NCS Multistage Conference Call Summary Company Overview - **Company**: NCS Multistage (Ticker: NCSM) - **Industry**: Oil field services and equipment - **Market Capitalization**: Approximately $115 million - **Trailing 12-month EBITDA**: Approximately $26 million - **Free Cash Flow**: Approximately $20 million - **Revenue for 2025**: Expected to be close to $180 million, representing about 2% market share in a nearly $10 billion addressable market for oil field services in 2025 [5][18] Core Business and Product Lines - **Focus**: Technology-driven solutions for oil and natural gas producers, including major companies like Chevron, BP, and Saudi Aramco [2][3] - **Product Lines**: 1. **Fracturing Systems**: Accounts for about 60% of revenue; helps maximize resource recovery [5][6] 2. **Repeat Precision**: Second largest product line, known for high-performance composite frac plugs [8][9] 3. **Tracer Diagnostics**: Provides cost-effective services to improve well designs and optimize field development [10][11] 4. **Well Construction**: Features the AirLock casing buoyancy system, aiding in drilling longer laterals [12][13] Strategic Focus and Growth Opportunities - **Market Positioning**: Aims to build on leadership in fracturing systems and capitalize on high-margin growth opportunities, particularly in international markets [15][19] - **International Revenue Growth**: More than doubled in 2024 compared to 2023, increasing from about 5% to 10% of total revenue [17] - **Acquisition of ResMetrics**: Enhances Tracer Diagnostics capabilities, with trailing 12-month revenues of over $10 million and an EBITDA margin of over 30% [20][22] Financial Performance and Projections - **Revenue Growth**: Grew by 14% or $20 million in 2024; projected 8% growth in 2025, with 5% from organic initiatives and 3% from ResMetrics acquisition [27] - **Gross Margin**: Approximately 40%, improved by about 250 basis points in 2024 compared to 2023 [28] - **Free Cash Flow Generation**: Expected to convert about 50%-60% of Adjusted EBITDA to free cash flow [30] Market Dynamics and Competitive Landscape - **Challenging Market Environment**: Despite a flat-to-lower completion count and reduced rig count in the U.S., NCS is gaining market share through differentiated products [35][36] - **International Expansion**: Significant growth opportunities identified in unconventional markets like Argentina (Vaca Muerta) and the Middle East [42][44] Investor Considerations - **Valuation**: Currently trading at about four times enterprise value to 2025 EBITDA, which is a discount compared to peers [31] - **Shareholder Support**: Advent International holds over 50% of shares and has been supportive of management and strategic initiatives [46][48] Conclusion - **Investment Opportunity**: NCS Multistage presents a compelling investment case with strong organic growth, innovative technology, and a capital-light business model that generates free cash flow through industry cycles [32][33]

Core Points - NCS Multistage Holdings, Inc. will present at the Sidoti Year End Virtual Conference on December 10, 2025 [1] - The company will also host virtual one-on-one meetings with investors on December 10-11, 2025 [2] - NCS is a leading provider of engineered products and support services for oil and natural gas well construction and completions [3] Company Overview - NCS provides products and services primarily to exploration and production companies for onshore and offshore wells [3] - The company's offerings are utilized in both unconventional and conventional oil and natural gas formations [3] - NCS operates in various markets, including North America, the North Sea, the Middle East, Argentina, and China [3] - NCS's common stock is traded on the Nasdaq Capital Market under the symbol "NCSM" [3]

Core Insights - NCS Multistage Holdings, Inc. reported total revenues of $46.5 million in Q3 2025, reflecting a 6.0% year-over-year increase, driven by stronger U.S. and international sales, particularly in fracturing systems and wellbore construction [1][5] - Adjusted Gross margins decreased slightly to 41.7% from 42.1% in Q3 2024, indicating a minor decline in profitability [1][5] - The company expects modest revenue and margin growth for the remainder of FY25, supported by resilience in core product lines and contributions from the recent acquisition of ResMetrics [1] Revenue Breakdown - U.S. revenue grew approximately 36.0% year-over-year, while international revenue saw an increase of around 38.0% during the same period [1][5] - Canadian product sales were softer due to lower rig counts, although Canada experienced a 32% sequential growth as spring break-up effects eased [1][5] Financial Performance - As of Q3 2025, Adjusted EBITDA was reported at $7.0 million, and diluted EPS was $1.37 [5] - The integration of ResMetrics is ahead of plan, contributing approximately $2 million to U.S. tracer diagnostics in Q3 2025 [5]

Acquisition - The company acquired 100% of Reservoir Metrics, LLC for $7.1 million, with $5.8 million in cash and contingent consideration of up to $1.3 million based on international trade tariffs[86] Revenue and Sales Performance - Total revenues for the three months ended September 30, 2025, were $46.5 million, a 5.8% increase from $44.0 million in the same period of 2024[116] - Product sales accounted for 67% of revenues for Q3 2025, down from 72% in Q3 2024, while services represented 33%, up from 28% in the same period[106] - Product sales revenue was $31.2 million, down 1.4% from $31.7 million year-over-year, while services revenue increased by 24.2% to $15.3 million[116] - Total revenues for the nine months ended September 30, 2025, were $133.0 million, a 13.1% increase from $117.6 million in the same period of 2024[124] - Product sales increased to $94.1 million, up 14.1% from $82.5 million, driven by sales in the United States, Canada, and international markets[124] - Services revenue rose to $38.9 million, a 10.9% increase from $35.1 million, with significant contributions from the U.S. and Canada[124] Cost and Expenses - Cost of sales was $27.9 million, representing 60.0% of revenues, compared to $26.2 million or 59.5% of revenues in the prior year[117] - Selling, general and administrative expenses rose to $14.8 million, an increase of 4.8% from $14.1 million in the previous year, primarily due to higher share-based compensation[118] - Cost of sales was $81.0 million, representing 60.9% of revenues, slightly up from 60.8% in the prior year[125] - Selling, general and administrative expenses increased to $44.6 million, up from $42.8 million, primarily due to higher share-based compensation[126] Profitability - Net income for the three months ended September 30, 2025, was $4.2 million, a decrease of 9.8% from $4.7 million in the same period of 2024[114] - Gross margin for the three months ended September 30, 2025, was 40.0%, slightly down from 40.5% in the prior year[115] - Net income for the nine months ended September 30, 2025, was $10.4 million, a 135.3% increase from $4.4 million in 2024[122] - Income from operations surged to $5.3 million, reflecting a 283.4% increase from $1.4 million in the previous year[122] Market Conditions - The average U.S. land rig count decreased by 7% year-over-year to 527 in Q3 2025, and the Canadian rig count fell by 15% compared to Q3 2024[102] - Canadian E&P activity is expected to decline by 3% to 5% in 2025, while U.S. activity is projected to decrease by 6% to 8%[88] - Natural gas prices averaged $3.03 per MMBtu in Q3 2025, down from $3.19 per MMBtu in Q2 2025, primarily due to strong production growth[96] - Oil prices remained volatile, with WTI crude averaging $65.78 per barrel in Q3 2025, slightly down from $64.57 in Q2 2025[95] - Competitive pressures have negatively impacted market share and operating margins, constraining the ability to raise prices amid rising costs[90] Foreign Currency Impact - The company’s revenues from Canadian sales were approximately 51% for Q3 2025, down from 66% in Q3 2024, indicating a significant impact from foreign currency fluctuations[108] - Foreign currency exchange loss for the three months ended September 30, 2025, was $(0.4) million, compared to a gain of $0.2 million in the same period of 2024[120] - Foreign currency exchange gain was $0.8 million for the nine months ended September 30, 2025, compared to a loss of $(0.8) million in 2024[128] Cash Flow and Liquidity - The company had cash and cash equivalents of $25.3 million and total outstanding indebtedness of $7.4 million as of September 30, 2025[131] - Net cash provided by operating activities increased to $9.0 million for the nine months ended September 30, 2025, compared to $2.1 million in 2024, reflecting a higher net income of $6.0 million[137] - Net cash used in investing activities rose to $6.1 million in 2025 from $0.7 million in 2024, primarily due to a $5.8 million acquisition of ResMetrics[138] - Net cash used in financing activities was $3.8 million for the nine months ended September 30, 2025, compared to $2.7 million in 2024, with principal payments related to finance lease obligations totaling $1.6 million[139] - Future liquidity needs may require additional indebtedness or equity issuances, depending on financial performance and market conditions[135] Operational Insights - The company’s fracturing systems products enable efficient pinpoint stimulation, enhancing recovery from oil and gas wells[84] - Services revenue in the United States increased by $4.7 million, primarily due to tracer diagnostics services, including approximately $2 million from ResMetrics[116] - The percentage of operating costs denominated in Canadian dollars was approximately 19% for the three months ended September 30, 2025[112] - The company plans to upgrade manufacturing and field service equipment, tracer diagnostics deployment, and Repeat Precision manufacturing facilities as part of its capital expenditures[134] Tax and Accounting - The effective tax rate for the three months ended September 30, 2025, was (14.9%), compared to (0.7%) for the same period in 2024[121] - The company has not identified any significant changes in material cash requirements since the last annual report[140] - There are no material changes to critical accounting estimates from the previous annual report[141] Customer Concentration - The company’s largest customer constituted 17% of trade receivables as of September 30, 2025, indicating significant customer concentration risk[148]

Financial Data and Key Metrics Changes - The company's Q3 2025 revenue was $46.5 million, a 6% year-over-year improvement, exceeding the midpoint of guidance, including contributions from ResMetrix since acquisition [16][4] - Adjusted EBITDA for Q3 was $7 million, exceeding guidance and including ResMetrix's contribution [18] - Free cash flow for the first nine months of 2025 improved by $6.8 million compared to the prior year, reaching $6.8 million after distributions to non-controlling interest [6][19] - The company reported a net income of $3.8 million for Q3, with diluted earnings per share of $1.37, compared to $4.1 million and $1.60 in the same quarter last year [18] Business Line Data and Key Metrics Changes - U.S. revenue increased by 26% sequentially and 54% year-over-year, with a 37% increase excluding ResMetrix [5][6] - Canadian revenue increased by 9% year-to-date despite a 6% decline in average rig count, indicating strong customer value [8] - International revenue reached 10% of total revenue, marking a significant milestone for the company [8] Market Data and Key Metrics Changes - The North Sea market continues to show strong collaboration with customers, supporting technical papers and hosting workshops [9] - The Canadian market has seen a pullback in activity, with a 15% year-over-year decline in rig count, but the company remains optimistic about future growth [46][48] Company Strategy and Development Direction - The company is focused on organic growth initiatives and new product development, aiming to maximize financial flexibility and free cash flow [7] - Core strategies include building on leading market positions, capitalizing on high-margin growth opportunities, and commercializing innovative solutions [7][10] - The integration of ResMetrix is progressing well, with early successes in operational and financial performance [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed caution moving into Q4 due to challenging market conditions, including stagnating U.S. rig counts and declines in Canada [21] - The company expects annual revenue for 2025 to be between $174 million and $178 million, representing 8% year-over-year growth [22] - Free cash flow expectations for the year have been increased to $11 million to $13 million, reflecting favorable working capital balances [23][24] Other Important Information - The company has a strong liquidity position with total liquidity of approximately $45 million [24] - A recent legal matter in Canada was resolved favorably for the company, overturning a prior judgment against it [14] Q&A Session Summary Question: What does the opportunity set look like for ResMetrix in the Middle East going forward? - Management highlighted that ResMetrix brought long-term contracts and expanded the company's portfolio in the Middle East, particularly in Oman and Saudi Arabia [26][27] Question: Would free cash flow expectations remain similar in a flat growth environment for 2026? - Management indicated that they typically convert 50% to 60% of adjusted EBITDA to free cash flow, suggesting a stable profile in a flat growth scenario [28][29] Question: How is the integration of ResMetrix progressing and what are the synergy expectations? - Integration is on track, with potential synergies of $1 million to $2 million expected from improved efficiencies in operations [35][36] Question: What does the pipeline look like for the North Sea going into 2026? - Management expects robust activity in the North Sea next year, with several orders already in hand for sliding sleeves [38][39] Question: Given the weakness in Canadian rigs, how will the company defend its margins? - Management noted that while there has been a pullback in activity, they have historically gained market share and will adapt their cost structure if necessary [45][48] Question: What is the competitive environment for tracer diagnostics in international markets? - Management described the competitive landscape as manageable, with a few global competitors in tracer diagnostics, allowing for a focus on value delivery [54][55]

Financial Data and Key Metrics Changes - The company's Q3 2025 revenue was $46.5 million, a 6% year-over-year improvement, exceeding the midpoint of guidance [18] - Adjusted EBITDA for the first nine months of 2025 was $17.5 million, representing a 24% increase year-over-year [7] - Free cash flow after distributions to non-controlling interest improved by $6.5 million compared to the same period in 2024, totaling $6.8 million for the first nine months of 2025 [7][20] - Net income for Q3 2025 was $3.8 million, or diluted earnings per share of $1.37, compared to $4.1 million or $1.60 per share in the same quarter last year [19] Business Line Data and Key Metrics Changes - U.S. revenue increased by 26% sequentially and 54% year-over-year, with a 37% increase when excluding Resmetrics [6][18] - Canadian revenue increased by 9% for the first nine months of 2025 despite a 6% decline in average rig count [10] - International revenue reached 10% of total revenue in 2024, with continued growth expected [10] Market Data and Key Metrics Changes - Canadian revenue saw a 19% decline in Q3 2025 due to a general slowdown in activity levels and lower rig counts [18] - U.S. and international revenues increased by 37% and 38% respectively for Q3 2025, driven by increased fracturing system sales [18] Company Strategy and Development Direction - The company aims to build upon its leading market positions, particularly in fracturing systems and tracer diagnostics [9] - The strategy includes capitalizing on high-margin growth opportunities worldwide, with a focus on the North Sea and other international markets [10][11] - The company is committed to commercializing innovative solutions to complex customer challenges, with ongoing product development and field trials [12] Management's Comments on Operating Environment and Future Outlook - Management expressed caution moving into Q4 2025 due to challenging market conditions, including a stagnating U.S. rig count and activity declines in Canada [22] - The company expects annual revenue for 2025 to be between $174 million and $178 million, representing 8% year-over-year growth [22] - Free cash flow guidance for the year has been increased to $11 to $13 million, reflecting more favorable working capital balances [24] Other Important Information - The integration of Resmetrics is progressing well, with early successes noted in operational and financial performance [14][15] - A recent legal matter in Canada was resolved favorably for the company, with the Federal Court of Appeal overturning a prior judgment against NCS [16] Q&A Session Summary Question: What does the opportunity set look like for Resmetrics in the Middle East going forward? - Management highlighted that Resmetrics brought long-term contracts and expanded market presence in the Middle East, particularly in Oman and Saudi Arabia [31] Question: Would free cash flow remain similar in a flat growth environment in 2026? - Management indicated that they typically convert 50% to 60% of adjusted EBITDA to free cash flow, suggesting a stable profile in a flat growth scenario [33] Question: How is the integration of Resmetrics progressing and what synergies are expected? - Integration is on track, with expected synergies of $1.5 million from improved efficiencies in operations and cost of sales [41][42] Question: What is the outlook for the North Sea market and new product developments? - The North Sea remains a strong market, with ongoing projects and new product developments expected to enhance opportunities [44][46] Question: How is the competitive environment in international markets, particularly in the Middle East? - Management noted that competition varies by market, with a focus on delivering value through insights and reports to customers [67]

Core Insights - NCS Multistage (NCSM) reported quarterly earnings of $1.37 per share, exceeding the Zacks Consensus Estimate of $1.17 per share, but down from $1.5 per share a year ago, resulting in an earnings surprise of +17.09% [1] - The company achieved revenues of $46.54 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.95% and up from $44.01 million year-over-year [2] - NCS Multistage shares have increased approximately 56.9% year-to-date, significantly outperforming the S&P 500's gain of 17.2% [3] Earnings Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $0.83 on revenues of $44.5 million, and for the current fiscal year, it is $3.84 on revenues of $177.1 million [7] Industry Context - The Oil and Gas - Field Services industry, to which NCS Multistage belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

Financial Performance - Total revenues for Q3 2025 were $46.5 million, a 6% year-over-year increase from $44.0 million in Q3 2024[8] - Net income for Q3 2025 was $3.8 million, or $1.37 per diluted share, compared to $4.1 million, or $1.60 per diluted share in Q3 2024[13] - Adjusted EBITDA for Q3 2025 was $7.0 million, consistent with the same quarter of 2024, resulting in an adjusted EBITDA margin of 15%[14] - Gross profit for Q3 2025 was $18.6 million, with a gross margin of 40%, slightly down from 41% in Q3 2024[11] - Net income for the nine months ended September 30, 2025, was $10,394,000, significantly higher than $4,418,000 for the same period in 2024, representing a 135.2% increase[31] - Net income for Q3 2025 was $4,242,000, a decrease from $4,704,000 in Q3 2024, while net income for the nine months ended September 30, 2025, was $10,394,000, compared to $4,418,000 in the same period last year[44] Revenue Breakdown - U.S. revenues increased by 37% year-over-year, while international revenues rose by 38%, offset by a 19% decline in Canadian revenues[3] - Total revenues from the United States for the three months ended September 30, 2025, were $17,146,000, an increase of 54.5% from $11,134,000 in 2024[33] - Total revenues for the three months ended September 30, 2025, were $46,538,000, an increase of 5.7% compared to $44,006,000 for the same period in 2024[27] - Product sales for the nine months ended September 30, 2025, reached $94,062,000, up 14.1% from $82,455,000 in 2024[27] Cash Flow and Liquidity - Cash from operations for the first nine months of 2025 improved by approximately $7 million compared to the same period in 2024[5] - The company ended Q3 2025 with over $25 million in cash and $19 million available under its undrawn credit facility[5] - Free cash flow for the nine months ended September 30, 2025, was $8,742,000, significantly higher than $1,350,000 for the same period in 2024[49] - Cash and cash equivalents at the end of the period were $25,295,000, down from $25,880,000 at the beginning of the period[31] - Cash and cash equivalents as of September 30, 2025, were $25,295,000, a slight decrease from $25,880,000 as of December 31, 2024[38] Assets and Liabilities - Total current assets as of September 30, 2025, were $111,336,000, an increase from $105,570,000 as of December 31, 2024[29] - The company reported total liabilities of $34,911,000 as of September 30, 2025, a decrease from $36,703,000 as of December 31, 2024[29] - Total stockholders' equity increased to $110,137,000 as of September 30, 2025, compared to $98,839,000 at the end of 2024[29] - Net working capital as of September 30, 2025, was $63,002,000, an increase from $56,412,000 as of December 31, 2024[38] Operational Insights - The company anticipates continued strong operational performance despite deteriorating market conditions and potential oversupply in the oil market[7] - The acquisition of Reservoir Metrics, LLC contributed approximately $2 million to services revenue in the U.S.[9] - Capital expenditures for the nine months ended September 30, 2025, were $0.3 million, down from $0.7 million in the same period of 2024[18] Earnings and Margins - Basic earnings per share attributable to NCS Multistage Holdings, Inc. for the three months ended September 30, 2025, were $1.47, compared to $1.63 in 2024, reflecting a decrease of 9.8%[27] - Adjusted gross profit for Q3 2025 was $19,413,000, up from $18,532,000 in Q3 2024, resulting in an adjusted gross margin of 42%[41] - EBITDA for Q3 2025 was $5,327,000, compared to $6,133,000 in Q3 2024, with adjusted EBITDA at $7,041,000, reflecting a margin of 15%[44] - Adjusted EBITDA less share-based compensation for Q3 2025 was $6,378,000, slightly down from $6,424,000 in Q3 2024[44] Costs - Total cost of sales, exclusive of depreciation and amortization, was $27,125,000 for Q3 2025, compared to $25,474,000 in Q3 2024[41] - Distributions to non-controlling interest for the nine months ended September 30, 2025, were $1,900,000, compared to $1,000,000 in the same period of 2024[49]

Core Insights - NCS Multistage Holdings, Inc. reported strong operational and financial performance for Q3 2025, with total revenues of $46.5 million, a 6% increase year-over-year, driven by contributions from the acquisition of Reservoir Metrics, LLC [3][9][10] - The company experienced a 37% increase in U.S. revenues and a 38% increase in international revenues, although Canadian revenues declined by 19% due to reduced activity [3][4][9] - The company maintained a strong balance sheet with over $25 million in cash and only $7 million in debt, primarily from finance leases [5][16] Financial Performance - Total revenues for Q3 2025 were $46.5 million compared to $44.0 million in Q3 2024, with product sales remaining relatively flat [9][26] - Net income for Q3 2025 was $3.8 million, or $1.37 per diluted share, down from $4.1 million, or $1.60 per diluted share in Q3 2024 [9][13] - Adjusted EBITDA for Q3 2025 was $7.0 million, consistent with the same quarter of 2024, reflecting an adjusted EBITDA margin of 15% [14][47] Operational Highlights - The integration of ResMetrics is progressing well, with operational initiatives ahead of schedule, positioning the combined business as a market leader in reservoir analysis [6][7] - Cash flow from operations improved by approximately $7 million for the first nine months of 2025 compared to the same period in 2024, with free cash flow less distributions to non-controlling interest improving by over $6 million [5][15] Market Conditions - The company noted deteriorating market conditions, particularly in Canada, with reduced drilling and completion activity and potential oversupply in the oil market due to OPEC+ production increases [7][8] - Despite these challenges, the company aims to maintain momentum through the end of the year [7] Legal Matters - In October 2025, a Canadian court overturned a prior judgment against the company in a patent dispute, reducing the cost award from approximately $1.8 million to $0.9 million [20]

Core Viewpoint - NCS Multistage Holdings Inc (NCSM) is expected to report its third-quarter 2025 results on October 29, with adjusted earnings anticipated to show a significant decline compared to the previous year [1][8]. Earnings Estimates - The Zacks Consensus Estimate for NCSM's third-quarter earnings per share is $1.17, reflecting a 22% decrease from the prior year's reported figure [2][8]. - Revenue estimates stand at $46.1 million, indicating a 4.8% increase year-over-year [2][8]. Market Conditions - Average spot prices for West Texas Intermediate (WTI) crude oil in July, August, and September were $68.39, $64.86, and $63.96 per barrel, respectively, which is lower than the previous year's averages of $81.80, $76.68, and $70.24 per barrel [3][4]. - The softer pricing environment is likely to negatively impact NCSM's business, as the company provides services and products for optimizing oil and gas wells [4]. Earnings Performance Indicators - NCSM has an Earnings ESP of 0.00%, indicating no expected earnings beat for this reporting cycle [5]. - The company currently holds a Zacks Rank of 3 (Hold) [5]. Comparative Stocks - BP and ConocoPhillips are highlighted as companies with better earnings prospects, with BP having an Earnings ESP of +1.87% and ConocoPhillips at +0.34% [6][7].