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Patterson-UTI (PTEN) Q2 Earnings Fall Y/Y, Sales Lag Estimates
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Patterson-UTI Energy, Inc. (PTEN - Free Report) reported second-quarter 2024 adjusted net profit of 3 cents per share, down from the prior-year quarter's level of 40 cents. This year-over-year deterioration was mainly due to poor contribution from the Drilling Services segment.
Total revenues of $1348.2 million missed the Zacks Consensus Estimate of $1418 million. However, the top line increased 77.7% year over year. This outperformance can be attributed to PTEN's increased year-over-year revenue contribution from its Completion Services segment.
Patterson, a leading provider of oilfield services and products to oil and natural gas exploration and production companies, will pay its quarterly dividend of 8 cents per share on Sep 16, 2024, to the company’s shareholders of record as of Sep 3.
PTEN returned $164 million to its shareholders in the second quarter and $295 million in the first half of the year. The Houston, TX-based oil and gas drilling company repurchased 12 million shares for $132 million in the second quarter.
Since completing the NexTier merger and Ulterra acquisition, PTEN returned a total of $407 million to its shareholders, including repurchase of 28 million shares worth $309 million in this period. The company has $819 million remaining in its share repurchase authorization as of Jun 30, 2024.
Patterson-UTI Energy, Inc. Price, Consensus and EPS Surprise
Drilling Services: Revenues in this segment totaled $440.3 million, down 10.1% from the prior-year quarter’s figure of $489.7 million. Additionally, the top line was also below our projection of $441.5 million.
Operating profit amounted to $76.1 million compared with $113.3 million in the second quarter of 2023. However, the figure marginally beat our estimate of $75.6 million. The company secured approximately $433 million in term contracts for the U.S. drilling rigs as of Jun 30, 2024.
Completion Services: This segment’s revenues of $805.4 million rose about 221.8% from the year-ago quarter’s figure of $250.2 million. However, the metric missed our projection of $860.3 million.
Operating profit totaled $10.7 million compared with $25.3 million in the second quarter of 2023. Additionally, the figure missed our estimate of $35.8 million.
Drilling Products: Revenues totaled $86.1 million, missing our estimate of $90.4 million. However, the operating profit of $8.6 million exceeded our estimate, which anticipated an operating loss of $8.4 million.
Other Services: Revenues amounted to $16.5 million, 13.2% lower than the year-ago quarter’s figure of $19 million. The figure missed our projection of $17.9 million.
Operating profit amounted to $0.4 million compared with an operating loss of $0.6 million in the second quarter of 2023. The figure beat our projection of an operating loss of $0.1 million.
Capital Expenditure & Financial Position
In the reported quarter, PTEN spent $130.5 million on capital programs compared with $132.4 million in the prior year period. As of Jun 30, 2024, the company had cash and cash equivalents worth $75 million and long-term debt of $1219.2 million. The company’s debt-to-capitalization was 20.9%.
By 2024, the company anticipates generating free cash flow from adjusted EBITDA at a rate of 40%.
The company’s management expects relatively steady industry drilling activity compared to current levels for the rest of the year. PTEN anticipates that its customers will continue to manage their annual budgets through completion activity, likely impacting frac activity with higher-than-normal calendar white space persisting through year-end. The company also believes that much of the impact from its customer consolidation and weak natural gas prices is already reflected in current industry activity.
In the Drilling Services segment, the company anticipates an average of 108 U.S. rigs operating in the third quarter, with an adjusted gross profit of $15,000 per operating day. This reduction in profit per day compared to previous periods is mainly due to customer churn and the reduced rig count's effect on fixed cost absorption. Outside the U.S. Contract Drilling, adjusted gross profit for other Drilling Services is expected to decrease marginally compared to the second quarter.
In the Completion Services segment, the company expects less white space in the third quarter relative to the second quarter, although elevated white space will continue as its customers aim to stay within their annual budgets. PTEN expects a modest increase in adjusted gross profit for Completion Services in the third quarter compared to the second quarter. Activity in West Texas should remain steady, with growth driven by increased activity in natural gas basins.
For the Drilling Products segment, the company anticipates ongoing growth in international operations and a seasonal recovery in Canada after the spring breakup. In the United States, revenues are projected to decline slightly due to a lower industry rig count, although the company expects to outperform the industry rig count changes. Adjusted gross profit for the Drilling Products segment is anticipated to increase in the third quarter compared to the previous quarter.
Other revenues and adjusted gross profit for the third quarter are expected to remain flat.
The company expects selling, general and administrative expenses to be $65 million and depreciation, depletion, amortization and impairment expenses to be $265 million in the same period.
Important Energy Earnings So Far
While it's early in the earnings season, there have been a few key energy releases thus far. Let’s glance through a couple of them.
Liberty Energy (LBRT - Free Report) , the Denver-CO-based oil and gas equipment company, announced second-quarter 2024 adjusted earnings of 61 cents per share, which marginally beat the Zacks Consensus Estimate of 60 cents. However, LBRT’s bottom line underperformed the year-ago quarter’s reported figure of 87 cents due to a year-over-year increase in costs and expenses.
Ahead of the earnings release, Liberty’s board of directors announced a cash dividend of 7 cents per common share, payable on Sep 20, 2024, to its stockholders of record as of Sep 6. As part of its shareholder return policy, LBRT repurchased the company’s shares worth $30 million at an average price of $20.39 per share in the reported quarter. Liberty returned $41 million to its shareholders through share repurchases and cash dividends.
Houston, TX-based Halliburton Company (HAL - Free Report) , an oil and gas equipment and services provider, reported second-quarter 2024 adjusted net income per share of 80 cents, in line with the Zacks Consensus Estimate and above the year-ago quarter profit of 77 cents (adjusted). The robust numbers reflect strength in the international markets.
As of Jun 30, 2024, the company reported $2.1 billion in cash and cash equivalents and $7.6 billion in long-term debt, representing a debt-to-capitalization ratio of 43.2. HAL also bought back $250 million worth of its stock in the April-June period. The company generated $1.1 billion of cash flow from operations in the second quarter, leading to a free cash flow of $793 million.
Meanwhile, energy infrastructure provider Kinder Morgan (KMI - Free Report) reported second-quarter adjusted earnings per share of 26 cents, in line with the Zacks Consensus Estimate. The bottom line was favorably impacted by strong financial contributions from the Natural Gas Pipelines, Products Pipelines and Terminals business segments. Moreover, KMI’s second-quarter discounted cash flow (DCF) was $1.10 billion, up from $1.07 billion a year ago.
As of Jun 30, 2024, Kinder Morgan reported $98 million in cash and cash equivalents. Its long-term debt amounted to $28.5 billion at the quarter-end. For the full year 2024, KMI anticipates a DCF of $5 billion ($2.26 per share) and an adjusted EBITDA of $8.16 billion, each indicating 8% growth from the previous year’s reported figures.
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Patterson-UTI (PTEN) Q2 Earnings Fall Y/Y, Sales Lag Estimates
Patterson-UTI Energy, Inc. (PTEN - Free Report) reported second-quarter 2024 adjusted net profit of 3 cents per share, down from the prior-year quarter's level of 40 cents. This year-over-year deterioration was mainly due to poor contribution from the Drilling Services segment.
Total revenues of $1348.2 million missed the Zacks Consensus Estimate of $1418 million. However, the top line increased 77.7% year over year. This outperformance can be attributed to PTEN's increased year-over-year revenue contribution from its Completion Services segment.
Patterson, a leading provider of oilfield services and products to oil and natural gas exploration and production companies, will pay its quarterly dividend of 8 cents per share on Sep 16, 2024, to the company’s shareholders of record as of Sep 3.
PTEN returned $164 million to its shareholders in the second quarter and $295 million in the first half of the year. The Houston, TX-based oil and gas drilling company repurchased 12 million shares for $132 million in the second quarter.
Since completing the NexTier merger and Ulterra acquisition, PTEN returned a total of $407 million to its shareholders, including repurchase of 28 million shares worth $309 million in this period. The company has $819 million remaining in its share repurchase authorization as of Jun 30, 2024.
Patterson-UTI Energy, Inc. Price, Consensus and EPS Surprise
Patterson-UTI Energy, Inc. price-consensus-eps-surprise-chart | Patterson-UTI Energy, Inc. Quote
Segmental Performances
Drilling Services: Revenues in this segment totaled $440.3 million, down 10.1% from the prior-year quarter’s figure of $489.7 million. Additionally, the top line was also below our projection of $441.5 million.
Operating profit amounted to $76.1 million compared with $113.3 million in the second quarter of 2023. However, the figure marginally beat our estimate of $75.6 million. The company secured approximately $433 million in term contracts for the U.S. drilling rigs as of Jun 30, 2024.
Completion Services: This segment’s revenues of $805.4 million rose about 221.8% from the year-ago quarter’s figure of $250.2 million. However, the metric missed our projection of $860.3 million.
Operating profit totaled $10.7 million compared with $25.3 million in the second quarter of 2023. Additionally, the figure missed our estimate of $35.8 million.
Drilling Products: Revenues totaled $86.1 million, missing our estimate of $90.4 million. However, the operating profit of $8.6 million exceeded our estimate, which anticipated an operating loss of $8.4 million.
Other Services: Revenues amounted to $16.5 million, 13.2% lower than the year-ago quarter’s figure of $19 million. The figure missed our projection of $17.9 million.
Operating profit amounted to $0.4 million compared with an operating loss of $0.6 million in the second quarter of 2023. The figure beat our projection of an operating loss of $0.1 million.
Capital Expenditure & Financial Position
In the reported quarter, PTEN spent $130.5 million on capital programs compared with $132.4 million in the prior year period. As of Jun 30, 2024, the company had cash and cash equivalents worth $75 million and long-term debt of $1219.2 million. The company’s debt-to-capitalization was 20.9%.
This Zacks Rank #4 (Sell) company generated $563.4 million in cash from operations and $206 million in free cash flow. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Outlook
By 2024, the company anticipates generating free cash flow from adjusted EBITDA at a rate of 40%.
The company’s management expects relatively steady industry drilling activity compared to current levels for the rest of the year. PTEN anticipates that its customers will continue to manage their annual budgets through completion activity, likely impacting frac activity with higher-than-normal calendar white space persisting through year-end. The company also believes that much of the impact from its customer consolidation and weak natural gas prices is already reflected in current industry activity.
In the Drilling Services segment, the company anticipates an average of 108 U.S. rigs operating in the third quarter, with an adjusted gross profit of $15,000 per operating day. This reduction in profit per day compared to previous periods is mainly due to customer churn and the reduced rig count's effect on fixed cost absorption. Outside the U.S. Contract Drilling, adjusted gross profit for other Drilling Services is expected to decrease marginally compared to the second quarter.
In the Completion Services segment, the company expects less white space in the third quarter relative to the second quarter, although elevated white space will continue as its customers aim to stay within their annual budgets. PTEN expects a modest increase in adjusted gross profit for Completion Services in the third quarter compared to the second quarter. Activity in West Texas should remain steady, with growth driven by increased activity in natural gas basins.
For the Drilling Products segment, the company anticipates ongoing growth in international operations and a seasonal recovery in Canada after the spring breakup. In the United States, revenues are projected to decline slightly due to a lower industry rig count, although the company expects to outperform the industry rig count changes. Adjusted gross profit for the Drilling Products segment is anticipated to increase in the third quarter compared to the previous quarter.
Other revenues and adjusted gross profit for the third quarter are expected to remain flat.
The company expects selling, general and administrative expenses to be $65 million and depreciation, depletion, amortization and impairment expenses to be $265 million in the same period.
Important Energy Earnings So Far
While it's early in the earnings season, there have been a few key energy releases thus far. Let’s glance through a couple of them.
Liberty Energy (LBRT - Free Report) , the Denver-CO-based oil and gas equipment company, announced second-quarter 2024 adjusted earnings of 61 cents per share, which marginally beat the Zacks Consensus Estimate of 60 cents. However, LBRT’s bottom line underperformed the year-ago quarter’s reported figure of 87 cents due to a year-over-year increase in costs and expenses.
Ahead of the earnings release, Liberty’s board of directors announced a cash dividend of 7 cents per common share, payable on Sep 20, 2024, to its stockholders of record as of Sep 6. As part of its shareholder return policy, LBRT repurchased the company’s shares worth $30 million at an average price of $20.39 per share in the reported quarter. Liberty returned $41 million to its shareholders through share repurchases and cash dividends.
Houston, TX-based Halliburton Company (HAL - Free Report) , an oil and gas equipment and services provider, reported second-quarter 2024 adjusted net income per share of 80 cents, in line with the Zacks Consensus Estimate and above the year-ago quarter profit of 77 cents (adjusted). The robust numbers reflect strength in the international markets.
As of Jun 30, 2024, the company reported $2.1 billion in cash and cash equivalents and $7.6 billion in long-term debt, representing a debt-to-capitalization ratio of 43.2. HAL also bought back $250 million worth of its stock in the April-June period. The company generated $1.1 billion of cash flow from operations in the second quarter, leading to a free cash flow of $793 million.
Meanwhile, energy infrastructure provider Kinder Morgan (KMI - Free Report) reported second-quarter adjusted earnings per share of 26 cents, in line with the Zacks Consensus Estimate. The bottom line was favorably impacted by strong financial contributions from the Natural Gas Pipelines, Products Pipelines and Terminals business segments. Moreover, KMI’s second-quarter discounted cash flow (DCF) was $1.10 billion, up from $1.07 billion a year ago.
As of Jun 30, 2024, Kinder Morgan reported $98 million in cash and cash equivalents. Its long-term debt amounted to $28.5 billion at the quarter-end. For the full year 2024, KMI anticipates a DCF of $5 billion ($2.26 per share) and an adjusted EBITDA of $8.16 billion, each indicating 8% growth from the previous year’s reported figures.