Archer Ltd (ARHVF) (Q2 2026) Earnings Call Highlights: Record EBITDA and Strategic Backlog Growth
GuruFocus News
Thu, August 13, 2026 at 8:30 PM GMT+5:30
6 min read
This article first appeared on GuruFocus
For the complete transcript of the earnings call, please refer to the full earnings call transcript
Positive Points
Record quarterly EBITDA of $44.9 million with a margin of 17.1%, up from 14.1% in the same quarter last year
Backlog increased to $3.9 billion, providing strong earnings visibility for 2027 and beyond
Adjusted EBITDA grew approximately 14% year-on-year, outperforming peers who saw an average decline of 8%
Secured a major integrated P&A contract in the UK covering 260 wells, strengthening strategic positioning
Land drilling in Argentina showed strong growth with EBITDA up 225% year-on-year and a 25% margin
Continued shareholder returns with a 10% direct yield, among the highest in the peer group
Negative Points
Revenue declined in platform operations by 20% year-on-year due to loss of Brazil operations and no modular rig activity
Norway operations were impacted by labor disputes, resulting in a loss of approximately $1 million of EBITDA in June
The Cullin floating wind project experienced challenges, delays, and additional costs, leading to disputes with a major subcontractor
Net interest-bearing debt increased to approximately $489 million due to working capital build-up and investment in growth
Reported net profit was only $0.2 million for the quarter, despite record EBITDA, due to exceptional items and other costs
Q & A Highlights
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Q: What were the key financial highlights for Archer in Q2 2026, and how did the company perform relative to its peers? A: Doug Skindlow, CEO, reported a record quarter for Archer in terms of EBITDA and margin. Revenue was $263 million, and EBITDA reached $44.9 million, corresponding to a margin of 17.1%. Adjusted for the divested workover business in Argentina, EBITDA increased by approximately 14% year-on-year, compared to an average decline of around 8% for peers. This demonstrates continued earnings growth and margin expansion driven by increased market share, high-margin P&A services, and disciplined capital allocation.
Q: Can you provide details on the significant increase in backlog and the major contract awards secured during the quarter? A: Doug Skindlow, CEO, highlighted that the backlog increased from $3.4 billion at the end of Q1 to $3.9 billion. Key additions included an integrated P&A contract in the UK covering approximately 260 wells, a three-year extension with Equinor for wireline and intervention services in Norway, a two-year extension of Equinor’s frame agreement for P&A and downhole services, and a drilling contract extension with Pan American Energy. Additionally, a five-year contract for one additional super-spec rig with YPF in Vaca Muerta was secured, strengthening long-term earnings visibility.
