• Revenue: $1.9 billion, flat year-over-year.
• Adjusted EBITDA: $521 million, a 15% decrease year-over-year.
• Cash from Operations: $482 million, similar to the prior year.
• Debt Reduction: $176 million achieved in 2024.
• Share Repurchases: $75 million, representing 4% of outstanding shares.
• Net Debt-to-EBITDA Ratio: Approximately 1.4x.
• Capital Expenditures: $217 million for the year, slightly above guidance.
• Canadian Drilling Activity: Averaged 55 rigs in Q4, with daily operating margins of $14,559.
• US Drilling Activity: Averaged 34 rigs in Q4, with daily operating margins of USD9,165.
• International Drilling Activity: Averaged 8 rigs in Q4, with average day rates of USD49,636.
• Long-term Debt Position: $748 million as of December 31, 2024.
• Total Liquidity Position: Approximately $600 million, excluding letters of credit.
• 2025 Capital Plan: $225 million, with $175 million for sustaining and infrastructure, and $50 million for upgrades and expansion.

• Warning! GuruFocus has detected 4 Warning Sign with PDS.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Precision Drilling Corp (NYSE:PDS) generated cash provided by operations of $482 million, demonstrating strong cash flow despite lower industry activity.
• The company achieved full synergies from its CWC acquisition, enhancing operational efficiency.
• Precision Drilling Corp (NYSE:PDS) reduced its debt by $176 million and repurchased $75 million of shares, representing 4% of outstanding shares.
• The company nearly doubled its EverGreen revenue year over year, showcasing growth in its product offerings.
• Precision Drilling Corp (NYSE:PDS) maintained a strong liquidity position with approximately $600 million, excluding letters of credit.

Negative Points

• Adjusted EBITDA decreased by 15% year over year, indicating a decline in profitability.
• US drilling activity saw a decrease, with daily operating margins falling below guidance.
• The company faced nonrecurring charges of $8 million, impacting fourth-quarter financial results.
• Canadian drilling margins were slightly below guidance due to rig reactivation costs.
• The US land market remains challenging, with flat oil activity and potential downside risks in the first half of 2025.

Q & A Highlights

Q: Kevin, one of your competitors is guiding to lower US activity in Q1 and slightly lower margins. Can you speak to contract duration for those rigs and if you think you can backfill that activity with new work? A: Kevin Neveu, President and CEO: There's been a lot of churn in the US, particularly in oil, with short-term contracts. I expect the first couple of quarters to be flat, but we should gain traction later in the year. There's downside risk, but we've managed it well so far.

Q: What assumptions are you making that give you comfort in seeing activity growth in the back half of the year, especially in gas-focused areas like Haynesville? A: Kevin Neveu, President and CEO: We've had conversations with customers in Marcellus and Haynesville. While there's churn expected this quarter, rig counts should stay firm or increase slightly. Opportunities may emerge in Q2 and Q3.

Q: On the Canadian front, how do you see margins progressing throughout the year? Will Q1 be the low point? A: Carey Ford, CFO: Q1 margins are impacted by rig reactivations and a shift towards Super Singles, which are slightly shallower. However, we haven't seen degradation in pricing or margins by rig class. Kevin Neveu added that pricing traction is expected as the year progresses, especially with LNG Canada increasing rig demand.

Q: Regarding tariffs, did you buy enough drill pipe to last through the year, and how do you view the business risk from tariffs? A: Kevin Neveu, President and CEO: The tariff reduction from 25% to 10% was a relief. Tariffs are less impactful than large swings in WTI or exchange rates. We have a diverse supply chain to manage around tariffs, and macro risks are more concerning than tariffs.

Q: On the US business, can you talk about your thoughts on tuck-in acquisitions and the challenges in getting deals done? A: Carey Ford, CFO: The market for consolidation is there, and our capital structure allows us to pursue growth opportunities. Valuation remains a challenge, but we are hypersensitive on price. Scale is an important competitive advantage for larger drillers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.