Phxtech: PHX Energy Announces All-Time Record Fourth Quarter and Annual Revenue and Strong Financial Results

In This Article: PHX Energy Services Corp. CALGARY, Alberta, Feb. 25, 2025 (GLOBE NEWSWIRE) -- Fourth Quarter Highlights Year End Highlights For the year ended December 31, 2024, the Corporation generated annual consolidated revenue of $659.7 million which is the highest annual revenue in the Corporation's history (2023 - $656.3 million). Consolidated revenue in the 2024-year included $38.4 million of motor rental revenue (2023 - $47 million) and $11.2 million of revenue generated from the sale of motor equipment and parts (2023 - $11 million). The Corporation's US division achieved annual revenue of $479.5 million, only 3 percent lower than the record $496.5 million set in 2023. US division revenue in the 2024-year represented 73 percent of consolidated revenue (2023 - 76 percent). PHX Energy's Canadian division generated annual revenue of $180.2 million (2023 - $159.8 million), the highest level achieved since 2014. For the year-ended December 31, 2024, adjusted EBITDA (1) was $123.7 million, 19 percent of consolidated revenue and the second highest level in the Corporation's history, as compared to the record $150.7 million, 23 percent of consolidated revenue in 2023. Included in the 2024-year's adjusted EBITDA is $24.6 million of net gain on disposition of drilling equipment, a decrease compared to $31.3 million in 2023, and a $2.2 million write-down of inventory to its net realizable value at the end of 2024. Apart from the lower net gain on disposition of drilling equipment and write-down of inventory, the decline in profitability in the 2024-year was primarily due to generally increased equipment repair costs, weaker activity in the Corporation's high margin RSS and motor rental revenue streams in the US, and lower margins realized from the sale of motor equipment and parts. For the year-ended December 31, 2024, the Corporation recognized cash-settled share-based compensation expense of $11.8 million (2023 - $13.5 million). Adjusted EBITDA excluding cash-settled share-based compensation expense (1) in the 2024-year was $135.5 million, 21 percent of consolidated revenue (2023 - $164.2 million, 25 percent of consolidated revenue). In the 2024-year, earnings were $54.6 million, $1.16 per share as compared to $98.6 million, $1.96 per share in 2023. For the year-ended December 31, 2024, the Corporation recorded a tax provision of $15.7 million, an increase compared to $5.1 million in 2023. Additionally, depreciation and amortization expenses in the 2024 twelve-month period increased by 15 percent to $44.8 million (pre-tax) from $38.9 million (pre-tax) in 2023. For the year ended December 31, 2024, PHX Energy generated excess cash flow (2) of $47.6 million, after deducting net capital expenditures (2) of $46.5 million. In the 2024 twelve-month period, through its previous and current NCIB, the Corporation purchased and canceled 2,141,232 common shares for $20.6 million. Since the second quarter of 2017 to December 31, 2024, a total of 16.3 million common shares have been purchased and cancelled under PHX Energy's various NCIB's. This represents 28 percent of common shares outstanding as of June 30, 2017. It is the Corporation's intention to continue the current strategy of leveraging the NCIB as a tool to further reward shareholders through its Return of Capital Strategy ('ROCS"). PHX Energy paid $37.6 million in dividends in the 2024-year which is 24 percent higher than the dividend amount paid in 2023. The Board previously approved a preliminary 2025 capital expenditure budget of $50 million. With $2 million of the 2024 capital expenditure budget carried forward into 2025 and an additional $3 million in capital expenditures expected, the Corporation now anticipates spending $55 million in capital expenditures during 2025, which was recently approved by the Board. As at December 31, 2024, the Corporation had working capital ( 2 ) of $84.5 million and net debt ( 2 ) of $2.7 million. Financial Highlights (Stated in thousands of dollars except per share amounts, percentages and shares outstanding) Three-month periods ended December 31, Years ended December 31, 2024 2023 % Change 2024 2023 % Change Operating Results Revenue 178,676 165,332 8 659,663 656,341 1 Earnings 14,098 33,134 (57 ) 54,622 98,580 (45 ) Earnings per share - diluted 0.30 0.68 (56 ) 1.16 1.96 (41 ) Adjusted EBITDA (1) 29,638 35,388 (16 ) 123,734 150,717 (18 ) Adjusted EBITDA per share - diluted (1) 0.63 0.70 (10 ) 2.63 2.86 (8 ) Adjusted EBITDA as a percentage of revenue (1) 17 % 21 % 19 % 23 % Cash Flow Cash flows from operating activities 17,676 36,754 (52 ) 96,898 96,723 - Funds from operations (2) 24,305 28,167 (14 ) 99,695 119,317 (16 ) Funds from operations per share - diluted (3) 0.51 0.56 (9 ) 2.12 2.26 (6 ) Dividends paid per share (3) 0.20 0.15 33 0.80 0.60 33 Dividends paid 9,183 7,277 26 37,570 30,189 24 Capital expenditures (3) 15,714 15,474 2 83,277 64,932 28 Excess cash flow (2) 17,263 22,347 (23 ) 47,569 92,813 (49 ) Financial Position, December 31, Working capital (2) 84,545 93,915 (10 ) Net debt (Net cash) (2) 2,664 (8,869 ) n.m. Shareholders' equity 222,205 209,969 6 Common shares outstanding 45,506,773 47,260,472 (4 ) n.m. - not meaningful Outlook In the first two months of 2025, our US division is operating at robust activity levels. With our unique suite of technology and strong reputation, we believe our US operations will continue to produce strong financial results as we continue to focus on increased RSS utilization and our proprietary Real Time RSS Communication technology. In addition, we anticipate a slight uptick in the US rig count which will also be beneficial for growth in the year ahead. In 2025 we will continue to dedicate resources towards our Atlas motor rental business and believe we will see growth as we expand our fleet capacity further beyond the demand within our full-service division. Additionally, the division's reputation will become more established as more operators experience the reliability and power advantages of our Atlas motors. In the sales division of our Atlas business, we foresee incremental increases in revenue in line with our customers' 2024 fleet expansion as their part requirements will increase. Although the timing of orders for parts is difficult to predict as it is based on customers' activity levels and service cycles. Thus far in the first quarter of 2025, our Canadian operations have seen higher activity levels and the first quarter is typically the strongest for this division. With this promising start to the year, we are cautiously optimistic that our Canadian operations will continue to produce strong results in 2025, especially with the addition of owned RSS technology and the associated Real Time RSS Communication technology. We have held an enviable market share position in Canada for numerous years and believe we will be able to maintain this position while also increasing the high margin RSS portion of activity as in the first quarter we have already seen more demand. In 2025, we will strive to improve our profitability through our high margin businesses and internal efficiencies. Although, the potential of tariffs and changes to the global trade environment could impact our supply chain and demand for services. We are monitoring the situation closely and our team is developing contingency plans where possible in our supply chain to reduce the impact of tariffs that may be enacted. We will remain committed to our ROCS to reward shareholders, leveraging our dividend and NCIB programs. We have paid $184 million in dividends since 2011 which equates to $4.93 per share. Under our NCIB programs, 28 percent of common shares outstanding as at June 30, 2017 have been purchased and cancelled. It is our intention to continue the current strategy of leveraging the NCIB as a tool to further reward shareholders and there are approximately 2.3 million shares remaining for purchase prior to its expiry in August of this year. We foresee generating improved excess cash flow in the 2025-year and therefore anticipate distributions made under ROCS will remain within the 70 percent of excess cash flow target. Michael Buker, President February 25, 2025 Overall Performance In the fourth quarter of 2024, PHX Energy reported its highest level of quarterly revenue in the Corporation's history, generating consolidated revenue of $178.7 million (2023-quarter - $165.3 million). With increased capacity in its premium technology fleet and continued strong demand for the Corporation's unique technology offering, activity in both the US and Canadian divisions outperformed industry activity trends, which helped drive the 8 percent gain in revenue. For the three-month period ended December 31, 2024, the Corporation's US division's revenue increased by 8 percent to a record $132.3 million compared to $122.1 million in the same 2023-quarter. The US industry's rig count declined by 6 percent compared to the fourth quarter of 2023. In comparison, PHX Energy's US operating days (3) saw a modest increase of 8 percent to 4,438 days from 4,114 in the 2023-quarter. The US division's average revenue per day (3) for directional drilling services slightly decreased by 2 percent quarter-over-quarter. Without the impact of foreign exchange, the average revenue per day for directional drilling services was down 6 percent. Softer industry activity levels in the 2024-period had a more direct impact on the Corporation's US motor rental activity and partly caused the US motor rental revenue to decrease to $9.2 million from $9.9 million in the same period in 2023. In the 2024-quarter, the US division generated $5.3 million of revenue from motor equipment and parts sold (2023-quarter - $0.9 million). Revenue from the Corporation's US division in the 2024-quarter represented 74 percent of consolidated revenue (2023 - 74 percent). The Corporation's Canadian division generated its highest level of fourth quarter revenue since