NCS Multistage(NCSM) - 2025 Q2 - Quarterly Results

NCS Multistage Holdings, Inc. Second Quarter 2025 Results NCS Multistage Holdings reports strong Q2 2025 results with significant revenue and Adjusted EBITDA growth, alongside a strategic acquisition, while maintaining a cautious outlook for the second half of the year Review and Outlook In Q2 2025, NCS Multistage Holdings exceeded expectations with a 23% year-over-year revenue increase, outperforming industry activity levels, and announced a strategic acquisition | Metric | Q2 2025 (in millions) | YoY Change | | :--- | :--- | :--- | | Total Revenues | $36.5 | +23% | | Net Income | $0.9 | N/A (from loss) | | Diluted EPS | $0.34 | N/A (from loss) | | Adjusted EBITDA | $2.2 | +$1.3 | | Metric | H1 2025 vs H1 2024 | Change Amount (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | Improvement | +$12.9 | +18% | | Adjusted EBITDA | Improvement | +$3.4 | +49% | - Announced the acquisition of Reservoir Metrics, LLC ("ResMetrics"), a leader in reservoir analysis, which had unaudited revenue over $10 million with an EBITDA margin over 30% for the trailing twelve months ended June 30, 2025[6] - The company maintains a strong balance sheet with over $25 million in cash, over $17 million in credit facility availability, and only $8 million in debt (capital leases) as of the end of Q2[5] - Management expressed caution for the second half of the year due to deteriorating market conditions, including U.S. rig count declines, a slow Canadian rig count recovery, potential oil oversupply from OPEC+, and trade uncertainties[7] Financial Review Total revenues for Q2 2025 grew to $36.5 million, a 23% increase year-over-year, driven by strong activity in Canada and the U.S., which offset a decline in international revenues | Period | Revenue (in millions) | Change | | :--- | :--- | :--- | | Q2 2025 vs Q2 2024 | $36.5 vs $29.7 | +23% | | Q2 2025 vs Q1 2025 | $36.5 | -27% | | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | | Gross Profit | $12.3 | $11.3 | | Gross Margin | 34% | 38% | | Adjusted Gross Profit | $13.0 | $12.0 | | Adjusted Gross Margin | 36% | 40% | - SG&A expenses decreased by $1.2 million compared to Q2 2024, primarily due to lower professional fees and payroll expenses[13] | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | | Net Income (Loss) | $0.9 | $(3.1) | | Diluted EPS | $0.34 | $(1.21) | - A deferred income tax benefit of $1.4 million was recorded due to the reversal of a valuation allowance against Canadian deferred tax assets, reflecting sustained improvements in operating results[15] Liquidity and Capital Expenditures As of June 30, 2025, NCS maintained a strong liquidity position with $25.4 million in cash and $17.2 million available under its undrawn credit facility | Liquidity Metric (as of June 30, 2025) | Amount (in millions) | | :--- | :--- | | Cash | $25.4 | | Total Indebtedness | $7.7 | | ABL Facility Availability | $17.2 | | Working Capital | $87.2 | - Net working capital increased to $64.0 million as of June 30, 2025, up from $56.4 million at December 31, 2024, mainly due to higher accounts receivable and inventory[20] - Capital expenditures, net of proceeds from sales, were $0.5 million for the six months ended June 30, 2025[21] Strategic Acquisition of Reservoir Metrics, LLC On July 31, 2025, NCS acquired 100% of Reservoir Metrics, LLC (ResMetrics), a provider of tracer diagnostics services, for $5.9 million in cash - NCS acquired ResMetrics for $5.9 million in cash, with a potential earn-out of up to $1.3 million based on international trade tariff rates[23] - The acquisition is a strategic move to enhance the company's tracer diagnostics service offerings[23] Financial Statements This section presents the company's condensed consolidated statements of operations, balance sheets, cash flows, and revenues by geographic area for the reported periods Condensed Consolidated Statements of Operations For the second quarter of 2025, NCS reported total revenues of $36.5 million and net income of $0.9 million, a significant improvement from a net loss in the prior-year period Q2 Performance (Three Months Ended June 30) | Metric (in thousands, except EPS) | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $36,454 | $29,690 | | Gross Profit (Calculated) | $12,998 | $11,971 | | (Loss) Income from Operations | $(2,030) | $(4,150) | | Net Income (Loss) Attributable to NCS | $924 | $(3,095) | | Diluted EPS | $0.34 | $(1.21) | H1 Performance (Six Months Ended June 30) | Metric (in thousands, except EPS) | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $86,459 | $73,548 | | Income from Operations | $2,259 | $(1,649) | | Net Income (Loss) Attributable to NCS | $4,980 | $(1,025) | | Diluted EPS | $1.84 | $(0.41) | Condensed Consolidated Balance Sheets As of June 30, 2025, the company's balance sheet showed total assets of $158.0 million, an increase from year-end 2024, with total liabilities decreasing and total equity increasing | Balance Sheet Item (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $25,372 | $25,880 | | Total current assets | $110,970 | $105,570 | | Total assets | $157,977 | $152,812 | | Total current liabilities | $23,806 | $25,419 | | Total liabilities | $33,998 | $36,703 | | Total equity | $123,979 | $116,109 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $1.9 million, a decrease from the prior year, with net cash used in investing and financing activities Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,876 | $4,099 | | Net cash used in investing activities | $(474) | $(393) | | Net cash used in financing activities | $(2,240) | $(1,669) | | Net change in cash and cash equivalents | $(508) | $1,894 | | Cash and cash equivalents end of period | $25,372 | $18,614 | Revenues by Geographic Area In Q2 2025, Canada was the largest market with $18.0 million in revenue, while U.S. revenue also grew, offsetting a decline in other international countries Q2 Revenues by Geography (in thousands) | Region | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | United States | $13,612 | $11,791 | | Canada | $17,969 | $12,058 | | Other Countries | $4,873 | $5,841 | | Total Revenues | $36,454 | $29,690 | H1 Revenues by Geography (in thousands) | Region | H1 2025 | H1 2024 | | :--- | :--- | :--- | | United States | $22,984 | $21,802 | | Canada | $55,687 | $43,727 | | Other Countries | $7,788 | $8,019 | | Total Revenues | $86,459 | $73,548 | Reconciliation of GAAP to Non-GAAP Financial Measures This section provides reconciliations of key non-GAAP financial measures including net working capital, adjusted gross profit, EBITDA, and free cash flow Net Working Capital The company calculates Net Working Capital by excluding cash and current debt maturities from the standard working capital definition, showing an increase to $64.0 million as of June 30, 2025 Net Working Capital Reconciliation (in thousands) | Component (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Working capital | $87,164 | $80,151 | | Less: Cash and cash equivalents | $(25,372) | $(25,880) | | Plus: Current maturities of long term debt | $2,200 | $2,141 | | Net working capital | $63,992 | $56,412 | Adjusted Gross Profit and Adjusted Gross Margin Adjusted Gross Profit, which excludes depreciation and amortization from cost of sales, was $13.0 million in Q2 2025, though the Adjusted Gross Margin declined to 36% Adjusted Gross Profit Reconciliation (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Gross Profit (GAAP) | $12,269 | $11,318 | $33,409 | $28,273 | | Gross Margin (GAAP) | 34% | 38% | 39% | 38% | | Adjusted Gross Profit | $12,998 | $11,971 | $34,853 | $29,542 | | Adjusted Gross Margin | 36% | 40% | 40% | 40% | EBITDA and Adjusted EBITDA For Q2 2025, Adjusted EBITDA more than doubled to $2.2 million from $0.9 million in Q2 2024, with the margin improving from 3% to 6% Adjusted EBITDA Reconciliation (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $1,698 | $(2,839) | $6,152 | $(286) | | EBITDA | $2,136 | $(1,153) | $8,676 | $3,227 | | Adjusted EBITDA | $2,223 | $916 | $10,437 | $6,993 | | Adjusted EBITDA Margin | 6% | 3% | 12% | 10% | Free Cash Flow For the first six months of 2025, Free Cash Flow was $1.4 million, a decrease from the prior year, with Free Cash Flow less distributions to non-controlling interests at $0.5 million Free Cash Flow Reconciliation (Six Months Ended June 30, in thousands) | Metric (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,876 | $4,099 | | Less: Capital Expenditures | $(745) | $(686) | | Plus: Proceeds from sales of property | $271 | $293 | | Free cash flow | $1,402 | $3,706 | | Less: Distributions to non-controlling interest | $(900) | $(500) | | Free cash flow less distributions | $502 | $3,206 |