Calfrac Reports Third Quarter 2024 Results with Record Financial Performance in Argentina
CALGARY, Alberta, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Calfrac Well Services Ltd. ("Calfrac" or "the Company") (TSX:CFW) announces its financial and operating results for the three and nine months ended September 30, 2024. The following press release should be read in conjunction with the management's discussion and analysis and interim consolidated financial statements and notes thereto as at September 30, 2024. Readers should also refer to the "Forward-looking statements" legal advisory and the section regarding "Non-GAAP Measures" at the end of this press release. All financial amounts and measures are expressed in Canadian dollars unless otherwise indicated. Additional information about Calfrac is available on the SEDAR+ website at www.sedarplus.ca, including the Company's Annual Information Form for the year ended December 31, 2023.
CEO'S MESSAGE
Calfrac achieved revenue of $430.1 million during the third quarter, which was consistent on a sequential basis with the second quarter as growth across multiple service lines in Argentina offset lower utilization in North America. The Company's Argentinean operations leveraged its second horizontal fracturing fleet in the Vaca Muerta shale play and commencement of its first offshore coiled tubing program to produce the highest quarterly profit in the country's history. During the period, Calfrac improved upon its year-over-year safety record as it exited September with a trailing twelve-month Total Recordable Injury Frequency ("TRIF") of 0.81, as compared to 1.14 in 2023. The Company expects to navigate the changing market conditions through 2025 by prudently deploying capital and maximizing net income to generate sustainable returns for its shareholders.
Calfrac's Chief Executive Officer, Pat Powell commented: "I am proud of the way that the Calfrac team performed during the third quarter. I am looking forward to finishing the year strong as we continue to safely and efficiently execute on our client's development plans in North America and Argentina to maximize returns for our shareholders."
SELECT FINANCIAL HIGHLIGHTS, CONTINUING OPERATIONS
Three Months Ended Sep. 30,
Nine Months Ended Sep. 30,
2024
2023
Change
2024
2023
Change
(C$000s, except per share amounts)
($)
($)
(%)
(unaudited)
Revenue
430,109
483,093
(11
)
1,186,252
1,442,879
(18
)
Adjusted EBITDA(1)
65,039
91,286
(29
)
156,482
262,865
(40
)
Consolidated cash flows provided by operating activities
23,910
101,264
(76
)
42,713
160,350
(73
)
Capital expenditures
22,509
50,825
(56
)
137,334
116,017
18
Net (loss) income
(6,687
)
97,523
(107
)
14,959
184,367
(92
)
Per share, basic
(0.08
)
1.20
(107
)
0.17
2.28
(93
)
Per share, diluted
(0.08
)
1.09
(107
)
0.17
2.12
(92
)
As at
Sep. 30,
Dec. 31,
Change
2024
2023
(C$000s)
($)
($)
(%)
(unaudited)
Cash and cash equivalents
17,684
34,140
(48
)
Working capital, end of period
307,139
236,392
30
Total assets, end of period
1,297,460
1,126,197
15
Long-term debt, end of period
349,964
250,777
40
Net debt(1)(2)
354,412
241,065
47
Total consolidated equity, end of period
643,776
615,903
5
(1) Refer to "Non-GAAP Measures" on page 7 for further information.(2) Refer to note 10 of the consolidated interim financial statements for further information.
THIRD QUARTER OVERVIEW
In the third quarter of 2024, the Company:
generated revenue of $430.1 million, a decrease of 11 percent from the third quarter in 2023 resulting primarily from lower activity and a lower pricing environment in the United States;
reported third-quarter Adjusted EBITDA of $65.0 million versus $91.3 million in the third quarter of 2023 mainly as a result of lower utilization in North America and pricing in the United States, offset partially by improved utilization in Argentina as the Company operated two unconventional fracturing spreads concurrently for portions of the third quarter;
reported a net loss from continuing operations of $6.7 million or $0.08 per share diluted compared to net income of $97.5 million or $1.09 per share diluted during the third quarter in 2023;
increased period-end working capital to $307.1 million from $236.4 million at December 31, 2023, due to a combination of higher activity and geographical mix; and
incurred capital expenditures from continuing operations of $22.5 million, which included $8.7 million of expansion capital in Argentina.
FINANCIAL OVERVIEW, CONTINUING OPERATIONSTHREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 VERSUS 2023
NORTH AMERICA
Three Months Ended Sep. 30,
Nine Months Ended Sep. 30,
2024
2023
Change
2024
2023
Change
(C$000s, except operational and exchange rate information)
($)
($)
(%)
(unaudited)
Revenue
289,225
401,291
(28
)
871,705
1,190,660
(27
)
Adjusted EBITDA(1)
31,372
83,023
(62
)
100,643
234,793
(57
)
Adjusted EBITDA (%)(1)
10.8
20.7
(48
)
11.5
19.7
(42
)
Fracturing revenue per job ($)
35,452
43,633
(19
)
35,563
43,480
(18
)
Number of fracturing jobs
7,906
8,870
(11
)
23,791
26,472
(10
)
Active pumping horsepower, end of year (000s)
1,009
1,035
(3
)
1,009
1,035
(3
)
US$/C$ average exchange rate(2)
1.3641
1.3411
2
1.3604
1.3456
1
(1) Refer to "Non-GAAP Measures" on page 7 for further information.(2) Source: Bank of Canada.
OUTLOOK
Calfrac produced lower sequential profitability in the third quarter driven by decreased utilization in Canada combined with a change in customer mix in the United States. However, activity in the United States improved throughout the period and the Company expects this momentum to continue into the fourth quarter. In response to higher demand for the Company's services, Calfrac temporarily transferred equipment from Canada to service clients in the Williston basin. However, the Company plans to return this large fracturing fleet to Canada late in the fourth quarter. Calfrac anticipates that solid utilization in the United States will drive improved sequential quarter-over-quarter profitability in North America.
The Company made further progress on its equipment modernization program and exited the third quarter with 60 Tier IV Dynamic Gas Blending ("DGB") pumps and anticipates operating the equivalent of five Tier IV DGB fleets in the first quarter of 2025.
THREE MONTHS ENDED SEPTEMBER 30, 2024 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2023
REVENUE
Revenue from Calfrac's North American operations decreased to $289.2 million during the third quarter of 2024 from $401.3 million in the comparable quarter of 2023. The Company's operations in North America had a slow start to the quarter, but gained momentum as the quarter progressed. Utilization grew throughout the third quarter and the Company exited with high utilization of its 13 fracturing fleets in North America. The Company operated 15 fleets in the comparable quarter of 2023. Lower pricing in the United States contributed to the 19 percent decrease in average revenue per job in the third quarter of 2024 versus the same quarter in 2023. Coiled tubing revenue decreased by 37 percent as compared to the third quarter in 2023 mainly due to lower utilization of Calfrac's six deep coiled tubing units combined with the completion of smaller jobs.
ADJUSTED EBITDA
The Company's operations in North America generated Adjusted EBITDA of $31.4 million or 11 percent of revenue during the third quarter of 2024 compared to $83.0 million or 21 percent of revenue in the same period in 2023. This decrease was primarily due to the decline in fracturing fleet utilization in the United States combined with lower pricing relative to the same period in 2023.
NINE MONTHS ENDED SEPTEMBER 30, 2024 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2023
REVENUE
Revenue from Calfrac's North American operations decreased to $871.7 million during the first nine months in 2024 from $1.2 billion in the comparable period in 2023. The 27 percent decrease in revenue was primarily due to lower activity in the United States combined with lower pricing. As a result, Calfrac idled two fracturing fleets during February 2024 and operated an average of 10 fleets in North America during the first nine months of 2024 as compared to 15 fleets in the comparable period in 2023. In addition, activity for the Company's coiled tubing operations in North America decreased by 35 percent from the first nine months of 2023 due to lower industry demand for its six crewed units.
ADJUSTED EBITDA
The Company's operations in North America generated Adjusted EBITDA of $100.6 million during the first nine months of 2024 compared to $234.8 million in the same period in 2023. This decrease in Adjusted EBITDA was largely driven by lower fracturing and coiled tubing utilization in North America during the first quarter of 2024 as well as lower overall pricing levels in the United States. However, utilization during the second quarter of 2024 improved for Calfrac's fracturing fleets in North America, particularly in May and June, as the completion programs of the Company's core clients significantly increased. The third quarter started slowly on both sides of the border, but gained momentum as the quarter progressed with the Company operating 13 fleets at near full utilization in September.
ARGENTINA
Three Months Ended Sep. 30,
Nine Months Ended Sep. 30,
2024
2023
Change
2024
2023
Change
(C$000s, except operational and exchange rate information)
($)
($)
(%)
($)
($)
(%)
(unaudited)
Revenue
140,884
81,802
72
314,547
252,219
25
Adjusted EBITDA(1)
37,463
14,331
161
68,222
43,623
56
Adjusted EBITDA (%)(1)
26.6
17.5
52
21.7
17.3
25
Fracturing revenue per job ($)
91,597
78,634
16
84,083
83,242
1
Number of fracturing jobs
837
582
44
2,090
1,784
17
Active pumping horsepower, end of period (000s)
139
139
—
139
139
—
US$/C$ average exchange rate(2)
1.3641
1.3411
2
1.3604
1.3456
1
(1) Refer to "Non-GAAP Measures" on page 7 for further information.(2) Source: Bank of Canada.
OUTLOOK
Calfrac's Argentinean operations leveraged the strong momentum from the second quarter to sequentially increase profitability by approximately three times, as it produced Adjusted EBITDA of $37.5 million, a record quarter for this operating division. Even with the expanded footprint, it improved upon its best-in-class safety record by exiting September with a TRIF of 0.33, a decrease from 0.41 in June. While the Company expects consistent utilization for its offshore coiled tubing unit through to the end of the year, activity for its fracturing operations in the Vaca Muerta shale play will experience a sequential decrease in available spot work. Currently, Calfrac is negotiating with its long-term customers on multi-year service contracts and plans to capitalize on the growing development in this country.
THREE MONTHS ENDED SEPTEMBER 30, 2024 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2023
REVENUE
Calfrac's Argentinean operations generated revenue of $140.9 million during the third quarter of 2024 versus $81.8 million in the comparable quarter in 2023. The 72 percent increase in revenue was driven by a significant increase in the number of fracturing jobs completed during the quarter and improved pricing for spot work. For the first time in the Company's history in Argentina, two unconventional fracturing spreads operated in the Vaca Muerta shale play at the same time. The successful operations and expanding customer base reinforces management's decision to add equipment into the country, allowing the Company to support and participate in the anticipated growth of Argentina's energy sector moving forward. The Company also demonstrated growth in activity across its other service lines primarily due to the additional revenue generated from its new offshore coiled tubing operations combined with the bundled nature of its service contracts.
ADJUSTED EBITDA
The Company's operations in Argentina generated Adjusted EBITDA of $37.5 million during the third quarter of 2024 compared to $14.3 million in the same quarter of 2023, while the Company's Adjusted EBITDA margins increased to 27 percent from 18 percent. This increase was primarily due to the significant revenue growth and efficiencies resulting from operating two unconventional fracturing spreads simultaneously during the quarter.
NINE MONTHS ENDED SEPTEMBER 30, 2024 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2023
REVENUE
Calfrac's Argentinean operations generated revenue of $314.5 million during the first nine months of 2024 compared to $252.2 million in the first nine months of 2023 as the Company demonstrated strong activity growth across all service lines. The primary driver for the increase in revenue was higher fracturing activity as the Company operated two unconventional fracturing spreads simultaneously for portions of the third quarter combined with revenue generated from its newly commenced offshore coiled tubing operations. Cementing revenue also increased due to the bundled nature of the Company's contracted services in the Vaca Muerta shale play.
ADJUSTED EBITDA
The Company's operations in Argentina generated Adjusted EBITDA of $68.2 million or 22 percent of revenue during the first nine months in 2024 versus $43.6 million or 17 percent of revenue in the comparable period in 2023. The Company continued to focus on growing its operating presence in the Vaca Muerta shale play, which more than offset lower utilization in Las Heras following the completion of its contract with a major client in that region during the second quarter of 2024.
SUMMARY OF QUARTERLY RESULTS, CONTINUING OPERATIONS
Three Months Ended
Dec. 31,
Mar. 31,
Jun. 30,
Sep. 30,
Dec. 31,
Mar. 31,
Jun. 30,
Sep. 30,
2022
2023
2023
2023
2023
2024
2024
2024
(C$000s, except per share and operating data)
($)
($)
($)
($)
($)
($)
($)
($)
(unaudited)
Financial
