Report

Q1 Misses, but Acquisition and Debt Reduction Alleviate Impact

Enterprise Group, Inc. (TSX: E.TO, NASDAQ: ETOLF), an oil and gas equipment and services provider, reported a challenging Q1 2025, with revenue down 16% YoY and EPS down 50% YoY, missing estimates by 11% and 32%, respectively. The declines were driven by a tough comparison to an inflated Q1 2024 from a one-time gas project and delays in the Kitimat LNG plant, pushing gas producers to defer drilling. However, Enterprise strengthened its balance sheet by using $29M from a Q4 2024 bought deal financing to significantly reduce debt, unlike its highly leveraged peers. The recent $20M acquisition of FlexEnergy Solutions’ Canadian operations, including 17 turbines, positions Enterprise as the exclusive nationwide supplier of FlexEnergy’s turbine and microturbine systems, with estimated incremental revenue of at least $8M annually to justify the valuation. Despite no direct U.S. exposure, potential U.S. tariffs on Canadian energy exports pose a risk, though a lower 10% tariff applies to energy. Enterprise’s stock rose 44% YoY, outperforming the S&P Oil & Gas Equipment & Services Index, which fell 36%. A potential softening of tariffs and Trump’s pro-energy policies could further boost the sector’s outlook.
Underlying
Enterprise Group

Enterprise Group is a construction services company operating in the energy, utility and transportation infrastructure industry. Co.'s focus is primarily underground construction and maintenance and specialty equipment rentals. Co. provides directional drilling and installation of underground power, telecommunications and natural gas lines to the utility infrastructure segment of the construction industry. Co.'s heavy equipment rentals division, E One Limited, provides equipment rentals for both the oilfield and civil construction sectors and project crews constructing pipelines and facilities.

Provider
Fundamental Research
Fundamental Research

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Analysts
Sid Rajeev

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