Precision Drilling Corporation (NYSE:PDS) Q1 2023 Earnings Conference Call April 26, 2023 2:00 PM ET
Company Participants
Lavonne Zdunich - Director of Investor Relations
Carey Ford - Senior Vice President & Chief Financial Officer
Kevin Neveu - President & Chief Executive Officer
Conference Call Participants
Waqar Syed - ATB Capital Markets
Cole Pereira - Stifel
Luke Lemoine - Piper Sandler
Keith MacKey - RBC Capital Markets
Kurt Hallead - The Benchmark Company
Operator
Good day, and thank you for standing by. Welcome to the Precision Drilling Corporation 2023 First 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 First Quarter Earnings Conference Call and Webcast. Today, I'm joined by Kevin Neveu, our President and CEO; and Carey Ford, our CFO. Earlier this morning, Precision reported strong first quarter results. Carey will review these results with you, followed by an operational update and outlook commentary from Kevin. Once we have finished our prepared comments, we will open the call to 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.
With that, I'll turn it over to Carey.
Carey Ford
Thanks, Lavonne. Precision’s Q1 financial results exceeded our expectations for revenue, adjusted EBITDA, earnings and cash flow. Adjusted EBITDA of $203 million was driven by strong drilling activity, improved pricing and strict cost control. Our Q1 adjusted EBITDA included a share-based compensation recovery of $12 million, which reflects our stock price decline during the quarter.
Without this recovery, adjusted EBITDA would've been $191 million, which compares to $84 million in Q1 2022, an increase of 127%. Revenue for the quarter was $559 million, an increase of 59% from Q1 2022.
Margins in both the U.S. and Canada were higher than guidance, resulting from stronger than expected pricing, higher ancillary service revenue, and improved cost performance. I commend our marketing and operations teams for achieving these results.
In the U.S., drilling activity for Precision averaged 60 rigs in Q1, consistent with our activity in the previous quarter. Daily operating margins in Q1, excluding the impacts of turnkey and IBC were US$14,179, an increase of US$2,330 from Q4. For Q2, we expect normalized margins to be relatively flat with Q1.