RPC spent last quarter convincing investors that the worst was behind it. Adjusted EBITDA margin jumped 250 basis points to 14.3%, the specialty service lines that carry the company's best economics were growing again, and management sounded noticeably more confident than it had during the weather-dented trough at the end of fiscal 2025. The stock has rallied on that story. The third-quarter report, due before the open on October 29, is where that recovery either shows it can compound or reveals itself as a one-quarter bounce.
The Street is not asking for much. Consensus calls for earnings of $0.09 a share on revenue of about $465 million. That would be roughly 4% revenue growth from the year-ago $447.1 million, with earnings flat against last year's $0.09, and only a sliver above the $0.08 and $460.9 million posted last quarter. In other words, analysts are modeling a plateau rather than a continued climb. Management did not offer formal quarterly guidance, so the bar is set by the shape of the second-quarter rebound itself. Matching consensus would mean simply holding margins near current levels. Beating it convincingly would require the mix shift toward higher-margin work to keep running.
That mix shift is the heart of the bull case. Downhole tools and ThruTubing grew 10% sequentially last quarter, with the Rocky Mountain region up 20%, while snubbing and coil tubing lifted cut pressure control revenue 8%. Management tied much of this to differentiated technology: new MetalMax power section sizes and district expansion, Permian horseshoe wells stretching past 27,000 feet, and additional customer trials of its Unplugged product. It also raised its target for 2 7/8-inch coil tubing units to three by year-end, up from one by mid-year, and put a new big bore snubbing unit to work on a multi-project, regulatory-driven cavern storage inspection job. Evidence that these businesses grew again, and that the snubbing unit stayed busy after mobilizing in June, would validate the argument that RPC can expand margins even in a flat drilling market.
The weaker pieces deserve equal scrutiny. Wireline revenue fell 16% sequentially on aggressive competitor pricing and lost crews, a sharp deterioration from the 3% slip in the prior period. Another double-digit drop would suggest the business is structurally losing share rather than weathering a soft patch. Pressure pumping, the company's largest commodity exposure, slipped 1%, and management has no plans to reactivate idled fleets. SG&A also crept up to 11.2% of revenue on bad debt and consulting costs; if that proves sticky, it eats directly into the operating leverage the bulls are counting on. Cash flow is the other pressure point. Free cash flow was only $4 million through the first half, and capital spending guidance was raised to $170 million to $190 million. Investors will want to see whether second-half spending begins translating into revenue and whether working capital starts releasing cash.
Sentiment has cooled even as the stock has run. Shares are up 16.6% since the last report, beating the S&P 500 by about 12 points, yet trader sentiment has flipped from moderately bullish to mildly bearish. At $6.26, the stock sits just below its 200-day moving average of $6.36 and in the upper half of its post-earnings range of $5.21 to $6.73, well short of last quarter's $7.41 high. That combination suggests the market has priced in some recovery but remains skeptical about its durability. Commentary on the CEO search, with Ben Palmer retiring by year-end, and on whether easing gas takeaway constraints point to firmer 2027 customer budgets could sway that skepticism.
Ultimately, this quarter hinges on whether margins hold near or above 14% while wireline stabilizes. If the technology-led businesses keep outrunning the commodity lines, the recovery narrative stays intact and the elevated capital budget looks like a sensible bet. If margins slip back and wireline keeps bleeding, last quarter's improvement starts to look like a pause in a still-difficult market.