STEP Energy Services Ltd.

STEP posted Q2 2025 revenue of $228 million, down from $308 million in Q1 2025 and roughly in line with $231 million in Q2 2024. Adjusted EBITDA was $35 million at a 15% margin, versus $59 million at 19% margin in Q1 and $42 million at 18% margin in Q2 2024. Net income was $6 million, or $0.08 per diluted share, compared with $24 million, or $0.33 per diluted share, in Q1; prior-year Q2 net income was $10 million, or $0.14 per diluted share. Free cash flow was $17 million, capital expenditures were about $14 million, and net debt ended the quarter at $44 million, down from approximately $85 million. Looking ahead, management said Q3 revenue should be flat to down sequentially because of a shift from STEP-supplied sand to client-supplied sand, but EBITDA should improve sequentially because sand is low-margin pass-through. The company also said it expects to sell the U.S. fracturing assets by the end of 2025 and expects 4 additional NGx pumps to be available for commercial deployment in Q1 2026.

Stephen Glanville framed the quarter as evidence of operational execution despite a tough market and the deliberate exit from U.S. fracturing. He highlighted high utilization, strength in coiled tubing, and adoption of Coil Plus, saying the business is focused on technology, adaptability, and areas where it can earn the best returns. His tone was cautiously optimistic, with repeated emphasis on longer-term growth opportunities in Canadian fracturing and coiled tubing.

Klaas Deemter emphasized the quarter’s hard numbers and the balance-sheet improvement: $228 million of revenue, $35 million of adjusted EBITDA at a 15% margin, $17 million of free cash flow, and $44 million of net debt. He noted $14 million of capex in the quarter, made up of $6 million sustaining, $7 million optimization, and $1 million right-of-use additions. He said the planned sale of $15 million of assets held for sale should close before year-end, with proceeds initially used to pay down debt, and said the 4 NGx pumps would add only about $2 million to 2025 capex, with some of the payment pushed into 2026.

Analysts focused on three issues: why Q3 will have more client-supplied sand, how the planned NGx pump purchase affects 2025 capex, and what the company will do with proceeds from the asset sale. Management said the sand mix shift is due to certain clients going direct to sand suppliers, not a broad change in customer behavior, and said Q3 EBITDA should rise sequentially because less company-supplied sand improves margins. On the asset sale, management said there has been decent interest, expects the assets to be sold before year-end, and intends to use proceeds first to pay down debt before considering capital allocation alternatives.