A return to profitability and a surge in operational momentum marked a strong start to the year for this North American drilling contractor.
Could it reflect a broader recovery in energy services and signal renewed confidence in the company’s strategic direction?
AKITA Drilling (TSX:AKT.A) delivered a solid financial performance in the second quarter of 2025, reporting net income of C$2.3 million, a dramatic turnaround from a C$0.5 million loss in the same period last year.
Coming on the heels to a successful start to the year, these results reflect a surge in U.S. drilling activity, improved operational efficiency, and disciplined financial management.
This article is disseminated in partnership with Akita Drilling Ltd. It is intended to inform investors and should not be taken as a recommendation or financial advice.
Strong top-line growth and margin expansion
AKITA’s revenue rose 29 per cent year-over-year to C$49.6 million, driven primarily by its U.S. operations, which saw a 36 per cent increase in revenue to C$38.7 million. The Canadian segment posted modest growth, with revenue up 11 per cent to C$10.9 million.
Operating margin for the quarter climbed 40 per cent to C$11.9 million, with consolidated margin percentage improving to 24 per cent, up from 22 per cent in Q2 2024. This margin expansion was supported by higher utilization and cost efficiencies, particularly in the U.S. division.
U.S. division leads the charge
Despite a broader industry slowdown in rig counts, AKITA’s U.S. segment recorded 875 operating days, a 40 per cent increase from 623 in Q2 2024. This translated into a 42 per cent jump in adjusted operating margin, reaching C$9.8 million.
While adjusted revenue per operating day declined slightly due to pricing pressure, AKITA offset this with lower operating expenses per day and a one-time drill pipe sale. Excluding this sale, adjusted revenue per day fell 6 per cent, but adjusted operating margin per day still rose 1 per cent to C$11,151.
Canadian division steady, but margins under pressure
In Canada, AKITA maintained stable activity levels with 490 operating days, up from 473 in Q2 2024. However, adjusted operating margin remained flat at C$4.4 million, and per-day margins declined due to the absence of a labor contract that had boosted profitability in the prior year.
Excluding the impact of that contract, adjusted operating margin per day actually increased 4 per cent, reflecting modest day rate improvements and operational discipline.
Cash flow and balance sheet strength
AKITA’s financial health improved significantly in Q2 2025:
- Adjusted funds flow from operations rose 54 per cent to C$9.8 million
- Net cash from operating activities jumped 67 per cent to C$18.2 million
- Working capital release totaled C$11.5 million, up from C$7.0 million in Q2 2024
The company also reduced its total debt by 24 per cent, bringing it down to C$39.7 million and achieving a debt-to-EBITDA ratio of 0.53:1. This milestone triggered the launch of AKITA’s return of capital strategy, beginning with a normal course issuer bid (NCIB) initiated on August 6, 2025.
This news has been welcomed by the investment community and has helped drive overall gains for the company’s stock, which has gained more than 26 per cent since the year began.
Leadership insights
“We have made significant progress in de- leveraging the company over the past three years, reducing debt from C$95 million at March 31, 2022 to C$39.7 million at June 30, 2025,” Colin Dease, AKITA’s president and chief executive officer stated in a news release. “We are pleased with this accomplishment and appreciate our shareholders’ patience during this deleveraging phase. We are excited to announce the launch of an NCIB as the first step to return value to our shareowners.
What this means for AKITA
AKITA’s Q2 2025 results mark a pivotal moment for the company. The return to profitability, strong cash generation, and reduced leverage position AKITA to pursue shareholder returns while maintaining operational flexibility. The U.S. division’s performance demonstrates resilience and growth potential even in a challenging market, while the Canadian segment remains a stable contributor.
With its internal leverage threshold met and capital return underway, AKITA is signaling confidence in its financial trajectory and commitment to delivering value to shareholders.
To keep up with the latest developments from the company, visit AKITA Drilling’s website.
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