Patterson-UTI Energy (PTEN) Q4 2023 earnings summary

Executive summary

• Q4 revenue was $1.58B, adjusted EBITDA was $409M, and adjusted net income was $78M, or $0.19 per diluted share, excluding merger and integration expenses.

• First full quarter following the NexTier merger and Ulterra acquisition; management cited strong completion results and continued U.S. drilling outperformance.

Financial highlights

• Q4 net income attributable to common stockholders was $62M, or $0.15 per diluted share, including $20M of merger and integration expense; adjusted net income was $78M, or $0.19 per share.

• Q4 revenue was $1.584B; adjusted EBITDA was $409M, a 25.8% margin, and operating cash flow was $453M.

• Q4 free cash flow was $247M; FY 2023 revenue was $4.146B, net income attributable to common stockholders was $246M, and adjusted EBITDA was $1.183B.

• FY diluted EPS was $0.88 versus $0.70 in 2022; FY adjusted EBITDA margin was 28.5% versus 26.2%.

Outlook and guidance

• 2024 capex budget is $740M: $285M Drilling Services, $360M Completion Services, $55M Drilling Products, and $40M Other and Corporate; budget is substantially below combined 2023 capex.

• 2024 free cash flow conversion goal is at least 40% of adjusted EBITDA; expected shareholder returns are at least $400M, with a near-term goal to return more than 50% of free cash flow.

• Q1 Drilling Services expects 120 U.S. rigs on average and adjusted gross profit relatively flat QoQ; Q1 Completion Services revenue is forecast at $940M–$950M and adjusted gross profit at $190M–$200M.

• Q1 Drilling Products revenue is expected near $90M and adjusted gross profit at $40M, including $5M of non-cash Ulterra step-up costs; excluding those costs, expected adjusted gross profit is $45M.

• 2024 effective tax rate is expected near 24%, with cash taxes of $35M–$45M after tax attributes; Q1 SG&A is forecast near $65M and depreciation, depletion, amortization and impairment near $280M.