CES Energy Solutions (CEU) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 revenue of $553.2 million, up 7% year-over-year, and record Adjusted EBITDAC of $95.4 million, up 29% year-over-year, with a 17.3% margin, matching the highest in nine years.

• Net income rose 42% to $48.2 million for the quarter and 53% to $102.6 million for the six months ended June 30, 2024.

• Strong free cash flow of $54.8 million and continued deleveraging, with total debt to trailing twelve months EBITDA at a new low of 1.12x.

• Renewed NCIB plan, repurchasing 1.5 million shares at $7.90/share, and maintaining quarterly dividend of $0.03/share.

• Closed tuck-in acquisition of HydroLite LLC (now AES Completion Services) in Texas for $15 million, expanding specialized service offerings.

Financial highlights

• Q2 revenue of $553.2 million, up from $516 million in Q2 2023; U.S. revenue hit a record $391 million (71% of total), Canadian revenue $162 million.

• Adjusted EBITDAC of $95.4 million, up 29% from $73.9 million in Q2 2023; margin at 17.3% versus 14.3% last year.

• Cash flow from operations was $83 million; free cash flow $55 million, with a 60% conversion rate to EBITDAC.

• CapEx net of disposals was $22 million; full-year 2024 CapEx expected at $75–80 million, split between maintenance and expansion.

• Working capital surplus as of June 30, 2024, was $640 million; net debt was negative $234 million.

Outlook and guidance

• Margin guidance raised to 15.5%–16.5%, reflecting sustained high service intensity and product mix.

• Expects stable upstream activity, increased service intensity, and continued strength in commodity pricing for the remainder of 2024.

• Optimistic about 2024–2025 activity, supported by infrastructure projects and market share gains.

• Free cash flow generation expected to remain strong through cycles, underpinned by recurring revenue streams.

• Guidance includes strategic capital allocation to high-growth basins and ongoing cost reductions.