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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

or

 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.

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

2

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.

3

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.

4

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.

5

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.

6

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.

7

Table of Contents

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.

8

Table of Contents

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:

9

Table of Contents

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.

10

Table of Contents

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.

11

Table of Contents

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