Total Energy Services Q1 2025 Update - $TOT.to

Decent results. Australia and CPS offset weakness elsewhere.

*Disclosure: I own shares in TOT. I am not a professional. Please do your own due diligence.

Price: $9.69 CAD

MC: 375 million CAD

EV: 426 million CAD

Yield: 4.1%

1 year performance: flat (not including dividends)

TOT reported Thursday after the close and held a call yesterday morning. Results were fairly in line with of my expectations and the stock was up 4.4%.

*all numbers in CAD unless stated otherwise

Quarter Recap

• 251.9 million revenue vs 204.7 million

  • Up 23%

• EBITDA at 50.5 million vs 43.3 million

  • Up 17%

  • 20% margin

• Capital budget increased to 73.9 million for 2025

  • Up 12 million

    • Upgrade and reactivate idle Australian rig from Saxon that is scheduled to commence operations in Q4 2025

    • Upgrade Canadian rig

    • 3.9 million for new rental equipment in RTS segment expected to be deployed in Q4 2025

Segmented Results

• Contract Drilling Services (CDS)

  • Revenue at 91.1 million vs 81.2 million last year

    • Up 12%

  • EBITDA at 25.2 million vs 22.3 million last year

    • Up 13%

    • 28% margin consistent with last year's

  • Revenue per operating day up 14%

    • Down 1% in Canada

    • Up 6% in US

    • Up 32% in Australia

  • Utilization down 6%

  • The slowdown in North America was offset by the acquisition of Saxon in March of 2024 which is located in Australia

• Rentals and Transport Services (RTS)

  • Revenue at 23 million vs 22.4 million last year

    • Up 3%

  • EBITDA at 8.4 million vs 9.7 million last year

    • Down 13%

    • 37% margin vs 43% last year

  • Utilization ticked down 10% driven by Canada

  • Sounds like mix was the largest reason for the delta

• Compression and Process Services

  • Revenue of 106.2 million vs 77.5 million last year

    • Up 37%

  • EBITDA at 15.7 million vs 10.9 million last year

    • Up 44%

    • Margin at 15% vs 14% last year

  • Backlog jumped to 265.4 million vs 185.7 last year and 189 million in Q1 2024

  • Increased fabrication of parts and service activity coupled with efficiency of higher production rates is the reason for the but jump in revenue

• Well Service (WS)

  • Revenue at 31.6 million vs 23.6 million last year

    • Up 34%

  • EBITDA at 5.3 million vs 4.3 million last year

    • Up 23%

    • Margin at 17% vs 18% last year

  • Revenue per service hour and utilization higher

  • Increased activity in Australia due to reactivation of several upgraded rigs that offset US decline

Call Notes

• CPS backlog build a mix of E&P and infrastructure

• Australia ramping in Q1 after some rigs idle and start up costs in Q4 2024

• There are a couple of more rigs they can upgrade for Australia if they get contracted

• Noted they plan on continuing with the NCIB

Valuation

I have TOT at 2.3x EV/ttm EBITDA. As with pretty much all the OFS cos, I am not sure what to expect for the next 3-4 quarters due to all the volatility.

Closing Thoughts

Not much to report here. I like the capital discipline and the business diversity that Total provides. They have some flexibility in the balance sheet to take advantage of opportunities that a slowdown can provide.

TOT is a nice mix in the OFS basket.

I continue to hold my shares.

Thanks for reading.

Dean

* long TOT.to