RPC (RES) Q3 2026 earnings review
RPC's tool profits rise, but a wireline write-down causes a loss
RPC, an oilfield services provider, grew operating profit in its specialty tool lines but wrote down its recent wireline acquisition. Third-quarter sales edged up 5% from a year ago, and profit per share excluding one-offs reached $0.10 as coiled tubing and tool rentals improved. However, chief executive Ben Palmer recorded a $75 million write-down on the Pintail wireline unit because of weak pricing and lower activity, which pushed the company into a net loss.
| Revenue | $467.7M +4.6% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $0.10 $0.08 last quarter and a year ago |
| Pintail wireline write-down | $74.5M drove a $41.9M net loss |
| Quarterly dividend outlook | Unchanged $0.04 per share declared |
⚖️ Verdict: 🔴 Bearish
The story got worse because the Pintail write-down confirms that RPC's biggest acquisition is losing value just a year after closing, while uncollected bills and inventory purchases kept nine-month free cash flow down at $5 million. One bright spot: non-wireline completion and rental services expanded margins, and third-quarter capital spending ran below what the full-year plan pointed to by our math.
The question now is whether specialty tools like downhole motors and large coiled tubing can grow fast enough to offset ongoing wireline price wars and convert earnings into actual cash. Either those specialty lines keep gaining share and working capital reverses in the fourth quarter, or wireline weakness and slow customer collections continue to drain cash reserves. The third-quarter 10-Q service-line breakdown and fourth-quarter cash collections will settle it.
🐂 Bull Case
Coiled Tubing and Rentals Lifted Operating Margins
RPC has been investing in specialized well-servicing tools, including large-diameter coiled tubing (continuous metal pipe spooled into oil wells) and downhole tools, to reduce its reliance on commoditized well completions. Chief executive Ben Palmer said Cudd Pressure Control's coiled tubing, nitrogen and snubbing (high-pressure well maintenance) lines each grew revenue by double digits from last quarter, while Patterson Rental Tools grew 7%.
- Operating margin excluding one-offs: 6.0%, up 1.2 percentage points from last quarter by our math
- Technical Services operating income: $28.9 million, up 4.7% from last quarter and 18.1% from a year ago
- Support Services operating income: $3.6 million, up 55.8% from last quarter on a 3.3% revenue rise
- Overhead expenses: 10.9% of revenue, down 0.3 percentage points from last quarter by our math
Profitability improved because rental tools carry fixed costs, so extra revenue drops quickly to the bottom line. Furthermore, cost of revenues (the direct cost of running field crews) fell 0.2 percentage points of sales from last quarter. Note that the earnings release did not break out quarterly sales for Thru-Tubing Solutions downhole tools or utilization for MetalMax motors, which await the quarterly filing and conference call.
What to watch: the service-line revenue table in the third-quarter 10-Q filing and confirmation by year-end that all three 2 7/8-inch coiled tubing units are in service. Continued sequential growth in downhole tools and coiled tubing would prove that specialty equipment can keep lifting margins despite weak wireline pricing.
Sales Grew Despite Tough Comparison and Oil Drop
Heading into the second half of 2026, RPC faced a difficult year-over-year revenue comparison because it bought Pintail in April 2025, making last year's third quarter its first full period at a higher revenue base. Even so, total revenue rose 4.6% from a year ago and 1.5% from last quarter to $467.7 million. That marks a second straight quarter of organic growth after lapping the acquisition.
The company grew sales even as average US oil prices fell 10.8% from the second quarter to $86.07 a barrel. Because $86 oil still offers drillers healthy returns, average US active drilling rigs rose 6.3% from last quarter and 9.1% from a year ago to 589. Higher customer drilling and completion activity kept RPC's non-wireline field crews busy and eased the risk of a second-half revenue drop.
What to watch: fourth-quarter customer activity against typical year-end holiday slowdowns and budget exhaustion. Holding revenue steady next quarter would show that current oil prices are strong enough to override seasonal winter pullbacks.
🐻 Bear Case
Pintail Write-Down Undercuts the Diversification Pitch
"Our results benefited from improved profitability across much of our portfolio, demonstrating the value of RPC’s diversified service offerings," chief executive Ben Palmer said. Yet RPC bought Pintail in April 2025 for $245 million to be the centerpiece of that diversification into wireline (lowering electrical cables into wells to perforate rock for oil flow). Just six quarters later, the company wrote down Pintail's value by $74.5 million.
The non-cash charge wiped out $58.3 million of Pintail's intangible assets and $16.2 million of its equipment, driving RPC to a $41.9 million net loss. The company blamed "persistent pricing weakness as well as lower activity and cost pressure" in wireline. In addition, RPC still books $7.3 million every quarter in acquisition-related employment costs for Pintail, which it excludes from its preferred profit metrics.
This write-down matters because it proves that buying wireline capacity did not shield RPC from oilfield price wars. Instead, low-priced rivals forced Pintail to lose work or cut rates so severely that its assets could no longer support their book value. Furthermore, the company warned in its risk disclosures of "the possibility of continued pricing weakness, lower activity levels and cost pressure requiring further impairments with respect to Pintail".
What to watch: the remaining $61.0 million of net intangible assets on the balance sheet and wireline revenue in the 10-Q filing. Another sequential drop in wireline sales would put the rest of Pintail's book value at risk of write-downs.
Uncollected Bills and Inventory Drain Free Cash Flow
RPC wants to fund equipment upgrades and shareholder dividends from its operations, but working capital (cash tied up in day-to-day operations) is absorbing almost all of its cash generation. Through the first nine months of 2026, the company generated $115.7 million in operating cash flow and spent $110.7 million on capital equipment, leaving just $5.0 million in free cash flow.
- Third-quarter free cash flow: $1.2 million by our math, down 69.6% from $4.1 million a year ago
- Working capital cash drain: $68.0 million over nine months, including $25.4 million in the third quarter by our math
- Accounts receivable: $387.1 million, up 18.1% since December 2025
- Inventories: $140.5 million, up 18.1% since December 2025 and 11.7% from last quarter
The company attributed the cash drain to uncollected customer bills from higher activity, collection timing, and "strategic inventory purchases including key components in short supply". Because free cash flow was only $5.0 million over nine months, RPC had to use its cash reserves to cover $26.6 million in dividends and a $20.0 million debt payment, reducing its cash balance by $32.9 million this year.
What to watch: accounts receivable and inventory levels at year-end. If RPC does not turn those uncollected bills into cash in the fourth quarter, full-year free cash flow will fall well short of its $35 million annual dividend.
Equipment Spending Lags the Full-Year Target
Last quarter, finance chief Michael Schmit raised RPC's 2026 capital spending plan for the second time to $170–190 million to fund targeted growth equipment. However, by our math, the company spent only $39.9 million on capital expenditures in the third quarter, barely up from $38.7 million in the second quarter and $32.1 million in the first.
That brings nine-month capital spending to $110.7 million. By our math, RPC would have to spend $69.3 million in the fourth quarter—a 74% jump from the third-quarter rate—to reach the $180 million middle of its full-year range. Last year, the company also underspent its initial capital plan and pushed $15 million of equipment spending into 2026. Slow spending means new revenue-generating tools are arriving later than planned.
What to watch: any update to the 2026 capital spending range on the conference call or in the 10-Q filing. A cut to the range would confirm that equipment lead times or weak cash flow delayed the growth investments into 2027.
Risks this quarter didn't answer
Four standing risks from prior quarters received no update in the third-quarter earnings release and await the conference call or quarterly 10-Q filing.
- Chief executive succession: Ben Palmer plans to retire by year-end 2026, and the board has not yet named a replacement to maintain his capital discipline.
- Idled pressure pumping fleets: no update on the two unstaffed Tier-2 diesel hydraulic fracturing fleets, which remain less desirable to customers than newer gas-burning equipment.
- Customer credit losses: bad-debt provisions jumped eleven-fold in the first half of 2026, and the third-quarter allowance was not disclosed in the release while net receivables stayed elevated at $387.1 million.
- Related-party transactions: no update on the pricing or value of the transition services agreement and shared aircraft with MasterCraft, a company backed by RPC's controlling shareholder family.
👓 Other Themes
Labor, Trucking and Fuel Costs Keep Rising
Even as customer drilling activity improved, RPC faced steady cost inflation in the field. Chief executive Ben Palmer noted that "inflationary pressures across several expense categories, particularly labor, trucking and fuel, continue to create cost pressures". Combined with a fiercely competitive oilfield market that limits broad price increases, these rising input costs make it harder for RPC to expand margins outside its specialized tool lines.
💲 Other KPIs
Cash and equivalents stood at $177.1 million against $30.0 million of Pintail seller notes and $1.6 million of finance leases, leaving $145.5 million in net cash by our math. Total cash fell $2.4 million from last quarter and $32.9 million since December 2025 as working capital, dividends and a $20.0 million Q2 debt payment outpaced operating cash flow.
Diluted shares used to calculate profit per share excluding one-offs were 221.6 million, unchanged from last quarter and up 0.5% from 220.6 million a year ago. RPC bought back virtually no stock in the third quarter, keeping year-to-date repurchases at $3.5 million exclusively to cover employee tax withholdings on vested stock awards.
🔮 Guidance
Unchanged. The board declared its regular $0.04 per share quarterly cash dividend, payable December 10, 2026. The payout costs about $8.9 million a quarter, or $35.5 million annualized, which RPC continues to fund from its cash balance while free cash flow remains near zero.
❓ Key Questions
Did Thru-Tubing Solutions grow in the third quarter?
Downhole tools grew about 10% sequentially in both the first and second quarters and represent RPC's main technology growth driver. The press release omitted the line's third-quarter performance and MetalMax motor utilization, which are needed to judge if technology adoption is still outpacing the rig count.
Will 2026 capital spending fall short of $170–190 million?
Nine-month capital spending reached $110.7 million after $39.9 million in the third quarter by our math. Reaching the $180 million midpoint requires a $69.3 million fourth-quarter outlay, raising the question of whether equipment deliveries are slipping into 2027.
How much did Pintail wireline revenue fall this quarter?
RPC took a $74.5 million impairment on Pintail and warned that continued pricing weakness and lower activity could trigger further write-downs. Investors need to know wireline's current revenue run-rate and margin to assess the risk to the remaining $61.0 million of net intangibles.
When will the board name a new chief executive?
Chief executive Ben Palmer plans to retire and step down from the board by the end of 2026. With two months left in the year, the company has not named a successor or confirmed whether the new leader will keep Palmer's strict return standards.