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PATTERSON UTI ENERGY INC (PTEN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $1.176B and diluted EPS was −$0.10; adjusted EBITDA was $219M. Results reflected resilient margins despite moderated activity; legal accruals ($20M) and higher repair costs in Drilling Products weighed on GAAP earnings .
  • Versus estimates, PTEN modestly beat on revenue ($1,175.954M vs $1,170.923M*) and delivered a smaller loss per share than expected (−$0.054 vs −$0.086*). Beats were driven by steady U.S. drilling outside Permian, cost actions in completions, and strong directional drilling/product integration .
  • Q4 2025 guidance: Drilling Services adjusted gross profit down ~5% sequentially; Completion Services adjusted gross profit ~$85M; Drilling Products slight improvement; DD&A ~$225M; capex ~$140M. Full‑year 2025 capex lowered to “below $600M,” before $33M asset sales realized YTD .
  • Capital returns remain a priority: Q3 returned $64M via $0.08 dividend and $34M buybacks; board declared $0.08 dividend payable Dec 15, 2025. Management reiterated at least 50% of annual free cash flow to shareholders and optionality to accelerate buybacks .

What Went Well and What Went Wrong

What Went Well

  • “Margin performance across Patterson-UTI is outpacing what we have historically seen in periods of activity moderation,” supported by integration, performance-based agreements, and technology edge; management expects “relative margin resiliency to continue” .
  • Completions: record continuous pumping (348 hours) and deployment of EOS (Vertex Automation Controls, Fleet Stream, IntelliStim). Pricing per horsepower hour held steady, with margin gains from efficiency and cost reductions; two EOS commercial deals signed for 2026 .
  • Directional drilling and Drilling Products: strong U.S./Canada performance; U.S. revenue per industry rig at a company record; ~40% improvement since Ulterra acquisition and >10% market share gain on PTEN rigs .

What Went Wrong

  • GAAP net loss of $36.4M (EPS −$0.10) driven by $23M in other operating expenses (incl. $20M legal accruals) and moderated activity; sequential adjusted EBITDA down to $219M .
  • Permian softness: U.S. contract drilling rig count sequentially lower (average 95 rigs; 8,737 operating days), with pricing “decline… in general,” contributing to guided ~5% Q4 adjusted gross profit decline in Drilling Services .
  • Drilling Products margins pressured by higher-than-normal bit repair expense early in the quarter (July); margins recovered later but still impacted Q3 profitability .

Financial Results

Consolidated Performance vs Prior Year and Quarter

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$1,357.222 $1,219.320 $1,175.954
Diluted EPS ($USD)−$2.50 −$0.13 −$0.10
Net Income (Loss) Attributable to Common ($USD Millions)−$978.761 −$49.144 −$36.402
Adjusted EBITDA ($USD Millions)$275.274 $226.631 $218.654

Notes: Q3 2024 included an $885M goodwill impairment in Completion Services .

Actuals vs S&P Global Consensus (Q3 2025)

MetricEstimate*Actual
Revenue ($USD Millions)$1,170.923*$1,175.954
Primary EPS ($USD)−$0.086*−$0.054 (diluted EPS −$0.10 per share; adjusted net loss −$20.5M)

Estimates count: Revenue (11*), EPS (9*).
*Values retrieved from S&P Global.

Segment Breakdown

SegmentQ3 2024 Revenue ($MM)Q2 2025 Revenue ($MM)Q3 2025 Revenue ($MM)Q3 2024 Adj. Gross Profit ($MM)Q2 2025 Adj. Gross Profit ($MM)Q3 2025 Adj. Gross Profit ($MM)Q3 2024 Op. Inc (Loss) ($MM)Q2 2025 Op. Inc (Loss) ($MM)Q3 2025 Op. Inc (Loss) ($MM)
Drilling Services$421.563 $403.805 $380.200 $170.686 $149.033 $133.793 −$34.395 $40.602 $37.124
Completion Services$831.567 $719.332 $705.275 $127.758 $100.249 $111.157 −$908.665 (incl. goodwill impairment) −$29.248 −$27.722
Drilling Products$89.102 $88.390 $85.880 $41.958 $39.055 $35.615 $9.136 $6.820 $5.803
Other$14.990 $7.793 $4.599 $4.913 $1.620 $1.556 −$3.573 −$2.000 $0.810

KPIs and Cash/Capex

KPIQ3 2024Q2 2025Q3 2025
U.S. Contract Drilling Operating Days9,870 9,465 8,737
Average Operating Rig Count (U.S.)—104 95
Total Capex ($USD Millions)$180.587 $144.206 $144.479
Adjusted Free Cash Flow YTD ($USD Millions)——$146.332 (nine months)
Cash & Equivalents ($USD Millions)——$186.913
Shareholder Returns in Quarter ($USD Millions)—$46 (Q2) $64

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Drilling Services Adjusted Gross ProfitQ4 2025—Down ~5% q/q New detail (sequential decline)
Completion Services Adjusted Gross ProfitQ4 2025—~$85M; less seasonality vs Q4 2024 New detail
Drilling Products Adjusted Gross ProfitQ4 2025—Slight improvement vs Q3 New detail
SG&A ExpenseQ4 2025—Relatively steady q/q New detail
DD&AQ4 2025Q3 guide ~$230M ~$225M Lowered
CapexQ4 2025—~$140M New detail
2025 Full‑Year CapexFY 2025Net < $600M Below $600M before $33M asset sales; “updated… lower than previously expected” Lowered
DividendQ4 2025$0.08 declared cadence $0.08 per share payable Dec 15, 2025 Maintained

Earnings Call Themes & Trends

TopicQ1 2025 (Prior Two Quarters)Q2 2025Q3 2025 (Current)Trend
AI/Technology (Cortex, Vertex, EOS; P10 Digital Performance Center)Cortex/automation emphasized; Vertex testing; digital backbone strategy EOS rollout and steady deployment; digital revenues growing; ERP consolidation for efficiency EOS platform advanced with Vertex Controls, Fleet Stream, IntelliStim; two EOS contracts signed for 2026; full deployment by year‑end Accelerating adoption/monetization
Macro/LNG & Gas OutlookConstructive gas outlook; Haynesville ramp; >80% fleet gas-capable Customers planning for LNG take‑away; expect gas upside into 2026 Gas upside in 2026 (LNG physical demand); steady near‑term activity Improving medium‑term
Rig Pricing/Drilling ActivityLow single-digit drilling pricing declines; steady rigs into Q2 Leading edge dayrates low-to-mid $30k; mid‑90s rig count expected in Q3 Slight pricing softening; stabilization expected post-Q4 Stable-to-slightly softer
Power/Data Center (Microgrids, EcoCell)Case-by-case capital deployment in power; focus on free cash returns Optionality discussed; cautious allocation Power opportunity “TBD”; significant technical expertise; avoid EPC-scale low-return projects Exploratory, disciplined
International (Saudi, Canada)International steady; Canada seasonal Middle East gains; Canada spring breakup impact Saudi slowdown; expect Q4 international improvement; Canada steady Mixed; improving Q4
Cost Discipline/IntegrationIntegration benefits; high-grade assets; capital stewardship ERP consolidation; cost takeout ongoing Efficiency gains and cost reductions boosting margins in completions; legal accrual one-off Improving structural efficiencies

Management Commentary

  • “Margin performance… is outpacing what we have historically seen in periods of activity moderation… We expect this relative margin resiliency to continue.” — Andy Hendricks, CEO .
  • “Our low leverage and strong liquidity give us significant flexibility… we will continue to deploy capital only towards opportunities we believe will deliver high long-term returns… including the option to further accelerate our share repurchase program.” — Andy Smith, CFO .
  • “Our emerald fleet of 100% natural gas‑powered equipment remains in high demand… direct‑drive pumps… deliver 100% natural gas‑powered solutions… for significantly less capital… scheduled to begin long-term dedicated work in the fourth quarter.” — CEO .
  • “We remain committed to returning at least 50% of our annual free cash flow to shareholders… net debt to EBITDA just over one time; $187M cash and undrawn $500M revolver.” — CEO/CFO .

Q&A Highlights

  • Completion pricing resilience: despite peer commentary on moderation, PTEN cited steady horsepower-hour pricing and operational differentiation; record 348-hour continuous pumping in Northeast .
  • Emerald direct‑drive vs electric economics: direct‑drive projected ~25–30% lower capital deployed vs electric+turbines; competitive OpEx; aligns with capital-efficient growth and monetization of automation software .
  • Drilling Services outlook: slight pricing decline; average rig count steady; adjusted gross profit guided down ~5% in Q4 due to softer market and activity mix .
  • Power market optionality: significant technical capability in microgrids, but large EPC-like data center projects not a focus; prioritize high-return oilfield applications and free cash flow .
  • Capital returns: flexibility to exceed 50% free cash flow return; potential acceleration of buybacks; dividend maintained .

Estimates Context

  • Revenue: modest beat ($1,175.954M actual vs $1,170.923M estimate*). EPS: loss smaller than expected (−$0.054 actual vs −$0.086 estimate*). Nine revenue estimates and eleven EPS estimates indicate broad coverage; PTEN’s operational execution and cost actions likely drove the variance .
  • Areas for estimate revision: Q4 segment adjusted gross profit guidance (Drilling Services down ~5%; Completions ~$85M) and lowered FY25 capex likely to prompt minor EPS/cash flow updates for Q4 and FY25 .
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Margin resilience and technology moat: Integration plus EOS/Cortex automation are sustaining margins through activity moderation; expect continued monetization into 2026 .
  • Near-term setup: Q4 guide implies a modest sequential dip in Drilling Services margins and seasonality in completions; however, management expects strongest quarterly free cash flow in Q4, supporting capital returns .
  • Medium-term thesis: LNG-driven gas activity should accelerate in 2026; PTEN is positioned across Haynesville/Northeast and with gas-capable fleets to capture upside .
  • Capital discipline: FY25 capex lowered; direct‑drive investments appear more capital efficient than electric frac expansions; strengthens FCF and return potential .
  • Shareholder returns: commitment to ≥50% FCF to shareholders plus optionality to accelerate buybacks; $0.08 quarterly dividend sustained .
  • Risks: legal accruals and repair costs can pressure GAAP results; Permian softness and tender dynamics may weigh on near-term drilling margins .
  • Catalyst watch: Q4 FCF peak, EOS commercial wins, deployment of direct‑drive fleets, and any early 2026 gas activity signals (LNG take‑away) are potential stock catalysts .