Calfrac Well Services (CFW) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was CAD 430.1 million, flat sequentially, as Argentina's growth and record profitability offset lower North American activity and utilization.

• Argentina achieved significant profitability gains, leveraging a second large fracturing fleet and strong offshore coiled tubing utilization.

• Net loss from continuing operations was CAD 6.7 million, compared to net income of CAD 97.5 million in Q3 2023.

• Safety improved, with TRIF at 0.81 versus 1.14 a year ago.

• Leadership changes included Marco Aranguren as President, US Operations, and Adrian Martinez as Director General, Argentina, to accelerate strategic priorities.

Financial highlights

• Q3 2024 revenue decreased 11% year-over-year to CAD 430.1 million, mainly due to lower US activity and pricing.

• Adjusted EBITDA was CAD 65 million, a 29% year-over-year decline, but sequentially flat as Argentina offset North America.

• Net loss of CAD 6.7 million ($0.08/share diluted) versus net income of CAD 97.5 million ($1.09/share diluted) in Q3 2023.

• Capital expenditures were CAD 22.5 million, including CAD 8.7 million for Argentina expansion, down from CAD 50.8 million in Q3 2023.

• Working capital stood at CAD 307.1 million, with CAD 17.7 million in cash (CAD 13.6 million in Argentina).

Outlook and guidance

• Expect a solid finish to 2024 in North America, with increased U.S. utilization improving sequential profitability.

• Argentina's Q4 activity to return to Q2 levels, with strong profitability growth expected in 2025 as a second permanent fleet is added.

• Multi-year service contract negotiations ongoing in Argentina to capitalize on sector growth.

• Capital spending in 2025 will be lower, with a cautious approach due to commodity price outlook.

• Equipment temporarily moved from Canada to the US will return late Q4; five Tier IV DGB fleets expected in Q1 2025.