Source Energy Services (SHLE) Q1 2025 earnings summary

Executive summary

• Achieved record sand sales volumes of 1,041,223 MT and sand revenue of CAD 162.9 million, up 22% year-over-year, driven by strong completion activity in the Western Canadian Sedimentary Basin.

• Completed initial phases of Peace River facility expansion and commenced operations at Taylor, BC terminal.

• Logistics capabilities enhanced with terminal expansions and trucking asset acquisitions, supporting lowest landed cost in the region.

• Net income rose to CAD 23.6 million, up CAD 21.7 million year-over-year, aided by improved performance, a legal settlement, and share-based compensation recovery.

• Adjusted EBITDA increased 5% to CAD 33.8 million, reflecting record sand volumes and well site solutions.

Financial highlights

• Total revenue reached CAD 208.6 million, up CAD 39 million from Q1 2024, with sand revenue per MT at CAD 156.45.

• Gross margin was CAD 36.8 million; adjusted gross margin was CAD 46.2 million, both up year-over-year.

• Net earnings per share rose to CAD 1.74 from CAD 0.14 year-over-year.

• Free cash flow was CAD 11.9 million, down CAD 3.6 million due to higher taxes, capex, and lease payments.

• Operating expenses increased by up to CAD 1.9 million, driven by higher activity, compensation, maintenance, and royalties.

Outlook and guidance

• Expecting 5%-10% growth in overall market and volumes for the year, with robust activity anticipated in Q2 and Q3.

• Adjusted gross margin per ton expected to remain in the CAD 45–46 range for 2025.

• Expects continued strong customer activity in the Montney basin and increased demand as LNG Canada and additional LNG capacity come online.

• No change in outlook despite macroeconomic uncertainty; industry activity levels expected to remain resilient.

• Monitoring impact of US-Canada tariffs and commodity price volatility on long-term capital plans.