Source Energy Services Reports Q2 2025 Results

Executive Summary

• Source Energy Services Ltd. reported strong financial results for Q2 2025, driven by record sand sales volumes and revenue growth, with net income nearly tripling year-over-year.
• The company achieved record sand sales volumes of 1,094,355 metric tonnes and total revenue of $201.9 million, representing a 14% increase from Q2 2024.
• Key operational milestones include the completion of the next phase of the Peace River facility expansion and the receipt of a Remission Order from the Government of Canada reversing surtaxes on imported frac sand.

Key Details

• Financial Performance (Q2 2025):
  • Total Revenue: $201.9 million (up $25.5 million or 14% from Q2 2024).
  • Sand Revenue: $161.5 million (up $21.4 million or 15% from Q2 2024).
  • Net Income: $13.6 million (up $8.9 million from Q2 2024).
  • Adjusted EBITDA: $35.2 million (up $4.4 million or 14% from Q2 2024).
  • Adjusted Gross Margin: $48.6 million (up 15% from Q2 2024).
  • Gross Margin: $36.7 million (up 13% from Q2 2024).
• Operational Metrics:
  • Sand Volumes: 1,094,355 MT (record for the quarter), up from 921,148 MT in Q2 2024.
  • Six-Month Sand Volumes: 2,135,578 MT (up from 1,795,997 MT in H1 2024).
  • Sahara Fleet Utilization: 83% across the eleven-unit fleet.
  • Peace River Facility: Completed next phase of expansion, approaching nameplate capacity of 1,000,000 MT.
• Capital Allocation & Shareholder Returns:
  • Normal Course Issuer Bid (NCIB): Repurchased 225,400 common shares in Q2 2025 at a weighted average price of $11.99 per share.
  • NCIB Authorization: Up to 750,000 shares or $5.0 million, terminating May 12, 2026.
• Regulatory & Tariff Updates:
  • Remission Order: Received from the Government of Canada on June 26, 2025, reversing and refunding surtaxes paid on frac sand imported from the US since March 4, 2025.
  • Revenue Impact: Tariff reversal impacted average realized sand price per MT; however, Adjusted Gross Margin was not impacted as surtaxes were borne by customers.
• Free Cash Flow:
  • Q2 2025 Free Cash Flow: $11.6 million (down from $12.9 million in Q2 2024).
  • H1 2025 Free Cash Flow: $23.6 million (down from $27.8 million in H1 2024).
  • Drivers of decrease: Higher income taxes paid, increased capital expenditures (Peace River expansion, trucking trailers), and higher lease obligations.
• Business Outlook:
  • Anticipates a slowdown in customer activity levels for H2 2025 due to weaker commodity prices and trade policy uncertainty.
  • Taylor facility expected to be fully operational in Q3 2025.
  • Long-term demand supported by LNG Canada online status and increased natural gas export capabilities.

Notable Quotes

• Note: No direct quotes from the CEO or President were included in the provided text.