*Disclosure: I own shares in TOT.to
Price: $9.45 CAD
MC: 384 million CAD
EV: 469 million CAD (I removed the cost of the Saxon transaction)
Yield: 3.8%
1 year performance: +6%
TOT reported Thursday after the close and held a call Friday morning. Revenue was lower than my expectations, but margins were stronger. And the stock was essentially flat on the day.
Right before they issued the Q4 financials they announced the completion of Saxon Energy Services based in Australia.
Quarter Recap
Revenue up 1% to 213.8 million.
Ebidta up 26% to 45.3 million.
There was a large tax expense that made the income statement muddy.
Upped dividend 13% to 0.09 per share.
Segmented results:
Contract Drilling Services
Rev up 8% to 74.7 million.
EBITDA up 33% to 23.9 million.
Higher revenue per operating day offset by some equipment movement.
RTS – Rentals and Transportation
Revenue down 2% to 19.5 million.
EBITDA up 12% to 6.9 million.
Some market share gains in US offset some Canadian deferrals.
CPS – Compression & Process Services
Revenue up 2% to 95.4 million.
EBITDA up 31% to 14.1 million.
Higher US fabrication sales, increased equipment overhaul and improved utilization of Canada compression renal fleet.
Backlog at 162.8 million which is down from 219.5 last year and up 9.9 sequentially.
WS – Well Servicing
Revenue down 16% to 24.1 million.
EBITDA down 36% to 4.0 million.
Reduced well abandonment activity following the conclusion of government incentive programs.
Call Notes
Stable activity in Canada and Australia offset by lower activity in US.
Canada had stronger revenue per operating day from rig upgrades.
Sounds like they are keen on share buybacks.
It sounded like Australia has some decent growth prospect with the combined two companies.
They are going to focus on integrating the two businesses.
As well they are looking to perform some rig upgrades as the opportunity arises.
We didn’t get much more detail on Saxon other than they said it will be accretive.
It will be good to get an update at the end of Q1.
Closing Thoughts
I like TOT as part of my OFS basket. They are executing well. I like the exposure to different geographies and different parts of the industry.
They mentioned buybacks on the call. This will be interesting. The stock is well off it’s lows so it doesn’t’ look “cheap” if your barometer is the price chart. Having said that they are trading less that 3x EV/2024 est EBITDA, and likely 5-6ishx FCF which is cheap if activity remains stable. So I would like them to continue buying back shares.
Thanks for reading.
Dean
* long TOT.to