ACT Energy Technologies Ltd. press release

ACT Energy Technologies Reports 2026 Q3 Interim Results

2026-11-06

TSX - Toronto Stock Exchange · Canada · Corporate Finance

Canada NewsWire

CALGARY, AB, Nov. 6, 2026/CNW/ -- (TSX: ACX)_ACT Energy Technologies Ltd (the "Company" or "ACT")'s News release contains "forward-looking statements" within the meaning of applicable Canadian securities laws. For a full disclosure of forward-looking statements and the risks to which they are subject, see the 'Forward-Looking Statements' section in this News release. This News release contains references to Adjusted gross margin, Adjusted gross margin percentage, Adjusted EBITDAS, Adjusted EBITDAS margin percentage, Free cash flow, Net debt, Working capital and Net capital expenditures. These terms do not have standardized meanings prescribed under International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and may not be comparable to similar measures used by other companies. See the 'Non-GAAP measures' section in this News release for definitions and tabular calculations._

2026 Q3 FINANCIAL RESULTS

Revenues of $219.0 million in 2026 Q3 increased 85%, compared to $118.3 million in 2025 Q3, reflecting record quarterly activity in the Canadian segment together with contributions from Stryker, acquired January 5, 2026, and SB, acquired April 1, 2026. Income before income taxes was $18.5 million in 2026 Q3, compared to $12.7 million in 2025 Q3, mainly due to increased revenues, partially offset by higher depreciation and finance costs associated with the acquisitions and a foreign exchange loss in 2026 Q3, compared to a foreign exchange gain in 2025 Q3. Net income was $14.0 million, compared to $15.2 million in 2025 Q3; the prior-year quarter benefited from an income tax recovery, while the current quarter carried an income tax expense. Adjusted EBITDAS(1)of $40.1 million in 2026 Q3 increased 68%, compared to $23.9 million in 2025 Q3, the highest Adjusted EBITDAS the Company has recorded in any quarter, primarily attributable to higher Canadian activity and the Stryker and SB acquisitions in the United States. Canadian operating days(2)increased 41% in 2026 Q3, compared to 2025 Q3, well ahead of the 19% increase in the Western Canadian rig count(2). The outperformance reflects new customer additions and the expansion of the Company's technologies with new and existing customers. U.S. operating days(2)increased 140% in 2026 Q3, compared to 2025 Q3, mainly due to the Stryker and SB acquisitions, while the U.S. land rig count(2)increased only 13% in 2026 Q3 in comparison to 2025 Q3. Cash flow - operating activities of $18.8 million in 2026 Q3, compared to $6.5 million in 2025 Q3, reflecting stronger operating results partially offset by continued investment in operating working capital, principally trade receivables, to support the expanded Canada and U.S. operations. Free cash flow(1)of $6.3 million in 2026 Q3, compared to $16.6 million in 2025 Q3. The decrease reflects higher gross capital expenditures of $31.2 million (2025 Q3 - $6.0 million) as the Company deployed growth capital to meet strong Canadian demand (including new technologies), along with higher cash interest on acquisition-related borrowings. The Company's 2026 capital program is expected to total approximately $70 million to $75 million gross (of which approximately $40 million relates to growth capital), or $35 million to $40 million, net of lost-in-hole reimbursements(1), directed to replacement of lost-in-hole equipment and to MWD systems, mud motors and related technologies for existing customer commitments and the replacement of third-party rentals. The remaining program is expected to be funded from cash flow – operating activities within the existing credit facility. Net debt(1)was $154.3 million as at September 30, 2026, compared to $53.6 million as at December 31, 2025 and $142.1 million as at June 30, 2026, reflecting the debt used to fund the Stryker and SB acquisitions, together with the investment in working capital and growth capital expenditures. The Consolidated Funded Debt to Consolidated Credit Agreement EBITDA ratio was 1.4 times against a covenant limit of 3.0 times.

| | | | 1 | As defined in the 'Non-GAAP measures' section of this News release. | | 2 | Per 'Supplementary financial measures and other definitions' section in this News release. |

PRESIDENT'S MESSAGE

Comments from President & CEO Tom Connors:

"The third quarter was a record quarter for ACT on revenue, Adjusted EBITDAS(1) and operating days(2), and it confirms what we have been telling the market: that building size and scale through disciplined acquisitions would translate into results. Revenues of $219.0 million increased 85% and Adjusted EBITDAS(1)of $40.1 million increased 68% over the same quarter last year, surpassing the previous record set in 2024 Q3. Five years ago, the Company generated less than $5 million of Adjusted EBITDAS(1)for the full year; over the last twelve months, it has generated $107 million of Adjusted EBITDAS(1). Nearly all of that growth has come through accretive acquisitions, and the two most recent, Stryker and SB, have strengthened the business further and raised our expected return on invested capital going forward. The path has not always been smooth, but the direction has been consistent, and this quarter is the clearest evidence yet of where it leads.

"Canada delivered the most active quarter in the Company's history. Operating days increased 41% to 5,691 days, well ahead of the 19% increase in the average Western Canadian directional rig count, and revenues per operating day(2)increased 7%, as more of our work used technologies that improve drilling efficiency and well productivity for our customers. That outperformance is the product of many years of work: deep experience in multi-lateral drilling, consistent execution on the long runs those wells require, and tools built for them. Multi-lateral development is a growing market, our customers are finding new applications for it beyond its traditional heavy oil areas, and that plays directly to our strengths. Demand for our Canadian services is high and utilization of our equipment and crews is high. We expect the market to be constrained on both people and equipment through the first quarter of 2027, and we are preparing for those activity levels now, adding crews and placing orders for longer-lead measurement-while-drilling systems and mud motors so that we can grow with our customers' programs.

"In the United States, operating days increased 140% to 5,159 days against a 13% increase in the average U.S. directional rig count. Stryker and SB were the principal drivers; both performed in line with our expectations and their integration is substantially complete. Activity in our pre-existing operations was modestly higher than a year ago, and the market dynamic is beginning to turn in our favour. Customers are increasingly focused on performance and value, pricing has stabilized and is beginning to improve, and we expect conditions to strengthen further as oilfield service equipment supply tightens through 2027. That makes margin recapture the near-term opportunity in the United States, and rotary steerable deployment remains our capital priority there because it raises what we earn on every operating day without requiring a higher rig count.

"We chose Stryker and SB for the capability of their businesses and their teams to grow, and they are strengthening the Company by doing exactly that. ACT operates as one platform with many strong, local operators, and the third quarter is what that model is designed to produce: local leaders accountable for their customers and their execution, supported by a center that scales. Direct SG&A costs fell to 8% of revenue from 11% a year ago, which is that leverage showing up in the numbers.

"Activity and customer demand are increasing, and we are growing to meet them. Gross capital expenditures of $31.2 million in the quarter, or $16.3 million net of lost-in-hole reimbursements, reflect the first of the Canadian growth equipment entering the fleet, and a portion of that investment anticipates continued elevated demand into 2027. We are ordering longer-lead items now so that we can meet it. Net debt(1)was $154.3 million at September 30, 2026 and our Consolidated Funded Debt to Consolidated Credit Agreement EBITDA ratio was 1.4 times against a covenant limit of 3.0 times. Free cash flow(1)of $6.3 million reflects that investment together with a build in receivables that moves with Canadian activity and will begin to be collected through the fourth quarter. Each quarter we balance priorities for capital between debt repayment, higher-return growth investment, shareholder returns and acquisition opportunities, weighing each on its returns and on its contribution to the long-term strength of the business.

"Activity in the fourth quarter to date has continued to build in Canada and has held firm in the United States, and we enter the coming quarters with the strongest outlook the Company has had. We will finish 2026 with more owned technology in the field than at any point in our history, a clear view of where that technology goes next, and a balance sheet that allows us to act on it," stated Tom Connors, ACT President and Chief Executive Officer.

| | | | 1 | As defined in the 'Non-GAAP measures' section of this News release. | | 2 | Per 'Supplementary financial measures and other definitions' section in this News release. |

FINANCIAL HIGHLIGHTS

| (stated in thousands of Canadian dollars, except net income per common share amounts) | Three months ended September 30, | Nine months ended September 30, | | | | 2026 | 2025 | 2026 | 2025 | | | | | | | | | Revenues | $ 219,031 | $ 118,260 | $ 541,968 | $ 365,627 | | | | | | | | Gross margin percentage | 23 % | 27 % | 22 % | 24 % | | Adjusted gross margin percentage(1) | 28 % | 33 % | 28 % | 30 % | | | | | | | | Adjusted EBITDAS(1) | $ 40,127 | $ 23,898 | $ 89,908 | $ 58,853 | | Adjusted EBITDAS margin percentage(1) | 18 % | 20 % | 17 % | 16 % | | | | | | | | Net income | $ 13,951 | $ 15,154 | $ 21,275 | $ 12,443 | | Per common share - basic | $ 0.36 | $ 0.45 | $ 0.57 | $ 0.37 | | Per common share - diluted | $ 0.36 | $ 0.41 | $ 0.57 | $ 0.33 | | | | | | | | Cash flow - operating activities | $ 18,806 | $ 6,512 | $ 27,930 | $ 51,226 | | | | | | | | Free cash flow(1) | $ 6,265 | $ 16,558 | $ 24,072 | $ 23,337 | | | | | | | | Weighted average common shares outstanding: | | | | | | Basic (000s) | 38,896 | 33,892 | 37,487 | 33,889 | | Diluted (000s) | 39,080 | 37,404 | 37,631 | 37,443 |

| (stated in thousands of Canadian dollars) | September 30, 2026 | December 31, 2025 | | | | | | Current assets | $ 271,094 | $ 184,250 | | Current liabilities | $ 170,593 | $ 127,457 | | Working capital(1) | $ 114,341 | $ 84,092 | | Total assets | $ 657,953 | $ 462,382 | | Loans and borrowings and promissory notes | $ 163,066 | $ 61,534 | | Net debt(1) | $ 154,337 | $ 53,581 | | Exchangeable promissory note ("EP note") | $ — | $ 26,697 | | Shareholders' equity | $ 311,397 | $ 248,773 |

| (1) | As defined in the 'Non-GAAP measures' section of this News release. |

OUTLOOK

Commodity prices remain volatile with trade policy and geopolitical events continuing to influence near-term pricing. Beneath that volatility, the longer-dated oil price has improved: forward prices for 2027 and beyond have strengthened materially since the beginning of 2025 and again since the second quarter. Because our customers set budgets against forward prices rather than spot, that is the more relevant signal for 2027 drilling programs than quarter-to-quarter moves in WTI. North American natural gas pricing remains weak on high storage levels, and we expect gas-directed drilling to remain restrained near-term, while LNG Canada, additional U.S. Gulf Coast liquefaction and gas-fired power demand continue to build the case for incremental Montney, Duvernay, Deep Basin and Haynesville activity from 2027 onward.

In Canada, we expect a strong fourth quarter and a first quarter of 2027 that is busier than the comparable prior-year periods. Demand for our directional drilling services, and in particular for our multi-lateral drilling and technology offerings, currently exceeds our available equipment. We have accelerated Canadian growth capital into the fourth quarter to add MWD systems and ancillary support equipment, with equipment lead times measured in months, and the application of our multi-lateral technology is expanding into additional heavy oil and oil sands plays. Our objective is to hold and extend the market share gains achieved during 2026 while continuing to convert activity into margin as owned equipment displaces third-party rentals. Weather-related interruptions remain a normal source of quarter-to-quarter variability. A further tail wind for Canadian activity could be adoption of legislation to allow accelerated depreciation of our customers' capital expenditures.

In the U.S., we expect activity to build modestly from third-quarter levels. Customer consolidation and reduced directional drilling capacity across the industry continue to concentrate work with providers that can demonstrate scale, technical capability and balance sheet strength. With the integration of Stryker and SB substantially complete, our U.S. priorities are restoring margin in our pre-existing directional business and continued deployment of rotary steerable systems, which raise revenues per operating day without requiring a higher rig count. We continue to monitor trade policy and the tariff treatment of equipment for any impact on our supply chain and cost base.

We do not require a higher rig count to grow. Longer laterals, multi-lateral well designs and greater technology intensity per rig are increasing demand for owned downhole technology and consistent execution, which is where we have invested. Our priorities for the balance of 2026 and into 2027 are to deploy growth capital where customer demand exceeds our equipment supply, convert that activity into cash, maintain leverage within a range appropriate for a Canadian oilfield services company through the cycle, and retain the flexibility to pursue further accretive acquisitions.

RESULTS OF OPERATIONS

Financial

| | Three months ended September 30, | Nine months ended September 30, | | | | (stated in thousands of Canadian dollars, except percentages) | 2026 | 2025 | 2026 | 2025 | | | | | | | | Revenues | | | | | | United States | $ 133,496 | $ 61,501 | $ 339,881 | $ 225,185 | | Canada | 85,535 | 56,759 | 202,087 | 140,442 | | Total revenues | 219,031 | 118,260 | 541,968 | 365,627 | | Cost of sales | | | | | | Direct costs | (157,355) | (78,708) | (389,067) | (256,140) | | Depreciation and amortization | (11,809) | (7,861) | (32,817) | (22,657) | | Share-based compensation | (60) | (131) | (133) | (391) | | Total cost of sales | (169,224) | (86,700) | (422,017) | (279,188) | | | | | | | | Gross margin | $ 49,807 | $ 31,560 | $ 119,951 | $ 86,439 | | | | | | | | Gross margin percentage | 23 % | 27 % | 22 % | 24 % | | Adjusted gross margin percentage(1) | 28 % | 33 % | 28 % | 30 % | | | | | | |

| (1) | As defined in the 'Non-GAAP measures' section of this News release. |

Operational

| (stated in Canadian dollars, except operating days and average industry land rig counts) | Three months ended September 30, | % | Nine months ended September 30, | % | | | | 2026 | 2025 | Change | 2026 | 2025 | Change | | | | | | | | | | | Operating days(1) | | | | | | | | United States | 5,159 | 2,152 | 140 % | 13,343 | 8,030 | 66 % | | Canada | 5,691 | 4,036 | 41 % | 13,969 | 10,397 | 34 % | | | 10,850 | 6,188 | 75 % | 27,312 | 18,427 | 48 % | | | | | | | | | | Average industry land rig count - directional(2) | | | | | | | | United States | 586 | 520 | 13 % | 548 | 533 | 3 % | | Canada | 200 | 168 | 19 % | 181 | 161 | 12 % | | | | | | | | | | Average revenues per operating

day(1) | | | | | | | | United States | $ 25,876 | $ 28,579 | (9 %) | $ 25,473 | $ 28,043 | (9 %) | | Canada | $ 15,030 | $ 14,063 | 7 % | $ 14,467 | $ 13,508 | 7 % | | | $ 20,187 | $ 19,111 | 6 % | $ 19,844 | $ 19,842 | — % | | | | | | | | | | Net lost-in-hole equipment

reimbursements(3) | $ 14,889 | $ 7,355 | 102 % | $ 28,924 | $ 15,312 | 89 % | | | | | | | | |

| (1) | Per 'Supplementary financial measures and other definitions' section in this News release. | | (2) | Per JWN RigLocator and Enverus. | | (3) | As defined in the 'Non-GAAP measures' section of this News release. |

Summary

The Company delivered the strongest operational quarter in its history. Western Canada delivered its highest third-quarter revenues to date, reflecting higher activity with new and existing customers, while results in the United States benefited from the contribution of Stryker and SB. Consolidated operating days(1)increased 75% in 2026 Q3, compared to 2025 Q3, against a 14% increase in the combined directional rig count(1) resulting in increased revenues and Adjusted EBITDAS(2) of 85% and 68%, respectively.

Gross margin and Adjusted gross margin percentages(2)were 23% and 28% in 2026 Q3, compared to 27% and 33% in 2025 Q3, respectively. Gross margin and Adjusted gross margin percentages(2)were 22% and 28% during the nine months ended September 30, 2026, compared to 24% and 30% for the same period in 2025, respectively. The decreases are attributed to a higher weighting of U.S. directional services revenues following the acquisitions, which operates at a lower gross margin percentage than the Canadian segment, as discussed further in the segmented information below.

| | | | 1 | Per 'Supplementary financial measures and other definitions' section in this News release. | | 2 | As defined in the 'Non-GAAP measures' section of this News release. |

Income before income taxes was $18.5 million and $34.5 million in three and nine months ended September 30, 2026, compared to $12.7 million and $9.8 million for the same periods in 2025, respectively. Income from operating activities increased in both the three and nine months ended September 30, 2026 as a direct result of increased Canadian activity and the Company's acquisitions of Stryker and SB, including the integration and preservation of the entrepreneurial culture and operational strengths of the acquired businesses.

Net income of $14.0 million and $21.3 million for the three and nine months ended September 30, 2026, compares to net income of $15.2 million and $12.4 million for the same periods in 2025, respectively. In 2026, the net income was impacted by the following: i) an income tax expense compared to a recovery in 2025 Q3, ii) foreign exchange gain and loss fluctuations, and iii) higher finance costs related to the 2026 acquisitions. A non-cash deferred tax expense adjustment recognized in 2026 Q2 and a higher effective tax expense following the full utilization of previously unrecognized deferred tax assets at the end of 2025 were the main drivers of the income tax expense recognized in 2026.

Further details on the key drivers affecting segment results of operations are provided below.

SEGMENTED INFORMATION

United States

Revenues

U.S. revenues were $133.5 million in 2026 Q3, an increase of $72.0 million or 117%, compared to $61.5 million in 2025 Q3. The Company experienced a 140% increase in operating days(1)in 2026 Q3 (2026 - 5,159 days; 2025 - 2,152 days), well ahead of the 13% increase in the average U.S. directional rig count(1), mainly due to the Stryker and SB acquisitions, combined with an increase in the Company's other U.S. directional operations. The average revenues per operating day(1)decreased 9% in 2026 Q3 (2026 - $25,876 per day; 2025 - $28,579 per day), reflecting a job mix weighted toward lower equipment-intensity work as the Company added rigs and expanded it's U.S. customer base. In addition, there was a lower proportion of revenues from the Company's rental and technology businesses, which have no associated operating days(1).

U.S. revenues were $339.9 million in the nine months ended September 30, 2026, an increase of $114.7 million or 51%, compared to $225.2 million for the same period in 2025. The Company experienced a 66% increase in operating days(1)in the nine months ended September 30, 2026 in comparison to the same period in 2025 (2026 - 13,343 days; 2025 - 8,030 days), despite only a 3% increase in the average U.S. directional rig count, mainly due to the Stryker and SB acquisitions. The average revenues per operating day(1)decreased 9% in the nine months ended September 30, 2026 (2026 - $25,473 per day; 2025 - $28,043 per day), compared to the same period in 2025, for reasons described above.