Arabian Drilling Company (2381) Q2 2025 earnings summary

Executive summary

• H1 2025 revenue declined 6.9% year-over-year to SAR 1.77 billion, with EBITDA down 13.7% and net income dropping 50.3% to SAR 83 million, reflecting rig suspensions and market challenges.

• Largest backlog intake since Q3 2023, with SAR 2.4 billion added in Q2 and the first international contract signed, valued at SAR 75 million.

• Utilization rate at 78.7% with 48 active rigs out of 61, impacted by ongoing suspensions.

• Ongoing cost reduction initiatives, including SG&A downsizing and efficient cash management, support liquidity and debt obligations.

• No impairment losses were recognized in H1 2025, compared to SAR 105 million in H1 2024.

Financial highlights

• Q2 2025 revenue fell 5.3% sequentially to SAR 862 million; EBITDA dropped 20.6% to SAR 303 million; net income plunged 90.1% to SAR 7 million.

• EBITDA margin for H1 2025 at 38.5%, down 3.0 percentage points year-over-year; Q2 margin at 35.1%.

• Operating cash flow for H1 2025 was SAR 480 million, down from SAR 894 million in H1 2024.

• Net debt increased 9.9% year-over-year to SAR 2.66 billion, with net debt/TTM EBITDA at 1.9x.

• CapEx reduced significantly as growth cycle ends; gross debt stable at SAR 3.1 billion.

Outlook and guidance

• Q3 2025 revenue projected to decline up to 10% from Q2 due to continued rig suspensions.

• Dividend payments paused for 2025 to preserve cash for international expansion; resumption to be evaluated in early 2026.

• CapEx guidance trimmed to SAR 800–850 million for 2025, with improved free cash flow guidance by SAR 50 million.

• Management expects market conditions to remain challenging through 2025, with potential pickup in 2026.

• Management expects future revenue from signed drilling contracts to total SAR 5.5 billion over the next five years.