Total Energy Services Quick Update - TOT.to

Quick update after Q1 2024

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

Price: $9.49 CAD

MC: 385.5 million

EV: 741.3 million

Yield: 3.8%

1 year performance: +10% (not including dividends)

I’m still getting caught up from the barrage of earnings last week, so this is a bit late.

TOT reported last week and held a call. Results were a bit behind my expectations and the stock has been down about 2-3% since then.

Quarter Recap

• Revenue was 205 million. Down 14% yoy.

• EBITDA was down 11% to 43.3 million.

• There was a tax reassessment that they announced that hurt FCF this quarter.

Moving onto the different segments:

• Contract Drilling

  • Revenue of 81.2 vs 82.5 million last year.

  • EBITDA of 22.3 vs 20.3 million last year.

  • Moderation of activity, but they have made market share gains.

  • Saxon has contributed more this year vs last year as the acquisition is included in these results.

• Rentals and Transportation

  • Revenue was down 8% to 22.4 million.

  • EBITDA was up 1% to 9.7 million.

  • Had better margins due to higher utilization of equipment with better revenue rates and lower mobilization costs this quarter.

• Compression and Process Services

  • Revenue of 77.5 vs 98.1 million.

    • Down 21% yoy.

  • EBITDA of 10.9 vs 12.6 million.

    • Down 13%.

  • Lower fab sales and negative impact of low nat gas prices.

  • Backlog at 185.7 million vs 227.4 yoy.

• Well Servicing

  • Revenue of 23.6 mil vs 32.7 mil. Down 28%.

  • EBITDA of 4.3 vs 8.3. Down 48%.

  • Lower activity in all jurisdictions.

    • Canada hurt by lower well abandonment.

    • US down with much lower activity levels.

    • Extended wet weather in Australia.

Call Notes

• Outlook was steady for the most part from here.

• They seemed to be pretty measured about adding equipment in advance of LNG Canada starting up. This has been common as industry players are looking to maintain their discipline with capital.

• Looking to be balanced with additional capital allocation about their stated capex.

  • Debt paydown.

  • Dividends and buybacks.

Valuation

I have them at 2.5x EV/2024 EBITDA and about 2.9x EV/ttm EBITDA.

Closing Thoughts

Not much to add here. As with many OFS cos we are seeing what the business looks like with flat or declining activity. This company is quite shareholder friendly so I am comfortable keeping my position.

Thanks for reading.

Dean

* long TOT.to