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CES Energy Solutions Q2 Earnings Call Highlights

Key Points Interested in CES Energy Solutions Corp.? Here are five stocks we like better. Record second-quarter performance: Revenue rose 24.4% year over year to CAD 714.1 million, while adjusted EBITDA increased about 35% to CAD 119.2 million. The 16.7% EBITDA margin exceeded the company's target range, though management expects second-half margins to remain within the existing 15.5%–16.5% guidance. Growth driven by market-share gains and strong activity: CES held a 29.7% share of active North American land rigs, with particularly strong positions in Canadian drilling fluids and the Permian Basin. Management sees sustained Canadian activity and continued U.S. growth through 2026 and into 2027, especially in land production chemicals. Strong cash generation and shareholder returns: Funds flow from operations reached a record CAD 97 million, while the company plans roughly CAD 100 million in 2026 capital spending. CES repurchased more than 1.5 million shares around quarter-end, renewed authorization for up to 18.1 million additional repurchases, and ended the quarter with leverage of 1.15 times adjusted EBITDA. CES Energy Solutions (TSE:CEU) reported record second-quarter revenue and adjusted EBITDA, supported by market-share gains, higher service intensity and strong activity across its North American drilling fluids and production chemicals businesses. President and CEO Ken Zinger said quarterly revenue reached an all-time high of CAD 714.1 million, up 24.4% from the prior-year period. Adjusted EBITDA rose about 35% year over year to a record CAD 119.2 million, while the company's 16.7% EBITDA margin exceeded its stated target range of 15.5% to 16.5%. → No Hangover: Revisiting Microsoft One Week After Earnings The company generated CAD 497 million of revenue in the U.S., its sixth consecutive quarterly record in that market, and CAD 217.1 million in Canada, its strongest second-quarter Canadian revenue result. U.S. operations represented 70% of consolidated revenue during the period, while Canada accounted for 30%. Margins supported by revenue and temporary factors Management said the quarter's margin performance reflected record revenue, increased service intensity, and a single short-term project. It also cited the effect of a weaker Canadian dollar and increased values in certain product categories under its standard cost accounting process. → MarketBeat Week in Review – 08/03 - 08/07 During the question-and-answer session, management said that excluding those temporary factors, the EBITDA margin would likely have been "somewhere squarely between the 16%-16.5% range." The company nevertheless expects margins in the second half to remain in the higher half of its 15.5% to 16.5% target range. Story Continues CES did not raise its formal margin guidance, despite exceeding the upper end of the range in several recent quarters. Zinger said supply shortages, shipping disruptions and price volatility associated with the Iran conflict have created an unpredictable environment for sourcing and pricing products. He said the company does not expect those conditions to result in meaningful or sustained margin erosion. → Why the Landlord of the AI Boom Could Outlast the Chipmakers "The company continues to fire on all cylinders," management said, while noting that it wants to avoid setting a higher target before it has a clear path to sustaining it. Market share and operating outlook CES said it was servicing 235 of 791 active North American land rigs at the time of the call, representing a 29.7% market share. Its Canadian Drilling Fluids business was serving 89 of 219 Canadian jobs, or a 40.6% share. In the U.S., AES was supplying chemistry and services to 146 of 572 active land rigs, including a 39.5% share in the Permian Basin. Zinger said Canadian activity has remained strong after breakup, with the Western Canadian Sedimentary Basin rig count at its highest August level since 2014. He said the company expects elevated activity to