RPC(RES) - 2021 Q2 - Quarterly Report

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