Executive Summary

Q1 2024 revenue was $46.6M, adjusted EBITDA $11.8M, and diluted EPS was -$0.62; management said results were “ahead of expectations” due to cost control and organizational changes implemented early in the quarter .
Dayrates rolled down as legacy contracts recontracted, reducing revenue/day to $30,313 and rig margin/day to $11,829; utilization was 58% on 1,376 revenue days, broadly flat vs Q4 .
Guidance: Q2 rig operating margin/day expected to fall ~15% sequentially; average rigs ~15; backlog is $69.4M with ~70% expiring in 2024 .
Street estimates from S&P Global were unavailable for ICD this quarter (consensus data mapping not found); therefore, beats/misses vs consensus cannot be assessed (S&P Global estimates unavailable).

What Went Well and What Went Wrong

What Went Well

Cost discipline: SG&A fell to $4.3M (incl. $0.3M non-cash), down from $5.7M in Q4 and $6.7M YoY, driven by cost-cutting initiatives early in Q1 .
Operational repositioning: Two rigs moved from Haynesville to Permian and one 200-to-300 series conversion completed; only one operating 200 series rig remains, scheduled for conversion later this year .
Sequential EBITDA improvement: Adjusted EBITDA rose to $11.8M from $9.9M in Q4, as per-day costs improved and operations stabilized .

What Went Wrong

Dayrate pressure: Revenue/day declined to $30,313 from $31,508 in Q4 and $34,870 YoY as legacy contracts rolled to current market rates, compressing margins .
Lower utilization and activity: Utilization was 58% and revenue days were 1,376, down from 1,744 YoY; average rigs working were 15.1 vs 19.4 YoY .
Interest burden: Interest expense was $9.9M, including $2.7M non-cash amortization; net loss was -$9.0M, and management elected to pay PIK interest on the Convertible Notes due September 30, 2024, highlighting financing constraints .

Financial Results

Income Statement and Profitability (trend)

Metric	Q3 2023	Q4 2023	Q1 2024
Revenue ($USD Millions)	$44.2	$45.8	$46.6
Net Income (Loss) ($USD Millions)	-$7.6	-$25.95	-$8.99
Diluted EPS ($USD)	-$0.54	-$1.84	-$0.62
Adjusted Net Income (Loss) ($USD Millions)	-$5.24	-$8.64	-$7.27
Adjusted EBITDA ($USD Millions)	$12.91	$9.88	$11.78

Unit Economics

Metric	Q3 2023	Q4 2023	Q1 2024
Revenue per Operating Day ($)	$32,925	$31,508	$30,313
Cost per Operating Day ($)	$18,920	$19,195	$18,484
Rig Margin per Operating Day ($)	$14,005	$12,313	$11,829

Activity and Balance Sheet KPIs

Metric	Q3 2023	Q4 2023	Q1 2024
Rig Operating Days	1,229	1,370	1,376
Average Operating Rigs	13.4	14.9	15.1
Utilization (%)	51%	57%	58%
Adjusted Net Debt ($USD Millions)	$183.17	$179.14	$190.33

Year-over-Year Comparison (Q1)

Metric	Q1 2023	Q1 2024
Revenue ($USD Millions)	$63.76	$46.64
Diluted EPS ($USD)	$0.00	-$0.62
Adjusted EBITDA ($USD Millions)	$21.41	$11.78
Rig Margin per Operating Day ($)	$15,665	$11,829
Revenue Days	1,744	1,376
Average Operating Rigs	19.4	15.1
Utilization (%)	75%	58%

Note: Estimates from S&P Global were unavailable for ICD this quarter; thus, no “vs consensus” column is shown (S&P Global estimates unavailable).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Rig Operating Margin per Day	Q1 2024	Down ~12–14% sequential (from Q4 call/PR outlook)	Actual: $11,829/day; Next: Q2 down ~15% sequential	Lower sequential trajectory signaled for Q2
Average Net Operating Rigs	Q1 2024 vs Q2 2024	Q1: ~15 rigs	Q2: ~15 rigs, with elevated rig churn but aiming to reduce internal churn	Maintained
Backlog (≥6-month terms)	Entering Q1 vs Entering Q2	$82.9M (75% expires 2024)	$69.4M (~70% expires 2024)	Lower
2024 Capex Budget (net of disposals)	FY 2024	~$18.2M	Q1 cash capex outlay: $8.2M (incl. $8.1M relating to 2023 deliveries)	Maintained budget; Q1 spend detailed
Cash SG&A Budget	FY 2024	$15.3M	Q1 SG&A $4.3M (incl. $0.3M non-cash); reductions from cost actions	Maintained budget; execution visible
Convertible Notes Interest	9/30/2024	Not specified previously	Company elected to pay PIK interest due 9/30/2024	New disclosure

Earnings Call Themes & Trends

Note: Q1 2024 earnings call transcript could not be retrieved due to a database inconsistency. Themes below reflect management disclosures from the Q1 press release and prior quarter materials.

Topic	Previous Mentions (Q-2: Q3 2023; Q-1: Q4 2023)	Current Period (Q1 2024)	Trend
Basin shift (Haynesville → Permian)	Transition and churn; end of Haynesville-to-Permian moves; dayrate pressure on early reactivations	Two additional rigs moved; further 200→300 conversion completed; last 200 series to convert later in 2024	Continued repositioning; fleet upgrade progressing
Dayrates and recontracting	Expected margin/day down ~14% in Q4→Q1 on recontracting	Revenue/day and margin/day down; Q2 margin/day expected down ~15% sequential	Ongoing pressure
Technology bundles adoption	>50% rigs earning technology bundle revenue exiting 2023	Not quantified in Q1 PR (implicitly continued focus)	Stable to improving (contextual)
Cost discipline	SG&A variability; Q4 SG&A $5.7M (incl. $1.2M non-cash) with cost actions	SG&A reduced to $4.3M; “ahead of expectations” due to cost control and org changes	Improving
Capital allocation/capex	2024 capex ~$18.2M; accelerated 200→300 conversions	Q1 capex $8.2M; conversion program continued	Executing within plan
Financing/refinancing	Special committee formed; refinancing window opens 9/18/2024	Electing PIK interest on 9/30/2024 payment; adjusted net debt $190.3M	Deleveraging constrained; liquidity managed

Management Commentary

“Our financial results for the first quarter came in ahead of expectations driven by strong cost control across the Company’s operating and support functions and organizational changes made early during the quarter.” – CEO Anthony Gallegos .
“During the quarter we relocated two additional rigs from the Haynesville to the Permian Basin and completed a 200-to-300 series conversion… we have scheduled our remaining 200 series rig for conversion later this year.” – CEO Anthony Gallegos .
“Looking forward, while we expect our reported net average working rigs during the second quarter to remain flat… we believe [longer-term programs] will reduce internal rig churn and create opportunities to increase our average operating rig count during the back half of the year.” – CEO Anthony Gallegos .

Q&A Highlights

Q1 2024 earnings call transcript was not accessible due to a database inconsistency; Q&A specifics and tone shifts cannot be cited from the transcript this quarter.

Estimates Context

S&P Global consensus estimates for Q1 2024 EPS, revenue, and EBITDA were unavailable for ICD due to a CIQ mapping issue; therefore comparisons to Wall Street consensus cannot be made this quarter (S&P Global estimates unavailable).

Key Takeaways for Investors

Margin pressure from recontracting is persisting: revenue/day and margin/day fell sequentially and YoY, with Q2 margin/day guided to decline ~15% sequentially .
Cost actions are driving tangible improvement: SG&A down and adjusted EBITDA improved sequentially despite rate pressure, underpinning the “ahead of expectations” result .
Fleet upgrading continues to support competitiveness: ongoing 200→300 series conversions and Permian repositioning align ICD with customer demand for higher-spec rigs .
Activity stable near term with potential back-half lift: average rigs expected ~15 in Q2 amid elevated churn; management targeting longer-term programs to reduce internal churn and potentially lift rig count later in 2024 .
Backlog moderated: $69.4M with ~70% expiring in 2024 vs $82.9M previously; contract visibility is shorter, increasing sensitivity to market dayrates .
Financing posture cautious: interest expense remains heavy; the company elected to PIK the September 30, 2024 Convertible Notes interest while evaluating refinancing alternatives later in 2024 .
Trading lens: narrative hinges on execution of cost reduction, contract mix improvement, and stabilization of dayrates; watch Q2 margin/day trajectory and backlog replenishment for stock catalysts .

Independence Contract Drilling, Inc. (ICD)·Q1 2024 Earnings Summary