Precision Drilling (PDS) Q2 2024 earnings summary

Executive summary

• Q2 revenue reached $429 million, up from $426 million in Q2 2023, driven by strong Canadian and international activity, offsetting lower U.S. results.

• Adjusted EBITDA was $115 million, down from $142 million in Q2 2023, mainly due to lower U.S. activity and increased share-based compensation.

• Net earnings were $21 million ($1.44/share), marking the eighth consecutive quarter of positive net earnings.

• Strategic priorities for 2024 include maximizing free cash flow, reducing debt, increasing shareholder returns, and operational excellence.

• The company is the market leader in Canada and a top-four onshore driller in the U.S., with growing international operations, especially in Kuwait and Saudi Arabia.

Financial highlights

• Q2 adjusted EBITDA was CAD 125 million, excluding a CAD 10 million share-based compensation charge.

• Funds provided by operations were CAD 112 million; cash provided by operations was CAD 174 million.

• U.S. and Canadian day rates have increased 45% and 83% respectively over the last 10 quarters, driving revenue and EBITDA growth.

• Debt reduced by $103 million as of June 30, 2024; targeting $150–$200 million reduction in 2024 and $600 million from 2022–2026.

• Repurchased $40 million of shares year-to-date, targeting 25–35% of free cash flow for buybacks.

Outlook and guidance

• Canadian and international revenue growth expected to continue through 2025, supported by the Trans Mountain pipeline and LNG Canada start-up.

• International activity to remain elevated, with eight rigs running throughout 2024, a 40% increase over 2023.

• Well service activity in Canada expected to grow ~40% over 2023, with adjusted EBITDA on track to increase 40–50% year-over-year.

• Net debt to adjusted EBITDA expected to be ~1.25x by year-end, with a target below 1x in 2025.

• 2024 capital allocation targets: $150–$200 million debt repayment and 25–35% of free cash flow to share buybacks.