Pason Systems Q3 2024 Update - PSI.to
Quick update after Q3 2024
*Disclosure: I own shares in PSI. I am not a professional. Please do your own due diligence.
Price: $15.08 CAD
MC: 1.2 billion CAD
EV: 1.1 billion CAD
Yield: 3.4%
1 year performance: +11% (not including dividends)
PSI reported yesterday after the close and held a call this morning. Results were a bit behind my expectations and the stock was up 2.4% at the time of writing.
*all numbers in CAD unless stated otherwise
Quarter Recap
Consolidated revenue came in at 105.9 million vs 93.1 last year.
This year included 12.5 million in revenue from Completions.
EBITDA of 44.1 million vs 42.3 million last year
North American drilling was strong with revenue of 74.1 million vs 72.2 million last year.
Revenue per industry day was 1,058 vs 975 last year.
International drilling revenue was flat at 15.3 million.
Completions revenue came in at 12.5 million.
Solar & Energy Storage (Energy Toolbase) seen revenue of 3.9 million.
Call Notes
Completions is more exposed to M&A activity in the industry. It’s ramping behind my original expectations.
Capex for 2024 to come in around 70 million which is down from the 75-80 guide.
Expected capex of 65 million in 2025.
They sound confident in the long term potential for Completions.
The mud analyzer sounds like it has quite high day rates and should help them with a 6-7% CAGR in day rates.
Valuation
I have them at 7.7x EV/ttm EBITDA and around 6.5x EV/my estimated 2025 EBITDA.
Closing Thoughts
Though the quarter was weaker than I expected, the business is performing well. They demonstrated that they can grow in a shrinking environment. The Completions side of the business is ramping behind my expectations, but I trust that they will deliver in the long term. Despite the exposure to such a cyclical industry, PSI is high quality. They have very strong margins and ROIC. I like the company as part of my OFS basket.
Thanks for reading.
Dean
* long PSI.to