PHX Energy Services (PHX) Q3 2024 earnings summary

Executive summary

• Consolidated Q3 2024 revenue was $160.6M, down 5% from Q3 2023's record $169.4M, despite a 10% drop in US rig count and weak Canadian natural gas prices.

• Adjusted EBITDA for Q3 2024 was $29M (18% margin), down from $43.5M (26% margin) in Q3 2023, with net earnings of $10.2M ($0.22/share) versus $24.9M ($0.50/share) last year.

• US division revenue fell 6% year-over-year to $117M, while Canadian revenue dropped 4% to $43.7M; US operations contributed 73% of consolidated revenue.

• Lower profitability was driven by decreased activity in high-margin lines (RSS, motor rentals, equipment sales) and lower net gain on equipment disposition.

Financial highlights

• Q3 2024 adjusted EBITDA was $29M (18% of revenue), down from $43.5M (26%) in Q3 2023; excluding share-based comp, adjusted EBITDA was $31.5M (20% margin).

• Net earnings for Q3 2024 were $10.2M ($0.22/share), down from $24.9M ($0.50/share) in Q3 2023.

• Cash flows from operating activities were $28.7M, down 15% year-over-year; excess cash flow was $19.3M, down 25%.

• Dividends paid per share increased 33% to $0.20; $9.4M paid in Q3 2024, up 24% year-over-year.

• Net capital expenditures were $4.2M, down from $7.1M in Q3 2023.

Outlook and guidance

• US rig count expected to stabilize, with US operations maintaining Q3 activity levels; focus remains on expanding high-margin RSS business.

• Canadian operations expected to remain strong into 2025, with new RSS technology expected to improve margins.

• Preliminary 2025 capital expenditure budget set at $50M, split evenly between growth and maintenance.

• Commitment to shareholder returns through ROCS and continued NCIB purchases.