Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

RPC, INC. AND SUBSIDIARIES

​

activities as a measure of our liquidity. Additionally, RPC's definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, management believes it is important to view free cash flow as a measure that provides supplemental information to our Condensed Consolidated Statements of Cash Flows.

​

A non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that either 1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows, or 2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

​

See Non-GAAP Financial Measures below for a reconciliation of EBITDA and Adjusted EBITDA to net income, and Adjusted EBITDA margin to net income margin, the most directly comparable financial measures calculated and presented in accordance with GAAP and a reconciliation of Free Cash Flow to Operating Cash Flow, the most directly comparable financial measure calculated and presented in accordance with GAAP.

​

Results of Operations

​

THREE MONTHS ENDED MARCH 31, 2026, COMPARED TO THREE MONTHS ENDED MARCH 31, 2025

Revenues. Revenues of $454.8 million for the three months ended March 31, 2026, increased 36.6% compared to the three months ended March 31, 2025. The increase in revenues was primarily due to revenues of $97.8 million from Pintail, which was acquired during the second quarter of 2025, coupled with revenue increases in pressure pumping, downhole tools and coiled tubing. The pressure pumping market remains highly competitive. Management believes the industry continues to be over-supplied and efficiency gains are contributing to excess capacity in the industry. These challenges have impacted activity levels, asset utilization, and pricing. International revenues represented 1.5% of total revenues in the first quarter of 2026 compared to 2.4% in the same period of the prior year. We believe that international revenues will continue to be less than 10% of RPC's consolidated revenues in the foreseeable future.

​

RPC, INC. AND SUBSIDIARIES

​

During the first quarter of 2026, the average price of oil was 1.9% lower and the average price of natural gas was 16.2% higher, both compared to the same period in the prior year. The average domestic rig count (Source: Baker Hughes, Inc.) for the three months ended March 31, 2026, was 6.8% lower than in the same period in 2025.

The Technical Services segment revenues for the first quarter of 2026 increased by 39.3% compared to the same period of the prior year due primarily to the acquisition of Pintail, coupled with an increase in pressure pumping, downhole tools and coiled tubing revenues. Support Services segment revenues for the first quarter of 2026 decreased by 2.7% compared to the same period in the prior year, primarily due to lower pricing within rental tools.

Technical Services reported operating income was $16.0 million during the first quarter of 2026 compared to operating income of $14.0 million in the first quarter of 2025. The increase in Technical Services operating income was primarily due to an increase in downhole tool activity, partially offset by an overall weaker pricing environment and unfavorable pressure pumping job mix. The first quarter of 2026 includes operating results of Pintail. Support Services segment revenues for the first quarter of 2026 decreased by 2.7% compared to the same period in the prior year, primarily due to lower activity levels within rental tools. Support Services reported operating income of $401 thousand for the first quarter of 2026 compared to operating income of $2.7 million for the first quarter of 2025. First quarter 2026 Support Services operating income decreased by $2.3 million compared to the first quarter of the prior year due to lower pricing in rental tools and job mix.

Cost of revenues. Cost of revenues increased 45.8% to $355.6 million for the three months ended March 31, 2026, compared to $243.9 million for the three months ended March 31, 2025, primarily due to costs from Pintail, which was acquired during the second quarter of 2025, coupled with increases in expenses consistent with higher activity levels. In accordance with Staff Accounting Bulletin (SAB) Topic 11.B, cost of revenues presented on the Consolidated Statements of Operations excludes depreciation and amortization totaling $37.1 million for the first quarter of 2026 compared to $32.4 million for the first quarter of 2025.

Selling, general and administrative expenses. Selling, general and administrative expenses increased to $48.2 million for the three months ended March 31, 2026, compared to $42.5 million for the three months ended March 31, 2025, primarily due to an increase in variable expenses consistent with higher activity levels, coupled with expenses from Pintail, which was acquired during the second quarter of 2025.

Acquisition related employment costs. Acquisition related employment costs of $7.3 million represent non-cash accounting adjustments related to the Pintail acquisition costs that are contingent upon continued employment of certain Pintail employees.

Depreciation and amortization. Depreciation and amortization increased 20.3% to $42.9 million for the three months ended March 31, 2026, compared to $35.6 million for the three months ended March 31, 2025. Depreciation and amortization increased due to additional fixed assets and intangibles related to the Pintail acquisition, coupled with capital expenditures in the past year.

Gain on disposition of assets, net. Gain on disposition of assets, net was $1.8 million for the three months ended March 31, 2026, compared to $1.5 million for the three months ended March 31, 2025. The gain on disposition of assets, net is generally comprised of gains and losses related to various property and equipment dispositions or sales to customers of lost or damaged rental equipment.

Other income, net. Other income, net was $749 thousand for the three months ended March 31, 2026, compared to $885 thousand for the same period in the prior year.

Interest expense and interest income. Interest expense increased to $830 thousand for the three months ended March 31, 2026, compared to $131 thousand for the three months ended March 31, 2025. Interest expense increased primarily due to interest on the Seller Note issued in conjunction with the Pintail acquisition. Interest expense includes interest on the Seller Note, facility fees on the unused portion of the credit facility and the amortization of loan costs. Interest income decreased to $1.8 million compared to $3.4 million in the prior year due to a lower average cash balance, primarily due to the acquisition of Pintail during the second quarter of 2025.

Income tax provision. Income tax provision was $3.5 million during the three months ended March 31, 2026, compared to $4.5 million tax provision for the same period in 2025. The effective tax rate was 80.1% for the three months ended March 31, 2026, compared to a 27.2% effective tax rate for the three months ended March 31, 2025. The increase in effective tax rate is primarily due to acquisition related employment costs that are permanently nondeductible for tax purposes, which had a disproportionate impact due to lower pretax income.

RPC, INC. AND SUBSIDIARIES

​

Net income, net income margin and diluted earnings per share. Net income was $0.9 million during the three months ended March 31, 2026, or $0.00 (rounded) diluted earnings per share, compared to net income of $12.0 million during the three months ended March 31, 2025, or $0.06 diluted earnings per share. Net income margin was 0.2% for the three months ended March 31, 2026, compared to 3.6% for the same period in the prior year.

Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA was $53.5 million, and Adjusted EBITDA margin was 11.8% for the three months ended March 31, 2026, compared to $48.9 million and 14.7%, respectively, for the same period in the prior year.

Cash provided by operating activities and Free cash flow. Cash provided by operating activities was $31.2 million for the three months ended March 31, 2026, compared to $39.9 million for the three months ended March 31, 2025. The decrease in cash provided by operating activities is due primarily to unfavorable changes in working capital, coupled with lower net income. Working capital was a use of cash during the current quarter primarily due to higher accounts receivable due to activity increases. Free cash flow was a use of $0.9 million for the three months ended March 31, 2026, compared to a source of $7.6 million for the three months ended March 31, 2025.

Non-GAAP Financial Measures

Reconciliation of GAAP and non-GAAP Financial Measures

Disclosed herein are non-GAAP financial measures of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Free cash flow. These measures should not be considered in isolation or as a substitute for performance or liquidity measures prepared in accordance with GAAP.

​

A non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that either 1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations, balance sheet or statement of cash flows, or 2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

​

Set forth below are reconciliations of these non-GAAP measures with their most directly comparable GAAP measures.

RPC, INC. AND SUBSIDIARIES

​

​

​

Liquidity and Capital Resources

Cash Flows

The Company's cash and cash equivalents decreased $9.2 million to $200.7 million as of March 31, 2026, compared to cash and cash equivalents of $210.0 million as of December 31, 2025.

The following table sets forth the historical cash flows for the three months ended March 31, 2026, and 2025:

​

Cash provided by operating activities for the three months ended March 31, 2026, decreased by $8.7 million compared to the three months ended March 31, 2025, primarily due to unfavorable changes in working capital, coupled with a decrease in net income. Change in working capital was a use of cash of $21.7 million during the three months ended March 31, 2026, compared to a use of cash of $6.9 million in the same period last year. The most significant working capital related cash flow during the three months ended March 31, 2026, was a cash use of $47.1 million in accounts receivable, partially offset by a cash source of $41.3 million in accounts payable, both due to an increase in activity levels, coupled with the timing of payments and receipts. The changes in the other components of working capital were mainly due to the timing of payments and receipts.

Cash used for investing activities for the three months ended March 31, 2026, increased by $0.4 million compared to the three months ended March 31, 2025, primarily due to a decrease in proceeds from sale of assets, partially offset by a slight decrease in capital expenditures primarily related to the timing of new equipment deliveries. Capital expenditures were $32.1 million for the three months ended March 31, 2026, compared to $32.3 million for the three months ended March 31, 2025.

Cash used for financing activities for the three months ended March 31, 2026, increased by $0.9 million compared to the three months ended March 31, 2025, primarily due to an increase in repurchases of the Company's shares for taxes related to the vesting of restricted shares.

Financial Condition and Liquidity

The Company's financial condition remains strong. We believe the liquidity provided by our existing cash and cash equivalents and our overall strong capitalization is sufficient to meet our requirements for at least the next twelve months. Our material cash requirements, including commitments for capital expenditures, as of the end of the latest fiscal period, are set forth below under "Material Cash Requirements." The Company's decisions about the amount of cash to be used for investing and financing activities are influenced by our capital position, and the expected amount of cash to be provided by operations. RPC does not expect to utilize our revolving credit facility to meet these liquidity requirements in the near term.

The majority of our cash and cash equivalents are held at multiple financial institutions, each of which holds funds in excess of amounts insured by the Federal Deposit Insurance Corporation ("FDIC"). These financial institutions are among the largest in the United States and we believe are a safe place to hold our deposits.

The Company currently has a $100.0 million revolving credit facility that matures in June 2027. The facility contains customary terms and conditions, including restrictions on indebtedness, dividend payments, business combinations and other related items. The

RPC, INC. AND SUBSIDIARIES

​

revolving credit facility includes a full and unconditional guarantee by the Company's 100% owned domestic subsidiaries whose assets equal substantially all of the consolidated assets of the Company and its subsidiaries. Certain of the Company's minor subsidiaries are not guarantors. The Credit Agreement's maturity date is June 22, 2027, and the interest rate is based on Term Secured Overnight Financing Rate (Term SOFR). In addition, the terms of the agreement have a 1.00% per annum floor for Base Rate borrowings and permits the issuance of letters of credit in currencies other than U.S. dollars. As of March 31, 2026, RPC had no outstanding borrowings under the revolving credit facility, and letters of credit outstanding relating to self-insurance programs and contract bids totaled $18.2 million; therefore, a total of $81.8 million of the facility was available. The Company is currently in compliance with the credit facility financial covenants. For additional information with respect to RPC's facility, see note to the consolidated financial statements titled "Notes Payable."

​

The Company has a shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (SEC) that expires on May 5, 2028, which permits it to offer common stock, preferred stock, warrants, rights, depositary shares, purchase contracts and units containing two or more of the foregoing, in one or more offerings in an aggregate amount of up to $300 million. The Form S-3 is intended to provide us the flexibility to conduct registered sales of our securities, subject to market conditions and our future capital needs.

​

Material Cash Requirements

The Company currently expects capital expenditures to be between $160 million and $180 million in 2026. We expect capital expenditures to be directed towards capitalized maintenance of our existing equipment and selected growth opportunities as well as the upgrade to our ERP and supply chain systems. As of March 31, 2026, $32.1 million had been spent.

During 2026, the Company continued its multi-year systems transformation program to upgrade its ERP and supply chain systems and continues to capitalize some costs associated with ERP implementation. We plan to continue the ERP implementation through a phased approach.

As noted above, the Company issued a Seller Note in connection with the Pintail Acquisition. The Seller Note matures on April 1, 2028, and provides for specified principal payments to be made annually through the third anniversary of the acquisition. The first principal payment of $20 million will be made on May 11, 2026. Interest on the Seller Note accrues at a variable rate equal to the SOFR for the applicable interest period, plus 2.0% per annum, or where applicable, at a specified default rate. For the first quarter of 2026, interest payments paid on the Seller Note totaled approximately $704 thousand. The Seller Note provides for principal reduction or cancellation upon certain events related to the employment of one of the sellers.

As of March 31, 2026 letters of credit outstanding relating to self-insurance programs and contract bids totaled $18.2 million.

The Company has ongoing sales and use tax audits in various jurisdictions subject to varying interpretations of statutes. The Company has recorded the exposure from these audits to the extent issues are resolved or are probable and reasonably estimated. These audits involve issues that could result in unfavorable outcomes that cannot be currently estimated.

The Company has a stock buyback program with authorization to repurchase up to 49,578,125 shares in the open market. There were no shares repurchased on the open market during the first quarter of 2026, and 12,768,870 shares remained available to be repurchased under the current authorization as of March 31, 2026. The Company may repurchase outstanding common shares periodically based on market conditions and our capital allocation strategies. The stock buyback program does not have a predetermined expiration date. For additional information with respect to RPC's stock buyback program, see note to the consolidated financial statements titled "Cash Paid for Common Stock Purchased and Retired."

On April 28, 2026, the Board of Directors declared a regular quarterly cash dividend of $0.04 per share payable June 10, 2026, to common stockholders of record at the close of business on May 8, 2026. The Company expects to continue to pay cash dividends to common stockholders, subject to industry conditions and RPC's earnings, financial condition, and other relevant factors.

Management expects to fund the foregoing obligations primarily from operating cash flows and existing cash, with the revolving credit facility providing added flexibility if needed.

RPC, INC. AND SUBSIDIARIES

​

INFLATION

The Company purchases its equipment and materials from suppliers who provide competitive prices and employ skilled workers from competitive labor markets. If inflation in the general economy increases, the Company's costs for equipment, materials and labor could increase as well. In addition, increases in activity in the domestic oilfield can cause upward wage pressures in the labor markets from which it hires employees, especially if employment in the general economy increases. Also, activity increases can cause supply disruptions and higher costs of certain materials and key equipment components used to provide services to the Company's customers. In recent years, the price of labor and raw materials has increased. The cost increases have moderated but remain high by historical standards. Additionally, tariffs can impact the absolute costs of materials, as well as cause shifts in production to more domestic production adding inflationary pressures to domestic suppliers. Though the ultimate impact is uncertain, the Company does not currently expect tariffs on goods imported into the U.S. to result in materially higher costs of equipment.

OUTLOOK

The current and projected prices of oil, natural gas and natural gas liquids are important catalysts for U.S. domestic drilling activity and can be impacted by economic and policy developments as well as geopolitical disruptions. RPC believes that oil prices currently remain at levels sufficient to continue drilling and completion activities, however the recent fluctuations of oil prices and potential further volatility could result in the Company's customers opting to delay completion activity. Long-term, projected higher demand for oil and natural gas should drive increased activity in most of the basins in which RPC operates. Recent geopolitical events in the Middle East have added new dynamics to the global market where infrastructure and physical supply have been restricted. Depending on the duration of the conflict's impacts, activity outside of the Middle East could benefit.

We continue to monitor the supply and demand for our services and the competitive environment, including trends such as increasing customer preferences for more efficient equipment. Increased efficiencies in recent years of oilfield completion services and equipment, particularly in pressure pumping, has inherently contributed to oversupply in the Oilfield Services (OFS) market. We believe that competition will remain intense.

OFF BALANCE SHEET ARRANGEMENTS

The Company does not have any material off balance sheet arrangements.

RELATED PARTY TRANSACTIONS

Marine Products Corporation (Marine Products)

In conjunction with RPC's spin-off of its powerboat manufacturing business, RPC and Marine Products entered into various agreements that define the companies' relationship. Per the terms of their Transition Support Services agreement, which may be terminated by either party, RPC provides certain administrative services, including financial reporting and income tax administration, acquisition assistance, etc., to Marine Products. Charges from the Company (or from corporations that are subsidiaries of the Company) for such services were $414 thousand for the three months ended March 31, 2026, and $297 thousand for the comparable period in 2025. All of the Company's directors are also directors of Marine Products, and the executive officers are employees of both the Company and Marine Products.

On February 5, 2026, Marine Products entered into an Agreement and Plan of Merger with MasterCraft Boat Holdings, Inc., a Delaware corporation ("MasterCraft"). The transaction is subject to shareholder and regulatory approvals and other closing conditions. If the Proposed Merger closes as planned, the Transition Support Services agreement is expected to be canceled on or about the closing date and a new Transition Support Services agreement is expected to be signed with Mastercraft.

Other

The Company periodically purchases, in the ordinary course of business, products or services from suppliers that are owned by officers or significant stockholders of or affiliated with certain directors of RPC. The total amounts paid to these affiliated parties were $15 thousand for the three months ended March 31, 2026, and $16 thousand for the three months ended March 31, 2025. All of the related party transactions are reviewed and approved by a subcommittee of the Nominating and Corporate Governance Committee consisting of independent members, or in certain instances, by the Audit Committee.

RPC, INC. AND SUBSIDIARIES

​

A group that includes Amy R. Kreisler and Timothy C. Rollins, each of whom is a director of the Company, certain of their family members, and certain companies under their and/or their family members' control, controls in excess of fifty percent of the Company's voting power.

RPC and Marine Products own 50% each of a limited liability company, 255 RC, LLC, that was created for the joint purchase and ownership of a corporate aircraft. RPC recorded certain net operating costs comprised of rent and an allocable share of fixed costs of $43 thousand for the three months ended March 31, 2026, compared to $53 thousand for the comparable period in 2025.

Pursuant to the registration rights agreement between us and our largest stockholder, LOR, Inc. (LOR) and certain of its affiliates (collectively, the Selling Stockholders) and their permitted transferees, we have filed a shelf registration statement on Form S-3 with the SEC that expires on May 5, 2028. The Form S-3 shelf registration statement registers the resale of up to 127,235,202 shares of our common stock, which represents most of the Company securities held by the Selling Stockholders. In addition, they have the right to require, subject to certain conditions and limitations, certain piggyback registrations with respect to registrations initiated by us.

CRITICAL ACCOUNTING POLICIES

The discussion of Critical Accounting Policies is incorporated herein by reference from the Company's annual report on Form 10-K for the fiscal year ended December 31, 2025. There have been no significant changes in the critical accounting policies since year-end.

IMPACT OF RECENT ACCOUNTING STANDARDS

See Note to the Consolidated Financial Statements titled "Recent Accounting Standards" for a description of recent accounting standards, including the expected dates of adoption and estimated effects on results of operations and financial condition.

SEASONALITY

Oil and natural gas prices affect demand throughout the oil and natural gas industry, including the demand for the Company's products and services. The Company's business depends in large part on the economic conditions of the oil and gas industry, and specifically on the capital expenditures of its customers related to the exploration and production of oil and natural gas. There is a positive correlation between these expenditures and customers' demand for the Company's services. As such, when these expenditures fluctuate, customers' demand for the Company's services fluctuates as well. These fluctuations depend on the current and projected prices of oil and natural gas and resulting drilling activity and are not seasonal to any material degree.

FORWARD-LOOKING STATEMENTS

Certain statements made in this report that are not historical facts are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. The words "may," "will," "expect," "believe," "anticipate," "project," "estimate," "focus," "plan," and similar expressions generally identify forward-looking statements. Such forward-looking statements may include, without limitation, statements that relate to our business strategy, plans and objectives, and our beliefs and expectations regarding future demand for our equipment and services, trends in the industry, and other events and conditions that may influence the oilfield services market and our performance in the future. Forward-looking statements made elsewhere in this report include, without limitation, statements regarding: our belief that operating results for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026, estimated future amortization expense, the impact of ongoing sales and use tax audits in various jurisdictions, the outcome of lawsuits, legal proceedings, claims and audits, interest rate risk, the impact on our financial results of geopolitical events, the impact of global conflicts including the conflict involving Iran and the blockage of the Strait of Hormuz, the timing and amount of repurchases of shares of the Company's common stock, that we continuously monitor factors that impact current and expected customer activity levels, such as the prices of oil and natural gas, changes in pricing for our services and equipment, and utilization of our equipment and personnel, our belief that international revenues will continue to be less than 10% of RPC's consolidated revenues in the foreseeable future, that the Company currently expects capital expenditures to be between $160 million and $180 million in 2026 and that we expect capital expenditures to be directed towards capitalized maintenance of our existing equipment and selected growth opportunities as well as the upgrade to our ERP and supply chain systems, our plan to continue the ERP implementation through a phased approach, that we expect to continue to pay cash dividends to common stockholders, subject to industry conditions and RPC's earnings, financial condition, and other relevant factors, our expectation to fund obligations primarily from operating cash flows and existing cash, with the revolving credit facility providing added flexibility if needed, that our financial condition remains strong, exposure to market risk and expectations regarding its impact, our belief that competition will remain intense, that oil prices currently remain at levels sufficient to continue drilling and completion activities,

RPC, INC. AND SUBSIDIARIES

​

however the recent fluctuations of oil prices and potential further volatility could result in the Company's customers opting to delay completion activity. That long-term, projected higher demand for oil and natural gas should drive increased activity in most of the basins in which RPC operates, that recent geopolitical events in the Middle East have added new dynamics to the global market where infrastructure and physical supply have been restricted, and depending on the duration of the conflict's impacts, activity outside of the Middle East could benefit. and expectations regarding changes in internal controls.

​

Such forward-looking statements are based on certain assumptions and analyses made by our management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of RPC to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Risk factors that could cause such future events not to occur as expected include the following: the volatility of oil and natural gas prices; our concentration of customers in the energy industry and periodic downturns; our business depends on capital spending by our customers, many of whom rely on outside financing to fund their operations; dependence on our key personnel; our ability to identify or complete acquisitions; our ability to attract and retain skilled workers; some of our equipment and several types of materials used in providing our services are available from a limited number of suppliers; whether outside financing is available or favorable to us; increasing expectations from customers, investors and other stakeholders regarding our environmental, social and governance practices; our compliance with regulations and environmental laws; possible declines in the price of oil and natural gas, which tend to result in a decrease in drilling activity and therefore a decline in the demand for our services; the ultimate impact of current and potential political unrest and armed conflict in the oil producing regions of the world, including the current conflict involving Israel and the Gaza Strip, which could impact drilling activity; adverse weather conditions in oil or gas producing regions, including the Gulf of America; competition in the oil and gas industry, especially in pressure pumping, and adverse impacts from the industry being over-supplied; limits to the Company's ability to implement price increases; the potential impact of possible future regulations on hydraulic fracturing on our business; risks of international operations; reliance on large customers; our operations rely on digital systems and processes that are subject to cyber-attacks or other threats; and our cash and cash equivalents are held primarily at a single financial institution, the potential for tariffs to increase our costs of materials and reduce our profitability, and capital expenditures are determined based on current expectations for our business, as a result, the occurrence of any of the foregoing or changes in our business model or expectations may cause us to materially increase or decrease our capital spending plans. Additional discussion of factors that could cause actual results to differ from management's projections, forecasts, estimates and expectations is contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and in this Quarterly Report on Form 10-Q.

​