Total Energy's Record Backlog and Weirton Expansion Signal a Structural Upturn

Compression backlog hits $554.5M with visibility into 2028, U.S. fabrication capacity set to nearly double, and upgraded fleets in Australia and Canada drive record quarterly results.

TOT.TO · Earnings Call · 2026-08-13

Record Quarter on Strong Fundamentals

Total Energy Services delivered a standout second quarter, posting record revenue, EBITDA, and net income driven by robust North American demand for compression and process equipment, along with the deployment of upgraded drilling and service rigs in Australia and Canada. As CFO Yuliya Gorbach noted, “Total Energy's results for the 3 months ended June 30, 2026, represent record quarterly results, driven by continued strong North American demand for natural gas compression and process equipment and the deployment of upgraded drilling and service rigs in Australia and Canada.” — Yulia Gorbach, VP Finance and CFO · 2026-08-13 The company also benefited from a $3 million year-over-year increase in gains on asset dispositions, partially offset by $2.3 million in nonrecurring U.S. contract drilling expenses. Geographically, revenue diversification continues, with 43% from Canada, 34% from the U.S., and 23% from Australia. The Compression and Process Services (CPS) segment now contributes 55% of consolidated revenue, up from 53% a year ago, reflecting the strength in fabrication sales. The capital commitments to support this growth are substantial, including the recently increased 2026 capital budget of $144.6 million, with over $100 million allocated to growth capital.

Backlog and Capacity: The Weirton Inflection

The standout metric is the fabrication sales backlog, which reached a record $554.5 million at June 30, an 82% increase year-over-year and 24% higher than the previous quarter. This provides visibility well into 2028, and management notes that quoting activity remains vibrant. The key capacity expansion is the Weirton, West Virginia facility, which is on track to complete construction by Q1 2027 and will nearly double U.S. fabrication capacity. As CEO Daniel Halyk stated,

Expansion of our U.S. fabrication capacity in Weirton, West Virginia is on time and on budget with facility construction scheduled to be completed by the first quarter of 2027.
Daniel Halyk, President · 2026-08-13

This expansion is crucial for capturing the strong demand for fabrication capacity and addresses the lead time constraints on major components like engines, which now exceeds 90 weeks. The company has been strategically managing inventory and engine purchases to load-level production, a theme echoed in prior quarters. In November 2025, Halyk highlighted, “Lead times for major inputs, notably Cat Engines, are now well in excess of 90 weeks.” — Daniel Halyk, CEO or President (likely senior executive leading the call) · 2025-11-13

Fleet Upgrades and Market Share in Drilling and Well Servicing

Beyond compression, Total is seeing tangible results from its fleet upgrade program. In Australia, the company is running 11 drilling rigs, soon to be 12, and has invested heavily in upgrading the Saxon fleet. The Australian well servicing business saw a 194% year-over-year EBITDA increase, driven by higher utilization and pricing. In Canada, market share gains in drilling are notable, with a double-to-triple conversion rig already contracted. Halyk candidly explained the renewed focus: “We were probably focused on selling some of the new iron that was coming out the triple and we lost – took our eye off the ball in our traditional markets, combined with the upgrade capital we put in place and just renewed focus.” — Daniel Halyk, President · 2026-08-13 The RTS segment is also turning a corner, with the first major heavy truck replacement cycle in years and targeted new equipment additions that will be deployed throughout North America.

Capital Allocation: Shareholder Returns and M&A

The company's balance sheet remains a strategic asset. With $50.5 million in cash, $150 million of revolving credit availability, and a net cash position on its bank covenant, Total is well-positioned to fund growth and shareholder returns. The company returned $22.5 million to shareholders in the first half via dividends and buybacks, and the recent $32.7 million capital budget increase reflects confidence in the outlook. Management continues to evaluate M&A opportunities but remains disciplined, comparing returns against buybacks and organic investments. As Halyk noted, “We're looking at a lot of things... it comes down to do these work relative to other options such as share buybacks and organic.” — Daniel Halyk, President · 2026-08-13 This disciplined approach has been consistent, as seen in prior quarters when he emphasized, “In the U.S., we're pretty much at capacity without some major outsourcing and labor changes.” — Daniel Halyk, CEO or President (likely senior executive leading the call) · 2025-11-13 The company is clearly focused on delivering value while positioning for the next upcycle in energy services. In summary, Total Energy's record backlog, capacity expansion, and successful fleet upgrades underscore a company at an inflection point. The combination of strong demand, prudent capital allocation, and a clean balance sheet makes this a compelling story for investors seeking exposure to the North American energy services recovery.