Precision Drilling (PDS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue rose 6.8% year-over-year to $477 million, driven by higher Canadian and international activity, offsetting lower U.S. results.

• Adjusted EBITDA increased 24% to $142 million, with net earnings nearly doubling to $39 million ($2.77/share), marking the ninth consecutive quarter of positive earnings.

• Integration of recent acquisitions, such as CWC and High Arctic, delivered strong returns, with $20 million annual synergies and expanded operational capabilities.

• Increased drilling activity in Canada and internationally offset a constrained U.S. market, with 10% more drilling days billed and Canadian drilling rig utilization days up 25% year-over-year.

• Completion and Production Services revenue up 27% to $73 million, with Adjusted EBITDA up 40% to $20 million, reflecting CWC acquisition benefits.

Financial highlights

• Debt reduced by $49 million in Q3 and $152 million year-to-date, reaching the low end of the 2024 target range.

• Share repurchases totaled $17 million in Q3 and $50 million year-to-date, aligning with the target of 25%-35% of free cash flow to shareholders.

• Funds provided by operations were CAD 113 million, and cash provided by operations was $80 million in Q3; liquidity exceeded $500 million at quarter-end.

• Q3 Adjusted EBITDA margin improved to 30% from 26% in 2023.

• Working capital at quarter-end was $166 million, up from $137 million at year-end 2023.

Outlook and guidance

• 2024 capital spending plan increased from CAD 195 million to CAD 210 million to fund rig upgrades and advance drill pipe purchases ahead of potential tariffs.

• Canadian rig activity expected to remain strong into 2025, supported by Trans Mountain pipeline expansion and LNG Canada startup.

• U.S. activity remains subdued due to volatile commodity prices and customer consolidation, but new contracts and LNG projects may drive future growth.

• International operations stable with all eight rigs contracted through 2025; further rig activations targeted.

• Guidance for 2024 includes depreciation of approximately CAD 300 million, cash interest expense of CAD 70 million, and an effective tax rate of 25%.