Pason Reports Third Quarter 2026 Results and Declares Quarterly Dividend
Pason Reports Third Quarter 2026 Results and Declares Quarterly Dividend |
| [05-November-2026] |
CALGARY, AB, Nov. 5, 2026 /CNW/ -- Pason Systems Inc. ("Pason" or the "Company") (TSX: PSI) announced today its 2026 third quarter results and the declaration of a quarterly dividend. The following news release should be read in conjunction with the Company's Management Discussion and Analysis ("MD&A"), the Condensed Consolidated Interim Financial Statements and related notes for the three and nine months ended September 30, 2026, as well as the Annual Information Form for the year ended December 31, 2025. All of these documents are available on SEDAR+ at www.sedarplus.ca. Financial Highlights
Pason's financial results for the three months ended September 30, 2026 reflect improvements in North American drilling activity, increased control system deliveries within the Company's Solar and Energy Storage segment, and the operating leverage inherent in the Company's North American Drilling segment. In the third quarter of 2026 Pason generated $119.1 million in consolidated revenue, an 18% increase from the prior year comparative period. Pason also generated $45.1 million in Adjusted EBITDA in the third quarter of 2026, a 17% increase from the level generated in the third quarter of 2025. Within its North American Drilling segment, Pason posted a new record quarterly Revenue per Industry Day in the third quarter of 2026 of $1,125, a 5% increase from $1,071 generated in the third quarter of 2025. Revenue per Industry Day in the third quarter benefited from improved product adoption and increased Canadian activity year over year, a region which generates comparatively higher day rates than the US. With this record quarterly level, along with 11% higher levels of industry activity year over year, the North American segment grew revenue by 16% from $68.8 million generated in Q3 2025 to $80.0 million generated in Q3 2026. This is the highest quarterly revenue for the segment since Q1 2015 when industry drilling activity was more than double the level seen in the current quarter. While operating expenses for the segment remain mostly fixed in nature, Pason's North American Drilling segment incurred higher levels of repair expenses and supplies consumed in the field with increased activity year over year. Resulting segment gross profit continues to reflect the significant operating leverage inherent in the segment and was $49.4 million during the third quarter of 2026, a 17% increase from $42.2 million in the comparative 2025 period. The Company's Completions segment generated $13.8 million in revenue in the third quarter of 2026, a 6% decrease from $14.6 million in the comparative period in 2025. During the third quarter of 2026, Pason experienced several schedule gaps in existing customers' activity levels, resulting in 25 IWS Active Jobs, compared to 30 IWS Active Jobs in the third quarter of 2025. Slightly offsetting this result, Revenue per IWS Day of $6,010 in the third quarter 2026 increased 11% from $5,393 in Q3 2025, continuing to reflect the increasing trend in complexity on active jobs. Depreciation and amortization expense for the Completions segment was $7.7 million in both comparative quarterly periods and primarily represents depreciation expense on IWS' growing hardware platform. Also included in depreciation and amortization expense for the segment is $2.2 million in amortization expense associated with intangible assets acquired through the IWS Acquisition, which are not indicative of capital required to operate the business. Segment gross loss in the third quarter of 2026 was $2.4 million, compared to gross loss of $1.2 million in the comparative 2025 period. Excluding these intangibles amortization expenses, Adjusted gross loss for Completions was $0.2 million in the third quarter of 2026 compared to Adjusted gross profit of $1.0 million in the comparable 2025 period, and reflects the current stage of growth for the segment along with the gaps in our Completions customer activity in the current quarter. The Company's International Drilling segment generated $12.8 million in revenue, a slight improvement from $12.5 million in the third quarter of 2025 with relatively stable industry conditions for the Company's operating regions when comparing each quarterly period. As a result, segment gross profit was $5.4 million in the third quarter of 2026 compared to $5.2 million in the comparative 2025 period. The Company's Solar and Energy Storage segment generated revenue of $12.4 million in the third quarter of 2026, compared to $5.1 million generated in the third quarter of 2025, with a significant increase in control system deliveries in the current quarter. Pason generated $45.1 million in Adjusted EBITDA, or 37.9% of revenue in the third quarter of 2026, compared to $38.5 million or 38.1% of revenue in the third quarter of 2025. Current quarter Adjusted EBITDA reflects higher levels of revenue generated by the Company's North American Drilling segment over its mostly fixed cost base and resulting operating leverage. A comparison of Adjusted EBITDA margins year over year reflects the impacts of higher revenue generated by the Company's Solar and Energy Storage segment at lower margins. The Company recorded net income attributable to Pason of $18.9 million ($0.24 per share) in the third quarter of 2026, compared to net income attributable to Pason of $12.5 million ($0.16 per share) recorded in the corresponding period in 2025. This is a result of higher Adjusted EBITDA year over year as further outlined above, and lower other expenses primarily related to the settlement agreement announced on December 8, 2025 ending all ongoing and pending intellectual property litigation between the involved parties. These effects were partially offset with higher stock-based compensation expense and income tax expenses which have increased as a result of the Company's recent share price performance and increased earnings before taxes, respectively. Sequentially, Q3 2026 consolidated revenue of $119.1 million was an 18% increase from consolidated revenue of $100.8 million in the second quarter of 2026, with significant increases in revenue from the Company's North American Drilling and Solar and Energy Storage segments. Revenue in the North American Drilling business unit increased from $67.1 million in the second quarter of 2026 to $80.0 million in the third quarter of 2026, due to an increase in drilling activity and a higher percentage of Canadian drilling activity in the segment quarter over quarter. The International Drilling segment had relatively flat revenue in several regions and reported revenue of $12.8 million, in the third quarter of 2026 compared to $13.1 million in the second quarter of 2026. As noted above, the Completions segment saw a decline in revenue in the third quarter of 2026 as a result of several scheduling gaps in existing customers' activity levels. The Solar and Energy Storage segment generated $12.4 million of revenue in the third quarter of 2026, a significant increase from revenue of $4.8 million in the second quarter 2026, with higher control system deliveries quarter over quarter. Quarterly revenue for this business unit will continue to fluctuate with timing of delivery on control system projects. Operating expenses for the Company's drilling and completions segments remained mostly fixed sequentially, while the Solar and Energy Storage segment recognized $12.1 million in operating expenses, up from $4.9 million in the second quarter of 2026, primarily related to costs of goods sold on increased control systems revenue. Consolidated Adjusted EBITDA was $45.1 million or 37.9% of revenue in the third quarter of 2026, compared to $35.7 million or 35.4% of revenue in the second quarter of 2026. The Company's Adjusted EBITDA and Adjusted EBITDA margin benefited from higher levels of drilling activity in North America coming out of spring break up, highlighting the Company's mostly fixed cost base and resulting operating leverage. Significant growth in lower margin Solar and Energy Storage revenue partially offset the incremental margins seen quarter over quarter. Pason's balance sheet remains strong, with no interest bearing debt, and $76.8 million in Total Cash, as at September 30, 2026, compared to $77.1 million, as at December 31, 2025. Pason generated cash from operating activities of $33.7 million in the third quarter of 2026, exceeding $29.4 million generated in the third quarter of 2025, reflecting higher Adjusted EBITDA year over year, partially offset by investments in working capital with increased revenue in the Company's North American drilling segment. During the three months ended September 30, 2026, Pason invested $14.8 million in net capital expenditures, compared to $10.7 million in the third quarter of 2025 as the Company continues to execute on its 2026 capital budget. Net capital expenditures in the current year includes investments associated with supporting growth and scalability of the Company's pressure control automation technology offering, as well as investments in supporting increasing complexity of customers' completions operations. Net capital expenditures in the quarter also includes investments in the ongoing refresh of Pason's drilling related technology platform. Resulting Free Cash Flow in the third quarter of 2026 was $18.8 million, compared to $18.7 million in the same period in 2025. In the third quarter of 2026, Pason returned $11.6 million to shareholders through the quarterly dividend of $10.1 million and $1.5 million of share repurchases. President's Message Improvements in North American land drilling activity continued through the third quarter of 2026, with Pason's financial and operating results demonstrating the benefits of our leading market position. Five key areas underpin our objective of doubling revenue over the next five to seven years from 2023 levels, which preceded our acquisition of the remainder of IWS:
Our third quarter Completions revenue reflected both the lag in recovery of completions activity as well as meaningful activity gaps among several of our customers. For several quarters, our success in securing new customers in our Completions segment served to offset activity slowdowns among incumbents; consequently, the benefits of the significant gains we have had in expanding our customer base are not readily apparent in our reported results. IWS Active Jobs averaged 25 in the third quarter, compared with 31 in the second quarter, as several customers paused completions programs between pads. Activity resumed late in the third quarter, and IWS Active Jobs in October exceeded 30 jobs. Revenue per IWS Day was $6,010 per day, up 7% from the prior quarter, reflecting our focus on more complex operations. We expect to benefit from increased complexity in the industry driven by more advanced completions designs and techniques. Our North American Drilling segment benefited from both increasing activity in the quarter and record Revenue per Industry Day of $1,125 per day, driven primarily by increased product adoption and a greater proportion of revenue from the Canadian market. We expect continued strength in this segment in coming quarters as industry activity continues to slowly move higher. Industry adoption of a wide range of data-driven automation and analytics technologies, which rely on reliable, high quality data as an input, and increasing well complexity are strong tailwinds for our business. Our International business increased year-over-year, with growth across most of our operating regions in the quarter, offset by the effects of a particularly strong prior comparator period in Brazil in the prior year. Energy Toolbase, our Solar and Energy Storage business, revenue more than doubled relative to the comparative period a year ago, driven by the timing of control system project deliveries. We expect continued strength in this segment, though reported revenue will continue to fluctuate based on the timing of project deliveries. Margins in our core business remain strong; consolidated Adjusted EBITDA margins of 38% in the third quarter include significant revenue increases from our lower-margin Solar and Energy Storage segment. We expect to deliver greater profitability as revenue grows, by applying the experience and expertise acquired across decades of serving the drilling industry to the completions segment in the areas of product design, operational deployment and service, and ongoing customer support. Our approach to capital allocation is unchanged and looks to balance the discipline and predictability of our regular quarterly dividend, which is unchanged at $0.13 per share, with the flexibility to pursue organic investments and share repurchases, which we evaluate through the lens of expected returns on capital. M&A opportunities that surface need to compete against expected returns on investment in our own business or repurchases of our own shares. We continue to see the highest expected returns from organic investments in our business. With the gaps in our Completions customer activity in the third quarter, we expect 2026 capital expenditures near the lower end of the $60 to $70 million range, with the timing of certain Completions investments moving into 2027. We anticipate capital expenditures in 2027 of $65 to $75 million to support activity growth and a more rapid transition to next generation technologies better suited to more complex completions operations. Significant reductions in global oil supplies and drawdowns of both crude and product inventories provide greater confidence for our customers around improved commodity prices in the medium to longer term. We anticipate these factors will translate into continued activity increases through the remainder of 2026 and into 2027. We are well positioned to respond to the needs of our customers as activity increases. The benefits of our leading market share and high operating leverage are most pronounced during times of increasing activity. Our focus remains on delivering exceptional performance in areas which are within our control. Our priorities are centered on expanding our service and technology advantages, maintaining a strong balance sheet, and returning capital to shareholders in a disciplined manner. Quarterly Dividend Pason announced today that the Board of Directors has declared a quarterly dividend of thirteen cents (C$0.13) per share on the Company's common shares. The dividend will be paid on December 31, 2026 to shareholders of record at the close of business on December 17, 2026. Third Quarter Conference Call Pason will be conducting a conference call for interested analysts, brokers, investors, and media representatives to review its 2026 third quarter results at 9:00 a.m. (Alberta Time) on Friday, November 6, 2026. The conference call dial-in numbers are 1-888-510-2154 or 1-437-900-0527, and the call will be simultaneously audio webcast via: www.pason.com/webcast. You can access the fourteen-day replay by dialing 1-888-660-6345 or 1-289-819-1450, using password 13429#. An archived audio webcast of the conference call will also be available on Pason's website at www.pason.com/investors. Non-GAAP Financial Measures A non-GAAP financial measure has the definition set out in National Instrument 52-112 "Non-GAAP and Other Financial Measures Disclosure". The following non-GAAP measures may not be comparable to measures used by other companies. Management believes these non-GAAP measures provide readers with additional information regarding the Company's operating performance, and ability to generate funds to finance its operations, fund its research and development and capital expenditure program, and return capital to shareholders through dividends or share repurchases. EBITDA and Adjusted EBITDA EBITDA is defined as net income before interest income and expense, income taxes, stock-based compensation expense, and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA, adjusted for foreign exchange, impairment of property, plant, and equipment, restructuring costs, net monetary adjustments, government wage assistance, revaluation of put obligation, gain or loss on mark-to-market of short-term investments, gain on previously held equity interest and other items, which the Company does not consider to be in the normal course of continuing operations. Management believes that EBITDA and Adjusted EBITDA are useful supplemental measures as they provide an indication of the results generated by the Company's principal business activities prior to the consideration of how these results are taxed in multiple jurisdictions, how the results are impacted by foreign exchange or how the results are impacted by the Company's accounting policies for equity-based compensation plans. Reconcile Net Income toEBITDA
Reconcile EBITDA to AdjustedEBITDA
Free cash flow Free cash flow is defined as cash from operating activities plus proceeds on disposal of property, plant, and equipment, less capital expenditures (including changes to non-cash working capital associated with capital expenditures), and deferred development costs. This metric provides a key measure on the Company's ability to generate cash from its principal business activities after funding capital expenditure programs, and provides an indication of the amount of cash available to finance, among other items, the Company's dividend and other investment opportunities. Reconcile cash from operating activities to free cash flow
Adjusted gross profit (loss) for the Completions segment Adjusted gross profit (loss) for the Company's Completions segment is calculated as segment gross profit (loss) adding back amortization expense related to intangibles acquired through the IWS Acquisition in 2024. This amortization expense is not reflective of capital required to run operations within the Company. This measure is used within Pason's Completions segment to more accurately reflect profitability of the segment. Reconcile Completions revenue to adjusted gross profit (loss)
Supplementary Financial Measures A supplementary financial measure: (a) is, or is intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of the Company; (b) is not presented in the financial statements of the Company; (c) is not a non-GAAP financial measure; and (d) is not a non-GAAP ratio. Supplementary financial measures found within this press release are as follows: Revenue per Industry Day Revenue per Industry Day is defined as the total revenue generated from the North American Drilling segment over all active drilling rig days in the North American market. This metric provides a key measure of the North American Drilling segment's ability to evaluate and manage product adoption, pricing, and market share penetration. Drilling rig days are calculated by using accepted industry sources. IWS Active Jobs IWS Active Jobs represents the average number of jobs per day that IWS is generating revenue on through the rental of its technology offering to customers during the reporting period. This metric provides a key measure of IWS' market penetration. Revenue per IWS Day Revenue per IWS Day is defined as the total revenue generated by the Completions segment over all IWS active days during the quarter. IWS active days are calculated by using IWS Active Jobs in the reporting period. This metric provides a key measure of the IWS' ability to evaluate and manage product adoption and pricing. Adjusted EBITDA as a percentage of revenue Calculated as Adjusted EBITDA divided by revenue. Total Cash Calculated as the sum of cash and cash equivalents, and short-term investments from the Company's Condensed Consolidated Interim Balance Sheets. The Company's short-term investments are comprised of US dollar bonds. Forward Looking Information Certain statements contained herein constitute "forward-looking statements" and/or "forward-looking information" under applicable securities laws (collectively referred to as "forward-looking statements"). Forward-looking statements can generally be identified by the words "anticipate," "expect," "believe," "may," "could," "should," "will," "estimate," "project," "intend," "plan," "outlook," "forecast" or expressions of a similar nature suggesting a future outcome or outlook. Without limiting the foregoing, the forward-looking statements in this document include, but are not limited to, the following: the Company's growth strategy and related schedules; divergence in activity levels between the geographic regions in which we operate; demand fluctuations for our products and services; the Company's ability to increase or maintain market share; projected future value, forecasted operating and financial results; planned capital expenditures; expected product performance and adoption, including the timing, growth and profitability thereof; potential dividends and dividend growth strategy; potential repurchases under the Company's NCIB; future use and development of technology; our financial ability to meet long-term commitments not included in liabilities; the collectability of accounts receivable; the application of critical accounting estimates and judgements; treatment under governmental regulatory and taxation regimes; and projected increasing shareholder value. These forward-looking statements reflect the current views of Pason with respect to future events and operating performance as of the date of this document. They are subject to known and unknown risks, uncertainties, assumptions, and other factors that could cause actual results to be materially different from results that are expressed or implied by such forward-looking statements. Although we believe these forward-looking statements are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to: the state of the economy; volatility in industry activity levels and resulting customer expenditures on E&P activities; customer demand for existing and new products; the industry shift towards more efficient drilling and completions activity and technology to assist in that efficiency; the impact of competition; the loss of key customers; the loss of key personnel; cybersecurity risks; reliance on proprietary technology and ability to protect the Company's proprietary technologies; reliance on renewable energy; changes to government regulations (including those related to safety, environmental, or taxation); the impact of extreme weather events and seasonality on our suppliers and on customer operations; and war, terrorism, pandemics, social or political unrest that disrupts global markets. These risks, uncertainties and assumptions include, but are not limited to, those discussed in this document under the heading, "Risk Factors" and in the Company's other filings with Canadian securities regulators. These documents are on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR+ website (www.sedarplus.ca) or through Pason's website (www.pason.com). Forward-looking statements contained in this document are expressly qualified by this cautionary statement. There is no representation by Pason and there can be no assurance that actual results achieved will be the same, in whole or in part, as those set out in the forward-looking statements contained herein. Readers are therefore cautioned not to place undue reliance on such forward-looking statements. Except to the extent required by applicable law, Pason assumes no obligation to publicly update or revise any forward-looking statements made in this document or otherwise, whether resulting from new information, future events or otherwise. Pason Systems Inc. Pason is a leading global provider of specialized data management systems for oil and gas drilling and completions operations. Pason's drilling related solutions which include data acquisition, wellsite reporting, automation, remote communications, web-based information management, and data analytics, enable collaboration between operations in the field and the office. Through Intelligent Wellhead Systems ("IWS"), Pason also provides engineered controls, data acquisition, and software, to automate workflows and processes for oil and gas well completions operations, improving wellsite safety and efficiency. Through Energy Toolbase ("ETB"), the Company also provides products and services for the solar power and energy storage industry. ETB's solutions enable project developers to model, control, and monitor economics and performance of solar energy and storage projects. Pason's common shares trade on the Toronto Stock Exchange and OTC Markets Group under the symbol PSI and PSYTF, respectively. For more information about Pason Systems Inc., visit the company's website at www.pason.com or contact investorrelations@pason.com. Additional information on risks and uncertainties and other factors that could affect Pason's operations or financial results are included in Pason's reports on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR+ website (www.sedarplus.ca) or through Pason's website (www.pason.com). SOURCE Pason Systems Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company Codes: Toronto:PSI,OTC-PINK:PSYTF,OTC MARKETS GROUP:PSYTF,OTC-BB:PSYTF | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
