STEP is set to deploy a Tier 4 dual fuel fleet in Q3: In Q2 2023, STEP Energy Services’ (STEP) fracture operating days declined in Canada and USA. However, its active pumping horsepower (HHP) remained unchanged compared to the previous year. In Q3, it will deploy Canada’s first Tier 4 dual fuel fleet. It also plans to convert 21 existing Tier 4 diesel pumps to dual fuel in the US by 2023-end. The company’s active coiled tubing units increased in Canada and the US in Q2 2023. Read more about this in our recent article here.
Fundamental metrics weakened in Q2: Year-over-year, STEP’s revenues decreased by 18% and 11% in Canada and the US, respectively, in Q2. Its adjusted EBITDA margin contracted marginally due to adverse weather conditions and delayed & canceled work programs.
STEP’s cash flows improved; debt lowered: STEP’s cash flow from operations increased by 3.7x in 1H 2023 compared to a year ago. As a result, its free cash flow turned positive. The FCF enabled STEP to reduce long-term debt by 16% since FY2022. Its debt-to-equity was 0.35x as of June 30, 2023.
Thanks for reading the STEP take three, designed to give you three critical takeaways from STEP’s earnings report. Soon we will present a second update on STEP earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.
