Precision Drilling Corporation (NYSE:PDS) Q2 2024 Earnings Conference Call July 31, 2024 1:00 PM ET

Company Participants

Lavonne Zdunich – Vice President-Investor Relations
Kevin Neveu – President and Chief Executive Officer
Carey Ford – Chief Financial Officer

Conference Call Participants

Kurt Hallead – Benchmark
Luke Lemoine – Piper Sandler
Aaron MacNeil – TD Cowen
Waqar Syed – ATB Capital Markets
Jamie Kubik – CIBC
John Gibson – BMO Capital Markets

Operator

Good day, and thank you for standing by. Welcome to the Precision Drilling Corporation 2024 Second Quarter Conference Call. I would now like to hand the call over to Lavonne Zdunich, Vice President of Investor Relations. Please go ahead.

Lavonne Zdunich

Thank you and welcome to Precision’s second quarter earnings conference call and webcast. Participating on today’s call with me will be Kevin Neveu, our President and CEO; and Carey Ford, our CFO. Earlier – last night, we reported strong second quarter results, which Carey will review 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. 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. Please see our news release and other regulatory filings for more information on financial measures, forward-looking statements and risk factors. As a reminder, we express our financial results in Canadian dollars unless otherwise indicated.

With that, I’ll pass it over to Carey.

Carey Ford

Thank you, 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, geographic diversification and organizational focus on cash flow and return on capital drove our financial results.

Precision’s demonstrated commitment to strengthen our balance sheet continues with year-to-date debt reduction and share repurchases of $103 million and approximately $40 million, respectively. For 2024, we expect to reduce debt by $150 million to $200 million and utilize 25% to 35% of free cash flow before debt repayments to repurchase shares.

Longer term, we plan to reduce debt by $600 million between 2022 and 2026, with approximately $240 million remaining over the next 2.5 years. We expect to achieve a leverage level of below 1x net debt to EBITDA and increase our direct shareholder returns towards 50% over that time period. The progress on these capital allocation targets is clear, and the longer-term trend remains in place as we’ve reduced debt by over $1.3 billion since the beginning of 2016.