Archer (ARCH) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $309 million, up 5% year-over-year, with EBITDA of $32.8 million, up 9% year-over-year.

• Net income for Q2 was $1 million, with a robust backlog of $2.5 billion firm and $4 billion including options.

• Strategic acquisitions in managed pressure drilling (ADA Argentina), offshore wind (Moreld Ocean Wind/Archer Wind), and increased stake in Iceland Drilling to 60% support growth and diversification.

• Completed acquisition of 65% of Vertikal Services AS, expanding into renewable energy services.

• Executed a capital reorganization, including a 25:1 reverse share split and par value reduction.

Financial highlights

• H1 2024 revenue was $617.3 million, up 9.9% year-over-year; H1 EBITDA at $65.1 million, up 9.8% year-over-year.

• Q2 EBITDA margin was 10.6%; EBIT for Q2 was $15.5 million.

• Net interest expense in Q2 was $12.1 million; net interest-bearing debt at $371 million as of Q2 2024.

• Cash and cash equivalents at quarter-end were $51.6 million; equity at $181.4 million, reduced due to FX adjustments and YTD loss.

• Capital expenditure for H1 2024 was $25.6 million, up from $16.8 million year-over-year.

Outlook and guidance

• 2024 revenue guidance reaffirmed at $1.2–1.3 billion, with EBITDA expected between $134–140 million, and EBITDA growth projected at 15–20%.

• CapEx expected at 4–5% of revenue; leverage ratio targeted between 2.4 and 2.7 by year-end.

• Strong market sentiment in the UK, international, Norwegian, and Argentinian markets, with robust demand for well services and P&A projects.

• Focus on production drilling and capturing Plug and Abandonment work in the North Sea; continued growth in Argentina's Vaca Muerta shale.

• Energy transition presents new market opportunities, but pace and impact remain uncertain.