Trican Well Service (TCW) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was CAD 221.6 million, down 12% year-over-year, with softer results due to customer delays from water restrictions, well licensing, and capital management amid weak natural gas prices.

• Adjusted EBITDA for Q3 2024 was CAD 50.2 million (23% margin), down from CAD 65.7 million (26%) in Q3 2023.

• Net earnings were CAD 24.5 million, or CAD 0.12 per share (basic and diluted), compared to CAD 36.4 million (CAD 0.17 per share) a year earlier.

• Free cash flow for Q3 2024 was CAD 32.4 million, down from CAD 47.7 million in Q3 2023.

• The company maintains a strong balance sheet with CAD 136.5 million in working capital and CAD 3.0 million in cash as of September 30, 2024.

Financial highlights

• Gross profit margin for Q3 2024 was 19%, down from 23% in Q3 2023.

• Adjusted EBITDA margin for Q3 2024 was 23%-24%, down from 26%-27% in Q3 2023.

• Year-to-date revenue for the first nine months of 2024 was CAD 705.3 million, a 2% decrease from 2023.

• Dividends paid in Q3 2024 totaled CAD 8.7 million (CAD 0.045 per share), up from CAD 8.5 million (CAD 0.040 per share) in Q3 2023.

• CapEx was CAD 15.2 million, primarily for maintenance and electric ancillary equipment.

Outlook and guidance

• Q4 2024 is expected to be stronger than Q3 due to deferred work and robust customer activity.

• 2025 activity anticipated to mirror 2024, with upside potential as LNG exports begin and Canadian oil and gas export capacity expands.

• Customers remain disciplined, spending about 50% of free cash flow on drilling and completions.

• Activity in the Montney and Duvernay plays is expected to grow, driven by well economics and LNG demand.

• Anticipates positive LNG Canada phase two investment decision in 2025, supporting long-term growth.