NCS Multistage(NCSM) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) Unaudited condensed consolidated financial statements for Q1 2025 show increased revenue and net income, driven by strong Canadian and international market performance Condensed Consolidated Balance Sheets Total assets increased to $155.1 million, liabilities decreased, and equity rose to $120.8 million as of March 31, 2025 Condensed Consolidated Balance Sheet Highlights (In thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $109,041 | $105,570 | | Total Assets | $155,118 | $152,812 | | Total Current Liabilities | $23,865 | $25,419 | | Total Liabilities | $34,282 | $36,703 | | Total Equity | $120,836 | $116,109 | Condensed Consolidated Statements of Operations Q1 2025 total revenues rose 14.0% to $50.0 million, with net income significantly increasing to $4.1 million, or $1.51 diluted EPS Statements of Operations Highlights (In thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $50,005 | $43,858 | | Income from Operations | $4,289 | $2,501 | | Net Income | $4,454 | $2,553 | | Net Income attributable to NCS | $4,056 | $2,070 | | Diluted EPS | $1.51 | $0.82 | Condensed Consolidated Statements of Comprehensive Income Comprehensive income attributable to the company for Q1 2025 significantly increased to $4.0 million, primarily due to higher net income Comprehensive Income (In thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $4,454 | $2,553 | | Comprehensive Income | $4,443 | $2,057 | | Comprehensive Income attributable to NCS | $4,045 | $1,574 | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity increased to $120.8 million by March 31, 2025, primarily due to net income and share-based compensation - Key changes in stockholders' equity for Q1 2025 include a $4.5 million increase from net income and a $0.6 million increase from share-based compensation[16] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved slightly in Q1 2025, with overall cash and equivalents decreasing by $2.9 million to $23.0 million Summary of Cash Flows (In thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,645) | $(1,880) | | Net cash used in investing activities | $(451) | $(136) | | Net cash used in financing activities | $(790) | $(630) | | Net change in cash and cash equivalents | $(2,883) | $(2,716) | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail revenue by geography, debt facilities, and ongoing patent litigation, supporting the unaudited financial statements Revenue by Geographic Area (In thousands) | Region | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | United States | $9,372 | $10,011 | | Canada | $37,718 | $31,669 | | Other Countries | $2,915 | $2,178 | | Total Revenues | $50,005 | $43,858 | - The company has a $35.0 million ABL Facility with an available borrowing base of $26.8 million as of March 31, 2025, with no outstanding indebtedness under the facility[47] - The company is involved in ongoing patent litigation. A Canadian court ruled against NCS, a decision which is under appeal. Separately, NCS received favorable jury verdicts against Nine Energy Services and TCO AS in the U.S., which are also under appeal[57][58][60] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 performance, highlighting 14.0% revenue growth, strong liquidity, and market outlook with key risks Overview and Outlook The 2025 outlook anticipates stable Canadian activity, modest U.S. decline, and international growth, with risks from commodity prices and competition - The 2025 market outlook anticipates stable activity in Canada, a modest decline in the U.S., and increased activity in international markets like the North Sea, Middle East, and Argentina[74] - The company faces risks from competitive pressures, which constrain pricing, and potential cost increases from tariffs on steel and chemicals from China[77][78] - Geopolitical conflicts in the Middle East and the Russia-Ukraine war, along with global economic concerns, contribute to oil price volatility[76] Results of Operations Q1 2025 revenues increased 14.0% to $50.0 million, and net income grew 74.5% to $4.5 million, driven by Canadian and international growth Q1 2025 vs. Q1 2024 Operational Results (In thousands) | Metric | Q1 2025 | Q1 2024 | Variance ($) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $50,005 | $43,858 | $6,147 | 14.0% | | Total Gross Profit | $21,140 | $16,955 | $4,185 | 24.7% | | Income from Operations | $4,289 | $2,501 | $1,788 | 71.5% | | Net Income | $4,454 | $2,553 | $1,901 | 74.5% | - Revenue growth was driven by a $6.0 million (19.1%) increase in Canada and a $0.7 million (33.8%) increase in other countries, while U.S. revenue declined by $0.6 million (6.4%)[98] - Gross margin as a percentage of revenue improved from 61.3% to 57.7% due to higher-margin international work and supply chain efficiencies[99] Liquidity and Capital Resources As of March 31, 2025, liquidity includes $23.0 million cash and $26.8 million available ABL facility, sufficient for future operations - The company's liquidity position as of March 31, 2025 includes $23.0 million in cash and $26.8 million available under its ABL Facility, with no outstanding borrowings[104] - Total planned capital expenditures for 2025 are estimated to be between $1.5 million and $1.8 million[107] Cash Flow Summary (In thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,645) | $(1,880) | | Net cash used in investing activities | $(451) | $(136) | | Net cash used in financing activities | $(790) | $(630) | Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure has not materially changed since the disclosures in its 2024 Annual Report - There have been no material changes in the company's market risk exposure since December 31, 2024[121] Controls and Procedures Disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025[122] - No material changes to internal control over financial reporting occurred during the first quarter of 2025[123] PART II. OTHER INFORMATION Legal Proceedings For information regarding legal proceedings, refer to Note 10 of the unaudited condensed consolidated financial statements - For information regarding legal proceedings, refer to Note 10 of the unaudited condensed consolidated financial statements[126] Risk Factors There have been no material changes from the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the 2024 Annual Report[127] Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025 - No director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025[128] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data - The exhibits filed with this report include CEO and CFO certifications pursuant to the Sarbanes-Oxley Act and Inline XBRL documents[129] Signatures Signatures The report was formally signed and submitted by the Chief Financial Officer and Treasurer on May 1, 2025 - The Form 10-Q was signed on May 1, 2025, by Mike Morrison, Chief Financial Officer and Treasurer[133]