Source Energy Services Reports Q3 2025 Results

Executive Summary

• Source Energy Services reported a material decline in Q3 2025 results versus the prior year, with total revenue down 32% to C$125.3 M and a net loss of C$6.2 M.
• Adjusted EBITDA fell 43% to C$20.3 M; sand sales volume dropped 31% to 665,006 MT, while sand revenue decreased 30% to C$100.3 M.
• Capital expenditures rose sharply (+C$15.3 M) due to the acquisition of sand‑processing assets for future expansion at Peace River, leading to negative free cash flow of C$12.7 M for the quarter.

Key Details

• Revenue & Volume – Sand sales: 665,006 MT; sand revenue: C$100.3 M (‑30% YoY). Total revenue: C$125.3 M (‑32% YoY).
• Profitability – Gross margin: C$19.6 M (‑42% YoY); Adjusted Gross Margin: C$30.3 M (‑30% YoY). Net loss: C$6.2 M (worse by C$16.4 M vs. Q3 2024). Adjusted EBITDA: C$20.3 M (‑43% YoY).
• Utilization – Sahara fleet utilization averaged 62% across eleven units; U.S. units were 100% utilized, Canadian units lower due to reduced activity.
• Capital Structure – Term loan principal repayments reduced outstanding balance by C$11.7 M (total repayments YTD C$19.9 M).
• Share Repurchases – Normal Course Issuer Bid: 167,500 shares repurchased this quarter; cumulative repurchases to date FY2025 total 392,900 shares.
• Capex & Asset Acquisition – Acquired sand‑processing assets for Peace River expansion (targeting 3 M MT nameplate capacity). Capital expenditures net of disposals: C$18.5 M (↑C$15.3 M YoY). Maintenance/sustaining capex up C$2.8 M.
• Free Cash Flow – Negative free cash flow of C$12.7 M for Q3 2025 versus positive C$20.1 M in Q3 2024, driven by higher capex and lease payments.
• Liquidity – Financing expense paid: C$6.5 M (Q3); financing expense YTD: C$20.0 M. Lease obligations paid: C$6.8 M (Q3).
• Outlook – Management expects a rebound in Q4 activity, projecting full‑year 2025 proppant demand similar to or slightly ahead of 2024 and robust growth in 2026 driven by LNG projects and increased natural‑gas exports.
• Conference Call – Q3 results call scheduled for 7:30 am MST (9:30 am ET) on 2025‑11‑07; dial‑in details provided.

Notable Quotes

“Source anticipates increased activity levels for the remainder of the year, which will result in a solid rebound for the fourth quarter and a full‑year 2025 proppant demand similar to or slightly ahead of 2024.” – Scott Melbourn, CEO