Company Quick10K Filing
RPC
Price5.23 EPS-0
Shares212 P/E-17
MCap1,110 P/FCF7
Net Debt-50 EBIT-85
TEV1,061 TEV/EBIT-12
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-07-31
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-02-28
10-Q 2019-09-30 Filed 2019-10-31
10-Q 2019-06-30 Filed 2019-07-31
10-Q 2019-03-31 Filed 2019-05-02
10-K 2018-12-31 Filed 2019-02-28
10-Q 2018-09-30 Filed 2018-10-31
10-Q 2018-06-30 Filed 2018-07-31
10-Q 2018-03-31 Filed 2018-04-30
10-K 2017-12-31 Filed 2018-02-28
10-Q 2017-09-30 Filed 2017-10-31
10-Q 2017-06-30 Filed 2017-07-31
10-Q 2017-03-31 Filed 2017-04-28
10-K 2016-12-31 Filed 2017-02-28
10-Q 2016-09-30 Filed 2016-10-31
10-Q 2016-06-30 Filed 2016-08-01
10-Q 2016-03-31 Filed 2016-05-03
10-K 2015-12-31 Filed 2016-02-29
10-Q 2015-09-30 Filed 2015-10-30
10-Q 2015-06-30 Filed 2015-07-31
10-Q 2015-03-31 Filed 2015-05-01
10-K 2014-12-31 Filed 2015-02-27
10-Q 2014-09-30 Filed 2014-11-03
10-Q 2014-06-30 Filed 2014-07-31
10-Q 2014-03-31 Filed 2014-04-29
10-K 2013-12-31 Filed 2014-02-28
10-Q 2013-09-30 Filed 2013-11-01
10-Q 2013-06-30 Filed 2013-07-31
10-Q 2013-03-31 Filed 2013-05-01
10-Q 2012-06-30 Filed 2012-08-02
10-Q 2012-03-31 Filed 2012-05-02
10-Q 2011-09-30 Filed 2011-11-03
10-Q 2011-06-30 Filed 2011-08-02
10-Q 2011-03-31 Filed 2011-05-05
10-K 2010-12-31 Filed 2011-03-04
10-Q 2010-09-30 Filed 2010-11-04
10-Q 2010-06-30 Filed 2010-08-06
10-Q 2010-03-31 Filed 2010-05-07
10-K 2009-12-31 Filed 2010-03-03
8-K 2020-08-26 Officers, Exhibits
8-K 2020-08-18 Other Events, Exhibits
8-K 2020-07-29 Earnings, Exhibits
8-K 2020-07-07 Other Events, Exhibits
8-K 2020-06-10
8-K 2020-05-06
8-K 2020-05-05
8-K 2020-04-28
8-K 2020-04-28
8-K 2020-04-09
8-K 2020-01-29
8-K 2020-01-08
8-K 2019-11-14
8-K 2019-10-23
8-K 2019-10-08
8-K 2019-08-21
8-K 2019-07-24
8-K 2019-07-01
8-K 2019-07-01
8-K 2019-06-20
8-K 2019-04-26
8-K 2019-04-24
8-K 2019-04-24
8-K 2019-04-23
8-K 2019-04-01
8-K 2019-04-01
8-K 2019-03-26
8-K 2019-02-11
8-K 2019-01-23
8-K 2019-01-23
8-K 2019-01-22
8-K 2019-01-02
8-K 2019-01-02
8-K 2018-11-26
8-K 2018-10-24
8-K 2018-10-24
8-K 2018-10-09
8-K 2018-09-04
8-K 2018-07-25
8-K 2018-07-25
8-K 2018-07-02
8-K 2018-07-02
8-K 2018-04-25
8-K 2018-04-25
8-K 2018-04-24
8-K 2018-04-03
8-K 2018-04-02
8-K 2018-02-12
8-K 2018-01-24
8-K 2018-01-24
8-K 2018-01-02

RES 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 res-20200630xex31d1.htm
EX-31.2 res-20200630xex31d2.htm
EX-32.1 res-20200630xex32d1.htm
EX-95.1 res-20200630xex95d1.htm

RPC Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
1.81.41.10.70.40.02012201420172020
Assets, Equity
0.70.50.40.20.1-0.12012201420172020
Rev, G Profit, Net Income
0.30.20.10.0-0.1-0.22012201420172020
Ops, Inv, Fin

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2020

Commission File No. 1-8726

RPC, INC.

(Exact name of registrant as specified in its charter)

Delaware

    

58-1550825

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

2801 Buford Highway, Suite 300, Atlanta, Georgia 30329

(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code -- (404) 321-2140

Securities Registered under Section 12(b) of the Act:

Title of each class:

    

Trading Symbol(s)

    

Name of each exchange on which registered:

Common stock, par value $0.10

RES

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of July 24, 2020, RPC, Inc. had 215,123,252 shares of common stock outstanding.

Table of Contents

RPC, INC. AND SUBSIDIARIES

Table of Contents

    

Page No.

Part I. Financial Information

Item 1.

Financial Statements (Unaudited)

Consolidated Balance Sheets –As of June 30, 2020 and December 31, 2019

3

Consolidated Statements of Operations – For the three and six months ended June 30, 2020 and 2019

4

Consolidated Statements of Comprehensive (Loss) Income - For the three and six months ended June 30, 2020 and 2019

5

Consolidated Statements of Stockholders’ Equity – For the six months ended June 30, 2020 and 2019

6

Consolidated Statements of Cash Flows – For the six months ended June 30, 2020 and 2019

7

Notes to Consolidated Financial Statements

8 – 19

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20 – 28

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

28

Item 4.

Controls and Procedures

28

Part II. Other Information

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 3.

Defaults upon Senior Securities

29

Item 4.

Mine Safety Disclosures

29

Item 5.

Other Information

30

Item 6.

Exhibits

30

Signatures

31

2

Table of Contents

RPC, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2020 AND DECEMBER 31, 2019

(In thousands)

(Unaudited)

    

June 30, 

    

December 31, 

2020

2019

(Note 1)

ASSETS

 

  

 

  

Cash and cash equivalents

$

145,405

$

50,023

Accounts receivable, net of allowance for doubtful accounts of $4,051 in 2020 and $5,181 in 2019

 

109,183

 

242,574

Inventories

 

93,392

 

100,947

Income taxes receivable

 

46,907

 

24,145

Prepaid expenses

 

5,855

 

10,459

Assets held for sale

5,385

5,385

Other current assets

 

2,976

 

3,325

Total current assets

 

409,103

 

436,858

Property, plant and equipment, less accumulated depreciation of $793,163 in 2020 and $1,396,908 in 2019

 

278,358

 

516,727

Operating lease right-of-use assets

29,215

33,850

Goodwill

 

32,150

 

32,150

Other assets

 

34,042

 

33,633

Total assets

$

782,868

$

1,053,218

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

  

Accounts payable

$

21,083

$

53,147

Accrued payroll and related expenses

 

13,246

 

19,641

Accrued insurance expenses

 

6,312

 

7,540

Accrued state, local and other taxes

 

3,731

 

2,427

Income taxes payable

 

435

 

1,534

Current portion of operating lease liabilities

9,411

10,625

Other accrued expenses

 

4,596

 

6,488

Total current liabilities

 

58,814

 

101,402

Long-term accrued insurance expenses

 

12,995

 

14,040

Long-term pension liabilities

 

37,420

 

39,254

Deferred income taxes

 

902

 

37,319

Long-term operating lease liabilities

23,978

28,378

Other long-term liabilities

 

106

 

2,492

Total liabilities

 

134,215

 

222,885

Common stock

 

21,512

 

21,443

Capital in excess of par value

 

 

Retained earnings

 

649,844

 

832,113

Accumulated other comprehensive loss

 

(22,703)

 

(23,223)

Total stockholders’ equity

 

648,653

 

830,333

Total liabilities and stockholders’ equity

$

782,868

$

1,053,218

The accompanying notes are an integral part of these consolidated financial statements.

3

Table of Contents

RPC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019

(In thousands except per share data)

(Unaudited)

Three months ended

Six months ended

June 30, 

June 30, 

    

2020

    

2019

    

2020

    

2019

Revenues

$

89,300

$

358,516

$

333,077

$

693,172

Cost of revenues (exclusive of items shown below)

 

80,037

 

265,088

 

261,981

 

517,483

Selling, general and administrative expenses

 

28,775

 

43,293

 

65,305

 

88,714

Impairment and other charges

1,639

207,175

Depreciation and amortization

 

19,573

 

42,881

 

58,866

 

85,386

Gain on disposition of assets, net

 

(3,194)

 

(1,133)

 

(4,013)

 

(4,637)

Operating (loss) income

 

(37,530)

 

8,387

 

(256,237)

 

6,226

Interest expense

 

(71)

 

(164)

 

(184)

 

(253)

Interest income

 

68

 

594

 

402

 

1,394

Other (expense) income, net

 

(1,481)

 

(53)

 

(1,789)

 

392

(Loss) income before income taxes

 

(39,014)

 

8,764

 

(257,808)

 

7,759

Income tax (benefit) provision

 

(13,921)

 

2,593

 

(72,292)

 

2,327

Net (loss) income

$

(25,093)

$

6,171

$

(185,516)

$

5,432

(Loss) Earnings per share

 

 

 

  

 

  

Basic

$

(0.12)

$

0.03

$

(0.87)

$

0.02

Diluted

$

(0.12)

$

0.03

$

(0.87)

$

0.02

Dividends per share

$

$

0.05

$

$

0.15

The accompanying notes are an integral part of these consolidated financial statements.

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RPC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019

(In thousands)

(Unaudited)

Three months ended

Six months ended

June 30, 

June 30, 

    

2020

    

2019

    

2020

    

2019

Net (loss) income

$

(25,093)

$

6,171

$

(185,516)

$

5,432

Other comprehensive income (loss):

Pension adjustment and reclassification adjustment, net of taxes

 

186

 

174

 

918

 

347

Foreign currency translation

 

314

 

333

 

(398)

 

431

Comprehensive (loss) income

$

(24,593)

$

6,678

$

(184,996)

$

6,210

The accompanying notes are an integral part of these consolidated financial statements.

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RPC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019

(In thousands)

(Unaudited)

Six months ended June 30, 2020

Accumulated

Capital in 

Other

Common Stock

Excess of

Retained

Comprehensive

    

Shares

    

Amount

    

Par Value

    

Earnings

    

(Loss) Income

    

Total

Balance, December 31, 2019

 

214,423

$

21,443

$

$

832,113

$

(23,223)

$

830,333

Stock issued for stock incentive plans, net

 

1,014

 

100

 

1,997

 

 

 

2,097

Stock purchased and retired

 

(177)

 

(17)

 

(1,997)

 

1,222

 

 

(792)

Net loss

 

 

 

 

(160,423)

 

 

(160,423)

Pension adjustment, net of taxes

 

 

 

 

 

732

 

732

Foreign currency translation

 

 

 

 

 

(712)

 

(712)

Balance, March 31, 2020

215,260

$

21,526

$

$

672,912

$

(23,203)

$

671,235

Stock issued for stock incentive plans, net

(135)

(4)

2,021

2,017

Stock purchased and retired

(2)

(10)

(2,021)

2,025

(6)

Net loss

(25,093)

(25,093)

Pension adjustment, net of taxes

186

186

Foreign currency translation

314

314

Balance, June 30, 2020

215,123

$

21,512

$

$

649,844

$

(22,703)

$

648,653

Six months ended June 30, 2019

Accumulated

Capital in 

Other

Common Stock

Excess of

Retained

Comprehensive

    

Shares

    

Amount

    

Par Value

    

Earnings

    

(Loss) Income

    

Total

Balance, December 31, 2018

 

214,544

$

21,454

$

$

947,711

$

(18,746)

$

950,419

Adoption of accounting standards (Note 2)

 

 

 

 

2,376

 

(2,732)

 

(356)

Stock issued for stock incentive plans, net

 

843

 

84

 

2,368

 

 

 

2,452

Stock purchased and retired

 

(245)

 

(24)

 

(2,368)

 

(306)

 

 

(2,698)

Net loss

 

 

 

 

(739)

 

 

(739)

Dividends

 

 

 

 

(21,486)

 

 

(21,486)

Pension adjustment, net of taxes

 

 

 

 

 

173

 

173

Foreign currency translation

 

 

 

 

 

98

 

98

Balance, March 31, 2019

215,142

$

21,514

$

$

927,556

$

(21,207)

$

927,863

Adoption of accounting standards (Note 2)

87

87

Stock issued for stock incentive plans, net

(23)

(2)

2,438

2,436

Stock purchased and retired

(540)

(54)

(2,438)

(2,159)

(4,651)

Net income

6,171

6,171

Dividends

(10,738)

(10,738)

Pension adjustment, net of taxes

174

174

Foreign currency translation

333

333

Balance, June 30, 2019

214,579

$

21,458

$

$

920,917

$

(20,700)

$

921,675

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RPC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019

(In thousands)

(Unaudited)

Six Months ended June 30,

    

2020

    

2019

OPERATING ACTIVITIES

 

  

 

  

Net (loss) income

$

(185,516)

$

5,432

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

  

 

  

Depreciation, amortization and other non-cash charges

 

58,924

 

86,809

Stock-based compensation expense

 

4,114

 

4,888

Gain on disposition of assets, net

 

(4,013)

 

(4,637)

Deferred income tax benefit

 

(36,723)

 

(12,579)

Impairment and other non-cash charges

206,264

(Increase) decrease in assets:

 

  

 

  

Accounts receivable

 

133,223

 

(34,337)

Income taxes receivable

 

(22,762)

 

31,158

Inventories

 

7,320

 

11,701

Prepaid expenses

 

4,601

 

1,614

Other current assets

 

235

 

600

Other non-current assets

 

(423)

 

(3,609)

Increase (decrease) in liabilities:

 

 

Accounts payable

 

(27,451)

 

2,764

Income taxes payable

 

(1,099)

 

(3,647)

Accrued payroll and related expenses

 

(6,373)

 

(2,758)

Accrued insurance expenses

 

(1,228)

 

1,167

Accrued state, local and other taxes

 

1,304

 

2,753

Other accrued expenses

 

(4,966)

 

(349)

Pension liabilities

 

(610)

 

4,497

Long-term accrued insurance expenses

 

(1,045)

 

2,208

Other long-term liabilities

 

(1,677)

 

(245)

Net cash provided by operating activities

 

122,099

 

93,430

INVESTING ACTIVITIES

 

 

Capital expenditures

 

(38,659)

 

(132,253)

Proceeds from sale of assets

 

12,740

 

9,776

Net cash used for investing activities

 

(25,919)

 

(122,477)

FINANCING ACTIVITIES

 

  

 

  

Payment of dividends

 

 

(32,224)

Cash paid for common stock purchased and retired

 

(798)

 

(7,349)

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 beginning of period

 

50,023

 

116,262

Cash and cash equivalents at end of period

$

145,405

$

47,642

Supplemental cash flows disclosure:

 

  

 

  

Income taxes refund, net

$

(9,847)

$

(12,125)

Supplemental disclosure of noncash investing activities:

 

  

 

  

Capital expenditures included in accounts payable

$

2,185

$

31,407

The accompanying notes are an integral part of these consolidated financial statements.

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RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.    GENERAL

The accompanying unaudited consolidated financial statements include the accounts of RPC, Inc. and its wholly-owned subsidiaries (“RPC” or the “Company”) and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These consolidated financial statements have been prepared in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 810, “Consolidation” and Rule 3A-02(a) of Regulation S-X. In accordance with ASC Topic 810 and Rule 3A-02 (a) of Regulation S-X, the Company’s policy is to consolidate all subsidiaries and investees where it has voting control.

In the opinion of management, all adjustments (all of which consisted of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020.

The balance sheet at December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2019.

A group that includes the Company’s Chairman of the Board, R. Randall Rollins, and his brother Gary W. Rollins, who is also a director of the Company, and certain companies under their control, controls in excess of fifty percent of the Company’s voting power.

2.    RECENT ACCOUNTING STANDARDS

The FASB issued the following applicable Accounting Standards Updates (ASU):

Recently Adopted Accounting Standards:

ASU No. 2016-13, Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The ASU introduced a new accounting model, the Current Expected Credit Losses model (CECL), which requires earlier recognition of credit losses and additional disclosures related to credit risk. The CECL model utilizes a lifetime expected credit loss measurement objective for recognition in place of the current incurred loss model. The Company adopted the provisions of the standard in the first quarter of 2020 specifically identified an immaterial cumulative-effect adjustment to the opening balance of retained earnings. The Company plans to continue to record an allowance on its trade receivables based on aging at the end of each reporting period using current reasonable and supportable forecasted economic conditions. See Note 8 “Current Expected Credit Losses” for expanded disclosures.
ASU No. 2017-04 —Intangibles —Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company adopted these provisions in the first quarter of 2020, on a prospective basis.
ASU No. 2018-15 — Intangibles —Goodwill and Other —Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments reduce the complexity for the accounting for costs of implementing a cloud computing service arrangement and align the requirements for capitalizing implementation costs that are incurred in a hosting arrangement that is a service contract with the costs incurred to

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RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

develop or obtain internal-use software. The Company adopted these provisions in the first quarter of 2020 and the adoption did not have a material impact on its consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted:

ASU No. 2019-12 — Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing the exceptions to the incremental approach for intra-period tax allocation in certain situations, requirement to recognize a deferred tax liability for a change in the status of a foreign investment, and the general methodology for computing income taxes in an interim period when year-to date loss exceeds the anticipated loss for the year. The amendments also simplify the accounting for income taxes with regard to franchise tax, evaluation of step up in the tax basis of goodwill in certain business combinations, allocating current and deferred tax expense to legal entities that are not subject to tax and enacted change in tax laws or rates. The amendments are effective beginning in the first quarter of 2021 and the Company is currently evaluating the impact of adopting these provisions on its consolidated financial statements.

3.    REVENUES

Accounting Policy:

RPC’s contract revenues are generated principally from providing oilfield services. These services are based on mutually agreed upon pricing with the customer prior to the services being delivered and, given the nature of the services, do not include the right of return. Pricing for these services is a function of rates based on the nature of the specific job, with consideration for the extent of equipment, labor, and consumables needed for the job. RPC typically satisfies its performance obligations over time as the services are performed. RPC records revenues based on the transaction price agreed upon with its customers.

Sales tax charged to customers is presented on a net basis within the consolidated statements of operations and therefore excluded from revenues.

Nature of services:

RPC provides a broad range of specialized oilfield services to independent and major oil and gas companies engaged in the exploration, production and development of oil and gas properties throughout the United States and in selected international markets. RPC manages its business as either (1) services offered on the well site with equipment and personnel (Technical Services) or (2) services and tools offered off the well site (Support Services). For more detailed information about operating segments, see Note 7.

RPC contracts with its customers to provide the following services by reportable segment:

Technical Services

Includes pressure pumping, downhole tools services, coiled tubing, nitrogen, snubbing and other oilfield related services including wireline, well control, fishing and pump down services.

Support Services

Rental tools – RPC rents tools to its customers for use with onshore and offshore oil and gas well drilling, completion and workover activities.
Other support services include oilfield pipe inspection services, pipe management and pipe storage; well control training and consulting.

Our contracts with customers are generally very short-term in nature and generally consist of a single performance obligation – the provision of oilfield services.

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RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Payment terms:

RPC’s contracts with customers state the final terms of the sales, including the description, quantity, and price of each service to be delivered. The Company’s contracts are generally short-term in nature and in most situations, RPC provides services ahead of payment - i.e., RPC has fulfilled the performance obligation prior to submitting a customer invoice. RPC invoices the customer upon completion of the specified services and collection generally occurs between 30 to 60 days after invoicing. As the Company enters into contracts with its customers, it generally expects there to be no significant timing difference between the date the services are provided to the customer (satisfaction of the performance obligation) and the date cash consideration is received. Accordingly, there is no financing component to our arrangements with customers.

Significant judgments:

RPC believes the output method is a reasonable measure of progress for the satisfaction of our performance obligations, which are satisfied over time, as it provides a faithful depiction of (1) our performance toward complete satisfaction of the performance obligation under the contract and (2) the value transferred to the customer of the services performed under the contract. RPC has elected the right to invoice practical expedient for recognizing revenue related to its performance obligations.

Disaggregation of revenues:

See Note 7 for disaggregation of revenue by operating segment and services offered in each of them and by geographic regions.

Timing of revenue recognition for each of the periods presented is shown below:

Three months ended

Six months ended

June 30, 

June 30, 

(in thousands)

    

2020

    

2019

    

2020

    

2019

Oilfield services transferred at a point in time

$

$

$

$

Oilfield services transferred over time

 

89,300

 

358,516

 

333,077

 

693,172

Total revenues

$

89,300

$

358,516

$

333,077

$

693,172

Contract balances:

Contract assets representing the Company’s rights to consideration for work completed but not billed are included in accounts receivable, net on the consolidated balance sheets are shown below:

    

June 30, 

    

December 31, 

    

June 30, 

    

December 31, 

(in thousands)

2020

2019

2019

2018

Unbilled trade receivables

$

21,578

$

52,052

$

95,898

$

56,408

Substantially all of the unbilled trade receivables disclosed were invoiced during the following quarter.

4.    IMPAIRMENT AND OTHER CHARGES

During the second quarter of 2020, the Company experienced drastic declines in oilfield drilling and completions, with revenues reflecting low levels not recorded by RPC or the industry for many years. In response, the Company reduced headcount, furloughed employees and implemented compensation reductions for remaining active employees with the goal of adjusting its cost structure in response to expected low revenue levels.

Beginning late in the first quarter of 2020 and continuing during the second quarter, the oil and gas industry experienced an unprecedented disruption due to the substantial decline in global demand for oil caused by the COVID-19 pandemic and subsequent mitigation efforts as well as macroeconomic events such as the geopolitical tensions between the Organization of Petroleum Exporting Countries and Russia, regarding limits on oil production. These factors resulted in a significant drop in oil prices and a substantial deterioration of the Company’s market capitalization. The Company determined these events constituted

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RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

a triggering event that required a review of the recoverability of its long-lived assets and performed an interim goodwill impairment assessment as of March 31, 2020.

The Company used both income based and market based approaches to determine the fair value of its long-lived asset groups and its reporting units for goodwill impairment assessment. Under the income approach, the fair value for each of its asset groups and reporting units was determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company used internal forecasts, updated for recent events, to estimate future cash flows and terminal value calculation, which incorporates historical and forecasted trends, including an estimate of long-term future growth rates, based on its most recent views of the long-term outlook for each asset group and reporting units. For the market based valuation, the Company used comparable public company multiples. The selection of comparable businesses was based on the markets in which the asset groups and reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services. Based on the concluded fair value of the asset groups, the Company measured and recorded an impairment loss that represents the amount by which the asset groups' carrying amounts exceeded their fair value. For purposes of the goodwill impairment assessment, the fair value of each reporting unit exceeded its net book value and therefore, goodwill was deemed not impaired.

The Company recorded the following pre-tax charges during the three and six months ended June 30, 2020 which are reflected in “Impairment and other charges” in the consolidated statements of operations:

Three months ended

Six months ended

    

June 30, 

    

June 30, 

(in thousands)

2020

2019

2020

2019

Long Lived Asset Impairments (1)

$

$

$

204,765

$

Severance Costs

 

1,487

 

 

1,882

 

Other (2)

 

152

 

 

528

 

Total

$

1,639

$

$

207,175

$

(1).

Relates solely to the Technical Services segment and primarily includes pressure pumping and coiled tubing assets.

(2).

Includes interest costs related to leased assets that were impaired in the third and fourth quarters of 2019 and additional costs related to abandoned assets.

See Note 7 for details of impairment and other charges by segment.

The Company plans to continue to adjust its cost structure in accordance with its assessment of the operating environment. If market conditions continue to deteriorate, including crude oil prices further declining and remaining at low levels for a sustained period of time, the Company may record further asset impairments, or an impairment of the carrying value of goodwill.

5.    EARNINGS PER SHARE

Basic and diluted earnings per share are computed by dividing net loss by the weighted average number of shares outstanding during the respective periods. In addition, the Company has periodically issued share-based payment awards that contain non-

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RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

forfeitable rights to dividends and are therefore considered participating securities. The following table shows the restricted shares of common stock (participating securities) outstanding and a reconciliation of outstanding weighted average shares:

Three months ended

Six months ended

June 30

June 30

(In thousands)

    

2020

    

2019

    

2020

    

2019

Net (loss) income available for stockholders:

$

(25,093)

$

6,171

$

(185,516)

$

5,432

Less: Adjustments for earnings attributable to participating securities

 

 

(109)

 

 

(334)

Net (loss) income used in calculating earnings per share

$

(25,093)

$

6,062

$

(185,516)

$

5,098

Weighted average shares outstanding (including participating securities)

 

215,174

 

214,908

 

215,090

 

214,974

Adjustment for participating securities

 

(2,772)

 

(2,569)

 

(2,730)

 

(2,559)

Shares used in calculating basic and diluted earnings per share

 

212,402

 

212,339

 

212,360

 

212,415

6.    STOCK-BASED COMPENSATION

In April 2014, the Company reserved 8,000,000 shares of common stock under the 2014 Stock Incentive Plan with a term of 10 years expiring in April 2024. This plan provides for the issuance of various forms of stock incentives, including, among others, incentive and non-qualified stock options and restricted shares. As of June 30, 2020, there were 3,850,000 shares available for grant.

Stock-based employee compensation expense was as follows for the periods indicated:

Three months ended

Six months ended

June 30, 

June 30

(in thousands)

    

2020

    

2019

    

2020

    

2019

Pre-tax expense

$

2,017

$

2,436

$

4,114

$

4,888

After tax expense

$

1,523

$

1,839

$

3,106

$

3,690

Restricted Stock

The following is a summary of the changes in non-vested restricted shares for the six months ended June 30, 2020:

Weighted Average

    

Shares

    

Grant-Date Fair Value

Non-vested shares at December 31, 2019

 

2,393,673

$

13.23

Granted

 

1,085,875

 

4.59

Vested