Analyst Note| Preston Caldwell |
While Patterson did experience sequential improvement in its first-quarter results, the magnitude of improvement was disappointing compared with the recovery in industrywide U.S. shale activity. Revenue increased 9% sequentially, driven mainly by a 16% improvement in the Contract Drilling segment. Adjusted operating margins were still an abysmal negative 49%, only slightly improved from the negative 56% of the prior quarter. However, for now our fair value and no-moat rating are unchanged following the results.