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

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

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

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20Financial%20Information) This section provides unaudited consolidated financial statements, management's analysis of financial condition and operations, market risk disclosures, and controls and procedures for the company [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 RPC, Inc. and its subsidiaries, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, recent standards, revenue recognition, impairment charges, segment information, and other financial disclosures for the three months ended March 31, 2020 and 2019 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's financial position, including assets, liabilities, and equity, at specific points in time Consolidated Balance Sheets (in millions) | Metric | March 31, 2020 (in millions) | December 31, 2019 (in millions) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $82.646 | $50.023 | | Total current assets | $479.824 | $436.858 | | Total assets | $869.132 | $1,053.218 | | Total current liabilities | $118.178 | $101.402 | | Total liabilities | $197.897 | $222.885 | | Total stockholders' equity | $671.235 | $830.333 | - Total assets decreased by **$184.086 million** from December 31, 2019, to March 31, 2020, primarily due to a significant reduction in Property, plant and equipment[7](index=7&type=chunk) - Cash and cash equivalents increased by **$32.623 million** from December 31, 2019, to March 31, 2020[7](index=7&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income or loss over a specific period Consolidated Statements of Operations (in millions) | Metric | Three months ended March 31, 2020 (in millions) | Three months ended March 31, 2019 (in millions) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Revenues | $243.777 | $334.656 | | Cost of revenues | $181.944 | $252.395 | | Selling, general and administrative expenses | $36.530 | $45.421 | | Impairment and other charges | $205.536 | $0 | | Operating loss | $(218.707) | $(2.161) | | Net loss | $(160.423) | $(0.739) | | Basic (Loss) Earnings per share | $(0.76) | $0.00 | | Diluted (Loss) Earnings per share | $(0.76) | $0.00 | | Dividends per share | $0.00 | $0.10 | - Revenues decreased by **27.2% YoY**, from **$334.656 million** in Q1 2019 to **$243.777 million** in Q1 2020[9](index=9&type=chunk) - The company reported a significant net loss of **$160.423 million** in Q1 2020, compared to a net loss of **$0.739 million** in Q1 2019, primarily due to **$205.536 million** in impairment and other charges[9](index=9&type=chunk) - Dividends per share were suspended in Q1 2020, down from **$0.10** in Q1 2019[9](index=9&type=chunk) [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the total comprehensive income or loss, including net income and other comprehensive income items Consolidated Statements of Comprehensive Income (in millions) | Metric | Three months ended March 31, 2020 (in millions) | Three months ended March 31, 2019 (in millions) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net loss | $(160.423) | $(0.739) | | Other comprehensive income (loss): | | | | Pension adjustment and reclassification adjustment, net of taxes | $0.732 | $0.173 | | Foreign currency translation | $(0.712) | $0.098 | | Comprehensive loss | $(160.403) | $(0.468) | - Comprehensive loss significantly increased to **$160.403 million** in Q1 2020 from **$0.468 million** in Q1 2019, driven by the higher net loss[11](index=11&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity accounts, including retained earnings and common stock, over a period Consolidated Statements of Stockholders' Equity (in millions) | Metric | December 31, 2019 (in millions) | March 31, 2020 (in millions) | | :----------------------------------- | :----------------------------- | :----------------------------- | | Total Stockholders' Equity | $830.333 | $671.235 | | Retained Earnings | $832.113 | $672.912 | | Common Stock Shares | 214,423 | 215,260 | | Stock issued for stock incentive plans, net | N/A | $2.097 | | Stock purchased and retired | N/A | $(0.792) | | Net loss | N/A | $(160.423) | - Total stockholders' equity decreased by **$159.098 million** from December 31, 2019, to March 31, 2020, primarily due to the net loss incurred[13](index=13&type=chunk) - Retained earnings decreased by **$159.201 million**, reflecting the net loss for the period[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by operating, investing, and financing activities Consolidated Statements of Cash Flows (in millions) | Metric | Three months ended March 31, 2020 (in millions) | Three months ended March 31, 2019 (in millions) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $54.839 | $77.146 | | Net cash used for investing activities | $(21.424) | $(56.210) | | Net cash used for financing activities | $(0.792) | $(24.184) | | Net increase (decrease) in cash and cash equivalents | $32.623 | $(3.248) | | Cash and cash equivalents at end of period | $82.646 | $113.014 | - Net cash provided by operating activities decreased by **$22.307 million** YoY, from **$77.146 million** in Q1 2019 to **$54.839 million** in Q1 2020[16](index=16&type=chunk) - Net cash used for investing activities decreased by **$34.786 million** YoY, from **$56.210 million** in Q1 2019 to **$21.424 million** in Q1 2020, primarily due to lower capital expenditures[16](index=16&type=chunk) - Net cash used for financing activities decreased significantly by **$23.392 million** YoY, from **$24.184 million** in Q1 2019 to **$0.792 million** in Q1 2020, mainly due to the suspension of dividends[16](index=16&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the consolidated financial statements [1. GENERAL](index=10&type=section&id=1.%20GENERAL) This note outlines the basis of presentation for the unaudited interim financial statements and the company's control structure - The unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions[18](index=18&type=chunk) - Operating results for Q1 2020 are not indicative of the full year 2020 results[19](index=19&type=chunk) - A group including the Company's Chairman and his brother controls over **50%** of the Company's voting power[21](index=21&type=chunk) [2. RECENT ACCOUNTING STANDARDS](index=10&type=section&id=2.%20RECENT%20ACCOUNTING%20STANDARDS) This note discusses the adoption and impact of new accounting pronouncements on the company's financial reporting - The Company adopted ASU No. 2016-13 (CECL model) in Q1 2020, requiring earlier recognition of credit losses, with an immaterial cumulative-effect adjustment to retained earnings[22](index=22&type=chunk) - ASU No. 2017-04, simplifying goodwill impairment testing, was adopted prospectively in Q1 2020[22](index=22&type=chunk) - ASU No. 2019-12, simplifying income tax accounting, is effective Q1 2021, and the Company is evaluating its impact[25](index=25&type=chunk) [3. REVENUES](index=12&type=section&id=3.%20REVENUES) This note details the company's revenue recognition policies and disaggregates revenues by service segment - RPC generates contract revenues primarily from specialized oilfield services, recognized over time as services are performed[26](index=26&type=chunk)[34](index=34&type=chunk) - Services are categorized into Technical Services (well site equipment/personnel) and Support Services (off-well site services/tools)[28](index=28&type=chunk) Segment Revenues (in millions) | Segment | Three months ended March 31, 2020 (in millions) | Three months ended March 31, 2019 (in millions) | | :---------------- | :------------------------------------------ | :------------------------------------------ | | Technical Services | $227.700 | $314.079 | | Support Services | $16.077 | $20.577 | | Total Revenues | $243.777 | $334.656 | [4. IMPAIRMENT AND OTHER CHARGES](index=14&type=section&id=4.%20IMPAIRMENT%20AND%20OTHER%20CHARGES) This note explains the significant impairment and other charges recorded due to market conditions impacting asset values - Due to the COVID-19 pandemic, OPEC disputes, and declining oil prices, RPC recorded **$205.536 million** in pre-tax impairment and other charges in Q1 2020[36](index=36&type=chunk)[38](index=38&type=chunk) - These charges primarily relate to long-lived asset impairments (**$204.765 million**) within the Technical Services segment, specifically pressure pumping and coiled tubing assets[38](index=38&type=chunk) - Goodwill was deemed not impaired as the fair value of each reporting unit exceeded its net book value[38](index=38&type=chunk) [5. EARNINGS PER SHARE](index=16&type=section&id=5.%20EARNINGS%20PER%20SHARE) This note provides the calculation of basic and diluted earnings per share, reflecting the company's profitability on a per-share basis Earnings Per Share Data (in millions, except per share amounts) | Metric | Three months ended March 31, 2020 (in millions) | Three months ended March 31, 2019 (in millions) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net loss available for stockholders | $(160.423) | $(0.739) | | Net loss income used in calculating earnings per share | $(160.423) | $(0.964) | | Shares used in calculating basic and diluted EPS | 212,311 | 212,491 | - Basic and diluted loss per share was **$(0.76)** for Q1 2020, compared to **$0.00** for Q1 2019[9](index=9&type=chunk) [6. STOCK-BASED COMPENSATION](index=17&type=section&id=6.%20STOCK-BASED%20COMPENSATION) This note details the expense recognized for stock-based awards and the remaining unrecognized compensation cost Stock-Based Compensation Expense (in millions) | Metric | Three months ended March 31, 2020 (in millions) | Three months ended March 31, 2019 (in millions) | | :---------------- | :------------------------------------------ | :------------------------------------------ | | Pre-tax expense | $2.097 | $2.452 | | After tax expense | $1.583 | $1.851 | - Total unrecognized compensation cost for non-vested restricted shares was **$47.529 million** as of March 31, 2020, expected to be recognized over **3.8 years**[45](index=45&type=chunk) [7. BUSINESS SEGMENT INFORMATION](index=17&type=section&id=7.%20BUSINESS%20SEGMENT%20INFORMATION) This note provides financial data disaggregated by the company's two reportable business segments: Technical Services and Support Services - RPC operates under two reportable segments: Technical Services (well site activities like pressure pumping) and Support Services (off-well site services like rental tools)[46](index=46&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) Segment Financial Performance (in millions) | Segment | Q1 2020 Revenues (in millions) | Q1 2019 Revenues (in millions) | Q1 2020 Operating (Loss) Income (in millions) | Q1 2019 Operating (Loss) Income (in millions) | | :---------------- | :----------------------------- | :----------------------------- | :------------------------------------------ | :------------------------------------------ | | Technical Services | $227.700 | $314.079 | $(12.207) | $(4.457) | | Support Services | $16.077 | $20.577 | $1.547 | $3.137 | | Corporate Expenses | N/A | N/A | $(3.330) | $(4.345) | | Impairment and Other Charges | N/A | N/A | $(205.536) | $0 | | Total Revenues | $243.777 | $334.656 | N/A | N/A | | Total Operating Loss | N/A | N/A | $(218.707) | $(2.161) | - Technical Services revenues decreased by **27.5% YoY**, and Support Services revenues decreased by **21.9% YoY**[51](index=51&type=chunk) [8. CURRENT EXPECTED CREDIT LOSSES](index=21&type=section&id=8.%20CURRENT%20EXPECTED%20CREDIT%20LOSSES) This note describes the company's adoption of the CECL model and the methodology for estimating credit losses - The Company adopted ASU No. 2016-13 (CECL) on January 1, 2020, with an immaterial non-adjustment to retained earnings[55](index=55&type=chunk) - The allowance for credit losses is based on historical collection, economic conditions, and customer financial status, with no significant impact from COVID-19 or OPEC disputes on the estimate[55](index=55&type=chunk)[57](index=57&type=chunk) Allowance for Credit Losses (in millions) | Metric | 2020 (in millions) | | :----------------------------------- | :------------------ | | Beginning balance, January 1 | $5.181 | | Provision for current expected credit losses | $0.212 | | Write-offs | $(0.301) | | Recoveries collected (net of expenses) | $0.008 | | Balance as of March 31 | $5.100 | [9. INVENTORIES](index=23&type=section&id=9.%20INVENTORIES) This note provides details on the composition and changes in the company's inventory balances Inventories (in millions) | Metric | March 31, 2020 (in millions) | December 31, 2019 (in millions) | | :---------------- | :----------------------------- | :----------------------------- | | Inventories | $97.267 | $100.947 | - Inventories consist of raw materials, parts, and supplies, decreasing by **$3.680 million** from December 31, 2019, to March 31, 2020[59](index=59&type=chunk) [10. EMPLOYEE BENEFIT PLAN](index=23&type=section&id=10.%20EMPLOYEE%20BENEFIT%20PLAN) This note outlines the costs and changes related to the company's employee benefit plans, including pension adjustments Employee Benefit Plan Costs (in millions) | Metric | Three months ended March 31, 2020 (in millions) | Three months ended March 31, 2019 (in millions) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net periodic benefit cost | $0.262 | $0.070 | | Unrealized (losses) gains, net (SERP assets) | $(4.987) | $2.852 | - The Company made no contributions to its Retirement Income Plan in Q1 2020 or Q1 2019[60](index=60&type=chunk) - SERP assets decreased from **$28.476 million** at December 31, 2019, to **$23.491 million** at March 31, 2020, resulting in unrealized losses[61](index=61&type=chunk) [11. NOTES PAYABLE TO BANKS](index=25&type=section&id=11.%20NOTES%20PAYABLE%20TO%20BANKS) This note describes the company's revolving credit facility, its terms, and compliance with covenants - RPC has a **$125 million** revolving credit facility maturing July 26, 2023, with no outstanding borrowings as of March 31, 2020[63](index=63&type=chunk)[67](index=67&type=chunk) - Letters of credit outstanding totaled **$19.8 million**, leaving **$105.2 million** available under the facility[67](index=67&type=chunk) - The Company was in compliance with all credit facility covenants as of March 31, 2020[64](index=64&type=chunk) [12. INCOME TAXES](index=25&type=section&id=12.%20INCOME%20TAXES) This note details the income tax benefit, effective tax rate, and significant components affecting the tax provision - The income tax benefit for Q1 2020 was **$58.371 million**, reflecting an effective tax rate of **26.7%**, compared to **26.5%** in Q1 2019[9](index=9&type=chunk)[71](index=71&type=chunk) - The Q1 2020 effective rate includes a net discrete provision of **$22.8 million**, primarily from revaluing deferred tax assets/liabilities and a **$13.1 million** benefit from the CARES Act's net operating loss carryback provision[71](index=71&type=chunk)[72](index=72&type=chunk) [13. FAIR VALUE DISCLOSURES](index=27&type=section&id=13.%20FAIR%20VALUE%20DISCLOSURES) This note categorizes assets and liabilities measured at fair value into a three-level hierarchy based on input observability - Fair value measurements are categorized into Level 1 (quoted active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[74](index=74&type=chunk) Fair Value Measurements (in millions) | Asset Category | March 31, 2020 Total (in millions) | Level 1 (in millions) | Level 2 (in millions) | Level 3 (in millions) | | :-------------------------- | :----------------------------- | :-------------------- | :-------------------- | :-------------------- | | Equity securities | $0.056 | $0.056 | $0 | $0 | | Investments measured at net asset value | $23.491 | N/A | N/A | N/A | | Assets held for sale | $5.385 | $0 | $5.385 | $0 | | Long-lived assets held and used | $133.101 | $0 | $0 | $133.101 | - Long-lived assets held and used, impaired in Q1 2020, were valued using Level 3 unobservable inputs (discounted expected cash flows)[79](index=79&type=chunk) [14. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME](index=29&type=section&id=14.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20(LOSS)%20INCOME) This note presents the components of accumulated other comprehensive income (loss) and changes during the period Accumulated Other Comprehensive (Loss) Income (in millions) | Component | Balance at Dec 31, 2019 (in millions) | Change during Q1 2020 (in millions) | Balance at Mar 31, 2020 (in millions) | | :-------------------- | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Pension Adjustment | $(20.908) | $0.732 | $(20.176) | | Foreign Currency Translation | $(2.315) | $(0.712) | $(3.027) | | Total | $(23.223) | $0.020 | $(23.203) | - Accumulated other comprehensive loss slightly decreased by **$0.020 million** from December 31, 2019, to March 31, 2020[81](index=81&type=chunk) - In Q1 2019, the Company reclassified **$2.7 million** of stranded tax effects related to its pension plan from AOCI to retained earnings due to a change in U.S. federal tax rate[84](index=84&type=chunk) [15. LEASES](index=30&type=section&id=15.%20LEASES) This note describes the company's operating lease arrangements, including right-of-use assets and lease liabilities - RPC recognizes operating leases with durations over **12 months** on the balance sheet as Right-Of-Use (ROU) assets and lease liabilities[85](index=85&type=chunk) Lease Information (in millions) | Metric | March 31, 2020 (in millions) | | :----------------------------------- | :----------------------------- | | Operating lease right-of-use assets | $33.250 | | Current portion of operating lease liabilities | $10.215 | | Long-term operating lease liabilities | $27.529 | | Total lease liabilities | $37.744 | | Total lease cost (Q1 2020) | $4.405 | - Weighted average remaining lease term for operating leases is **5.3 years**, with a weighted average discount rate of **3.38%**[90](index=90&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=32&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 condition and results of operations for the three months ended March 31, 2020, compared to the prior year. It highlights the significant negative impact of the COVID-19 pandemic and OPEC disputes on the oil and gas industry, leading to reduced activity, lower pricing, and substantial impairment charges. The company discusses its strategic responses, financial performance by segment, liquidity, capital resources, and future outlook [Overview](index=32&type=section&id=Overview) This section provides a high-level summary of the company's business and the key factors impacting its financial performance in the quarter - RPC provides specialized oilfield services, with revenues and profits dependent on oil and gas prices and customer drilling/production activities[93](index=93&type=chunk) - Q1 2020 results were overshadowed by OPEC disputes and the COVID-19 pandemic, leading to customer cancellations and a projected historically high decline in oilfield activity[95](index=95&type=chunk) Key Financial Metrics (in millions) | Metric | Q1 2020 (in millions) | Q1 2019 (in millions) | Change (%) | | :----------------------------------- | :-------------------- | :-------------------- | :--------- | | Revenues | $243.8 | $334.7 | -27.2% | | Impairment and other charges | $205.5 | $0 | N/A | | Loss before income taxes | $(218.8) | $(1.0) | N/A | | Diluted loss per share | $(0.76) | $0.00 | N/A | | Cash provided by operating activities | $54.8 | $77.1 | -28.9% | [Outlook](index=34&type=section&id=Outlook) This section discusses management's expectations for future oilfield activity, market conditions, and their potential impact on the company's operations - U.S. oilfield well completion activity is expected to decline significantly in the near term due to recent steep drops in oil prices[104](index=104&type=chunk)[105](index=105&type=chunk) - Oil prices decreased by over **80%** in early Q2 2020, reaching levels not seen since **1986**, with significant negative implications for RPC's near-term activity and financial results[105](index=105&type=chunk) - Increased competition and improved service efficiency, coupled with declining oil prices, have led to oversupply in oilfield completion services, negatively impacting pricing and equipment utilization[107](index=107&type=chunk)[108](index=108&type=chunk) - Lower activity levels are partially offset by improved availability and lower costs for raw materials and skilled labor[112](index=112&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue trends, cost structures, and profitability drivers Consolidated Results of Operations | Metric | Q1 2020 | Q1 2019 | Change (%) | | :----------------------------------- | :------ | :------ | :--------- | | Consolidated revenues | $243.8M | $334.7M | -27.2% | | Technical Services revenues | $227.7M | $314.1M | -27.5% | | Support Services revenues | $16.1M | $20.6M | -21.9% | | Consolidated operating loss | $(218.7)M | $(2.2)M | N/A | | Cost of revenues as % of revenues | 74.6% | 75.4% | -0.8 pp | | SG&A expenses as % of revenues | 15.0% | 13.6% | +1.4 pp | | Depreciation and amortization as % of revenues | 16.1% | 12.7% | +3.4 pp | | Average U.S. domestic rig count | 785 | 1,043 | -24.7% | | Average oil price (per barrel) | $47.23 | $54.58 | -13.5% | | Average natural gas price (per mcf) | $1.92 | $2.92 | -34.3% | - The decrease in revenues was primarily due to lower activity levels and pricing across most service lines, both domestically and internationally[115](index=115&type=chunk) - Cost of revenues decreased in absolute terms but slightly improved as a percentage of revenues due to operational efficiencies and cost reductions[119](index=119&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations, including cash position and credit facilities - Cash and cash equivalents were **$82.6 million** as of March 31, 2020[127](index=127&type=chunk) - The Company's financial condition remains strong, with sufficient liquidity from existing cash and a **$125 million** revolving credit facility (matures Oct 2023) to meet requirements for at least the next **twelve months**[130](index=130&type=chunk) - As of March 31, 2020, **$105.2 million** was available under the credit facility, with no outstanding borrowings[130](index=130&type=chunk) [Cash Requirements](index=38&type=section&id=Cash%20Requirements) This section outlines the company's anticipated cash outflows for capital expenditures, benefit plans, and shareholder distributions - Expected capital expenditures for 2020 are approximately **$50 million**, with **$25.0 million** already spent as of March 31, 2020, primarily for maintenance[132](index=132&type=chunk)[135](index=135&type=chunk) - The Company does not expect to make cash contributions to its Retirement Income Plan for the remainder of 2020[137](index=137&type=chunk) - The stock buyback program has **8,248,184 shares** remaining available for repurchase as of March 31, 2020, with no open market purchases in 2020[138](index=138&type=chunk)[165](index=165&type=chunk) - Dividends to common stockholders were suspended on July 22, 2019, with no timetable for resumption[139](index=139&type=chunk) [INFLATION](index=40&type=section&id=INFLATION) This section discusses the potential impact of inflation on the company's operating costs, particularly for equipment, materials, and labor - Inflation can increase costs for equipment, materials, and labor, especially with increased oilfield activity[140](index=140&type=chunk) - Labor costs declined throughout 2019 and into Q1 2020 due to declining oilfield activity, and raw material prices also decreased due to increased supply[140](index=140&type=chunk) [OFF BALANCE SHEET ARRANGEMENTS](index=40&type=section&id=OFF%20BALANCE%20SHEET%20ARRANGEMENTS) This section confirms the absence of any material off-balance sheet arrangements that could significantly impact the company's financial position - The Company does not have any material off-balance sheet arrangements[141](index=141&type=chunk) [RELATED PARTY TRANSACTIONS](index=40&type=section&id=RELATED%20PARTY%20TRANSACTIONS) This section discloses transactions with entities or individuals considered related parties to the company - RPC charged Marine Products Corporation **$217 thousand** in Q1 2020 for administrative services[142](index=142&type=chunk) - Total payments to suppliers owned by officers/significant stockholders were **$411 thousand** in Q1 2020[144](index=144&type=chunk) - Charges from Rollins, Inc. for administrative services and rent totaled **$18 thousand** in Q1 2020[145](index=145&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=42&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section refers to the company's most significant accounting policies that require management's subjective judgments and estimates - There have been no significant changes to critical accounting policies since the fiscal year ended December 31, 2019, as incorporated by reference from the annual report on Form 10-K[146](index=146&type=chunk) [IMPACT OF RECENT ACCOUNTING STANDARDS](index=42&type=section&id=IMPACT%20OF%20RECENT%20ACCOUNTING%20STANDARDS) This section directs readers to detailed information regarding the effects 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[147](index=147&type=chunk) [SEASONALITY](index=42&type=section&id=SEASONALITY) This section clarifies that the demand for the company's services is not materially affected by seasonal patterns - Demand for RPC's services is primarily influenced by oil and natural gas prices and customer capital expenditures, which are not seasonal to any material degree[148](index=148&type=chunk) [FORWARD-LOOKING STATEMENTS](index=42&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section provides a cautionary note regarding statements about future events, highlighting inherent risks and uncertainties - The report contains forward-looking statements regarding future oilfield activity, cost structure adjustments, international growth, and financial performance[149](index=149&type=chunk) - These statements involve known and unknown risks, uncertainties, and other factors, including the combined impact of OPEC disputes and the COVID-19 pandemic, declines in oil/gas prices, and competition[153](index=153&type=chunk) - The Company does not undertake to update its forward-looking statements[152](index=152&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) RPC is exposed to interest rate risk from its credit facility, though no outstanding interest-bearing advances existed as of March 31, 2020. The Company also faces market risk from foreign exchange rates, but this is not expected to materially affect consolidated results due to the majority of transactions being in U.S. currency - The Company is subject to interest rate risk on its credit facility, but had no outstanding interest-bearing advances as of March 31, 2020[154](index=154&type=chunk) - Foreign exchange rate risk is not expected to have a material effect due to the majority of transactions occurring in U.S. currency[155](index=155&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=44&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 March 31, 2020, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting were identified during the quarter - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of March 31, 2020[156](index=156&type=chunk)[157](index=157&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[158](index=158&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=Part%20II.%20Other%20Information) This section includes disclosures on legal proceedings, risk factors, equity security sales, defaults, mine safety, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=46&type=section&id=Item%201.%20Legal%20Proceedings) RPC 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[161](index=161&type=chunk) - The outcome of such litigation is not expected to have a material adverse effect on RPC's financial position or results of operations[161](index=161&type=chunk) [ITEM 1A. RISK FACTORS](index=46&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors from the 2019 Form 10-K, except for new risks related to the combined impacts of the OPEC disputes and the COVID-19 pandemic. These events have caused a sharp decline in economic activity, strained oil storage, and resulted in highly volatile oil prices, leading to customer cancellations and workforce reductions - No material changes to risk factors from the 2019 Form 10-K, except for those related to OPEC disputes and the COVID-19 pandemic[162](index=162&type=chunk) - The combined impacts of OPEC disputes and COVID-19 led to an abrupt decline in economic activity, strained U.S. oil storage, and historically volatile oil prices[162](index=162&type=chunk) - Customers began canceling drilling and completion activities in March, leading RPC to reduce its workforce, adjust compensation, and cut expenses and capital expenditures[163](index=163&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) RPC repurchased 176,906 shares in Q1 2020 at an average price of $4.48 per share, primarily in connection with taxes related to the vesting of restricted shares. As of March 31, 2020, 8,248,184 shares remain available under the existing stock buyback program Share Repurchases | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :----------------------------------- | :----------------------------- | :--------------------------- | | January 1, 2020 to January 31, 2020 | 175,405 | $4.48 | | February 1, 2020 to February 29, 2020 | 1,396 | $4.46 | | March 1, 2020 to March 31, 2020 | 105 | $2.04 | | Totals | 176,906 | $4.48 | - Shares were repurchased in connection with taxes related to the vesting of certain restricted shares[166](index=166&type=chunk) - As of March 31, 2020, **8,248,184 shares** remain available for repurchase under the stock buyback program, which has no predetermined expiration date[165](index=165&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=46&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[167](index=167&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Information required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95.1 - Mine Safety Disclosures are provided in Exhibit 95.1[168](index=168&type=chunk) [ITEM 5. OTHER INFORMATION](index=47&type=section&id=Item%205.%20Other%20Information) No other information is reported in this section - No other information is reported[170](index=170&type=chunk) [ITEM 6. EXHIBITS](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate organizational documents, certifications (Section 302 and 906), Mine Safety Disclosures, and XBRL taxonomy documents - The exhibits include corporate organizational documents, Section 302 and 906 certifications, Mine Safety Disclosures, and XBRL documents[171](index=171&type=chunk) [SIGNATURES](index=48&type=section&id=Signatures) The report is duly signed on behalf of RPC, Inc. by its President and Chief Executive Officer, Richard A. Hubbell, and its Vice President, Chief Financial Officer and Corporate Secretary, Ben M. Palmer, on May 8, 2020 - The report is signed by Richard A. Hubbell, President and CEO, and Ben M. Palmer, VP, CFO, and Corporate Secretary[175](index=175&type=chunk) - The signing date for the report is May 8, 2020[175](index=175&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ 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, 2019 Commission File No. 1-8726 RPC, INC. Delaware (State of Incorporation) 58-1550825 (I.R.S. Employer Identification No.) 2801 BUFORD HIGHWAY NE, SUITE 300 ATLANTA, GEORGIA 30329 (404) 321-2140 | Secu ...

RPC, Inc. (NYSE:RES) Q4 2019 Earnings Conference Call January 29, 2020 9:00 AM ET Company Participants Jim Landers – Vice President-Corporate Finance Rick Hubbell – President and Chief Executive Officer Ben Palmer – Chief Financial Officer Conference Call Participants Tommy Moll – Stephens Inc. Connor Lynagh – Morgan Stanley Ian McPherson – Simmons Marc Bianchi – Cowen Stephen Gengaro – Stifel Waqar Syed – AltaCorp Capital Chris Voie – Wells Fargo George O’Leary – TPH & Co Vebs Vaishnav – Scotiabank Operato ...

Financial Performance - RPC's revenues decreased by 18% sequentially and 33% year-over-year, reaching $293.24 million in Q3 2019[15] - Adjusted EBITDA decreased by 56% sequentially and 77% year-over-year, totaling $22.775 million in Q3 2019[15] - The company reported an adjusted net loss of $17.978 million in Q3 2019, compared to an adjusted net income of $6.171 million in Q2 2019 and $49.967 million in Q3 2018[15] - Adjusted net loss per share was $0.08 in Q3 2019, compared to an adjusted net income per share of $0.03 in Q2 2019 and $0.23 in Q3 2018[15] Strategic Actions - RPC announced the retirement of 400,000 pressure pumping horsepower and the closure of several pressure-pumping related locations[15] - The company is aligning its cost structure to current and expected activity levels by closing locations and cutting costs[23] - RPC is upgrading its pressure pumping fleet by integrating an additional 100,000 HP of high-capacity pumps and retiring older horsepower[23] Market and Operational Context - Pressure pumping revenues declined due to low utilization and job mix[15] - The company recorded impairment and other charges of $71.7 million during the quarter[15] - Increased frac fleet efficiency is slowing the process of rationalizing oversupply[18] Capital Stewardship - Operating cash flow exceeded capital expenditures by $1 billion during the period from 2006 to Q3 2019[27] - RPC has returned $1 billion to shareholders since 1997[27]

Financial Performance - Revenues for the third quarter of 2019 were $293.2 million, a decrease of $146.8 million or 33.4% compared to the same period in 2018[92]. - Domestic revenues decreased by 33.9% to $275.9 million, while international revenues fell by 23.6% to $17.3 million[112]. - Loss before income taxes was $93.4 million for Q3 2019, compared to income of $55.5 million in Q3 2018[96]. - Revenues for the nine months ended September 30, 2019, were $986.4 million, a decrease of 26.6% compared to the same period in 2018, driven by lower pricing and activity levels[125]. Cost and Expenses - Cost of revenues as a percentage of revenues increased to 76.8% in Q3 2019 from 68.4% in Q3 2018, reflecting lower revenues and competitive pricing[110]. - Selling, general and administrative expenses rose to $42.6 million, or 14.5% of revenues, compared to 9.5% in the same quarter of 2018[94]. - Selling, general and administrative expenses increased to $131.3 million for the nine months ended September 30, 2019, up from $128.1 million in the same period in 2018, representing 13.3% of revenues[129]. - Cost of revenues decreased by 25.2% to $225.2 million in Q3 2019, but as a percentage of revenues, it increased to 14.5% due to lower revenues and competitive pricing[117][118]. Impairment and Charges - The company recorded impairment and other charges of $71.7 million, primarily due to location closures and equipment retirements[95]. - Impairment and other charges amounted to $71.7 million in Q3 2019, primarily related to asset abandonment and severance costs, with no impairment charges recorded in Q3 2018[120]. Market Conditions - Average oil price per barrel was $56.39, down 19.1% from $69.73 in the same period last year[110]. - Average natural gas price was $2.38 per thousand cubic feet, an 18.8% decrease from $2.93 in Q3 2018[110]. - Average price of natural gas decreased by 12.0% and oil by 14.9% during the nine months ended September 30, 2019, compared to the same period in 2018[126]. - The U.S. domestic rig count decreased by approximately 11% compared to the end of 2018, indicating a decline in drilling activity[100]. Capital Expenditures - Capital expenditures for 2019 are expected to be approximately $260 million, focused on new revenue-producing equipment and maintenance[97]. - The company expects capital expenditures of approximately $260 million for 2019, with $209.3 million spent as of September 30, 2019[145]. - The Company expects capital expenditures to be approximately $260 million in 2019, primarily directed towards new revenue-producing equipment and capitalized maintenance[161]. Future Outlook - The Company believes that U.S. oilfield well completion activity will decline during the near term, impacting demand for its services[161]. - The Company anticipates that customers will reduce drilling and completion activity in Q4 2019, leading to negative consequences for pricing and utilization of its services[161]. Cash and Financial Position - Cash and cash equivalents as of September 30, 2019, were $49.5 million, with net cash provided by operating activities decreasing by $152.2 million compared to the prior year[138]. - The Company does not have any material off-balance sheet arrangements, indicating a stable financial position[151]. Corporate Governance - The Company maintains effective disclosure controls and procedures, ensuring timely and accurate reporting of required information[168]. - The Company has not identified any changes in internal control over financial reporting that materially affect its operations during the most recent fiscal quarter[169]. Dividends and Related Party Transactions - The company has suspended dividends to common stockholders as of July 22, 2019, with no timetable for resumption[149]. - Total amounts paid to affiliated parties were $1,068,000 for the nine months ended September 30, 2019, up from $911,000 for the same period in 2018, reflecting a 17.2% increase[154]. - Charges for services and rent from Rollins, Inc. amounted to $86,000 for the nine months ended September 30, 2019, down from $110,000 for the same period in 2018, a decrease of 21.8%[155].

RPC, Inc. (NYSE:RES) Q3 2019 Results Earnings Conference Call October 23, 2019 9:00 AM ET Company Participants Rick Hubbell - President and CEO Ben Palmer - Chief Financial Officer Jim Landers - Vice President, Corporate Finance Conference Call Participants Praveen Narra - Raymond James Stephen Gengaro - Stifel Chase Mulvehill - Bank of America Marc Bianchi - Cowen Scott Gruber - Citigroup Chris Voie - Wells Fargo Vebs Vaishnov - Howard Weil Connor Lynagh - Morgan Stanley Waqar Syed - AltaCorp Capital Georg ...

RES LISTED NYSE | --- | --- | |-------|---------------------------| | | | | | | | | Power Conference New York | | | September 4, 2019 | | | | Jim Landers – Vice President Corporate Finance Forward-Looking Statement Disclosure 2 Certain statements and information included in this presentation constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including all statements that look forward in time or express management's beliefs, expectations or hop ...