Geodrill Q3 2024 Update - GEO.to
Quick update after Q3 2024
*Disclosure: I own shares in GEO.to. I am not a professional. Please do your own due diligence.
Price: $2.87 CAD / $2.02 USD
MC: 96.6 million USD
EV: 92.7 million USD
1 year performance: +55%
GEO reported yesterday morning and held a call. Results were a bit ahead of my expectations and the stock was essentially flat on the day.
*all numbers in USD unless stated otherwise
Quarter Recap
Revenue came in at 34.1 million vs 30.1 million last year.
Up 13%.
EBITDA came in at 7.6 million vs 0.6 million last year.
Subsequent to end of the quarter they secured contracts in Chile totaling 49 million
Two very significant multi rig contracts signed.
After the quarter end they started drilling Chile and Peru long term contracts that were announced earlier in the year.
They ended the quarter with 95 rigs.
Call Notes
The contract signed after the quarter end was with a new Tier 1 customer.
They secured a multi rig extension with an existing customer.
The business looks like it has lots of visibility for the next 2-3 years from here.
The growth in revenue so far this year is primarily from Africa. The rigs in Chile are just starting work and did not contribute materially to revenue.
It sounds like they will continue to expand the rig fleet due to the strong demand.
Capital allocation focus on paying off debt and capex. A buyback vs dividend was discussed on the call, but nothing confirmed either way.
Valuation
I have them at about 7x EV/ttm FCF and 3.1 EV/tm EBITDA. And less than 3x EV/2025 EBITDA (my estimates).
Closing Thoughts
It’s nice to see the business rebounding. The balance sheet looks better every quarter. The contract wins year to date demonstrate the demand for their rigs and give some visibility into the business. I continue to hold my shares.
Thanks for reading.
Dean
* long GEO.to