Trican Well Service Ltd.

Good morning, ladies and gentlemen. Welcome to the Trican Well Service Third Quarter 2024 Earnings Results Conference Call and Webcast. As a reminder, this conference is being recorded. I would now like to turn the meeting over to Mr. Brad Fedora, President and Chief Executive Officer of Trican Well Service Limited. Please go ahead, Mr. Fedora.

Good morning, everyone. Thank you for joining our Q3 call. First, instead of Scott Matson, who's traveling today, Desmond Ho, our director of corporate finance, will give an overview of the quarterly results. And then as usual, I will provide some comments with respect to the corridor, the current operating conditions, and our outlook for the rest of this year and next year. And then we'll open the call for questions. We have several members of our executive team in the room today, and everybody will be available to answer questions, not only during this call, but for the remainder of the day. I'll now turn the call over to Desmond.

Thanks, Brad. 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 Q3 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 Form for the year ended December 31, 2023 for a more complete description of business risks and uncertainties facing Trican. This document is available both 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 Q3 2024 MD&A. Our quarterly results were released after close of market last night and are available both on CDAR and our website. So with that, I'll provide a brief summary of our quarter. My comments will draw comparisons mostly to the third quarter of last year and I will also provide some commentary about our quarterly activity and our expectations going forward. Trican's results for the quarter compared to last year's Q3 were solid, but not quite as strong as last year as certain customers delayed portions of their capital programs. Programs were delayed for various reasons, including water restrictions in some specific cases, well-licensing requirements, and customers generally managing their capital programs through the last half of the year in the face of challenging commodity price environments, particularly natural gas pricing. Revenue for the quarter was $221.6 million, with adjusted EBITDA of $50.2 million, or 23% of revenues. Not quite as strong as adjusted EBITDA of $65.7 million, or 26% of revenues we generated in Q3 2023, but still solid. Adjusted EBITDA for the quarter came in at $53.1 million, or 24% of revenues. To arrive at EBITDA, we add back the effects of cash-settled share-based compensation, recognizing 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 market these items. On a consolidated basis, we continue to generate positive earnings, producing $24.5 million in the quarter, which translates to $0.12 per share on both a basic and fully diluted basis. Trican generated free cash flow of $32.4 million during the quarter. Our definition of free cash flow is essentially EBITDA less non-discretionary cash expenditures, which include maintenance capital, interest, current tax, and cash settled stock-based compensation. You can see more details on this in the non-GAAP measures section of our MD&A. CapEx for the quarter totaled $15.2 million, split between maintenance capital of about $10.4 million and upgrade capital of $4.8 million. Our upgrade capital is dedicated mainly to the electrification of ancillary frac equipment and ongoing investments to maintain the productive capability of our active equipment. The balance sheet remains in great shape. We exited the quarter with positive working capital of approximately $136.5 million and expect to release a bit of working capital as we move through Q4 and exit the year in a similar strong position. With respect to our return on capital strategy, we repurchased and cancelled 7.5 million shares under our NCIB program in the quarter. Subsequent to Q3 2024, we'll purchase and cancel an additional 1 million shares and continue to be active with our buyback program. The 2023-2024 NCIB program was successfully completed on October 2nd, 2024, resulting in the purchase of 21 million common shares, the full 10% of our public float allowable under the program, at a weighted average price of $4.51 per share. On October 2nd, 2024, we announced the renewal of our NCIB program, which will allow us to purchase up to 19 million common shares. Again, 10% of our public flow to add renewal. The renewed program is scheduled to run from October 5th, 2024 through October 4th, 2025. As noted in our press release, the board of directors approved a dividend of 4.5 cents per share, reflecting approximately 8.5 million in aggregate to shareholders. The distribution is scheduled to be made on December 31st, 2024 to shareholders of record as of close of business on December 13th, 2024. I would like to note that the dividends are designated as eligible dividends for Canadian income tax purposes. With that, I'll turn things back to Brad.