Pason Systems Q2 2024 Update $PSI.to
Quick update after Q2 2024
*Disclosure: I own shares in PSI.to. I am not a professional. Please do your own due diligence.
Price: $14.50 CAD
MC: 1.12 billion CAD
EV: 1.1 billion CAD
Yield: 3.6%
1 year performance: +6.6% (not including dividends)
After PSI, I am all caught up on earnings.
PSI reported last week and held a call. Results were a bit behind my expectations and the stock was down 4-5% over the next couple of trading days.
*all numbers in CAD unless stated otherwise
Quarter Recap
Consolidated revenue at 95.9 million vs 84.7 million last year.
Up 13%.
North America revenue was 63.8 million vs 67.3 million.
Down 5%.
International revenue of 15.3 million vs 15 million.
Up 2%.
Completions (IWS) revenue of 13.7 million.
Up 7% sequentially.
29 active jobs.
EBITDA came in at 33.1 million vs 37.9 million last year.
Call Notes
IWS hit by low nat gas market and M&A in the sector.
More than half of their top 10 customers are acquirers and go through some capital discipline as they sort out assets.
They are confident in IWS medium and long term.
Mud analyzer rollout going as expected.
Still confident in core drilling business to grow 6-7% annually over time.
Valuation
I am lowering my expectations for 2024 and 2025 given the slow ramp in IWS and lower overall activity. I have them at 6.7x EV/2024 EBITDA and 5.5x EV/2025 EBITDA.
Closing Thoughts
IWS is not ramping as quick as I had originally hoped. Overall industry activity lower than I expecting as well. They are still a premium name and I think deserve a better multiple than the industry. Thought they are trading at a better multiple than most, I still think there is room for some multiple expansion. I expect overall industry activity to increase in the next couple of years and like PSI here. The overexposure to nat gas compared to my other names is exactly why I have a basket of OFS cos.
I continue to hold my shares.
Thanks for reading.
Dean
* long PSI.to