Trican Well Service Ltd.

Good morning, ladies and gentlemen, and welcome to TRICAN Wealth Services First Quarter 2024 Earnings Results Conference Call and Webcast. As a reminder, this conference call is being recorded. I would now like to turn the meeting over to Mr. Brad Fedora, President and Chief Executive Officer of TRICAN Wealth Services Limited. Please go ahead, Mr. Fedora.

Good morning. Thanks for joining us, everyone. First, Scott Matson, our CFO, will give an overview of the quarterly results. I will then provide some comments with respect to the corridor and the current operating conditions and our views for the outlook of the future. And then we will open the call for questions. Several members of our executive team are here today in the room and are available to answer any questions that everybody may have. I'll now turn the call over to Scott.

Thanks, Brad. Just before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements and other information based on current expectations or results for the company. Certain material factors or assumptions that were applied in drawing conclusions or making projections are reflected in the forward-looking information section of our MD&A for Q1 of 2024. A number of business risks and uncertainties could cause actual results to differ materially from these forward-looking statements and our financial outlook. Please refer to our 2023 Annual Information Forum for the year ended December 31st, 2023 for a more complete description of the business risks and uncertainties facing Trican. This document is available on our website and on CDAR. During this call, we will refer to several common industry terms and use certain non-GAAP measures, which are more fully described in our Q1 2024 MD&A. And our quarterly results were released after close of market last night and are available both on CDAR and our website. So with that, let's move on to our results for the quarter. Most of my comments will draw comparisons to the first quarter of last year. but I'll also provide some commentary about our quarterly activity and our expectations going forward. Trican's results for the quarter compared to last year's Q1 were solid but not quite as strong based on moderately reduced activity year over year. The quarter started a bit slower than we anticipated with a snap of extremely cold weather delaying some of our customers' operations as we started back in earnest in January. But with that, revenue for the quarter was $271.9 million, with adjusted EBITDA of $72.8 million, or 27% of revenues. Again, not quite as strong as the $81.6 million of revenues we generated last year, but still very solid. This was mainly a result of activity levels on the frac side of the business being a little slower due to the start of the year, combined with the job mix and the specific customer well designs and programs that we executed during the quarter. Adjusted EBITDAs came in at 74.4 million or 27% of revenues. To arrive at EBITDAs, we add back the effects of cash settled share based compensation recognized in the quarter to more clearly show the results of our operations and remove some of the financial noise associated with changes in our share price as we mark to market these items. On a consolidated basis, we continue to generate positive earnings, generating 41.2 million in the quarter. which translates to $0.20 per share basic and $0.19 per share on a fully diluted basis. Trican generated free cash flow of $49.9 million during the quarter. Our definition of free cash flow is essentially EBITDA, less non-discretionary cash expenditures, which include maintenance capital, interest, current income tax, and cash settled stock-based comp. You can see more details on this in our non-GAAP measures section of the MD&A. Capital expenditures for the quarter totaled $15.3 million, split between our maintenance capital of $11.5 million and upgrade capital of $3.8 million. Our upgraded capital was dedicated mainly to the electrification of ancillary frac equipment and ongoing investments to maintain the productive capacity of Trican's active equipment. During Q1 2024, we deployed our fifth Tier IV fleet. and the second group of electric ancillary equipment into the field, and we are extremely happy with the operational and financial performance of this equipment. The balance sheet remains in excellent shape. We exited the quarter with positive working capital of approximately $175 million, including cash of $9.3 million. As we anticipated, our cash position decreased compared to year end. The major factors that contributed were as follows. Working capital increased by $74 million due to the uptick in Q1 activity, and we would expect the majority of this to unwind as we move through the summer. Tax payments were a combined $39.7 million with $36.4 million related to our 2023 tax bill, which we telegraphed throughout 2023. The remainder related to our ongoing installments for 2024. NCIB funding was $16.7 million in the quarter with our share repurchase program still in active flight. and our dividend payment was $9.3 million. With respect to our return of capital strategy, we repurchased and canceled 4.0 million shares under the NCIB program in Q1 of 2024. And subsequent to the quarter, we purchased and canceled an additional 1.6 million shares and continue to be active with our buyback program. And Brad will provide a bit more color on our NCIB strategy a bit later. As noted in our press release, the Board of Directors approved a dividend of four and a half cents per share, reflecting approximately 9.1 million in aggregate spend to shareholders. The distribution is scheduled to be made on June 28th, 2024 to shareholders of record as of the close of business on June 14th, 2024. And I would note that the dividends are designated as eligible dividends for Canadian income tax purposes. So with that, I'll turn things back over to Brad.