RPC(RES) - 2021 Q1 - Quarterly Report

Part I. Financial Information Financial Statements 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 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 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 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 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] - 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] - 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] 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 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 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] - International revenues fell 39.0% to $9.7 million in Q1 2021 compared to the prior year[85] - Capital expenditures in Q1 2021 totaled $11.8 million, primarily for maintenance of existing equipment[83] 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] - 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] - The company does not expect to significantly increase its fleet capacity until projected financial returns are justified[96] Results of Operations 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] - Depreciation and amortization decreased 54.8% to $17.8 million, primarily due to asset impairment charges recorded in previous quarters[108] Liquidity and Capital Resources 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] - As of March 31, 2021, the company had no outstanding borrowings under its $100 million revolving credit facility, with $81.8 million available[119] - The company expects 2021 capital expenditures to be approximately $55 million No shares were repurchased on the open market in Q1 2021[120][123] Quantitative and Qualitative Disclosures about Market Risk 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] - Risk from changes in foreign exchange rates is not expected to be material as the majority of transactions are in U.S. dollars[140] Controls and Procedures 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] - No material changes to the company's internal control over financial reporting were identified during the first quarter of 2021[143] Part II. Other Information Legal Proceedings 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] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] - As of March 31, 2021, 8,248,184 shares remain available for repurchase under the company's stock buyback program[149] Defaults upon Senior Securities No defaults upon senior securities occurred during the reporting period - None[151] Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[152] Other Information No other information is reported for this period - None[153] Exhibits 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]