PTEN

Patterson-UTI is a textbook late-cycle North American land driller in pain. FY2025 revenue fell 9.8% to $4.79B, the second consecutive down year after the 2024 peak, and the company posted a $93.6M net loss on a -0.9% operating margin. The MD&A is explicit about why: U.S. contract drilling operating days fell 11.1% (40,899 → 36,371) on 'industry-wide activity declines,' fracturing revenue dropped ~$306M (-12%) on weaker service pricing, and 2024 already absorbed an $885M goodwill impairment on completion services plus $114M of rig abandonments. Drilling Products revenue also slipped on lower Saudi activity and a softer U.S. rig count. This is cyclical compression, not a structural break.

The balance sheet and cash generation tell a more reassuring story and are the reason this is a hold, not a sell. Operating cash flow was still $961M against $589M of capex, leaving substantial free cash flow that funded $122M of dividends and $69.6M of buybacks. Cash climbed 75% to $419M, current portion of debt was paid down to zero, long-term debt held flat at $1.22B, and liabilities/equity is a comfortable 0.73x. At $9.52 the stock trades at 0.8x sales and roughly 3.8x operating cash flow — cheap on cash-flow metrics, but earnings-based multiples are meaningless while the company is loss-making.