CES Energy Solutions (CEU) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 revenue of $553.2 million, up 7% year-over-year, and record Adjusted EBITDAC of $95.4 million, up 29% year-over-year, with a 17.3% margin, matching the highest in nine years.

• Net income rose 42% to $48.2 million for the quarter and 53% to $102.6 million for the six months ended June 30, 2024.

• Free cash flow reached $54.8 million, and total debt to trailing twelve months EBITDA dropped to 1.12x, reflecting strong deleveraging.

• Renewed NCIB plan allows repurchase of up to 19.2 million shares; 1.5 million already bought at $7.90/share.

• Closed tuck-in acquisition of HydroLite LLC (now AES Completion Services) in Texas for $15 million, expanding specialized service offerings.

Financial highlights

• Q2 revenue of $553.2 million, up from $516 million in Q2 2023; US revenue hit a record $391 million (71% of total), Canada set a Q2 record at $162 million.

• Adjusted EBITDAC of $95.4 million, up 29% year-over-year; margin at 17.3%, up from 14.3% in Q2 2023.

• Cash flow from operations was $83.2 million; free cash flow $54.8 million, with a 60% conversion rate to EBITDAC.

• CapEx for Q2 was $21.6 million; full-year 2024 CapEx expected at $75–80 million, split between maintenance and expansion.

• Working capital surplus as of June 30, 2024, was $639.6 million.

Outlook and guidance

• Margin guidance raised to 15.5%-16.5%, reflecting sustained high service intensity and product mix.

• Expects stable upstream activity, increased service intensity, and continued strength in commodity pricing for the remainder of 2024.

• 2024 capital expenditures projected at $75–80 million, split evenly between maintenance and expansion.

• Optimistic about free cash flow generation and ability to support dividends and share repurchases.

• Continued optimism for 2024–2025 activity, driven by infrastructure projects and market share gains.