Total Energy Services (TOT) Q3 2024 earnings summary

Executive summary

• Achieved record quarterly financial results for Q3 2024, driven by stable conditions in Canada and Australia, strong North American demand for compression/process equipment, and the Saxon Energy Services acquisition, which contributed $44.4M in revenue and $2.1M in net income since March 7, 2024.

• Revenue grew 4% year-over-year, with EBITDA up 12% and gross margin improving to 26% from 24% in Q3 2023.

• Returned $8.7M to shareholders in Q3 via dividends and buybacks; cumulative returns now $323M.

• Geographic revenue mix shifted: Canada 49%, U.S. 34%, Australia 17%.

Financial highlights

• Q3 2024 revenue: $241.9M, up 4% year-over-year; Q3 EBITDA: $50.5M, up 12%; Q3 net income: $19.7M, up 2%.

• Gross margin for Q3: 26% (up from 24% last year).

• Positive working capital of $97.3M, including $61.9M in cash at quarter-end.

• Senior bank debt to EBITDA ratio at 0.26; interest coverage ratio at 10.15x (26.65x excluding non-recurring interest expense).

• Shareholders’ equity: $561.2M, up 6% from December 31, 2023.

Outlook and guidance

• Business conditions expected to remain stable in core jurisdictions, supported by strong Asian LNG demand and North American LNG export investments.

• 2024 capital budget increased by $19.8M, with $13.1M for Australian rig upgrades; total 2024 capex projected at $147.7M.

• Three upgraded rigs in Australia to commence operations in Q1 2025 under long-term contracts.

• Remaining 2024 capital commitments of $35.3M to be funded from $61.9M cash on hand as of September 30, 2024.

• 2025 capital program to be announced in January, with a disciplined, opportunity-driven approach.