Pason Systems Quick Update - $PSI.to
Quick update after Q1 2024
*Disclosure: I own shares in PSI. I am not a professional. Please do your own due diligence.
Price: $15.78 CAD
MC: 1.26 billion
EV: 1.19 billion
Yield: 3.3%
1 year performance: +40%
Pason reported Thursday after the close and held a call yesterday morning. Results were a bit behind my expectations and the stock ended down 1% on the day.
Quarter Recap
Consolidated revenue at 104.7 million.
Up 7% from prior year.
The new Completions segment (formed after the acquisition of IWS) was 12.8 million.
Without it revenue would have been down.
Adj EBITDA at 42.4 million vs 52.4 million last year.
There was a gain on their previous position in IWS of 50.7 million.
North American Drilling revenue was at $1,000 per industry day. A new milestone.
This is pretty solid given the activity levels were down about 15%.
Capex was high, but there was some carryover from 2023 and investment in IWS.
Call Notes
They are still keeping the expectations of 20-25 million in revenue from IWS. I was shocked given the revenue of 12.8 in Q1.
Their growth opportunities in revenue per industry day in North America. Feel they can grow with pricing and providing more valuable data to users.
They have some adoption opportunities to growth International revenue.
Closing Thoughts
This was our first look at IWS as part of Pason. I was surprised by the revenue number. I was thinking they would be a bit more positive on the call with IWS numbers for the rest of the year. I can see them upping guidance relating to IWS/Completions after Q2.
Overall PSI is delivering well. The revenue per industry day is solid given activity levels. It helps me sleep a bit easier knowing that we shouldn’t see a bit drop in the top line from here.
Valuation
I have them at about 6.6x EV/2024 EBITDA which is fair. PSI deserves to trade at a premium to other service companies. Though I also feel other services companies are trading too cheap, so maybe we get multiple expansion that is more broad based. Or maybe we don’t. I am holding my position here. I can see adding with another strong quarter from IWS.
Thanks for reading.
Dean
* long PSI.to