Source Energy Services (SHLE) Q3 2026 earnings summary

Executive summary

• Q3 sand sales volume rose 55% YoY to 1,027,659 MT; revenue increased 50% to CAD 188.0 million and Adjusted EBITDA rose CAD 6.6 million to CAD 26.9 million.

• Higher WCSB activity and frac intensity lifted volumes, while Peace River ramp-up costs, diesel and product mix pressured per-tonne margins.

Financial highlights

• Sand revenue was CAD 143.8 million, up 43% YoY; well site solutions revenue reached CAD 43 million, up CAD 19 million, as last-mile and longer-haul volumes rose 52%.

• Gross margin rose 14% to CAD 22.3 million and Adjusted Gross Margin increased 24% to CAD 37.5 million.

• Net loss narrowed to CAD 3.8 million from CAD 6.2 million; operating income was CAD 4.7 million versus CAD 3.8 million.

• 9M revenue was CAD 485.4 million versus CAD 535.8 million; Adjusted EBITDA was CAD 71.7 million versus CAD 89.3 million, and net loss was CAD 12.7 million versus net income of CAD 31.0 million.

• Q3 Free Cash Flow was CAD 9.7 million versus negative CAD 12.7 million; 9M Free Cash Flow was negative CAD 3.6 million versus positive CAD 10.9 million.

Outlook and guidance

• FY 2026 completion activity is expected below 2025 levels; some pads were deferred to 2027, while customer activity may stabilize through the rest of 2026.

• Initial customer feedback points to higher 2027 activity and sand volumes in the Montney and WCSB; wet sand demand is expected to remain robust.

• Peace River ramp-up and one-time costs are expected to be isolated to 2026, with facility optimization and improved performance planned for 2027.

• 2026 capital spending is estimated at CAD 30–40 million; 2027 spending is expected to be considerably lower YoY and focused on operations, optimization and maintenance.

• Near-term activity may fluctuate with geopolitical uncertainty and weaker Canadian natural gas prices; LNG projects and pipeline capacity additions support the longer-term outlook.