PTEN · 10-Q · 2026Q1 · Full report

Gross Margin Drivers

PATTERSON UTI ENERGY INC · 2026-04-28 · Importance 60 · Surprise 40

Adjusted gross profit for the three months ended March 31, 2026 was $133.9 million for Drilling Services (down 19.0% YoY from $165.2 million) and $98.1 million for Completion Services (down 9.5% YoY from $108.4 million). The declines were primarily driven by decreased operating days in U.S. contract drilling and lower fracturing activity and pumping hours, with completion services fracturing revenues down ~$39.8 million YoY. Drilling Products adjusted gross profit declined to $32.9 million (down 15.1% YoY) with higher raw material and repair costs partially offsetting lower activity. Company‑wide GAAP gross profit was affected by depreciation and amortization of $218.4 million in the quarter, which management excludes in adjusted gross profit reporting.

Key facts

• Drilling services adjusted gross profit decreased 19.0% year-over-year from $165,231 thousand to $133,856 thousand.
• Completion services adjusted gross profit decreased 9.5% year-over-year from $108,399 thousand to $98,101 thousand.
• Drilling services adjusted gross profit for the three months ended March 31, 2026 was $133,856 thousand.
• Depreciation, depletion, amortization and impairment for the company totaled $218,394 thousand for the three months ended March 31, 2026.
• Completion services adjusted gross profit for the three months ended March 31, 2026 was $98,101 thousand.
• Drilling products adjusted gross profit decreased 15.1% year-over-year from $38,723 thousand to $32,873 thousand.
• Drilling products adjusted gross profit for the three months ended March 31, 2026 was $32,873 thousand.
• Depreciation, amortization and impairment expense in the drilling products segment decreased year over year primarily due to the diminishing impact of the purchase‑accounting step‑up to fair value related to our drill bits.

Impact estimates