Total Energy Services’ Earnings Call: Mixed Results

Total Energy Services ((TSE:TOT)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Total Energy Services painted a mixed picture, reflecting both achievements and challenges. The company reported strong revenue growth in key segments and a robust financial position, alongside significant accomplishments in the Australian market. However, these positives were tempered by a decrease in EBITDA, margin pressures, and difficulties in the North American operations, particularly in the U.S. well servicing sector.

Increased Revenue in Key Segments

Total Energy Services reported an 8% year-over-year increase in consolidated third-quarter revenue. The CPS segment saw a revenue boost of $15.2 million, Well Servicing increased by $6.2 million, and the RTS segment added $1.6 million. This growth highlights the company’s ability to capitalize on market opportunities despite broader economic challenges.

Strong Financial Position

The company maintained a solid financial standing with $115.5 million in positive working capital, including $57.1 million in cash. The bank debt to EBITDA ratio was notably low at 0.25, underscoring Total Energy’s prudent financial management and resilience in a fluctuating market.

Australian Market Success

Total Energy achieved remarkable success in the Australian market, with a 32% increase in operating days and a 162% rise in operating income for Well Servicing. The active drilling rig count in Australia reached a record high of 13, demonstrating the company’s strategic focus and operational efficiency in this region.

Record Fabrication Sales Backlog

The company reported a significant increase in its fabrication sales backlog, which rose by $76.9 million or 25% to $380.8 million. This backlog provides visibility into the second half of 2026, offering a stable foundation for future growth and revenue generation.

Decreased EBITDA and Margin Pressures

Despite revenue growth, Total Energy experienced a $7.6 million decrease in EBITDA compared to the previous year. The consolidated gross margin dropped by 209 basis points, with the CPS segment’s EBITDA declining by 22%. These figures highlight the ongoing margin pressures faced by the company.

Lower North American Activity

The North American market presented challenges, with a 33% year-over-year decline in operating days for the CDS segment. This decline was partially offset by increased activity in Australia, yet it underscores the difficulties in the North American sector.

Foreign Exchange Impact and Cost Inflation

The CPS segment results were negatively impacted by a $1.8 million foreign exchange loss, alongside increased costs due to tariff-related supply chain challenges. These factors contributed to the overall margin pressures faced by the company.

Substantial Decline in U.S. Well Servicing Activity

The U.S. well servicing sector experienced a significant decline in activity levels, which negatively impacted the overall segment performance. This decline contrasts with the growth seen in Australia and Canada, highlighting regional disparities in market conditions.

Forward-Looking Guidance

Looking ahead, Total Energy Services is focusing on leveraging strong North American demand for compression equipment and executing significant upgrades in Australia to meet ongoing market needs. The company remains committed to maintaining its strong financial position, with a focus on strategic growth and operational efficiency.

In conclusion, Total Energy Services’ earnings call reflected a balanced view of achievements and challenges. While the company demonstrated strong revenue growth and financial stability, it also faced margin pressures and regional operational challenges. Moving forward, Total Energy is poised to capitalize on market opportunities and address the challenges in its path.