PHX Energy Services (PHX) Q2 2024 earnings summary

Executive summary

• Consolidated Q2 2024 revenue was $154.2M, down 1% from Q2 2023's record $155.6M, with strong Canadian segment performance offsetting lower US rig activity.

• Adjusted EBITDA was $30M (19% margin), down from $34.8M (22%) in Q2 2023; net earnings were $12.9M ($0.26/share), down from $18.1M ($0.35/share) year-over-year.

• Canadian revenue rose 25% to $38.2M, a record for Q2, while US revenue fell 7% to $116M, reflecting a 16% drop in US rig count.

• Dividends paid increased 24% to $9.5M, and 358,300 shares were repurchased for $3.1M under the NCIB.

Financial highlights

• Q2 2024 adjusted EBITDA margin was 19%, down from 22% in Q2 2023; excluding share-based comp, margin was 20%.

• Gross profit margin (excl. D&A) declined to 26% from 30% year-over-year.

• Funds from operations were $24.3M, down from $30.2M in Q2 2023.

• Net capital expenditures were $19.4M, up from $3.5M in Q2 2023, mainly for fleet growth.

• Working capital at June 30, 2024 was $75.1M; net cash position was $4.1M.

Outlook and guidance

• US rig count continues to soften, leading to a more cautious outlook for the US division in Q3.

• Canadian division expected to maintain strong results, with focus on expanding RSS and new technologies.

• 2024 capital expenditures budget set at $75M, with lower growth capex anticipated for 2025.

• Anticipates positive excess cash flow in H2 2024, supporting continued dividends and share buybacks.