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1. Company Snapshot

1.a. Company Description

Calfrac Well Services Ltd., together with its subsidiaries, provides specialized oilfield services in Canada, the United States, and Argentina.It offers hydraulic fracturing, coiled tubing, cementing, and other well stimulation services, as well as pressure pumping services to oil and natural gas industries.The company was founded in 1999 and is headquartered in Calgary, Canada.

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1.b. Last Insights on CFW

Calfrac Well Services Ltd. faces negative drivers behind its recent stock performance, primarily driven by the complex Canadian market landscape. The company operates in a market influenced by potential tariff impacts, which could act as a tax on consumers and affect economic growth. Additionally, the January 2025 TSX penny stocks report highlights the company's niche nature, which may limit its growth opportunities.

1.c. Company Highlights

2. Calfrac Well Services Limited Earnings Analysis

Calfrac Well Services Limited reported its fourth quarter 2024 earnings, highlighting a challenging operational and financial environment. Revenue from continuing operations amounted to $381.2 million, reflecting a 10% year-over-year decline, driven by lower activity levels and pricing pressures, particularly in the U.S. market. The company's adjusted EBITDA of $34.5 million was down 45% YoY, underscoring the margin compression the company has faced. Notably, Calfrac recorded a net loss of $6.4 million in Q4, compared to a net income of $13.2 million in the prior year, as higher costs and lower utilization rates weighed on performance. Despite these headwinds, the company maintained a focus on operational efficiency and long-term strategic initiatives.

Publication Date: Mar -13

📋 Highlights
  • Revenue Decline:: Revenue from continuing operations decreased 10% YoY to $381.2 million, reflecting challenging market conditions.
  • Adjusted EBITDA Drop:: Adjusted EBITDA fell 45% YoY to $34.5 million, indicating margin压缩 and operational challenges.
  • Net Loss:: The company reported a net loss of $6.4 million, compared to a net income of $13.2 million in the previous year, highlighting profitability issues.
  • Capital Expenditures:: Q4 capital expenditures were $33 million, with a $135 million budget planned for 2025, signaling investment in growth and modernization.
  • Tier IV Fracturing Equipment Transition:: Calfrac transitioned to Tier IV equipment, with 66 pumps operational by year-end and a target of 95 by 2025, enhancing operational efficiency.

Financial Performance and Margins

The company's financial performance in Q4 2024 was marked by significant margin compression. Revenue declined due to softer demand and pricing pressures, particularly in the U.S., where activity levels remained subdued. Adjusted EBITDA fell sharply, reflecting both operational challenges and higher costs, including those related to equipment upgrades and safety initiatives. The net loss for the quarter was attributed to these factors, as well as elevated capital expenditures, which totaled $33 million in Q4, with a $135 million budget planned for 2025 to support fleet modernization and expansion efforts.

Operational Updates and Strategic Initiatives

Calfrac highlighted several key operational updates during the earnings call. The company has made progress in transitioning its fleet to Tier IV fracturing equipment, with 66 pumps upgraded by year-end, and plans to reach 95 pumps by the end of 2025. This initiative is expected to enhance operational efficiency and reduce emissions, aligning with industry trends toward sustainability. Additionally, Calfrac continued its expansion in Argentina, deploying two fleets in the Vaca Muerta shale play, a region that remains a key growth driver for the company. However, challenges in the U.S. market, including lower activity levels and pricing pressures, tempered optimism in the near term. Despite these challenges, the company expressed optimism about the outlook for 2025, citing stabilization in North America and continued growth in Argentina.

Future Outlook and Valuation Considerations

Overall, Calfrac's Q4 2024 earnings reflect the challenges of operating in a dynamic and competitive industry, but the company's strategic focus on modernization, safety, and growth in key markets provides a foundation for future success. While near-term headwinds remain, the company's long-term prospects appear positive, particularly if it can successfully execute its strategic initiatives and navigate the challenges posed by tariffs and inflation.

3. NewsRoom

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Calfrac Reports Third Quarter 2025 Results

Nov -14

Source: globenewswire.com

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Calfrac Announces Rights Offering and Redemption of Second Lien Notes

Nov -14

Source: globenewswire.com

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Calfrac Well Services Insiders Placed Bullish Bets Worth CA$8.68m

Nov -03

Source:

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With 48% ownership, Calfrac Well Services Ltd. (TSE:CFW) has piqued the interest of institutional investors

Oct -13

Source:

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Calfrac Well Services Second Quarter 2025 Earnings: Beats Expectations

Aug -10

Source:

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Calfrac Well Services Q2 Net Income Falls; Reduces Operating Footprint in North America

Aug -08

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Calfrac Reports Strong Second Quarter 2025 Results

Aug -08

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Calfrac Well Services Insiders Added CA$8.39m Of Stock To Their Holdings

May -26

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.17%)

6. Segments

Fracturing

Expected Growth: 1.2%

Calfrac Well Services Ltd.'s fracturing segment growth of 1.2 is driven by increasing demand for hydraulic fracturing services in North America, improved operational efficiency, and strategic contract wins. Additionally, the company's focus on technology advancements, such as its proprietary PACE™ technology, has enhanced its service offerings and competitiveness.

Coiled Tubing

Expected Growth: 0.8%

Coiled Tubing from Calfrac Well Services Ltd. growth driven by increasing demand for oil and gas production, improved operational efficiency, and strategic expansion into new markets. Additionally, the company's focus on technology advancements, cost reduction initiatives, and strong customer relationships contribute to its 0.8 growth rate.

Cementing

Expected Growth: 1.1%

Calfrac Well Services Ltd.'s 1.1 growth in cementing is driven by increasing demand for oil and gas, rising drilling activities, and growing adoption of hydraulic fracturing. Additionally, the company's strategic expansion into new markets, investments in technology, and operational efficiencies have contributed to its growth.

Subcontractor

Expected Growth: 0.9%

Calfrac Well Services Ltd.'s subcontractor growth is driven by increasing demand for oilfield services, expansion into new markets, and strategic partnerships. The company's focus on operational efficiency, cost reduction, and innovative technology adoption also contribute to its growth. Additionally, the subcontractor's ability to adapt to changing market conditions and customer needs has enabled it to maintain a steady growth rate of 0.9.

Product

Expected Growth: 1.3%

Calfrac Well Services Ltd.'s 1.3 growth is driven by increasing demand for hydraulic fracturing services, expansion into new markets, and strategic acquisitions. Additionally, improving oil prices and increased drilling activities in North America contribute to the growth. The company's focus on operational efficiency, cost reduction, and innovative technology also support its growth momentum.

7. Detailed Products

Cementing Services

Calfrac provides cementing services to ensure a strong bond between the casing and the formation, preventing fluid migration and ensuring wellbore integrity.

Acidizing Services

Calfrac offers acidizing services to stimulate oil and gas wells, increasing production and enhancing recovery.

Coiled Tubing Services

Calfrac provides coiled tubing services for a range of applications, including well intervention, fishing, and milling operations.

Fracturing and Stimulation Services

Calfrac offers fracturing and stimulation services to increase oil and gas production, using advanced technologies and techniques.

Well Intervention Services

Calfrac provides well intervention services, including logging, perforating, and pipe recovery, to optimize well performance and extend well life.

Downhole Survey and Logging Services

Calfrac offers downhole survey and logging services to provide critical data for well planning, drilling, and production optimization.

8. Calfrac Well Services Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Calfrac Well Services Ltd. is medium due to the availability of alternative services and products in the oil and gas industry.

Bargaining Power Of Customers

The bargaining power of customers for Calfrac Well Services Ltd. is high due to the concentration of major oil and gas companies that have significant bargaining power.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Calfrac Well Services Ltd. is low due to the availability of multiple suppliers in the market.

Threat Of New Entrants

The threat of new entrants for Calfrac Well Services Ltd. is low due to the high barriers to entry in the oil and gas industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Calfrac Well Services Ltd. is high due to the competitive nature of the oil and gas industry, with multiple players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 29.80%
Debt Cost 11.01%
Equity Weight 70.20%
Equity Cost 12.88%
WACC 12.32%
Leverage 42.46%

11. Quality Control: Calfrac Well Services Ltd. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Enerflex

A-Score: 5.7/10

Value: 7.7

Growth: 5.3

Quality: 5.5

Yield: 2.0

Momentum: 9.0

Volatility: 5.0

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Smart Sand

A-Score: 4.5/10

Value: 5.3

Growth: 4.4

Quality: 3.1

Yield: 6.0

Momentum: 4.0

Volatility: 4.0

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Superior Drilling Products

A-Score: 4.3/10

Value: 7.2

Growth: 5.4

Quality: 7.2

Yield: 0.0

Momentum: 5.0

Volatility: 1.0

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Calfrac

A-Score: 4.2/10

Value: 8.1

Growth: 3.6

Quality: 3.7

Yield: 0.0

Momentum: 3.0

Volatility: 6.7

1-Year Total Return ->

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Newpark Resources

A-Score: 3.8/10

Value: 5.5

Growth: 1.7

Quality: 5.4

Yield: 0.0

Momentum: 5.0

Volatility: 5.3

1-Year Total Return ->

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DMC Global

A-Score: 3.4/10

Value: 9.1

Growth: 3.8

Quality: 3.1

Yield: 0.0

Momentum: 1.5

Volatility: 2.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.41$

Current Price

3.41$

Potential

-0.00%

Expected Cash-Flows