ACT Energy Technologies Ltd. press release
ACT Energy Technologies Reports 2025 Q2 Interim Results
TSX - Toronto Stock Exchange · Canada
Canada NewsWire
/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA /
CALGARY, AB , Aug. 8, 2025 /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, 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. _
2025 Q2 FINANCIAL RESULTS
Sustained Adjusted EBITDAS (1) margins despite lower activity and revenues primarily attributable to lower third-party rental costs as a result of the Rime measurement-while-drilling ("MWD") deployment. Adjusted EBITDAS (1) of $14.8 million in 2025 Q2 decreased 14%, compared to $17.3 million in 2024 Q2, attributable to lower revenues, offset by lower direct costs. Revenues of $112.0 million in 2025 Q2, a decrease of 14%, compared to $130.3 million in 2024 Q2, with the decline primarily attributable to lower U.S. operating days. Net loss of $10.0 million in 2025 Q2, compared to net income of $5.3 million in 2024 Q2. The net loss was mainly due to: i) unrealized foreign exchange loss of $6.5 million mainly related to the translation of intercompany balances, and ii) a provision of $4.8 million related to a sales tax issue (refer to the 'Provision' section in this news release for more details) and iii) lower revenues. Cash flow - operating activities of $26.0 million in 2025 Q2, compared to $34.1 million in 2024 Q2. Free cash flow (1) of $2.7 million in 2025 Q2, compared to Free cash flow deficit (1) of $1.8 million in 2024 Q2. The Company completed its normal course issuer bid ("NCIB"), purchasing 1,110,858 common shares of ACT during the first six months of 2025 for a total amount of $6.3 million , at an average price of $5.69 per common share. Loans and borrowings less cash was $38.1 million as at June 30, 2025 , compared to $50.7 million as at December 31, 2024 . The Company's liquidity position remained strong with $62.2 million of undrawn capacity on the Company's amended Credit Agreement and a cash balance of $24.0 million ( December 31, 2024 - $55.0 million and $12.8 million , respectively).
2025 Q2 OPERATIONAL RESULTS
Canadian operating days in 2025 Q2 were consistent compared to 2024 Q2. U.S. operating days decreased 24% in 2025 Q2, compared to 2024 Q2. The decrease in operating days in 2025 Q2 was mainly as a result of customer consolidation and a competitive U.S. market given tariff and general macro uncertainties causing customers to remain more cautious with their spending. A decrease in the Canadian average revenues per operating day of 3% in 2025 Q2, compared to 2024 Q2, was primarily due to lower lost-in-hole revenues (1) . An increase in the U.S. average revenues per operating day of 9% in 2025 Q2, compared to 2024 Q2, was primarily due to higher lost-in-hole revenues (1) . Improved U.S gross margins by 5% in 2025 Q2, compared to 2024 Q2, from the reduction of third-party rental costs by utilizing Rime supplied MWD systems. Further durability of gross margins is expected as more MWD systems are deployed. To date, twenty-nine Rime MWD systems have been deployed with an additional twenty-one MWD systems expected to be deployed by the end of 2025 Q3. A substantial majority of the inventory required to build-out these systems was spent in 2024, with minimal purchases required in 2025.
| (1) | As defined in the 'Non-GAAP measures' section of this news release. |
PRESIDENT'S MESSAGE
Comments from President & CEO Tom Connors :
"Our second quarter 2025 showed steady results in Canada and improving adjusted gross margins corporately despite weaker U.S. activity. In Canada , our second quarter activity levels started off strong through April and May, but essentially matched the underlying industry trend which was a slow ramp up out of spring break-up as we continued through June. We retain a strong market position in those regions that have some of the best economic return levels, which, combined with our extensive experience and leading technology offering, is ideally suited for the growing number and length of wells drilled in the multi-lateral oil plays.
"Our U.S. results were heavily impacted by the 10% weakening in West Texas Intermediate ("WTI") oil prices in 2025 Q2 versus 2025 Q1 levels, which sent the average U.S. land rig count down another 3% sequentially as well. The industry rig count in the Permian basin fell to a greater extent, which impacted our operating footprint that is heavily focused on this leading U.S. oil play. Combined with the lingering effects of client mergers and acquisitions ("M&A") in 2024, our U.S. operating days dropped 7% sequentially, however, despite a soft U.S. operating environment, our Adjusted gross margin, including and excluding lost-in-hole revenues, improved versus 2025 Q1 and 2024 Q2. Additional MWD deployment was a contributing factor to improved margins as we now have available our fully-built fleet of MWD systems for marketing. Increasing the penetration of this next-generation technology with our clients is expected to grow our U.S. operating margins by lowering our third-party MWD rental costs.
"We remain committed to returning capital to our shareholders. During the second quarter, we completed our 2024 / 2025 NCIB program, maxing out our available repurchases, a total of 1.9 million shares, or 6% of our issued and outstanding shares as at June 30 , 2025. We are renewing our program and will continue to utilize this program as a lever for returning capital to shareholders.
"We remain committed to delivering ultra-high-performance directional drilling and related down-hole services, leveraging our proprietary technologies and experienced team. This focus will allow us to deliver value to our shareholders through the cycles. To maximize returns, we continue to expect allocating capital as follows:
Margin expansion: utilize selective capital investment, primarily rotary steerable systems ("RSS") and MWD to replace rental equipment with in-house, next-generation technology solutions. Return of capital: repurchase shares through the Company's NCIB. Further strengthen our financial position: although debt remains low, continue to reduce leverage, which allows for business resiliency through the cycles and optionality to pursue a counter-cyclical, long-term investment strategy.
"By having this diverse approach to capital allocation, we believe we will continue to build an increasingly durable business model, one that optimizes investment returns over the long term," stated Tom Connors , ACT President and Chief Executive Officer.
FINANCIAL HIGHLIGHTS (unaudited)
| _(stated in thousands of Canadian dollars, except net income per common share amounts) _ | Three months ended June 30, | Six months ended June 30, | | | | 2025 | 2024 | 2025 | 2024 | | | | | | | | | Revenues | $ 112,010 | $ 130,297 | $ 247,367 | $ 295,253 | | | | | | | | Gross margin percentage | 22 % | 21 % | 22 % | 22 % | | Adjusted gross margin percentage (1) | 29 % | 26 % | 28 % | 28 % | | | | | | | | Adjusted EBITDAS (1) | $ 14,824 | $ 17,305 | $ 34,523 | $ 46,054 | | Adjusted EBITDAS margin percentage (1) | 13 % | 13 % | 14 % | 16 % | | | | | | | | Net (loss) income | $ (9,959) | $ 5,259 | $ (2,711) | $ 16,840 | | Per common share - basic (2) | $ (0.30) | $ 0.15 | $ (0.08) | $ 0.49 | | Per common share - diluted (2) | $ (0.30) | $ 0.14 | $ (0.08) | $ 0.44 | | | | | | | | Cash flow - operating activities | $ 26,029 | $ 34,123 | $ 44,714 | $ 49,866 | | Free cash flow (deficit) (1) | $ 2,726 | $ (1,799) | $ 10,601 | $ 4,409 | | | | | | | | Weighted average common shares outstanding: | | | | | | Basic (000s) (2) | 33,626 | 34,439 | 33,892 | 34,574 | | Diluted (000s) (2) | 33,626 | 38,402 | 33,892 | 38,490 |
| Balance (stated in thousands of Canadian dollars) | June 30, 2025 | December 31, 2024 | | | | | | Working capital, excluding current portion of loans and borrowings (1) | $ 73,698 | $ 84,417 | | Total assets | $ 455,490 | $ 472,881 | | Loans and borrowings | $ 62,145 | $ 63,527 | | Shareholders' equity | $ 234,119 | $ 241,580 |
| (1) | Refer to the 'Non-GAAP Measures' section in this news release. | | (2) | Restated to reflect the 7:1 common share consolidation on July 3, 2024. Refer to the 'Common share consolidation' section in this news release. |
OUTLOOK
General uncertainty related to commodity prices, trade, and potential tariffs, are resulting in restrained levels of drilling activity and a more cautious spending environment. Despite the cautious environment, Canadian activity levels appear to be somewhat resilient and the rig count in the U.S. seems to be nearing a bottom, with some potential for increases in the back half of this year. We remain positive on the longer-term outlook for energy fundamentals due to general economic growth, increasing demand from emerging economies, and significant opportunities related to growth in power demand.
In Canada , stronger customer balance sheets, reasonably constructive commodity price levels, and additional takeaway capacity for both oil and gas continue to support consistent levels of drilling activity. The first LNG Canada natural gas volumes have now shipped from Kitimat, British Columbia and the expansion of the Trans Mountain Pipeline supports heavy oil production, both of which should be positive for drilling activity in the long term. Currently, our Canadian job count is in the low-50 job count range supported by our strong presence in multi-lateral drilling markets. Given relatively strong drilling economics for multi-lateral drilling projects, activity levels are anticipated to be resilient in these areas with continued plans for growth though this cycle and into the future. We expect our Canadian activity levels to be similar or slightly less than 2024 levels of activity as some of our customers have deferred spending plans to later this year due to market uncertainty.
In the U.S., the continued slow decline of industry oil drilling levels has caused our U.S. job run-rate to pull back to the mid-30 jobs per day versus the range of 40 to 50 jobs per day we saw one year ago. While activity levels are lower year-over-year, we still see a significant opportunity for margin recapture as we replace third party rentals with our own MWD technology. We expect to build on the initial success of the product rollout thus far and continue to increase levels of customer adoption through the back half of this year and into next year. The rig counts in the U.S. appear to be approaching a bottom as improved year-over-year natural gas prices are expected to result in increased gas rig counts in the back half of this year. Further, ongoing major additions to U.S. LNG export capacity in the coming two to three years and extreme growth in data center build-out should motivate continued strength in U.S. natural gas demand, pricing and gas drilling levels.
Overall, we remain bullish on longer-term global energy demand and believe that pursuing strong directional drilling market positions in the both the U.S. and Canada remains the best way to capture this opportunity.
RESULTS OF OPERATIONS
Financial
| | Three months ended June 30, | Six months ended June 30, | | | | (stated in thousands of Canadian dollars, except percentages) | 2025 | 2024 | 2025 | 2024 | | | | | | | | Revenues | | | | | | United States | $ 82,068 | $ 99,069 | $ 163,684 | $ 205,631 | | Canada | 29,942 | 31,228 | 83,683 | 89,622 | | Total revenues | 112,010 | 130,297 | 247,367 | 295,253 | | Cost of sales | | | | | | Direct costs | (79,559) | (96,165) | (177,432) | (213,173) | | Depreciation and amortization | (7,448) | (6,180) | (14,796) | (17,815) | | Share-based compensation | (129) | (169) | (260) | (392) | | Cost of sales | (87,136) | (102,514) | (192,488) | (231,380) | | | | | | | | Gross margin | $ 24,874 | $ 27,783 | $ 54,879 | $ 63,873 | | | | | | | | Gross margin percentage | 22 % | 21 % | 22 % | 22 % | | Adjusted gross margin percentage (1) | 29 % | 26 % | 28 % | 28 % | | | | | | |
| (1) | Refer to the 'Non-GAAP Measures' section in this news release. |
Operational
| _(stated in Canadian dollars, except operating days and average industry land rig counts) _ | Three months ended June 30, | % | Six months ended June 30, | % | | | | 2025 | 2024 | Change | 2025 | 2024 | Change | | | | | | | | | | | Operating days (1) | | | | | | | | United States | 2,838 | 3,746 | (24 %) | 5,878 | 7,416 | (21 %) | | Canada | 2,107 | 2,130 | (1 %) | 6,361 | 6,504 | (2 %) | | | 4,945 | 5,876 | (16 %) | 12,239 | 13,920 | (12 %) | | | | | | | | | | Industry land rig count (2) | | | | | | | | United States | 556 | 583 | (5 %) | 564 | 593 | (5 %) | | Canada | 138 | 139 | (1 %) | 172 | 168 | 2 % | | | | | | | | | | Average revenues per operating day (1) | | | | | | | | United States | $ 28,918 | $ 26,447 | 9 % | $ 27,847 | $ 27,728 | — % | | Canada | $ 14,211 | $ 14,661 | (3 %) | $ 13,156 | $ 13,780 | (5 %) | | | $ 22,651 | $ 22,174 | 2 % | $ 20,211 | $ 21,211 | (5 %) | | | | | | | | | | Net lost-in-hole equipment reimbursements (3) | $ 6,841 | $ 4,742 | 44 % | $ 7,957 | $ 15,388 | (100 %) | | | | | | | | |
| (1) | Per 'Supplementary financial measures and other definitions' section in this news release. | | (2) | Per Baker Hughes and Rig Locator. | | (3) | Refer to the 'Non-GAAP Measures' section in this news release. |
Summary
The Company improved gross margin and Adjusted gross margin percentages (1) despite a 16% and 12% decline in the Company's operating days in 2025 Q2 and the six months ended June 30, 2025 , compared to prior periods, respectively. The decline in operating days was offset by increased lost-in-hole revenues (1) in 2025 Q2. There was a significant reduction of lost-in-hole revenues (1) in 2025 Q1 contributing significantly to the decline in the Company's revenues in the six months ended June 30, 2025 , compared to the prior period.
The Company has improved the resiliency of gross margins through replacement of third-party rental equipment with owned equipment, primarily focused on Rime MWD systems. Typically, decreased revenue of 14% and 16% in 2025 Q2 and the six months ended June 30, 2025 , respectively, would result in the Company's fixed components of direct costs negatively impacting margin percentages.
| (1) | As defined in the 'Non-GAAP measures' section of this news release. |
SEGMENTED INFORMATION
United States
Revenues
U.S. revenues were $82.1 million in 2025 Q2, a decrease of $17.0 million or 17%, compared to $99.1 million in 2024 Q2. The Company experienced a 24% decrease in operating days in 2025 Q2 (2025 - 2,838 days; 2024 - 3,746 days). The Company's activity declines exceeded the 5% decrease in the average U.S. land rig count mainly as a result of consolidation by some of the Company's customers. In addition, the Company felt the impact of the increasingly competitive U.S. market given the general market uncertainty contributing to commodity price volatility. The average revenues per operating day (2) increased 9% in 2025 Q2 (2025 - $28,918 per day; 2024 - $26,447 per day). The increase in average revenues per operating day (2) is mainly due to higher lost-in-hole revenues (1) .
U.S. revenues were $163.7 million in the six months ended June 30, 2025 , a decrease of $41.9 million or 20%, compared to $205.6 million for the same period in 2024. The Company experienced a 21% decrease in operating days in the six months ended June 30, 2025 (2025 - 5,878 days; 2024 - 7,416 days). The Company's activity declines exceeded the 5% decrease in the average U.S. land rig count mainly as a result of consolidation by some of the Company's customers. In addition, the Company felt the impact of the increasingly competitive U.S. market given the general market uncertainty contributing to commodity price volatility. The average revenues per operating day (2) relatively consistent in the six months ended June 30, 2025 (2025 - $27,847 per day; 2024 - $27,728 per day). The unusually low lost-in-hole revenues (1) the Company experienced in 2025 Q1 was partially offset by higher lost-in-hole revenues (1) in 2025 Q2, although lost-in-hole revenues (1) remained lower in the six months ended June 30, 2025 , compared to the same period in 2024. Lost-in-hole activity has historically been relatively consistent as a percentage of operating revenues.
| (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. |
Direct costs
U.S. direct costs included in cost of sales were $58 .1 million in 2025 Q2, a decrease of $16.4 million or 22%, compared to $74.5 million in 2024 Q2. The decrease is mainly due to lower MWD third-party rental costs, resulting from the Rime MWD build-out and lower labour and repair costs related to lower activity and cost reduction initiatives in 2025 Q2. As a result, direct costs as a percentage of revenues were 71% in 2025 Q2, compared to 75% in 2024 Q2. In addition, direct costs as a percentage of revenues were lower due to higher lost-in-hole revenues (1) in 2025 Q2.
U.S. direct costs included in cost of sales were $120 .2 million in the six months ended June 30, 2025 , a decrease of $35.0 million or 23%, compared to $155.2 million for the same period in 2024. The decrease is mainly due to lower MWD third-party rental costs, resulting from the Rime MWD build-out and lower labour and repair costs related to lower activity and cost reduction initiatives in the six months ended June 30, 2025 . As a result, direct costs as a percentage of revenues were 73% in the six months ended June 30, 2025 , compared to 75% for the same period in 2024. Lower direct costs as a percentage of revenues were offset by the effect of lower lost-in-hole revenues (1) in the six months ended June 30 , 2025, compared to the same period in 2024.
| (1) | As defined in the 'Non-GAAP measures' section of this news release. |
Canadian
Revenues
Canadian revenues were $29.9 million in 2025 Q2, a decrease of $1.3 million or 4%, compared to $31.2 million in 2024 Q2, with the decline primarily attributable to lower lost-in-hole revenues (1) , as activity was consistent with 2024 Q2. The average revenues per operating day (2) decreased 3% in 2025 Q2 (2025 - $14,211 per day; 2024 - $14,661 per day). The decrease in the average revenues per operating day (2) is mainly attributed to lower lost-in-hole revenues (1) .
Canadian revenues were $83.7 million in the six months ended June 30, 2025 , a decrease of $5.9 million or 7%, compared to $89.6 million for the same period in 2024, with the decline primarily attributable to lower lost-in-hole revenues (1) and a 2% decrease in operating days in the six months ended June 30, 2025 (2025 - 6,361 days; 2024 - 6,504 days). Despite an increase in the Western Canada average land rig count of 2%, ACT had a slight decline in activity during the six months ended June 30, 2025 , relative to the comparative period, primarily attributable to lower activity in oil plays where ACT is more prevalent. The average revenues per operating day (2) decreased 5% in the six months ended June 30, 2025 (2025 - $13,156 per day; 2024 - $13,780 per day). The decrease in the average revenues per operating day (2) is mainly attributed to lower lost-in-hole revenues (1) . In the six months ended June 30, 2025 , the Company experienced an unusually low rate of lost-in-hole activity compared to the same period in 2024 ( $7.3 million ), which was conversely unusually high. Over longer periods of time, lost-in-hole activity has historically been relatively consistent as a percentage of operating revenues.