RPC Q1 Earnings Call Highlights

RPC (NYSE:RES) reported higher first-quarter 2026 revenue as activity improved across most service lines despite winter storms early in the period, while profitability was pressured by job mix, fuel costs and working capital needs.

President and CEO Ben M. Palmer said demand strengthened as the quarter progressed, with sequential revenue growth across the majority of RPC’s service lines. The company also described recent geopolitical developments and higher commodity prices as “incrementally positive,” though management said customer responses have so far been modest.

Revenue Rises, Adjusted EBITDA Slips

Chief Financial Officer Michael L. Schmit said first-quarter revenue increased 7% sequentially to $455 million compared with the fourth quarter of 2025. Technical Services, which represented 95% of total revenue, rose 7%, while Support Services, accounting for the remaining 5%, was flat.

RPC’s largest service lines accounted for 94% of total revenue during the quarter. Schmit provided the following revenue mix:

• Pressure pumping: 31%
• Downhole tools: 23.3%
• Wireline: 22.7%
• Coiled tubing: 8.5%
• Cementing: 5.8%
• Rental tools: 3%

Cost of revenues, excluding depreciation and amortization, increased to $356 million from $330 million in the prior quarter. Schmit said the increase was primarily tied to job mix, as RPC provided higher levels of materials, supplies and fuel for customers. Selling, general and administrative expenses were $48 million, up slightly from the previous quarter, but declined as a percentage of revenue to 10.6%.

Adjusted diluted earnings per share were $0.03. Adjustments totaled $0.03 per share and were related to acquisition-related employment costs. Adjusted EBITDA declined to $53.5 million from $55.1 million, and adjusted EBITDA margin fell 110 basis points sequentially to 11.8%.

Schmit said the company’s effective tax rate was unusually high in the quarter because permanent non-deductible items, mainly acquisition-related employment costs, had a disproportionate impact on relatively low pretax income.

Downhole Tools Lead Technical Services Strength

Palmer highlighted Thru Tubing Solutions as a key contributor within Technical Services, saying downhole tools revenue increased 11% sequentially. He said most geographic regions posted double-digit growth.

Management emphasized continued adoption of MetalMax, Thru Tubing Solutions’ metal-on-metal power section. Palmer said adoption is accelerating as inventory availability expands across both markets and motor sizes. He said MetalMax has displaced conventional power sections over the past six months, though it still represents only 15% of RPC’s power section utilization.

Palmer also said Thru Tubing Solutions’ UnPlug technology, which replaces traditional bridge plugs, is gaining momentum, with several operators choosing it as their primary stage isolation method. The company is also seeing success with a new surface vibratory technology, particularly in longer laterals.

“Overall, our downhole tools business is benefiting from longer laterals and the need for technologies to deal with the related completion challenges,” Palmer said.

Cudd Results Mixed Across Service Lines

Within Cudd Pressure Control, revenue declined 7% sequentially. Palmer attributed the decrease to weakness in the Rockies region and difficult comparisons in well control, as the fourth quarter included multiple large well control events. That was partially offset by stronger nitrogen and snubbing activity, with nitrogen revenue up 13% and snubbing revenue up 8%.

Palmer said Cudd’s snubbing business expects to receive and begin testing a big bore snubbing unit later this month. The unit was designed for cavern gas storage work and built to support a long-term customer’s storage well maintenance schedule. Palmer said the work is regulatory driven and part of RPC’s effort to diversify into other markets.

Coiled tubing, the largest service line within Cudd Pressure Control, declined 7% sequentially due to tough comparisons in the Rockies and Northeast. Palmer said a new 2 7/8-inch unit remained well utilized, and RPC is upgrading an existing unit to handle larger 2 7/8-inch tubing.

Pintail Completions, described by Palmer as the largest wireline provider in the Permian Basin, generated revenue that was relatively flat sequentially. Management said the business is expected to trend closely with activity among large Permian operators.

Cudd Energy Services’ pressure pumping business posted a 20% sequential revenue increase, driven by job mix, primarily from operators for whom RPC provided materials, supplies and fuel during the quarter.

Balance Sheet Remains Strong as Capex Outlook Rises

Schmit said operating cash flow year to date was $31 million, while capital expenditures totaled $32 million, resulting in negative free cash flow of $1 million. Operating cash flow was negatively affected by higher working capital tied to increased revenue, including higher accounts receivable, as well as the absence of unearned revenue that benefited the fourth quarter. Higher accounts payable partially offset those factors.

At quarter-end, RPC had approximately $201 million in cash, a $50 million seller finance note payable and no borrowings under its $100 million revolving credit facility. The company’s regular cash dividend remained unchanged at $0.04 per share, with dividend payments totaling $8.9 million.

RPC now expects 2026 capital expenditures of $160 million to $180 million. Schmit said the company raised the low end of the range from the prior quarter because of opportunistic asset purchases it was able to deploy. The outlook includes approximately $15 million delayed from late 2025.

Management Cautiously Optimistic, but Pricing Recovery Limited

Palmer said the company is cautiously optimistic about the rest of 2026 because commodity prices are more supportive of activity than they were entering the year. However, he said the outlook will depend on operators’ ability to hedge at higher prices, the duration of higher commodity prices and service companies’ discipline in a more supportive market.

During the question-and-answer session, Don Crist of Johnson Rice asked about spot market pricing amid overseas conflict and higher oil prices. Palmer said RPC has seen “some firming,” but added that it is not yet broad-based.

Schmit noted that pressure pumping represents 31% of RPC’s total revenue and said spot exposure is larger in that business than in some other service lines. Asked about reactivating stacked fleets, Palmer said RPC would not reactivate fleets at current pricing levels. He said the company would need visibility into pricing, work duration and volume before considering reactivation.

Schmit added that the stacked fleets are Tier 2 diesel fleets, while customers are more focused on dual-fuel equipment and lower costs, especially with diesel prices elevated.

John Daniel of Daniel Energy Partners asked about a potential disconnect between exploration and production companies signaling flattish activity and land drillers discussing higher activity. Schmit said pricing has not yet caught up enough to drive a broader response, while Palmer said rental tools are seeing some improvement but not a broad-based increase.

Palmer said inquiries about equipment availability are coming more from private operators than public operators. Management reiterated that RPC’s focus remains on full-cycle returns, cash flow generation and long-term value, while its balance sheet provides flexibility to pursue markets where it sees additional upside.

About RPC (NYSE:RES)

RPC, Inc (NYSE: RES) provides essential equipment and services to companies engaged in the exploration, production and maintenance of oil and natural gas wells. The firm operates as an equity interest holding company, partnering with a network of independent service businesses to deliver a comprehensive suite of offerings for well completion and production operations.

Through its affiliated service companies, RPC offers pressure pumping and fracturing services, coiled tubing and nitrogen pumping, downhole tools and telemetry solutions, well intervention and workover services, along with rental tools and supply-chain logistics.

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