AKITA announces second quarter results with net income of $2.3 million, debt repayment of $10 million and commencement of a normal course issuer bid

AKITA announces second quarter results with net income of $2.3 million, debt repayment of $10 million and commencement of a normal course issuer bid Canada NewsWire CALGARY, AB, July 31, 2025 CALGARY, AB, July 31, 2025 /CNW/ - AKITA Drilling Ltd. (TSX: AKT.A) AKITA Drilling Ltd. ("AKITA" or the "Company") announces net income of $2.3 million for the three months ended June 30, 2025, reversing a loss of $0.5 million during the same period in 2024. The Company saw a notable increase in activity in its US operating segment during Q2 2025 compared to the prior year.  Adjusted funds flow from operations increased to $9.8 million in the second quarter of 2025 from $6.4 million in the second quarter of 2024. Net cash from operations increased to $18.2 million for the three months ended June 30, 2025, compared to $10.9 million in the same period of 2024, driven by a significant release of working capital, which totalled $11.5 million in Q2 2025, compared to $7.0 million in 2024. During the quarter, total debt decreased to $39.7 million from $52.4 million during the same period in 2024, resulting in a debt to EBITDA ratio of 0.53:1. This achievement brings the Company within its  internal leverage threshold, triggering the initiation of the Company's return of capital strategy in the form of a normal course issuer bid ("NCIB"), the details of which are available in a separate release, to commence August 6, 2025. Colin Dease, AKITA's President and Chief Executive Officer stated: "We have made significant progress in de- leveraging the Company over the past three years, reducing debt from $95 million at March 31, 2022 to $39.7 million at June 30, 2025. We are pleased with this accomplishment and appreciate our shareholders' patience during this deleveraging phase. We are excited to announce the launch of an NCIB as the first step to return value to our shareowners." CONSOLIDATED FINANCIAL HIGHLIGHTS For the Three Months Ended June 30, For the Six Months Ended June 30, $Thousands, except per share amounts 2025 2024 Change % Change 2025 2024 Change % Change Revenue 49,574 38,336 11,238 29 % 114,660 84,641 30,019 35 % Operating and maintenance expenses 37,635 29,806 7,829 26 % 83,664 63,317 20,347 32 % Operating margin 11,939 8,530 3,409 40 % 30,996 21,324 9,672 45 % Margin % 24 % 22 % 2 % 9 % 27 % 25 % 2 % 8 % Net cash from operating activities 18,209 10,913 7,296 67 % 27,218 17,861 9,357 52 % Adjusted funds flow from operations(1) 9,863 6,387 3,476 54 % 26,892 17,647 9,245 52 % Per share 0.25 0.16 0.09 56 % 0.68 0.44 0.24 55 % Net income (loss) 2,297 (478) 2,775 581 % 10,929 2,149 8,780 409 % Per share 0.06 (0.01) 0.07 700 % 0.28 0.05 0.23 460 % Capital expenditures 7,609 7,126 483 7 % 14,617 11,061 3,556 32 % Weighted average shares outstanding 39,734 39,734 - 0 % 39,734 39,725 9 0 % Total assets 258,006 242,353 15,653 6 % 258,006 242,353 15,653 6 % Total debt 39,780 52,404 (12,624) (24 %) 39,780 52,404 (12,624) (24 %) (1) See "Non-GAAP and Supplementary Financial Measures" near the end of this release for further detail. Canadian Drilling Division For the Three Months Ended June 30, For the Six Months Ended June 30, $Thousands, except per day amounts 2025 2024 Change % Change 2025 2024 Change % Change Revenue Canada 10,886 9,820 1,066 11 % 34,549 25,369 9,180 36 % Revenue from joint venture drilling rigs 8,098 9,631 (1,533) (16 %) 21,108 22,148 (1,040) (5 %) Flow through charges(1) (1,013) (1,055) 42 4 % (2,067) (1,684) (383) (23 %) Adjusted revenue Canada(1) 17,971 18,396 (425) (2 %) 53,590 45,833 7,757 17 % Operating and maintenance expenses Canada 8,511 8,166 345 4 % 24,883 18,479 6,404 35 % Operating and maintenance expenses from joint venture drilling rigs 6,113 6,907 (794) (11 %) 15,473 15,261 212 1 % Flow through charges(1) (1,013) (1,055) 42 4 % (2,067) (1,684) (383) (23 %) Adjusted operating and maintenance expenses Canada 13,611 14,018 (407) (3 %) 38,289 32,056 6,233 19 % Adjusted operating margin Canada(1) 4,360 4,378 (18) (0 %) 15,301 13,777 1,524 11 % Margin %(1) 24 % 24 % 0 % 0 % 29 % 30 % (1 %) (3 %) Operating days 490 473 17 4 % 1,418 1,122 296 26 % Adjusted revenue per operating day(1) 36,664 38,892 (2,228) (6 %) 37,796 40,849 (3,053) (7 %) Adjusted operating and maintenance expenses per operating day(1) 27,768 29,636 (1,868) (6 %) 27,004 28,570 (1,566) (5 %) Adjusted operating margin per operating day(1) 8,896 9,256 (360) (4 %) 10,792 12,279 (1,487) (12 %) Utilization(1) 32 % 31 % 1 % 3 % 46 % 36 % 10 % 28 % Rig count 17 17 - 0 % 17 17 - 0 % (1) See "Non-GAAP and Supplementary Financial Measures" near the end of this release for further detail. During the second quarter of 2025, AKITA's adjusted operating margin remained essentially flat at $4,360,000, compared to $4,378,000 in the same quarter of 2024. Despite the consistent operating margin, activity levels increased, with 490 operating days recorded in Q2 2025 compared to 473 operating days in the second quarter of 2024. Adjusted operating margin per operating day decreased to $8,896 in Q2 2025 from $9,256 in the same period of 2024. This decrease reflects the absence of a labour contract that contributed to margin in 2024 that was not active in the first half of 2025.  Excluding the profit from this contract, adjusted operating margin per operating day increased by 4% year over year, consistent with the modest day rate increases secured throughout the year. United States Drilling Division For the Three Months Ended June 30, For the Six Months Ended June 30, $Thousands, except per day amounts 2025 2024 Change % Change 2025 2024 Change % Change Revenue US 38,688 28,516 10,172 36 % 80,111 59,272 20,839 35 % Flow through charges(1) (4,812) (3,583) (1,229) (34 %) (10,322) (7,342) (2,980) (41 %) Adjusted revenue US(1) 33,876 24,933 8,943 36 % 69,789 51,930 17,859 34 % Operating and maintenance expenses US 28,929 21,640 7,289 34 % 58,404 44,837 13,567 30 % Flow through charges(1) (4,812) (3,583) (1,229) (34 %) (10,322) (7,342) (2,980) (41 %) Adjusted operating and maintenance expenses US 24,117 18,057 6,060 34 % 48,082 37,495 10,587 28 % Adjusted operating margin US(1) 9,759 6,876 2,883 42 % 21,707 14,435 7,272 50 % Margin %(1) 29 % 28 % 1 % 4 % 31 % 28 % 3 % 11 % Operating days 875 623 252 40 % 1,794 1,342 452 34 % Adjusted revenue per operating day(1) 38,706 40,021 (1,315) (3 %) 38,895 38,696 199 1 % Adjusted operating and maintenance expenses per operating day(1) 27,555 28,984 (1,429) (5 %) 26,798 27,940 (1,142) (4 %) Adjusted operating margin per operating day(1) 11,151 11,037 114 1 % 12,097 10,756 1,341 12 % Utilization(1) 65 % 46 % 19 % 41 % 66 % 49 % 17 % 35 % Rig count 15 15 - 0 % 15 15 - 0 % (1) See "Non-GAAP and Supplementary Financial Measures" near the end of this release for further detail. Despite a decline in the active rig count across the US industry, AKITA's operating days in the second quarter of 2025 improved by 40% to 875, up from 623 in the same period of 2024. This significant increase in activity drove higher adjusted operating margin, which increased to $9,759,000 in Q2 2025 from $6,876,000 in the same period of 2024. Adjusted revenue per operating day decreased to $38,706 in the second quarter of 2025 from $40,021 in the second quarter of 2024, largely due to pricing pressure across AKITA's US fleet amid a declining industry rig count. Adjusted revenue in Q2 2025 includes one-time drill pipe revenue of $1,061,000. Excluding this amount, adjusted revenue per day decreased by 6% year over year. Adjusted operating expense per operating day decreased to $27,555 in the second quarter of 2025 from $28,984 in the second quarter of 2024. This reduction reflects AKITA's continued focus on cost control and operational efficiency across its fleet. FURTHER INFORMATION This news release shall be used as preparation for reading the full disclosure documents. AKITA's unaudited interim condensed consolidated financial statements and management's discussion and analysis for the quarter ended June 30, 2025 will be available on the AKITA website (www.akita-drilling.com) and via SEDAR (www.sedarplus.ca) or can be requested in print from the Company. Non-GAAP and Supplementary Financial Measures Non-GAAP Financial Measures Adjusted Revenue and Adjusted Operating and Maintenance Expenses Revenue and operating and maintenance expenses in AKITA's Canadian operating segment include revenue and expenses from AKITA's wholly-owned drilling rigs as well as its share of joint venture revenue and expenses. Excluded from the revenue and expenses in AKITA's Canadian and US operating segment are flow through charges that are billed to operators and repaid to the Company. The volume and timing of the flow through charges can artificially impact the operational per day analysis and as a result management and certain investors may find the comparability between periods is improved when these flow through charges are excluded from revenue per day and operating and maintenance expense per day. The flow through charges do not have any impact on the Company's net earnings as the amounts offset each other. Adjusted Funds Flow from Operations and Adjusted EBITDA Adjusted funds flow from operations is not a recognized GAAP measure under IFRS and readers should note that AKITA's method of determining adjusted funds flow from operations may differ from methods used by other companies, and includes cash flow from operating activities before working capital changes, equity income from joint ventures, and income tax amounts paid or recovered during the period.  Nonetheless, management and certain investors may find adjusted funds flow from operations to be a useful measurement to evaluate the Company's operating results at year-end and within each year, since the seasonal nature of the business affects the comparability of non-cash working capital changes both between and within periods. Adjusted earnings before interest and finance costs, taxes, depreciation and amortization, other non-cash items and one-time gains and losses ("Adjusted EBITDA") is not a recognized GAAP measure under IFRS and readers should note that AKITA's method of determining adjusted EBITDA may differ from methods used by other companies, and removes the aspect of how the Company finances its operations from adjusted funds flow from operations. For the Three Months Ended June 30, For the Six Months Ended June 30, $Thousands 2025 2024 2025 2024 Net cash from operating activities 18,209 10,913 27,218 17,861 Interest paid 806 1,175 1,694 2,385 Interest expense (854) (1,224) (1,790) (2,483) Post-employment benefits paid 79 79 158 158 Equity income from joint ventures 1,917 2,632 5,419 6,675 Unrealized loss on foreign exchange 1,227 (194) 1,210 (602) Change in non-cash working capital (11,521) (6,994) (7,017) (6,347) Adjusted funds flow from operations 9,863 6,387 26,892 17,647 Non-GAAP Ratios "Adjusted funds flow from operations per share" is calculated on the same basis as net loss per class A and class B share basic and diluted, utilizing the basic and diluted weighted average number of class A and class B shares outstanding during the periods presented. "Adjusted revenue per operating day" may be useful to analysts, investors, other interested parties and management as a measure of pricing strength and is calculated by dividing adjusted revenue by the number of operating days for the period. "Adjusted operating and maintenance expenses per operating day" may be useful to analysts, investors, other interested parties and management as it demonstrates a degree of cost control and provides a proxy for specific inflation rates incurred by the Company FORWARD-LOOKING INFORMATION: Certain statements contained in this news release may constitute forward-looking information. Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "plan", "estimate", "expect", "may", "will", "intend", "should", and similar expressions. In particular, forward-looking information in this news release includes, but is not limited to, references to the outlook for the drilling industry (including activity levels and day rates), the Company's relationships and customers and vendors, advantages associated with the percentage of pad drilling rigs in the Company's Canadian drilling fleet, the renewal of drilling contracts, debt repayment and the Company's NCIB. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Although the Company believes that the expectations reflected in the forward-looking information are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and no assurance can be given that these expectations will prove to be correct. By their nature, these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and therefore carry the risk that the predictions and other forward-looking statements will not be realized.  Readers of this news release are cautioned not to place undue reliance on these statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, estimates and intentions expressed in such forward-looking statements. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of, among other things, prevailing economic conditions; the level of exploration and development activity carried on by AKITA's customers, world crude oil prices and North American natural gas prices; global liquefied natural gas (LNG) demand, weather, access to capital markets; and government policies.  We caution that the foregoing list of factors is not exhaustive and that while relying on forward-looking statements to make decisions with respect to AKITA, investors and others should carefully consider the foregoing factors, as well as other uncertainties and events, prior to making a decision to invest in AKITA.  Except where required by law, the Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by it or on its behalf. SOURCE AKITA Drilling Ltd. View original content to download multimedia: http://www.newswire.ca/en/releases/archive/July2025/31/c8587.html Contact: INVESTOR INQUIRIES: Darcy Reynolds, CPA, CA, Vice President, Finance and Chief Financial Officer, (403) 292-7530