Trican Well ((TSE:TCW)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Trican Well Service presented a balanced sentiment, highlighting both significant achievements and notable challenges. The company showcased strong performances in divisions like cementing and coil, alongside a substantial return of capital through share buybacks. However, these successes were tempered by decreased EBITDA compared to the previous year, pricing pressures, and new tariffs impacting costs.
Positive Earnings and Cash Flow
Trican reported positive earnings of CAD31.9 million for the quarter, translating to $0.17 per share, and generated free cash flow of CAD43 million. This financial performance underscores the company’s ability to maintain profitability despite external pressures.
Strong Cementing Division Performance
The cementing division demonstrated robust performance, maintaining high utilization and market share, especially in technical plays like the Duvernay, where it holds a commanding 75% market share. This division continues to be a cornerstone of Trican’s operational success.
Coil Division Revenue Record
The coil division experienced its largest revenue quarter to date, with utilization rates exceeding 70% and minimal downtime of only 1.6%. This record-setting performance highlights the division’s operational efficiency and market demand.
Share Buyback Program
Trican executed a significant share buyback program, repurchasing and canceling 2.5 million shares in Q1 and an additional 6.6 million shares subsequently, totaling 11.7 million shares. This represents 61% of the 2024-’25 NCIB program, reflecting the company’s commitment to returning capital to shareholders.
Technological Advancements
The company is investing in the electrification of equipment and technology modernization, with a capital budget of CAD70.2 million allocated for maintenance and growth initiatives. These advancements are expected to enhance operational efficiency and reduce environmental impact.
Decreased EBITDA and Revenue
Trican reported revenue of CAD259.1 million with adjusted EBITDA of CAD61.3 million, a decline from CAD72.8 million in Q1 2024. This decrease is attributed to competitive pricing and inflationary pressures, which have impacted the company’s margins.
Pricing Pressure and Inflation
The company faced pricing pressure and inflationary cost increases, affecting both margins and revenue. These challenges were further compounded by foreign exchange fluctuations and rail surcharges, which have added to operational costs.
Impact of Tariffs
New Canadian tariffs on sand have increased costs by CAD10 per tonne, impacting logistics and profitability. This development poses a challenge to maintaining cost efficiency in operations.
Forward-Looking Guidance
Looking ahead, Trican provided guidance with several key financial metrics. The company aims for a 20% return on invested capital, although current pricing pressures have slightly lowered margins. With a capital budget of CAD70.2 million for 2025, Trican is focusing on maintenance and growth initiatives. The company remains optimistic about the year, maintaining a solid balance sheet with CAD159 million in working capital and positive earnings of CAD31.9 million or CAD0.17 per share.
In conclusion, Trican Well Service’s earnings call presented a mixed sentiment, balancing strong divisional performances and capital returns with challenges from decreased EBITDA, pricing pressures, and tariffs. The company’s strategic focus on technological advancements and share buybacks highlights its commitment to growth and shareholder value.