NCS Multistage(US:NCSM)2025-10-30 20:10Acquisition - 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]