Why Is Patterson-UTI (PTEN) Down 13.6% Since Last Earnings Report?

Core Viewpoint - Patterson-UTI has experienced a decline in share price by approximately 13.6% since the last earnings report, underperforming the S&P 500, raising questions about the potential for a breakout or continued negative trend leading up to the next earnings release [1] Financial Performance - The company reported an adjusted net profit of 5 cents per share for Q2 2024, missing the Zacks Consensus Estimate of 9 cents, primarily due to poor performance in the Drilling Services segment [2] - Total revenues reached $1.3 billion, falling short of the Zacks Consensus Estimate of $1.4 billion, but reflecting a year-over-year increase of 77.7%, driven by higher revenue from the Completion Services segment [3] Shareholder Returns - Patterson-UTI will pay a quarterly dividend of 8 cents per share on September 16, 2024, to shareholders of record as of September 3 [4] - The company returned $164 million to shareholders in Q2 and $295 million in the first half of the year, including the repurchase of 12 million shares for $132 million in Q2 [4] - Since the completion of the NexTier merger and Ulterra acquisition, Patterson-UTI has returned a total of $407 million to shareholders, with $819 million remaining in its share repurchase authorization as of June 30, 2024 [5] Segment Performance - Drilling Services segment revenues totaled $440.3 million, down 10.1% from the prior year and below projections [6] - Completion Services segment revenues increased by 221.8% year-over-year to $805.4 million, but missed projections [7] - Drilling Products revenues were $86.1 million, missing estimates, while operating profit exceeded expectations [8] - Other Services revenues were $16.5 million, down 13.2% year-over-year, but operating profit improved compared to the previous year [9] Capital Expenditure & Financial Position - Capital expenditures for the quarter were $130.5 million, slightly lower than the prior year [10] - As of June 30, 2024, the company had cash and cash equivalents of $75 million and long-term debt of $1,219.2 million, with a debt-to-capitalization ratio of 20.9% [10] Outlook - The company anticipates generating free cash flow from adjusted EBITDA at a rate of 40% by 2024 [12] - Management expects steady industry drilling activity for the remainder of the year, with customers managing budgets through completion activity, potentially impacting frac activity [13] - Estimates for the company have trended downward, with a consensus estimate shift of -54% [14][16]