Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Calfrac Well Services Ltd (CFWFF, Financial) reported a sequential revenue increase of 29% from the first quarter, driven by higher activity in North America.
- The company achieved record levels of proppant pumped during fracking operations for two consecutive months.
- Calfrac's coiled tubing group set a record for the most plugs milled out in a 12-hour period.
- The company is expanding its operations in Argentina, leveraging North American best practices and seeing high demand for its services.
- Calfrac is modernizing its fleet with Tier IV DGB pumps, aiming to operate five dual fuel fleets in North America by early next year.
Negative Points
- Revenue from continuing operations decreased by 9% compared to the same period in 2023, primarily due to lower activity and pricing in the United States.
- Adjusted EBITDA declined by 26% from the same period last year, attributed to lower utilization and pricing levels in the United States.
- Net income from continuing operations decreased to $24.6 million from $50.5 million in the comparable quarter of 2023.
- The company's Tier IV fleet modernization program is progressing slower than initially anticipated.
- Calfrac's capital expenditures increased significantly, with $66.8 million spent in the second quarter, impacting cash flow.
Q & A Highlights
Q: What's the CapEx number for the year now?
A: The overall guidance is around $200 million on a full-year basis, with a significant portion of that increase being allocated to the Argentinian segment. - Michael Olinek, CFO
Q: Is the $20 million quarterly revenue from coiled tubing in Argentina sustainable in future quarters?
A: The uptake was partly due to the offshore coiled tubing rig, but overall, we are busier in Argentina and expect to continue at this level. - Patrick Powell, CEO
Q: Regarding fleet renewals and Tier IV upgrades, is the current pace in line with expectations?
A: It's a bit slower than anticipated. We chose to slow down to reassess, but we plan to finish the year with 80 Tier IV pumps in North America. - Patrick Powell, CEO
Q: Do you expect US revenues to improve from Q2 levels, especially in the US Rockies?
A: Yes, we expect to have 8 fleets operating soon, which is fully utilized for us, and it looks steady through to the fourth quarter. - Patrick Powell, CEO
Q: Can you discuss the market dynamics in Argentina that justify the investment in moving the Tier II fleet there?
A: The slowdown in the south allowed us to reallocate equipment to form a second large fleet in Argentina, where demand is high. The work is under contract, and the equipment is in high demand there. - Patrick Powell, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
