ACT Energy Technologies Ltd. press release
ACT Energy Technologies Reports 2025 Q3 Interim Results
TSX - Toronto Stock Exchange · Canada
Canada NewsWire
/_NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/_
CALGARY, AB, Nov. 7, 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 Q3 FINANCIAL RESULTS
The Company sustained comparable Adjusted EBITDA margins(1) of 20% in 2025 Q3 despite a decline in revenues to $118.3 millionin 2025 Q3 (2024 Q3 - $148.4 million). Revenue declines are primarily attributable to lower industry activity contributing to ACT's lower U.S. activity. Adjusted EBITDAS(1)of $23.4 millionin 2025 Q3 decreased 23%, compared to $30.2 millionin 2024 Q3, primarily attributable to the lower aforementioned revenues, offset by lower direct costs related to lower third-party rental costs as a result of the Rime measurement-while-drilling ("MWD") build-out. Net income of $15.2 millionin 2025 Q3, was lower than net income of $26.2 million. One of the reasons is that 2024 Q3 reflected previously unrecognized Canadian tax pools, which resulted in a deferred tax recovery of $11.1 millionin the period. Free cash flow(1)of $18.2 millionin 2025 Q3, compared to Free cash flow(1)of $14.2 millionin 2024 Q3. Cash flow - operating activities of $6.5 millionin 2025 Q3, compared to $19.4 millionin 2024 Q3. The Company remains focused on returning capital to shareholders and to the balance sheet. During the nine months ended 2025 the Company returns totaled $15 millioncomprised of: Repurchased 1,350,186 common shares at an average price of $5.54per common share, a total amount of $7.4 million. Reduced loans and borrowings by $7.6 millionwith loans and borrowings less cash of $41.7 millionas at September 30, 2025, compared to $50.7 millionas at December 31, 2024.
The Company's liquidity position remained strong with $68.7 millionof undrawn capacity on the Company's amended Credit Agreement and a cash balance of $14.1 million(December 31, 2024- $55.0 millionand $12.8 million, respectively).
2025 Q3 OPERATIONAL RESULTS
Canadian operating days(2)decreased by 11% in 2025 Q3, compared to 2024 Q3, less than industry activity declines. U.S. operating days(2)decreased 30% in 2025 Q3, compared to 2024 Q3. The decrease in operating days(2)in 2025 Q3 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. An increase in the Canadian average revenues per operating day(2)of 4% in 2025 Q3, compared to 2024 Q3, was primarily driven by an improved revenue mix, despite lower overall revenue and activity levels. U.S Adjusted gross margins(1)improved by 15% to an average of 29% in 2025 Q3, compared to an average of 25% in 2024 Q3. Positively affecting margins is a reduction of third-party rental costs, utilizing internally supplied MWD systems. Further durability of gross margins is expected as the Company's U.S. business returns to more normalized operating activity levels combined with the deployment of additional, already built, MWD systems.
| | | 1As defined in the 'Non-GAAP measures' section of this news release. | | 2Per 'Supplementary financial measures and other definitions' section in this news release |
PRESIDENT'S MESSAGE
Comments from President & CEO Tom Connors:
"Amid a backdrop of gradually softening oil and natural gas prices, ACT delivered resilient performance, outpacing the broader Canadian market and navigating a challenging U.S. drilling environment. A key milestone this quarter was the continued deployment of our proprietary next-generation Measurement-While-Drilling (MWD) systems in the U.S., which contributed to Adjusted EBITDAS margins(1)of 20% matching the year ago levels despite lower activity and corresponding revenue levels. We estimate this rollout will reduce third-party rental expenses by up to $10 million USDin 2025, with the potential to recapture an additional $10 millionin 2026 as deployment completes.
"In Canada, we remained one of the most active directional drillers in Q3, with job counts declining approximately 11% year-over-year, in line with a 13% reduction in overall rig activity. Our performance was supported by the strong economics of multi-lateral drilling, where our technology and expertise are well aligned with customer requirements. We also achieved higher revenue per day and improved margins through increased rotary steerable system (RSS) utilization and the introduction of value-added technologies that enhance drilling efficiency and customer outcomes.
"In the U.S., while the land rig count declined another 5% from Q2, we believe activity bottomed during the quarter. We anticipate a gradual recovery beginning in Q4. Our advanced RSS and MWD technologies continue to differentiate ACT, enabling us to support customers as they pursue longer laterals and more complex wells. By focusing on high-value segments and executing our technology rollout, we are well-positioned to grow and strengthen our business as market conditions improve.
"Our capital allocation strategy remains focused on long-term value creation and business resilience. We continue to:
Invest selectively in high-return organic growth opportunities that enhance customer productivity and drive margin expansion. Return capital to shareholders through our Normal Course Issuer Bid (NCIB) share repurchase program. Strengthen our financial position by maintaining a reduced leverage profile, enhancing our ability to pursue strategic, accretive acquisitions.
"This balanced approach supports our goal of building a durable, high-performing business that delivers sustainable shareholder returns," said Tom Connors, ACT President and Chief Executive Officer.
| | | 1As defined in the 'Non-GAAP measures' section of this news release. |
FINANCIAL HIGHLIGHTS (unaudited)
| _(stated in thousands of Canadian dollars, except net income per common share amounts)_ | Three months ended September 30, | Nine months ended September 30, | | | | 2025 | 2024 | 2025 | 2024 | | | | | | | | | Revenues | $ 118,260 | $ 148,449 | $ 365,627 | $ 443,702 | | | | | | | | Gross margin percentage | 27 % | 26 % | 24 % | 23 % | | Adjusted gross margin percentage(1) | 33 % | 30 % | 30 % | 29 % | | | | | | | | Adjusted EBITDAS(1) | $ 23,433 | $ 30,169 | $ 57,956 | $ 76,223 | | Adjusted EBITDAS margin percentage(1) | 20 % | 20 % | 16 % | 17 % | | | | | | | | Net income | $ 15,154 | $ 26,175 | $ 12,443 | $ 43,015 | | Per common share - basic | $ 0.45 | $ 0.75 | $ 0.37 | $ 1.24 | | Per common share - diluted | $ 0.41 | $ 0.68 | $ 0.33 | $ 1.12 | | | | | | | | Cash flow - operating activities | $ 6,512 | $ 19,377 | $ 51,226 | $ 69,243 | | Free cash flow(1) | $ 18,248 | $ 14,162 | $ 28,849 | $ 18,604 | | | | | | | | Weighted average common shares outstanding: | | | | | | Basic (000s) | 33,892 | 34,965 | 33,889 | 34,770 | | Diluted (000s) | 37,404 | 38,772 | 37,443 | 38,559 |
| Balance (stated in thousands of Canadian dollars) | September 30, 2025 | December 31, 2024 | | | | | | Working capital(1) | $ 81,921 | $ 84,417 | | Total assets | $ 457,998 | $ 472,881 | | Loans and borrowings | $ 55,884 | $ 63,527 | | Exchangeable promissory notes | $ 26,852 | $ 26,962 | | Shareholders' equity | $ 249,299 | $ 241,580 |
| (1)Refer to the 'Non-GAAP Measures' section in this news release. |
OUTLOOK
Several geopolitical factors continue to influence near-term energy demand, including OPEC+ production decisions, trade policy uncertainty, and global conflicts. Despite these headwinds, we remain encouraged by the long-term fundamentals supporting energy demand—driven by global economic growth, emerging market consumption, LNG expansion, and the increasing need for natural gas-powered data centers supporting AI infrastructure.
In Canada, additional takeaway capacity for oil and natural gas continues to support drilling activity. LNG Canada is ramping exports from Trains 1 and 2, targeting full capacity by spring 2026, with Phase 2 under evaluation. The Trans Mountain pipeline expansion is also incentivizing heavy oil production, benefiting our technology offerings. While E&P companies typically reduce activity heading into year-end, we anticipate a robust winter drilling season and a strong Q1 2026, comparable to last year's levels.
In the U.S., oil-focused activity remains subdued, but natural gas drilling is gradually increasing in regions like Haynesville and Appalachia. The ongoing build-out of U.S. LNG infrastructure and rising demand from AI-driven data centers are expected to drive future investment. In the near term, oil price volatility and seasonal budget constraints may limit rig count growth, and we expect U.S. job counts to remain relatively flat through year-end. Nevertheless, we will continue executing our technology-focused strategy to maximize returns and position ourselves for growth as market conditions improve.
RESULTS OF OPERATIONS
Financial
| | Three months ended September 30, | Nine months ended September 30, | | | | (stated in thousands of Canadian dollars, except percentages) | 2025 | 2024 | 2025 | 2024 | | | | | | | | Revenues | | | | | | United States | $ 61,501 | $ 86,948 | $ 225,185 | $ 292,579 | | Canada | 56,759 | 61,501 | 140,442 | 151,123 | | Total revenues | 118,260 | 148,449 | 365,627 | 443,702 | | Cost of sales | | | | | | Direct costs | (78,708) | (103,767) | (256,140) | (316,940) | | Depreciation and amortization | (7,861) | (6,432) | (22,657) | (24,247) | | Share-based compensation | (131) | (73) | (391) | (465) | | Total cost of sales | (86,700) | (110,272) | (279,188) | (341,652) | | | | | | | | Gross margin | $ 31,560 | $ 38,177 | $ 86,439 | $ 102,050 | | | | | | | | Gross margin percentage | 27 % | 26 % | 24 % | 23 % | | Adjusted gross margin percentage (1) | 33 % | 30 % | 30 % | 29 % | | | | | | |
| (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 September 30, | % | Nine months ended September 30, | % | | | | 2025 | 2024 | Change | 2025 | 2024 | Change | | | | | | | | | | | Operating days (1) | | | | | | | | United States | 2,152 | 3,080 | (30 %) | 8,030 | 10,496 | (23 %) | | Canada | 4,036 | 4,527 | (11 %) | 10,397 | 11,031 | (6 %) | | | 6,188 | 7,607 | (19 %) | 18,427 | 21,527 | (14 %) | | | | | | | | | | Average industry land rig count (2) | | | | | | | | United States | 520 | 567 | (8 %) | 533 | 566 | (6 %) | | Canada | 168 | 194 | (13 %) | 161 | 169 | (5 %) | | | | | | | | | | Average revenues per
operating day(1) | | | | | | | | United States | $ 28,579 | $ 28,230 | 1 % | $ 28,043 | $ 27,875 | 1 % | | Canada | $ 14,063 | $ 13,585 | 4 % | $ 13,508 | $ 13,700 | (1 %) | | | $ 19,111 | $ 19,515 | (2 %) | $ 19,842 | $ 20,611 | (4 %) | | | | | | | | | | Net lost-in-hole equipment
reimbursements (3) | $ 7,355 | $ 4,827 | 52 % | $ 15,312 | $ 20,215 | (24 %) | | | | | | | | |
| (1) Per 'Supplementary financial measures and other definitions' section in this news release. | | (2)Per JWN RigLocator and Enverus. | | (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 19% and 14% decline in the Company's operating days in 2025 Q3 and the nine months ended September 30, 2025, compared to prior periods, respectively. The reduction in operating days, particularly in the U.S., was the primary contributing factor to the decline in the Company's revenues for 2025 Q3 and the nine months ended September 30, 2025, compared to prior periods.
The Company 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 20% and 18% in 2025 Q3 and the nine months ended September 30, 2025, respectively, would result in the Company's fixed components of direct costs negatively impacting margin percentages.
| | | 1As defined in the 'Non-GAAP measures' section of this news release. |
SEGMENTED INFORMATION
United States
Revenues
U.S. revenues were $61.5 millionin 2025 Q3, a decrease of $25.4million or 29%, compared to $86.9 millionin 2024 Q3. The Company experienced a 30% decrease in operating days(1)in 2025 Q3 (2025 - 2,152 days; 2024 - 3,080 days). The Company's activity declines exceeded the 8% decrease in the average U.S. land rig count, magnified by certain of the Company's customers consolidating. In addition, the Company felt the impact of the increasingly competitive U.S. market given the general broad market uncertainties contributing to commodity price volatility. The average revenues per operating day(1)increased 1% in 2025 Q3 (2025 - $28,579per day; 2024 - $28,230per day).
U.S. revenues were $225.2 millionin the nine months ended September 30, 2025, a decrease of $67.4million or 23%, compared to $292.6 millionfor the same period in 2024. The Company experienced a 23% decrease in operating days(1)in the nine months ended September 30, 2025(2025 - 8,030 days; 2024 - 10,496 days). The Company's activity decline is consistent with the 6% 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(1)were consistent in the nine months ended September 30, 2025(2025 - $28,043per day; 2024 - $27,875per day), with the same period in 2024.
| _ | | 1Per 'Supplementary financial measures and other definitions' section in this news release. |
Direct costs
U.S. direct costs included in cost of sales were $43.5 millionin 2025 Q3, a decrease of $20.8 millionor 32%, compared to $64.3million in 2024 Q3. 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 Q3. As a result, direct costs as a percentage of revenues were 71% in 2025 Q3, compared to 74% in 2024 Q3. Also contributing to the decrease in direct costs as a percentage of revenues were higher lost-in-hole revenues(2)in 2025 Q3, compared to 2024 Q3.
U.S. direct costs included in cost of sales were $163.7 millionin the nine months ended September 30, 2025, a decrease of $55.8 millionor 25%, compared to $219.5million 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 nine months ended September 30, 2025. Direct costs as a percentage of revenues were 73% in the nine months ended September 30, 2025, compared to 75% for the same period in 2024, primarily as a result of lower MWD third-party rental costs, resulting from the Rime MWD build-out.
Canadian
Revenues
Canadian revenues were $56.8 millionin 2025 Q3, a decrease of $4.7million or 8%, compared to $61.5million in 2024 Q3, due to an 11% decrease in operating days(1)in 2025 Q3 (2025 - 4,036 days; 2024 - 4,527 days) consistent with the Western Canadaaverage land rig count decrease of 13%. The average revenues per operating day(1)increased 4% in 2025 Q3 (2025 - $14,063per day; 2024 - $13,585per day). The increase in the average revenues per operating day(1)is mainly attributable to a favorable job mix requiring additional revenue generating technologies.
Canadian revenues were $140.4 millionin the nine months ended September 30, 2025, a decrease of $10.7million or 7%, compared to $151.1million for the same period in 2024, with the decline primarily attributable to a 6% decrease in operating days(1)in the nine months ended September 30, 2025(2025 - 10,397 days; 2024 - 11,031 days). Consistent with a decline in the Western Canadaaverage land rig count of 4%, ACT had a slight decline in activity during the nine months ended September 30, 2025, relative to the comparative period. The average revenues per operating day(1)were consistent in the nine months ended September 30, 2025(2025 - $13,508per day; 2024 - $13,700per day), with the same period in 2024.
| _ | | 1Per 'Supplementary financial measures and other definitions' section in this news release. |
Direct costs
Canadian direct costs included in cost of sales were $35.2 millionin 2025 Q3, a decrease of $4.3million or 11%, compared to $39.5 millionin 2024 Q3. The decrease is mainly due to lower repair, third-party rental and labour costs in 2025 Q3, consistent with lower activity levels. As a percentage of revenues, direct costs were 62% in 2025 Q3, compared to 64% in 2024 Q3. A more favorable revenue mix in 2025 Q3, relative to 2024 Q3, is the primary factor in direct costs being lower as a percentage of revenues in 2025 Q3.
Canadian direct costs included in cost of sales were $92.4 millionin the nine months ended September 30, 2025, a decrease of $5.0million or 5%, compared to $97.4 millionfor the same period in 2024. The decrease is mainly due to lower repair, third-party rental and labour costs in the nine months ended September 30, 2025, consistent with lower activity levels. As a percentage of revenues, direct costs were 66% in the nine months ended September 30, 2025, compared to 64% for the same period in 2024. The effect of lower lost-in-hole revenues(1)in the nine months ended September 30, 2025, compared to the same period in 2024, is the primary factor in direct costs being higher as a percentage of revenues.
| _ | | 1As defined in the 'Non-GAAP measures' section of this news release. |
CONSOLIDATED
Revenues
The Company's revenues were $118.3 million in 2025 Q3, a decrease of $30.1million or 20%, compared to $148.4 millionin 2024 Q3. The decrease is driven by a 19% decrease in operating days(1)(2025 - 6,188 days; 2024 - 7,607 days) and a 2% decrease in the average revenues per operating day(1)(2025 - $19,111; 2024 - $19,515). Although both the Canadian and U.S. business units realized higher average revenues per operating day(1)compared to the prior year, the consolidated average revenues per operating day(1)decreased. The decline was primarily due to a higher weighting of Canadian operating days(1), which has lower average equipment intensity per job, and therefore lower average revenues per operating day(1)compared to U.S. jobs.
The Company recognized $365.6 million of revenues in the nine months ended September 30, 2025, a decrease of $78.1million or 18%, compared to $443.7 millionfor the same period in 2024. The decrease is driven by a 14% decrease in operating days(1)(2025 - 18,427 days; 2024 - 21,527 days), and a 4% decrease in the average revenues per operating day(1)(2025 - $19,842; 2024 - $20,611). The decline in the consolidated average revenues per operating day(1)was primarily due to a higher weighting of Canadian operating days(1), which has lower average equipment intensity per job, and therefore lower average revenues per operating day(1)compared to U.S. jobs.
| _ | | 1Per 'Supplementary financial measures and other definitions' section in this news release. |