NCS Multistage Holdings, Inc. (NASDAQ:NCSM) Q2 2023 Earnings Conference Call August 1, 2023 8:30 AM ET Company Participants Mike Morrison - Chief Financial Officer Ryan Hummer - Chief Executive Officer Conference Call Participants John Daniel - Daniel Energy Partners Dave Storms - Stonegate Jeff Robertson - Water Tower Research Operator Good day and thank you for standing by. Welcome to the Q2 2023 NCS Multistage Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is ...

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 June 30, 2023 OR Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number: 001-38071 NCS Multistage Holdings, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organiza ...

Financial Data and Key Metrics Changes - The company reported first-quarter revenues of $43.6 million, an 11% increase compared to the same period last year [47] - Gross profit was $18.5 million, with a gross margin of 43%, up from 38% year-over-year [7][45] - The net loss for the first quarter was $15 million, translating to a loss per share of $6.10, impacted by a $17.5 million charge related to a jury verdict [8][25] Business Line Data and Key Metrics Changes - Perforating gun sales were lower than expected, but there was increased momentum in PurpleSeal composite plug sales [3] - Canadian revenue was $30.7 million, near the midpoint of guidance, with strong increases compared to previous quarters [20] - U.S. revenue was $11.3 million, below guidance, reflecting reduced activity in natural gas production [43] Market Data and Key Metrics Changes - International operations generated $1.6 million in revenue, slightly above the midpoint of guidance [21] - The company expects industry activity growth of up to 10% in both Canada and the U.S. for 2023 [28][40] - The company anticipates a seasonal slowdown in Canadian operations due to spring breakup, with recovery expected in June [4] Company Strategy and Development Direction - The company is focused on leveraging new technologies to meet customer needs and expand its addressable market [30] - There is an emphasis on maintaining a strong balance sheet and generating positive free cash flow in 2023 [13][11] - The company plans to appeal a recent jury verdict, expecting insurance to cover most of the awarded damages [6][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of Canadian business activity in the third quarter [4] - The company expects to achieve annual adjusted EBITDA guidance weighted towards the second half of the year [12] - Management highlighted the potential for a multi-year cycle of improved growth prospects in the industry [32] Other Important Information - The company maintains a cash balance of over $13 million and a positive net cash position of $5.2 million [13][36] - Selling, general, and administrative costs were $16.2 million, slightly up from the previous year [24] - Adjusted net income for the first quarter was $1.2 million, an improvement from a net loss in the same period last year [25] Q&A Session Summary Question: What is the outlook for U.S. revenue growth? - Management expects modest sequential revenue growth in the U.S. in the second quarter despite recent reductions in activity [43] Question: How is the company addressing the recent jury verdict? - The company plans to appeal the verdict and believes that most of the damages will be covered by insurance [6][12] Question: What are the expectations for international market growth? - Management anticipates growth in international markets, particularly in the North Sea and the Middle East, as service activity increases [45][40]

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 March 31, 2023 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) | Delawa ...

FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Portions of the definitive proxy statement for the registrant's 2023 Annual Meeting of Stockholders are incorporated by reference in Part III of this Form 10-K. Such proxy statement will be filed with the Securities and Exchange Commission not later than 120 days aft ...

NCS Multistage Holdings, Inc. (NASDAQ:NCSM) Q4 2022 Earnings Conference Call March 7, 2023 8:30 AM ET Company Participants Ryan Hummer - CEO Mike Morrison - CFO Conference Call Participants Bill Austin - Daniel Energy Partners Operator Good day and welcome to the NCS Multistage Fourth Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today???s presentation there will be an opportunity to ask questions. [Operator Instructions]. Please note t ...

Investor Update March 2023 2 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 managemen ...

Investor Update November 2022 Disclaimer 2 Leading Global Fnergy Technology 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 cost ...

NCS Multistage Holdings, Inc. (NASDAQ:NCSM) Q3 2022 Earnings Conference Call November 1, 2022 8:30 AM ET Company Participants Ryan Hummer - Chief Financial Officer Robert Nipper - Founder and Chief Executive Officer Mike Morrison - Incoming Chief Financial Officer Conference Call Participants John Daniel - Daniel Energy Partners Operator Good day and thank you for standing by. Welcome to the NCS Multistage Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today???s ...

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for the period ended September 30, 2022, show a net income of **$4.0 million** for Q3 2022, despite negative cash from operations for the nine-month period due to increased working capital [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$137.1 million** as of September 30, 2022, from **$142.3 million** at year-end 2021, primarily due to a reduction in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $85,438 | $88,493 | | **Total Assets** | **$137,148** | **$142,325** | | **Total Current Liabilities** | $20,063 | $19,818 | | **Total Liabilities** | **$31,724** | **$31,658** | | **Total Equity** | **$105,424** | **$110,667** | | Cash and cash equivalents | $9,877 | $22,168 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenues increased **50.8%** to **$48.9 million** in Q3 2022, resulting in **$3.9 million** net income, while the nine-month period still recorded a **$3.1 million** net loss despite **40.1%** revenue growth Q3 2022 vs Q3 2021 Operating Results (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $48,870 | $32,411 | 50.8% | | Income from Operations | $4,047 | $2,640 | 53.3% | | Net Income Attributable to NCS | $3,935 | $2,796 | | | Diluted EPS | $1.58 | $1.14 | | Nine Months 2022 vs 2021 Operating Results (in thousands, except per share data) | Metric | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | Total Revenues | $115,446 | $82,386 | | Loss from Operations | ($4,066) | ($6,403) | | Net Loss Attributable to NCS | ($3,081) | ($6,396) | | Diluted EPS | ($1.27) | ($2.67) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income for Q3 2022 was **$0.6 million**, a decrease from Q3 2021, primarily due to a **$3.4 million** negative foreign currency translation adjustment, leading to a **$7.4 million** comprehensive loss for the nine-month period Comprehensive Income (Loss) (in thousands) | Period | 2022 | 2021 | | :--- | :--- | :--- | | **Three Months Ended Sep 30** | | | | Net income (loss) | $3,964 | $3,226 | | Foreign currency translation adjustments | ($3,359) | ($1,007) | | Comprehensive income (loss) | $605 | $2,219 | | **Nine Months Ended Sep 30** | | | | Net income (loss) | ($3,243) | ($5,775) | | Foreign currency translation adjustments | ($4,118) | ($184) | | Comprehensive income (loss) | ($7,361) | ($5,959) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity decreased from **$110.7 million** at year-end 2021 to **$105.4 million** as of September 30, 2022, driven by the nine-month net loss and negative foreign currency translation adjustments - The change in total equity from **$110.7 million** at the end of 2021 to **$105.4 million** at the end of Q3 2022 was primarily driven by the nine-month net loss and a cumulative negative currency translation adjustment of **$4.1 million**, which were partially offset by share-based compensation[15](index=15&type=chunk)[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$9.0 million** for the nine months ended September 30, 2022, a reversal from the prior year, primarily due to increases in accounts receivable and inventory, leading to a **$12.3 million** decrease in cash and cash equivalents Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($9,036) | $6,721 | | Net cash used in investing activities | ($440) | ($297) | | Net cash used in financing activities | ($2,387) | ($3,405) | | **Net change in cash and cash equivalents** | **($12,291)** | **$2,899** | | Cash and cash equivalents end of period | $9,877 | $18,444 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes disclose accounting policies, revenue disaggregation by geography (Canada largest market), the replacement of the prior credit facility with a new **$35.0 million** ABL Facility, and specifics on share-based compensation grants - The company provides engineered products and support services for oil and natural gas well construction and completions, operating primarily in North America with facilities in the US, Canada, Argentina, and Norway[25](index=25&type=chunk) Revenue by Geographic Region (Nine Months Ended Sep 30, in thousands) | Region | 2022 | 2021 | | :--- | :--- | :--- | | United States | $32,722 | $25,090 | | Canada | $76,136 | $51,530 | | Other Countries | $6,588 | $5,766 | | **Total Revenues** | **$115,446** | **$82,386** | - On May 3, 2022, the company terminated its Prior Senior Secured Credit Facility and entered into a new **$35.0 million** asset-based revolving credit facility (ABL Facility) which matures in 2027[53](index=53&type=chunk)[54](index=54&type=chunk) - During the first nine months of 2022, the company granted **70,938** RSUs, **48,565** cash-settled ESUs, and **17,454** PSUs as part of its share-based compensation program[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the **50.8%** YoY revenue increase in Q3 2022 driven by North American activity, noting significant cost pressures from raw materials and labor, while expecting continued strong industry activity despite risks from competition, a strong U.S. dollar, and potential economic slowdown [Outlook](index=18&type=section&id=Outlook) The company anticipates increased drilling and completion activity in the U.S. and Canada for 2022, driven by strong commodity prices, but faces challenges from intense competition, rising raw material and labor costs, a strengthening U.S. dollar, and potential economic recession - Management expects U.S. drilling activity to increase over **30%** and completion activity by over **10%** in 2022, with Canadian drilling and completion activity expected to increase by **20%** to **25%**[84](index=84&type=chunk) - The company is experiencing increased prices for raw materials (steel, chemicals), components, and outsourced services, as well as labor cost inflation, which may negatively impact margins[86](index=86&type=chunk)[111](index=111&type=chunk) - A strengthening U.S. dollar poses a risk, as over **60%** of revenue is generated in Canada, resulting in lower reported revenue and gross profit when converted to U.S. dollars[87](index=87&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q3 2022 revenues increased **50.8%** to **$48.9 million**, with income from operations growing **53.3%** to **$4.0 million**, though cost of sales as a percentage of revenue increased due to supply chain costs and the absence of the ERC benefit Q3 2022 vs Q3 2021 Results Summary (in thousands) | Metric | Q3 2022 | Q3 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $48,870 | $32,411 | 50.8% | | Total Cost of Sales | $28,394 | $17,636 | 61.0% | | SG&A | $15,379 | $10,982 | 40.0% | | Income from Operations | $4,047 | $2,640 | 53.3% | - Q3 2022 revenue growth was driven by higher product sales and services volumes in Canada and the U.S. due to increased industry activity[115](index=115&type=chunk) - Cost of sales as a percentage of revenue increased in Q3 2022 to **58.1%** from **54.4%** in Q3 2021, due to supply chain cost increases and the non-recurrence of the U.S. employee retention credit (ERC)[116](index=116&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2022, the company had **$9.9 million** in cash and access to a **$35.0 million** ABL facility, with net cash used in operations for the first nine months totaling **$9.0 million**, primarily due to increased accounts receivable and inventory - Primary liquidity sources are cash (**$9.9M**), cash from operations, and a new **$35.0M** ABL Facility, with the ABL borrowing base at **$23.8M** and no outstanding borrowings as of Sep 30, 2022[126](index=126&type=chunk) - Net cash used in operating activities was **($9.0) million** for the nine months ended Sep 30, 2022, compared to **$6.7 million** provided in the same period of 2021, primarily driven by increases in accounts receivable and inventory[24](index=24&type=chunk)[131](index=131&type=chunk) - Planned capital expenditures for 2022 are approximately **$1.0 million** to **$1.5 million**[128](index=128&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk exposure, primarily interest rate and foreign currency risk, remains largely unchanged since year-end 2021, with the new ABL Facility exposing it to variable interest rates, though no outstanding borrowings minimize immediate risk - The company's primary market risk exposure is to interest rates through its new ABL Facility, which has variable rates based on SOFR and CDOR, but as of September 30, 2022, there was no outstanding indebtedness under the facility[146](index=146&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of September 30, 2022, the company's disclosure controls and procedures were effective[147](index=147&type=chunk) - No changes occurred during the quarter ended September 30, 2022, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[148](index=148&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various ordinary course legal proceedings, which management does not expect to have a material adverse effect on its financial position, results of operations, or cash flows - The company is subject to various legal proceedings in the ordinary course of business but does not expect them to have a material adverse effect on its financial position, results of operations, or cash flows[65](index=65&type=chunk)[151](index=151&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors primarily focus on the new ABL Facility, including potential adverse effects of indebtedness on financial condition, restrictive covenants limiting business strategies, and the impact of volatile credit markets on future financing - The company's new ABL Facility, secured by substantially all assets, has a borrowing base that excludes assets of Repeat Precision and could be insufficient to meet liquidity needs[153](index=153&type=chunk) - The ABL Facility contains restrictive covenants that limit the company's ability to incur debt, grant liens, make investments, pay dividends, and make acquisitions[157](index=157&type=chunk) - A breach of covenants, such as the fixed charge coverage ratio (tested when liquidity is low), could lead to an event of default and acceleration of debt[158](index=158&type=chunk)[159](index=159&type=chunk) [Exhibits](index=33&type=section&id=Item%206.%20Exhibits) Exhibits filed with the Form 10-Q include amended employment agreements for executives and required CEO and CFO certifications under the Sarbanes-Oxley Act - Exhibits filed include amended employment agreements for the CEO and another executive, as well as Sarbanes-Oxley certifications[162](index=162&type=chunk)