Our view: PD reported adj. EBITDA of $142MM, in-line with our estimate of $142MM and Street consensus of $143MM. On a pre-SBC basis, PD generated adj. EBITDAS of $166MM, 5% above our expectations on stronger rig margins, notably in Canada. Looking ahead, PD sees continued strength in Canada through the spring, while the US sees headwinds from low natural gas prices and customer consolidation. Importantly, PD maintained its expectation to reduce debt by $150-200MM this year. We think the results have neutral implications for the stock today, pending guidance commentary on the 2pm ET conference call. The Canadian business continues to perform strongly, though we will be looking for commentary on US rig count additions/reductions over the remainder of the year. PD is running 39 US rigs, and we currently estimate the company adding 5-6 rigs over the back half of the year. Given near-term headwinds and competitor commentary for near-term rig reductions, this may prove optimistic.
• Adj. EBITDAS above Street/RBC estimates. Adj. EBITDAS of $166MM was 6%/5% above Street/RBC estimates. Results were primarily driven by higher revenues and slightly higher margins 31.4% vs Street 29.9% (RBC 31.1%). There was a $23MM stock- based compensation charge in the quarter. PD maintained its FY24 debt reduction target of $150-200MM, and return of 25%-35% of FCF to shareholders.
• Rig margins ahead of our expectations. In 1Q, PD operated 73, 38, and 8 rigs in the US, Canada, and International, respectively. PD reported US$11,148/day daily rig margins in the US (RBCe US$10,000/day), and $19,959/day in Canada (RBCe $15,500/day). • Outlook calls for strong Canadian activity and short-term US headwinds. The company currently has 39, 48, and 8 active rigs in the US, Canada, and International, respectively (RBC 2Q: 39, 45, 8). In the US, PD expects customers' activity to remain influenced by weak natural gas prices and pending customer consolidation in the short-term. In Canada, PD is currently operating 48 rigs, 10 rigs higher y/y. Internationally, PD expects its international rig count to remain at 8 rigs throughout FY24 (40% higher y/y), and continues to bid its current idle rigs.
• Conference call today at 2:00 PM ET