Patterson-UTI Energy Reports Financial Results for the Quarter Ended March 31, 2024
Patterson-UTI Energy, Inc. (NASDAQ:PTEN) reported strong financial results for the first quarter ended March 31, 2024. The company achieved total revenue of $1.5 billion, with net income of $51 million and adjusted net income of $61 million. They achieved a synergy target of $200 million from the NexTier merger, returned $130 million to shareholders, and have remaining share repurchase authorization of $945 million. The company also declared a quarterly dividend of $0.08 per share.
Patterson-UTI Energy demonstrated significant free cash flow following the NexTier merger and Ulterra acquisition.
The company is ahead of pace to return at least $400 million to shareholders in 2024.
They have already retired 4% of post-transaction outstanding shares and expect to convert at least 40% of adjusted EBITDA to free cash flow in 2024.
The near-term outlook for U.S. shale activity remains cautious, with slightly lower activity expected compared to the start of the year.
Natural gas prices and customer consolidation are potential headwinds to near-term activity.
Completion Services activity has declined slightly, particularly in natural gas basins.
Insights
The recent announcement by Patterson-UTI Energy indicates a solid financial performance for the first quarter of 2024, with total revenue reaching
However, investors should also pay attention to the mention of
The company's forward-looking statements reveal cautious optimism, anticipating slight improvements in drilling and completion activities in oil basins by the third quarter. This projection, if materialized, could signal a stable to positive trajectory in revenues for the company's core operations.
From a market perspective, Patterson-UTI Energy's performance in the U.S. drilling and completions sector merits attention. The company's ability to generate strong free cash flow, marked by
However, investors should carefully consider the near-term headwinds mentioned, such as natural gas prices and customer consolidation. These factors could potentially dampen the positive outlook and may result in fluctuating activity levels. The management's discipline in reducing cyclicality and focus on differentiated services creates a robust strategic framework but does not fully shield the company from macroeconomic and sector-specific challenges.
Within the energy sector, the ability to maintain a steady U.S. land rig count and active term contracts for drilling rigs, as indicated by future dayrate drilling revenue of approximately
However, the reliance on the performance of natural gas and oil prices is a double-edged sword; while there's resilience in activity levels, investors should be aware that volatility in commodity markets could significantly impact future performance. The company's proactive management of its drilling products and international growth opportunities further underscores its strategic initiatives and adaptability in a dynamic industry landscape.
HOUSTON, TX / ACCESSWIRE / May 1, 2024 / PATTERSON-UTI ENERGY, INC. (NASDAQ:PTEN) today reported financial results for the quarter ended March 31, 2024.
First Quarter 2024 Financial Results and Other Key Items
- Total revenue of
$1.5 billion - Net income attributable to common stockholders of
$51 million , or$0.13 per share- Includes
$12 million in merger and integration expenses
- Includes
- Adjusted net income attributable to common stockholders of
$61 million , or$0.15 per share- Excludes merger and integration expenses
- Adjusted EBITDA of
$375 million - Excludes merger and integration expenses
- Cash from Operations of
$366 million , Free Cash Flow of$139 million - Achieved annualized synergy target of
$200 million from the NexTier merger - Returned
$130 million to shareholders in the first quarter; confirmed expectation to return at least$400 million to shareholders in 2024- Used
$98 million to repurchase 9 million shares in the first quarter; since the close of the NexTier merger and Ulterra acquisition, we have repurchased4% of the post-transaction shares outstanding $945 million in remaining share repurchase authorization- Declared a quarterly dividend on its common stock of
$0.08 per share, payable on June 17, 2024 to holders of record as of June 3, 2024
- Used
Management Commentary
"The first quarter was another strong quarter for Patterson-UTI, and we met our adjusted gross profit guidance at each of our operating segments," said Andy Hendricks, Chief Executive Officer. "We are pleased with the way our team navigated a challenging market to start the year. Activity in both our U.S. drilling and completion businesses again outperformed, and our customers are recognizing the value that is being created by our top-tier service offerings. Our customers place a high value on differentiated services and technologies, which will benefit Patterson-UTI over the long-term as we look to create value for our shareholders.
"The near-term outlook for U.S. shale activity continues to be cautious and reflects slightly lower activity than we saw to start the year," continued Mr. Hendricks. "Activity in oil basins remains steady, although natural gas prices and customer consolidation remain a headwind to near-term activity. Based on current commodity prices, we think activity in our U.S. drilling and completion businesses is likely to improve slightly in oil basins, starting in the third quarter, with early indication that the impact of these headwinds may begin to ease later this year."
"The first quarter results demonstrate the significant free cash flow generation capability of Patterson-UTI following our combination with NexTier and the acquisition of Ulterra. We continue to invest in our business to maintain our position as a long-term winner in U.S. drilling and completions, while at the same time generating strong free cash flow," said Andy Smith, Chief Financial Officer. "We are significantly ahead of pace on our expectation to return at least
Drilling Services
During the first quarter, Drilling Services revenue totaled
Within the Drilling Services segment for the first quarter, U.S. Contract Drilling revenue was
As of March 31, 2024, the Company had term contracts for drilling rigs in the United States providing for future dayrate drilling revenue of approximately
For the first quarter, other Drilling Services revenue, which primarily includes International Contract Drilling and Directional Drilling, was
Completion Services
First quarter Completion Services revenue totaled
Financial performance in our Completion Services segment has been relatively steady compared to the pre-merger entities, even as market activity has slowed. This reflects our progress in capturing synergy value that we expected to unlock from the NexTier merger.
Activity in Appalachia remained relatively steady. As expected, activity in the Haynesville was the biggest driver of the decline in completion activity.
Utilization remains high for equipment that can be powered by natural gas, and we are continuing to see strong returns from our natural gas-powered assets that are working for large, long-term dedicated customers.
Drilling Products
First quarter Drilling Products revenue totaled
As a result of the purchase price accounting for the Ulterra acquisition, direct operating costs and depreciation expenses are temporarily higher than normal, as the drill bits were allocated a value higher than the manufactured cost. During the first quarter, the step-up in value increased reported segment direct operating costs by
The Drilling Products segment continues to perform well, with long-term International growth opportunities.
Other
During the first quarter, Other revenue totaled
Outlook
We see steady drilling and completion activity in oil basins, with the expectation that a few operators may add drilling rigs later this year based on current oil prices. Our activity in natural gas basins has so far been more resilient than we previously anticipated, although we have continued to see some activity decline in the second quarter. We currently expect our activity in natural gas basins will remain steady with second quarter levels through year-end.
Within the Drilling Services segment, we expect U.S. Contract Drilling to operate an average of 114 U.S. rigs in the second quarter, with adjusted gross profit per operating day down roughly
Completion Services activity has declined slightly to start the second quarter, mostly in the natural gas basins where our customers continue to slow activity in response to current natural gas prices. We also expect to see a few dedicated fleets operate in the second quarter with planned gaps in the schedule. Completion Services revenue for the second quarter is expected to be approximately
Second quarter results in our Drilling Products segment are expected to be relatively in line with the first quarter, as continued growth in our International operations is expected to largely offset seasonal activity declines from Canadian spring breakup.
For the second quarter, Other revenue and adjusted gross profit is expected to be roughly flat with the first quarter.
For the second quarter, we expect selling, general and administrative expense of approximately
"We are excited by our position as a leader in U.S. shale, and our results are starting to demonstrate the value creation that we envisioned from the NexTier merger and Ulterra acquisition," concluded Mr. Hendricks. "The discipline we see from our customers is continuing to reduce the cyclicality of the industry relative to prior business cycles, and the relative stability is giving our company the opportunity to use our differentiated products and services to add value to the drilling and completion process. Most importantly for our investors, the differentiation is creating an environment that allows us to make investments that grow our own returns and free cash flow conversion. Our objective is to continue to return a significant portion of our free cash flow to shareholders and create significant value for all Patterson-UTI shareholders over the long-term."
For purposes of the shareholder return target, the Company defines free cash flow as net cash provided by operating activities less capital expenditures. The shareholder return target, including the amount and timing of any dividend payments and/or share repurchases are subject to the discretion of the Company's Board of Directors and will depend upon business conditions, results of operations, financial condition, terms of the Company's debt agreements and other factors.
All references to "per share" in this press release are diluted earnings per common share as defined within Accounting Standards Codification Topic 260.
First Quarter Earnings Conference Call
The Company's quarterly conference call to discuss the operating results for the quarter ended March 31, 2024, is scheduled for May 2, 2024, at 9:00 a.m. Central Time. The dial-in information for participants is (888) 550-5422 (Domestic) and (646) 960-0676 (International). The conference ID for both numbers is 3822955. The call is also being webcast and can be accessed through the Investor Relations section of the Company's website at investor.patenergy.com. A replay of the conference call will be on the Company's website for two weeks.
About Patterson-UTI
Patterson-UTI is a leading provider of drilling and completion services to oil and natural gas exploration and production companies in the United States and other select countries, including contract drilling services, integrated well completion services and directional drilling services in the United States, and specialized bit solutions in the United States, Middle East and many other regions around the world. For more information, visit www.patenergy.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements which are protected as forward-looking statements under the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect Patterson-UTI's current beliefs, expectations or intentions regarding future events. Words such as "anticipate," "believe," "budgeted," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "potential," "project," "pursue," "should," "strategy," "target," or "will," and similar expressions are intended to identify such forward-looking statements. The statements in this press release that are not historical statements, including statements regarding Patterson-UTI's future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond Patterson-UTI's control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: the successful integration and expected benefits of the recently completed NexTier merger and Ulterra acquisition on our financial condition, results of operations, strategy and plans and our ability to realize those benefits; synergies, costs and financial and operating impacts of acquisitions, including the NexTier merger and the Ulterra acquisition; the successful integration of NexTier and Ulterra operations and the future financial and operating results of the combined company; the combined company's plans, objectives, expectations and intentions with respect to future operations and services; adverse oil and natural gas industry conditions; global economic conditions, including inflationary pressures and risks of economic downturns or recessions in the United States and elsewhere; volatility in customer spending and in oil and natural gas prices that could adversely affect demand for Patterson-UTI's services and their associated effect on rates; excess availability of land drilling rigs, completion services and drilling equipment, including as a result of reactivation, improvement or construction; competition and demand for Patterson-UTI's services; the impact of the ongoing Ukraine/Russia and Middle East conflicts and instability in other international regions; strength and financial resources of competitors; utilization, margins and planned capital expenditures; ability to obtain insurance coverage on commercially reasonable terms and liabilities from operational risks for which Patterson-UTI does not have and receive full indemnification or insurance; operating hazards attendant to the oil and natural gas business; failure by customers to pay or satisfy their contractual obligations (particularly with respect to fixed-term contracts); the ability to realize backlog; specialization of methods, equipment and services and new technologies, including the ability to develop and obtain satisfactory returns from new technology; the ability to retain management and field personnel; loss of key customers; shortages, delays in delivery, and interruptions in supply, of equipment and materials; cybersecurity events; difficulty in building and deploying new equipment; governmental regulation, including climate legislation, regulation and other related risks; environmental, social and governance practices, including the perception thereof; environmental risks and ability to satisfy future environmental costs; technology-related disputes; legal proceedings and actions by governmental or other regulatory agencies; the ability to effectively identify and enter new markets; public health crises, pandemics and epidemics; weather; operating costs; expansion and development trends of the oil and natural gas industry; financial flexibility, including availability of capital and the ability to repay indebtedness when due; adverse credit and equity market conditions; our return of capital to stockholders, including timing and amounts of dividends and share repurchases; stock price volatility; and compliance with covenants under Patterson-UTI's debt agreements.
Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in Patterson-UTI's SEC filings. Patterson-UTI's filings may be obtained by contacting Patterson-UTI or the SEC or through Patterson-UTI's website at http://www.patenergy.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. Patterson-UTI undertakes no obligation to publicly update or revise any forward-looking statement.
PATTERSON-UTI ENERGY, INC.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
| Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2024 | 2023 | 2023 | ||||||||||
REVENUES | $ | 1,510,360 | $ | 1,584,317 | $ | 791,802 | ||||||
COSTS AND EXPENSES: | ||||||||||||
Direct operating costs | 1,077,139 | 1,119,117 | 512,659 | |||||||||
Depreciation, depletion, amortization and impairment | 274,956 | 278,787 | 128,180 | |||||||||
Selling, general and administrative | 64,984 | 61,037 | 30,566 | |||||||||
Credit loss expense | 5,231 | 842 | - | |||||||||
Merger and integration expense | 12,233 | 19,949 | - | |||||||||
Other operating income, net | (11,182 | ) | (7,120 | ) | (5,566 | ) | ||||||
Total operating costs and expenses | 1,423,361 | 1,472,612 | 665,839 | |||||||||
OPERATING INCOME | 86,999 | 111,705 | 125,963 | |||||||||
OTHER INCOME (EXPENSE): | ||||||||||||
Interest income | 2,189 | 1,539 | 1,240 | |||||||||
Interest expense, net of amount capitalized | (18,335 | ) | (18,681 | ) | (8,826 | ) | ||||||
Other | 850 | (1,293 | ) | 1,486 | ||||||||
Total other expense | (15,296 | ) | (18,435 | ) | (6,100 | ) | ||||||
INCOME BEFORE INCOME TAXES | 71,703 | 93,270 | 119,863 | |||||||||
INCOME TAX EXPENSE | 19,997 | 31,332 | 20,185 | |||||||||
NET INCOME | 51,706 | 61,938 | 99,678 | |||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST | 471 | (12 | ) | - | ||||||||
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | 51,235 | $ | 61,950 | $ | 99,678 | ||||||
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE: | ||||||||||||
Basic | $ | 0.13 | $ | 0.15 | $ | 0.47 | ||||||
Diluted | $ | 0.13 | $ | 0.15 | $ | 0.46 | ||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | ||||||||||||
Basic | 408,182 | 415,656 | 212,089 | |||||||||
Diluted | 409,819 | 418,751 | 215,866 | |||||||||
CASH DIVIDENDS PER COMMON SHARE | $ | 0.08 | $ | 0.08 | $ | 0.08 | ||||||
PATTERSON-UTI ENERGY, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
| Three Months Ended | ||||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 51,706 | $ | 99,678 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, depletion, amortization and impairment | 274,956 | 128,180 | ||||||
Deferred income tax expense | 19,507 | 18,303 | ||||||
Stock-based compensation | 12,051 | (758 | ) | |||||
Net (gain) loss on asset disposals | (2,668 | ) | 538 | |||||
Credit loss expense | 5,231 | |||||||
Other | 613 | (648 | ) | |||||
Changes in operating assets and liabilities | 4,495 | (10,944 | ) | |||||
Net cash provided by operating activities | 365,891 | 234,349 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (226,941 | ) | (117,601 | ) | ||||
Proceeds from disposal of assets | 2,389 | 1,263 | ||||||
Other | (2,933 | ) | (7 | ) | ||||
Net cash used in investing activities | (227,485 | ) | (116,345 | ) | ||||
Cash flows from financing activities: | ||||||||
Purchases of treasury stock | (97,782 | ) | (73,586 | ) | ||||
Dividends paid | (32,553 | ) | (16,916 | ) | ||||
Payments of finance leases | (27,229 | ) | - | |||||
Other | (4,025 | ) | (7,837 | ) | ||||
Net cash used in financing activities | (161,589 | ) | (98,339 | ) | ||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 750 | - | ||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (22,433 | ) | 19,665 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 192,680 | 137,553 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 170,247 | $ | 157,218 | ||||
PATTERSON-UTI ENERGY, INC.
Additional Financial and Operating Data
(unaudited, dollars in thousands)
| Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2024 | 2023 | 2023 | ||||||||||
Drilling Services | ||||||||||||
Revenues | $ | 457,573 | $ | 463,598 | $ | 477,727 | ||||||
Direct operating costs | $ | 271,737 | $ | 276,439 | $ | 281,261 | ||||||
Adjusted gross profit (1) | $ | 185,836 | $ | 187,159 | $ | 196,466 | ||||||
Depreciation, amortization and impairment | $ | 92,345 | $ | 91,951 | $ | 91,293 | ||||||
Selling, general and administrative | $ | 3,879 | $ | 3,204 | $ | 3,845 | ||||||
Other operating (income) loss, net | $ | - | $ | (676 | ) | $ | 22 | |||||
Operating income | $ | 89,612 | $ | 92,680 | $ | 101,306 | ||||||
Capital expenditures | $ | 82,793 | $ | 73,625 | $ | 89,279 | ||||||
Completion Services | ||||||||||||
Revenues | $ | 944,997 | $ | 1,014,357 | $ | 293,268 | ||||||
Direct operating costs | $ | 745,594 | $ | 782,482 | $ | 220,116 | ||||||
Adjusted gross profit (1) | $ | 199,403 | $ | 231,875 | $ | 73,152 | ||||||
Depreciation, amortization and impairment | $ | 148,680 | $ | 147,891 | $ | 26,025 | ||||||
Selling, general and administrative | $ | 10,964 | $ | 13,662 | $ | 2,695 | ||||||
Other operating income, net | $ | (9,870 | ) | $ | - | $ | - | |||||
Operating income | $ | 49,629 | $ | 70,322 | $ | 44,432 | ||||||
Capital expenditures | $ | 123,377 | $ | 107,217 | $ | 21,425 | ||||||
Drilling Products | ||||||||||||
Revenues | $ | 89,973 | $ | 88,109 | $ | - | ||||||
Direct operating costs | $ | 48,630 | $ | 49,484 | $ | - | ||||||
Adjusted gross profit (1) | $ | 41,343 | $ | 38,625 | $ | - | ||||||
Depreciation, amortization and impairment | $ | 27,182 | $ | 31,392 | $ | - | ||||||
Selling, general and administrative | $ | 7,661 | $ | 7,494 | $ | - | ||||||
Operating income (loss) | $ | 6,500 | $ | (261 | ) | $ | - | |||||
Capital expenditures | $ | 15,586 | $ | 16,632 | $ | - | ||||||
Other | ||||||||||||
Revenues | $ | 17,817 | $ | 18,253 | $ | 20,807 | ||||||
Direct operating costs | $ | 11,178 | $ | 10,712 | $ | 11,282 | ||||||
Adjusted gross profit (1) | $ | 6,639 | $ | 7,541 | $ | 9,525 | ||||||
Depreciation, depletion, amortization and impairment | $ | 5,411 | $ | 6,291 | $ | 7,323 | ||||||
Selling, general and administrative | $ | 240 | $ | 232 | $ | 235 | ||||||
Operating income | $ | 988 | $ | 1,018 | $ | 1,967 | ||||||
Capital expenditures | $ | 3,797 | $ | 6,258 | $ | 5,223 | ||||||
Corporate | ||||||||||||
Depreciation | $ | 1,338 | $ | 1,262 | $ | 3,539 | ||||||
Selling, general and administrative | $ | 42,240 | $ | 36,445 | $ | 23,791 | ||||||
Merger and integration expense | $ | 12,233 | $ | 19,949 | $ | - | ||||||
Credit loss expense | $ | 5,231 | $ | 842 | $ | - | ||||||
Other operating income, net | $ | (1,312 | ) | $ | (6,444 | ) | $ | (5,588 | ) | |||
Capital expenditures | $ | 1,388 | $ | 1,541 | $ | 1,674 | ||||||
Total Capital Expenditures | $ | 226,941 | $ | 205,273 | $ | 117,601 | ||||||
Adjusted gross profit is defined as revenues less direct operating costs (excluding depreciation, depletion, amortization and impairment expense). See Non-GAAP Financial Measures below for a reconciliation of GAAP gross profit to adjusted gross profit by segment.
Selected Balance Sheet Data (unaudited, in thousands): | March 31, 2024 | December 31, 2023 | ||||||
Cash, cash equivalents and restricted cash | $ | 170,247 | $ | 192,680 | ||||
Current assets | $ | 1,354,702 | $ | 1,485,698 | ||||
Current liabilities | $ | 916,901 | $ | 1,050,435 | ||||
Working capital | $ | 437,801 | $ | 435,263 | ||||
Long-term debt | $ | 1,221,058 | $ | 1,224,941 | ||||
PATTERSON-UTI ENERGY, INC.
Non-GAAP Financial Measures
Adjusted EBITDA
(unaudited, dollars in thousands)
| Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2024 | 2023 | 2023 | ||||||||||
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) (1): | ||||||||||||
Net income | $ | 51,706 | $ | 61,938 | $ | 99,678 | ||||||
Income tax expense | 19,997 | 31,332 | 20,185 | |||||||||
Net interest expense | 16,146 | 17,142 | 7,586 | |||||||||
Depreciation, depletion, amortization and impairment | 274,956 | 278,787 | 128,180 | |||||||||
Merger and integration expense | 12,233 | 19,949 | - | |||||||||
Adjusted EBITDA | $ | 375,038 | $ | 409,148 | $ | 255,629 | ||||||
Total revenues | $ | 1,510,360 | $ | 1,584,317 | $ | 791,802 | ||||||
Adjusted EBITDA by Operating Segment: | ||||||||||||
Drilling Services | $ | 181,957 | $ | 184,631 | $ | 192,599 | ||||||
Completion Services | 198,309 | 218,213 | 70,457 | |||||||||
Drilling Products | 33,682 | 31,131 | - | |||||||||
Other | 6,399 | 7,309 | 9,290 | |||||||||
Corporate | (45,309 | ) | (32,136 | ) | (16,717 | ) | ||||||
Adjusted EBITDA | $ | 375,038 | $ | 409,148 | $ | 255,629 | ||||||
Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") is not defined by accounting principles generally accepted in the United States of America ("GAAP"). We define Adjusted EBITDA as net income plus income tax expense, net interest expense, depreciation, depletion, amortization and impairment expense and merger and integration expense. We present Adjusted EBITDA as a supplemental disclosure because we believe it provides to both management and investors additional information with respect to the performance of our fundamental business activities and a comparison of the results of our operations from period to period and against our peers without regard to our financing methods or capital structure. We exclude the items listed above from net income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be construed as an alternative to the GAAP measure of net income. Our computations of Adjusted EBITDA may not be the same as similarly titled measures of other companies.
PATTERSON-UTI ENERGY, INC.
Non-GAAP Financial Measures
Free Cash Flow
(unaudited, dollars in thousands)
| Three Months Ended | ||||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
Free Cash Flow (1): | ||||||||
Net cash provided by operating activities | 365,891 | 234,349 | ||||||
Less capital expenditures | (226,941 | ) | (117,601 | ) | ||||
Free cash flow | $ | 138,950 | $ | 116,748 | ||||
We define free cash flow as net cash provided by operating activities less capital expenditures. We present free cash flow as a supplemental disclosure because we believe that it is an important liquidity measure and that it is useful to investors and management as a measure of the company's ability to generate cash flow, after reinvesting in the company, that could be available for financing cash flows, such as dividend payments, share repurchases and/or repurchases of long-term indebtedness. Our computations of free cash flow may not be the same as similarly titled measures of other companies. Free cash flow is not intended to represent our residual cash flow available for discretionary expenditures. Free cash flow is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, cash flows from operations reported in accordance with GAAP.
PATTERSON-UTI ENERGY, INC.
Non-GAAP Financial Measures
Adjusted Gross Profit
(unaudited, dollars in thousands)
| Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2024 | 2023 | 2023 | ||||||||||
Drilling Services | ||||||||||||
Revenues | $ | 457,573 | $ | 463,598 | $ | 477,727 | ||||||
Less direct operating costs | (271,737 | ) | (276,439 | ) | (281,261 | ) | ||||||
Less depreciation, amortization and impairment | (92,345 | ) | (91,951 | ) | (91,293 | ) | ||||||
GAAP gross profit | 93,491 | 95,208 | 105,173 | |||||||||
Depreciation, amortization and impairment | 92,345 | 91,951 | 91,293 | |||||||||
Adjusted gross profit (1) | $ | 185,836 | $ | 187,159 | $ | 196,466 | ||||||
Completion Services | ||||||||||||
Revenues | $ | 944,997 | $ | 1,014,357 | $ | 293,268 | ||||||
Less direct operating costs | (745,594 | ) | (782,482 | ) | (220,116 | ) | ||||||
Less depreciation, amortization and impairment | (148,680 | ) | (147,891 | ) | (26,025 | ) | ||||||
GAAP gross profit | 50,723 | 83,984 | 47,127 | |||||||||
Depreciation, amortization and impairment | 148,680 | 147,891 | 26,025 | |||||||||
Adjusted gross profit (1) | $ | 199,403 | $ | 231,875 | $ | 73,152 | ||||||
Drilling Products | ||||||||||||
Revenues | $ | 89,973 | $ | 88,109 | $ | - | ||||||
Less direct operating costs | (48,630 | ) | (49,484 | ) | - | |||||||
Less depreciation, amortization and impairment | (27,182 | ) | (31,392 | ) | - | |||||||
GAAP gross profit | 14,161 | 7,233 | - | |||||||||
Depreciation, amortization and impairment | 27,182 | 31,392 | - | |||||||||
Adjusted gross profit (1) | $ | 41,343 | $ | 38,625 | $ | - | ||||||
Other | ||||||||||||
Revenues | $ | 17,817 | $ | 18,253 | $ | 20,807 | ||||||
Less direct operating costs | (11,178 | ) | (10,712 | ) | (11,282 | ) | ||||||
Less depreciation, depletion, amortization and impairment | (5,411 | ) | (6,291 | ) | (7,323 | ) | ||||||
GAAP gross profit | 1,228 | 1,250 | 2,202 | |||||||||
Depreciation, depletion, amortization and impairment | 5,411 | 6,291 | 7,323 | |||||||||
Adjusted gross profit (1) | $ | 6,639 | $ | 7,541 | $ | 9,525 | ||||||
We define "Adjusted gross profit" as revenues less direct operating costs (excluding depreciation, depletion, amortization and impairment expense). Adjusted gross profit is included as a supplemental disclosure because it is a useful indicator of our operating performance.
PATTERSON-UTI ENERGY, INC.
Non-GAAP Financial Measures
Drilling Services Adjusted Gross Profit
(unaudited, dollars in thousands)
| Three Months Ended | ||||||||
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
U.S. Contract Drilling | ||||||||
Revenues | $ | 393,339 | $ | 393,296 | ||||
Less direct operating costs | (215,107 | ) | (216,219 | ) | ||||
Less depreciation, amortization and impairment | (85,926 | ) | (85,966 | ) | ||||
GAAP gross profit | 92,306 | 91,111 | ||||||
Depreciation, amortization and impairment | 85,926 | 85,966 | ||||||
Adjusted gross profit (1) | $ | 178,232 | $ | 177,077 | ||||
Operating days - U.S. (2) | 11,024 | 10,841 | ||||||
Average revenue per operating day - U.S. (2) | $ | 35.68 | $ | 36.28 | ||||
Average direct operating costs per operating day - U.S. (2) | $ | 19.51 | $ | 19.94 | ||||
Average adjusted gross profit per operating day - U.S. (2) | $ | 16.17 | $ | 16.33 | ||||
Other Drilling Services | ||||||||
Revenues | $ | 64,234 | $ | 70,302 | ||||
Less direct operating costs | (56,630 | ) | (60,220 | ) | ||||
Less depreciation, amortization and impairment | (6,419 | ) | (5,985 | ) | ||||
GAAP gross profit | 1,185 | 4,097 | ||||||
Depreciation, amortization and impairment | 6,419 | 5,985 | ||||||
Adjusted gross profit (1) | $ | 7,604 | $ | 10,082 | ||||
We define "Adjusted gross profit" as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). Adjusted gross profit is included as a supplemental disclosure because it is a useful indicator of our operating performance.
Operational data relates to our contract drilling business. A rig is considered to be operating if it is earning revenue pursuant to a contract on a given day.
PATTERSON-UTI ENERGY, INC.
Non-GAAP Financial Measures
Adjusted Net Income and Adjusted Earnings Per Share
(unaudited, in thousands, except per share data)
| Three Months Ended March 31, 2024 | ||||||||||||||||
| As Reported | Adjusted | |||||||||||||||
| Total | Per Share | Total | Per Share (1) | |||||||||||||
Net income attributable to common stockholders as reported | $ | 51,235 | $ | 0.13 | $ | 51,235 | $ | 0.13 | ||||||||
Reverse certain item: | ||||||||||||||||
Merger and integration expense | 12,233 | |||||||||||||||
Income tax benefit | (2,569 | ) | ||||||||||||||
Net income attributable to common stockholders | $ | 51,235 | $ | 0.13 | $ | 60,899 | $ | 0.15 | ||||||||
Weighted average number of common shares outstanding, excluding non-vested shares of restricted stock | 408,182 | 408,182 | ||||||||||||||
Add dilutive effect of potential common shares | 1,637 | 1,637 | ||||||||||||||
Weighted average number of diluted common shares outstanding | 409,819 | 409,819 | ||||||||||||||
Federal statutory tax rate | 21.0 | % | ||||||||||||||
We define adjusted net income as net income attributable to common stockholders as reported, excluding merger and integration expense, less income tax benefit. We present adjusted net income and adjusted earnings per share in order to convey to investors our performance on a basis that, by excluding merger and integration expense, is more comparable to our net income and earnings per share information reported in previous periods. Adjusted net income and adjusted earnings per share should not be construed as an alternative to GAAP net income and earnings per share.
SOURCE: Patterson-UTI Energy, Inc.
View the original press release on accesswire.com
FAQ
What was the total revenue reported by Patterson-UTI Energy for the first quarter of 2024?
What is the adjusted net income attributable to common stockholders for the first quarter of 2024?
What is the quarterly dividend declared by Patterson-UTI Energy for the first quarter of 2024?
What is the remaining share repurchase authorization for Patterson-UTI Energy?
