Research Flash - Calfrac Well Services (CFW:TSX,$4.48|N/R) Q2 Financials Preview

Calfrac is expected to report Q2/22 financial results on July 28th before market open. Given the indicated results from CFW’s pressure pumping peers in North America, we are expecting strong results above consensus estimates. Last quarter, management guided for sequential growth in Q2 with a large step change in revenue and EBITDA coming in Q3 (reported in November). Management also outlined that CFW was planning to add its 9th U.S. fleet in Q2 (eventually growing to 13 fleets) and may add another fleet in Canada if demand grows.

Consensus is currently expecting:

  • Revenue of $304M (+3% QoQ, +47% YoY)

  • EBITDA of $23M (+10% QoQ, +423% YoY)

  • Net income of -$9.6M

Competitors Indicating Strong Results

Yesterday, Haliburton (HAL:US) reported Q2/22 financial results that beat street expectations. HAL reported revenue of US$5.1B vs. consensus of US$4.7B and EBITDA of US$0.9B vs. consensus of US$0.9B. HAL cited increasing demand for pressure pumping services in North and South America, with its completion & production segment growing revenue 42% YoY and the North American region growing revenue 55% YoY. On June 20th, STEP Energy (STEP:TSX) provided an operational update for Q2 and raised its guidance. STEP indicated steady demand and pricing for Canada and significant tightening in the U.S during Q2. STEP increased its Q2 guidance to $250-265M in revenue (vs. consensus of $213M) and $42-50M in adjusted EBITDA (vs. consensus of $27M). As for Q3, STEP expects higher activity levels in Canada and steady activity levels in the U.S.

Last week, NexTier Oilfield Solutions (NEX:US) raised its Q2 guidance as well, now guiding revenue growth of 30% QoQ (previously 20%), adjusted EBITDA of at least US$155M (previously $130M) and an adjusted EBITDA margin improvement of 500 bps QoQ. NEX also increased its 2022 FCF guidance from US$150M to US$175M. Canada-based peer Trican Well Services (TCW:TSX) will be reporting Q2/22 on July 26th after market close, providing another solid read-through for CFW.

Financing

On June 28th, CFW announced the repayment and cancellation of its $25M secured bridge loan from G2S2 Capital which it drew $15M from. We view this as another indicator of strong upcoming financial results. During the quarter, CFW also filed a short form prospectus for up to $500M; this ties with CFW’s main objective of decreasing its debt load.

20220720 - M Partners - CFW - Q2 Preview
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