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01/10 23:33
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects strong financial performance with revenue exceeding expectations and improved EBITDA. Q2 revenue was the highest since 2019, and net income turned positive. Despite a slight decline in margins, cost management improved. The Q&A highlighted growth opportunities, particularly in Canada and international markets, and management's cautious optimism. Although there was some lack of clarity in guidance tightening, the overall sentiment is positive, supported by new customer wins and strategic focus on synergies and international expansion.
Second Quarter Revenue $36 million, exceeded the high end of the guided range by more than $7 million, reflecting better-than-expected performance in each geography.
First Half Revenue Over $86 million, which is 18% or nearly $13 million higher than the first half of 2024, anchored by strong performance in Canada.
Adjusted EBITDA (Q2 2025) $2.2 million, exceeded the guided range of negative $2 million to breakeven, representing a year-over-year improvement of $1.3 million.
Adjusted EBITDA (First Half 2025) $10.4 million, an increase of $3.4 million or 49% compared to the first half of 2024.
Canada Revenue (First Half 2025) $56 million, increasing 27% compared to the same period in 2024, driven by strong performance in fracturing systems and composite plugs.
Second Quarter Revenues (Detailed) $36.5 million, highest second quarter revenue since 2019, representing a year-over-year improvement of 23%. Canada revenues improved by 49%, U.S. revenues improved by 15%, and international revenues decreased by 17%.
Adjusted Gross Profit (Q2 2025) $13 million, with an adjusted gross margin of 36%, down from 40% a year ago due to the mix of products sold and services provided.
Selling, General and Administrative Costs (Q2 2025) $13.6 million, down by $1.2 million compared to the same period last year.
Net Income (Q2 2025) $0.9 million, or diluted earnings per share of $0.34, an improvement compared to the net loss of $3.1 million or a loss per share of $1.21 in the prior year.
Cash on Hand (June 30, 2025) $25.4 million, with total debt of $7.7 million, resulting in a positive net cash position of $17.7 million.
7-inch sliding sleeve and service tool: Successfully ran for a remedial cementing application, with positive customer feedback and subsequent orders.
Stage saver composite frac plug: Strong uptake in the U.S. and Canada, designed to mitigate issues during simulfrac operations.
Canada: Revenue for the first half of 2025 was $56 million, a 27% increase compared to 2024, driven by strong performance in fracturing systems and composite plugs in Montney and Duvernay plays.
North Sea: Increased customer base from 5 in 2024 to 7 in 2025, with multiple successful operations and long-term growth expected.
Middle East: Expanded presence with a commercial purchase agreement and transition from radioactive to chemical tracing.
Revenue growth: Second quarter revenue of $36 million exceeded guidance by $7 million, with a 23% year-over-year improvement.
Adjusted EBITDA: Improved to $2.2 million in Q2 2025, a $1.3 million year-over-year increase.
Acquisition of ResMetrics: Acquired for $7.15 million, adding complementary tracer diagnostics technologies and expanding presence in the Middle East.
Market and Industry Conditions: Deterioration in market and industry conditions, including a decline in the U.S. rig count, slower-than-normal rig count recovery in Canada, potential oversupply in the oil market due to increased OPEC+ oil supply, and ongoing uncertainties related to tariffs and trade.
International Revenue Decline: A 17% decrease in international revenues, primarily due to timing delays in tracer diagnostic projects in the Middle East.
Product Mix Impact on Margins: Adjusted gross margin decreased from 40% to 36% year-over-year, primarily due to the mix of products sold and services provided.
Seasonal Decline in Canada: Sequential revenue decrease of 27% in the second quarter due to the normal seasonal decline in Canada resulting from spring breakup.
Integration Risks: Potential challenges in integrating ResMetrics, including the need to validate workflows and implement best practices, which may take time.
Economic and Strategic Uncertainty: Uncertainties related to tariffs, trade, and economic conditions that could impact strategic execution and financial performance.
Third Quarter 2025 Revenue Guidance: Expected total revenue in the range of $42 million to $46 million. Canadian revenue is projected at $25 million to $27 million, U.S. revenue at $12 million to $13 million, and international revenue at $5 million to $6 million.
Third Quarter 2025 Adjusted Gross Margin: Expected to range from 40% to 42%.
Third Quarter 2025 Adjusted EBITDA: Expected to range from $5.5 million to $7.0 million.
Full-Year 2025 Revenue Guidance: Annual revenue is projected to range from $168 million to $176 million, representing year-over-year growth of 6% at the midpoint. Including ResMetrics, the combined revenue guidance range is $172 million to $181 million.
Full-Year 2025 Adjusted EBITDA Guidance: Adjusted EBITDA is projected to range from $21 million to $24 million, with a midpoint of $22.5 million. Including ResMetrics, the combined adjusted EBITDA guidance is $22 million to $25.5 million.
Full-Year 2025 Free Cash Flow Guidance: Free cash flow after distributions to noncontrolling interest and excluding the cash paid to ResMetrics is expected to range from $7 million to $11 million.
ResMetrics Contribution to 2025: ResMetrics is expected to contribute an additional $4 million to $5 million of revenue and $1 million to $1.5 million of adjusted EBITDA for the last 5 months of 2025.
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The earnings call revealed strong financial performance, with significant revenue and EBITDA growth, particularly in the U.S. market. The successful integration of ResMetrix and promising opportunities in the Middle East and North Sea further enhance prospects. Despite some concerns about Canadian rig counts, the company plans to defend margins and grow market share. Shareholder returns are supported by a positive net cash position. The Q&A session provided additional confidence in strategic execution and market expansion, justifying a positive outlook for stock price movement.
The earnings call reflects strong financial performance with revenue exceeding expectations and improved EBITDA. Q2 revenue was the highest since 2019, and net income turned positive. Despite a slight decline in margins, cost management improved. The Q&A highlighted growth opportunities, particularly in Canada and international markets, and management's cautious optimism. Although there was some lack of clarity in guidance tightening, the overall sentiment is positive, supported by new customer wins and strategic focus on synergies and international expansion.
The company's earnings call reveals strong financial performance with a 14% YoY revenue increase, improved margins, and a positive net cash position. Despite geopolitical uncertainties and competitive pressures, the company maintains a favorable outlook with optimistic guidance and a solid cash position. The Q&A section highlights potential growth opportunities, particularly in international markets, and management's confidence in their technology portfolio. Although there are challenges in pricing and macroeconomic conditions, the overall sentiment remains positive, indicating a likely stock price increase in the short term.
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