10-K: RPC 2025 Annual Report: Revenue Up, Profit Down

RPC, Inc. reports a 15% revenue increase in 2025 to $1.6 billion, driven by the Pintail acquisition, but net income and operating income declined significantly due to competitive pressures and lower activity.

Summary

• Total revenues increased by 15.0% to $1.627 billion in 2025, primarily due to the Pintail acquisition, which contributed $295.8 million.
• Operating income decreased 54.1% to $44.7 million in 2025, down from $97.5 million in 2024.
• Net income was $32.1 million ($0.15 diluted earnings per share) in 2025, a significant decrease from $91.4 million ($0.43 diluted earnings per share) in 2024.
• Cash flows from operating activities decreased to $201.3 million in 2025 from $349.4 million in 2024.
• Capital expenditures totaled $148.4 million in 2025, primarily for capitalized maintenance and upgrades of existing equipment, coupled with ERP and other IT system upgrades.
• The average U.S. rig count decreased 6.3% to 562 in 2025, indicating lower industry activity.
• The pressure pumping market remains highly competitive and over-supplied, leading to increased price competition and impacting asset utilization.
• The company completed the dissolution of its Supplemental Executive Retirement Plan (SERP) in the fourth quarter of 2025, distributing participant balances and liquidating assets.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a challenging period for RPC, Inc., with significant declines in profitability and cash flow despite revenue growth from an acquisition, reflecting intense competitive pressures and a contracting market.

Positives

• Total revenues increased by 15.0% to $1.627 billion in 2025, primarily driven by the Pintail acquisition.
• The Pintail acquisition, completed on April 1, 2025, contributed $295.8 million in revenues for the partial year.
• The company's financial condition remains strong, with sufficient liquidity to meet requirements for at least the next twelve months.
• No outstanding borrowings under the $100 million revolving credit facility as of December 31, 2025, with $81.8 million available.
• Management believes Downhole Tools represents a differentiated service line with opportunities for technological innovation and new product development to drive growth.
• The company intends to continue upgrading its equipment to Tier 4 DGB (dynamic gas blending/dual-fuel) over time in response to industry trends for lower emissions and cost-effective assets.
• The company maintains a share buyback program with 12,768,870 shares remaining available for repurchase as of December 31, 2025.
• The company expects to continue paying cash dividends to common stockholders.
• Management believes the U.S. domestic oilfield is attractive due to its oil and natural gas reserves, political stability, and downstream energy infrastructure.
• Management believes capital discipline by E&Ps has and should generally reduce the volatility of the drilling rig count over time.
• Management believes the favorable long-term outlook for natural gas demand is sufficient for customers to maintain natural gas-directed E&P activities.
• The company maintained effective internal control over financial reporting as of December 31, 2025.

Negatives

• Operating income decreased 54.1% to $44.7 million in 2025 from $97.5 million in 2024.
• Net income decreased significantly to $32.1 million ($0.15 diluted EPS) in 2025 from $91.4 million ($0.43 diluted EPS) in 2024.
• Net income margin declined to 2.0% in 2025 from 6.5% in 2024.
• Adjusted EBITDA margin decreased to 14.3% in 2025 from 16.5% in 2024.
• Cash provided by operating activities decreased to $201.3 million in 2025 from $349.4 million in 2024.
• Free cash flow decreased to $52.9 million in 2025 from $129.5 million in 2024.
• The average U.S. rig count decreased 6.3% to 562 in 2025, indicating lower industry activity.
• Lower oil prices limited the profit incentive for customers to use oilfield services.
• Oversupply of Oilfield Services (OFS) capacity, particularly in pressure pumping, led to increased price competition.
• E&P consolidation resulted in the loss of some customers.
• Technical Services operating income decreased primarily due to lower pricing and decreased activity in pressure pumping and several other service lines.
• Support Services operating income decreased due to lower pricing within rental tools.
• Interest expense increased to $3.0 million in 2025 from $724 thousand in 2024, primarily due to interest on the Seller Note from the Pintail acquisition.
• Interest income decreased to $8.4 million in 2025 from $13.1 million in 2024 due to a lower average cash balance.
• The effective income tax rate significantly increased to 43.3% in 2025 from 18.9% in 2024 due to detrimental permanent and discrete adjustments on lower pretax income.
• One customer accounted for approximately 15% of total revenues in 2025, posing a concentration risk.
• The company has not yet invested in electric pressure pumping fleets, while the industry trends towards lower emission equipment.

Risks

• Demand for equipment and services is affected by the volatility of oil and natural gas prices.
• Fluctuations in drilling rig count and well completions impact business operations.
• Concentration of customers in the energy industry and periodic downturns may impact overall exposure to credit risk and cause increased credit loss allowance for accounts receivable.
• Business depends on capital spending by customers, many of whom rely on outside financing, which may become unavailable or unfavorable.
• Reliance on a large customer (approximately 15% of 2025 revenues) exposes the company to the risk of a material adverse impact if that customer is lost or reduces business.
• Ability to attract and retain skilled workers may impact growth potential and profitability.
• Some equipment and several types of materials used in providing services are available from a limited number of suppliers, potentially leading to delayed deliveries or higher prices.
• Operations are affected by adverse weather conditions, including hurricanes and prolonged rain/snow/ice, which can disrupt activities.
• International operations are subject to risks such as political changes, expropriation, currency restrictions, taxes, tariffs, boycotts, and other civil disturbances.
• Increasing expectations from governments, customers, investors, and other stakeholders regarding environmental, social, and governance (ESG) practices may create additional costs, harm reputation, or affect access to capital.
• Potential liability for litigation, personal injury, and property damage claims assessments.
• Operations may be adversely affected if unable to comply with regulations and environmental laws, including those related to hydraulic fracturing.
• Management and directors have a substantial ownership interest (approximately 61% of voting power), which could limit public stockholders' effective voice and delay or prevent third-party takeovers.
• The Controlling Group could take actions that negatively impact results of operations, financial condition, or stock price.
• The availability of common stock to the investing public may be limited due to substantial ownership by executive officers, directors, and their affiliates.
• Provisions in RPC's Certificate of Incorporation and Bylaws may inhibit a takeover of the company.
• Operations rely on digital systems and processes that are subject to cyberattacks or other threats, potentially leading to loss of data, business interruption, increased costs, and reputational harm.
• Increased usage of Artificial Intelligence (AI) and machine learning technologies could expose the company to operational, safety, cybersecurity, legal, and reputational risks, and adversely affect its ability to compete.
• Challenges with the multi-year implementation of a new Enterprise Resource Planning (ERP) system may impact business and operations, including financial reporting and internal controls.
• The company may not have adequate insurance coverage to compensate for losses, or existing coverage may not continue to be available on acceptable terms or at all.
• Cash and cash equivalents are held primarily at a single financial institution.
• Ongoing sales and use tax audits in various jurisdictions could result in unfavorable outcomes that cannot be currently estimated.
• The risk that the proposed merger between Marine Products and MasterCraft will not close, due to failure to obtain regulatory or stockholder approvals or failure to satisfy other conditions.
• Inflation in the general economy, upward wage pressures in labor markets, supply disruptions, and higher costs of certain materials and key equipment components.
• Changes in assumptions underlying critical accounting judgments and estimates (e.g., credit losses, self-insurance, goodwill, acquisitions).
• Diversion of time and attention of executive officers and other key personnel due to the Marine Products Corporation (MPC) merger.
• The common stock price has been volatile.

Future Outlook

The company expects capital expenditures to be between $150 million and $180 million in 2026, primarily for capitalized maintenance, equipment upgrades to Tier 4 DGB, and ERP/supply chain system enhancements. It intends to continue upgrading equipment to natural gas burning over time but does not plan to increase the overall number of frac fleets, while also considering future investments in electric pressure pumping fleets. Management believes current oil prices are sufficient for drilling and completion activities, but potential volatility could lead to customer delays. Long-term, higher demand for oil and natural gas is projected to drive increased activity in operating basins, though competition is expected to remain intense due to oversupply in the Oilfield Services market. The company anticipates ongoing consolidation of OFS and E&P companies and believes capital discipline by E&Ps should reduce rig count volatility. RPC expects to continue paying cash dividends, subject to industry conditions and financial performance, and does not foresee utilizing its revolving credit facility in the near term. The ERP system implementation will continue through a phased approach over the next few years. The Marine Products Transition Support Services agreement is expected to be canceled upon the proposed merger closing, with a new agreement to be signed with MasterCraft.

Management Comments

• Management believes Downhole Tools represents a differentiated service line with opportunities for technological innovation and new product development to drive growth.
• Management believes its financial and operating discipline have resulted in longevity and financial success in an industry where downturns can have significant financial impacts on operator liquidity and economic sustainability.
• Management believes there is an increased likelihood that a potential rapid rise in the use of artificial intelligence would have significant energy consumption requirements and boost demand for power solutions, many of which use oil and natural gas.
• Management believes these factors reinforce the attractiveness of the U.S. domestic oilfield due to its oil and natural gas reserves, political stability and downstream energy infrastructure.
• Management believes there is a general oversupply of OFS capacity, particularly in pressure pumping, which has created a high level of price competition as OFS companies seek to keep assets utilized.
• Management believes capital discipline has and should generally reduce the volatility of the drilling rig count over time.
• Management believes that the principal competitive factors in the market areas that it serves are price, product availability, and quality of our equipment, service quality, reputation for safety and technical proficiency.
• Management believes the industry continues to be over-supplied and efficiency gains are consistently adding pump hour capacity to the industry.
• Management believes that oil prices currently remain at levels sufficient to continue drilling and completion activities, however the recent fluctuations of oil prices and potential further volatility could result in the Company’s customers opting to delay completion activity.
• Management believes that competition will remain intense.
• Management believes the favorable long-term outlook for natural gas demand is sufficient for our customers to maintain natural gas-directed exploration and production activities.
• Management believes that this reduced exposure to active areas of a job location has led to fewer safety incidents.

Industry Context

StockSavvy.ai notes that RPC's 2025 performance reflects broader industry trends, including the impact of E&P capital discipline leading to lower rig counts and increased asset efficiency. The oversupply in the oilfield services market, particularly pressure pumping, continues to drive intense price competition, disproportionately benefiting E&Ps over service providers. The industry's shift towards lower-emission equipment (dual-fuel and electric fleets) is a significant factor, with RPC planning upgrades but not yet investing in electric fleets, potentially lagging some competitors in ESG-driven demand. The consolidation trend among E&Ps and OFS companies is also reshaping the competitive landscape, presenting both risks of customer loss and opportunities for M&A.

Comparison to Industry Standards

• RPC's net income margin of 2.0% in 2025 is significantly lower than its own 6.5% in 2024 and 12.1% in 2023, indicating a substantial decline in profitability relative to recent performance.
• The average U.S. domestic rig count decreased by 6.3% to 562 in 2025, which is a general industry trend impacting all OFS companies.
• RPC's cumulative total stockholder return of 187 in 2025 (indexed from 100 in 2020) outperformed the Russell 2000 Index (134) and the Peer Group (160), and also slightly outperformed the Philadelphia Oil Service Index (OSX) (182) over the same period.
• The company's Adjusted EBITDA margin of 14.3% in 2025 is lower than its 16.5% in 2024 and 23.1% in 2023, reflecting the industry-wide price competition and oversupply.
• The company's focus on upgrading to Tier 4 DGB equipment aligns with the industry trend towards lower emission and more cost-effective dual-fuel assets, but it has not yet invested in electric fleets, which are increasingly desired by larger customers for ESG goals.

Corporate Governance

Legal Proceedings

• RPC is a party to various routine legal proceedings primarily involving commercial claims, employee liability, workers' compensation claims, and claims for personal injury.
• The company is subject to ongoing sales and use tax audits in various jurisdictions.
• Management believes that the outcome of all existing lawsuits, legal proceedings, claims, and audits, even if determined adversely, would not have a material adverse effect on RPC's business or financial condition.

Related Party Transactions

• RPC provides administrative services to Marine Products Corporation under a Transition Support Services agreement, charging $1.1 million in 2025.
• All of RPC's directors are also directors of Marine Products, and executive officers are employees of both companies.
• Marine Products entered into a merger agreement with MasterCraft Boat Holdings, Inc. on February 5, 2026, which is expected to lead to the cancellation of the current Transition Support Services agreement and a new one with MasterCraft.
• The company periodically purchases products or services from suppliers owned by officers or significant stockholders of or affiliated with certain directors of RPC, totaling $60 thousand in 2025.
• RPC and Marine Products jointly own 50% each of 255 RC, LLC, which owns a corporate aircraft; RPC recorded net operating costs of approximately $180 thousand in 2025 for the aircraft.
• A group including Amy R. Kreisler and Timothy C. Rollins (directors) and their family members/controlled companies controls over 50% of the company's voting power (approximately 61% as of February 13, 2026).
• The company has a registration rights agreement with LOR, Inc. (largest stockholder) and its affiliates, registering up to 127,235,202 shares of common stock for resale.

Stakeholder Impact

• Shareholders: Experienced a significant decrease in net income and diluted EPS, but the company continues to pay dividends and has an active share buyback program. The substantial ownership by a controlling group (61%) may limit the influence of minority shareholders. Potential for dilution exists from future equity offerings under the S-3 shelf registration.
• Employees: Headcount increased to 2,893 in 2025 from 2,597 in 2024. The company focuses on workplace inclusion, development, training, competitive compensation/benefits, and safety programs. The dissolution of the SERP impacts certain highly compensated employees.
• Customers: Demand for services remains volatile, influenced by oil and gas prices and E&P capital spending. Customers benefit from increased price competition due to oversupply in the OFS market. There is a growing preference among customers for lower-emission equipment.
• Suppliers: Face potential for supply disruptions and higher costs for equipment and materials due to inflation and tariffs.
• Creditors: The company maintains a strong financial condition with no outstanding borrowings on its revolving credit facility. The Seller Note from the Pintail acquisition adds to debt obligations, with the first principal payment due April 1, 2026.

Next Steps

• Continue upgrading equipment to Tier 4 DGB (dynamic gas blending/dual-fuel) over time in response to industry trends.
• Evaluate future investments and options to transition the asset base toward more efficient dual-fuel or electric equipment.
• Continue the multi-year ERP implementation through a phased approach over the next few years.
• Monitor industry-wide factors impacting customer activity levels, such as oil and natural gas prices, competitive activity, E&P activity, and capital market trends.
• Allocate capital to maintain the capacity of the pressure pumping fleet to offset anticipated fleet retirements.
• Opportunistically repurchase stock under the existing buyback program, with 12,768,870 shares remaining available as of December 31, 2025.
• Continue paying regular quarterly dividends, subject to industry conditions and financial performance.
• The Marine Products Transition Support Services agreement is expected to be canceled, and a new one signed with MasterCraft upon the proposed merger closing.
• Assess the potential impact of new accounting standards (ASU 2025-11, ASU 2025-06, ASU 2024-03) on consolidated financial statements.
• Monitor the impact of Pillar Two global minimum tax rules as additional countries enact legislation.

Key Dates

Recommendation

RPC, Inc. faces significant headwinds with declining profitability and cash flow despite revenue growth from the Pintail acquisition, reflecting an oversupplied and highly competitive oilfield services market. While the company maintains a strong balance sheet, a dividend, and a buyback program, the substantial drop in earnings and margins, coupled with reliance on a single large customer and the evolving ESG landscape, suggests a "hold" position. The long-term outlook for oil and gas demand and strategic investments in dual-fuel technology offer some stability, but the immediate financial performance indicates challenges that warrant caution rather than a strong buy or sell.

Keywords

Oilfield Services, OFS, Pressure Pumping, Downhole Tools, Wireline, Coiled Tubing, Cementing, Rental Tools, Energy Sector, SEC Filing, 10-K, RPC Inc., RES, Oil & Gas, Hydraulic Fracturing, Permian Basin, Capital Expenditures, EBITDA, Free Cash Flow, Acquisition, Pintail Alternative Energy, Cybersecurity, ESG, Artificial Intelligence, ERP System