Precision Drilling (PDS) Q4 2025 earnings summary

Executive summary

• Achieved $413 million in free cash flow in 2025, enabling $101 million debt reduction, $76 million in share repurchases, and a 6% reduction in outstanding shares.

• Ended 2025 with a net debt to adjusted EBITDA ratio of 1.2x, targeting below 1.0x long-term.

• Q4 2025 revenue rose 2% to $479 million, with adjusted EBITDA up 5% to $126 million, but a net loss of $42 million due to $67 million in decommissioning and $17 million in drill pipe write-downs.

• Maintained resilient drilling margins and grew Canadian market share and U.S. rig utilization.

• Strategic priorities for 2026 include revenue growth, operational excellence, and maximizing free cash flow.

Financial highlights

• Q4 adjusted EBITDA was $126 million (margin 26%), with annual margin at 27%.

• Annual capital expenditures totaled $263 million, including $107 million for upgrades and 27 major rig enhancements.

• Net debt to adjusted EBITDA at 1.2x; available liquidity exceeded $445 million at year-end.

• Finance charges fell to $57 million due to lower debt levels.

• Share count reduced by 11% since Q1 2024, with a 6% reduction in 2025.

Outlook and guidance

• 2026 capital spending planned at $245 million, with $63 million for rig upgrades.

• Targeting $100 million in debt reduction and up to 50% of free cash flow for share repurchases in 2026.

• Canadian Q1 2026 rig count expected to peak at 87, with margins projected at $14,000–$15,000 per day; U.S. margins at $8,000–$9,000 per day.

• International operations supported by long-term contracts, with 7 rigs active and contracts extending into 2027 and 2028.

• Effective tax rate for 2026 expected at 25%-30%, with low cash taxes.