STEP Energy Services Ltd (SNVVF) Q2 2024 Earnings Call Highlights: Navigating Market Challenges ...

GuruFocus News
4 min read

In This Article:

  • Consolidated Revenue: $231 million in Q2 2024, down from $320 million in Q1 2024, and similar to $232 million in Q2 2023.

  • Adjusted EBITDA: $42 million with an 18% margin, compared to $80 million (25% margin) in Q1 2024 and $47 million (20% margin) in Q2 2023.

  • Net Income: $11 million or $0.14 per diluted share, compared to $41 million or $0.55 per diluted share in Q1 2024 and $15 million or $0.21 per diluted share in Q2 2023.

  • Canadian Segment Revenue: $161 million, with $125 million from fracturing and $36 million from coiled tubing.

  • US Segment Revenue: $70 million, with $23 million from fracturing and $47 million from coiled tubing.

  • Free Cash Flow: $20 million in Q2 2024, compared to $35 million in Q2 2023 and $54 million in Q1 2024.

  • Capital Expenditures: $29 million, including $9 million in sustaining capital, $17 million in optimization capital, and $3 million in right-of-use assets.

  • Net Debt: $76 million at the end of Q2 2024, down from $108 million at the end of Q1 2024.

  • Share Buyback: Approximately 1.9 million shares purchased through NCIB at an average price of $4.16 per share.

Release Date: August 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • STEP Energy Services Ltd (SNVVF) reported consolidated revenues of $231 million for Q2 2024, which is consistent with the prior year's Q2 revenue.

  • The Canadian segment showed a year-over-year increase in adjusted EBITDA, reaching $37 million compared to $33 million in Q2 2023.

  • The company successfully reduced its net debt from $108 million at the end of Q1 to $76 million by the end of Q2.

  • STEP Energy Services Ltd (SNVVF) has a strong market position in the US coiled tubing service line, with increasing activity levels both sequentially and year over year.

  • The company has invested in upgrading its asset base to Tier 4 dual fuel capable systems, demonstrating a commitment to leading-edge technology.

Negative Points

  • Q2 2024 revenues were down from the previous quarter's $320 million, reflecting challenging market conditions.

  • Adjusted EBITDA margin decreased to 18% in Q2 2024 from 25% in Q1 2024 and 20% in Q2 2023.

  • The US fracturing service line faced significant challenges due to competitive market dynamics, contributing less to revenue compared to previous years.

  • Free cash flow for Q2 2024 was $20 million, down from $35 million in Q2 2023 and $54 million in Q1 2024.

  • The company anticipates a slowdown in activity in both Canada and the US as clients reach the end of their capital budgets by the fourth quarter.

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