RPC(RES) - 2025 Q2 - Quarterly Report

Part I. Financial Information This section details the company's unaudited financial statements, management's analysis, market risk, and internal controls Item 1. Financial Statements (Unaudited) This section presents RPC, Inc.'s unaudited consolidated financial statements, reflecting significant changes due to the Pintail Alternative Energy acquisition Consolidated Balance Sheets As of June 30, 2025, total assets increased to $1.46 billion from $1.39 billion at year-end 2024, primarily driven by the Pintail acquisition which added significant goodwill and intangible assets Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $162,113 | $325,975 | | Total current assets | $641,909 | $732,842 | | Goodwill | $93,206 | $50,824 | | Other intangibles, net | $107,135 | $13,843 | | Total assets | $1,464,396 | $1,386,489 | | Liabilities & Equity | | | | Total current liabilities | $242,962 | $181,913 | | Note payable (non-current) | $30,000 | $— | | Total liabilities | $373,381 | $308,198 | | Total stockholders' equity | $1,091,015 | $1,078,291 | Consolidated Statements of Operations For the second quarter of 2025, revenues increased 15.6% year-over-year to $420.8 million, largely due to the Pintail acquisition Quarterly and Six-Month Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $420,809 | $364,153 | $753,686 | $741,986 | | Operating income | $15,536 | $35,468 | $27,922 | $67,817 | | Net income | $10,148 | $32,419 | $22,178 | $59,886 | | Diluted EPS | $0.05 | $0.15 | $0.10 | $0.28 | - The company recorded $6.55 million in acquisition-related employment costs in Q2 and YTD 2025, which were not present in 2024, significantly impacting operating income[9] Consolidated Statements of Cash Flows For the first six months of 2025, net cash from operating activities decreased to $92.9 million from $184.5 million in the prior year, mainly due to lower net income and unfavorable changes in working capital Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $92,943 | $184,487 | | Net cash used for investing activities | ($231,483) | ($118,916) | | Net cash used for financing activities | ($25,322) | ($27,365) | | Net (decrease) increase in cash | ($163,862) | $38,206 | - The primary driver for the large use of cash in investing activities was the $165.7 million payment for a business purchase, net of cash acquired[16] - Capital expenditures decreased to $75.3 million in the first six months of 2025 from $127.8 million in the same period of 2024[16] Notes to Consolidated Financial Statements The notes provide detailed explanations of the financial statements, including the Pintail acquisition, segment performance, and the effective tax rate - On April 1, 2025, RPC acquired Pintail Alternative Energy for $170 million in cash, $25 million in RPC common stock, and a $50 million seller note, included in the Technical Services segment[24][25] - The Pintail acquisition added $98.9 million in revenue for the period from April 1 to June 30, 2025[38] - The effective tax rate for Q2 2025 was 41.3% compared to 17.8% in Q2 2024, with the increase primarily due to non-deductible acquisition-related employment costs[56] Technical Services Revenue by Service Line (in thousands) | Service Line | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Pressure Pumping | $109,197 | $147,156 | | Downhole Tools | $99,587 | $100,670 | | Wireline | $103,924 | $5,193 | | Total Technical Services | $396,754 | $341,484 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management attributes Q2 revenue growth to the Pintail acquisition, while operating and net income declined due to lower pressure pumping pricing and acquisition costs - Q2 2025 revenue increase of 15.6% was primarily due to the Pintail acquisition, which was partially offset by lower pressure pumping activity levels and pricing pressure[123] - Management believes the pressure pumping market remains highly competitive and over-supplied, with efficiency gains adding to capacity, which has negatively impacted activity, utilization, and pricing[123] Non-GAAP Financial Measures Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $10,148 | $32,419 | $22,178 | $59,886 | | Adjusted EBITDA | $65,589 | $68,533 | $114,483 | $131,653 | | Free cash flow | $10,025 | $52,907 | $17,620 | $56,688 | - The company expects 2025 capital expenditures to be between $165 million and $215 million, mostly for maintenance[175] - On July 22, 2025, the Board declared a quarterly cash dividend of $0.04 per share[183] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company is exposed to interest rate risk through its credit facility and the new Seller Note from the Pintail acquisition, both of which have floating rates - The company is subject to interest rate risk from its credit facility and the Pintail Seller Note, which have floating interest rates[205] - Foreign exchange rate risk is not expected to have a material effect on the company's financial condition[206] Item 4. Controls and Procedures Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective, excluding the newly acquired Pintail business as permitted by SEC guidance - Management's evaluation of disclosure controls and procedures as of June 30, 2025, concluded they were effective[208] - As permitted by the SEC, the evaluation of internal controls excluded the recently acquired Pintail, and the company is currently integrating Pintail's controls[209][210] Part II. Other Information This section outlines the company's legal proceedings, new risk factors, and other significant corporate information Item 1. Legal Proceedings The company is involved in routine litigation in the ordinary course of business but does not believe the outcomes will have a material adverse effect on its financial position or results of operations - RPC does not expect litigation outcomes to have a material adverse effect on its financial position or results[217] Item 1A. Risk Factors A new material risk factor has been disclosed following the Pintail acquisition, concerning identified material weaknesses in its internal control over financial reporting - A new risk factor was added concerning material weaknesses in the internal control over financial reporting of the recently acquired subsidiary, Pintail, for the fiscal year ended December 31, 2024[218][220] - The company has initiated steps to remediate and improve the internal controls related to Pintail's operations[220] Item 5. Other Information On July 22, 2025, the Board of Directors adopted amended and restated bylaws, enhancing procedural and disclosure requirements for stockholder nominations and proposals - The Board of Directors approved and adopted amended and restated bylaws on July 22, 2025[228] - Key amendments to the bylaws include: * Enhanced procedural mechanics for stockholder nominations and proposals * Deletion of fee-shifting provisions * Additional flexibility for stock certificate signatures[229] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the Membership Interest Purchase Agreement for the Pintail acquisition, the amended and restated bylaws, and CEO/CFO certifications - Filed exhibits include the Pintail acquisition agreement (2.1), amended bylaws (3.2), and Section 302 and 906 certifications[231]