Pason Systems Q1 2025 Update - $PSI.to

Quick update after Q1 2025

*Disclosure: I own shares in XX. I am not a professional. Please do your own due diligence.

Price: $11.58 CAD

MC: 920 million CAD

EV: 835 million CAD

Yield: 4.5%

1 year performance: -27.5%

PSI reported Thursday night and held a call Friday morning. Results were ahead of my expectations and the stock was up 4.3 %.

*all numbers in CAD unless stated otherwise

Quarter Recap

• Revenue came in at 113.2 million vs 104.8 million last year

  • This was ahead of the 106 million analyst expectations

• EBITDA came in at 45.2 million vs 42.4 million last year

• North American drilling

  • Revenue of 75.7 million vs 73.6 or up 3%

  • EBITDA of 54.4 million vs 50.7

  • Revenue per industry day ticked up to 1,067 vs 1,000

  • They noted higher adoption in the press release

• International Drilling

  • Revenue of 14 mil vs 14.6 mil or down 4%

  • EBITDA of 6.7 mil vs 8.7 mil

  • A large customer in Argentina is pivoting from conventional wells to unconventional

• Completions

  • Revenue of 16 mil vs 12.8 mil or up 25%

  • EBITDA of 7.3 mil vs 5.6 mil

  • Active jobs up to 32 from 28

  • Revenue per IWS day at 5,486 vs 5,026

  • Q1 2024 was the first quarter with IWS under the Pason umbrella

• Solar and Energy Storage

  • Revenue at 7.4 mil vs 3.7 mil or up 98%

  • EBITDA at 1.9 mil vs 2.6 mil

• 16.7 million spent on capex in the quarter

  • Down from 19.3 last year

• They expect to spend about 65 million this year on capex

  • This is pretty much in line with last year

• They mentioned uncertainty in the short term with tariffs and trade, OPEC+ production plans and recession fears

Call Notes

• They noted the uncertainty in the market due to the tariff situation

  • They manufacture and repair on both sides of the border and have some flexibility.

  • The overall impact is not “overly significant”

• On the completions side of the business

  • They noted that M&A has settled down and we are seeing a bit of normalizing

  • Both new customers and existing customers are driving revenue higher

• Longer term on Argentina the potential is larger as the country transitions from conventional to unconventional wells

  • This will nudge them into adopting more technology and should increase the revenue per day for PSI there

• M&A doesn’t seem like it’s on their radar here as there is lots of opportunity inside the business

Valuation

I have them about 5.5x EV/ttm EBITDA. I am not sure what to make of the next couple of quarters for any OFS cos. The value is really a couple years down the road.

Closing Thoughts

I think PSI is a very high quality company inside the O&G industry. Their technology is in high demand as producers look to gain efficiency in their operations. I like the focus on growing the business organically from here.

I think this is a decent place to build a position. I own PSI in a basket of OFS cos.

Thanks for reading.

Dean

* long PSI.to