Pason Systems TSE: PSI reported fourth-quarter and full-year 2025 results that management said reflected resilience amid lower North American drilling and completions activity, supported by record revenue per industry day in its core drilling business and strong growth in its Solar and Energy Storage segment.
Full-year 2025 results: revenue up slightly, cash generation steady
Chief Financial Officer Celine Boston said Pason generated CAD 419 million in consolidated revenue in 2025, up 1% from 2024, despite declines in both drilling and completions markets. Adjusted EBITDA was CAD 153.4 million, representing 37% of revenue, compared to CAD 161.8 million, or 39% of revenue, in 2024. Boston attributed the margin change to lower activity in drilling segments and a higher mix of revenue coming from earlier-stage segments with lower margins.
Net income attributable to Pason was CAD 53.2 million (CAD 0.68 per share), down from CAD 121.5 million (CAD 1.53 per share) in 2024. Boston said the year-over-year decline primarily reflected a non-recurring, non-cash gain in 2024 related to the revaluation of Pason’s previously held equity interest in Intelligent Wellhead Systems (IWS).
Pason generated CAD 117.7 million in cash from operations, down 4% from CAD 123.2 million a year earlier, which Boston said was supported by strong working capital management. Net capital expenditures totaled CAD 54.3 million in 2025, down from CAD 69.1 million in 2024, resulting in free cash flow of CAD 63.3 million, up 17% from CAD 54.1 million.
Segment performance: drilling strength, completions outperformance, solar growth
Boston and President and CEO Jon Faber emphasized that Pason’s results continued a multi-year trend of outperforming changes in North American land drilling activity. Faber said 2025 marked the eighth consecutive year in which consolidated revenue growth outpaced the change in North American land drilling activity.
- North American Drilling: Despite a 6% decline in North American drilling activity, the segment generated $275 million of revenue in 2025 and achieved a record annual Revenue per Industry Day of $1,053, up 3% year-over-year.
- Completions: Pason generated $59 million in revenue, a 12% increase from 2024, even as management noted a 24% decline in active U.S. frac spreads over the same period. Faber said the company offset activity reductions among larger incumbent customers by adding new customers. He also described a strategic focus shift away from smaller “ancillary” jobs, which can reduce active IWS job counts while increasing revenue per IWS day and improving profitability.
- International Drilling: Revenue was $52 million in 2025, down from $60 million in 2024. Both Boston and Faber cited challenging conditions and a strategic/operational shift by a large customer in Argentina away from conventional drilling toward more unconventional development.
- Solar and Energy Storage: Revenue grew 87% year-over-year to CAD 33.7 million, driven by increased control system sales, particularly in the fourth quarter. Management cautioned that revenue in this segment can fluctuate based on the timing of control system deliveries.
Faber noted that more than 20% of consolidated 2025 revenue came from non-drilling segments (Completions and Solar and Energy Storage). He said this higher contribution can pressure consolidated margins in the near term, but management expects margins to improve as those segments scale.
Fourth-quarter snapshot: lower industry activity, record solar quarter
For the fourth quarter of 2025, Pason reported CAD 109 million in revenue and CAD 38.1 million in adjusted EBITDA, or 35% of revenue. That compared to CAD 42 million, or 39% of revenue, in the fourth quarter of 2024. Boston said the year-over-year change reflected tougher industry conditions impacting drilling and completions revenue against a mostly fixed cost base, as well as a higher proportion of lower-margin Solar and Energy Storage revenue.
Boston highlighted a record quarterly result in the Solar and Energy Storage segment, including CAD 16.2 million of revenue generated by Energy Toolbase. She reiterated that sales in the segment can vary significantly with delivery timing and noted operating expenses rose with the higher sales level due to the variable cost nature of that business.
In North American drilling, industry activity fell 6% year-over-year in the quarter, while Pason held revenue per industry day at $1,044. In completions, U.S. active frac spreads declined 23% year-over-year, but Pason’s completions revenue was CAD 13 million, down 5% from CAD 13.6 million in the prior-year quarter.
Pason ended the quarter with CAD 77 million in total cash, including short-term investments, and no interest-bearing debt. Net capital expenditures were CAD 12 million in Q4, which Boston said included investments in valve management and automation technology within completions and continued investment in drilling-related technology. Free cash flow was CAD 16.1 million versus CAD 17.6 million a year earlier, and Pason returned CAD 13.1 million to shareholders through dividends and share repurchases during the quarter.
Outlook and capital allocation: flat near-term expectations, continued investment
Looking ahead, Faber said the company expects industry conditions to remain relatively flat over the next few quarters, citing macroeconomic uncertainty and concerns about potential oversupplied oil markets. He added that increasing adoption of existing products and rolling out new products is “significantly more difficult” in the current environment.
Still, Faber outlined several medium- to long-term trends he believes could support demand for Pason’s data and technology, including increased demand for high-quality data and power linked to artificial intelligence, expected growth in natural gas demand for baseload power for data centers, and continued customer focus on efficiency gains through technology in drilling and completions.
On capital allocation, Faber said priorities are unchanged and centered on return on invested capital, maintaining a strong balance sheet, and returning capital to shareholders in a “disciplined and flexible manner.” He said 2025 capital expenditures of CAD 54.3 million were below the low end of the company’s previously provided range of CAD 55 million to CAD 60 million, and the company anticipates its 2026 capital program will be broadly in line at CAD 55 million to CAD 60 million. Pason is maintaining its regular quarterly dividend at CAD 0.13 per share, alongside repurchases.
Analyst Q&A: drivers of revenue per industry day and solar segment fit
During the question-and-answer session, TD Cowen’s Aaron MacNeil asked whether the 2025 outperformance in North American revenue per industry day was driven more by rig mix or “same-store” product adoption, and whether the metric could be negatively affected if rig counts stabilize or increase. Faber replied that it is “always a mix of both,” but said more of the improvement came from increased adoption of products, including a combination of new products and adoption of existing products. He added that in a “flattish” environment, the metric would likely be “the same to slightly up” based on current expectations.
MacNeil also asked about the strength in the solar business and how management views it within Pason’s portfolio. Faber said the business has benefited from shifts in the competitive landscape and regulatory-related dynamics that prompted some project acceleration. Longer term, he said management views it as a strong business, while also acknowledging an open question about how tightly it fits with Pason’s core focus on providing data for decision-making around oil and gas well construction activities.
About Pason Systems TSE: PSI
Pason Systems Inc is an oilfield specialist with fully integrated drilling data solutions. A host of products allow customers to collect, manage, report, and analyze drilling data for performance optimization and cost control. The electronic drilling recorder is the company's primary product, and provides a complete system of drilling data acquisition, data networking, drilling management tools, and reports at both the wellsite and customer office. Other product offerings include wellbore detection solutions, wellsite communications and bandwidth, wellbore gas analyzers, and software for data management.
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