NCS Multistage Holdings, Inc. (NASDAQ:NCSM) Q4 2024 Earnings Conference Call March 11, 2025 8:30 AM ET Company Participants Mike Morrison - Chief Financial Officer Ryan Hummer - Chief Executive Officer Conference Call Participants Dave Storms - Stonegate John Daniel - Daniel Energy Partners Operator Good day and thank you for standing by. Welcome to the Q4 and Full Year 2024 NCS Multistage Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, t ...

Financial Data and Key Metrics Changes - For Q4 2024, total revenues were $45 million, a 20% increase year-over-year, with contributions from all regions [21] - Full year 2024 revenues reached $162.6 million, a 14% improvement compared to 2023 [23] - Adjusted gross margin for Q4 2024 was 43%, up from 37% in Q4 2023, driven by higher margin international revenues [22] - Adjusted EBITDA for Q4 2024 was $8.2 million, significantly up from $2.5 million in Q4 2023 [26] - Full year adjusted EBITDA was $22.3 million, a substantial increase from $11.9 million in 2023 [27] Business Line Data and Key Metrics Changes - International revenue doubled from 5% to 10% of total revenue in 2024, reaching an all-time high of $16.5 million [12][23] - The company advanced the use of its fracturing systems technology, particularly in the North Sea and deepwater applications [11] Market Data and Key Metrics Changes - Canadian revenue increased by 20%, while U.S. revenue grew by 18% in Q4 2024 [21] - International revenue saw a remarkable increase of 280% year-over-year [21] Company Strategy and Development Direction - The company aims to grow revenue in excess of underlying market activity in 2025, focusing on Canada, the U.S., and international markets [18] - Strategic objectives include obtaining field trials for new technology and driving commercial success in new markets [18] - The company is actively pursuing M&A opportunities to enhance its technology and market presence [56] Management's Comments on Operating Environment and Future Outlook - Management expects 2025 customer activity in the U.S. to be flat to down, with slight increases in Canada and core international markets [30] - The strengthening U.S. dollar is anticipated to negatively impact revenue and adjusted EBITDA in 2025 [31] - The company plans to maintain a strong balance sheet and liquidity position, expecting to generate positive free cash flow in 2025 [36][37] Other Important Information - The company ended 2024 with a cash balance of nearly $26 million and a positive net cash position of $17.7 million [27][36] - Adjusted gross margin for the full year 2024 improved to 41% from 39% in 2023 [23] Q&A Session Summary Question: Insights on the cadence for the year and spring breakup in Canada - Management expects 2025 seasonality to mimic 2024, with typical activity patterns anticipated [43][44] Question: Factors driving margin expansion - Margin expansion was driven by international growth, operating leverage, and cost reduction actions taken in 2023 [48][50] Question: M&A opportunities and technology integration - The company is actively looking for small tech-related businesses that can complement its operations and enhance growth [56] Question: R&D developments and upcoming products - Exciting technologies are in development, with some nearing the prototype stage for market introduction [60]

Investor Update March 2025 Disclaimer Forward-Looking Statements The information in this presentation includes "forward-looking statements" that are subject to risks and uncertainties. All statements, other than statements of historical fact included in this presentation, regarding NCS Multistage Holdings, Inc.'s (the "Company," "NCS", "NCSM", "we" or "us") strategy, financial guidance, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of ...

Revenue and Market Performance - Approximately 63% of revenues in 2024 and 69% in 2023 were derived from operations in Canada, indicating a significant reliance on the Canadian market[291] - Total revenues for 2024 increased to $162,557,000, up 14.1% from $142,471,000 in 2023[308] - Product sales in the United States increased to $34,082,000 in 2024 from $26,613,000 in 2023, representing a growth of 28.0%[374] - Total revenues from Canada rose to $102,435,000 in 2024, up from $98,107,000 in 2023, marking a 4.0% increase[374] Financial Performance - Net income attributable to NCS Multistage Holdings, Inc. for 2024 was $6,593,000, compared to a net loss of $3,153,000 in 2023[308] - Basic earnings per share for 2024 was $2.60, a significant improvement from a loss of $1.27 per share in 2023[308] - Comprehensive income attributable to NCS Multistage Holdings, Inc. for 2024 was $4,741,000, compared to a loss of $3,288,000 in 2023[311] - Net income for 2024 was $8,138,000, a significant improvement from a net loss of $3,111,000 in 2023[316] Assets and Liabilities - Total current assets rose to $105,570,000 in 2024, compared to $103,217,000 in 2023, reflecting a 2.3% increase[306] - Total liabilities decreased to $36,703,000 in 2024, down from $42,639,000 in 2023, representing a reduction of 13.9%[306] - Total stockholders' equity increased to $116,109,000 in 2024, up from $109,393,000 in 2023, marking a growth of 6.5%[306] - The net property and equipment value decreased to $21,283,000 in 2024 from $23,336,000 in 2023, a decline of 8.8%[389] Cash Flow and Operating Activities - Net cash provided by operating activities increased to $12,725,000 in 2024, compared to $4,774,000 in 2023, reflecting a 167% increase[316] - Cash and cash equivalents increased to $25,880,000 in 2024 from $16,720,000 in 2023, a growth of 54.8%[306] - Total cash used in financing activities was $4,269,000 in 2024, up from $2,441,000 in 2023, reflecting increased financial obligations[316] Expenses and Costs - The company reported a total cost of sales of $95,096,000 in 2024, up from $86,868,000 in 2023, reflecting an increase of 9.5%[308] - The company reported a total of $57,820,000 in SG&A expenses for 2024, compared to $56,518,000 in 2023, reflecting a 2.3% increase[374] - Depreciation and amortization expenses increased to $5,316,000 in 2024 from $4,616,000 in 2023, a rise of 15%[316] Risks and Challenges - The company is exposed to credit risk due to the concentration of customers in the E&P industry, which may be similarly affected by economic and regulatory changes[294] - The company anticipates challenges in successfully implementing its strategy to increase sales in U.S. and international markets[12] - The company faces risks related to the inability to develop and implement new technologies that align with customer needs, particularly in non-traditional energy markets[14] - The company has identified potential risks from significant competition leading to pricing pressures and reduced market share[12] Debt and Financing - The company had no outstanding indebtedness under the ABL Facility or the Repeat Precision Promissory Note as of December 31, 2024[293] - Long-term debt as of December 31, 2024 was $6,001,000, slightly decreased from $6,344,000 in 2023, with total debt at $8,142,000[402] - The ABL Facility has an aggregate principal amount of $35 million, with an available borrowing base of $20.1 million as of December 31, 2024[405] Legal and Regulatory Matters - The company was ordered to pay approximately $1.8 million in costs to Kobold Corporation due to a patent infringement ruling, which was paid in November 2023[419] - The company expects to appeal the Canada Court decision regarding the patent infringement, with the appeal anticipated to be heard in early 2025[420] - NCS received jury awards of approximately $0.5 million and $1.9 million in damages against Nine Energy Services and TCO AS, respectively, related to patent infringement claims[422] Shareholder and Equity Information - Total share-based compensation expense for the year ended December 31, 2024, was $5.213 million, a slight decrease from $5.365 million in 2023[444] - The maximum aggregate number of shares available under the 2017 Equity Incentive Plan is 626,626 shares, with 185,281 shares available for future issuance as of December 31, 2024[431] - As of December 31, 2024, there was $1.1 million of total unrecognized compensation cost related to performance stock units (PSUs), expected to be recognized over a weighted average period of two years[440]

Financial Performance - Full year revenue for 2024 was $162.6 million, an increase of $20.1 million or 14% compared to 2023, with record international revenues of $16.5 million, representing 10% of total revenue[5][19] - Net income for 2024 was $6.6 million, or $2.55 per diluted share, compared to a net loss of $(3.2) million in 2023[6][19] - Fourth quarter total revenues were $45.0 million, a 28% year-over-year improvement, driven by increases in international and Canadian product sales[10][11] - Total revenues for the year ended December 31, 2024, reached $162,557,000, an increase of 14.1% from $142,471,000 in 2023[39] - Net income for the year ended December 31, 2024, was $8,138,000, compared to a net loss of $3,111,000 in 2023, representing a significant turnaround[37] - Net income for the three months ended December 31, 2024, was $3,720,000, compared to $39,849,000 for the same period in 2023, reflecting a significant decrease[55] Profitability Metrics - Adjusted EBITDA for 2024 was $22.3 million, an increase of $10.4 million compared to 2023, with an Adjusted EBITDA margin improving to 14%[6][19] - Adjusted gross profit for the year ended December 31, 2024, was $67,461,000, up from $55,603,000 in 2023, reflecting a growth of 21.4%[47] - Adjusted EBITDA for the year ended December 31, 2024, was $22,279,000, representing an increase from $11,949,000 in 2023, with an adjusted EBITDA margin of 14% compared to 8% in the previous year[55] - Adjusted net income attributable to NCS Multistage Holdings, Inc. for the year ended December 31, 2024, was $9,328,000, compared to a loss of $1,254,000 in 2023, indicating a turnaround in profitability[55] Cash Flow and Liquidity - Free cash flow after distributions to non-controlling interest reached $9.9 million in 2024, an increase of $7.3 million compared to 2023[7][20] - Cash flows from operating activities for 2024 were $12.7 million, a $7.9 million improvement compared to 2023[20] - Net cash provided by operating activities for the year ended December 31, 2024, was $12,725,000, significantly higher than $4,774,000 in 2023[37] - Free cash flow for the year ended December 31, 2024, was $11,938,000, up from $3,091,000 in 2023, indicating improved cash generation capabilities[59] - Cash and cash equivalents increased to $25,880,000 as of December 31, 2024, compared to $16,720,000 as of December 31, 2023[35] Expenses and Cost Management - SG&A expenses for 2024 totaled $57.8 million, reflecting a higher annual incentive bonus accrual compared to $56.5 million in 2023[13][18] - The company incurred $2,747,000 in share-based compensation for the year ended December 31, 2024, down from $4,164,000 in 2023, reflecting cost management efforts[55] Asset and Liability Management - Total current assets increased to $105,570,000 as of December 31, 2024, compared to $103,217,000 as of December 31, 2023[35] - Total liabilities decreased to $36,703,000 as of December 31, 2024, from $42,639,000 as of December 31, 2023[35] - The company reported a total stockholders' equity of $98,839,000 as of December 31, 2024, up from $91,618,000 in 2023[35] Market Outlook and Growth - The company expects revenue to outperform underlying industry growth in Canada, the U.S., and international markets in 2025[8][9] - The company anticipates continued growth in product sales and services as it expands into U.S. and international markets[30] - The company is focused on developing new technologies and products to align with customer needs, particularly in non-traditional energy markets[30] Foreign Currency and Legal Matters - Foreign currency losses for the year ended December 31, 2024, amounted to $2,963,000, compared to a gain of $462,000 in 2023, highlighting the impact of exchange rate fluctuations[55] - The company expects to continue incurring legal costs related to intellectual property, which may affect future financial performance[52]

Core Viewpoint - NCS Multistage Holdings, Inc. reported significant growth in revenue and profitability for the year ended December 31, 2024, driven by strong performance in international and Canadian markets, alongside improved operating efficiencies and strategic initiatives to enhance market presence [2][3][5]. Financial Performance - Total revenue for 2024 was $162.6 million, an increase of $20.1 million or 14% compared to 2023 [5][18]. - The company achieved record international revenues of $16.5 million, representing 10% of total revenue, up from 5% in the previous year [5]. - Adjusted EBITDA for 2024 was $22.3 million, an increase of over 85% from 2023, with an adjusted EBITDA margin of 14% [6][20]. - Net income attributable to NCS shareholders was $6.6 million, or $2.55 per diluted share, compared to a net loss of $(3.2) million in 2023 [6][20]. Fourth Quarter Results - For Q4 2024, total revenues were $45.0 million, a 28% increase compared to Q4 2023, primarily driven by international and Canadian product sales [11][12]. - Gross profit for Q4 was $18.7 million, with a gross margin of 42%, up from 35% in Q4 2023 [13]. - Adjusted EBITDA for Q4 was $8.2 million, compared to $2.5 million in Q4 2023, resulting in an adjusted EBITDA margin of 18% [17]. Cash Flow and Liquidity - Free cash flow after distributions to non-controlling interest reached $9.9 million in 2024, an increase of $7.3 million compared to 2023 [7][21]. - As of December 31, 2024, the company had $25.9 million in cash and $8.1 million in total debt, enhancing its financial flexibility [22]. Market Outlook - Looking ahead to 2025, the company anticipates stable or slightly increased activity levels in Canada, while the U.S. market may see a modest decline [8]. - NCS expects to outperform underlying industry growth in Canada, the U.S., and international markets in 2025 when measured in local currencies [9].

Company Overview - NCS Multistage Holdings, Inc. is a leading provider of highly engineered products and support services for optimizing oil and natural gas well construction, completions, and field development strategies [3] - The company primarily serves exploration and production companies for onshore and offshore wells, especially those drilled with horizontal laterals in both unconventional and conventional formations [3] - NCS's products and services are utilized across North America and selected international markets, including the North Sea, Middle East, Argentina, and China [3] - The company's common stock is traded on the Nasdaq Capital Market under the symbol "NCSM" [3] Upcoming Events - NCS will host a conference call to discuss its fourth quarter and full year 2024 results on March 11, 2025, at 7:30 a.m. Central Time [1] - The earnings release will be issued the evening prior to the conference call [1] - The conference call will be available via a live audio webcast, with options for participants to ask questions or join in listen-only mode [2] - A replay of the conference call will be available on the company's website shortly after the conclusion of the call for approximately seven days [2]

Core Insights - NCS Multistage Holdings, Inc. (NASDAQ: NCSM) reported total revenues of $44.0 million, reflecting a 15% year-over-year improvement [2] - The company has a liquidity position of $37.0 million, up from $33.0 million in Q2 2024, and has a manageable debt level of $8.6 million [2] - Adjusted EBITDA for NCSM was $7.1 million, showing a $0.3 million year-over-year improvement [2]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2024 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______ to ______ Commission file number: 001-38071 NCS Multistage Holdings, Inc. (Exact name of registrant as specified in its charter) ...

Financial Performance - Total revenues for Q3 2024 were $44.0 million, a 15% year-over-year increase from $38.3 million in Q3 2023, driven by higher international revenues and U.S. product sales[2]. - Net income for Q3 2024 was $4.1 million, or $1.60 per diluted share, compared to $4.4 million, or $1.77 per diluted share in Q3 2023[7]. - Adjusted EBITDA for Q3 2024 was $7.1 million, a $0.3 million improvement year-over-year, with an Adjusted EBITDA margin of 16% compared to 18% in the same period last year[8]. - Gross profit was $17.8 million with a gross margin of 41% in Q3 2024, up from $15.2 million and a 40% margin in Q3 2023[4]. - Total revenues for the three months ended September 30, 2024, increased to $44,006,000, up 15.5% from $38,279,000 in the same period of 2023[27]. - Product sales reached $31,675,000 for the three months ended September 30, 2024, compared to $27,286,000 in the prior year, reflecting a growth of 16.5%[27]. - Net income attributable to NCS Multistage Holdings, Inc. for the three months ended September 30, 2024, was $4,147,000, a decrease of 5.9% from $4,408,000 in the same period of 2023[27]. - The company reported a basic earnings per share of $1.63 for the three months ended September 30, 2024, down from $1.78 in the prior year[27]. - The total revenues for the nine months ended September 2024 were $117,554 thousand, an increase from $107,224 thousand in the same period last year[30]. - Adjusted net income attributable to NCS Multistage Holdings, Inc. for the three months ended September 30, 2024, was $3,887,000, compared to $4,744,000 in the same period of 2023[40]. Cash Flow and Liquidity - Free cash flow for the first nine months of 2024 was $0.4 million, a $3.3 million improvement compared to a cash use of $(3.0) million in the same period of 2023[9]. - Total liquidity as of September 30, 2024, was over $37 million, including $15.3 million in cash and availability under an undrawn revolving credit facility[17]. - Free cash flow for the three months ended September 30, 2024, was $1,350,000, compared to $(2,959,000) for the same period in 2023[46]. - Free cash flow less distributions to non-controlling interest for the three months ended September 30, 2024, was $350,000, compared to $(2,959,000) for the same period in 2023[46]. - Cash flows from operating activities provided $2,082 thousand in September 2024, a turnaround from cash used of $1,446 thousand in September 2023[29]. - The company reported a net cash provided by operating activities of $2,082,000 for the three months ended September 30, 2024, compared to $(1,446,000) for the same period in 2023[46]. Expenses and Costs - SG&A expenses for Q3 2024 totaled $14.1 million, an increase of $1.5 million year-over-year, reflecting higher annual incentive bonus accruals[5]. - The company reported total cost of sales of $25,474,000 for the three months ended September 30, 2024, an increase of 12.5% from $22,567,000 in the same period of 2023[27]. - Total cost of sales, exclusive of depreciation and amortization, was $25,474 thousand for the three months ended September 2024, compared to $22,567 thousand in the same period last year[38]. - The company recorded a provision for inventory obsolescence of $945 thousand in September 2024, compared to $256 thousand in September 2023[29]. - Share-based compensation for the three months ended September 30, 2024, was $651,000, down from $1,328,000 in the same period of 2023[44]. Assets and Liabilities - Total current assets decreased to $99,453,000 as of September 30, 2024, from $103,217,000 at the end of 2023, a decline of 3.7%[28]. - Accounts receivable—trade, net increased significantly to $36,652,000 as of September 30, 2024, compared to $23,981,000 at December 31, 2023, representing a growth of 53%[28]. - Total liabilities decreased to $31,733,000 as of September 30, 2024, down from $42,639,000 at the end of 2023, a reduction of 25.6%[28]. - Stockholders' equity increased to $114,110,000 as of September 30, 2024, compared to $109,393,000 at December 31, 2023, reflecting a growth of 4.9%[28]. - The company has maintained goodwill at $15,222,000 as of September 30, 2024, unchanged from December 31, 2023[28]. - The company reported a net working capital of $64,125 thousand as of September 30, 2024, an increase from $56,251 thousand at the end of December 2023[35]. Future Outlook - The company expects a 5-15% sequential reduction in revenue for Q4 2024 across U.S., Canada, and international markets due to anticipated lower year-end activity[18]. - The company expects to continue incurring legal costs associated with intellectual property matters, which may impact future financial performance[42].