Image source: Shutterstock

Highlights

  • For June quarter, the company’s Free Cash Flow stood at CAD 34.8 million against CAD 33.2 million in Q2 2022.
  • The net debt of the company was CAD 115.8 million at quarter end, versus CAD 142.2 million at December 31, 2022. 
  • STEP’s net debt has seen a significant drop of about CAD 200 million from peak levels in 2018.

TSX-listed STEP Energy Services Ltd. (TSX: STEP) provides fluid and nitrogen pumping, coiled tubing, and hydraulic fracturing solutions. The company’s modern equipment and quality execution makes it stand apart from other players in the sector.

For the June 2023 quarter, the company’s Free Cash Flow stood at CAD 34.8 million against CAD 33.2 million in Q2 2022. STEP has put CAD 14.4 million into sustaining and optimization capital equipment, completing its first Tier 4 dual fuel fleet conversion that was initiated in the last quarter of 2022.

Net debt of the company stood at CAD 115.8 million at quarter end, versus CAD 142.2 million on December 31, 2022. Notably, STEP’s net debt has seen a significant drop of about CAD 200 million from peak levels in 2018.

 

On the back of reduced contribution from Fracturing segment from US as well as from the Canada region, STEP’s net revenue decreased from CAD 273.0 million in the previous corresponding period to CAD 232.0 million in Q2 2023.

STEP Energy services’ earnings before taxes reduced to CAD 20.4 million, as compared to CAD 49.8 million in Q2 2022. This was mainly because the company had received and registered impairment reversal of property and equipment in 2022 financials. Overall, the company’s net income decreased to CAD 15.2 million versus net earnings of CAD 38.0 million in pcp.

Going forward, the company will have its focus centered on Free Cash Flow generation with continuous investment in the asset base, particularly in emission-reducing technologies, such as the Tier 4 dual fuel engines which has been recently deployed in its Canadian fracturing fleet.

Top 10 Shareholders

Around 57.65% of the total shareholding is held by its top ten shareholders. While ARC Financial Corporation is the biggest shareholder in the firm with a maximum stake of ­­­55.73%, Wealth Management, SGIIC, S.A.U. is the second biggest shareholder with over 0.47% shares.

Stock Price Performance

STEP’s stock price has jumped by around 8.03% over the last one week. It has increased by 7.78% over the last one month. The stock’s 52-week high and low price stand at CAD 6.85 and CAD 2.63, respectively.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is October 19, 2023. The reference data in this report has been partly sourced from EODHD/Others.