STEP Energy Services Ltd. Reports Third Quarter 2025 Results

Executive Summary

• STEP Energy Services reported Q3 2025 revenue of C$227.2 M (‑11% YoY) and posted a net income of C$6.8 M, reversing a C$5.5 M loss in the same quarter last year.
• Adjusted EBITDA was C$45.2 M (20% of revenue) with free cash flow of C$23.3 M; net debt fell to C$36.3 M, its lowest level since Q1 2018.
• The board approved a definitive arrangement agreement with ARC Financial Corp. to sell 100% of STEP’s shares for C$5.50 per share, which will result in delisting from the TSX and cessation as a reporting issuer upon closing (expected mid‑December 2025).

Key Details

• Revenue: C$227,237 K (Q3 2025) vs. C$255,991 K (Q3 2024); down 11% YoY.
• Net Income: C$6,782 K (Q3 2025) vs. a loss of C$(5,460) K (Q3 2024). Diluted EPS: $0.09 vs. $(0.08).
• Adjusted EBITDA: C$45,166 K (20% of revenue); down from C$49,369 K YoY but up from Q2 2025.
• Free Cash Flow: C$23,290 K (Q3 2025) vs. C$28,404 K YoY; per‑share diluted $0.31.
• Net Debt: C$36,302 K at September 30 2025, down from C$52,668 K year‑end 2024 and C$43,900 K at June 30 2025.
• Working Capital: C$77,897 K (up $42.5 M YoY).
• Operating Activity: 345 fracturing operating days (6 crews) pumping 524 k tonnes of proppant; 1,260 coiled‑tubing operating days (21 units).
• Terminated U.S. Fracturing Operations: Loss from terminated operations of C$(10,133) K in Q3 2025; impairment expense of C$4.6 M and inventory write‑down of C$3.0 M.
• Share Repurchases: No repurchases in Q3 2025; cumulative YTD 783,200 shares at $4.32 average price under NCIB.
• M&A Transaction: Non‑binding offer from ARC Financial Corp. to acquire all outstanding STEP shares for C$5.50 cash per share. ARC already controls ~55% of shares; voting support agreements cover an additional ~32% of total shares (71.7% of minority).
• Arrangement Agreement: Approved by board on October 17 2025 with 2659160 Alberta Ltd. and ARC Energy Fund 8 limited partnerships; subject to shareholder, court and customary closing conditions. Expected close ≈ December 16 2025.
• Post‑Closing Outlook: Shares to be delisted from TSX; STEP will cease to be a reporting issuer. Company will focus on cost control, high utilization of remaining Canadian fleet, and preparation for 2026 demand cycles.

Notable Quotes

• “The Board believes the proposed transaction represents the best strategic outcome for shareholders, providing immediate value and positioning the company for a streamlined future,” – Statement from STEP’s Special Committee (paraphrased).