Company Quick10K Filing
Quick10K
RPC
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$9.89 215 $2,130
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-07-24 Earnings, Exhibits
8-K 2019-07-01 Other Events, Exhibits
8-K 2019-07-01 Other Events, Exhibits
8-K 2019-06-20 Regulation FD
8-K 2019-04-26 Other Events, Exhibits
8-K 2019-04-24 Other Events, Exhibits
8-K 2019-04-24 Earnings, Exhibits
8-K 2019-04-23 Shareholder Vote
8-K 2019-04-01 Other Events, Exhibits
8-K 2019-04-01 Other Events, Exhibits
8-K 2019-03-26 Regulation FD, Exhibits
8-K 2019-02-11 Regulation FD, Exhibits
8-K 2019-01-23 Other Events, Exhibits
8-K 2019-01-23 Earnings, Exhibits
8-K 2019-01-22 Officers, Exhibits
8-K 2019-01-02 Other Events, Exhibits
8-K 2019-01-02 Other Events, Exhibits
8-K 2018-11-26 Other Events, Exhibits
8-K 2018-10-24 Earnings, Exhibits
8-K 2018-10-24 Other Events, Exhibits
8-K 2018-10-09 Other Events, Exhibits
8-K 2018-09-04 Other Events, Exhibits
8-K 2018-07-25 Other Events, Exhibits
8-K 2018-07-25 Earnings, Exhibits
8-K 2018-07-02 Other Events, Exhibits
8-K 2018-07-02 Other Events, Exhibits
8-K 2018-04-24 Shareholder Vote
8-K 2018-04-03 Other Events, Exhibits
8-K 2018-04-02 Other Events, Exhibits
8-K 2018-02-12 Other Events, Exhibits
8-K 2018-01-24 Earnings, Exhibits
8-K 2018-01-02 Other Events, Exhibits
ET Eternal Speech 38,980
BT BT Group 27,760
ANGI Angi Homeservices 8,360
PB Prosperity Bancshares 5,040
RGEN Repligen 3,070
TR Tootsie Roll 1,500
GNMK Genmark Diagnostics 428
PYX Playtex Products 163
RAIL Freightcar America 80
NBY Novabay Pharmaceuticals 10
RES 2019-06-30
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-20190630ex311509af9.htm
EX-31.2 res-20190630ex312f7f427.htm
EX-32.1 res-20190630ex3212d8836.htm
EX-95.1 res-20190630ex9510ed39a.htm

RPC Earnings 2019-06-30

RES 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

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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, 2019

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

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, 2019, RPC, Inc. had 214,578,915 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, 2019 and December 31, 2018

3

Consolidated Statements of Operations – For the three and six months ended June 30, 2019 and 2018

4

Consolidated Statements of Comprehensive Income – For the three and six months ended June 30, 2019 and 2018

5

Consolidated Statements of Stockholders’ Equity – For the six months ended June 30, 2019 and 2018

6

Consolidated Statements of Cash Flows – For the six months ended June 30, 2019 and 2018

7

Notes to Consolidated Financial Statements

8 - 20

Item 2.

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

21 – 29

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

29

Item 4.

Controls and Procedures

30

Part II. Other Information

Item 1.

Legal Proceedings

31

Item 1A.

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3.

Defaults upon Senior Securities

31

Item 4.

Mine Safety Disclosures

31

Item 5.

Other Information

31

Item 6.

Exhibits

32

Signatures

33

2

Table of Contents

RPC, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2019 AND DECEMBER 31, 2018

(In thousands)

(Unaudited)

    

June 30, 

    

December 31, 

2019

2018

(Note 1)

ASSETS

 

  

 

  

Cash and cash equivalents

$

47,642

$

116,262

Accounts receivable, net of allowance for doubtful accounts of $5,577 in 2019 and $4,813 in 2018

 

358,002

 

323,533

Inventories

 

118,606

 

130,083

Income taxes receivable

 

4,674

 

35,832

Prepaid expenses

 

8,154

 

9,766

Other current assets

 

3,049

 

3,462

Total current assets

 

540,127

 

618,938

Property, plant and equipment, less accumulated depreciation of $1,669,168 in 2019 and $1,633,827 in 2018

 

574,858

 

517,982

Operating lease right-of-use assets

42,727

Goodwill

 

32,150

 

32,150

Other assets

 

34,105

 

30,510

Total assets

$

1,223,967

$

1,199,580

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

  

 

  

Accounts payable

$

122,766

$

103,401

Accrued payroll and related expenses

 

22,981

 

25,715

Accrued insurance expenses

 

7,350

 

6,183

Accrued state, local and other taxes

 

5,834

 

3,081

Income taxes payable

 

1,059

 

4,706

Current portion of operating lease liabilities

12,181

Other accrued expenses

 

213

 

151

Total current liabilities

 

172,384

 

143,237

Long-term accrued insurance expenses

 

14,280

 

12,072

Long-term pension liabilities

 

33,675

 

29,638

Deferred income taxes

 

47,823

 

60,375

Long-term operating lease liabilities

31,624

Other long-term liabilities

 

2,506

 

3,839

Total liabilities

 

302,292

 

249,161

Common stock

 

21,458

 

21,454

Capital in excess of par value

 

 

Retained earnings

 

920,917

 

947,711

Accumulated other comprehensive loss

 

(20,700)

 

(18,746)

Total stockholders’ equity

 

921,675

 

950,419

Total liabilities and stockholders’ equity

$

1,223,967

$

1,199,580

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, 2019 AND 2018

(In thousands except per share data)

(Unaudited)

Three months ended

Six months ended

June 30, 

June 30, 

    

2019

    

2018

    

2019

    

2018

Revenues

$

358,516

$

467,926

$

693,172

$

904,260

Cost of revenues (exclusive of items shown below)

 

265,088

 

312,079

 

517,483

 

607,684

Selling, general and administrative expenses

 

43,293

 

42,534

 

88,714

 

86,348

Depreciation and amortization

 

42,881

 

40,094

 

85,386

 

77,574

Gain on disposition of assets, net

 

(1,133)

 

(1,810)

 

(4,637)

 

(3,173)

Operating income

 

8,387

 

75,029

 

6,226

 

135,827

Interest expense

 

(164)

 

(113)

 

(253)

 

(218)

Interest income

 

594

 

458

 

1,394

 

860

Other (expense) income, net

 

(53)

 

4,104

 

392

 

9,499

Income before income taxes

 

8,764

 

79,478

 

7,759

 

145,968

Income tax provision

 

2,593

 

19,535

 

2,327

 

33,895

Net income

$

6,171

$

59,943

$

5,432

$

112,073

Earnings per share

 

 

  

 

  

 

  

Basic

$

0.03

$

0.28

$

0.02

$

0.52

Diluted

$

0.03

$

0.28

$

0.02

$

0.52

Dividends per share

$

0.05

$

0.10

$

0.15

$

0.20

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, 2019 AND 2018

(In thousands)

(Unaudited)

Three months ended

Six months ended

June 30, 

June 30, 

    

2019

    

2018

    

2019

    

2018

Net income

$

6,171

$

59,943

$

5,432

$

112,073

Other comprehensive income (loss):

Pension adjustment and reclassification adjustment, net of taxes

 

174

 

155

 

347

 

328

Foreign currency translation

 

333

 

66

 

431

 

(415)

Comprehensive income

$

6,678

$

60,164

$

6,210

$

111,986

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, 2019 AND 2018

(In thousands)

(Unaudited)

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

Six months ended June 30, 2018

Accumulated

Capital in 

Other

Common Stock

Excess of

Retained

Comprehensive

    

Shares

    

Amount

    

Par Value

    

Earnings

    

(Loss) Income

    

Total

Balance , December 31, 2017

 

216,544

$

21,654

$

$

906,745

$

(16,702)

$

911,697

Adoption of accounting standard (Note 2)

 

 

 

 

15

 

(15)

 

Stock issued for stock incentive plans, net

 

498

 

50

 

2,505

 

 

 

2,555

Stock purchased and retired

 

(1,573)

 

(157)

 

(2,505)

 

(28,048)

 

 

(30,710)

Net income

 

 

 

 

52,130

 

 

52,130

Dividends

 

 

 

 

(21,657)

 

 

(21,657)

Pension adjustment, net of taxes

 

 

 

 

 

173

 

173

Foreign currency translation

 

 

 

 

 

(481)

 

(481)

Balance, March 31, 2018

215,469

$

21,547

$

$

909,185

$

(17,025)

$

913,707

Adoption of accounting standard (Note 2)

0

Stock issued for stock incentive plans, net

(82)

(8)

2,039

2,031

Stock purchased and retired

(560)

(56)

(2,039)

(7,291)

(9,386)

Net income

59,943

59,943

Dividends

(21,529)

(21,529)

Pension adjustment, net of taxes

155

155

Foreign currency translation

66

66

Balance, June 30, 2018

 

214,827

$

21,483

$

$

940,308

$

(16,804)

$

944,987

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, 2019 AND 2018

(In thousands)

(Unaudited)

Six months ended June 30, 

    

2019

    

2018

OPERATING ACTIVITIES

 

  

 

  

Net income

$

5,432

$

112,073

Adjustments to reconcile net income to net cash provided by operating activities:

 

  

 

  

Depreciation, amortization and other non-cash charges

 

86,809

 

79,410

Stock-based compensation expense

 

4,888

 

4,586

Gain on disposition of assets, net

 

(4,637)

 

(3,173)

Deferred income tax (benefit) provision

 

(12,579)

 

5,171

(Increase) decrease in assets:

 

  

 

  

Accounts receivable

 

(34,337)

 

843

Income taxes receivable

 

31,158

 

18,984

Inventories

 

11,701

 

(11,880)

Prepaid expenses

 

1,614

 

2,607

Other current assets

 

600

 

990

Other non-current assets

 

(3,609)

 

(1,113)

Increase (decrease) in liabilities:

 

  

 

  

Accounts payable

 

2,764

 

22,892

Income taxes payable

 

(3,647)

 

4,342

Accrued payroll and related expenses

 

(2,758)

 

515

Accrued insurance expenses

 

1,167

 

293

Accrued state, local and other taxes

 

2,753

 

(2,751)

Other accrued expenses

 

(349)

 

160

Pension liabilities

 

4,497

 

(4,367)

Long-term accrued insurance expenses

 

2,208

 

440

Other long-term liabilities

 

(245)

 

(818)

Net cash provided by operating activities

 

93,430

 

229,204

INVESTING ACTIVITIES

 

  

 

  

Capital expenditures

 

(132,253)

 

(149,692)

Proceeds from sale of assets

 

9,776

 

6,895

Net cash used for investing activities

 

(122,477)

 

(142,797)

FINANCING ACTIVITIES

 

  

 

  

Payment of dividends

 

(32,224)

 

(43,186)

Cash paid for common stock purchased and retired

 

(7,349)

 

(40,096)

Net cash used for financing activities

 

(39,573)

 

(83,282)

Net (decrease) increase in cash and cash equivalents

 

(68,620)

 

3,125

Cash and cash equivalents at beginning of period

 

116,262

 

91,050

Cash and cash equivalents at end of period

$

47,642

$

94,175

Supplemental cash flows disclosure:

 

  

 

  

Income taxes (refund) paid, net

$

(12,125)

$

4,977

Supplemental disclosure of noncash investing activities:

 

  

 

  

Capital expenditures included in accounts payable

$

31,407

$

19,727

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, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019.

The balance sheet at December 31, 2018 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, 2018.

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:

Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). The Company adopted ASC 842, Leases, and all the related amendments on January 1, 2019, by recognizing on its balance sheet, right-of-use assets and lease liabilities totaling approximately $44 million, for all of its leases with terms greater than 12 months. The Company adopted the standard using the optional transition method, with an immaterial adjustment to retained earnings upon adoption. The comparative information has not been restated and continues to be reported under the accounting standards that were in effect for those periods. The adoption of the standard did not have a material impact on the Company’s consolidated statements of operations and consolidated statements of cash flows. For expanded disclosures see Note 13 of the Notes to Consolidated Financial Statements.

ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments provide an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recorded. The Company adopted the standard in the first quarter of 2019 and elected to reclassify approximately $2.7 million of stranded tax effects related to its pension plan from AOCI to retained earnings.

ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The amendments expand the scope of ASC 718 to include share-based payments issued to nonemployees for goods or services, thereby substantially aligning the accounting for share-

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RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

based payments to nonemployees and employees. The Company adopted these provisions in the first quarter of 2019 and the adoption did not have a material impact on its consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted:

To be adopted in 2020 and later:

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. In addition, the amendments require the credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration to be presented as an allowance rather than a write-down. It also allows recording of credit loss reversals in current period net income. The amendments are effective starting in the first quarter of 2020 with early application permitted. The Company is currently evaluating the impact of adopting these provisions on its consolidated financial statements.

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 amendments are effective for annual or any interim goodwill impairment tests beginning in 2020 applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of adopting these provisions on its consolidated financial statements.

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 develop or obtain internal-use software. The provisions may be applied prospectively or retrospectively. The amendments are effective starting in the first quarter of 2020, with early adoption permitted. 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.

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RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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 6.

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.

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

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RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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)

    

2019

    

2018

    

2019

    

2018

Oilfield services transferred at a point in time

$

$

$

$

Oilfield services transferred over time

 

358,516

 

467,926

 

693,172

 

904,260

Total revenues

$

358,516

$

467,926

$

693,172

$

904,260

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)

2019

2018

2018

2017

Unbilled trade receivables

$

95,898

$

56,408

$

113,453

$

68,494

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

4.    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 is as follows:

Three months ended

Six months ended

June 30, 

June 30, 

(In thousands)

    

2019

    

2018

    

2019

    

2018

Net income available for stockholders:

$

6,171

$

59,943

$

5,432

$

112,073

Less: Adjustments for earnings attributable to participating securities

 

(109)

 

(673)

 

(334)

 

(1,266)

Net income used in calculating earnings per share

$

6,062

$

59,270

$

5,098

$

110,807

Weighted average shares outstanding (including participating securities)

 

214,908

 

215,194

 

214,974

 

215,641

Adjustment for participating securities

 

(2,569)

 

(2,473)

 

(2,559)

 

(2,528)

Shares used in calculating basic and diluted earnings per share

 

212,339

 

212,721

 

212,415

 

213,113

5.    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, 2019, there were 4,578,747 shares available for grant.

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RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

Three months ended

Six months ended

June 30, 

June 30, 

(in thousands)

    

2019

    

2018

    

2019

    

2018

Pre-tax expense

$

2,436

$

2,031

$

4,888

$

4,586

After tax expense

$

1,839

$

1,533

$

3,690

$

3,462

Restricted Stock

The following is a summary of the changes in non-vested restricted shares for the six months ended June 30, 2019:

Weighted Average

    

Shares

    

Grant-Date Fair Value

Non-vested shares at December 31, 2018

 

2,352,150

$

17.15

Granted

 

858,150

 

11.39

Vested

 

(615,160)

 

14.71

Forfeited

 

(37,613)

 

15.69

Non-vested shares at June 30, 2019

 

2,557,527

$

13.21

The total fair value of shares vested was $6,970,000 during the six months ended June 30, 2019 and $16,194,000 during the six months ended June 30, 2018. Excess tax benefits or deficits realized from tax compensation deductions in excess of, or lower than compensation expense are recorded as either a beneficial or detrimental discrete tax adjustment. This discrete tax adjustment was a detriment of $510,000 for the six months ended June 30, 2019 and a benefit of $1,620,000 for the six months ended June 30, 2018.

As of June 30, 2019, total unrecognized compensation cost related to non-vested restricted shares was $48,384,000, which is expected to be recognized over a weighted-average period of 3.9 years.

6.    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 the 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 centralized support services and regulatory compliance are classified as Corporate.

Technical Services consists primarily of pressure pumping, downhole tools, coiled tubing, snubbing, nitrogen, well control, wireline and fishing. 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 and consulting 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.

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RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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)

    

2019

    

2018

    

2019

    

2018

Technical Services:

 

  

 

  

 

  

 

  

Pressure Pumping

$

170,066

$

269,040

$

317,825

$

525,195

Downhole Tools

 

112,763

 

107,521

 

222,434

 

200,562

Coiled Tubing

 

21,284

 

27,404

 

41,462

 

52,600

Nitrogen

 

12,219

 

11,784

 

23,527

 

23,215

Snubbing

 

4,355

 

6,055

 

7,818

 

10,027

All other

 

17,347

 

28,048

 

39,047

 

57,316

Total Technical Services

$

338,034

$

449,852

$

652,113

$

868,915

Support Services:

 

  

 

  

 

  

 

  

Rental Tools

$

13,962

$

12,550

$

27,898

$

22,570

All other

 

6,520

 

5,524

 

13,161

 

12,775

Total Support Services

$

20,482

$

18,074

$

41,059

$

35,345

Total revenues

$

358,516

$

467,926

$

693,172

$

904,260

The following summarizes revenues for the United States and separately for all international locations combined for the three and six months ended June 30, 2019. 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 percent of RPC’s consolidated assets, and therefore are not presented.

Three months ended

Six months ended

June 30, 

June 30, 

(in thousands)

    

2019

    

2018

    

2019

    

2018

United States revenues

$

343,688

$

443,922

$

657,656

$

861,306

International revenues

 

14,828

 

24,004

 

35,516

 

42,954

Total revenues

$

358,516

$

467,926

$

693,172

$

904,260

The accounting policies of the reportable segments are the same as those described in Note 1 to these consolidated financial statements. RPC evaluates the performance of its segments based on revenues, operating profits and return on invested capital. Gains or losses on disposition of assets are reviewed by the CODM on a consolidated basis, and accordingly the Company does not report gains or losses at the segment level. Inter-segment revenues are generally recorded in segment operating results at prices that management believes approximate prices for arm’s length transactions and are not material to operating results.

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RPC, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Summarized financial information with respect RPC’s reportable segments for the three and six months ended June 30, 2019 and 2018 are shown in the following table:

Three months ended

Six months ended

June 30, 

June 30, 

(in thousands)

    

2019

    

2018

    

2019

    

2018

Revenues:

 

  

 

  

 

  

 

  

Technical Services

$

338,034

$

449,852

$

652,113

$

868,915

Support Services

 

20,482

 

18,074

 

41,059

 

35,345

Total revenues

$

358,516

$

467,926

$

693,172

$

904,260

Operating income (loss):

 

 

  

 

  

 

  

Technical Services

$

6,850

$

75,624

$

2,392

$

140,629

Support Services

 

4,018

 

1,193

 

7,155

 

288

Corporate

 

(3,614)

 

(3,598)

 

(7,958)

 

(8,263)

Gain on disposition of assets, net

 

1,133

 

1,810

 

4,637

 

3,173

Total operating income

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