ACT Energy Technologies Reports Fourth Quarter and Annual 2025 Results

/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/

CALGARY, AB, March 25, 2026 /CNW/ – (TSX:ACX) ACT Energy Technologies Ltd, formerly Cathedral Energy Services Ltd., (the “Company” or “ACT”) 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 %, Adjusted EBITDAS, Adjusted EBITDAS margin %, Free cash flow, Working capital, Net debt 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 KEY HIGHLIGHTS

The Company achieved the following 2025 results and highlights:

• Strong improvement in Adjusted gross margins⁽¹⁾ to 30% (2024 – 27%) despite a decline in revenues to $474.9 million (2024 –  $571.8 million). Positively affecting margins is a reduction of third-party rental costs from the utilization of internally supplied MWD⁽²⁾ systems. 
• Sustained Adjusted EBITDAS⁽¹⁾ margins despite lower U.S. activity contributing to a reduction in Adjusted EBITDAS to $76.3 million in 2025 (2024 – $93.8 million). Sustained margin levels were primarily attributable to the lower third-party rental costs as a result of the internal deployment of measurement-while-drilling (“MWD”) tools. The Company continues to improve the overall resiliency of the business through optimization of its cost structure.
• The Company focused allocation of excess available cash generated during 2025 toward the balance sheet:
  
  • Exiting the year with a significantly reduced leverage profile, Net debt⁽¹⁾ of $53.6 million compared to $77.7 million as at December 31, 2024. 
  • Repurchasing 1,907,386 common shares under the normal course issuer bid (“NCIB”) for a total purchase price of $10.2 million at an average cost of $5.32 per common share. Subsequent to December 31, 2025, the Company purchased 280,072 common shares for a total purchase price of $1.6 million, at an average purchase cost of $5.76 per common share.
• Further improving the ACT’s strategic positioning in the U.S., during the first quarter of 2026 the Company:
  • Acquired all the assets of Stryker Energy Directional Services, LLC for cash, shares and through the issuance of a promissory note. The total compensation amount was $32.9 million.
  • Entered into an agreement on March 9, 2026 to acquire the directional drilling services business of SB Directional Services for total consideration of $64.3 million in cash and shares. The transaction is expected to close in early April 2026.
• Overall in 2025, net income of $15.6 million compared to $57.9 million in 2024. The decrease is mainly due to decreased revenue from reduced U.S. operational activity, magnified by a change in the effect of foreign exchange of $14.9 million (primarily on inter-company lending activities), provisions for legacy sales and use tax audits of $4.8 million and inventory provisions of $2.5 million. 

PRESIDENT’S MESSAGE

To my fellow Shareholders:

“The resiliency in our business model was on full display in the fourth quarter, as we delivered 4Q 2025 Adjusted EBITDAS⁽¹⁾ of $17.4mm – nearly in line with the fourth quarter of 2024 – despite 15% lower revenue from reduced activity levels. Continued progress in our organic build out and deployment of MWD⁽²⁾ technology, together with higher Rotary Steerable (“RSS”) utilization, also supported the business, driving significantly higher Adjusted gross margin⁽¹⁾ and Adjusted EBITDAS margin percentages⁽¹⁾ versus the fourth quarter one year ago.”

“In Canada, we increased revenue per operating day in the fourth quarter as we continued to expand our footprint in higher-value RSS work for customers. As is typical for the season, activity tapered near year-end due to the holiday shutdown and, for some customers, budget exhaustion.”

“While activity in the U.S. slowed during 2025, we exited the year with our U.S. business strategically positioned for future growth. Our experience drilling longer laterals and increasingly complex wellbores drove higher demand for advanced solutions, with rotary steerable activity representing more than 20% of total operating days in the fourth quarter. We believe our breadth of capabilities, particularly our ability to service the higher-value segment of the market, positions us well to benefit as customers increasingly focus on improved drilling performance, greater efficiencies, and more complex well designs.”

“As we enter 2026, our capital allocation strategy remains centered on long-term value creation and strengthening business resilience. Our plan is to:

• Invest selectively in high-return, organic growth opportunities that improve customer productivity and support continued margin expansion.
• Return capital to shareholders through our Normal Course Issuer Bid (NCIB) share repurchase program.
• Position the Company with modest leverage to  preserve flexibility for strategic acquisitions, as demonstrated by the recently completed Stryker Acquisition and proposed SB Acquisition.

“With this disciplined and balanced approach to capital allocation, we believe we will continue to build an increasingly durable business model – one that optimizes shareholder returns over the long term,” stated Tom Connors, ACT President and Chief Executive Officer.

FINANCIAL HIGHLIGHTS

RESULTS OF OPERATIONS

Financial

Operational

Summary

The Company improved gross margin and Adjusted gross margin percentages⁽¹⁾ despite a 19% and 15% decline in the Company’s operating days⁽²⁾ in the three months ended December 31, 2025 and the year ended December 31, 2025, compared to prior periods, respectively. The reduction in operating days⁽²⁾, particularly in the U.S., was the primary contributing factor to the decline in the Company’s revenues for the three months ended December 31, 2025 and the year ended December 31, 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 15% and 17% in the three months ended December 31, 2025 and the year ended December 31, 2025, respectively, would result in the Company’s fixed components of direct costs negatively impacting margin percentages. However, gross margins improved meaningfully over the prior year periods despite the decline in revenue.

SEGMENTED INFORMATION

United States

Revenues

U.S. revenues were $62.7 million in the three months ended December 31, 2025, a decrease of $16.6 million or 21%, compared to $79.3 million in for the same period in 2024. The Company experienced a 32% decrease in operating days⁽²⁾ in the three months ended December 31, 2025 (2025 – 1,942 days; 2024 – 2,841 days). The Company’s activity declines exceeded the 5% 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 16% in the three months ended December 31, 2025 (2025 – $32,303 per day; 2024 – $27,913 per day) due to higher portion of rental revenue and a favorable job mix requiring additional revenue generating technologies. 

U.S. revenues were $287.9 million in the year ended December 31, 2025, a decrease of $84.0 million or 23%, compared to $371.9 million for the same period in 2024. The Company experienced a 25% decrease in operating days⁽¹⁾ in the year ended December 31, 2025 (2025 – 9,972 days; 2024 – 13,337 days). The Company’s activity declines exceeded 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⁾ increased 4% in the year ended December 31, 2025 (2025 – $28,873 per day; 2024 – $27,883 per day), with the same period in 2024. 

Direct costs

U.S. direct costs included in cost of sales were $47.8 million in the three months ended December 31, 2025, a decrease of $14.3 million or 23%, compared to $62.1 million in for the same period in 2024. Direct costs as a percentage of revenues were 76% in the three months ended December 31, 2025, compared to 78% in 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 cost reduction initiatives in the three months ended December 31, 2025.

U.S. direct costs included in cost of sales were $211.5 million in the year ended December 31, 2025, a decrease of $70.1 million or 25%, compared to $281.6 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 year ended December 31, 2025. Direct costs as a percentage of revenues were 73% in the year ended December 31, 2025, compared to 76% 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 $46.6 million in the three months ended December 31, 2025, a decrease of $2.2 million or 5%, compared to $48.8 million in for the same period in 2024, due to an 9% decrease in operating days⁽¹⁾ in the three months ended December 31, 2025 (2025 – 3,166 days; 2024 – 3,471 days) consistent with the Western Canada average land rig count decrease of 6%. The average revenues per operating day⁽¹⁾ increased 5% in the three months ended December 31, 2025 (2025 – $14,709 per day; 2024 – $14,054 per 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 $187.0 million in the year ended December 31, 2025, a decrease of $12.9 million or 6%, compared to $199.9 million for the same period in 2024, with the decline primarily attributable to a 6% decrease in operating days⁽¹⁾ in the year ended December 31, 2025 (2025 – 13,563 days; 2024 – 14,502 days). Consistent with a decline in the Western Canada average land rig count of 5%, ACT had a slight decline in activity during the year ended December 31, 2025, relative to the comparative period. The average revenues per operating day⁽¹⁾ were consistent in the year ended December 31, 2025 (2025 – $13,788 per day; 2024 – $13,785 per day), with the same period in 2024.

Direct costs

Canadian direct costs included in cost of sales were $32.7 million in the three months ended December 31, 2025, a decrease of $4.3 million or 12%, compared to $37.0 million in for the same period in 2024. The decrease is mainly due to lower repair, third-party rental and labour costs in the three months ended December 31, 2025, consistent with lower activity levels. As a percentage of revenues, direct costs were 70% in the three months ended December 31, 2025, compared to 76% in for the same period in 2024. A more favorable revenue mix in the three months ended December 31, 2025, relative to for the same period in 2024, is the primary factor in direct costs being lower as a percentage of revenues in the three months ended December 31, 2025.

Canadian direct costs included in cost of sales were $125.2 million in the year ended December 31, 2025, a decrease of $9.2 million or 7%, compared to $134.4 million for the same period in 2024. The decrease is mainly due to lower repair, third-party rental and labour costs in the year ended December 31, 2025, consistent with lower activity levels. As a percentage of revenues, direct costs were 67% in the year ended December 31, 2025, compared to 67% for the same period in 2024.

CONSOLIDATED

Revenues

The Company’s revenues were $109.3 million in the three months ended December 31, 2025, a decrease of $18.8 million or 15%, compared to $128.1 million in for the same period in 2024. The decrease is driven by a 19% decrease in operating days⁽¹⁾ (2025 – 5,108 days; 2024 – 6,312 days) offset by a 5% increase  in the average revenues per operating day⁽¹⁾ (2025 – $21,398; 2024 – $20,292).

The Company recognized $474.9 million of revenues in the year ended December 31, 2025, a decrease of $96.9 million or 17%, compared to $571.8 million for the same period in 2024. The decrease is driven by a 15% decrease in operating days⁽¹⁾ (2025 – 23,535 days; 2024 – 27,839 days), and a 2% decrease in the average revenues per operating day⁽¹⁾ (2025 – $20,180; 2024 – $20,539). 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.

Direct Costs

The Company recognized $80.5 million of direct costs in the three months ended December 31, 2025, a decrease of $18.6 million or 19%, compared to $99.1 million in for the same period in 2024. The decrease is mainly due to lower labour and repair costs resulting from the decrease in operating days⁽¹⁾ and cost reduction initiatives, and lower third-party MWD rental costs mainly related to the Rime MWD build-out.

The Company recognized $336.7 million of direct costs in the year ended December 31, 2025, a decrease of $79.3 million or 19%, compared to $416.0 million for the same period in 2024. The decrease is mainly due to lower labour and repair costs resulting from the decrease in operating days⁽¹⁾, and lower third-party MWD rental costs mainly related to the Rime MWD build-out.

Direct costs as a percentage of revenues decreased to 74% in the three months ended December 31, 2025, compared to 77% in for the same period in 2024. Lower third-party MWD rental costs mainly related to the Rime MWD build-out contributed to this reduction. Also contributing to the reduction was higher Lost-in-hole revenues⁽¹⁾ in the three months ended December 31, 2025, relative to the comparative period, since lost-in-hole activity typically has lower associated costs then other forms of revenue. Direct costs as a percentage of revenues were 71% for the year ended December 31, 2025, compared to 73% for the same period in 2024.

Gross margin and Adjusted gross margin⁽²⁾ 

The Gross margin and Adjusted gross margin percentages⁽²⁾ improved in for the fourth quarter and year ended December 31, 2025 compared to the same periods in 2024 despite a 15% and 17% decrease in revenues in the three months ended December 31, 2025 and the year ended December 31, 2025, respectively. This improvement is primarily due to the ongoing deployment of its newly built MWD fleet, reducing third-party rental costs.

Depreciation and amortization expense

Depreciation and amortization expense included in cost of sales increased to $8.2 million in the three months ended December 31, 2025, compared to $6.7 million in for the same period in 2024, mainly due to a higher portion of the MWD build-out being depreciated. Depreciation and amortization expense included in cost of sales remained consistent for the years ended December 31, 2025 and 2024 at $30.9 million.

Selling, general and administrative (“SG&A”) expenses

The Company recognized direct costs included in SG&A expenses of $11.6 million and $56.3 million in the three months ended December 31, 2025 and the year ended December 31, 2025, which were slightly higher than $10.6 million and $54.5 million for the same periods in 2024, respectively. As a result of SG&A being more fixed cost in nature, against lower revenues, direct costs included in SG&A expenses as a percentage of revenues were 11% and 12% in the three months ended December 31, 2025 and the year ended December 31, 2025, compared to 8% and 10% for the same periods in 2024, respectively.

Depreciation and amortization included in SG&A expenses were $2.8 million and $11.0 million in the three months ended December 31, 2025 and the year ended December 31, 2025, compared to $2.7 million and $10.1 million for the same periods in 2024, respectively. The slight increases are mainly due to amortization expense associated with RSS licenses acquired in the latter part of 2024.

Stock-based compensation included in SG&A expenses were $0.5 million and $3.0 million in the three months ended December 31, 2025 and the year ended December 31, 2025, compared to $0.6 million and $2.6 million for the same periods in 2024, respectively. The increase for the year ended December 31, 2025 is mainly due to restricted shares granted in 2025.

Provision

The Company is subject to a historical U.S. sales and use tax audit (the “Audit”) period that originated prior to the Company’s acquisition of Altitude Energy Partners (“AEP Acquisition”) on July 14, 2022, with certain errors determined to extend into the period after the AEP Acquisition (the “Post-Closing Audit Period”). In 2025 the Company received additional information relating to this Audit impacting the Post-Closing Audit Period and recorded an incremental provision of $4.8 million. No revisions to this estimate were made in the three months ended December 31, 2025. In the fourth quarter of 2025, the Company paid $4.1 million to the tax authorities in partial settlement of the Audit. As at December 31, 2025, the Company’s Post-Closing Audit Period provision accrued is $8.0 million. 

Also in relation to the Audit, certain liabilities originated prior to the AEP Acquisition (the “Pre-Closing Audit Period”). The Company has recognized a provision of $14.8 million in Trade and other payables related to the Pre-Closing Audit Period. Pursuant to the Equity Purchase Agreement related to the AEP Acquisition, the sellers provided the Company with an indemnity related to pre-closing tax issues, specifically identifying the risk around the Audit. Accordingly, the Company has recognized an offsetting indemnity receivable of $14.8 million in Other receivable. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. 

All figures in this section are presented in Canadian dollars; however, the underlying figures are denominated in U.S. dollars and are therefore subject to fluctuations in foreign currency exchange rates. New information may become available that prompts the Company to adjust its judgment regarding the adequacy of this provision.

Research and development (“R&D”) costs

The Company recognized R&D costs of …

Full story available on Benzinga.com