As we approach 2025, financial results become increasingly important for companies to demonstrate their resilience and preparedness for the upcoming year. Strong financial performance in the final quarters of 2024 can provide a clear indication of a company’s ability to navigate market fluctuations, optimize operations, and capitalize on growth opportunities. Investors are particularly focused on metrics like revenue growth, profitability, cash flow, and debt reduction as these reflect a company’s stability and potential for future returns.
Companies that show robust financial health are well-positioned to face economic uncertainties and capitalize on favorable market trends, making their financial results a key consideration for anyone looking to make informed investment decisions in 2025.
Take AKITA Drilling (TSX: AKT.A), a company that provides contract drilling services, primarily to the oil and gas industry, in Canada and the U.S. —— which recently announced its Q3 2024 results.
The company notably highlighted a return to profitability, increased revenue, and strong operational metrics, positioning itself for long-term growth in a recovering energy market.
Q3 2024 financial highlights
In its financials released earlier in November, AKITA reported a net income of $1.1 million, or $0.03 per share, for Q3 2024—and although down from Q3, 2023, the company’s financials are up sequentially from Q2, 2024’s net loss of $478K
Adjusted funds flow from operations decreased to $8.4 million in Q3 2024, down from $10.6 million in Q3 2023. This decline was primarily driven by a lower operating margin per day in the Canadian division, impacted by rig mix and reduced activity in the US division.
However, net cash from operations rose to $6.5 million for the three months ended September 30, 2024, compared to $2.3 million in the same period last year, reflecting a positive shift in non-cash working capital.
“We are extremely proud of the debt repayment we have achieved year to date and of our success in reactivating rigs in the US despite challenging market conditions,” Colin Dease, CEO of AKITA said in a news release. “ With 12 active rigs in each division, our activity is now strong and balanced between Canada and the US, and we anticipate a strong fourth quarter for the company.”
In contrast to the ongoing decline in the U.S. industry’s active rig count, AKITA’s U.S. rig count rose throughout the quarter, increasing from eight rigs in early July to 12 rigs by the end of September. This represents an 80 per cent utilization rate, significantly higher than the 40 per cent utilization rate for the U.S. industry as a whole at the end of the quarter.
Similarly, in Canada, AKITA saw its active rig count grow from 9 rigs at the start of the quarter to 12 rigs by quarter-end, achieving a 71 per cent utilization rate compared to the 57% per cent utilization rate for the Canadian industry at the same time.
What’s next for AKITA
Looking forward, AKITA expects demand for its services to remain strong through the remainder of 2024. The company has reaffirmed its full-year 2024 guidance, which includes expectations for higher utilization rates and continued solid pricing.
The positive outlook for the Canadian oil and gas market, coupled with AKITA’s improved operational metrics, puts the company in a solid position to generate returns and making itself an attractive opportunity for investors.
The investment corner
For investors, AKITA Drilling presents a compelling opportunity to capitalize on the recovery in the energy sector. With solid financial results, lower debt, and an increasing market presence, the company is positioned to continue its positive momentum into 2025.
The growth in both revenue and profitability, combined with strong operational performance and a favorable outlook, makes AKITA an attractive stock for investors looking for stable returns in the oilfield services sector.
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(Top image: AKITA Drilling)