Trican Well Service Ltd.

Good morning, ladies and gentlemen. Welcome to the TRICAN Wealth Service Fourth Quarter 2023 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 Service Limited. Please go ahead, Mr. Fedora.

Thank you very much, and good morning, everyone. Thank you for attending the TRICAN Fourth Quarter Results Conference Call. First of all, Scott Mattson, our Chief Financial Officer, will give an overview of the quarterly results. I will then provide some comments with respect to the quarter and the current operating conditions and our outlook for the near future. And then we'll open the call for questions. As usual, several members of our executive team are in the room today and are available to answer any questions anyone may have. And now I'd like to turn the call over to Scott to start things off.

Thanks, Brad. Good morning, everyone. 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 Q4 2023. 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 31st, 2023 for a more complete description of 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 Q4 2023 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, let's move on to our results for the quarter. Most of my comments will draw comparisons to the fourth quarter of last year, and I'll provide a few comments about our quarterly activity and expectations going forward. Trican's results for Q4 were as anticipated, essentially in line with last year's Q4, with slightly more activity muted a bit by inflationary pressure and impacted by the standard Christmas break, which lasted pretty much through the end of the year. Revenue for the quarter was $254.9 million, an increase of about 8% compared to Q4 of 2022. An adjusted EBITDA came in at $56.4 million or 22% of revenues, down slightly from the $59.4 million or 25% of revenues we generated in Q4 of 2022. This was mainly attributable to our job mix in the quarter based on the specific well designs and customer programs that we executed during the quarter. Adjusted EBITDAs for the quarter came in at 58.8 million or 23% of revenues, again, essentially in line with the 60.1 million or 25% of revenues we printed last year. 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 continued to generate positive earnings, printing $28.8 million in the quarter, which translates to about $0.14 per share basic and 13% per share on a fully diluted basis. We generated free cash flow of $38.7 million during the quarter, as compared to $47.1 million in Q4 of 2022. Our definition of free cash flow is essentially EBITDA, slash non-discretionary cash expenditures, which includes maintenance capital, interest, cash taxes and cash settled stock-based compensation. As we've previously noted, we moved into a net taxable position in 2023, which is the primary driver of the year-over-year difference. You can see more details on this in the non-GAAP measures section of our MD&A. Capital expenditures of the quarter totaled $18.3 million, split between maintenance capital of about $8.8 million and upgrade capital of $9.5 million. The upgrade capital was dedicated mainly to our ongoing Tier 4 capital refurbishment program and the electrification of ancillary frac equipment, which Brad will touch on later. Updates to our fifth Tier 4 fleet were largely completed in the fourth quarter, with final commissioning occurring early in Q1, and that equipment is now deployed and operating. The balance sheet remains in excellent shape. We exited the quarter with positive working capital of approximately $153.2 million, including cash of $88.8 million. And I would note that a portion of that cash balance will be used to satisfy our 2023 tax obligations and will flow out in Q1 of 2024. Finally, with respect to our return of capital strategy, we repurchased and canceled 2.6 million shares under our NCIB program in Q4 of 2023. On an annualized basis in 2023, we repurchased and canceled a total of 22.7 million shares at an average price of about $3.46 per share. representing approximately 10% of the shares outstanding at the beginning of last year. We've repurchased and canceled about 2.6 million shares since year end, and we continue to be active and opportunistic with our buyback program. As noted in our press release, our board of directors approved a dividend of 4.5 cents per share for the quarter, representing an increase of 12.5% from our previous quarterly dividend. This essentially offsets the reduction in share count as a result of the company's ongoing NCIB program and will keep our annual expected dividend payout in the $34 to $36 million range. Distribution is scheduled to be made on March 29th, 2024 to shareholders of record as of the close of business on March 15th. 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.