Secure Energy Services (SES-T)

For the quarter-ended, SES reported EPS of 12c missing estimates of 13c. Revenue (Excl oil purchase and resale) beat estimates of $333M coming in at $337M declining from $353M from the year prior. Adjusted EBITDA was $114M, declining from $119M but coming in well-ahead of forecasts of $102.15M. The comapny's CEO stated, "Strong second quarter results were driven by robust industry fundamentals, favorable weather conditions, and continued operational execution across our business units, resulting in double digit revenue growth on a same store sales basis." SES also raised its full-year adjusted EBITDA guidance and repurchased approximately 11% of outstanding shares in the quarter. The decline in revenue appears to be driven by wek industry conditions, but we think the results are fine outside of that. The adjusted EBITDA guidance raise is good to see and SES continues to be cheap at 13.5x forward earnings. 
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He's been warming up to services in general. Well run. Too much uncertainty re sites it's been ordered to sell off. he's waiting for clarity on those sales proceeds. See his Top Picks.

Environmental services. Processes wastewater for oil and gas, mid-stream processing and storage. Very attractive EBITDA margins of 35-40%. Just bought biggest competitor. Stock's down, as Competition Bureau is forcing divestitures. Company is appealing this, good chance of winning. 9x earnings, share buybacks. Yield is 6.10%.

(A Top Pick July 5/16. Up 5.41%.) *Long* (Pairs trade with a Short on Precision Drilling (PD-T). This operates in the environmental reclamation business. Environmental liabilities are something that are becoming increasingly important, particularly in Canada where they have most of their market share. He is still quite fond of this.

(A Top Pick July 5/16. Up 17%.) *LONG* (Pairs trade with a Short on Precision Drilling (PD-T). Took the trade off, but this is still a good company.

He likes the water treatment business. It is hard to replicate. The revenues are quite stable. As you get a recovery in drilling that business will ramp up also. They are almost the only game in town. It is possible they will increase the dividend at the end of the year. (Analysts’ Target: $12.06).

They will benefit from more activity in the oil patch. He likes the management team. It has a good balance sheet. It is one of his favourite names and he owns a lot of it.

She would Buy this if you have a 1-year outlook at least. It has a great business and there is a lot of torque to increasing activity in the basin. They do a lot of waste management. With oil prices increasing, she does think that this is the point in time when things are going to start to ramp up. It offers a lot of opportunity on the server side. A great management team. They have a pristine balance sheet. She can see lots and lots of upside.

*LONG* (Pairs trade with a Short on Precision Drilling (PD-T). (Top Pick July 5/16, Down 2%) It is a volume based business and is in better shape now as volumes are increasing. The balance sheet is in far better shape than PD-T’s.

A very well respected services company where a lot of people have been hiding to have service exposure, given that a lot of their revenue is a lot more secure. Feels you can do a lot better in other service areas such as pressure pumpers and frac sand companies. Dividend yield of 2.7%.