PHX Energy Announces Second Quarter Results and Record Second Quarter Revenue

Executive Summary

• PHX Energy reported second-quarter 2025 revenue of $167.7 million, a 9% increase year-over-year, driven by strong performance in the US division and increased motor rental activity.
• Earnings declined to $8.5 million ($0.17 per share) from $12.9 million in Q2 2024, primarily due to higher direct costs from tariffs, increased depreciation, and inventory obsolescence provisions.
• The company declared a quarterly dividend of $0.20 per share and continued its Normal Course Issuer Bid (NCIB) share buyback program, while maintaining a focus on RSS technology expansion.

Key Details

• Revenue: Consolidated revenue was $167.7 million (Q2 2025) vs. $154.2 million (Q2 2024), a 9% increase. This includes $12.8 million from motor rentals and $1.0 million from equipment/parts sales.
• Adjusted EBITDA: Reported at $27.4 million (16% of revenue), down 9% from $30.0 million in Q2 2024. Adjusted EBITDA excluding cash-settled share-based compensation was $28.5 million.
• Earnings: Net earnings were $8.5 million ($0.17 diluted EPS), compared to $12.9 million ($0.26 diluted EPS) in the prior year period.
• US Division Performance: Revenue grew 10% to $128.1 million. Operating days increased 8% to 4,486 days despite a 5% decline in industry rig counts. RSS activity represented 24% of operating days (up from 19% in Q2 2024).
• Canadian Division Performance: Revenue grew 4% to $39.6 million. Operating days decreased 12% to 2,362 days, but average revenue per day improved 16% to $16,409, driven by RSS expansion.
• Costs and Margins: Direct costs increased 13% to $143.4 million, impacted by tariffs on equipment parts and repair services. A $1.4 million provision for inventory obsolescence (related to a discontinued motor line) was recorded.
• Capital Expenditures: Total capex was $20.7 million, with net capex at $9.9 million after $10.9 million in proceeds from equipment dispositions. Growth capex was $12.4 million, focused on Velocity Real-Time systems, Atlas motors, and RSS tools.
• Dividends: Declared $0.20 per share ($9.1 million total), paid on July 15, 2025.
• Share Buybacks: Purchased and cancelled 100,000 shares for $0.9 million in Q2 2025. Subsequent to quarter-end, an additional 279,000 shares were purchased for $2.3 million.
• Balance Sheet: Working capital stood at $92.8 million, and net debt was $31.0 million. The company had CAD $53.1 million and USD $20 million available under credit facilities.
• Outlook: Management anticipates continued resilience through RSS differentiation and motor rental growth, though profitability may be impacted by global economic instability, tariffs, and OPEC+ strategies.

Notable Quotes

• "In 2025, our operations continued to be resilient in the weaker industry environment. We expect to continue to generate strong activity and revenue in the second half of 2025 relative to the market conditions, mainly through our continued focus on differentiating ourselves as a premium Rotary Steerable Systems (“RSS”) provider." — Michael Buker, President & CEO