Source Energy Services Reports Q4 2025 and Year End Results

Executive Summary

• Source Energy Services reported record sand sales volumes of 3.71 million MT in 2025, generating $560 M in sand revenue (+5% YoY).
• Total 2025 revenue reached $700.3 M (up $26.4 M), with net income of $33.1 M – a $23.6 M increase from the prior year.
• Adjusted EBITDA fell to $112.3 M (‑9% YoY) due to higher third‑quarter slowdown and incremental costs at the Peace River expansion; free cash flow for the year was $16.98 M, down from $46.59 M in 2024.

Key Details

• Production & Sales
• Q4 2025 sand sales volume: 906,903 MT (‑18% YoY increase).
• FY 2025 sand sales volume: 3,707,487 MT (record level).
• Sand revenue FY 2025: $560.0 M (+$27.0 M vs. 2024).

• Well‑site solutions revenue Q4 2025: $28.3 M (+6% YoY).

• Financial Performance

• Total FY 2025 revenue: $700.3 M (↑ $26.4 M).
• Gross margin FY 2025: $116.6 M (‑8% vs. 2024).
• Adjusted Gross Margin FY 2025: $159.3 M (‑2%).
• Net income FY 2025: $33.1 M (↑ $23.6 M).

• Adjusted EBITDA FY 2025: $112.3 M (‑9% YoY).

• Operating Metrics

• Sahara fleet utilization: 74% overall (US units at 100%).
• New facilities: Commenced operations at Taylor transload facility; completed Phase 1 of Peace River expansion to 1,000,000 MT capacity.

• Normal Course Issuer Bid repurchased 464,800 shares during FY 2025.

• Cost Structure

• Cost of sales (ex‑depr.) FY 2025: $541.0 M (+$29.7 M YoY) driven by higher volumes and Peace River integration costs.
• Operating expense FY 2025: $30.3 M (+$4.8 M).

• G&A expense FY 2025: $17.5 M (‑$2.0 M).

• Liquidity & Capital Resources

• Free cash flow FY 2025: $16.98 M (down from $46.59 M).
• Capital expenditures (net of disposals, excl. Taylor): $40.34 M (+$21.3 M YoY), primarily for Peace River expansion and sand‑processing assets.

• Lease payments FY 2025: $26.92 M (↑ from $21.38 M).

• Outlook

• Management expects 2026 activity levels to be broadly consistent with 2025, with potential upside from Western Canadian LNG projects (KSI Lisims approval, LNG Canada Phase 2).

• Anticipates continued demand for proppant in the Montney, Duvernay and Deep Basin areas.

• Technical Update

• Updated NI 43‑101 technical reports filed for three Wisconsin mineral projects; no material change to resource estimates.

• Investor Call

• Q4 2025 results conference call scheduled for 7:30 am MST (9:30 am ET) on 27 Feb 2026; dial‑in details provided.

Notable Quotes

“We delivered a record year of sand volumes and are well positioned to capture the growing proppant demand driven by LNG projects in Western Canada,” – Scott Melbourn, CEO.