Ensign Energy Services (ESI) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $434.6M (CAD 434.6 million), down 2% year-over-year; nine-month revenue was $1,257.7M (CAD 1.26 billion), down 8%.

• Adjusted EBITDA for Q3 2024 was $119.0M, up 1% year-over-year; nine-month Adjusted EBITDA was $336.7M, down 7%.

• Net income attributable to shareholders was $5.3M in Q3, reversing a $5.2M loss in Q3 2023; nine-month net loss was $0.5M.

• Funds flow from operations in Q3 was $116.9M, down 2% year-over-year; nine-month funds flow was $323.6M, down 9%.

• Debt reduction remained a priority, with $135M (CAD 135 million) repaid in 2024 and $352.6M since January 2023, supporting a three-year target of $600M.

Financial highlights

• Canadian revenue rose 21% in Q3; U.S. revenue fell 16%; international revenue rose 12%.

• Depreciation expense increased 18% in Q3 to $91.0M; interest expense fell 24% to $23.8M in Q3.

• General and administrative expenses increased 1% year-over-year in Q3 but fell 12% sequentially from Q2.

• Working capital deficit was $8.1M at September 30, 2024, compared to a $15.8M surplus at December 31, 2023.

• Total debt, net of cash, was $1,066.4M at September 30, 2024, down 14% year-over-year.

Outlook and guidance

• Oilfield services outlook remains constructive, with Canadian activity boosted by new pipeline capacity and most rigs contracted into 2025.

• U.S. market improvements are not expected until late 2025 or 2026 due to M&A activity and low natural gas prices.

• International activity to modestly decline in Q4 2024 but expected to increase in 2025 as standby rigs become active.

• No major CapEx increases expected for 2025 unless U.S. activity picks up.

• Targeted debt reduction of $200M for 2024 and $600M by end of 2025 reaffirmed.