Precision Drilling Corporation (NYSE:PDS) Q2 2023 Earnings Conference Call July 27, 2023 2:00 PM ET

Company Participants

Lavonne Zdunich - Director, IR

Carey Ford - SVP and CFO

Kevin Neveu - President and CEO

Conference Call Participants

Luke Lemoine - Piper Stanley

Aaron MacNeil - TD Cowen

Waqar Syed - ATB Capital

Keith Mackey - RBC Capital Markets

Cole Pereira - Stifel

Kurt Hallead - Benchmark

Operator

Good day, and thank you for standing by. Welcome to the Precision Drilling Corporation 2023 Second Quarter Results Conference Call.

I would like to hand the conference over to Lavonne Zdunich, Director of Investor Relations. Please go ahead.

Lavonne Zdunich

Thank you, operator. Welcome everyone to Precision Drilling's second quarter earnings conference call and webcast. Today, I'm joined by Kevin Neveu, Precision's President and CEO; and Carey Ford, our CFO.

Earlier today, we reported our second quarter results. To begin our call today, Carey will review these results, and then Kevin will provide an operational update and outlook commentary. Once we have finished our prepared comments, we will open the call for questions.

Please note that some of our comments today will refer to non-IFRS financial measures, and will include forward-looking statements, which are subject to a number of risks and uncertainties.

For more information on financial measures, forward-looking statements, and risk factors, please refer to our news release and other regulatory filings. As a reminder, we express our financial results in Canadian dollars unless otherwise indicated.

Carey over to you.

Carey Ford

Thanks Lavonne. Precision's Q2 financial results exceeded our expectations for revenue, adjusted EBITDA, earnings, and cash flow. The resiliency of our high performance, high value business model and organizational focus on cash flow and return on capital, drove our financial results and progress in strengthening the balance sheet.

We have not yet reached our desired capital structure, but in the middle of 2023, we crossed a few milestones, including total debt below CAD1 billion, and net debt to TTM EBITDA below two times -- well below two times and cumulative debt reduction of over CAD1.1 billion since the beginning of 2016.

Now, I'll move on to Q2 performance. Adjusted EBITDA of CAD142 million was driven by healthy drilling activity, improved pricing, and strict cost control and included a share based compensation charge of CAD3 million. Without this charge adjusted EBITDA would have been CAD145 million, which compares to a normalized EBITDA of CAD75 million in Q2 2022, representing an increase of 93%.