Arabian Drilling Company (2381) Q4 2024 earnings summary

Executive summary

• Achieved record revenue of SAR 3.62 billion for 2024, up 4% year-over-year, and record EBITDA of SAR 1.5 billion, despite industry headwinds and rig suspensions.

• Net income declined to SAR 321.4 million, down 47% year-over-year, mainly due to higher depreciation, impairment, and finance costs from fleet expansion.

• Deployed 13 unconventional rigs, expanding the fleet to 61 and becoming the largest drilling contractor in Saudi Arabia.

• Maintained high operational efficiency with 83.1% utilization and 1.67% non-productive time, 4x lower than industry average.

• Total dividends for 2024 were SAR 344.8 million, with a further SAR 120.2 million proposed for 2025.

Financial highlights

• Revenue: SAR 3,619M (+4% YoY); EBITDA: SAR 1,508M (+2% YoY); Adjusted Net Income: SAR 426M (-30% YoY); Net income: SAR 321.4M (-47% YoY).

• EBITDA margin at 41.7%; operating cash flow up 29% YoY to SAR 1,750M.

• Gross profit dropped to SAR 759.9 million from SAR 975.9 million year-over-year.

• Net debt increased 39% to SAR 2.44 billion, mainly to finance unconventional rig capex; net debt/EBITDA at 1.6x.

• Dividend payout for 2024 totaled SAR 240 million, representing 75% of net income.

Outlook and guidance

• 2025 guidance will be provided quarterly due to market uncertainty; Q1 2025 revenue expected to be flat to Q4 2024, with up to 5% upside.

• Management expects suspended drilling contracts to resume in 2026 and forecasts a 10% increase in day rates every three years.

• Focus on increasing utilization by redeploying suspended rigs and leveraging alliances for international expansion.

• CapEx for 2025 expected to be about 50% of 2024, around SAR 900 million.