RPC INC [RES] Filings

10-Q 1 res-20240630x10q.htm 10-Q

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, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to__________

Commission File No. 001-08726

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)

(404) 321-2140

(Registrant’s telephone number, including area code)

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 19, 2024, RPC, Inc. had 215,008,964 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, 2024 and December 31, 2023	3

	Consolidated Statements of Operations – For the three and six months ended June 30, 2024 and 2023	4

	Consolidated Statements of Comprehensive Income – For the three and six months ended June 30, 2024 and 2023	5

	Consolidated Statements of Stockholders’ Equity – For the three and six months ended June 30, 2024 and 2023	6

	Consolidated Statements of Cash Flows – For the six months ended June 30, 2024 and 2023	7

	Notes to Consolidated Financial Statements	8 – 19

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20 – 27

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27

Item 4.	Controls and Procedures	28

Part II. Other Information

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	28

Item 3.	Defaults upon Senior Securities	28

Item 4.	Mine Safety Disclosures	28

Item 5.	Other Information	28

Item 6.	Exhibits	29

Signatures		30

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RPC, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2024, AND DECEMBER 31, 2023

(In thousands, except share and par value data)


	June 30,		December 31,
	2024		2023
ASSETS		(Unaudited)		Note 1
Cash and cash equivalents	$	261,516	$	223,310
Accounts receivable, net of allowance for credit losses of $6,753 in 2024 and $7,109 in 2023		303,074		324,915
Inventories		113,426		110,904
Income taxes receivable		8,253		52,269
Prepaid expenses		8,155		12,907
Other current assets		2,551		2,768
Total current assets		696,975		727,073
Property, plant and equipment, less accumulated depreciation of $846,596 in 2024 and $810,933 in 2023		500,492		435,139
Operating lease right-of-use assets		22,902		24,537
Finance lease right-of-use assets		4,534		1,036
Goodwill		50,824		50,824
Other intangibles, net		11,880		12,825
Retirement plan assets		29,613		26,772
Other assets		8,026		8,639
Total assets	$	1,325,246	$	1,286,845

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Accounts payable	$	100,276	$	85,036
Accrued payroll and related expenses		26,503		30,956
Accrued insurance expenses		5,754		5,340
Accrued state, local and other taxes		5,608		4,461
Income taxes payable		303		275
Unearned revenue		—		15,743
Current portion of operating lease liabilities		6,513		7,367
Current portion of finance lease liabilities and finance obligations		3,828		375
Accrued expenses and other liabilities		2,319		2,304
Total current liabilities		151,104		151,857
Long-term accrued insurance expenses		11,316		10,202
Retirement plan liabilities		24,577		23,724
Deferred income taxes		57,958		51,290
Long-term operating lease liabilities		17,308		18,600
Long-term finance lease liabilities		690		819
Other long-term liabilities		2,537		7,840
Total liabilities		265,490		264,332
Commitments and contingencies (Note 12)

STOCKHOLDERS’ EQUITY
Preferred stock, $0.10 par value, 1,000,000 shares authorized, none issued		—		—
Common stock, $0.10 par value, 349,000,000 shares authorized, 215,008,964 and 215,026,458 shares issued and outstanding in 2024 and 2023, respectively		21,501		21,502
Capital in excess of par value		—		—
Retained earnings		1,040,790		1,003,380
Accumulated other comprehensive loss		(2,535)		(2,369)
Total stockholders’ equity		1,059,756		1,022,513
Total liabilities and stockholders’ equity	$	1,325,246	$	1,286,845

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

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RPC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024, AND 2023

(In thousands except per share data)

(Unaudited)


	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenues	$	364,153	$	415,858	$	741,986	$	892,526
COSTS AND EXPENSES:
Cost of revenues (exclusive of depreciation and amortization shown separately below)		262,284		265,786		538,893		571,036
Selling, general and administrative expenses		37,406		43,604		77,491		85,801
Pension settlement charges		—		911		—		18,286
Depreciation and amortization		32,333		26,203		62,337		50,328
Gain on disposition of assets, net		(3,338)		(3,015)		(4,552)		(5,951)
Operating income		35,468		82,369		67,817		173,026
Interest expense		(99)		(73)		(333)		(145)
Interest income		3,343		2,698		6,308		4,553
Other income, net		732		631		1,499		1,392
Income before income taxes		39,444		85,625		75,291		178,826
Income tax provision		7,025		20,612		15,405		42,289
Net income	$	32,419	$	65,013	$	59,886	$	136,537

Earnings per share
Basic	$	0.15	$	0.30	$	0.28	$	0.63
Diluted	$	0.15	$	0.30	$	0.28	$	0.63
Dividends paid per share	$	0.04	$	0.04	$	0.08	$	0.08

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

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RPC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024, AND 2023

(In thousands)

(Unaudited)


	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023
Net income	$	32,419	$	65,013	$	59,886	$	136,537
Other comprehensive income:
Pension settlement and adjustment, net of tax		—		576		—		17,254
Foreign currency translation		(53)		439		(166)		423
Comprehensive income	$	32,366	$	66,028	$	59,720	$	154,214

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 THREE AND SIX MONTHS ENDED JUNE 30, 2024, AND 2023

(In thousands)

(Unaudited)


	Six months ended June 30, 2024
								Accumulated
				Capital in				Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss		Total
Balance, December 31, 2023	215,026	$	21,502	$	—	$	1,003,380	$	(2,369)	$	1,022,513
Stock issued for stock incentive plans, net	652		65		1,861		—		—		1,926
Stock purchased and retired	(1,331)		(133)		(1,861)		(7,888)		—		(9,882)
Net income	—		—		—		27,467		—		27,467
Dividends	—		—		—		(8,621)		—		(8,621)
Foreign currency translation	—		—		—		—		(113)		(113)
Balance, March 31, 2024	214,347	$	21,434	$	—	$	1,014,338	$	(2,482)	$	1,033,290
Stock issued for stock incentive plans, net	662		67		2,615		—		—		2,682
Stock purchased and retired	—		—		(2,615)		2,615		—		—
Net income	—		—		—		32,419		—		32,419
Dividends	—		—		—		(8,582)		—		(8,582)
Foreign currency translation	—		—		—		—		(53)		(53)
Balance, June 30, 2024	215,009	$	21,501	$	—	$	1,040,790	$	(2,535)	$	1,059,756


	Six months ended June 30, 2023
								Accumulated
				Capital in				Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss		Total
Balance, December 31, 2022	216,609	$	21,661	$	—	$	856,013	$	(19,939)	$	857,735
Stock issued for stock incentive plans, net	1,149		115		1,687		—		—		1,802
Stock purchased and retired	(1,388)		(139)		(1,687)		(9,523)		—		(11,349)
Net income	—		—		—		71,524		—		71,524
Dividends	—		—		—		(8,679)		—		(8,679)
Pension adjustment, net of taxes	—		—		—		—		16,678		16,678
Foreign currency translation	—		—		—		—		(16)		(16)
Balance, March 31, 2023	216,370	$	21,637	$	—	$	909,335	$	(3,277)	$	927,695
Stock issued for stock incentive plans, net	40		4		2,312		—		—		2,316
Stock purchased and retired	(1)		—		(2,312)		2,310		—		(2)
Net income	—		—		—		65,013		—		65,013
Dividends	—		—		—		(8,635)		—		(8,635)
Pension adjustment, net of taxes	—		—		—		—		576		576
Foreign currency translation	—		—		—		—		439		439
Balance, June 30, 2023	216,409	$	21,641	$	—	$	968,023	$	(2,262)	$	987,402

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

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RPC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2024, AND 2023

(In thousands)

(Unaudited)


	Six months ended June 30,
	2024		2023
OPERATING ACTIVITIES
Net income	$	59,886	$	136,537
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		62,337		50,328
Stock-based compensation expense		4,608		4,118
Gain on disposition of assets, net		(4,552)		(5,951)
Gain due to benefit plan financing arrangement		(1,151)		—
Deferred income tax provision		6,668		4,401
Pension settlement charges		—		18,286
Other non-cash adjustments		193		242
Decrease (increase) in assets:
Accounts receivable		21,716		23,017
Income taxes receivable		44,016		(10,745)
Inventories		(2,648)		(7,001)
Prepaid expenses		4,750		3,327
Other current assets		75		(297)
Other non-current assets		(792)		(833)
Increase (decrease) in liabilities:
Accounts payable		11,760		(30,646)
Income taxes payable		28		(95)
Unearned revenue		(15,743)		—
Accrued payroll and related expenses		(4,429)		(7,075)
Accrued insurance expenses		414		1,933
Accrued state, local and other taxes		1,147		2,121
Other accrued expenses		(4,562)		(2,938)
Pension and retirement plan liabilities		853		(5,068)
Long-term accrued insurance expenses		1,114		2,491
Other long-term liabilities		(1,201)		1,406
Net cash provided by operating activities		184,487		177,558

INVESTING ACTIVITIES
Capital expenditures		(127,799)		(104,488)
Proceeds from sale of assets		8,883		8,688
Purchase of business - advance		—		(78,982)
Proceeds from benefit plan financing arrangement		2,380		—
Re-investment in benefit plan financing arrangement		(2,380)		—
Net cash used for investing activities		(118,916)		(174,782)

FINANCING ACTIVITIES
Payment of dividends		(17,203)		(17,314)
Cash paid for common stock purchased and retired		(9,858)		(11,351)
Cash paid for finance lease and finance obligations		(304)		—
Net cash used for financing activities		(27,365)		(28,665)

Net increase (decrease) in cash and cash equivalents		38,206		(25,889)
Cash and cash equivalents at beginning of period		223,310		126,424
Cash and cash equivalents at end of period	$	261,516	$	100,535

Supplemental cash flows disclosure:
Income tax (refund) payments, net	$	(33,403)	$	48,553
Interest paid	$	84	$	83
Supplemental disclosure of noncash investing activities:
Capital expenditures included in accounts payable	$	12,494	$	12,769

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

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RPC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 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, 2024, are not necessarily indicative of the results to be expected for the year ending December 31, 2024.

The balance sheet at December 31, 2023 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, 2023.

A group that includes Gary W. Rollins, Pamela R. Rollins, Amy Rollins Kreisler and Timothy C. Rollins, each of whom is a director of the Company, and certain companies under their control, controls in excess of fifty percent of the Company’s voting power.

Certain prior year amounts have been reclassified to conform to the presentation in the current year.

2. RECENT ACCOUNTING STANDARDS

Recently Issued Accounting Standards Not Yet Adopted:

Accounting Standards Update (ASU) No. 2023-07: Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures: These amendments require an entity to disclose the title and position of the Chief Operating Decision Maker (CODM) and the significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss. These amendments are effective for annual disclosures beginning in 2024 and interim disclosures beginning in the first quarter of 2025, with early adoption permitted. These amendments are effective retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting these provisions on its consolidated financial statements.

ASU No. 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures: These amendments require an entity to include consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid, disaggregated by jurisdiction. These amendments are effective for annual disclosures beginning in 2025, with early adoption permitted for annual financial statements that have not yet been issued. The Company is currently evaluating the impact of adopting these provisions on its consolidated financial statements.

Securities and Exchange Commission (SEC) Final Rules: Climate related Disclosure: The SEC adopted final rules designed to enhance public company disclosures related to the risks and impacts of climate-related matters. The new rules require disclosures relating to climate-related risks and risk management as well as the board and management’s governance of such risks. In addition, the rules include requirements to disclose the financial effects of severe weather events and other natural conditions in the audited financial statements and disclose information about greenhouse gas emissions, which will be subject to a phased-in assurance requirement. On April 4, 2024, the SEC stayed its climate disclosure rules to “facilitate the orderly judicial resolution” of pending legal challenges. If litigation is resolved in favor of the SEC, a majority of the final rules are effective for RPC beginning in the year 2026.

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RPC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

3. BUSINESS ACQUISITION

Effective July 1, 2023 (Effective Date), the Company completed its acquisition of all of the outstanding equity interests in Spinnaker Oilwell Services, LLC (Spinnaker), pursuant to a Merger Agreement (Merger Agreement) with Catapult Energy Services Group, LLC, as the representative of the Sellers.

Spinnaker, headquartered in Oklahoma City, Oklahoma, is a leading provider of oilfield cementing services in the Permian and Mid-Continent basins. Spinnaker operates two facilities located in El Reno, Oklahoma and Hobbs, New Mexico and maintains 18 full-service cementing spreads. This acquisition significantly expanded RPC's cementing business from its presence in South Texas to basins in which it currently provides other services. Spinnaker is included in our Technical Services Segment. As part of the acquisition, the Company recorded goodwill of $18.7 million and intangible assets of $13.2 million consisting of customer relationships and trade names and trademarks.

The supplemental pro forma financial information presented below has been prepared using the acquisition method of accounting and is based on the historical financial information of Spinnaker and RPC. This proforma financial information does not necessarily represent what the combined company’s revenues or results of operations would have been had the acquisition been completed on January 1, 2023, nor do they intend to be a projection of future operating results of the combined company. It also does not reflect any operating efficiencies or potential cost savings that might be achieved from synergies of combining Spinnaker and RPC.

The following table provides unaudited supplemental pro forma financial information as if the acquisition had occurred on January 1, 2023.


	Three months ended June 30,				Six months ended June 30,
(in thousands)		2024		2023		2024		2023
Revenues	$	364,153	$	442,815	$	741,986	$	944,283
Net income		32,419		69,585		59,886		145,682

4. 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 accompanying 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 titled Business Segment Information.

Our contracts with customers are generally short-term in nature and generally consist of a single performance obligation – the provision of oilfield services. RPC contracts with its customers to provide the following services by reportable segment:

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RPC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Technical Services

●Includes pressure pumping, downhole tools services, coiled tubing, cementing, nitrogen, snubbing and other oilfield related services including wireline, well control, fishing, and water management.

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 and well control training.

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 is generally expected 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 titled Business Segment Information for disaggregation of revenue by operating segment and services offered in each of them and by geographic regions.

Contract balances:

Contract assets representing the Company’s rights to consideration for work completed but not billed are included in accounts receivable, net in the accompanying Consolidated Balance Sheets and are shown below:


	June 30,		December 31,
(in thousands)	2024		2023
Unbilled trade receivables	$	76,271	$	59,831

Substantially all of the unbilled trade receivables disclosed were, or are expected to be, invoiced during the following quarter.

Unearned revenue

Contract liabilities represent payments received in advance of satisfying the Company’s performance obligation and are recognized over time as the service is performed. All of the $15.7 million recorded as unearned revenue as of December 31, 2023 has been recognized as revenues during the six months ended June 30, 2024.

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RPC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

5. DEPRECIATION AND AMORTIZATION

Depreciation and amortization disclosed in the Consolidated Statements of Operations related to the following components:


	Three months ended				Six months ended
	June 30,				June 30,
(in thousands)		2024		2023		2024		2023
Cost of revenues	$	29,524	$	23,879	$	56,844	$	45,659
Selling, general and administrative expenses		2,809		2,324		5,493		4,669
Total	$	32,333	$	26,203	$	62,337	$	50,328

6. EARNINGS PER SHARE

Basic and diluted earnings per share are computed by dividing net income 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-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)	2024		2023		2024		2023
Net income available for stockholders	$	32,419	$	65,013	$	59,886	$	136,537
Less: Adjustments for earnings attributable to participating securities		(533)		(1,056)		(953)		(2,193)
Net income used in calculating earnings per share	$	31,886	$	63,957	$	58,933	$	134,344

Weighted average shares outstanding (including participating securities)		214,844		216,398		214,922		216,762
Adjustment for participating securities		(3,603)		(3,584)		(3,457)		(3,544)
Shares used in calculating basic and diluted earnings per share		211,241		212,814		211,465		213,218

7. STOCK-BASED COMPENSATION

The Company has issued various forms of stock incentives, including incentive and non-qualified stock options, time-lapse restricted shares and performance share unit awards under its Stock Incentive Plans to officers, selected employees and non-employee directors. The Company’s 2014 Stock Incentive Plan expired in April 2024. At the April 23, 2024, annual meeting of stockholders, the 2024 Stock Incentive Plan reserving 8,000,000 shares for the issuance of share-based payment awards described above was approved. As of June 30, 2024, there were 7,324,824 shares available for grant under the Company’s 2024 Stock Incentive Plan.

During the second quarter of 2024, the Company issued time-lapse restricted shares to its officers and other selected employees that will vest ratably over a period of three years. The Company had previously issued time-lapse restricted shares to certain other selected employees in the first quarter of 2024 with the same vesting provisions as the current quarter. Also, during the second quarter of 2024, officers and selected employees were granted performance share unit awards that vest at different levels based on pre-established financial performance targets with a modifier for stock performance based on total shareholder return. The grant date fair value of the awards was determined with the assistance of a third-party specialist based on a range of potential outcomes relative to the market condition. The Company periodically evaluates the portion of performance share unit awards that are probable to vest and updates compensation expense accruals accordingly. In accordance with the terms of their Director Compensation Program, equity grants in the form of fully vested Company shares totaling approximately $400 thousand were awarded to all non-employee directors, in the second quarter of 2024.

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RPC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

8. BUSINESS SEGMENT INFORMATION

RPC’s reportable segments are the same as its operating segments. RPC manages its business under Technical Services and Support Services. Technical Services is comprised of service lines that generate revenue based on equipment, personnel or materials at the well site and are closely aligned with completion and production activities of our customers. Support Services is comprised of service lines which generate revenue from services and tools offered off the well site and are more closely aligned with the customers’ drilling activities. Selected overhead including certain centralized support services and regulatory compliance are classified as Corporate.

Technical Services consists primarily of pressure pumping, downhole tools, coiled tubing, cementing, snubbing, nitrogen, well control, wireline, fishing and water management. The services offered under Technical Services are high capital and personnel intensive businesses. The Company considers all of these services to be closely integrated oil and gas well servicing businesses and makes resource allocation and performance assessment decisions based on this operating segment as a whole across these various services.

Support Services consist primarily of drill pipe and related tools, pipe handling, pipe inspection and storage services, and oilfield training services. The demand for these services tends to be influenced primarily by customer drilling-related activity levels.

The Company’s Chief Operating Decision Maker (CODM) assesses performance and makes resource allocation decisions regarding, among others, staffing, growth and maintenance capital expenditures and key initiatives based on the operating segments outlined above.

Segment Revenues:

RPC’s operating segment revenues by major service lines are shown in the following table:


	Three months ended				Six months ended
	June 30,				June 30,
(in thousands)	2024		2023		2024		2023
Technical Services:
Pressure Pumping	$	147,156	$	209,820	$	323,412	$	474,621
Downhole Tools		100,670		101,589		194,464		208,993
Coiled Tubing		38,984		38,355		72,152		78,421
Cementing		28,038		6,019		55,789		12,264
Nitrogen		8,346		12,719		17,896		24,816
Snubbing		5,278		7,672		10,134		14,763
All other		13,012		13,844		24,031		28,131
Total Technical Services		341,484		390,018		697,878		842,009

Support Services:
Rental Tools		17,422		18,334		33,396		36,010
All other		5,247		7,506		10,712		14,507
Total Support Services		22,669		25,840		44,108		50,517

Total revenues	$	364,153	$	415,858	$	741,986	$	892,526

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RPC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following summarizes revenues for the United States and separately for all international locations combined for the three and six months ended June 30, 2024, and 2023. The revenues are presented based on the location of the use of the equipment or services. Assets related to international operations are less than 10% of RPC’s consolidated assets, and therefore are not presented.

Three months ended

Six months ended

June 30,

(in thousands)

2024

2023

2024

2023

United States revenues