Business Context and Reporting Period
Company: RPC, Inc. (NYSE: RES)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal Year Ended December 31, 2025
Business Overview: RPC provides specialized oilfield services and equipment to independent and major oil and gas companies, primarily in the U.S. The company operates through two segments: Technical Services (on-site services like pressure pumping, wireline, and downhole tools) and Support Services (off-site equipment rental and pipe inspection).
Key Event: On April 1, 2025, RPC acquired Pintail Alternative Energy, L.L.C., a leading wireline perforating services provider in the Permian Basin, for a total purchase price of approximately $181.4 million.
Key Financial Metrics
| Metric (in thousands) | 2025 | 2024 | Change |
|---|---|---|---|
| Total Revenues | $1,626,566 | $1,414,999 | +15.0% |
| Operating Income | $44,732 | $97,538 | -54.1% |
| Net Income | $32,080 | $91,444 | -64.9% |
| Diluted EPS | $0.15 | $0.43 | -65.1% |
| Adjusted EBITDA | $232,668 | $232,967 | -0.1% |
| Adjusted EBITDA Margin | 14.3% | 16.5% | -220 bps |
| Free Cash Flow | $52,924 | $129,456 | -59.1% |
| Cash & Equivalents (Year End) | $209,974 | $325,975 | -35.6% |
| Capital Expenditures | $148,407 | $219,930 | -32.5% |
Debt & Liquidity: As of December 31, 2025, RPC had no outstanding borrowings under its $100 million revolving credit facility. The company holds a $50 million secured note payable (Seller Note) related to the Pintail acquisition, with the first principal payment of $20 million due in April 2026. Letters of credit outstanding totaled $18.2 million, leaving $81.8 million available under the credit facility.
Material Changes vs. Prior Period
- Revenue Growth Driven by Acquisition: Total revenue increased 15.0% to $1.63 billion, primarily due to $295.8 million in revenue from the Pintail acquisition. Without Pintail, organic revenue would have declined due to lower pressure pumping activity.
- Profitability Compression: Operating income fell 54.1% to $44.7 million. This decline was driven by lower pricing and decreased activity in pressure pumping, partially offset by Pintail's contribution. Net income margin dropped from 6.5% in 2024 to 2.0% in 2025.
- Acquisition Costs: The company recorded $20.3 million in "Acquisition related employment costs" in 2025, representing non-cash amortization of contingent consideration and redistribution payments related to the Pintail deal.
- Segment Performance:
- Technical Services: Revenue increased 15.8% to $1.54 billion, but operating income decreased from $89.1 million to $68.0 million due to pricing pressure.
- Support Services: Revenue increased 1.7% to $90.5 million; operating income decreased slightly to $13.6 million.
- Effective Tax Rate: The effective tax rate increased significantly to 43.3% in 2025 from 18.9% in 2024, largely due to the impact of non-deductible acquisition-related employment costs and discrete tax adjustments on lower pre-tax income.
Guidance, Outlook, and Risks
Management Outlook:
- Capital Expenditures: RPC expects 2026 capital expenditures to range between $150 million and $180 million, focused on maintaining existing equipment and ERP system upgrades.
- Market Conditions: Management notes an oversupply of oilfield services (OFS) capacity, particularly in pressure pumping, leading to intense price competition. The U.S. rig count decreased 6.3% in 2025 to an average of 562.
- Strategic Focus: The company plans to continue upgrading equipment to Tier 4 dual-fuel assets to meet lower emission trends but does not currently intend to increase the total number of frac fleets. They are evaluating future investments in electric fleets.
- Dividends: The Board declared a quarterly dividend of $0.04 per share in January 2026. The company expects to continue paying dividends subject to industry conditions.
Key Risks & Contingencies:
- Customer Concentration: One private E&P customer accounted for approximately 15% of 2025 revenues.
- Commodity Volatility: Demand is highly sensitive to oil and natural gas prices. Average oil prices fell to $65.58/barrel in 2025 from $76.60 in 2024.
- Legal & Tax: Ongoing sales and use tax audits in various jurisdictions with outcomes that cannot be currently estimated. A range of exposure for self-insured claims is estimated between $19.1 million and $26.7 million.
- Integration Risk: The Pintail acquisition is still in the measurement period; final valuation adjustments to assets (particularly property, plant, and equipment) could be material.
Investor Verification Checklist
- Pintail Integration: Verify the final purchase price allocation and any remaining adjustments to goodwill or intangible assets during the measurement period.
- Pressure Pumping Margins: Monitor pricing trends and utilization rates in the pressure pumping segment, which faces significant oversupply and competition.
- Debt Service: Confirm the company's ability to service the $20 million principal payment due on the Pintail Seller Note in April 2026 from operating cash flows.
- Tax Rate Normalization: Assess whether the 43.3% effective tax rate in 2025 is a one-time anomaly due to acquisition costs or indicative of a structural change.
- Customer Concentration: Evaluate the stability of the relationship with the single customer representing 15% of revenue.