RPC, Inc. (RES) Q2 2026 Earnings Report, Transcript and Summary

Good morning, and thank you for joining us for RPC, Inc.’s second-quarter 2026 earnings conference call. Today’s call will be hosted by Ben Palmer, President and CEO, and Mike Schmit, Chief Financial Officer. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. I would like to advise everyone that this conference call is being recorded. I will now turn the call over to Mr. Schmit.

Thank you, and good morning. Before we begin, I want to remind you that some of the statements that will be made on this call could be forward-looking in nature and reflect a number of known and unknown risks. Please refer to our press release issued today, along with our 10-K and other public filings that outline those risks, all of which can be found on RPC’s website at [www.rpc.net](http://www.rpc.net). In today’s earnings release and conference call, we will be referring to several non-GAAP measures of operating performance and liquidity. We believe these non-GAAP measures allow us to compare performance consistently over various periods. Our press release and our website contain reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. I will now turn the call over to our President and CEO, Ben Palmer.

Thank you, Mike, and thank you for joining our call this morning. Before turning to our second-quarter results, I want to briefly address the CEO succession announcement we made in June. As we announced, I plan to retire as President and CEO and step down from the Board by the end of 2026, following 30 years with RPC. The Board has initiated a search for my successor, which is expected to conclude before year-end. And I will remain in an advisory capacity to support a smooth leadership transition. It has been the privilege of my professional life to spend the past three decades at RPC. Together with our talented team, we have built a diversified platform underpinned by strong brands, a low-leverage balance sheet, and a disciplined focus on full-cycle returns. I am committed to working closely with the Board to ensure continuity for our employees, customers, and shareholders. And in the meantime, our focus remains on disciplined execution, prudent capital allocation, and delivering long-term shareholder value. With that, let’s turn to our second-quarter results. And I will provide you with a few operational highlights. While industry activity levels remained relatively subdued, RPC delivered sequential revenue growth and meaningful margin expansion driven by strong execution, improved job mix, technology adoption, and contributions from targeted investments. Within Technical Services, ThruTubing Solutions’ downhole tools revenues increased 10% sequentially. We saw broad-based strength, with our Rocky Mountain region growing more than 20% sequentially. ThruTubing Solutions is a market leader in downhole completion tools with a portfolio of products supported by proprietary technologies and our patent portfolio. Over the last several years, we have introduced new motor sizes, new motor components, split-string tools, surface tools, and stage isolation products, just to name a few. These products have been well received and allow us to continue our market leadership. ThruTubing Solutions has introduced new sizes of its metal-on-metal power section called MetalMax, along with expanding availability across districts. This has resulted in an increased addressable market and improved MetalMax penetration. MetalMax’s performance and design characteristics are enabling entry into new markets and applications previously served by traditional power section components. The product reduces the number of trips an operator has to make out of the hole, reducing nonproductive time. Our ThruTubing Solutions team completed multiple horseshoe wells in the Permian exceeding 27,000 feet over the last several weeks. In addition to long lateral sections, these wells have added friction and complexities due to the turns. We collaborate with operators to package a solution that will drill out the well in the most efficient and reliable way. ThruTubing Solutions’ UnPlug technology, which replaces traditional bridge plugs, continues to have success. During the quarter, we had several additional customers trial this product. Overall, our downhole tools business is benefiting from more complex and longer laterals that are well suited for our technology solutions. Also within Technical Services, Cudd Pressure Control’s revenues were up 8% sequentially, led by coiled tubing, snubbing, and well control. Cudd Pressure Control’s snubbing business was up 14% sequentially. We received the big-bore snubbing unit during the quarter and began work in early June. The unit has since mobilized to a multi-project job. The big bore’s design features make it ideally suited for cavern gas storage inspections, which is regulatory-driven. This is part of our effort to continue diversifying beyond well completions. Coiled tubing, our largest service line within Cudd Pressure Control, was up 6% sequentially. Coiled tubing had the strongest growth in Elk City, which serves multiple basins, as well as growth in Pennsylvania and Michigan. We saw increased utilization across all of our larger-diameter units, with the 2 7/8-inch unit fully utilized. As part of our multiyear coiled tubing strategy, we have accelerated our investments here. We now expect a total of three 2 7/8-inch-capable units by year-end, with two coming from reel-trailer upgrades to previously modernized units and one from the previously delivered Trailblazer unit. These upgrades provide additional large-diameter capabilities to be deployed to the highest-return markets. While the wireline market conditions remain highly competitive, we have remained disciplined on pricing and continue to maintain a strong position with key customers. Pintail wireline revenues were down 16% sequentially. Revenues were impacted by customer activity reductions and lost crews due to aggressive competitor pricing. Cudd Energy Services’ pressure pumping business saw a 1% sequential revenue decrease. Revenues benefited from slightly improved pricing but were also offset by slightly lower pump hours. Job mix impacted revenues as we saw less fuel and M&S costs and revenues, but benefited our profit margins. Our focus remains on continuing to earn an appropriate return on our equipment over a cycle, but without significant activity changes, we do not see meaningful increases in pricing. Currently, we have no plans to reactivate fleets at current levels. However, we are encouraged by easing gas takeaway constraints and the potential for 2027 E&P budgets to reflect a more supportive commodity price environment. Current oil prices are more supportive of activity levels. However, the volatility from geopolitical events creates a less certain environment for customer investment decisions. We believe operators are being cautious due to uncertainty around the duration and ultimate levels of commodity prices. We do not expect a significant change in activity in the near term, but we acknowledge the dynamic nature of the market and are in a position to respond. Our focus is on controllable factors, strong full-cycle returns, and cash flow generation. With that, I will now have Mike discuss the quarter’s financial results.

Thanks, Ben. Our second-quarter financial results, with sequential comparisons to the first quarter of 2026, are as follows. Revenues increased 1% to $461 million. Breaking down our operating segments, Technical Services, which represented 95% of our total second-quarter revenues, was up 1%. Support Services represented 5% of revenues and was up 11%. The following is a breakdown of the second-quarter revenues for our largest service lines. Pressure pumping, 30.3%. Downhole tools, 25.3%. Wireline, 19.2%. Coiled tubing, 8.8%. Cementing, 6.2%. Rental tools, 3.6%. Together, these service lines accounted for 94% of our total revenues. Cost of revenues, excluding depreciation and amortization, was $346 million, compared to $356 million in the prior quarter. This decrease was primarily related to job mix as we provided lower levels of materials and supplies and fuel for customers during the quarter. SG&A expenses were $52 million, up from $48 million in the prior quarter. SG&A increased due to some incentive compensation, higher bad debt expense, and some other consulting expenses. As a percentage of revenue, SG&A increased 60 basis points to 11.2%. Depreciation and amortization was $43 million, slightly up from the previous quarter. The effective tax rate was lower compared to the previous quarter, primarily due to the smaller impact of permanent adjustments on increased pretax income. Adjusted diluted EPS was $0.08 per share in the second quarter. Adjustments totaled $0.03 per share and related to acquisition-related employment costs. Adjusted EBITDA was $66 million, up from $53.5 million. Adjusted EBITDA margin increased 250 basis points sequentially to 14.3%. EBITDA margin benefited from modest pricing improvements, better job mix, operational leverage from higher revenues at several locations, and a sales tax refund. Net cash provided by operating activities year to date was $75 million. And after CapEx of $71 million, free cash flow was $4 million. Working capital has been impacted by higher revenues and the timing of customer payments. At quarter-end, we had approximately $180 million in cash, $30 million in notes payable, and no borrowings on our $100 million revolving credit facility, which we amended and extended during the quarter through June 2031. Our regular cash dividend remains unchanged at $0.04 per share. Dividend payments totaled $17.7 million year to date. We expect 2026 capital expenditures in the range of $170 million to $190 million. We raised the range due to targeted growth investments where we see strong full-cycle returns, particularly in the areas that can further differentiate our service offerings. Given the timing and lead times, some of the spending may ultimately occur in 2027. We will continue to adjust our spending based on project returns and opportunity. I will now turn it back over to Ben for some closing remarks.

Okay. Thank you, Mike. While we remain cautious regarding the pace of broader industry improvement, we believe RPC is well positioned with differentiated technologies, a strong balance sheet, and the financial flexibility to pursue attractive opportunities while continuing to generate cash and deliver strong full-cycle returns. I want to thank all of our employees who put in tremendous work to provide high levels of service and value to our customers every day. Thank you for joining us this morning. And at this time, we are happy to address any questions.

We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Again, we ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. If you would like to ask a question, please press star one to raise your hand. Your first question comes from the line of John Daniel with Daniel Energy Partners. John, your line is open. Please go ahead.

Thank you. Good morning, guys.

Morning, John.

Morning, John.

Okay. Ben, first of all—

Yep.

Just thank you for the support over the years, and I wish you a great retirement. And hopefully, you will come to Midland for the barbecue in November.

Well, I actually—

So—

Yeah.

I only really have one question.

Plan to. Thank you.

On the coiled tubing units, the upgrades, are they staying in one basin, or do you see the opportunities to take them across the U.S.? And just your thoughts on where that could go over the next couple of years in terms of the need for more of those units?

Yeah. We have done a lot in South Texas, the Mid-Con, and the Permian. That’s where our focus has been. But obviously, they are mobile, and particular customer relationships will have a big bearing on where we send those. But I would say, at this point in time, those particular basins are the ones that we would probably be focused on. We do not see any big shifts at this point in time in that.

Okay. And then I think that I’m going to squeeze one more in. Just on the frac side of the business, I know you don’t—I don’t think you’re going to disclose how many fleets you have running today—but just some thoughts on whether you see opportunities for incremental horsepower deployments?

In terms of increased, I would say no. What we are doing, though, is supporting the business. We are making selective, call them upgrades or whatever, as equipment. Obviously, it is something you manage over time in terms of older units. Are those refurbished or replaced? Obviously, we are upgrading those to the newer technology, obviously leaning more and more into the equipment that is either entirely or, you know, the DGB-type equipment.

Right.

That’s ongoing, that process of doing those upgrades. I would say, again, we are trying to remain disciplined, as we have over time. We are not aggressively trying to upgrade. We are trying to be prudent. You know, use what we have that’s available that we can generate decent returns with. But we are able to—the business is able to fund those needs that we are willing to put back into the business.

Okay. Well, thank you very much. And again, congratulations.

Thank you, John. Appreciate that very much.

Sure.

If you would like to ask a question, please press star one to raise your hand. We have reached the end of the Q&A session. I will now turn the call back to Mr. Ben Palmer for closing remarks.

Okay. Thank you, operator, and thank you for listening in. We appreciate it. Hope you have a good rest of the day, and look forward to checking in. Take care.

This concludes today’s call. A reminder that the conference call will be replayed on [www.rpc.net](http://www.rpc.net) within two hours following the completion of the call. Thank you for attending. You may now disconnect.