Record sales are not record earnings
CES (TSX: CEU) reported second-quarter 2026 results on August 6. Revenue was a record $714.1 million, up 24 percent from $574.0 million and up 5 percent from the first quarter. Adjusted EBITDAC was a record $119.2 million, a 16.7 percent margin, up 35 percent year over year. Funds flow was $96.8 million. Operating cash was $60.4 million. Free cash flow was $25.0 million, down from $35.3 million, on working-capital to support the sales line. Net income was $38.5 million, or $0.18 a share, down 26 percent. The drag is the June 15 refinance, not a volume collapse.
On June 15 CES issued $300.0 million of 5.625 percent notes due June 15, 2033, net $294.8 million after fees. Proceeds retired $275.0 million of 6.875 percent notes due 2029. The call cost $285.6 million including $9.5 million of premium and $1.2 million of accrued interest. Total debt at June 30 was $513.0 million. Trailing leverage was 1.15 times. Working-capital surplus was $761.3 million, $248.3 million over total debt. They returned $25.0 million in the quarter: $13.3 million of buybacks, 0.8 million shares at $17.00, and $11.6 million of dividends. The next dividend is $0.055, payable October 15 to holders of record September 30. 2026 capex, net of disposals, is about $100 million.
This is mud and production chemistry, not a well
U.S. revenue was a record $497.0 million, 28 percent U.S. drilling-fluids share against 25 percent a year earlier. Canada was a second-quarter record $217.1 million, down 11 percent sequentially on breakup, 36 percent Canadian fluids share, unchanged. First-half revenue was $1.4 billion. CES sells drill-bit, completion, and production chemicals. It does not print boe/d. The note says a short-term project and last year's fire compare helped the margin. Treat those as one-time.
Neutral read
CEU is on the listed oilfield-services list. Banks were skipped. $714.1 million of sales and $38.5 million of net income are both facts. Write the record as a chemicals quarter, not as Canadian drilling days. Watch whether free cash flow catches the sales line once working capital rolls, whether 1.15 times stays after the new notes, and whether $0.055 holds if U.S. share slips.