Source Energy Services (SHLE) Q4 2024 earnings summary

Executive summary

• Achieved record sand sales volumes of 3.53 million MT and total revenue of $674.0 million in 2024, up $104.2 million from 2023, with sand revenue of $532.9 million, a 16% increase year-over-year.

• Delivered record adjusted EBITDA of $123.9 million, a $24.8 million increase year-over-year, and net income of $9.5 million.

• Completed refinancing with a new US$135 million term loan and $40 million credit facility, improving liquidity to $68.8 million at year-end.

• Closed two sand trucking asset acquisitions and expanded well site solutions with new Sahara units deployed.

• Expanded infrastructure with Chetwynd terminal upgrade and partnership for Taylor, BC terminal, expected operational in 2025.

Financial highlights

• Gross margin increased 16% to $127.3 million; Adjusted Gross Margin up 20% to $162.6 million year-over-year.

• Adjusted Gross Margin per MT for 2024 was $46.11, up from $43.07 in 2023.

• Free Cash Flow for 2024 was $46.6 million, up from $37.3 million in 2023.

• Q4 2024 sand sales volumes were 767,712 MT, with sand revenue of $117.7 million, down from Q4 2023.

• Adjusted EBITDA for Q4 was $25.8 million, down from $28.3 million in Q4 2023.

Outlook and guidance

• Early Q1 2025 activity is strong, with expectations for continued volume growth over 2024.

• Anticipates 2025 capital expenditures of $28–33 million, mainly for Peace River expansion and mine development.

• Expects strong industry fundamentals in 2025, driven by LNG export growth and increased natural gas demand in the Montney region.

• Focus remains on generating free cash flow, deleveraging, and expanding domestic production to 1 million tonnes in 2025.

• US tariffs on Canadian imports could impact long-term customer capital plans, but LNG export growth may offset risks.