Q1 Misses, but Acquisition and Debt Reduction Alleviate Impact

• E is up 44% YoY, outperforming the S&P Oil & Gas Equipment & Services Index, which is down 36% due to lower oil prices, a broader market pullback, and concerns over a potential recession sparked by trade tensions.
• Although E has no direct U.S. exposure, its clients exporting energy products to the U.S. could be affected by Trump’s tariffs. However, the energy sector faces a lower 10% tariff versus  25% on most other goods. We expect Trump may reverse or soften these tariff measures due to their potential negative effect on U.S. consumers and businesses. If that happens, we would adopt a bullish stance on the energy sector, given Trump’s focus on boosting energy production, which we anticipate will improve investor sentiment across North American energy services.

 

Key Financial Data ($)
YE Dec 31	$2,024	2025E	2026E
Cash	30,674,798	2,130,446	5,875,363
Working Capital	$36,281,170	$3,120,473	$7,268,227
Total Assets	$118,341,207.00	$113,861,453.00	$123,877,082.00
Total Debt	$22,669,463.00	$10,551,700.00	$10,551,700.00
Revenue	$34,646,888.00	$37,980,589.00	$43,218,630.00
Net Income	$4,543,553	$6,879,936	$9,219,653
EPS	$0	$0	$0

Price and Volume (1-year)

 

	YTD	12M
E	-17%	44%
TSX	3%	15%
Sector*	-26%	-36%

 

Enterprise vs Larger Players 

 

E is up 44% YoY, making it the second-best performing stock on our list of oilfield services companies. Ranked third in 2024 revenue growth, with the same position projected for 2025

Gross margins in line; debt-to-capital notably below the sector average

 

Financials 

Q1-2025 revenue and EPS were down YoY due to a large one-time client gas project that boosted Q1-2024.

Q1 revenue declined 16% YoY, missing our estimate by 11%. Gross margins decreased 6 pp YoY to 50%, in line with our estimate, and above the historical average of 47%, and sector average of 46%

G&A expenses rose 36% YoY, and were 4% higher than our estimate. With expenses outpacing revenue, EPS fell 50% YoY to $0.04 vs our forecast of $0.06

CAPEX increased 25% YoY to $6M, driven by heightened client demand necessitating new equipment purchases. Debt/capital declined QoQ (from 28% to 7%), reflecting the repayment of significant debt with

 

Appendix