Sign in
PU

PATTERSON UTI ENERGY INC (PTEN)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue of $1.22B slightly exceeded consensus, while EPS of -$0.13 missed due to a $28M non-cash impairment tied to Colombian drilling; Adjusted EBITDA fell sequentially and year-over-year, reflecting softer completions and segment mix .
  • Management guided Q3 to mid-90s average rig count, Drilling Services adjusted gross profit of ~$130M, and steady sequential adjusted gross profit in Completion Services; SG&A to decline slightly and DD&A/impairment about $230M .
  • Technology adoption remained a bright spot: higher sequential revenue from drilling automation and progress deploying Vertex frac automation (Bakken/Appalachia), FleetStream digital, and Lateral-Science ML; Drilling Products delivered another record U.S. revenue per U.S. industry rig .
  • Capital allocation remained balanced: $46M returned via $0.08 dividend and $16M buybacks; FY25 capex guided to < $600M with maintenance reduced amid slightly lower activity, and free cash flow expected to accelerate in H2 .
  • Near-term stock catalysts: revenue beat vs. estimates but EPS miss on impairment, steady Q3 completion outlook against a mixed macro, and increasing digital/automation attachment that enhances resiliency and returns .

What Went Well and What Went Wrong

What Went Well

  • Higher sequential revenue from drilling automation technologies (Cortex auto-driller, REX early alert), with growing demand for proprietary products enhancing rig performance and customer stickiness .
  • Completions technology milestones: Vertex frac pump controls automation successfully deployed in the Bakken and Appalachia; on track for fleet-wide deployment by year-end 2025, supported by FleetStream real-time data and Lateral-Science ML .
  • Drilling Products posted record U.S. revenue per U.S. industry rig, with steady international gains (Middle East, offshore penetration) and resilience through performance-based agreements .

What Went Wrong

  • Reported net loss of $49M and diluted EPS of -$0.13, driven by a $28M impairment in Colombian drilling operations, overshadowing a modest top-line beat .
  • Completion Services adjusted gross profit declined to $100M; calendar white space from customer-specific gaps required spot work to fill utilization, compressing profitability vs. year-ago .
  • Guidance implies lower Q3 Drilling Services rig count (mid-90s) and reduced segment adjusted gross profit (~$130M) amidst moderating oil-basin activity and basin-to-basin movement increasing costs .

Financial Results

Consolidated Financials vs Prior Periods

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Billions)$1.35 $1.28 $1.22
Diluted EPS ($USD)$0.03 $0.00 -$0.13
Adjusted EBITDA ($USD Millions)$323.7 $251.2 $231.2
Adjusted EBITDA Margin %24.0% 19.6% 19.0%

Actual vs S&P Global Consensus (Q2 2025)

MetricActualConsensusSurprise
Revenue ($USD Billions)$1.22 $1.21*+0.9%*
Diluted EPS ($USD)-$0.13 -$0.04*Miss (-$0.09)*
EBITDA ($USD Millions)260.7*227.3*Beat (+$33.3M, +14.7%)*

Values retrieved from S&P Global.*

Segment Breakdown (Revenue and Adjusted Gross Profit)

SegmentQ2 2024 Revenue ($MM)Q2 2024 Adj GP ($MM)Q1 2025 Revenue ($MM)Q1 2025 Adj GP ($MM)Q2 2025 Revenue ($MM)Q2 2025 Adj GP ($MM)
Drilling Services$440.3 $178.8 $412.9 $165.2 $403.8 $149.0
Completion Services$805.4 $152.1 $766.1 $108.4 $719.3 $100.2
Drilling Products$86.1 $39.9 $85.7 $38.7 $88.4 $39.1
Other$16.5 $6.2 $15.9 $6.8 $7.8 $1.6

KPIs

KPIQ2 2024Q1 2025Q2 2025
U.S. Operating Days (Contract Drilling)10,388 9,573 9,465
Avg Rigs Working (Qtr)——104
Term Contract Future Dayrate Revenue ($MM)—$407 $312
Rigs under Term (forward)—Avg 62 in Q2’25; 35 over four qtrs ending Mar-26 Avg 48 in Q3’25; 27 over four qtrs ending Jun-26
Dividend per Share$0.08 $0.08 $0.08 declared; payable Sep 15, 2025
Adjusted Free Cash Flow ($MM, YTD/H1)—$50.7 (Q1) $70.2 (H1)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Drilling Services avg rig countQ3 2025—Mid-90s New (moderating)
Drilling Services adj. gross profitQ3 2025—~$130M New (lower vs Q2 actual)
Completion Services adj. gross profitQ3 2025—Steady vs Q2 New (maintained)
Drilling Products adj. gross profitQ3 2025—Slight improvement New (raised)
Other adj. gross profitQ3 2025—Roughly flat New (maintained)
SG&A expenseQ2 2025 / Q3 2025~$65M (Q2 guide) Decline slightly in Q3 Maintained lower trajectory
DD&A and impairmentQ2 2025 / Q3 2025~ $230M (Q2 guide) ~ $230M in Q3 Maintained
FY 2025 Capital ExpendituresFY 2025~$600M < $600M; maintenance capex reduced Lowered maintenance
DividendQ2/Q3 2025$0.08 declared for Q2 $0.08 declared; payable Sep 15, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Digital drilling automation (Cortex, REX)Tier-1 rig performance, high adjusted GP/day; integration strategy; steady drilling activity Higher sequential revenue from automation; growing ML apps; broader customer acceptance Strengthening adoption
Completions automation (Vertex)Emerald HP to surpass 200k by mid-2025; 80% fleet nat gas capable Vertex deployed in Bakken/Appalachia; fleet-wide deployment by YE25; Emerald & Tier IV DGB fully utilized Scaling deployment
Macro/rig countStable oil activity; nat gas balancing; Q1 DS avg 106 rigs guide Rig count mid-90s in Q3; potential stabilization in Q4; LNG demand into 2026 Near-term moderation; medium-term constructive
Drilling Products/UlterraSteady 2024; innovation driving resilience Record U.S. revenue per U.S. industry rig; gains in Middle East/Canada; Maverick bit traction Outperforming peers
Capital allocationFY25 capex ~$600M; 50%+ FCF returns target FY25 capex < $600M; $46M returns in Q2; H2 FCF acceleration expected Discipline + tech focus

Management Commentary

  • “We are seeing growing demand for our proprietary products that enhance the drilling process, including our Cortex® Automation Platform... and our cloud-based, REX® early alert, field monitoring system.”
  • “We successfully deployed our proprietary Vertex™ frac pump controls automation in both the Bakken and Appalachia... on track to complete fleet-wide deployment... by the end of 2025.”
  • “Our balance sheet remains a key strategic advantage... We expect free cash flow will accelerate in the second half of 2025...”
  • CFO: “Total reported revenue... $1,219,000,000... net loss... $49,000,000... included a $28,000,000 impairment related to our drilling operations in Colombia.”

Q&A Highlights

  • Completion outlook: Q3 steady despite macro softness; Q4 likely seasonal decline but not necessarily steep given customer plans and LNG tailwinds into 2026 .
  • Rig count: Potential stabilization in Q4; basin movement increases costs, pressuring DS margin per day; super-spec rig pricing relatively steady in low-to-mid $30Ks with rising demand for digital overlays .
  • Emerald fleet strategy: 100% nat gas recip direct-drive seen as more capital efficient than large electric+turbine systems; premium pricing persists; further adds planned on a returns-driven basis .
  • Ulterra/Drilling Products: Gains in Middle East and offshore; market share resilience in softer activity via higher-tech bits and downhole tools .
  • Cost and systems: ERP consolidation (3 to 1), facilities, and headcount adjustments to improve efficiency and take cost out .

Estimates Context

  • Q2 2025 revenue modestly beat consensus ($1.22B actual vs $1.21B*) and EBITDA beat ($260.7M* vs $227.3M*), but EPS missed (-$0.13 actual vs -$0.04*) due to impairment .
  • Prior periods show similar pattern: Q1 2025 actual revenue of $1.28B exceeded the $1.19B* consensus, while EBITDA was near estimates; Q2 2024 revenue underperformed vs consensus as activity softened .
  • Implication: Street likely revises near-term EPS and DS margins lower to reflect basin movement and impairments, but maintains medium-term EBITDA/FCF trajectory on strong digital/automation attach and resilient super-spec pricing.*

Values retrieved from S&P Global.*

S&P Global Consensus Snapshots

MetricQ2 2024Q1 2025Q2 2025
Revenue Consensus Mean ($MM)1,424.3*1,188.0*1,207.99*
Primary EPS Consensus Mean ($)0.085*-0.0428*-0.0411*
EBITDA Consensus Mean ($MM)328.3*234.6*227.33*
Primary EPS - # of Estimates12*10*12*
Revenue - # of Estimates14*9*12*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue resilience amid macro volatility, but EPS vulnerability to one-off impairments suggests near-term earnings variability; focus on cash generation and adjusted metrics .
  • Q3 setup: DS rigs mid-90s and ~$130M adj. gross profit, with steady completions; near-term DS margin pressure from basin mix and movement costs .
  • Technology edge is increasingly monetized: Cortex/REX driving drilling revenues; Vertex automation scaling across fleets; expect rising digital attachment and performance-based pricing .
  • Completions capacity bifurcation: Emerald and Tier IV DGB fleets remain fully utilized with premium pricing; lower-tier diesel likely exits industry, improving overall balance .
  • Capital discipline: FY25 capex < $600M with reduced maintenance; H2 FCF acceleration anticipated—supports dividends/buybacks and selective tech investment .
  • Medium-term thesis: LNG-driven gas activity uplift into 2026, international/product exposure via Ulterra, and integrated digital platform should enhance returns through cycle .
  • Trading implications: Watch for any incremental Q4 softness vs expectations in completions; stock likely sensitive to evidence of DS stabilization and ongoing tech revenue momentum .