Total Energy Services Q2 2024 Update

Quick update after Q2 2024

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

Price: $9.14 CAD

MC: 366 million

EV: 480 million

Yield: 3.94%

1 year performance: -2.7% (not including dividends).

Working through the reporting backlog still. TOT reported last week and held a call. Results were ahead of my expectations and the stock was initially up 3%, but has since settled and is only up abut 1% since the release.

*all numbers in CAD unless stated otherwise

Quarter Recap

• First full quarter with Saxon acquisition

• Consolidated revenue at 213.3 million vs 208.8 million.

• EBITDA at 37.4 million vs 30.3 million.

• CDS (Contract Drilling Services)

  • Revenue at 67.9 million vs 54.3 million.

  • EBITDA at 14.5 million vs 9.9.

  • Canadian activity consistent with last year.

  • US had lower activity.

  • Australia operating days more than doubles with the addition of Saxon rigs.

• RTS (Rental and Transportation Services)

  • Revenue of 17.8 vs 19.8.

  • EBITDA of 6.1 million vs 71 million.

  • Lower US activity.

  • Small gain in revenue per equipment offset some of the lower activity.

• CPS (Compression and Process Services)

  • Revenue of 109.5 million vs 113.1 million.

  • EBITDA 17.6 million vs 12.4 million

  • Lower sales due to shifting customer preferences in US.

  • Overall utilization up driving better margins.

  • Backlog at 204.6 million vs 185.6 last year and 185.7 in Q1 2024..

• WS (Well Servicing)

  • Revenue at 18.2 million vs 21.6 million.

  • EBITDA at 2.1 million vs 2.9 million last year.

  • Lower activity in all jurisdictions.

    • Lower well abandonment in Canada.

    • Mentioned customer consolidation in US.

    • Australia entering wet season.

• Capex

  • The quarter was 20.7 million vs 12.7 million last year.

  • Reminder that they had 14.2 million carryover from the 2023 capex budget.

  • There is about 30 million left for 2024.

Call Notes

There was only one analyst on the call, so there wasn’t much. What I did fine interesting that they mentioned they were happy with how the Saxon acquisition has been going.

Valuation

I have them trading at about 2.6x EV/2024 EBITDA. Probably a better way is estimating full year numbers from Saxon. With Saxon I get closer to 2.4x EV/EBITDA.

Closing Thoughts

I own TOT as part of my OFS basket. I like the international presence that TOT brings. I think there is enough liquidity in the shares that this would be a good candidate for multiple expansion if interest returns to smallcaps and/or energy.

Thanks for reading.

Dean

* long TOT.to