ADES (2382) Q2 2024 earnings summary

Executive summary

• Revenue for 1H 2024 rose 54.3% year-over-year to SAR 3.1bn, with net profit more than doubling to SAR 403mn, driven by strong operational performance and new contracts across KSA, India, Kuwait, and Algeria.

• Maintained high utilization rates and expanded presence in key markets, including Southeast Asia, GCC, and new contracts in Thailand and Indonesia.

• Secured a substantial backlog of SAR 28.05bn, providing revenue and cash flow visibility, and completed a major USD 3bn financing transaction to support future growth.

• Board recommended a dividend distribution of SAR 237.5mn, representing 60% of 1H 2024 net profit, marking the first payout post-listing.

• The group operates in oil and gas drilling and production services across the Middle East, Africa, and Asia, with significant expansion in Saudi Arabia and Kuwait.

Financial highlights

• Revenue rose 54.3% year-over-year to SAR 3.1bn in 1H 2024; EBITDA increased 61.7% to SAR 1.5bn, with margin improving to 49.3%.

• Net profit surged 105.9% year-over-year to SAR 403mn in 1H 2024; net profit margin rose to 13.2%.

• Operating cash flow grew 71.8% year-over-year to SAR 1.57bn; free cash flow increased 60.5% while CAPEX decreased 31.1% due to project completions.

• Gross profit for H1 2024 was SAR 1,177mn, up from SAR 781mn year-over-year; gross margin at 38.5%.

• Cash and cash equivalents reached SAR 768mn as of 30 June 2024.

Outlook and guidance

• Management reiterates FY 2024 EBITDA guidance of SAR 2.89–3.04bn, supported by continued operational growth and ramp-up of recent expansions.

• No anticipated changes to the operating fleet for the remainder of 2024.

• Focus remains on securing renewals, expanding backlog, and leveraging tight offshore jackup market conditions.

• Recently secured USD 3bn facility to fund organic and inorganic growth amid ongoing market consolidation.