STEP Energy Services Ltd. (STEP) Earnings Call Transcript & Summary

Welcome to the annual meeting of the shareholders of STEP Energy Services Limited. I am Douglas Freel, Chair of the Board of Directors of STEP. And I will chair this meeting. This year, to proactively deal with the unprecedented public health impact of COVID-19 and to mitigate risk to the health and safety of our communities, shareholders, employees and other stakeholders, we have had to limit in-person attendance at the meeting taking place at our offices and instead have many of you joining us by audio webinar. As set out in our press release of April 28, 2020, this is not a virtual meeting. The audio webinar does not permit shareholders to vote or to ask questions live during the meeting. As a result, shareholders were encouraged to vote in advance of the meeting and to submit questions in advance by e-mail through STEP's Investor Relations email. This meeting will only consist of the formal business required to be addressed. I would like to now introduce the members of STEP's leadership team and directors of the corporation who are here with us today. Given the exceptional circumstances, we have asked our directors and officers to not attend the meeting in person, except as required to establish a quorum for the meeting. A number of STEP's officers and directors have joined us remotely. Present in person are Regan Davis, President and Chief Executive Officer; Michael Kelly, CFO; and Steve Glanville, COO; and myself. In order to cover the required business, we have prearranged with certain shareholders to move and to second certain motions of the -- of business. This is in no way intended to discourage comments from the floor, but only to assist with the progress of the meeting. Should any registered shareholder or proxy holder present in person wish to speak on any matter, I would ask that you address the Chair with your questions. The votes on all motions will be conducted by a show of hands unless a ballot is requested. As I mentioned earlier, shareholders were encouraged to vote by proxy prior to the meeting as in-person attendance is limited, and voting on the audio webinar is not possible. If you submitted a proxy in advance naming the management-appointed proxy holder and have not revoked it, your vote will be cast by Regan Davis as the management-appointed proxy holder. A sufficient number of proxies were received before the meeting to ensure that all motions before the meeting was passed. The meeting will now come to order. I will ask Josh Kane, STEP's General Counsel, to act as Secretary of the meeting, and TSX Trust Company to act as scrutineer. As TSX Trust Company is joining the meeting by telephone, I will also ask Mr. Kane to act as co-scrutineer for the meeting to assist TSX Trust Company as needed. I have received a declaration prepared by TSX Trust Company indicating that either a notice of this meeting and the accompanying proxy materials or the notice and access notice as applicable was duly mailed to shareholders of record as at March 20, 2020. I direct a copy of the notice of meeting, accompanying proxy materials and the notice and access notice with proof of mailing be attached to the minutes of this meeting by the Secretary. Unless there is any objection, I will dispense with the reading of the notice of this meeting. Pursuant to the current bylaws of the corporation, business may only be transacted at this meeting if at least 2 shareholders or duly appointed proxy holders are present in person or representing in the aggregate not less than 15% of the shares entitled to vote at the meeting. The scrutineer's report has now been received and shows that 109 shareholders are present in person at the meeting or are represented by proxy, representing an aggregate of 43,779,000 common shares of STEP for a total of just over 65% of the outstanding shares. I am therefore advised that there is a quorum present, and I now declare that the meeting is regularly called and properly constituted for the transaction of business. I direct a copy of the scrutineer's report be attached to the minutes of this meeting by the Secretary. The first item of business concerns the presentation of STEP's financial statements for the year ended December 31, 2019, which have been approved by the Board of Directors of STEP. Copies of the annual financial statements, together with the auditor's report on the financial statements and related management's discussion and analysis, are available online. Shareholders who wish to receive a paper copy of these documents should contact our transfer agent, TSX Trust Company. With the consent of the meeting, we shall dispense with the reading of the financial statements and the auditor's report thereon. If there is no discussion of these documents, we will move to the next item on the agenda. The next item of business is to fix the number of directors. STEP's articles allow for a maximum of 11 directors. There are presently 7 directors, and it is proposed that 7 directors be elected to the Board of Directors at the meeting.

Mr. Chairman, I move to fix the number of directors to be elected at this meeting at 7.

Mr. Chairman, I second the motion.

You have heard the resolution. Is there any discussion? All those in favor, signify in the usual manner by raising your right hand. Opposed, if any? [Voting]

The motion is carried. The next item of business is the election of the Board of Directors of STEP. The shareholders of STEP have determined that 7 directors be elected at this meeting for the ensuing year or until their successors are elected or appointed. All proposed nominees have consented to stand for reelection and serve as directors if elected. STEP has adopted a majority voting policy, whereby in an uncontested election, if any nominee for director receives a greater number of votes withheld from his or her election than votes for such election, he or she shall tender their resignation to the Board following the meeting. The Compensation and Corporate Governance Committee and the Board of Directors will consider the resignation, which is expected to be promptly accepted, except in situations where extraordinary circumstances warrant the applicable director continuing to serve as a member of the Board of Directors. The Board will disclose its election decision via press release within 90 days of the meeting. It is now in order to proceed with the election of directors.

Mr. Chairman, I nominate each of the directors listed in STEP's management information circular being Evelyn Angelle, Regan Davis, Douglas Freel, Jeremy Gackle, Donna Garbutt, James Harbilas and Jason Skehar for election as directors of the corporation to hold office until the next annual meeting of the shareholders or until their successors are earlier elected or appointed.

I second the nomination.

As no additional nominations were received prior to the meeting, in accordance with the advanced notice provisions in the corporation's bylaws, I now declare the nominations closed. I will read the name of each nominee, following which all of those in favor of the motion in respect of that individual being elected as a director of STEP Energy Services Limited until the close of the next annual general meeting of shareholders or until his or her successor has been duly elected or appointed, signify in the usual manner by raising your right hand. In favor of Evelyn Angelle? Withheld, if any? [Voting]

In favor of Regan Davis? Withheld, if any? [Voting]

In favor of Douglas Freel? Withheld, if any? [Voting]

In favor of Jeremy Gackle? Withheld, if any? [Voting]

In favor of Donna Garbutt? Withheld, if any? [Voting]

In favor of James Harbilas? Withheld, if any? [Voting]

In favor of Jason Skehar? Withheld, if any? [Voting]

The motion in respect of each nominee is carried. I declare that each of the 7 nominees are elected as directors of the corporation to hold office until the close of the next annual general meeting of the shareholders or until their successors have been duly elected or appointed. The next item of business is the appointment of auditors and the authorization of the Board of Directors to fix the remuneration of the auditors.

Mr. Chairman, I move to appoint KPMG LLP chartered accountants as auditor of the corporation until the close of the next annual meeting of the shareholders and authorize the directors to fix their remuneration.

Mr. Chairman, I second the motion.

You have heard the resolution. Is there any discussion? All those in favor, signify in the usual manner by raising your right hand. Opposed, if any? [Voting]

The motion is carried. The next item of business is to approve the option plan as set forth on Page 9 of STEP's management information circular. The key amendments to the option plan are summarized on Page 8 and 9 of the circular, and the full text of the option plan is set forth in Schedule C to the circular. In order to be effective, the resolution to approve the option plan requires the approval of more than 50% of the votes cast by or on behalf of shareholders present in person or represented by a proxy at the meeting.

Mr. Chairman, I move that the resolution to approve the option plan as set forth on Page 9 of STEP's management information circular be approved.

Mr. Chairman, I second the motion.

You have heard the resolution. Is there any discussion? All those in favor, signify in the usual manner by raising your right hand. Opposed, if any? [Voting]

The motion is carried. The final item of business is to approve the performance and restricted share unit plan as set forth on Page 10 of STEP's management information circular. The key amendments to the PRSU Plan are summarized on pages 9 and 10 of the circular, and the full text of the PRSU Plan is set forth in Schedule D to the circular. In order to be effective, the resolution to approve the PRSU Plan requires the approval of more than 50% of the votes cast by or on behalf of shareholders present in person or represented by a proxy at this meeting.

Mr. Chairman, I move that the resolution to approve the PRSU Plan as set forth on Page 10 of STEP's management information circular be approved.

Mr. Chairman, I second the motion.

You have heard the resolution. Is there any discussion? All those in favor, signify in the usual manner by raising your right hand. Opposed, if any? [Voting]

The motion is carried. If there is no further business to be brought before the meeting, I shall ask Regan Davis for the motion of termination.

Mr. Chairman, I move that the meeting be terminated.

Mr. Chairman, I second the motion.

All those in favor of the resolution, please signify in the usual manner by raising your right hand. Opposed, if any? [Voting]

Carried. I declare the meeting terminated. Thank you, everybody. Thank you for listening in to our AGM call.