CES Energy Solutions Corp.

Good morning everyone and welcome to the CES Energy Solutions third quarter 2024 results conference call and webcast. As a reminder, all participants are in a listen only mode and the conference call is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing the star key followed by zero. I would now like to turn the conference over to Mr. Tony Alucino, T Financial Officer. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for attending today's call. I'd like to note that in our commentary today, there will be forward-looking financial information and that our actual results may differ materially from the expected results due to various risk factors and assumptions. These risk factors and assumptions are summarized in our third quarter MD&A, and press release dated November 6th, 2024. And then our AIF dated February 29th, 2024. In addition, certain financial measures that we will refer to today are not recognized under current general accepted accounting policies. And for a description and definition of these, please see our third quarter MD&A. At this time, I'd like to turn the call over to Ken Zinger our president and CEO.

Thank you, Tony. Welcome, everyone, and thank you for joining us for our third quarter 2024 earnings call. On today's call, I will provide a brief summary of our financial results released yesterday, followed by an update on capital allocation, and then our divisional updates for Canada and the U.S. I'll then pass the call over to Tony to provide a detailed financial update. We'll take some questions, and then we'll wrap up the call. I'll start my comments today by highlighting some of the major financial accomplishments we achieved in Q3 of 2024. These highlights include all-time record quarterly revenue of $607 million, which was 13% higher than Q3 of last year and almost 3% higher than our prior quarterly record. All-time quarterly EBITDA of $103 million, which was ahead of last year's Q3 by 28%. even a margin of 16.9% versus 15% in Q3 of 2023. To date, we have repurchased 9 million shares of the 19.2 million shares allowed under our current NCIB plan at an average price of $7.68. This represents 47% of the current program in just three and a half months. Free cash flow of $40.1 million during the quarter and $152.3 million year-to-date at September 30th. Total debt to trailing 12 months EBITDA rose slightly to 1.14 from 1.12 at the end of last quarter, but well below the 1.49 reported at year-end 2023 and at the lower end of our targeted range of 1 to 1.5 times. Cash conversion cycle came in at a record 101 days, well below our targeted range of 110 to 115 days. I'm happy to confirm that our previously announced capital allocation plans remain the same as stated on the last call. We will continue to pay our quarterly dividend of $0.03 per share or approximately $27 million per year with an intention to adjust the dividend once per year while reporting Q4 results in March of each year. We will continue to support the business with the necessary investments required to provide acceptable growth and returns. This includes a slight increase of our CapEx in 2024 to $85 million in order to support the revenue growth we believe is coming over the next three quarters. We anticipate CapEx will revert back to the $75 million level in 2025. We will continue to look for strategic tuck-in acquisition opportunities into related business lines or geographies where we believe we can add value and grow returns. Based on our current outlook, We intend to once again purchase the maximum number of shares possible under the NCIB of $19.2 million. We will continue to target a debt level in the 1 to 1.5 times debt to trailing 12 months EBITDA range. I will now move on to summarize Q3 performance by division. Today, our rig count in North America stands at 196 rigs out of the 782 listed as running, representing an industry-leading North American land market share of over 25%. In Canada, the Canadian Drilling Fluids Group continues to lead the WCSB in market share. Today, we are providing service to 77 of the 212 jobs listed as underway in Canada, or a 36.3% market share. The active drilling rate count in Canada so far in the second half of 2024 has been trending consistently higher by approximately 10-15% year-over-year. We remain excited about the prospects for 2024 and 2025 and continue to anticipate that activity will be a little stronger during these years than was experienced in 2023 due to the completion and startup of infrastructure projects and their associated takeaway capacity. Purechem, our Canadian production chemical business, had very strong results once again in Q3. All of the business lines within Purechem continue to grow significantly as we continue to take market share, win bids, optimize formulations, and fine-tune the overall growth. The revenue and earnings from our primary business production treating continue to drive the growth in Canada as we consistently strive to deliver superior products and service combined with competitive market pricing. In the United States, AEF, our U.S. growing foods group, is providing chemistries and service to 120 of the 568 raised listed as active in the USA land market today for a continued number one market share of US land rigs at just over 21%. The number of rigs drilling in the USA was roughly neutral quarter over quarter, as we believe we are now at or near the bottom of active rig counts. In fact, we expect a small uptick in activity beginning in Q1 and better overall activity in 2025 than was experienced in the second half of 2024. We continue to enjoy a basin leading 94 rigs out of the 304 listed as working in the Permian Basin, or 31%. The Permian industry rig count has also been roughly flat quarter over quarter, and we have the same optimism about increased activity in Q1 as with the broader USA. As well, service intensity continues to demonstrate its presence in our numbers for drilling fluids throughout North America. We continue to utilize our scientists, laboratories, and facilities to develop new innovative solutions to optimize performance for our customers. The integration of the HydroLite acquisition continues to progress well. Operating as AES completion services, we've already started to see significant contributions from the team and look forward to continuing to maximize value from this accretive tuck-in acquisition. Finally, the JCAM Catalyst division continued to lead the company with its growth in Q3. We are consistently winning more business, growing revenue, and taking market share at JCAM Catalyst. We remain confident that we have not only achieved the largest market share in the Permian Basin, but that we are growing that share every day. As well, we have now achieved commercial and operational success with a technically sophisticated product line for the offshore market in the Gulf of Mexico. This achievement opens the door to some higher margin business, as well as establishing credibility to participate in more RFP opportunities. Although a small piece of our business today, we believe we are on a path to grow this attractive segment. As always, I want to extend my appreciation to each and every one of our employees for their commitment to the business culture and success of CES. It is rewarding to note that due to the growth we are experiencing, and anticipating in all parts of our business, we have increased our total number of employees at CES from 2,236 on January 1st of 2024 to 2,488 at the end of Q3. This represents an increase of 252 employees so far this year, or approximately 10%. In conclusion, I would like to thank all of our employees in every division. It speaks once again to the quality of the people we employ everywhere in every division here at CES. With that, I'll pass the call over to Tony for the financial update.