CES Energy Solutions Announces Dividend, Strong Stock Performance, and Earnings Growth

CES Energy Solutions Corp announces a dividend of CA$0.03 per share, yielding 1.8% of the current stock price, after reporting record revenue and EBITDA in Q1 2024. The company's strong financial performance is driven by its leading market positions in Canada and the US.

author-image
Trim Correspondents
New Update
CES Energy Solutions Announces Dividend, Strong Stock Performance, and Earnings Growth

CES Energy Solutions Announces Dividend, Strong Stock Performance, and Earnings Growth

CES Energy Solutions Corp, a leading provider of advanced consumable chemical solutions to the oil and gas industry, has announced a dividend of CA$0.03 per share, yielding 1.8% of the current stock price. The company's stock has been on a strong upward trajectory, with a 55% increase over the past three months.

Why this matters: The strong financial performance and dividend announcement of CES Energy Solutions Corp can have a ripple effect on the oil and gas industry, influencing investor confidence and market trends. This can also impact the overall economy, as the energy sector is a significant contributor to national GDP.

Analysts are bullish on CES Energy Solutions' future performance, with expectations of a 21.6% growth in Earnings Per Share (EPS) next year. The company's recent financial results have been impressive, as highlighted during its Q1 2024 earnings call on May 9, 2024.

During the call, President and CEO Ken Zinger discussed the company's record-breaking performance. CES Energy Solutions achieved record revenue of $588.6 million, surpassing the prior record set in Q4 2022 by nearly 5%. The company also posted an all-time highest quarterly EBITDA of $102 million, a 20% increase from the previous record set last quarter. The EBITDA margin reached 17.3%, the highest quarterly margin achieved by CES in nine years.

CES Energy Solutions generated free cash flow of $57.4 million during the quarter, while its total debt to trailing 12 months EBITDA ratio dropped to a new low of 1.28 times from 1.49 times at the end of December 2023. Zinger also outlined the company's capital allocation plans for 2024, which include supporting the business with necessary investments for growth and returns, seeking tuck-in acquisition opportunities, paying a quarterly dividend of $0.03 per share, renewing the NCIB plan in July 2024, maximizing share repurchases under the NCIB, and using remaining free cash flow to reduce leverage to approximately 1 times total debt to trailing 12 months EBITDA.

The company's Canadian Drilling Fluids division continues to lead the Western Canadian Sedimentary Basin (WCSB) in market share, with a rig count of 171 out of 723 listed as running, representing a market share of 23.6%. Meanwhile, the US AES division is providing chemistries and service to 132 of the 605 active rigs listed in the USA land market, maintaining its number one market share of US land rigs at 21.8%.

With its strong financial performance, attractive dividend yield, and leading market positions in Canada and the US, CES Energy Solutions is well-positioned for continued growth and success in the oil and gas industry. As Zinger stated during the earnings call, "CES delivered record revenue and EBITDA in the quarter despite the typical seasonal slowdown in activity, which is a testament to our positioning and the strong execution of our team."

Key Takeaways

  • CES Energy Solutions announces CA$0.03 dividend per share, yielding 1.8%.
  • Stock price up 55% in 3 months, with 21.6% EPS growth expected next year.
  • Q1 2024 earnings: record revenue of $588.6 million, EBITDA of $102 million.
  • Company achieves highest quarterly EBITDA margin in 9 years at 17.3%.
  • CES leads market share in Western Canada and US land rigs at 23.6% and 21.8%.