Total Energy Services ((TSE:TOT)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for Total Energy Services presented a mixed outlook, highlighting significant growth in Australian operations and the Compression and Process Services (CPS) segment, while also addressing challenges in the North American market. The company’s strong financial position supports its strategic investments and expansions, providing a solid foundation amidst global uncertainties.
Revenue Growth
Total Energy Services reported a 23% increase in consolidated first-quarter revenue compared to Q1 of 2024. This growth was driven by strategic acquisitions and increased activity in key segments, showcasing the company’s ability to capitalize on market opportunities.
EBITDA Increase
The first quarter saw a 17% rise in consolidated EBITDA, reaching CAD 7.2 million. This increase underscores the company’s operational efficiency and its commitment to enhancing profitability through strategic initiatives.
Australian Operations Success
Australian operations were a standout performer, with operating days increasing by 70% and revenue surging by 124% year-over-year. This success translated into a 15-fold increase in operating income, highlighting the region’s growing importance to Total Energy’s overall performance.
Compression and Process Services (CPS) Performance
The CPS segment experienced a 37% increase in first-quarter revenue compared to 2024, with operating income rising by 51% year-over-year. This robust performance reflects the segment’s strategic significance and its contribution to the company’s growth trajectory.
CPS Sales Backlog
The CPS sales backlog saw a substantial increase of CAD 76.4 million, or 40%, by March 31, 2025, compared to the end of 2024. This growth in backlog indicates strong future demand and positions the segment for continued success.
North American Well Servicing Margins
Challenges in North American markets were evident, with weaker margins in Well Servicing due to competitive conditions and cost inflation. This highlights the need for strategic adjustments to navigate the challenging landscape.
US Drilling and Completion Activity
Softer US drilling and completion activity negatively impacted earnings, reflecting broader industry trends and emphasizing the importance of diversifying revenue streams.
Canadian CDS Challenges
The Canadian CDS segment faced a 32% decrease in first-quarter operating income year-over-year, attributed to lower rig utilization and the inability to increase rates. This underscores the competitive pressures in the Canadian market.
Gross Margin Decline
Total Energy’s consolidated gross margin declined to 25% from 28% in the prior year quarter. This decrease highlights the impact of competitive pressures and cost challenges on profitability.
Forward-Looking Guidance
Total Energy’s forward-looking guidance remains optimistic, with a 23% increase in consolidated revenue driven by strategic acquisitions and enhanced activity in key segments. The company’s robust financial position, with CAD 78.9 million in positive working capital and a low debt ratio, supports its stable outlook despite global economic uncertainties.
In conclusion, Total Energy Services’ earnings call painted a picture of mixed sentiment, with strong growth in Australian operations and the CPS segment offset by challenges in North American markets. The company’s strategic initiatives and solid financial footing provide a foundation for future growth, even as it navigates industry challenges.