9. INVENTORIES](index=17&type=section&id=9.%20INVENTORIES) This note details the composition and valuation of RPC, Inc.'s inventories - Inventories, consisting of raw materials, parts, and supplies, were **$81.2 million** at June 30, 2021, a slight decrease from **$82.9 million** at December 31, 2020. They are recorded at the lower of cost or net realizable value[54](index=54&type=chunk) [10. COMMITMENTS AND CONTINGENCIES](index=17&type=section&id=10.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines RPC, Inc.'s commitments and potential liabilities from ongoing sales and use tax audits - The Company is subject to ongoing sales and use tax audits in various jurisdictions. While some assessment costs are accrued, a recent state tax assessment received on July 12, 2021, is being evaluated, but the Company believes the likelihood of a material loss is remote and cannot be reasonably estimated[55](index=55&type=chunk)[56](index=56&type=chunk) [11. EMPLOYEE BENEFIT PLAN](index=18&type=section&id=11.%20EMPLOYEE%20BENEFIT%20PLAN) This note provides details on RPC, Inc.'s Retirement Income Plan and Supplemental Retirement Plan, including benefit costs and asset information | Net periodic benefit cost (in thousands) | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest cost | $247 | $412 | $494 | $823 | | Expected return on plan assets | $(377) | $(396) | $(754) | $(791) | | Amortization of net losses | $202 | $247 | $404 | $493 | | Net periodic benefit cost | $72 | $263 | $144 | $525 | - Net periodic benefit cost for the Retirement Income Plan decreased significantly to **$72 thousand** for Q2 2021 (from **$263 thousand** in Q2 2020) and to **$144 thousand** for H1 2021 (from **$525 thousand** in H1 2020). No contributions were made to the plan in H1 2021 or H1 2020[57](index=57&type=chunk) - The Supplemental Retirement Plan (SERP) assets, primarily mutual funds and COLI policies, totaled **$31.2 million** at June 30, 2021. Trading gains related to SERP assets were **$1.6 million** for Q2 2021 and **$2.1 million** for H1 2021. SERP liabilities were **$31.0 million** at June 30, 2021, with unrealized gains of **$1.7 million** for Q2 2021 and **$2.3 million** for H1 2021[59](index=59&type=chunk)[60](index=60&type=chunk) [12. NOTES PAYABLE TO BANKS](index=18&type=section&id=12.%20NOTES%20PAYABLE%20TO%20BANKS) This note describes RPC, Inc.'s revolving Credit Agreement, available liquidity, and compliance with covenants - RPC has a **$100 million** revolving Credit Agreement maturing July 26, 2023, which was amended in September 2020 to reduce the maximum borrowing amount, decrease the minimum tangible net worth covenant, and increase margin spreads/commitment fees. As of June 30, 2021, there were no outstanding borrowings, and **$82.1 million** was available after accounting for **$17.9 million** in letters of credit[61](index=61&type=chunk)[62](index=62&type=chunk)[66](index=66&type=chunk)[132](index=132&type=chunk) - The Company was in compliance with all credit facility covenants as of June 30, 2021[64](index=64&type=chunk)[132](index=132&type=chunk) | Interest (in thousands) | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest incurred | $40 | $65 | $106 | $153 | | Interest paid | $40 | $40 | $82 | $80 | [13. INCOME TAXES](index=20&type=section&id=13.%20INCOME%20TAXES) This note details RPC, Inc.'s effective income tax rates and the factors influencing them for the periods presented - For Q2 2021, the effective tax rate was a provision of **4.8%** compared to a benefit of **35.7%** in Q2 2020. For H1 2021, it was a benefit of **6.2%** compared to **28.0%** in H1 2020. The beneficial rate is mainly due to unfavorable permanent adjustments and detrimental discrete adjustments related to restricted stock vesting and the employee retention credit[68](index=68&type=chunk)[111](index=111&type=chunk)[125](index=125&type=chunk) [14. FAIR VALUE DISCLOSURES](index=22&type=section&id=14.%20FAIR%20VALUE%20DISCLOSURES) This note provides information on RPC, Inc.'s fair value measurements for financial assets, categorized by input levels - The Company categorizes fair value measurements into Level 1 (quoted active market prices), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[73](index=73&type=chunk) | Fair Value Measurements at June 30, 2021 (in thousands) | Total | Level 1 (Quoted prices in active markets for identical assets) | Level 2 (Significant other observable inputs) | Level 3 (Significant unobservable inputs) | | :------------------------------------------------------ | :--------- | :------------------------------------------------------------- | :-------------------------------------------- | :---------------------------------------- | | Assets: | | | | | | Equity securities | $184 | $184 | $— | $— | | Investments measured at net asset value | $31,183 | | | | | Assets held for sale | $4,032 | $— | $4,032 | $— | - Equity securities are valued at Level 1, while investments measured at net asset value (SERP assets) are primarily recorded at their net cash surrender values, approximating fair value. Assets held for sale are valued at Level 2 based on observable market data[71](index=71&type=chunk)[74](index=74&type=chunk) [15. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME](index=23&type=section&id=15.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20(LOSS)%20INCOME) This note details the components and changes in RPC, Inc.'s accumulated other comprehensive loss | (in thousands) | Pension Adjustment | Foreign Currency Translation | Total | | :------------- | :----------------- | :--------------------------- | :---- | | Balance at December 31, 2020 | $(15,181) | $(2,525) | $(17,706) | | Total activity for the period | $306 | $205 | $511 | | Balance at June 30, 2021 | $(14,875) | $(2,320) | $(17,195) | - Accumulated other comprehensive loss improved from **$(17.7) million** at December 31, 2020, to **$(17.2) million** at June 30, 2021, driven by positive changes in pension adjustment and foreign currency translation[76](index=76&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on RPC's financial performance, condition, and future outlook. It details the impact of market conditions, particularly oil and gas prices and the COVID-19 pandemic, on revenues, costs, and profitability. It also discusses liquidity, capital resources, and key operational strategies [Overview](index=24&type=section&id=Overview) This section provides an overview of RPC, Inc.'s business, key influencing factors, and a summary of recent financial performance - RPC provides specialized oilfield services primarily in the U.S. and selected international markets. Financial results are influenced by oil/natural gas prices, service pricing, equipment utilization, geopolitical factors, economic conditions, and weather[80](index=80&type=chunk) - The oil and gas industry experienced significant disruption in 2020 due to OPEC disputes and the COVID-19 pandemic, which continued into Q2 2021. RPC maintained operations as an essential infrastructure business, implementing employee health and safety procedures[82](index=82&type=chunk) - Q2 2021 revenues increased by **111.4% to $188.8 million** compared to Q2 2020, driven by significantly higher activity levels across all major service lines, recovering from the pandemic's impact. International revenues increased **6.0% to $7.2 million**[83](index=83&type=chunk) - Operating loss improved significantly to **$(1.2) million** in Q2 2021 from **$(37.5) million** in Q2 2020. Net loss also improved to **$(0.7) million** from **$(25.1) million** in the same period[9](index=9&type=chunk) [Outlook](index=26&type=section&id=Outlook) This section discusses the market outlook for the oil and gas industry, including drilling activity and RPC, Inc.'s strategic responses - U.S. domestic drilling rig count declined significantly from Q4 2018 to Q3 2020 due to decreased oil demand. However, oil prices rose over **66%** and natural gas prices over **74%** in Q2 2021 compared to Q2 2020, encouraging increased drilling and completion activities[91](index=91&type=chunk)[93](index=93&type=chunk) - Oil-directed drilling is expected to remain the majority of domestic drilling, with natural gas-directed drilling remaining a low percentage due to relatively low prices and high production from existing wells[94](index=94&type=chunk) - RPC continues to selectively upgrade existing equipment for dual-fuel capability and advanced technology. The company will monitor customer activity and financial returns before activating additional idle equipment, aiming for moderate fleet expansions to maintain a strong balance sheet and position for long-term growth[96](index=96&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section analyzes RPC, Inc.'s financial performance, comparing revenues, costs, and profitability across different periods [THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO THREE MONTHS ENDED JUNE 30, 2020](index=28&type=section&id=THREE%20MONTHS%20ENDED%20JUNE%2030,%202021%20COMPARED%20TO%20THREE%20MONTHS%20ENDED%20JUNE%2030,%202020) This section provides a detailed comparison of RPC, Inc.'s financial results for the three months ended June 30, 2021, versus the prior year period | (in thousands) | June 30, 2021 | June 30, 2020 | Change (%) | | :------------- | :------------ | :------------ | :--------- | | Revenues | $188,757 | $89,300 | 111.4% | | Domestic Revenues | $181,530 | $82,506 | 120.0% | | International Revenues | $7,227 | $6,794 | 6.0% | | Cost of revenues | $145,789 | $80,037 | 82.2% | | Selling, general and administrative expenses | $29,403 | $28,775 | 2.2% | | Depreciation and amortization | $17,896 | $19,573 | -8.6% | | Impairment and other charges | $— | $1,639 | -100.0% | | Operating income (loss) | $(1,220) | $(37,530) | 96.8% | | Income tax provision (benefit) | $33 | $(13,921) | -100.2% | - Average natural gas price increased by **74.3%** and average oil price by **143.7%** in Q2 2021 compared to Q2 2020. The average domestic rig count increased by **15.6%**[101](index=101&type=chunk) - Technical Services operating income was **$1.4 million** in Q2 2021, a significant improvement from a **$34.1 million loss** in Q2 2020. Support Services operating loss widened to **$2.4 million** from **$1.8 million** due to lower rental tool pricing[102](index=102&type=chunk) [SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO SIX MONTHS ENDED JUNE 30, 2020](index=30&type=section&id=SIX%20MONTHS%20ENDED%20JUNE%2030,%202021%20COMPARED%20TO%20SIX%20MONTHS%20ENDED%20JUNE%2030,%202020) This section provides a detailed comparison of RPC, Inc.'s financial results for the six months ended June 30, 2021, versus the prior year period | (in thousands) | June 30, 2021 | June 30, 2020 | Change (%) | | :------------- | :------------ | :------------ | :--------- | | Revenues | $371,367 | $333,077 | 11.5% | | Domestic Revenues | $354,459 | $310,500 | 14.2% | | International Revenues | $16,908 | $22,577 | -25.1% | | Cost of revenues | $292,012 | $261,981 | 11.5% | | Selling, general and administrative expenses | $59,998 | $65,305 | -8.1% | | Depreciation and amortization | $35,669 | $58,866 | -39.4% | | Impairment and other charges | $— | $207,175 | -100.0% | | Operating loss | $(11,741) | $(256,237) | 95.4% | | Income tax benefit | $(681) | $(72,292) | 99.1% | - Average natural gas price increased by **81.0%** and average oil price by **67.3%** in H1 2021 compared to H1 2020. The average domestic rig count decreased by **27.8%**[113](index=113&type=chunk) - Technical Services operating loss significantly reduced to **$4.3 million** in H1 2021 from **$46.3 million** in H1 2020. Support Services operating loss widened to **$5.3 million** from **$0.3 million** due to lower activity levels for rental tools[114](index=114&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses RPC, Inc.'s cash flows, financial condition, and capital requirements [Cash Flows](index=32&type=section&id=Cash%20Flows) This section analyzes RPC, Inc.'s cash flows from operating, investing, and financing activities - Cash and cash equivalents increased by **$36.5 million** to **$121.0 million** as of June 30, 2021, from **$84.5 million** at December 31, 2020[126](index=126&type=chunk) | (In thousands) | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $54,866 | $122,099 | | Net cash used for investing activities | $(17,781) | $(25,919) | | Net cash used for financing activities | $(566) | $(798) | - Operating cash flow decreased due to a smaller favorable change in working capital, despite a federal tax refund. Investing cash flow decreased due to reduced capital expenditures, partially offset by lower proceeds from asset sales. Financing cash flow decreased due to lower costs for share repurchases related to restricted stock vesting[127](index=127&type=chunk)[128](index=128&type=chunk)[130](index=130&type=chunk) [Financial Condition and Liquidity](index=33&type=section&id=Financial%20Condition%20and%20Liquidity) This section assesses RPC, Inc.'s overall financial health and ability to meet its short-term and long-term obligations - RPC's financial condition remains strong, with existing cash and strong capitalization expected to provide sufficient liquidity for at least the next twelve months without needing the revolving credit facility[131](index=131&type=chunk) - The **$100 million** revolving credit facility had **$82.1 million** available as of June 30, 2021, after accounting for **$17.9 million** in letters of credit, and the Company was in compliance with all financial covenants[132](index=132&type=chunk) [Cash Requirements](index=33&type=section&id=Cash%20Requirements) This section outlines RPC, Inc.'s anticipated capital expenditures, pension contributions, and stock buyback plans - Expected capital expenditures for 2021 are approximately **$65 million**, with **$25.9 million** spent by June 30, 2021, primarily for maintenance and upgrades of existing equipment, including dual-fuel pressure pumping equipment[133](index=133&type=chunk) - The Company did not make cash contributions to its Retirement Income Plan in H1 2021 and does not expect to for the remainder of the year[135](index=135&type=chunk) - RPC has an authorized stock buyback program for up to **41.6 million shares**, with **8.2 million shares** remaining available. No open market purchases were made in H1 2021, only shares repurchased for taxes related to restricted stock vesting[136](index=136&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - The Board suspended common stock dividends on July 22, 2019, and expects to resume them subject to earnings and financial condition, with no set timetable[137](index=137&type=chunk) [INFLATION](index=34&type=section&id=INFLATION) This section discusses the impact of inflation on RPC, Inc.'s costs and its ability to pass these costs to customers - Increased oilfield activity in late 2020 and H1 2021 has led to rising labor costs due to skilled labor departure and increasing raw material prices due to supply chain disruptions. RPC is attempting to pass these costs to customers, but success is not assured due to competitive market conditions[139](index=139&type=chunk) [OFF BALANCE SHEET ARRANGEMENTS](index=34&type=section&id=OFF%20BALANCE%20SHEET%20ARRANGEMENTS) This section confirms that RPC, Inc. does not have any material off-balance sheet arrangements - The Company does not have any material off-balance sheet arrangements[140](index=140&type=chunk) [RELATED PARTY TRANSACTIONS](index=34&type=section&id=RELATED%20PARTY%20TRANSACTIONS) This section details transactions between RPC, Inc. and its related parties - RPC charged Marine Products Corporation **$437 thousand** for administrative services in H1 2021. The Company also purchased **$514 thousand** in products/services from suppliers owned by officers/stockholders and paid Rollins, Inc. **$52 thousand** for administrative services and rent in H1 2021. Jointly owned 255 RC, LLC incurred **$100 thousand** in net operating costs for a corporate aircraft[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=34&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section refers to RPC, Inc.'s critical accounting policies as disclosed in its annual report - There have been no significant changes in critical accounting policies since the fiscal year ended December 31, 2020, as referenced in the Company's annual report on Form 10-K[145](index=145&type=chunk) [IMPACT OF RECENT ACCOUNTING STANDARDS](index=34&type=section&id=IMPACT%20OF%20RECENT%20ACCOUNTING%20STANDARDS) This section directs readers to Note 2 for details on the impact of recent accounting standards - Refer to Note 2 of the Notes to Consolidated Financial Statements for details on recent accounting standards, including adoption dates and estimated effects[146](index=146&type=chunk) [SEASONALITY](index=36&type=section&id=SEASONALITY) This section explains that demand for RPC, Inc.'s services is driven by customer capital expenditures, not seasonal factors - Demand for RPC's services is primarily driven by customer capital expenditures in oil and gas exploration and production, which fluctuate with current and projected oil and natural gas prices and drilling activity, rather than being seasonal to any material degree[149](index=149&type=chunk) [FORWARD-LOOKING STATEMENTS](index=36&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section identifies forward-looking statements and outlines risks that could cause actual results to differ materially - This section identifies forward-looking statements related to business strategy, future demand, market conditions, and financial performance. It also outlines known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from projections, including the impact of the COVID-19 pandemic, oil/gas price declines, geopolitical factors, and competition[150](index=150&type=chunk)[151](index=151&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) RPC is exposed to interest rate risk from its credit facility and foreign exchange rate risk, though the latter is not expected to be material due to the majority of transactions being in U.S. currency - The Company is subject to interest rate risk on its credit facility, which bears a floating rate. As of June 30, 2021, there were no outstanding interest-bearing advances[152](index=152&type=chunk) - RPC is also exposed to market risk from foreign exchange rates, but this is not expected to materially affect consolidated results due to the majority of transactions occurring in U.S. currency[153](index=153&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of RPC's disclosure controls and procedures as of June 30, 2021, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting were identified during the quarter - As of June 30, 2021, RPC's management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were **effective at a reasonable assurance level**[157](index=157&type=chunk) - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[158](index=158&type=chunk) [PART II. OTHER INFORMATION](index=28&type=section&id=Part%20II.%20Other%20Information) This section provides additional disclosures including legal proceedings, risk factors, equity sales, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=28&type=section&id=Item%201.%20Legal%20Proceedings) RPC is involved in routine litigation but does not anticipate any material adverse effects on its financial position or results of operations from these proceedings - 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[161](index=161&type=chunk) [ITEM 1A. RISK FACTORS](index=28&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors detailed in the Company's annual report on Form 10-K for the year ended December 31, 2020 - For a comprehensive list of risk factors, refer to the Company's annual report on Form 10-K for the year ended December 31, 2020[162](index=162&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the second quarter of 2021, RPC repurchased 1,578 shares at an average price of $5.65, solely in connection with taxes related to the vesting of restricted shares. No open market purchases were made, and 8,248,184 shares remain available under the existing stock buyback program | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Number of Shares that May Yet Be Purchased Under Plans or Programs | | :------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------- | | April 1, 2021 to April 30, 2021 | 1,578 | $5.65 | 8,248,184 | | May 1, 2021 to May 31, 2021 | — | — | 8,248,184 | | June 1, 2021 to June 30, 2021 | — | — | 8,248,184 | | Totals | 1,578 | $5.65 | 8,248,184 | - The repurchased shares were exclusively for taxes related to the vesting of restricted shares, not open market purchases. The stock buyback program, authorizing up to **41.6 million shares**, has no predetermined expiration date[164](index=164&type=chunk)[165](index=165&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=28&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) There were no defaults upon senior securities reported - No defaults upon senior securities were reported[166](index=166&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to RPC, Inc - Mine Safety Disclosures are not applicable to the Company[167](index=167&type=chunk) [ITEM 5. OTHER INFORMATION](index=28&type=section&id=Item%205.%20Other%20Information) No other information was reported under this item - No other information was reported[168](index=168&type=chunk) [ITEM 6. EXHIBITS](index=29&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the 10-Q report, including corporate organizational documents, stock certificates, Section 302 and 906 certifications, and XBRL taxonomy documents - Exhibits include Restated Certificate of Incorporation, Amended and Restated Bylaws, Form of Stock Certificate, Section 302 and 906 certifications for CEO and CFO, and various XBRL taxonomy documents[170](index=170&type=chunk) [SIGNATURES](index=30&type=section&id=Signatures) This section contains the official signatures of RPC, Inc.'s President, CEO, CFO, and Corporate Secretary, certifying the report - The report was signed on July 30, 2021, by Richard A. Hubbell, President and Chief Executive Officer, and Ben M. Palmer, Vice President, Chief Financial Officer and Corporate Secretary[174](index=174&type=chunk)

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]