| /NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/ CALGARY, AB, May 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 Q1 FINANCIAL RESULTS - ACT's first quarter revenues of $135.4 million saw a strong increase coming out of the winter holiday season, up 6% sequentially, modestly better than the North American active land rig count sequential increase of 5% (1). Similarly, Adjusted EBITDAS (2) of $19.7 million in 2025 Q1 posted a 12% sequential increase versus the $17.6 million in 2024 Q4.
- Owing principally to weakness in the U.S. land rig count year-over-year, plus much lower levels of lost-in-hole revenues (2) in 2025 Q1, our consolidated revenues declined 18%, compared to $165.0 million in 2024 Q1. The 31% decline in Adjusted EBITDAS (2) compared to $28.8 million in 2024 Q1, was disproportionately impacted by lower lost-in-hole revenues (2).
- Net income of $7.2 million in 2025 Q1, compared to $11.6 million in 2024 Q1 mainly due to lower revenues in 2025 Q1.
- Cash flow - operating activities of $18.7 million in 2025 Q1, compared to $15.7 million in 2024 Q1.
- Free cash flow (2) of $7.9 million in 2025 Q1, compared to Free cash flow (2) of $6.2 million in 2024 Q1.
- The Company purchased 742,699 common shares of ACT under its normal course issuer bid ("NCIB") for a total amount of $4.5 million, at an average price of $6.09 per common share. Subsequent to March 31, 2025, the Company purchased 212,900 common shares for a total purchase amount of $1.0 million, at an average purchase price of $4.84 per common share.
- Loans and borrowings less cash was $50.3 million as at March 31, 2025, compared to $50.7 million as at December 31, 2024.
- The Company strengthened liquidity with $61.3 million of undrawn capacity on the Company's amended Credit Agreement and a cash balance of $12.9 million (December 31, 2024 - $55.0 million and $12.8 million, respectively).
2025 Q1 OPERATIONAL RESULTS - While we remained one of the most active directional drillers in the Canadian market during the first quarter, we experienced a modest decline in operating days of 3% versus 2024 Q1 given slight differences in activity across the various Canadian resource plays. The ramp up in 2025 Q1 activity was also relatively strong this year, with our job count rebounding by approximately 23% sequentially versus a 20% increase of the industry rig count (1).
- Our U.S. activity saw sequential gains in 2025 Q1 despite a difficult underlying U.S. land rig market. First quarter operating days were up 7% sequentially, relative to 2024 Q4. This contrasts with an essentially flat U.S. land rig count (1). On a year-over-year basis, a 5% contraction in the U.S. land rig count (1) plus customer consolidation pushed our U.S. operating days down by 17% in 2025 Q1, compared to 2024 Q1.
- ACT recognized an unusually low level of lost-in-hole revenues (2), which led to a decrease in the Canadian and U.S. average revenues per operating day (3) of 5% and 8%, respectively, in 2025 Q1, compared to 2024 Q1. Historically, lost-in-hole activity has been achieved at relatively consistent levels as a percentage of operating revenues.
- At the end of 2025 Q1, the Company began to see realized gross margin expansion in its U.S. directional business reducing its third-party rental costs by utilizing Rime supplied measurement-while-drilling ("MWD") systems. Further strengthening of gross margins is expected as more MWD systems are deployed. As of May 8, 2025, twenty-four Rime MWD systems have been deployed with an additional twenty-six MWD systems expected to be built by the end of 2025 Q2. A substantial majority of the inventory required to build-out these systems was spent in 2024, with minimal purchases required in 2025.
(1) As per Baker Hughes and Rig Locator. | (2) As defined in the 'Non-GAAP measures' section of this news release. | (3) Per 'Supplementary financial measures and other definitions' section in this news release. |
PRESIDENT'S MESSAGE Comments from President & CEO Tom Connors: "Our first quarter 2025 results showed solid improvement coming out of the holiday break as operating days in both of our major geographic segments outperformed the rise in underlying industry benchmarks. Our North American operating days improved by over 15% compared to fourth quarter 2024 levels versus a 5% increase in the North American active land rig count (1). In Canada, we saw relatively consistent activity levels relative to the robust activity levels associated with the first quarter of 2024. We continue to believe that the regions in which we operate 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 depth of wells drilled in multi-lateral oil plays. "While we did see a meaningful sequential activity increase in our U.S. segment, our activity was down from the first quarter of 2024. Our U.S. operating days fell by 17% year-over-year due to lower industry drilling levels, especially among exploration and production ("E&P") companies involved in mergers and acquisitions ("M&A"). Overall, the U.S. land rig count declined by 5% year-over-year in 2025 Q1 (1), whereas the U.S. rig count working for E&P companies involved in M&A is down 19% (source: RBC Research, April 21, 2025). Numerous U.S. transactions saw significantly fewer rigs deployed within six to twelve months after announcement. Despite these impacts, our U.S. segment continues to operate at levels consistent with our historical proportions of the overall industry rig count. "We started to see margin expansion in the first quarter of 2025 and believe we will see further margin expansion as we continue the deployment of our own MWD systems developed by Rime Downhole Technologies (acquired in 2023). We remain on target to complete the construction of 50 MWD systems by the end of the second quarter of 2025. These new MWD systems will strengthen the durability of our cash flow, replacing rented third-party MWD systems. The deployment of the tools into an operating environment for our customers will happen incrementally throughout 2025 with full utilization rates expected in 2026. "Our business focus remains consistent, we are 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 expect to allocate capital as follows: - Expand margins: utilize selective capital investment, primarily rotary steerable systems ("RSS") and MWD, replacing rental equipment with optimized in-house solutions.
- Return of capital: repurchase of shares through the Company's NCIB.
- Further strengthen our financial position: although debt remains low, further modest reduction of debt will allow for business resiliency through the cycles, allowing the Company to be counter-cyclical with respect to long-term investment decisions.
"By having this diverse approach to capital allocation, we believe we will continue to build out a durable business model, focused on ensuring an effective use of capital. "Volatile industry conditions are to be expected and anticipated in an oilfield service business. We are fortunate to have people to help navigate this business through uncertain times if and as they arise. We sincerely appreciate their dedication to our business and customers as we continue to build our Company," stated Tom Connors, ACT President and Chief Executive Officer. (1) Per Baker Hughes and Rig Locator |
FINANCIAL HIGHLIGHTS
(unaudited)
|
| Three months ended March 31, | (stated in thousands of Canadian dollars, except net income per common share amounts) |
| 2025 |
| 2024 |
|
|
|
|
| Revenues | $ | 135,357 | $ | 164,956 |
|
|
|
|
| Gross margin percentage |
| 22 % |
| 22 % | Adjusted gross margin percentage (1) |
| 28 % |
| 29 % |
|
|
|
|
| Adjusted EBITDAS (1) | $ | 19,699 | $ | 28,752 | Adjusted EBITDAS margin percentage (1) |
| 15 % |
| 17 % |
|
|
|
|
| Net income | $ | 7,248 | $ | 11,584 | Per common share - basic (2) | $ | 0.21 | $ | 0.34 | Per common share - diluted (2) | $ | 0.19 | $ | 0.30 |
|
|
|
|
| Cash flow - operating activities | $ | 18,685 | $ | 15,746 | Free cash flow (1) | $ | 7,875 | $ | 6,211 |
|
|
|
|
| Weighted average common shares outstanding: |
|
|
|
| Basic (000s) (2) |
| 34,160 |
| 34,383 | Diluted (000s) (2) |
| 37,867 |
| 38,495 |
|
|
|
|
|
Balance (stated in thousands of Canadian dollars) | March 31,
2025 | December 31,
2024 |
|
|
| Working capital, excluding current portion of loans and borrowings (1) | $ 70,665 | $ 84,417 | Total assets | $ 485,001 | $ 472,881 | Loans and borrowings | $ 63,200 | $ 63,527 | Shareholders' equity | $ 243,284 | $ 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 Despite ongoing uncertainty in global markets related to proposed U.S. trade policy revisions, the longer-term outlook for North American energy-related activity remains positive. Global demand continues to rise while geopolitical events continue to increase the uncertainty around supply. Our E&P clients have also worked hard since the Covid downturn to improve their balance sheets, which should allow much better insulation around field capital spending levels against a backdrop of commodity price volatility. In Canada, the commissioning of the Trans Mountain oil pipeline expansion in May 2024, followed by the impending start-up of the liquified natural gas ("LNG") Canada project in mid-2025, will provide significant tidewater and global market access for both Canadian crude and natural gas. Both projects should continue to translate to more consistent and slightly improved activity levels for oilfield service providers over time. LNG also represents a significant area of growth for the U.S. market as more than 11 bcf per day of export capacity will be added from 2025 to 2028, supporting incremental growth in drilling activity and less volatility in activity related to the cyclicality of domestic natural gas prices. The potential growth in energy demand related to the evolving market for artificial intelligence ("AI") data centers is a developing trend that could further support natural gas-related drilling activity over the long-term. Despite the typical pull-back in second quarter activity in Canada owing to wet weather conditions, our recent job count has been in the low-to-high 20 range, which is modestly ahead of last year's April-to-early May run rate. Our Canadian customers have shown a tendency in recent years to level-load their capital programs in 2025 Q2, which includes more pad-based drilling to avoid road bans. For the remainder of the year, our Canadian activity is expected to be similar to 2024. If uncertainty or increased costs due to trade policy persists, some potential for downside risk exists, but could be offset by improved pricing for Canadian heavy oil production due to narrowing of the discount typically realized by Canadian producers due to pipeline constraints. Trans Mountain pipeline volumes and loadings remain strong, showing the real-time virtue of expanded takeaway capacity. With our industry-leading position in multi-lateral drilling, the compelling economics of multi-lateral wells is expected to support continued solid activity through the summer despite potential headwinds related to weaker commodity prices or other market uncertainties. Similar to the fourth quarter of 2024, we also anticipate that operator discipline will remain a factor in the fourth quarter of 2025 and likely result in some degree of budget exhaustion and reduced activity versus the third quarter of 2025. In the U.S. we expect to operate in a range of 40 to 50 jobs daily for the remainder of the year as drilling activity remains somewhat constrained due to customer consolidation and concern over commodity price volatility. We do see near term risk in customer activity resulting from the proposed U.S. tariffs and potential negative effect on oil prices. However, improved year-over-year natural gas prices are creating some optimism for an increase in rig activity later this year or into 2026, particularly as new Gulf Coast LNG export facilities come online. We feel well-positioned to navigate a relatively flat macroeconomic environment in North America and are optimistic about the potential upside related to the deployment of our own technology in the U.S. market, but we remain cautious on the impact of tariffs and are evaluating the potential impact on our business. Given our supply chains are generally resident in each nation and 65% to 70% of our revenues are U.S. based, we expect the impact will be somewhat limited, but there may be certain elements of our supply chain that will increase in cost. While tariffs and their potential impact may persist or prove to be short-term in nature, the underlying risk is the negative impact on the investment climate and overall consumer sentiment. RESULTS OF OPERATIONS Financial
| Three months ended March 31, | (stated in thousands of Canadian dollars, except percentages) | 2025 | 2024 |
|
|
| Revenues |
|
| United States | $ 81,616 | $ 106,562 | Canada | 53,741 | 58,394 | Total revenues | 135,357 | 164,956 | Cost of sales |
|
| Direct costs | (97,873) | (117,008) | Depreciation and amortization | (7,348) | (11,635) | Share-based compensation | (131) | (223) | Cost of sales | (105,352) | (128,866) |
|
|
| Gross margin | $ 30,005 | $ 36,090 |
|
|
| Gross margin percentage | 22 % | 22 % | Adjusted gross margin percentage (1) | 28 % | 29 % |
|
|
|
(1) Refer to the 'Non-GAAP Measures' section in this news release. |
Operational
| Three months ended March 31, | % | (stated in Canadian dollars, except operating days and average industry land rig counts) | 2025 | 2024 | Change |
|
|
|
| Operating days(1) |
|
|
| United States | 3,040 | 3,670 | (17 %) | Canada | 4,254 | 4,374 | (3 %) |
| 7,294 | 8,044 | (9 %) |
|
|
|
| Industry land rig count (2) |
|
|
| United States | 572 | 602 | (5 %) | Canada | 205 | 197 | 4 % |
|
|
|
| Average revenues per operating day (1) |
|
|
| United States | $ 26,847 | $ 29,036 | (8 %) | Canada | $ 12,633 | $ 13,350 | (5 %) |
| $ 18,557 | $ 20,507 | (10 %) |
|
|
|
| Net lost-in-hole equipment reimbursements (3) | $ 1,117 | $ 10,646 | (90 %) |
|
|
|
|
(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 sustained gross margin and Adjusted gross margin percentages (1) despite a 9% decline in the Company's operating days and a significant reduction of lost-in-hole revenues (1), both contributing significantly to the 18% decline in the Company's revenues relative to the prior period. Typically, declines in operating days and revenues would result in the Company's fixed components of direct costs negatively impacting margin percentages. However, the Company's improved the durability and resiliency of gross margins through replacement of third-party rental equipment with owned equipment, primarily through deployment of Rime MWD systems. (1) Refer to the 'Non-GAAP Measures' section in this news release. |
SEGMENTED INFORMATION United States Revenues U.S. revenues were $81.6 million in 2025 Q1, a decrease of $25.0 million or 24%, compared to $106.6 million in 2024 Q1. The Company experienced a 17% decrease in operating days in 2025 Q1 (2025 - 3,040 days; 2024 - 3,670 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. The average revenues per operating day (2) decreased 8% in 2025 Q1 (2025 - $26,847 per day; 2024 - $29,036 per day). The decrease in average revenues per operating day (2) is mainly due to lower lost-in-hole revenues and lower equipment service intensity on jobs during 2025 Q1, compared to 2024 Q1. In 2025 Q1, the Company experienced an unusually low rate of lost-in-hole activity compared to 2024 Q1 ($12.4 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. Direct costs U.S. direct costs included in cost of sales were $62.1 million in 2025 Q1, a decrease of $18.6 million or 23%, compared to $80.7 million in 2024 Q1. 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 in 2025 Q1. As a percentage of revenues, direct costs were 76% in 2025 Q1 and 2024 Q1. Lower direct costs as a percentage of revenues, as described above, were offset by the effect of minimal lost-in-hole revenues (1) in 2025 Q1 relative to the comparative period. Canadian Revenues Canadian revenues were $53.7 million in 2025 Q1, a decrease of $4.7 million or 8%, compared to $58.4 million in 2024 Q1, with the decline primarily attributable to lower lost-in-hole revenues (1) and a 3% decrease in operating days in 2025 Q1 (2025 - 4,254 days; 2024 - 4,374 days). Despite a modest increase in the Western Canada average land rig count of 4%, ACT had a slight decline in activity during 2025 Q1 primarily attributable to lower activity in oil plays where ACT is more prevalent. The average revenues per operating day (2) decreased 5% in 2025 Q1 (2025 - $12,633 per day; 2024 - $13,350 per day). The decrease in the average revenues per operating day (2) is mainly attributed to lower lost-in-hole revenues (1). In 2025 Q1, the Company experienced an unusually low rate of lost-in-hole activity compared to 2024 Q1 ($4.3 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. Direct costs Canadian direct costs included in cost of sales were $35.7 million in 2025 Q1, a decrease of $0.6 million or 2%, compared to $36.3 million in 2024 Q1. The decrease is mainly due to lower labour and repair costs in 2025 Q1 as a result of lower activity. As a percentage of revenues, direct costs were 66% in 2025 Q1, compared to 62% in 2024 Q1. The effect of minimal lost-in-hole revenues (1) in 2025 Q1 relative to the comparative period is the primary factor in direct costs being higher as a percentage of revenues in the current period. CONSOLIDATED Revenues The Company recognized $135.4 million of revenues in 2025 Q1, a decrease of $29.6 million or 18%, compared to $165.0 million in 2024 Q1. The decrease is due to a 9% decrease in operating days (2025 - 7,294 days; 2024 - 8,044 days), and a 10% decrease in the average revenues per operating day (2) resulting from very low levels of lost-in-hole revenue (1) compared to 2024 Q1. Direct costs The Company recognized $97.9 million of direct costs in 2025 Q1, a decrease of $19.1 million or 16%, compared to $117.0 million in 2024 Q1. The decrease is mainly due to lower labour and repair costs related to the decrease in operating days, and lower third-party MWD rental costs mainly related to the Rime MWD build-out. Direct costs as a percentage of revenues increased to 72% in 2025 Q1, compared to 71% in 2024 Q1, mainly due to the effect of minimal lost-in-hole revenues (1) in 2025 Q1 relative to the comparative period. Gross margin and adjusted gross margin The gross margin percentage was 22% in 2025 Q1 and 2024 Q1. The Adjusted gross margin percentage (1) decreased to 28% in 2025 Q1, compared to 29% in 2024 Q1. Despite a 9% decline in the Company's operating days and a significant reduction of lost-in-hole revenues (1), the gross margin percentage and Adjusted gross margin percentage (1) were relatively consistent. The Company remains focused on reducing third-party MWD rental costs by investing capital to build out its MWD fleet. Depreciation and amortization expense Depreciation and amortization expense included in cost of sales decreased to $7.3 million in 2025 Q1, compared to $11.6 million in 2024 Q1. The decrease is mainly due to a change in depreciation methodology affecting the prior period. (1) Refer to the 'Non-GAAP Measures' section in this news release. | (2) Per 'Supplementary financial measures and other definitions' section in this news release. |
Selling, general and administrative ("SG&A") expenses
| Three months ended March 31, | (stated in thousands of Canadian dollars) | 2025 | 2024 |
|
|
| Selling, general and administrative expenses: |
|
| Direct costs | $ 16,433 | $ 16,026 | Depreciation and amortization | 2,826 | 2,347 | Share-based compensation | 541 | 930 | Selling, general and administrative expenses | $ 19,800 | $ 19,303 |
The Company recognized direct costs included in SG&A expenses of $16.4 million in 2025 Q1, relatively consistent compared to $16.0 million in 2024 Q1. Direct costs included in SG&A expenses as a percentage of revenues were 12% in 2025 Q1, compared to 10% in 2024 Q1. The increase resulting from lower lost-in-hole revenues (1) and the fixed nature of SG&A expenses being unaffected by activity levels. Depreciation and amortization included in SG&A expenses were $2.8 million in 2025 Q1, compared to $2.3 million in 2024 Q1. The increase is mainly due to intangible amortization expense related to the rotary steerable system ("RSS") licenses. Stock-based compensation included in SG&A expenses were $0.5 million in 2025 Q1, compared to $0.9 million in 2024 Q1. The decrease is mainly due to certain stock options being fully vested in 2024. Research and development ("R&D") costs
| Three months ended March 31, | (stated in thousands of Canadian dollars) | 2025 | 2024 |
|
|
| Research and development costs | $ 1,364 | $ 1,203 |
The Company recognized R&D costs of $1.4 million in 2025 Q1, compared to $1.2 million in 2024 Q1. R&D costs are salaries, benefits, purchased materials and shop supply costs related to new product development and technology. Write-off of property, plant and equipment
| Three months ended March 31, | (stated in thousands of Canadian dollars) | 2025 | 2024 |
|
|
| Write-off of property, plant and equipment | $ 179 | $ 1,635 |
The Company recognized a write-off of property, plant and equipment of $0.2 million in 2025 Q1, compared to $1.6 million in 2024 Q1. The write-offs related to equipment lost-in-hole and damaged beyond repair. Lost-in-hole equipment and damaged beyond repair reimbursements from customers are based on service agreements held with clients and are recognized as revenues. Finance costs
| Three months ended March 31, | (stated in thousands of Canadian dollars) | 2025 | 2024 |
|
|
| Finance costs - loans and borrowings and exchangeable promissory notes | $ 2,235 | $ 2,465 | Finance costs - lease liabilities | $ 281 | $ 205 |
Finance costs - loans and borrowings and exchangeable promissory notes were $2.2 million in 2025 Q1, a decrease of $0.3 million, compared to $2.5 million in 2024 Q1. The decrease is mainly due to a lower outstanding balance of loans and borrowings in 2025 Q1 compared to 2024 Q1. In addition, the Company had finance costs - lease liabilities of $0.3 million in 2025 Q1, related to lease liabilities, compared to $0.2 million in 2024 Q1. Foreign exchange
| Three months ended March 31, | (stated in thousands of Canadian dollars) | 2025 | 2024 |
|
|
| Foreign exchange (loss) gain | $ (250) | $ 1,970 | Foreign currency translation (loss) gain on foreign operations | $ (79) | $ 1,455 |
The Company recognized a foreign exchange loss of $0.3 million in 2025 Q1, compared to a foreign exchange gain of $2.0 million in 2024 Q1. The impact of foreign exchange is due to fluctuations of the Canadian dollar relative to the United States dollar ("USD") related to foreign currency transactions and balances recognized in net income. The Company recognized a foreign currency translation loss on foreign operations of $0.1 million in 2025 Q1, compared to a gain of $1.5 million in 2024 Q1. The Company's foreign operations are denominated in USD and differences due to fluctuations in the foreign currency exchange rates are recorded in other comprehensive income. Income tax recovery (expense)
| Three months ended March 31, | (stated in thousands of Canadian dollars) | 2025 | 2024 |
|
|
| Current | $ (74) | $ (1,453) | Deferred | 1,269 | (212) | Income tax recovery (expense) | $ 1,195 | $ (1,665) |
The Company recognized an income tax recovery of $1.2 million in 2025 Q1, compared to an income tax expense of $1.7 million in 2024 Q1. Income tax expense is recognized based upon expected annualized rates using the statutory rates of 23% for both Canada and the U.S. adjusted for key items that will effect the Company's actual tax for the period. During 2025 Q1, the Company realized a loss before income tax in its U.S. segment resulting in an income tax recovery in the current period. In addition, the Company utilized previously unrecognized Canadian tax pools reducing the Canadian tax expense to nil. The remaining amount of unrecognized Canadian and U.S. tax pools as at March 31, 2025 are estimated at $5.5 million and $9.6 million, respectively. LIQUIDITY AND CAPITAL RESOURCES Annually, the Company's principal source of liquidity is cash generated from its operations. In addition, the Company has the ability to fund liquidity requirements through its credit facility and the issuance of additional debt and/or equity, if available. In order to facilitate the management of its liquidity, the Company prepares an annual budget, which is updated, as necessary, depending on varying factors, including changes in capital structure, execution of the Company's business plan and general industry conditions. The annual budget is approved by the Board of Directors and updated forecasts are prepared as the fiscal year progresses with changes reviewed by the Board of Directors. Cash flow - operating activities was $18.7 million in 2025 Q1, compared to $15.7 million in 2024 Q1. ACT remains focused on reducing its loans and borrowings and generating Free cash flow, as defined in the 'Non-GAAP measures' section of this news release. In addition, the Company will remain opportunistic in executing its NCIB and making strategic and accretive acquisitions. At March 31, 2025, the Company had working capital, excluding current portion of loans and borrowings of $70.7 million (December 31, 2024 - $84.4 million). Common share consolidation On May 9, 2024, the shareholders of the Company approved the consolidation of the issued and outstanding common shares of the Company, on the basis of one post-consolidation common share for a range of five to ten pre-consolidation common shares. On June 10, 2024, the Board of Directors approved a consolidation ratio of one post-consolidation share for seven pre-consolidation common shares (the "Consolidation"). As a result, on July 3, 2024, 243,383,392 common shares issued and outstanding prior to the Consolidation were reduced to 34,769,056 common shares. No fractional common shares were issued in connection with the Consolidation, and all fractional common shares that otherwise would have been issued was rounded to the nearest whole common share. The number of shares and per share amounts in this news release were restated to reflect the Consolidation. Normal course issuer bid During the three months ended March 31, 2025, 742,699 (2024 - 353,100) common shares were purchased under the NCIB for a total purchase amount of $4.5 million (2024 - $2.1 million) at an average price of $6.09 (2024 - $5.88) per common share. A portion of the purchase amount reduced share capital by $4.2 million (2024 - $2.0 million) and the residual purchase amount of $0.3 million (2024 - $0.1 million) was recorded to the surplus. In connection with the NCIB, the Company established an automatic securities purchase plan ("the Plan"). Accordingly, the Company may repurchase its common shares under the Plan on any trading day during the NCIB, including during regulatory restrictions or self-imposed trading blackout periods. The Plan commenced on July 29, 2024 and will terminate on July 28, 2025. As at March 31, 2025, the Company recognized $3.9 million as an accrued liability for the maximum common shares to be purchased under the Plan. Subsequent to March 31, 2025, the Company purchased 212,900 common shares for a total purchase amount of $1.0 million, at an average purchase price of $4.84 per common share. Syndicated and revolving credit facilities On March 21, 2025, the Company entered into a Fifth Amended and Restated Credit Agreement with its existing syndicate of lenders co-lead by ATB Financial and Royal Bank of Canada ("Amended Credit Agreement"). The Amended Credit Agreement provided for the following: i. | A revolving facility with an approximate principal amount of $124.3 million comprised of: i) $100.0 million Syndicated Revolving Facility ("CAD Syndicated Revolving Facility") and ii) $10.0 million revolving facility provided by ATB Financial ("ATB Revolving Facility"), and iii) USD $10.0 million (approximately CAD $14.3 million equivalent) provided by HSBC Bank USA, N.A. ("HSBC Revolving Facility"). The revolving facility replaced the Company's existing facilities (CAD Syndicated Term Facility of $59.0 million, USD Syndicated Term Facility of USD $21.0 million, Syndicated Operating Facility of $35.0 million, Revolving Operating Facility of $15.0 million and USD Revolving Operating Facility of $10.0 million). As such, the contractual repayments of the CAD Syndicated Term Facility and USD Syndicated Term Facility are no longer required; |
|
| ii. | A lower amended interest rate updated to the financial institution's prime rate plus 1.0% to 1.75% or Canadian Overnight Repo Rate Average rate / Secured Overnight Financing Rate plus 2.0% to 2.75% (previously prime rate plus 1.5% to 2.25% or Canadian Overnight Repo Rate Average rate / Secured Overnight Financing Rate plus 2.5% to 3.25%); |
|
| iii. | The maturity date extended from July 11, 2026 to March 21, 2028; |
|
| iv. | Replaced the financial covenant of Consolidated Fixed Charge Coverage ratio (previously required to be no less than 1.25:1) with a Consolidated Interest Coverage Ratio, which is required to be no less than 3.00:1. The Consolidated Funded Debt to Consolidated Credit Agreement EBITDA ratio remained unchanged and shall not exceed 2.50:1; and |
|
| v. | The syndicate of lenders remained unchanged with the exception of Royal Bank of Canada joining ATB Financial as the syndicate co-lead. |
As at March 31, 2025, $61.3 million of the $124.3 million Revolving Facility remained undrawn. At March 31, 2025, the Company was in compliance with all covenants, including its financial covenants, which were as follows: - Consolidated Funded Debt to Consolidated Credit Agreement EBITDA ratio shall not exceed 2.5:1.0 (calculated - 1.0); and
- Consolidated Interest Coverage ratio shall not be less than 3.0 :1.0 (calculated - 9.6).
Contractual obligations and contingencies As at March 31, 2025, the Company's commitment to capital is approximately $7.2 million (December 31, 2024 - $11.9 million), which is expected to be incurred over the next six months. The Company holds six letters of credit totaling $1.8 million (December 31, 2024 - $1.8 million) related to rent payments, corporate credit cards and a utilities deposit. The Company is involved in various other legal claims and tax audits associated with the normal course of operations. The Company believes that any liabilities that may arise pertaining to such matters would not have a material impact on its financial position. In relation to a pre-closing sales tax issue related to the July 14, 2022 acquisition of Altitude, as a result of a preliminary assessment, the Company has recognized a provision of $15.5 million in Trade and other payables. Pursuant to the Equity Purchase Agreement related to the Altitude acquisition, the sellers provided the Company with an indemnity related to pre-closing tax issues, including the sales tax issue noted. Accordingly, the Company has recognized an offsetting indemnity receivable of $15.5 million in Other receivable. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of this provision. The following table outlines the anticipated payments related to contractual commitments subsequent to March 31, 2025: (stated in thousands of Canadian dollars) | Carrying
amount | One year | 1-2 years | 3-5 years | Thereafter |
|
|
|
|
|
| Loans and borrowings - principal | $ 63,818 | $ 685 | $ — | $ 63,133 | $ — | Exchangeable promissory ("EP") notes - principal | 28,752 | — | 28,752 | — | — | Interest payments on loans and borrowings and EP notes | 15,635 | 6,122 | 5,079 | 4,434 | — | Lease liabilities - undiscounted | 21,839 | 4,034 | 3,684 | 8,779 | 5,342 | Trade and other payables | 116,352 | 116,352 | — | — | — | Total | $ 246,396 | $ 127,193 | $ 37,515 | $ 76,346 | $ 5,342 |
Capital structure As at May 8, 2025, the Company has 33,551,247 common shares, 3,290,598 stock options, 376,203 restricted shares, and EP Notes that are exchangeable into a maximum of 3,510,000 common shares outstanding. NET CAPITAL EXPENDITURES The following table details the Company's Net capital expenditures (1):
| Three months ended March 31, | (stated in thousands of Canadian dollars) | 2025 | 2024 |
|
|
| MWD and related equipment | $ 14,855 | $ 7,911 | Motors and related equipment | 7,985 | 7,206 | Shop and automotive equipment | 56 | 233 | Other | 653 | 569 |
|
|
| Gross capital expenditures | 23,549 | 15,919 | Less: net lost-in-hole equipment reimbursements | (1,117) | (10,646) | Net capital expenditures (1) | $ 22,432 | $ 5,273 |
(1) Refer to the 'Non-GAAP Measures' section in this news release. |
Equipment additions totaling $23.5 million included $7.6 million of items previously purchased and held in inventory for the Rime MWD system build-out in 2025 Q1. As at March 31, 2025, property, plant and equipment included $15.8 million (2024 - $7.9 million) of MWD equipment not yet being depreciated as they are currently being manufactured and tested. Depreciation of the assets will commence upon the assets being fully operational. Given the current market uncertainty, partly as a result of the enacted and proposed U.S. tariffs, the Company's 2025 Net capital expenditure budget will be dynamic and adjusted to reflect management's expectation of future activity levels. Currently, the Company's target Net capital expenditures (1) budget is anticipated to relate to necessary sustaining capital expenditures that will enhance realized gross margin percentage levels, including growing ACT's high-performance mud motors, MWD in both Canada and the U.S., and selective RSS deployments. ACT intends to fund its 2025 capital plan from cash flow - operating activities. NON-GAAP MEASURES ACT uses certain performance measures throughout this news release that are not defined under IFRS Accounting Standards or Generally Accepted Accounting Principles ("GAAP"). These non-GAAP measures do not have a standardized meaning and may differ from that of other organizations, and accordingly, may not be comparable. Investors should be cautioned that these measures should not be construed as alternatives to IFRS Accounting Standards measures as an indicator of ACT's performance. These measures include the Adjusted gross margin, Adjusted gross margin percentage, Adjusted EBITDAS, Adjusted EBITDAS margin percentage, Free cash flow, Working capital and Net capital expenditures. Management believes these measures provide supplemental financial information that is useful in the evaluation of ACT's operations. These non-GAAP measures are defined as follows: i) | "Adjusted gross margin" - calculated as gross margin before non-cash costs (write-down of inventory included in cost of sales, depreciation and amortization and share-based compensation); is a supplemental measure of changes in financial performance that are closely related to the Company's core operating activities, by excluding certain non-cash costs that might otherwise distort trends in overall profitability (see tabular calculation);
|
| ii) | "Adjusted gross margin percentage" - calculated as Adjusted gross margin divided by revenues; is considered a primary indicator of operating performance (see tabular calculation);
|
| iii) | "Adjusted EBITDAS" - calculated as net income before finance costs, unrealized foreign exchange gain (loss), foreign exchange gain (loss) on intercompany balances, income tax expense, depreciation and amortization, gain on settlement of lease liabilities, non-recurring costs, write-down of inventory included in cost of sales and share-based compensation; provides supplemental information to net income that is useful in evaluating the results from our principal business activities prior to consideration of how our activities are financed, foreign exchange components and other charges like depreciation (see tabular calculation);
|
| iv) | "Adjusted EBITDAS margin percentage" - calculated as Adjusted EBITDAS divided by revenues; provides supplemental information to net income that is useful in evaluating the results and financing of the Company's business activities before considering certain charges as a percentage of revenues (see tabular calculation);
|
| v) | "Free cash flow" - calculated as cash flow - operating activities prior to: i) changes in non-cash working capital, ii) and income tax (refund) payment less: i) cash flow - investing activities (updated from property, plant and equipment ("PP&E") and intangible asset additions, excluding assets acquired in business combinations), ii) required repayments on loans and borrowings, in accordance with the Company's credit facility agreement, and iii) repayments of lease liabilities, net of finance costs, offset by proceeds on disposal of PP&E. This is a useful supplemental measure of the Company's ability to generate funds from operations available for future capital expenditures, discretionary debt repayments, or other strategic initiatives (see tabular calculation).
|
|
|
|
|
| Free cash flow was updated from prior periods to deduct cash flow - investing activities (updated from PP&E and intangible asset additions, excluding assets acquired in business combinations) to include changes in non-cash investing working capital in the calculation to account for non-cash movements in the period; |
|
|
|
| vi) | "Net capital expenditures" - calculated as the gross capital expenditures less net lost-in-hole equipment reimbursements, as defined below - refer to the "Net capital expenditures" section of this news release for tabular calculation; |
|
|
|
|
|
| 1. | "Lost-in-hole revenues" - represent reimbursements received from customers and insurance proceeds related to directional drilling equipment that is lost in-hole or damaged beyond repair. Management considers lost-in-hole revenues to be supplemental information that assists in understanding fluctuations in the Company's reported revenues under IFRS Accounting Standards. Although lost-in-hole revenues tend to remain relatively consistent over longer periods, they can vary significantly from period to period, causing fluctuations in the Company's financial results; |
|
|
|
|
| 2. | "Net lost-in-hole equipment reimbursements" - represent lost-in-hole revenues, as defined above, less outflows associated with vendor payments for insurance coverage and third-party rental equipment replacement, following equipment loss-in-hole or damage beyond repair; and |
|
|
|
| vii) | "Working capital" - calculated as current assets less current liabilities, excluding the current portion of loans and borrowings. Management uses this measure as an indication of the Company's financial and cash liquidity position. |
|
The following tables provide reconciliations from the IFRS Accounting Standards to non-GAAP measures included in this news release. Adjusted gross margin
| Three months ended March 31, | (stated in thousands of Canadian dollars) | 2025 | 2024 |
|
|
| Gross margin | $ 30,005 | $ 36,090 | Add non-cash items included in cost of sales: |
|
| Write-down of inventory included in cost of sales | — | 7 | Depreciation and amortization | 7,348 | 11,635 | Share-based compensation | 131 | 223 | Adjusted gross margin | $ 37,484 | $ 47,955 |
|
|
| Adjusted gross margin percentage | 28 % | 29 % |
Adjusted EBITDAS
| Three months ended March 31, | (stated in thousands of Canadian dollars, except percentages) | 2025 | 2024 |
|
|
| Net income | $ 7,248 | $ 11,584 | Add (deduct): |
|
| Income tax (recovery) expense | (1,195) | 1,665 | Depreciation and amortization - cost of sales | 7,348 | 11,635 | Depreciation and amortization - selling, general and administrative expenses | 2,826 | 2,347 | Share-based compensation - cost of sales | 131 | 223 | Share-based compensation - selling, general and administrative expenses | 541 | 930 | Finance costs - loans and borrowings and exchangeable promissory notes | 2,235 | 2,465 | Finance costs - lease liabilities | 281 | 205 | Unrealized foreign exchange loss (gain) | 284 | (2,309) | Non-recurring expenses, including inventory write-off | — | 7 | Adjusted EBITDAS | $ 19,699 | $ 28,752 |
|
|
| Adjusted EBITDAS margin percentage | 15 % | 17 % |
Free cash flow
| Three months ended March 31, | (stated in thousands of Canadian dollars) | 2025 | 2024 |
|
|
| Cash flow - operating activities | $ 18,685 | $ 15,746 | Add (deduct): |
|
| Income tax (refund) payment | (55) | 160 | Changes in non-cash operating working capital | 1,091 | 14,481 | Less: |
|
| Cash flow - investing activities | (10,809) | (18,128) | Required repayments on loans and borrowings (1) | — | (5,149) | Repayments of lease liabilities, net of finance costs | (1,037) | (899) | Free cash flow | $ 7,875 | $ 6,211 |
(1) Required repayments on loans and borrowings in accordance with the credit facility agreement, which excludes discretionary debt repayments. |
SUPPLEMENTARY FINANCIAL MEASURES AND OTHER DEFINITIONS i) | "Average revenues per operating day" - is a supplemental operational metric calculated by dividing revenues, either for a specific geographic segment or on a consolidated basis as reported under IFRS Accounting Standards, by the corresponding number of operating days for that segment or on a consolidated basis. Management uses revenues per operating day to assess pricing strength, service intensity, and comparative financial performance against different periods and across different geographic markets; and
| ii) | "Operating days" - are defined as the total number of calendar days during which directional drilling services were actively provided to a customer at a rig site, excluding any days where personnel or equipment were on location but not engaged in active drilling operations (such as standby, rig move days, or other non-operational periods, regardless of whether partial revenues were recognized). |
FORWARD LOOKING STATEMENTS This news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words suggesting future outcomes. In particular, this news release contains forward-looking statements relating to, among other things: - The 2025 Net capital expenditure budget and financing thereof;
- At the end of 2025 Q1, the Company began to see realized gross margin expansion in its U.S. directional business reducing its third-party rental costs by utilizing Rime supplied measurement-while-drilling ("MWD") systems. Further durability of gross margins is expected as more MWD systems are deployed. To date, twenty-four Rime MWD systems have been deployed with an additional twenty-six MWD systems expected to be deployed by the end of 2025 Q2.
- We started to see margin expansion in the first quarter of 2025 and believe we will see further margin expansion as we continue the deployment of our own MWD systems developed by Rime Downhole Technologies (acquired in 2023). We remain on target to complete the construction of 50 MWD systems by the end of the second quarter of 2025. These new MWD systems will strengthen the durability of our cash flow, replacing rented third-party MWD systems. The deployment of the tools into an operating environment for our customers will happen incrementally throughout 2025 with full utilization rates expected in 2026
- The Company remains focused on reducing third-party MWD rental costs by investing capital to build out its MWD fleet.
- ACT's business focus remains consistent, we are 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 expect to allocate capital as follows:
- Expand margins: utilize selective capital investment, primarily RSS and MWD, replacing rental equipment with optimized in-house solutions.
- Return of capital: repurchase of shares through the Company's NCIB.
- Further strengthen our financial position: although debt remains low, further modest reduction of debt will allow for business resiliency through the cycles allowing the Company to be counter-cyclical with respect to long-term investment decisions.
- By having this diverse approach to capital allocation, we believe we will continue to build out a durable business model, focused on ensuring an effective use of capital.
- Given the current market uncertainty, partly as a result of the enacted and proposed U.S. tariffs, the Company's 2025 Net capital expenditure budget, will be dynamic and adjusted to reflect management's expectation of future activity levels.
- Currently, the Company's target Net capital expenditure budget is anticipated to relate to necessary sustaining capital expenditures that will enhance realized gross margin percentage levels, including growing ACT's high-performance mud motors, MWD in both Canada and the U.S., and RSS in the U.S. ACT intends to fund its 2025 capital plan from cash flow - operating activities.
- The longer-term outlook for North American energy-related activity remains positive.
- Global demand continues to rise while geopolitical events continue to increase the uncertainty around supply.
- In Canada, the commissioning of the Trans Mountain oil pipeline expansion in May 2024, followed by the impending start-up of the LNG Canada project in mid-2025, will provide significant tidewater and global market access for both Canadian crude and natural gas.
- Both projects should continue to translate to more consistent and slightly improved activity levels for oilfield service providers over time.
- LNG also represents a significant area of growth for the U.S. market as more than 11 bcf per day of export capacity will be added from 2025 to 2028, supporting incremental growth in drilling activity and less volatility in activity related to the cyclicality of domestic natural gas prices.
- The potential growth in energy demand related to the evolving market for AI data centers is also a developing trend that could further support natural gas-related drilling activity over the long-term.
- For the remainder of the year, our Canadian activity is expected to be similar to 2024.
- If uncertainty or increased costs due to trade policy persists, some potential for downside risk exists, but could be offset by improved pricing for Canadian heavy oil production due to narrowing of the discount typically realized by Canadian producers due to pipeline constraints.
- Trans Mountain pipeline volumes and loadings remain strong, showing the real-time virtue of expanded takeaway capacity.
- With our industry-leading position in multi-lateral drilling, the compelling economics of multi-lateral wells is expected to support continued solid activity through the summer despite potential headwinds related to weaker commodity prices or other market uncertainties. Similar to the fourth quarter of 2024, we also anticipate that operator discipline will remain a factor in the fourth quarter of 2025 and likely result in some degree of budget exhaustion and reduced activity versus the third quarter of 2025.
- In the U.S. we expect to operate in a range of 40 to 50 jobs daily for the remainder of the year as drilling activity remains somewhat constrained due to customer consolidation and concern over commodity price volatility.
- We do see near term risk in customer activity resulting from the proposed U.S. tariffs and potential negative effect on oil prices. However, improved year-over-year natural gas prices are creating some optimism for an increase in rig activity later this year or into 2026, particularly as new Gulf Coast LNG export facilities come online.
- We feel well-positioned to navigate a relatively flat macroeconomic environment in North America and are optimistic about the potential upside related to the deployment of our own technology in the U.S. market, but we remain cautious on the impact of tariffs and are evaluating the potential impact on our business.
- Given our supply chains are generally resident in each nation and 65% to 70% of our revenues are U.S. based, we expect the impact will be somewhat limited, but there may be certain elements of our supply chain that will increase in cost.
- While tariffs and their potential impact may persist or prove to be short-term in nature, the underlying risk is the negative impact on the investment climate and overall consumer sentiment.
The Company believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to the Company, including information obtained from third-party industry analysts and other third-party sources. In some instances, material assumptions and material factors are presented elsewhere in this news release in connection with the forward-looking statements. You are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to: - the performance of ACT's business;
- impact of economic and social trends;
- oil and natural gas commodity prices and production levels;
- capital expenditure programs and other expenditures by ACT and its customers;
- the ability of ACT to attract and retain key management personnel;
- the ability of ACT to retain and hire qualified personnel;
- the ability of ACT to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities;
- the ability of ACT to maintain good working relationships with key suppliers;
- the ability of ACT to retain customers, market its services successfully to existing and new customers and reliance on major customers;
- risks associated with technology development and intellectual property rights;
- obsolescence of ACT's equipment and/or technology;
- the ability of ACT to maintain safety performance;
- the ability of ACT to obtain adequate and timely financing on acceptable terms;
- the ability of ACT to comply with the terms and conditions of its credit facility;
- the ability to obtain sufficient insurance coverage to mitigate operational risks;
- currency exchange and interest rates;
- risks associated with future foreign operations;
- the ability of ACT to integrate its transactions and the benefits of any acquisitions, dispositions and business development efforts;
- environmental risks;
- business risks resulting from weather, disasters and related to information technology;
- changes under governmental regulatory regimes including tariffs and tax, environmental, climate and other laws in Canada and the U.S.; and
- competitive risks.
Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in this news release and in the Company's Annual Information Form under the heading "Risk Factors". Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise. All forward-looking statements contained in this news release are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in the Company's current Annual Information Form that has been filed with Canadian provincial securities commissions and is available on www.sedarplus.ca and the Company's website (www.actenergy.com). CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at March 31, 2025 and December 31, 2024
Canadian dollars in '000s
(unaudited)
| March 31, | December 31, | Balance, | 2025 | 2024 |
|
|
| Assets |
|
| Current assets: |
|
| Cash | $ 12,949 | $ 12,792 | Trade receivables | 109,093 | 105,872 | Other receivable | 15,512 | 15,526 | Current taxes receivable | 2,285 | 2,417 | Prepaid expenses | 6,136 | 6,678 | Inventories | 45,076 | 51,498 | Total current assets | 191,051 | 194,783 |
|
|
| Property, plant and equipment | 145,885 | 129,243 | Intangible assets | 74,675 | 77,352 | Right-of-use assets | 17,285 | 15,359 | Goodwill | 43,405 | 43,444 | Deferred tax asset | 12,700 | 12,700 | Total non-current assets | 293,950 | 278,098 | Total assets | $ 485,001 | $ 472,881 |
|
|
| Liabilities and Shareholders' Equity |
|
| Current liabilities: |
|
| Trade and other payables | $ 116,352 | $ 106,242 | Loans and borrowings, current | 685 | 21,435 | Lease liabilities, current | 4,034 | 4,124 | Total current liabilities | 121,071 | 131,801 |
|
|
| Loans and borrowings, long-term | 62,515 | 42,092 | Exchangeable promissory notes | 27,200 | 26,962 | Lease liabilities, long-term | 17,805 | 16,037 | Deferred tax liability | 13,126 | 14,409 | Total non-current liabilities | 120,646 | 99,500 | Total liabilities | 241,717 | 231,301 |
|
|
| Shareholders' equity: |
|
| Share capital | 189,598 | 195,516 | Treasury shares | (469) | (469) | Exchangeable promissory notes | 1,242 | 1,242 | Contributed surplus | 17,950 | 17,408 | Accumulated other comprehensive income | 19,072 | 19,151 | Surplus | 15,891 | 8,732 | Total shareholders' equity | 243,284 | 241,580 | Total liabilities and shareholders' equity | $ 485,001 | $ 472,881 |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Three months ended March 31, 2025 and 2024
Canadian dollars in '000s except per share amounts
(unaudited)
| Three months ended March 31, |
| 2025 | 2024 |
|
|
| Revenues | $ 135,357 | $ 164,956 | Cost of sales: |
|
| Direct costs | (97,873) | (117,008) | Depreciation and amortization | (7,348) | (11,635) | Share-based compensation | (131) | (223) | Total cost of sales | (105,352) | (128,866) |
|
|
| Gross margin | 30,005 | 36,090 |
|
|
| Selling, general and administrative expenses: |
|
| Direct costs | (16,433) | (16,026) | Depreciation and amortization | (2,826) | (2,347) | Share-based compensation | (541) | (930) | Total selling, general and administrative expenses | (19,800) | (19,303) | Research and development costs | (1,364) | (1,203) | Write-off of property, plant and equipment | (179) | (1,635) | Gain on disposal of property, plant and equipment | 157 | — | Income from operating activities | 8,819 | 13,949 |
|
|
| Finance costs - loans and borrowings and exchangeable promissory notes | (2,235) | (2,465) | Finance costs - lease liabilities | (281) | (205) | Foreign exchange (loss) gain | (250) | 1,970 | Income before income taxes | 6,053 | 13,249 |
|
|
| Income tax recovery (expense): |
|
| Current | (74) | (1,453) | Deferred | 1,269 | (212) | Income tax recovery (expense) | 1,195 | (1,665) |
|
|
| Net income | 7,248 | 11,584 |
|
|
| Other comprehensive income |
|
| Foreign currency translation differences on foreign operations | (79) | 1,455 | Total comprehensive income | $ 7,169 | $ 13,039 |
|
|
| Net income per share - basic (restated) | $ 0.21 | $ 0.34 | Net income per share - diluted (restated) | $ 0.19 | $ 0.30 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Three months ended March 31, 2025 and 2024
Canadian dollars in '000s
(unaudited)
| Share
capital | Treasury Shares | Exchangeable
promissory
("EP") Notes | Contributed surplus | Accumulated other comprehensive income | Deficit | Total shareholders' equity |
|
|
|
|
|
|
|
| Balance, December 31, 2023 | $ 197,380 | $ (709) | $ 1,242 | $ 17,002 | $ 13,088 | $ (48,535) | $ 179,468 | Comprehensive income | — | — | — | — | 1,455 | 11,584 | 13,039 | Repurchased pursuant to normal course issuer bid | (2,019) | — | — | — | — | (58) | (2,077) | Issued pursuant to stock option exercises | 358 | — | — | (135) | — | — | 223 | Share-based compensation | — | — | — | 1,153 | — | — | 1,153 | Balance, March 31, 2024 | $ 195,719 | $ (709) | $ 1,242 | $ 18,020 | $ 14,543 | $ (37,009) | $ 191,806 |
|
| Share
capital | Treasury shares | EP Notes | Contributed surplus | Accumulated other comprehensive income | Surplus | Total shareholders' equity |
|
|
|
|
|
|
|
| Balance, December 31, 2024 | $ 195,516 | $ (469) | $ 1,242 | $ 17,408 | $ 19,151 | $ 8,732 | $ 241,580 | Comprehensive (loss) income | — | — | — | — | (79) | 7,248 | 7,169 | Repurchased pursuant to normal course issuer bid | (4,219) | — | — | — | — | (303) | (4,522) | Accrued purchases under the normal course issuer bid | (2,030) | — | — | — | — | 214 | (1,816) | Issued pursuant to stock options exercised | 331 | — | — | (130) | — | — | 201 | Share-based compensation | — | — | — | 672 | — | — | 672 | Balance, March 31, 2025 | $ 189,598 | $ (469) | $ 1,242 | $ 17,950 | $ 19,072 | $ 15,891 | $ 243,284 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Three months ended March 31, 2025 and 2024
Canadian dollars in '000s
(unaudited)
| Three months ended March 31, |
| 2025 | 2024 |
|
|
| Cash provided by (used in): |
|
|
|
|
| Operating activities: |
|
| Net income | $ 7,248 | $ 11,584 | Non-cash adjustments: |
|
| Income tax (recovery) expense | (1,195) | 1,665 | Depreciation and amortization | 10,174 | 13,982 | Share-based compensation | 672 | 1,153 | Write-off of property, plant and equipment | 179 | 1,635 | Gain on disposal of property, plant and equipment | (157) | — | Write-down of inventory included in cost of sales | — | 7 | Finance costs - loans and borrowings and exchangeable promissory notes | 2,235 | 2,465 | Finance costs - lease liabilities | 281 | 205 | Income tax refund (payment) | 55 | (160) | Unrealized foreign exchange loss (gain) | 284 | (2,309) |
| 19,776 | 30,227 | Changes in non-cash operating working capital | (1,091) | (14,481) | Cash flow - operating activities | 18,685 | 15,746 |
|
|
| Investing activities: |
|
| Property, plant and equipment additions | (23,549) | (15,919) | Intangible asset additions | (188) | (4,967) | Proceeds on disposal of property, plant and equipment | 208 | — | Changes in non-cash investing working capital | 12,720 | 2,758 | Cash flow - investing activities | (10,809) | (18,128) |
|
|
| Financing activities: |
|
| Advances of loans and borrowings, net of upfront financing fees | (335) | 10,000 | Repayments on loans and borrowings | (28) | (6,709) | Payments on lease liabilities, net of finance costs | (1,037) | (899) | Interest paid | (2,199) | (2,373) | Common shares repurchased pursuant to normal course issuer bid | (6,338) | (2,077) | Proceeds on common share and warrant issuances, net of issuance costs | 201 | 223 | Changes in non-cash financing working capital | 1,816 | — | Cash flow - financing activities | (7,920) | (1,835) |
|
|
| Effect of exchange rate on changes in cash | 201 | 451 | Change in cash | 157 | (3,766) | Cash, beginning of period | 12,792 | 10,731 | Cash, end of period | $ 12,949 | $ 6,965 |
ACT Energy Technologies Ltd., based in Calgary, Alberta, Canada, is incorporated under the Business Corporations Act (Alberta) and operates in the U.S. and Canada under Altitude Energy Partners, Discovery Downhole Services in the U.S., and Rime Downhole Technologies, LLC in the U.S.. ACT's common shares are publicly-traded on the Toronto Stock Exchange under the symbol "ACX". ACT is a trusted partner to North American energy companies requiring high performance directional drilling services and related downhole technologies. We work in partnership with our customers to tailor our equipment and expertise to meet their specific geographical and technical needs. Our experience, technologies and responsive personnel enable our customers to achieve higher efficiencies and lower project costs. For more information, visit www.actenergy.com. SOURCE ACT Energy Technologies LTD. | |
