AKITA announces 2024 annual results with net income of $12.9 million and repayment of $20 million in debt

Mar 10 2025 20:30 BST

CALGARY, AB , March 10, 2025 /CNW/ - AKITA Drilling Ltd.(TSX: AKT.A)

AKITA Drilling Ltd. ("AKITA" or the "Company") announces net income of $12.9 million for the year ended December 31, 2024, compared to $18.4 million in 2023. The decrease in net income in 2024 was due to lower activity in the first half of the year. Activity began to increase in the third quarter of 2024, and culminated in the strongest fourth quarter in the Company's history, with net income of $9.6 million in the fourth quarter of 2024. Adjusted funds flow from operations was $44.7 million for the year ended December 31, 2024 compared to $45.5 million in the prior year.

Colin Dease, AKITA's Chief Executive Officer stated: "We are very pleased with our performance over the back half of 2024. Despite significant industry challenges, particularly in the U.S. market, AKITA successfully met its debt repayment target and ended the year on a strong note. By the end of the third quarter, we achieved high rig utilization across both our Canadian and U.S. divisions. This momentum continued into the fourth quarter and is carrying into the first quarter of 2025, positioning us for continued success."

Activity for 2024 varied between the Canadian and US Divisions. The Canadian division was more active in 2024 than in 2023 overall, with 2,719 operating days in 2024 compared to 2,239 in 2023. The higher activity was concentrated in the second half of the year. In contrast, the US division saw a decline in operating days for the year, with 3,025 operating days in 2024, compared to 3,853 operating days in 2023. Activity in the US lagged behind 2023 for the first three quarters, but improved in the fourth quarter of 2024 above 2023 levels, despite a decline in the industry active rig count over the same period.

Operating margin per operating day followed the same trends as activity. In Canada, the operating margin per operating day increased to $11,612 in 2024, up from $10,258 in 2023. In the US Division operating margin per operating day decreased to $10,406 in 2024, from $11,419 in 2023.

Capital spending for the year totaled $28.0 million in 2024, compared to $24.6 million in 2023 and was a mix of certifications and rig equipment purchased to complete minor upgrades. The Company successfully achieved its debt repayment target in 2024, reducing its debt balance by $20 million for the second year in a row. As a result, total debt now stands at $50 million, gross of deferred financing costs.

CONSOLIDATED FINANCIAL HIGHLIGHTS

($Thousands except per share amounts)	For the three months ended December 31,				For the year ended December 31,
($Thousands except per share amounts)	2024	2023	Change	% Change	2024	2023	Change	% Change
Revenue	62,857	47,317	15,540	33 %	193,324	225,479	(32,155)	(14 %)
Operating and maintenance expenses	45,008	38,228	6,780	18 %	144,052	167,029	(22,977)	(14 %)
Operating margin	17,849	9,089	8,760	96 %	49,272	58,450	(9,178)	(16 %)
Margin %	28 %	19 %	9 %	47 %	25 %	26 %	(1 %)	(4 %)

Net cash from operating activities	5,946	17,523	(11,577)	(66 %)	30,264	35,567	(5,303)	(15 %)

Adjusted funds flow from operations⁽¹⁾	18,634	7,177	11,457	160 %	44,714	45,522	(808)	(2 %)
Per share	0.47	0.18	0.29	161 %	1.13	1.15	(0.02)	(2 %)

Net income (loss)	9,609	(1,166)	10,775	924 %	12,863	18,415	(5,552)	(30 %)
Per share	0.24	(0.03)	0.27	900 %	0.32	0.46	(0.14)	(30 %)

Capital expenditures	9,604	12,822	(3,218)	(25 %)	28,043	24,592	3,451	14 %

Weighted average shares outstanding	39,734	39,684	50	0 %	39,730	39,659	71	0 %

Total assets					268,763	263,640	5,123	2 %
Total debt					50,000	70,000	(20,000)	(29 %)
⁽¹⁾ See "Non-GAAP and Supplementary Financial Measures" near the end of this release for further detail.

United States Operations

$Thousands except per day amounts
	For the three months ended December 31,				For the year ended December 31,
	2024	2023	Change	% Change	2024	2023	Change	% Change
Revenue US	38,832	35,549	3,283	9 %	129,090	169,474	(40,384)	(24 %)
Flow through charges⁽¹⁾	(3,440)	(4,183)	743	18 %	(14,092)	(17,610)	3,518	20 %
Adjusted revenue US ⁽¹⁾	35,392	31,366	4,026	13 %	114,998	151,864	(36,866)	(24 %)

Operating and maintenance expenses US	28,625	29,293	(668)	(2 %)	97,612	125,473	(27,861)	(22 %)
Flow through charges⁽¹⁾	(3,440)	(4,183)	743	18 %	(14,092)	(17,610)	3,518	20 %
Adjusted operating and maintenance expenses US ⁽¹⁾	25,185	25,110	75	0 %	83,520	107,863	(24,343)	(23 %)

Adjusted operating margin US ⁽¹⁾	10,207	6,256	3,951	63 %	31,478	44,001	(12,523)	(28 %)
Margin %⁽¹⁾	29 %	20 %	9 %	45 %	27 %	29 %	(2 %)	(7 %)

Operating days	969	812	157	19 %	3,025	3,853	(828)	(21 %)

Adjusted revenue per operating day⁽¹⁾	36,524	38,628	(2,104)	(5 %)	38,016	39,414	(1,398)	(4 %)

Adjusted operating and maintenance expenses per operating day⁽¹⁾	25,991	30,924	(4,933)	(16 %)	27,610	27,995	(385)	(1 %)
Adjusted operating margin per operating day⁽¹⁾	10,533	7,704	2,829	37 %	10,406	11,419	(1,013)	(9 %)

Utilization⁽¹⁾	70 %	59 %	11 %	19 %	55 %	70 %	(15 %)	(21 %)

Rig count	15	15	-	0 %	15	15	-	0 %
⁽¹⁾ See "Non-GAAP and Supplementary Financial Measures" near the end of this release for further detail.

The Company's US division began the year with 11 of 15 rigs operating, which declined to 8 rigs in the second quarter, before increasing to 13 active rigs by year end. This recovery in AKITA's US active rig count contrasted the US industry's rig count which started the year at 601 active rigs and declined throughout the year to end at 573 active rigs. AKITA's increased rig count in the fourth quarter of 2024 was not enough to offset the activity losses over the first three quarters of the year, resulting in operating days falling to 3,025 in 2024 (55% utilization) from 3,853 operating days in 2023 (70% utilization). This reduction in activity was the key driver in the decrease in the adjusted operating margin in the US, which fell 28% to $31,478,000 in 2024 from $44,001,000 in 2023.

Adjusted revenue per day decreased in 2024 to $38,016 from $39,414 in 2023, as reduction in the industry active rig count put pricing pressure on contractors competing for fewer jobs. Slightly offsetting this decrease in adjusted revenue per day was a reduction in adjusted operating and maintenance expense per operating day, which decreased to $27,610 in 2024 from $27,995 in 2023. A focus on cost reduction coupled with the impact of increased capital expenditures in 2023 and 2024, resulted in a reduction of premature equipment failures and decreased maintenance costs; a trend that enabled the Company to reduce costs despite the price of the Company's inputs increasing year over year. Adjusted operating and maintenance costs were positively impacted in 2023 by the receipt of a $4.0 million Employee Retention Credit ("ERC") from the IRS. The ERC is a COVID-19 related credit, granted to employers that retained a certain number of employees while experiencing significant decreases in revenue during the pandemic. This amount reduced the total operating costs in 2023. Adjusting for this amount, adjusted operating and maintenance expense per day decreased 5% in 2024 year over year.

Canadian Operations

$Thousands except per day amounts
	For the three months ended December 31,				For the year ended December 31,
	2024	2023	Change	% Change	2024	2023	Change	% Change
Revenue Canada	24,024	11,768	12,256	104 %	64,235	56,005	8,230	15 %
Revenue from joint venture drilling rigs	12,806	7,672	5,134	67 %	45,991	35,662	10,329	29 %
Flow through charges⁽¹⁾	(2,674)	(860)	(1,814)	(211 %)	(5,213)	(5,986)	773	13 %
Adjusted revenue Canada ⁽¹⁾	34,156	18,580	15,576	84 %	105,013	85,681	19,332	23 %

Operating and maintenance expenses Canada	16,383	8,935	7,448	83 %	46,440	41,556	4,884	12 %

Operating and maintenance expenses from joint venture drilling rigs	8,962	6,129	2,833	46 %	32,212	27,144	5,068	19 %
Flow through charges⁽¹⁾	(2,674)	(860)	(1,814)	(211 %)	(5,213)	(5,986)	773	13 %
Adjusted operating and maintenance expenses Canada ⁽¹⁾	22,671	14,204	8,467	60 %	73,439	62,714	10,725	17 %

Adjusted operating margin Canada ⁽¹⁾	11,485	4,376	7,109	162 %	31,574	22,967	8,607	37 %

Margin %⁽¹⁾	34 %	24 %	10 %	42 %	30 %	27 %	3 %	11 %

Operating days	900	465	435	94 %	2,719	2,239	480	21 %

Adjusted revenue per operating day⁽¹⁾	37,951	39,957	(2,006)	(5 %)	38,622	38,268	354	1 %
Adjusted operating and maintenance expenses per operating day⁽¹⁾	25,190	30,546	(5,356)	(18 %)	27,010	28,010	(1,000)	(4 %)
Adjusted operating margin per operating day⁽¹⁾	12,761	9,411	3,350	36 %	11,612	10,258	1,354	13 %

Utilization⁽¹⁾	58 %	25 %	33 %	132 %	44 %	31 %	13 %	42 %

Rig count	17	20	(3)	(15 %)	17	20	(3)	(15 %)
⁽¹⁾ See "Non-GAAP and Supplementary Financial Measures" near the end of this release for further detail.

Results in Canada improved for the second consecutive year in 2024, with adjusted operating margin increasing 37% to $31,574,000 in the year, from $22,967,000 in 2023. This increase was primarily driven by increased activity in the year with operating days increasing 21% to 2,719 days in 2024 compared to 2,239 days in 2023. This increase in operating days was primarily driven by the Company's double rig category which made up 68% of the total increase, followed by AKITA's single rigs, which made up 22% of the increase, with the balance attributed to AKITA's triple rigs. During 2024, AKITA's Canadian fleet was 44% utilized which matched industry utilization.

Adjusted revenue per operating day was consistent year over year, with a 1% change from 2023 into 2024. The Company secured some moderate day rate increases in 2024, however, these rate increase were overshadowed by the higher adjusted revenue per day the Company achieved in the fourth quarter of 2023, which drove up the 2023 average and was related to a contract on two rigs that were commissioned and commenced operations, but which saw their drilling programs subsequently cancelled and resulting in the reimbursement of costs incurred which drove up both revenue and costs in the fourth quarter of 2023.

Adjusted operating and maintenance expenses per day decreased by 4% to $27,010 in 2024 from $28,010 in 2023. The decrease in operating and maintenance expense per day was attributable to fewer start-up costs in 2024, when compared to the fourth quarter of 2023.

With consistent adjusted revenue per operating day and decreasing adjusted operating and maintenance expense per operating day the adjusted operating margin per operating day increased 24% year over year which also contributed to the overall increase in the results in Canada.

FURTHER INFORMATION

This news release shall be used as preparation for reading the full disclosure documents. AKITA's audited consolidated financial statements and management's discussion and analysis for the year ended December 31, 2024 will be available on the AKITA website (www.akita-drilling.com) or via SEDAR+ (www.sedarplus.ca) or can be requested in print from the Company.

Non-GAAP and Supplementary Financial Measures

Non-GAAP Financial Measures

Adjusted Revenue and Operating and Maintenance Expenses

Revenue and operating and maintenance expenses in AKITA's Canadian operating segment include revenue and expenses from AKITA's wholly-owned drilling rigs as well as its share of joint venture revenue and expenses.

Excluded from the revenue and expenses in AKITA's Canadian and US operating segment are flow through charges that are billed to operators and repaid to the Company. The volume and timing of the flow through charges can artificially impact the operational per day analysis and as a result management and certain investors may find the comparability between periods is improved when these flow through charges are excluded from revenue per day and operating and maintenance expenses per day. The flow through charges do not have any impact on the Company's net income as the amounts offset each other.

Adjusted Funds Flow from Operations

Adjusted funds flow from operations is not a recognized GAAP measure under IFRS and readers should note that AKITA's method of determining adjusted funds flow from operations may differ from methods used by other companies, and includes cash flow from operating activities before working capital changes, equity income from joint ventures, and income tax amounts paid or recovered during the period. Nonetheless, management and certain investors may find adjusted funds flow from operations to be a useful measurement to evaluate the Company's operating results at year-end and within each year, since the seasonal nature of the business affects the comparability of non-cash working capital changes both between and within periods.

	For the three months ended December 31,		For the year ended December 31,
$Thousands	2024	2023	2024	2023
Net cash from operating activities	5,946	17,523	30,264	35,567
Interest paid	996	1,243	4,316	6,292
Interest expense	(1,044)	(1,294)	(4,511)	(6,502)
Lease Inducement	(569)	-	(569)	-
Post-employment benefits paid	79	79	315	322
Equity income from joint ventures	3,708	1,488	13,300	8,184
Unrealized gain (loss) on foreign exchange	(1,550)	391	(1,550)	391
Change in non-cash working capital	11,068	(12,253)	3,149	1,268
Adjusted funds flow from operations	18,634	7,177	44,714	45,522

Non-GAAP Ratios
"Adjusted funds flow from operations per share" is calculated on the same basis as net loss per class A and class B share basic and diluted, utilizing the basic and diluted weighted average number of class A and class B shares outstanding during the periods presented.

"Adjusted revenue per operating day" may be useful to analysts, investors, other interested parties and management as a measure of pricing strength and is calculated by dividing adjusted revenue by the number of operating days for the period.

"Adjusted operating and maintenance expenses per operating day" may be useful to analysts, investors, other interested parties and management as it demonstrates a degree of cost control and provides a proxy for specific inflation rates incurred by the Company

FORWARD-LOOKING INFORMATION:

Certain statements contained in this news release may constitute forward-looking information. Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "plan", "estimate", "expect", "may", "will", "intend", "should", and similar expressions.

Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information.

The Company's actual results could differ materially from those anticipated in this forward-looking information as a result of regulatory decisions, competitive factors in the industries in which the Company operates, prevailing economic conditions, and other factors, many of which are beyond the control of the Company.

The Company believes that the expectations reflected in the forward-looking information are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking information should not be unduly relied upon.

Any forward-looking information contained in this news release represents the Company's expectations as of the date hereof, and is subject to change after such date. The Company disclaims any intention or obligation to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required by applicable securities legislation.

SOURCE AKITA Drilling Ltd.

Company Announcements

AKITA announces 2024 annual results with net income of $12.9 million and repayment of $20 million in debt