Rating Outlook Upgrade
S&P Global Ratings revised its outlook on CES Energy Solutions Corp. (TSX:CEU) to positive from stable on 4 September 2026 and affirmed the issuer’s B+ credit rating as well as the B+ issue‑level rating on the company’s unsecured debt, leaving the recovery rating of 4 unchanged.
2025 Financial Performance
The Toronto‑based firm delivered a record revenue of C$2.5 billion in 2025 and posted adjusted EBITDA margins of 15.1%, despite a decline in industry rig counts across the United States and Canada. CES commands roughly 40% market share in both the Western Canada Sedimentary Basin and the Permian Basin for its drilling‑fluids segment.
2026‑2027 Projections
S&P projects adjusted free operating cash flow of C$200 million to C$220 million for each of 2026 and 2027. Capital expenditures are expected to be C$100 million to C$120 million annually, representing 3% to 5% of revenue. The rating agency forecasts adjusted funds‑from‑operations to debt averaging about 65% for the 2026‑27 period and a debt‑to‑EBITDA ratio of approximately 1.3×.
Leverage and Cash Flow Outlook
The positive outlook reflects S&P’s view that CES will expand its North American business with stable‑to‑improving margins while generating robust cash flow through its asset‑light business model. The firm anticipates the funds‑from‑operations to debt ratio to remain around 60% and the debt‑to‑EBITDA ratio to stay below 1.5×.
Revenue Growth and Geographic Exposure
S&P expects gradual revenue growth through 2027, supported by recent market‑share gains. Adjusted EBITDA margins are projected to stay within 14% to 16%. Canada accounts for about 34% of CES’s revenue, with activity levels expected to stay strong, driven by growing oil‑sands production and elevated drilling activity in the Montney formation.