STEP Energy Services Ltd. Reports First Quarter 2024 Results
CONSOLIDATED HIGHLIGHTS
FINANCIAL REVIEW
($000s except percentages and per share amounts) |
Three months ended |
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2024 |
|
|
|
2023 |
|
Consolidated revenue |
$ |
320,146 |
|
$ |
263,368 |
|
|
Net income |
$ |
41,357 |
|
$ |
19,656 |
|
|
Per share-basic |
$ |
0.58 |
|
$ |
0.27 |
|
|
Per share-diluted |
$ |
0.55 |
|
$ |
0.26 |
|
|
Adjusted EBITDA (1) |
$ |
79,533 |
|
$ |
45,352 |
|
|
Adjusted EBITDA % (1) |
|
25 |
% |
|
17 |
% |
|
Free Cash Flow (1) |
|
53,483 |
|
|
17,070 |
|
|
Per share-basic |
$ |
0.74 |
|
$ |
0.24 |
|
|
Per share-diluted |
$ |
0.72 |
|
$ |
0.23 |
|
|
(1) Adjusted EBITDA and Free Cash Flow are non-IFRS financial measures, Adjusted EBITDA % is a non-IFRS financial ratio. These metrics are not defined and have no standardized meaning under IFRS. See Non-IFRS Measures and Ratios. |
OPERATIONAL REVIEW
($000s except days, proppant, pumped, horsepower and units) |
Three months ended |
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2024 |
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|
2023 |
|
Fracturing services |
|
|
|
|
|||
Fracturing operating days (2) |
|
566 |
|
|
473 |
|
|
Proppant pumped (tonnes) |
|
830,000 |
|
|
510,000 |
|
|
Fracturing crews |
|
8 |
|
|
8 |
|
|
Dual fuel horsepower (“HP”), ended |
|
332,300 |
|
|
274,000 |
|
|
Total HP, ended |
|
490,000 |
|
|
490,000 |
|
|
Coiled tubing services |
|
|
|
|
|||
Coiled tubing operating days (2) |
|
1,352 |
|
|
1,263 |
|
|
Active coiled tubing units, ended |
|
22 |
|
|
21 |
|
|
Total coiled tubing units, ended |
|
35 |
|
|
35 |
|
|
(2) An operating day is defined as any coiled tubing or fracturing work that is performed in a 24-hour period, exclusive of support equipment. |
($000s except shares) |
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2024 |
|
|
|
2023 |
|
Cash and cash equivalents |
$ |
7,427 |
|
$ |
1,785 |
|
|
Working Capital (including cash and cash equivalents) (1) |
$ |
90,898 |
|
$ |
42,104 |
|
|
Total assets |
$ |
763,439 |
|
$ |
606,519 |
|
|
Total long-term financial liabilities (1) |
$ |
142,765 |
|
$ |
118,970 |
|
|
Net Debt (1) |
$ |
107,925 |
|
$ |
87,844 |
|
|
Shares outstanding |
|
71,724,258 |
|
|
72,233,064 |
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|
(3) Working Capital, Total long-term financial liabilities and Net Debt are non-IFRS financial measures. They are not defined and have no standardized meaning under IFRS. See Non-IFRS Measures and Ratios. |
FIRST QUARTER 2024 HIGHLIGHTS
-
Consolidated revenue for the three months ended
March 31, 2024 of$320.1 million , increased 22% from$263.4 million for the three months endedMarch 31, 2023 and increased 64% from$195.0 million for the three months endedDecember 31, 2023 . -
Net income for the three months ended
March 31, 2024 of$41.4 million ($0.55 per diluted share), compared to$19.7 million ($0.26 per diluted share) in the same period of 2023 and a loss of$5.2 million ($(0.07) per diluted share) for the three months endedDecember 31, 2023 . Included in income for the three months endedMarch 31, 2023 , was a share-based compensation recovery of$5.1 million , compared to an expense of$0.8 million during the three months endedMarch 31, 2024 . -
For the three months ended
March 31, 2024 , Adjusted EBITDA was$79.5 million or 25% of revenue compared to$45.4 million or 17% of revenue in the comparative period of the prior year. -
Free Cash Flow for the three months ended
March 31, 2024 was$53.5 million compared to$17.1 million in Q1 2023 and$(4.5) million in Q4 2023. -
STEP continued to advance its shareholder return strategy in 2024:
-
During the first quarter of 2024, the Company repurchased and cancelled 908,270 shares at an average price of
$4.30 per share under its Normal Course Issuer Bid (“NCIB”). Additionally, the Company cancelled the 48,600 shares repurchased in Q4 2023. Under the NCIB, the Company can repurchase and cancel 3.6 million shares, representing 5% of Company’s issued and outstanding shares.
-
During the first quarter of 2024, the Company repurchased and cancelled 908,270 shares at an average price of
-
Increased activity during the three months ended
March 31, 2024 resulted in an increase in Working Capital to$90.9 million from$42.1 million atDecember 31, 2023 . -
Net Debt increased to
$107.9 million atMarch 31, 2024 compared to$87.8 million atDecember 31, 2023 , resulting from a decrease in cash from operating activities. -
The Company invested
$30.5 million into sustaining and optimization capital equipment during the three months endedMarch 31, 2024 . The primary focus of the optimization capital was the continued upgrade of fracturing fleets inCanada and theU.S. with the latest Tier 4 dual fuel engine technology, which reduces cost and emissions by displacing up to 85% of diesel with natural gas. STEP completed the spend on its firstU.S. Tier 4 dual fuel fleet in Q1 2024 and anticipates the completion of a second Canadian Tier 4 dual fuel fleet in Q2 2024. -
STEP’s fracturing service line set monthly pumping records in
Canada and theU.S. , achieving 629 hours inCanada and 547 hours in theU.S. , a testament to the capabilities of the professionals that operate and manage these service lines as well as to the exceptional alignment with key clients that made this possible. -
STEP reactivated one coiled tubing spread during the quarter, bringing total active spreads in
Canada and theU.S. to 22, among the largest fleets inNorth America . The fleet continues to set depth records in theU.S. , reaching 8,356 meters (27,413 feet) during the first quarter.
FIRST QUARTER 2024 OVERVIEW
The first quarter of 2024 saw a growing divergence in pricing for the benchmark
Oilfield service levels are primarily reflected in publicly reported drilling rig counts, with estimates made by analysts on fracturing activities. Oil directed drilling rigs in the
STEP earned consolidated first quarter revenue of
STEP’s Canadian geographic region generated quarterly revenue of
STEP’s
The Company generated consolidated Adjusted EBITDA of
Net income was
Free Cash Flow (“FCF”) was
____________________
1 Rystad Energy: Frac Monitor,
MARKET OUTLOOK
The medium to longer term outlook for the North American energy sector is anticipated to continue strengthening as major energy infrastructure projects are completed in
Key LNG projects in
In the near term, natural gas will likely continue to struggle during the seasonal lull ahead of the summer power demand cycle. Production curtailment and capital reductions in the
Canadian activity levels have been strong to date, as cool temperatures in April delayed the onset of typical spring break up conditions. Some seasonal softness in utilization is expected in the second quarter, but all service lines are seeing relatively strong utilization levels as an increasing number of clients are seeing value in continuing their work programs through the second quarter.
The fracturing service line continues to have a solid book of work through the next several quarters, although not at the same intensity experienced in the first quarter. STEP has secured long term contracts with clients that have large multi-well pads in the
Activity for STEP’s coiled tubing and ancillary services of fluid pumping and nitrogen is also benefitting from the focus on client alignment. The Company is one of the leading service providers in the WCSB and STEP’s coiled tubing crews are valued for their technical expertise and experience in the most technically challenging wells. The Company’s focus on technology, such as STEP IQ real-time data services, brings industry leading solutions to client locations, allowing STEP to secure additional contracts for services for the balance of the year.
The worsening drought conditions have prompted extensive discussions with clients around the availability of water. This will remain a risk in 2024 but STEP’s comprehensive suite of water treatment solutions allow for greater use of recycled and non potable water than ever before. If drought conditions become more extreme, STEP’s proprietary LPG fracturing technology allows for the complete elimination of water.
The
Activity on STEP’s coiled tubing spreads has increased in the second quarter. The Company’s position as one of the leading service providers combined with strong client alignment in each operating basin continues to provide STEP with a solid base of consistent work. The weak natural gas market will increase competitive pressures, but STEP’s position as a technological leader in the market will provide some buffer to this. Utilization for the balance of the year is anticipated to remain steady and STEP can deploy additional spreads if market conditions improve and additional clients are secured. The continued E&P consolidation is expected to benefit STEP’s ultra deep coiled tubing capacity, as the contiguous land holdings of the consolidated entities create more opportunities for the three- and four-mile laterals to be drilled.
Consolidated
STEP’s steady reduction in leverage, particularly in the last three years, has resulted in a healthy balance sheet that provides stability despite the volatility in commodity prices. This stability enables STEP to continue focus on generation of Free Cash Flow that supports the Company’s commitment to investing into next generation technology and expanding its shareholder return framework.
STEP has made significant progress on upgrading the existing asset base to Tier 4 dual fuel capability and is committed to having 90% of its fracturing fleet capable of utilizing natural gas by the end of 2025. STEP continues to evaluate next generation technologies in both the fracturing and coiled tubing space to provide more efficient and cleaner solutions for our clients.
STEP’s shareholder return framework was expanded in late 2023 to include an NCIB. STEP believes that its current share price does not reflect the value inherent in its business and it intends to acquire the full amount permitted, provided market conditions remain favourable. STEP will continue to reduce overall leverage but will accept some short-term increases to invest in the future of the business.
CANADIAN FINANCIAL AND OPERATIONS REVIEW
STEP has a fleet of 16coiled tubing units in the WCSB, all of which are designed to service the deepest wells in the basin. STEP’s fracturing business primarily focuses on the deeper, more technically challenging plays in
($000’s except per day, days, units, proppant pumped and HP) |
Three months ended |
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2024 |
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2023 |
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Revenue: |
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|
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|
|||
Fracturing |
$ |
198,371 |
|
$ |
139,576 |
|
|
Coiled tubing |
|
42,698 |
|
|
34,859 |
|
|
|
|
241,069 |
|
|
174,435 |
|
|
Expenses |
|
179,168 |
|
|
138,609 |
|
|
Results from operating activities |
$ |
61,901 |
|
$ |
35,826 |
|
|
Adjusted EBITDA (1) |
$ |
72,127 |
|
$ |
44,776 |
|
|
Adjusted EBITDA % (1) |
|
30 |
% |
|
26 |
% |
|
Sales mix (% of segment revenue) |
|
|
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|
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Fracturing |
|
82 |
% |
|
80 |
% |
|
Coiled tubing |
|
18 |
% |
|
20 |
% |
|
Fracturing services |
|
|
|
|
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Number of fracturing operating days (2) |
|
450 |
|
|
312 |
|
|
Proppant pumped (tonnes) |
|
559,000 |
|
|
296,000 |
|
|
Fracturing crews |
|
6 |
|
|
5 |
|
|
Coiled tubing services |
|
|
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|
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Number of coiled tubing operating days (2) |
|
615 |
|
|
572 |
|
|
Active coiled tubing units, end of period |
|
10 |
|
|
9 |
|
|
Total coiled tubing units, end of period |
|
16 |
|
|
16 |
|
|
(1) Adjusted EBITDA is a non-IFRS financial measure and Adjusted EBITDA % are non-IFRS financial ratios. They are not defined and have no standardized meaning under IFRS. See Non-IFRS Measures and Ratios. (2) An operating day is defined as any coiled tubing or fracturing work that is performed in a 24-hour period, exclusive of support equipment. |
FIRST QUARTER 2024 COMPARED TO FIRST QUARTER 2023
Revenue for the three months ended
The high utilization across both service lines resulted in a significant increase in the profitability of our Canadian operations. Adjusted EBITDA for the first quarter of 2024 was
STEP has a fleet of 19 coiled tubing units in the Permian and
($000’s except per day, days, units, proppant pumped and HP) |
Three months ended |
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2024 |
|
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2023 |
|
Revenue: |
|
|
|
|
|||
Fracturing |
$ |
37,971 |
|
$ |
49,317 |
|
|
Coiled tubing |
|
41,106 |
|
|
39,616 |
|
|
|
|
79,077 |
|
|
88,933 |
|
|
Expenses |
|
77,077 |
|
|
96,056 |
|
|
Results from operating activities |
$ |
2,000 |
|
$ |
(7,123 |
) |
|
Adjusted EBITDA (1) |
$ |
12,826 |
|
$ |
4,816 |
|
|
Adjusted EBITDA % (1) |
|
16 |
% |
|
5 |
% |
|
Sales mix (% of segment revenue) |
|
|
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|
|||
Fracturing |
|
48 |
% |
|
55 |
% |
|
Coiled tubing |
|
52 |
% |
|
45 |
% |
|
Fracturing services |
|
|
|
|
|||
Number of fracturing operating days(2) |
|
116 |
|
|
161 |
|
|
Proppant pumped (tonnes) |
|
271,000 |
|
|
214,000 |
|
|
Fracturing crews |
|
2 |
|
|
3 |
|
|
Coiled tubing services |
|
|
|
|
|||
Number of coiled tubing operating days (2) |
|
737 |
|
|
691 |
|
|
Active coiled tubing units, end of period |
|
12 |
|
|
12 |
|
|
Total coiled tubing units, end of period |
|
19 |
|
|
19 |
|
|
(1) Adjusted EBITDA is a non-IFRS financial measure and Adjusted EBITDA % is non-IFRS financial ratios. They are not defined and have no standardized meaning under IFRS. See Non-IFRS Measures and Ratios. (2) An operating day is defined as any coiled tubing or fracturing work that is performed in a 24-hour period, exclusive of support equipment. |
FIRST QUARTER 2024 COMPARED TO FIRST QUARTER 2023
Revenue for the three months ended
Despite the slight revenue decline, the
CORPORATE FINANCIAL REVIEW
The Company’s corporate activities are separated from Canadian and
($000’s) |
Three months ended |
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|
2024 |
|
|
|
2023 |
|
Expenses: |
|
|
|
|
|||
Operating expenses |
|
588 |
|
|
485 |
|
|
Selling, general and administrative |
|
5,278 |
|
|
(1,466 |
) |
|
Results from operating activities |
$ |
(5,866 |
) |
$ |
981 |
|
|
Add: |
|
|
|
|
|||
Depreciation |
|
118 |
|
|
221 |
|
|
Share-based compensation |
|
328 |
|
|
(5,442 |
) |
|
Adjusted EBITDA (1) |
$ |
(5,420 |
) |
$ |
(4,240 |
) |
|
Adjusted EBITDA % (1) |
|
(2 |
%) |
|
(2 |
%) |
|
(1) Adjusted EBITDA is a non-IFRS financial measure and Adjusted EBITDA % is a non-IFRS financial ratio. They are not defined and have no standardized meaning under IFRS. See Non-IFRS Measures and Ratios. |
FIRST QUARTER 2024 COMPARED TO FIRST QUARTER 2023
For the three months ended
NON-IFRS MEASURES AND RATIOS
This press release includes terms and performance measures commonly used in the oilfield services industry that are not defined under IFRS. The terms presented are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These non-IFRS measures have no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The non-IFRS measures should be read in conjunction with the Company’s quarterly financial statements and Annual Financial Statements and the accompanying notes thereto.
“Adjusted EBITDA” is a financial measure not presented in accordance with IFRS and is equal to net (loss) income before finance costs, depreciation and amortization, (gain) loss on disposal of property and equipment, current and deferred income tax provisions and recoveries, equity and cash settled share-based compensation, transaction costs, foreign exchange forward contract (gain) loss, foreign exchange (gain) loss, and impairment losses. “Adjusted EBITDA %” is a non-IFRS ratio and is calculated as Adjusted EBITDA divided by revenue. Adjusted EBITDA and Adjusted EBITDA % are presented because they are widely used by the investment community as they provide an indication of the results generated by the Company’s normal course business activities prior to considering how the activities are financed and the results are taxed. The Company uses Adjusted EBITDA and Adjusted EBITDA % internally to evaluate operating and segment performance, because management believes they provide better comparability between periods. The following table presents a reconciliation of the non-IFRS financial measure of Adjusted EBITDA to the IFRS financial measure of net income (loss).
($000s except percentages) |
Three months ended |
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|
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|
2024 |
|
|
|
2023 |
|
Net income |
$ |
41,357 |
|
$ |
19,656 |
|
|
Add (deduct): |
|
|
|
|
|||
Depreciation and amortization |
|
20,668 |
|
|
20,774 |
|
|
Gain on disposal of equipment |
|
(358 |
) |
|
(273 |
) |
|
Finance costs |
|
2,909 |
|
|
2,900 |
|
|
Income tax expense |
|
13,783 |
|
|
6,169 |
|
|
Share-based compensation – Cash settled |
|
(295 |
) |
|
(6,418 |
) |
|
Share-based compensation – Equity settled |
|
1,135 |
|
|
1,322 |
|
|
Foreign exchange loss |
|
2,317 |
|
|
170 |
|
|
Unrealized (gain) loss on derivatives |
|
(1,983 |
) |
|
1,052 |
|
|
Adjusted EBITDA |
$ |
79,533 |
|
$ |
45,352 |
|
|
Adjusted EBITDA % |
|
25 |
% |
|
17 |
% |
“Free Cash Flow” is a financial measure not presented in accordance with IFRS and is equal to net cash provided by operating activities adjusted for changes in non-cash Working Capital from operating activities, sustaining capital expenditures, term loan principal repayments and lease payments (net of sublease receipts). The Company may deduct or include additional items in its calculation of Free Cash Flow that are unusual, non-recurring or non-operating in nature. Free Cash Flow is presented as this measure is widely used in the investment community as an indication of the level of cash flow generated by ongoing operations. Management uses Free Cash Flow to evaluate the adequacy of internally generated cash flows to manage debt levels, invest in the growth of the business or return capital to shareholders. The following table presents a reconciliation of the non-IFRS financial measure of Free Cash Flow to the IFRS financial measure of net cash provided by operating activities.
($000s) |
Three months ended |
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|
|
|
|
|
|
||
|
|
2024 |
|
|
|
2023 |
|
Net cash provided by (used in) operating activities |
$ |
10,242 |
|
$ |
45,836 |
|
|
Add (deduct): |
|
|
|
|
|||
Changes in non-cash Working Capital from (used in) provided by operating activities |
|
56,736 |
|
|
(12,203 |
) |
|
Sustaining capital |
|
(11,121 |
) |
|
(14,702 |
) |
|
Lease payments (net of sublease receipts) |
|
(2,374 |
) |
|
(1,861 |
) |
|
Free Cash Flow |
$ |
53,483 |
|
$ |
17,070 |
|
“Working Capital”, “Total long-term financial liabilities” and “Net Debt” are financial measures not presented in accordance with IFRS. “Working Capital” is equal to total current assets less total current liabilities. “Total long-term financial liabilities” is comprised of loans and borrowings, long-term lease obligations and other liabilities. “Net Debt” is equal to loans and borrowings before deferred financing charges less cash and cash equivalents and CCS derivatives. The data presented is intended to provide additional information about items on the statement of financial position and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS.
The following table represents the composition of the non-IFRS financial measure of Working Capital (including cash and cash equivalents).
($000s) |
|
|
|
|
|
|
||
|
|
|
2024 |
|
|
|
2023 |
|
Current assets |
|
$ |
292,466 |
|
$ |
154,715 |
|
|
Current liabilities |
|
|
(201,568 |
) |
|
(112,611 |
) |
|
Working Capital (including cash and cash equivalents) |
|
$ |
90,898 |
|
$ |
42,104 |
|
The following table presents the composition of the non-IFRS financial measure of Total long-term financial liabilities.
($000s) |
|
|
|
|
|
|
||
|
|
|
2024 |
|
|
|
2023 |
|
Long-term loans |
|
$ |
114,288 |
|
$ |
86,149 |
|
|
Long-term leases |
|
|
18,284 |
|
|
18,731 |
|
|
Other long-term liabilities |
|
|
10,193 |
|
|
14,090 |
|
|
Total long-term financial liabilities |
|
$ |
142,765 |
|
$ |
118,970 |
|
The following table presents the composition of the non-IFRS financial measure of Net Debt.
($000s) |
|
|
|
|
|
|
||
|
|
|
2024 |
|
|
|
2023 |
|
Loans and borrowings |
|
$ |
114,288 |
|
$ |
86,149 |
|
|
Add back: Deferred financing costs |
|
|
1,368 |
|
|
1,637 |
|
|
Less: Cash and cash equivalents |
|
|
(7,427 |
) |
|
(1,785 |
) |
|
Less: CCS Derivatives (asset) liability |
|
|
(304 |
) |
|
1,843 |
|
|
Net Debt |
|
$ |
107,925 |
|
$ |
87,844 |
|
RISK FACTORS AND RISK MANAGEMENT
The oilfield services industry involves many risks, which may influence the ultimate success of the Company. The risks and uncertainties set out in the AIF and Annual MD&A are not the only ones the Company is facing. There are additional risks and uncertainties that the Company does not currently know about or that the Company currently considers immaterial which may also impair the Company’s business operations and can cause the price of the Common Shares to decline. Readers should review and carefully consider the disclosure provided under the heading “Risk Factors” in the AIF and “Risk Factors and Risk Management” in the Annual MD&A, both of which are available on www.sedarplus.ca, and the disclosure provided in this press release under the headings “Market Outlook”. In addition, global and national risks associated with inflation or economic contraction may adversely affect the Company by, among other things, reducing economic activity resulting in lower demand, and pricing, for crude oil and natural gas products, and thereby the demand and pricing for the Company’s services. Other than as supplemented in this press release, the Company’s risk factors, and management thereof has not changed substantially from those disclosed in the AIF and Annual MD&A.
FORWARD-LOOKING INFORMATION & STATEMENTS
Certain statements contained in this press release constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking statements”). These statements relate to the expectations of management about future events, results of operations and the Company’s future performance (both operational and financial) and business prospects. All statements other than statements of historical fact are forward-looking statements. The use of any of the words “anticipate”, “plan”, “contemplate”, “continue”, “estimate”, “expect”, “intend”, “propose”, “might”, “may”, “will”, “shall”, “project”, “should”, “could”, “would”, “believe”, “predict”, “forecast”, “pursue”, “potential”, “objective” and “capable” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. While the Company believes the expectations reflected in the forward-looking statements included in this press release are reasonable, such statements are not guarantees of future performance or outcomes and may prove to be incorrect and should not be unduly relied upon.
In particular, but without limitation, this press release contains forward-looking statements pertaining to: 2024 and 2025 industry conditions and outlook, including demand for oil and gas; the effect of new LNG facilities on industry activity levels, including the completion of LNG Canada and the resulting LNG feed stock requirements; the effect of proposed Federal loan guarantee programs on LNG activity; OPEC+ production as it relates to oil prices; anticipated 2024 utilization levels, commodity prices, and pricing for the Company’s services; recession and inflation risk, including its effect on oil prices; the timing of completion of the Company’s tier 4 dual fuel conversions and anticipated substitution rates in the Company’s dual fuel fleets; the Company’s target of having natural gas capabilities in 90% of its fracturing fleets by 2025; the Company’s ability to test and evaluate next generation technologies; completion of the Trans Mountain Pipeline and a resulting increase in transport capacity; the potential for an equipment oversupply position to result in intermittent utilization and reduced margins; near term softness of pricing and utilization for the Company’s
The forward-looking information and statements contained in this press release reflect several material factors and expectations and assumptions of the Company including, without limitation: the effect of macroeconomic factors, including global energy security concerns and levels of oil and gas inventories; market concerns regarding economic recession; levels of oil and gas production, LNG export capacity, and the effect of OPEC+ related capacity and related uncertainty on the market for the Company’s services; that the Company will continue to conduct its operations in a manner consistent with past operations; the Company will continue as a going concern; the general continuance of current or, where applicable, assumed industry conditions; pricing of the Company’s services; the Company’s ability to market successfully to current and new clients; predictability of 2024 activity levels; predictable effect of seasonal weather and break up on the Company’s operations; the Company’s ability to utilize its equipment; the Company’s ability to collect on trade and other receivables; Client demand for dual fuel fleets and emissions reduction technologies; the Company’s ability to obtain and retain qualified staff and equipment in a timely and cost effective manner; levels of deployable equipment; future capital expenditures to be made by the Company; future funding sources for the Company’s capital program; the Company’s future debt levels; the availability of unused credit capacity on the Company’s credit lines; the impact of competition on the Company; the Company’s ability to obtain financing on acceptable terms; the Company’s continued compliance with financial covenants; the amount of available equipment in the marketplace; and client activity levels and spending. The Company believes the material factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable, but no assurance can be given that these factors, expectations and assumptions will prove correct.
Actual results could differ materially from those anticipated in these forward‐looking statements due to the risk factors set forth under the heading “Risk Factors” in the AIF and under the heading Risk Factors and Risk Management in this press release.
Any financial outlook or future orientated financial information contained in this press release regarding prospective financial performance, financial position or cash flows is based on the assumptions about future events, including economic conditions and proposed courses of action based on management’s assessment of the relevant information that is currently available. Projected operational information, including the Company’s capital program, contains forward looking information and is based on a number of material assumptions and factors, as are set out above. These projections may also be considered to contain future oriented financial information or a financial outlook. The actual results of the Company’s operations will likely vary from the amounts set forth in these projections and such variations may be material. Readers are cautioned that any such financial outlook and future oriented financial information contains herein should not be used for purposes other than those for which it is disclosed herein.
The forward-looking information and statements contained in this press release speak only as of the date of the document, and none of the Company or its subsidiaries assumes any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws. The reader is cautioned not to place undue reliance on forward-looking information.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
As at |
|
|
|
|
|
|
||
Unaudited (in thousands of Canadian dollars) |
|
|
2024 |
|
|
|
2023 |
|
ASSETS |
|
|
|
|||||
Current Assets |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
7,427 |
|
$ |
1,785 |
|
|
Trade and other receivables |
|
|
229,470 |
|
|
96,156 |
|
|
Inventory |
|
|
49,368 |
|
|
47,523 |
|
|
Prepaid expenses and deposits |
|
|
6,201 |
|
|
9,251 |
|
|
|
|
|
292,466 |
|
|
154,715 |
|
|
Property and equipment |
|
|
436,259 |
|
|
419,751 |
|
|
Right-of-use assets |
|
|
30,442 |
|
|
27,857 |
|
|
Intangible assets |
|
|
112 |
|
|
122 |
|
|
Other assets |
|
|
4,160 |
|
|
4,074 |
|
|
|
|
$ |
763,439 |
|
$ |
606,519 |
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|||
Current Liabilities |
|
|
|
|
|
|||
Trade and other payables |
|
$ |
173,723 |
|
$ |
91,785 |
|
|
Current portion of lease obligations |
|
|
12,011 |
|
|
8,753 |
|
|
Current portion of other liabilities |
|
|
4,823 |
|
|
4,536 |
|
|
Income tax payable |
|
|
11,011 |
|
|
7,537 |
|
|
|
|
|
201,568 |
|
|
112,611 |
|
|
Deferred tax liabilities |
|
|
20,328 |
|
|
19,390 |
|
|
Lease obligations |
|
|
18,284 |
|
|
18,731 |
|
|
Other liabilities |
|
|
10,193 |
|
|
14,090 |
|
|
Loans and borrowings |
|
|
114,288 |
|
|
86,149 |
|
|
|
|
|
364,661 |
|
|
250,971 |
|
|
Shareholders' equity |
|
|
|
|
|
|||
Share capital |
|
|
451,291 |
|
|
455,679 |
|
|
Contributed surplus |
|
|
37,301 |
|
|
36,060 |
|
|
Accumulated other comprehensive income |
|
|
15,158 |
|
|
10,138 |
|
|
Deficit |
|
|
(104,972 |
) |
|
(146,329 |
) |
|
|
|
|
398,778 |
|
|
355,548 |
|
|
|
|
$ |
763,439 |
|
$ |
606,519 |
|
|
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF NET INCOME AND OTHER COMPREHENSIVE INCOME
|
|
For the three months ended |
|
|||||
Unaudited (in thousands of Canadian dollars, except per share amounts) |
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
||||
Revenue |
|
$ |
320,146 |
|
$ |
263,368 |
|
|
Operating expenses |
|
|
250,607 |
|
|
228,955 |
|
|
Gross profit |
|
|
69,539 |
|
|
34,413 |
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
11,504 |
|
|
4,729 |
|
|
Results from operating activities |
|
|
58,035 |
|
|
29,684 |
|
|
|
|
|
|
|
|
|||
Finance costs, net |
|
|
2,909 |
|
|
2,900 |
|
|
Foreign exchange loss |
|
|
2,317 |
|
|
170 |
|
|
Unrealized (gain) loss on derivatives |
|
|
(1,983 |
) |
|
1,052 |
|
|
Gain on disposal of property and equipment |
|
|
(358 |
) |
|
(273 |
) |
|
Amortization of intangible assets |
|
|
10 |
|
|
10 |
|
|
Income before income tax |
|
|
55,140 |
|
|
25,825 |
|
|
|
|
|
|
|
||||
Income tax expense (recovery) |
|
|
|
|
|
|||
Current |
|
|
12,890 |
|
|
8,352 |
|
|
Deferred |
|
|
893 |
|
|
(2,183 |
) |
|
|
|
|
13,783 |
|
|
6,169 |
|
|
Net income |
|
|
41,357 |
|
|
19,656 |
|
|
|
|
|
|
|
||||
Other comprehensive income |
|
|
|
|
|
|||
Foreign currency translation gain (loss) |
|
|
5,020 |
|
|
(1,240 |
) |
|
Total comprehensive income |
|
$ |
46,377 |
|
$ |
18,416 |
|
|
Net Income per share: |
|
|
|
|
|
|||
Basic |
|
$ |
0.58 |
|
$ |
0.27 |
|
|
Diluted |
|
$ |
0.55 |
|
$ |
0.26 |
|
|
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
|
For the three months ended |
|
||||||
Unaudited (in thousands of Canadian dollars) |
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
||||
Operating activities: |
|
|
|
|
|
|||
Net income |
|
$ |
41,357 |
|
$ |
19,656 |
|
|
Adjusted for the following: |
|
|
|
|
|
|||
Depreciation and amortization |
|
|
20,668 |
|
|
20,774 |
|
|
Share-based compensation expense (recovery) |
|
|
840 |
|
|
(5,096 |
) |
|
Unrealized foreign exchange loss |
|
|
2,205 |
|
|
114 |
|
|
Unrealized (gain) loss on derivatives |
|
|
(1,983 |
) |
|
1,052 |
|
|
Gain on disposal of property and equipment |
|
|
(358 |
) |
|
(273 |
) |
|
Finance costs |
|
|
2,909 |
|
|
2,900 |
|
|
Income tax expense |
|
|
13,783 |
|
|
6,169 |
|
|
Income taxes paid |
|
|
(9,417 |
) |
|
(9,850 |
) |
|
Cash finance costs paid |
|
|
(3,026 |
) |
|
(1,813 |
) |
|
Changes in non-cash working capital from operating activities |
|
|
(56,736 |
) |
|
12,203 |
|
|
Net cash provided by operating activities |
|
|
10,242 |
|
|
45,836 |
|
|
|
|
|
|
|
||||
Investing activities: |
|
|
|
|
|
|||
Purchase of property and equipment |
|
|
(30,535 |
) |
|
(25,992 |
) |
|
Proceeds from disposal of equipment and vehicles |
|
|
12 |
|
|
326 |
|
|
Changes in non-cash working capital from investing activities |
|
|
6,767 |
|
|
(9,304 |
) |
|
Net cash used in investing activities |
|
|
(23,756 |
) |
|
(34,970 |
) |
|
|
|
|
|
|
||||
Financing activities: |
|
|
|
|
|
|||
Issuance (repayment) of loans and borrowings |
|
|
25,770 |
|
|
(10,526 |
) |
|
Repayment of obligations under finance lease |
|
|
(2,382 |
) |
|
(1,999 |
) |
|
Common shares repurchased |
|
|
(4,282 |
) |
|
- |
|
|
Net cash provided by (used in) financing activities |
|
|
19,106 |
|
|
(12,525 |
) |
|
|
|
|
|
|
||||
Impact of exchange rate changes on cash and cash equivalents |
|
|
50 |
|
|
111 |
|
|
|
|
|
|
|
|
|||
Increase (decrease) in cash and cash equivalents |
|
5,642 |
|
|
(1,548 |
) |
||
Cash and cash equivalents, beginning of the period |
|
1,785 |
|
|
2,785 |
|
||
Cash and cash equivalents, end of the period |
$ |
7,427 |
|
$ |
1,237
|
|
ABOUT STEP
STEP is an energy services company that provides coiled tubing, fluid and nitrogen pumping and hydraulic fracturing solutions. Our combination of modern equipment along with our commitment to safety and quality execution has differentiated STEP in plays where wells are deeper, have longer laterals and higher pressures. STEP has a high-performance, safety-focused culture and its experienced technical office and field professionals are committed to providing innovative, reliable and cost-effective solutions to its clients.
Founded in 2011 as a specialized deep capacity coiled tubing company, STEP has grown into a North American service provider delivering completion and stimulation services to exploration and production (“E&P”) companies in
Our four core values; Safety, Trust, Execution and Possibilities inspire our team of professionals to provide differentiated levels of service, with a goal of flawless execution and an unwavering focus on safety.
STEP will host a conference call on
To listen to the webcast of the conference call, please click on the following:
https://onlinexperiences.com/Launch/QReg/ShowUUID=31A28C66-F3A0-475A-B3BD-D8845C1883C5&LangLocaleID=1033
You can also visit the Investors section of our website at www.stepenergyservices.com and click on “Reports, Presentations & Key Dates”.
To participate in the Q&A session, please call the conference call operator at: 1-800-717-1738 (toll free) 15 minutes prior to the call’s start time and ask for “STEP Energy Services First Quarter 2024 Earnings Results Conference Call”.
The conference call will be archived on STEP’s website at www.stepenergyservices.com/investors
View source version on businesswire.com: https://www.businesswire.com/news/home/20240508586152/en/
For more information please contact:
President and Chief Executive Officer
Telephone: 403-457-1772
Chief Financial Officer
Telephone: 403-457-1772
Email: investor_relations@step-es.com
Web: www.stepenergyservices.com
Source: