Independence Contract Drilling (ICD) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $43.3 million, down 23% year-over-year, with net loss widening to $16.7 million from $4.2 million in Q2 2023.

• Average operating rig count fell to 14.5, with rig utilization at 56% versus 58% a year ago.

• Management expects further declines in rig count and revenue per day in the second half of 2024 due to market headwinds and customer consolidation.

• The company is actively reviewing strategic alternatives for refinancing its Convertible Notes due 2026.

• CEO cited continued market headwinds from customer consolidation, drilling efficiencies, and E&P fiscal discipline, impacting rig demand and utilization.

Financial highlights

• Q2 2024 revenues decreased 23% year-over-year to $43.3 million; six-month revenues down 25.1% to $90.0 million.

• Net loss for Q2 2024 was $16.7 million, compared to $4.2 million in Q2 2023; six-month net loss was $25.7 million versus $4.1 million prior year.

• Operating loss for Q2 2024 was $7.7 million, compared to operating income of $3.9 million in Q2 2023.

• Adjusted EBITDA was $8.5 million, down 28% sequentially and 55% year-over-year.

• Cash on hand at June 30, 2024 was $5.5 million; net working capital was $10.0 million.

Outlook and guidance

• Management expects average operating rig count and revenue per day to decline further in Q3 and Q4 2024 due to increased rig churn and customer fiscal discipline.

• Q3 2024 average operating rig count expected to decline to about 13 rigs; revenue per day expected to fall 2% sequentially.

• Company expects to return to Q2 rig count levels by end of Q4 2024 if re-contracting efforts succeed.

• Three rigs are expected to experience idle time before recontracting, impacting utilization and revenues.

• No assurance provided on the ability to recontract rigs or stabilize dayrates in the near term.