STEP’s Dual Fuel Horsepower Increased In Q3: In Q3 2023, STEP Energy Services (STEP) fracture operating days declined in Canada and the USA. Its dual-fuel horsepower increased by 12% in the past year compared to a 2% fall in total HP deployed. After Q3, it now plans to upgrade an additional fleet in Canada, expected to be completed in Q2 2024. The company shifted its coiled tubing activity to focus on the northern regions of the US. Read more about this in our recent article here.
Fundamental Metrics Were Mixed In Q3: Year-over-year, STEP’s revenues increased by 12% in Canada but declined by 6% in the US in Q3 2023. Its adjusted EBITDA margin contracted by 300 basis points due to a lower US fracturing service line on weak client activity.
STEP’s Cash Flows Improved; Debt Lowered: STEP’s cash flow from operations increased by 46% in 9M 2023 compared to a year ago. As a result, its free cash flow increased by 66%. The FCF enabled STEP to reduce long-term debt by 36% since FY2022. Its debt-to-equity was 0.25x as of September 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.
