Step Energy Services Ltd T.STEP

RBC

[retiredcf]

For the moment, it looks like the market is reacting to the lower revenue rather than looking at the big picture. Just added a few more. GLTA

November 2, 2022

STEP Energy Services Ltd.
3Q22 - Ahead of the Street; De-leveraging continues

TSX: STEP | CAD 6.56 | Outperform | Speculative Risk | Price Target CAD 9.00

Sentiment: Positive

Our view: We have a positive first impression of STEP’s 3Q22 results. Adj. EBITDA of $58MM was in-line with RBC estimates, but 11% ahead of the Street. The company continues to benefit from strong pressure pumping market dynamics, particularly in the US and expects the market to remain undersupplied heading into 2023.

• Adj. EBITDA ahead of the Street despite lower revenue. Revenue of $245MM was 10/8% ($27/21MM) below Street/RBC estimates, driven by lower activity and shift in job mix. Lower revenue was offset by a recovery in pricing, as adj. EBITDA of $58MM was ahead of the Street at $52MM but in-line with our estimates. Divisionally, Canada reported adj. EBITDA of $40.9MM, 6% above our $38.6MM estimate, primarily driven by higher adj. EBITDA margins of 29% versus our 23%. US reported adj. EBITDA of $20.8MM, 10% below our $23.1MM estimate. STEP generated $40MM FCF and reduced its net debt by about $47MM q/q.

• 2023 outlook relatively more constructive for US versus Canada. In the US, STEP expects horsepower demand to remain strong, with additional capacity not expected to come until mid-late 2023 due to supply chain constraints. Pricing power is expected to remain with oilfield service providers, with gains anticipated in 1H23. In Canada, STEP expects 2023 activity to exceed 2022 levels, with price increases to keep pace with inflation. The company remains focused on continued deleveraging in 2023. STEP also announced a full year capital budget of $55MM plus $16MM carryover from FY22, but will evaluate the budget quarterly. (RBC $85MM).

Conference call November 3 at 12:00 PM ET; webcast.

[222short222]

Sure you did.

[retiredcf]

You've been on SH for a couple of weeks and you think I'm lying when I stated that I added more. For what it's worth, in addition to STEP, I also added more TPZ near the close because that shouldn't have been in the red at all. Not much point having dry powder if you're not going to use it.  So far your posts are essentially garbage. GLTA

[Whynottoday2]

Interesting ..... Z:OIH up 3%, STEP down 8%.  Stays a lot! 

[222short222]

So what

[222short222]

The lack of confidence from the Step conference call Q&A says it all.

[EstevanOutsider]

STEP results were solid. Rumor has it Arc looking for an exit point and it is over double digits. STEP.is such a low multiple stock that I expect they'll get it. Canada frac heads to powerplay when Blueberry issue resolved in British Columbia. Until then we got Grand Prairie and USA.

[retiredcf]

Just to be clear, you think ARX is going to buy STEP? I certainly haven't heard that rumour before. GLTA