Mr. Tom Simons reports

CES ENERGY SOLUTIONS CORP. REPORTS RECORD REVENUE FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2018 AND DECLARES CASH DIVIDEND

CES Energy Solutions Corp. has released its financial and operating results for the three and 12 months ended Dec. 31, 2018. Further, CES will pay a cash dividend of 0.5 cent per common share on April 15, 2019, to the shareholders of record at the close of business on March 29, 2019.

Q4 2018 and 2018 annual revenue of $347.9-million and $1.3-billion, respectively, were both record quarterly and annual results for the company. Further, the company achieved adjusted EBITDAC (earnings from continuing operations before interest, taxes, depreciation and amortization) of $42.1-million and $167.6-million for the three and 12 months ended Dec. 31, 2018, respectively, which represents increases over both prior-year respective periods.

Revenue generated in the United States increased 34 per cent and 30 per cent to $239.8-million and $847.8-million for the three and 12 months ended Dec. 31, 2018, respectively, over the 2017 comparative periods. Both Q4 2018 and annual 2018 revenue generated in the United States are the highest U.S. revenues in the company's history, exceeding the previous records of $227.1-million in Q3 2018 and annual revenue of $652-million in 2017. The year-over-year increase in U.S. revenues was enabled by CES's completed investments in U.S. infrastructure and capabilities to date, significant activity improvement in the drilling fluids business, and increased production chemical related U.S. treatment points, particularly in the Permian basin. For Q4 2018, the company's U.S.-source revenues were also positively impacted on translation by weakness in the Canadian dollar versus U.S. dollar, compared with Q4 2017.

Revenue generated in Canada increased 8 per cent and 12 per cent to $108.2-million and $423.2-million for the three and 12 months ended Dec. 31, 2018, respectively, over the 2017 comparative periods. PureChem contributed the majority of this gain for the three and 12 months ended Dec. 31, 2018, compared with the comparative periods in prior year, as investments in PureChem infrastructure are largely complete and have enabled increased market share in Canada in the production chemicals business. Despite reasonable industry conditions in the first nine months of 2018, drilling activity in Canada in Q4 2018 was negatively impacted by heightened market uncertainty around lack of current oil and gas take-away capacity and the resulting record price differentials. As a result, oil and gas operators pared back capital spending and drilling programs in Q4 2018, negatively impacting revenues in CES's Canadian drilling fluids business in Canada for the three months ended Dec. 31, 2018, compared with the same period in 2017.

In Q4 2018, CES recorded gross margin of $69.7-million, or 20 per cent of revenue, compared with gross margin of $67.6-million, or 24.2 per cent of revenue generated in Q4 2017. Annual gross margin totalled $284.3-million, compared with $249.8-million for the 12 months ended Dec. 31, 2017, representing an increase of $34.5-million, or 14 per cent. In Q4 2018, CES recorded gross margin (excluding depreciation) of $81.3-million, or 23.4 per cent of revenue, compared with gross margin (excluding depreciation) of $78.2-million, or 28.1 per cent of revenue generated in Q4 2017. Annual gross margin (excluding depreciation) totalled $325.6-million, compared with $287.9-million for the 12 months ended Dec. 31, 2017, representing an increase of $37.7-million, or 13 per cent. CES faced cost inflation throughout 2018, which has outpaced the combination of CES's operating leverage gains and ability to pass through its input costs to its customers for its products and services. Further, the decline in drilling activity due to the challenges facing the oil and gas industry in Canada during Q4 2018 negatively affected gross margin as activity levels declined and corresponding lower revenue was over the same fixed cost base. As a result, gross margin (excluding depreciation) as a percentage of revenue in Q4 2018 has decreased from Q4 2017. CES believes that, going forward, margins may benefit from increased sales in areas such as the Permian basin and the Deep basin, realization of savings from recent Canadian head count reductions, increased operating leverage from its expanded infrastructure completed in 2018, and from the company's innovative technologies and superior service culture. Net income for the three and 12 months ended Dec. 31, 2018, was $15.5-million and $47.7-million, respectively, compared with $2.7-million and $36.2-million for the 2017 respective periods.

Excluding PureChem restructuring costs and one-time chief financial officer transition costs, Q4 2018 adjusted EBITDAC was $42.1-million, beating adjusted EBITDAC of $41.8-million in Q4 2017. Adjusted EBITDAC for the year ended Dec. 31, 2018, was $167.6-million, as compared with $154-million for the year ended Dec. 31, 2017, representing an increase of $13.6-million, or 9 per cent. Year over year, the company's operating results continued to benefit from increased activity levels due to the improved commodity price environment, and CES's businesses in both the United States and Canada have made positive contributions to revenue, net income and EBITDAC.

CES continues to maintain a prudent balance sheet and is well positioned to capitalize on the improving oil field activity levels in the United States and weather the current decline in industry activity in Canada. In October, 2017, CES successfully refinanced and reduced its coupon on its $300-million senior notes by issuing new 6.375 per cent senior notes, which have an extended maturity into October, 2024. At Dec. 31, 2018, CES had a net draw of $161.5-million on its senior facility (Dec. 31, 2017: $109.3-million), an increase of $12.1-million from $149.4-million as at Sept. 30, 2018, which is primarily driven by working capital build, capital expansion incurred in the quarter (which includes the completion of PureChem's Grande Prairie facility and the buildout of the Kermit mud plant in the Permian basin) and opportunistic share repurchases through CES's normal course issuer bid program. The maximum available draw on the senior facility at Dec. 31, 2018, was $180-million on the Canadian facility and $40-million (U.S.) on the U.S. facility (Dec. 31, 2017: $125-million and $40-million (U.S.), respectively). At Dec. 31, 2018, CES was in compliance with the terms and covenants of its senior facility. As at the date hereof, the company had a net draw of approximately $150-million on its senior facility.

CES continues to see improvement in its financial position and the company's board of directors and management believe that the market price of CES's common shares does not reflect their underlying value. On July 17, 2018, the company began a normal course issuer bid to repurchase for cancellation up to 24,587,978 common shares. The normal course issuer bid will terminate on July 16, 2019, or such earlier date as the maximum number of common shares are purchased pursuant to the normal course issuer bid or the normal course issuer bid is completed or is terminated at the company's election. In Q4 2018, the company repurchased 2,099,900 common shares at an average price of $3.42 per share for a total amount $7.2-million. Year to date, the company repurchased 4,799,900 common shares at a weighted average price per share of $4.07 per share for a total amount of $19.5-million, representing 19.5 per cent of total shares available to repurchase under the normal course issuer bid.

Outlook

CES continues to be optimistic about its prospects for 2019 and beyond. CES's record consolidated revenue result and record U.S. revenue result in 2018 reflect its effective execution in a dynamic environment and CES's strategy has positioned the company to take advantage of the opportunities ahead. CES believes that, over time, it can continue to grow its share of the oil field consumable chemical markets in which it competes. CES also sees the consumable chemical market increasing its share of the oil field spend as operators continue to: drill longer reach laterals and drill them faster; expand and optimize the utilization of pad drilling and cube development techniques; increase the intensity and size of their fracs; and require increasingly technical and specialized chemical treatments to effectively maintain existing cash flow generating wells and treat growing production from new wells.

In the United States, CES's infrastructure is largely built out to meet anticipated growing production chemical and drilling fluid needs in the key basins. In the Permian basin, the Kermit, Tex., mud plant expansion has been designed to double capacity over 2017 levels and has enabled the company to take on new work and continue to grow market share. In addition, Catalyst's current platform is set up to capitalize on growing production and higher levels of activity in the Permian basin, which CES believes will be even more pronounced in 2019 as several pipeline projects are on track to add significant off-take capacity. Further, CES continues to recruit top talent in this highly competitive region. CES plans to expand its existing barite grinding capabilities in the United States, further adding to the company's competitive positioning and operating leverage.

In Canada, market conditions faced headwinds due to current take-away capacity constraints and lack of consistent market access causing commodity price differentials to widen significantly and curtailment of production levels, resulting in Canadian oil and gas operators paring back capital programs in Q1 2019 as winter drilling activity is trending down 30 per cent over Q1 2018. Price differentials were positively impacted in Q4 2018 by the mandatory crude oil production curtailments established by the Alberta government, and CES believes that its current business is well positioned to capitalize on an improved Canadian outlook in H2 2019 and increased financial contribution from its PureChem division as the company grows into this infrastructure and continues to add scale.

CES's strategy is to utilize its decentralized management model; its vertically integrated manufacturing model; its problem-solving-through-science approach; its patented and proprietary technologies; and its superior people and execution to increase market share. The downturn made many middlemen, or competitors that are simply resellers of other company's products, redundant. By being basic in the manufacture of the consumable chemicals it sells, CES continues to be price competitive and a technology leader. Recent competitor consolidations and business failures will provide further opportunities for CES as operators require increasingly technical solutions and deeper customer-centric coverage models to meet their needs. CES believes that its unique value proposition makes it the premier independent provider of technically advanced consumable chemical solutions to the North American oil field.

CES's balance sheet is well positioned to capitalize on robust oil field activity levels in the United States and weather the current decline in industry activity in Canada. In October, 2017, CES successfully refinanced and reduced its coupon on its $300-million senior notes by issuing new 6.375 per cent senior notes which have an extended maturity into October, 2024. In 2019, it is expected that EBITDAC will materially exceed the sum of cash expenditures on interest, taxes and capital expenditures, allowing for free cash flow to be returned to shareholders through CES's monthly dividend and recently implemented normal course issuer bid.

As CES's infrastructure buildout in both Canada and the United States was largely completed in 2018, absent acceptable return expansionary capital projects, such as the buildout of the northeast United States barite facility, CES expects capital expenditures in 2019 to return to levels below 2017-2018 levels. CES's business model, capital structure and free cash flow generation attributes continue to permit prudent capital allocation to one or a combination of investment in current operations, debt reduction, opportunistic share repurchases, dividends and acquisitions.

CES will continue to assess organic and merger and acquisition opportunities that will improve CES's competitive position and enhance profitability. Any acquisitions must meet CES's stringent financial and operational metrics. In its core businesses, CES will focus on profitably growing market share, controlling costs, developing or acquiring new technologies and making strategic investments as required to position the business to capitalize on growing activity levels and increasing intensity.

Conference call details

With respect to the fourth quarter and annual results, CES will host a conference call/webcast at 9 a.m. MT (11 a.m. ET) on Wednesday, March 13, 2019.

North American toll-free callers:  1-855-327-6838

International/Toronto callers:  416-915-3239

Webcast:  on CES Energy's website

                               FINANCIAL HIGHLIGHTS
               (in thousands of dollars, except per-share amounts)

                                Three months ended Dec. 31,       Year ended Dec. 31, 
                                         2018         2017         2018         2017
Revenue
United States                      $  239,754   $  178,411   $  847,841   $  651,983
Canada                                108,151      100,420      423,210      377,657
Total revenue                         347,905      278,831    1,271,051    1,029,640
Gross margin                           69,702       67,606      284,263      249,801
as a percentage of revenue                20%       24.20%       22.40%       24.30%
Gross margin (excluding 
depreciation)                          81,278       78,243      325,548      287,937
as a percentage of revenue             23.40%       28.10%       25.60%          28%
Net income                             15,467        2,681       47,735       36,241
Per share -- basic                       0.06         0.01         0.18         0.14
Per share -- diluted                     0.06         0.01         0.17         0.13
Adjusted EBITDAC                       42,074       41,838      167,589      154,049
Per share -- basic                       0.16         0.16         0.63         0.58
Per share -- diluted                     0.15         0.15         0.61         0.56
Dividends declared                      3,994        2,009       12,707        7,982
Per share                               0.015       0.0075       0.0475         0.03

About CES Energy Solutions Corp.

CES is a leading provider of technically advanced consumable chemical solutions throughout the life cycle of the oil field. This includes total solutions at the drill bit, at the point of completion and stimulation, at the wellhead and pumpjack, and finally through to the pipeline and mid-stream market.

CES operates in several basins throughout the United States, including Permian, Eagleford, Bakken and Marcellus, as well as in the Western Canadian Sedimentary basin, with an emphasis on servicing the continuing major resource plays.

The JACAM, Catalyst, PureChem and Sialco brands are vertically integrated manufacturers of advanced specialty chemicals.

We seek Safe Harbor.