PHX Energy Services (PHX) Q1 2025 earnings summary

Executive summary

• Achieved all-time record quarterly consolidated revenue of $193.7 million, up 17% year-over-year and 8% sequentially from Q4 2024.

• Earnings rose 15% year-over-year to $20.2 million ($0.44 per share), with adjusted EBITDA up 16% to $40.7 million.

• Strong profitability driven by high-margin Rotary Steerable Systems (RSS) and motor rental revenue growth in both US and Canada.

• US division delivered record revenue of $136.1 million (70% of total), up 19% year-over-year; Canadian division revenue rose 11% to $57.6 million, highest since 2014.

• Declared $0.20 per share dividend ($9.1 million), with excess cash flow of $18.2 million after $13.8 million in net capital expenditures.

Financial highlights

• Revenue: $193.7 million (+17% YoY); Adjusted EBITDA: $40.7 million (+16% YoY, 21% margin); Net earnings: $20.2 million (+15% YoY).

• Funds from operations: $33.4 million (+28% YoY); Excess cash flow: $18.2 million (+144% YoY).

• Working capital: $90.6 million; Net debt: $12.2 million; Shareholders’ equity: $233.6 million.

• Gross profit as % of revenue (excl. D&A): 28% (down from 29% YoY); SG&A as % of revenue (excl. SBC): 8% (improved from 9%).

• R&D expense increased 48% to $1.8 million, reflecting expanded project scope.

Outlook and guidance

• Strong Q1 momentum expected to continue, but risks from global recession, OPEC+ strategies, and tariffs could impact activity and pricing.

• Focus remains on expanding high-margin RSS business and deploying advanced technologies.

• 2025 capital expenditure budget increased to $65 million, mainly for RSS fleet and Real Time RSS Communications technology.

• Commitment to shareholder returns via dividends and opportunistic NCIB purchases.