NCS Multistage(US:NCSM)2021-08-07 15:14Financial Data and Key Metrics Changes - The company's Q2 2021 revenues were $21.5 million, a 146% increase compared to Q2 2020, but a 25% decrease sequentially from Q1 2021 [15] - Gross profit for Q2 2021 was $7.5 million, representing 35% of revenue, compared to $2.3 million or 27% of revenue in Q2 2020 [15][16] - Adjusted EBITDA for Q2 2021 was negative $1.6 million, showing a $6.3 million improvement year-over-year but a decrease of $1.7 million from Q1 2021 [18] - The company maintained a strong balance sheet with approximately $8 million in net cash as of June 30, 2021 [11] Business Line Data and Key Metrics Changes - U.S. revenue for Q2 2021 was $9.2 million, an 18% sequential increase, but below guidance due to unexpected issues [7] - Canadian revenue also reached $9.2 million, exceeding guidance of $5 million to $6 million, indicating a stronger recovery than the U.S. [9] - International revenue significantly increased to $3 million in Q2 2021, up from $0.5 million in Q1 2021, surpassing guidance [10] Market Data and Key Metrics Changes - The Canadian rig count is tracking closely with 2019 levels, indicating a stronger recovery compared to the U.S. [9] - The Petroleum Services Association of Canada increased its well drilling expectations for 2021 by 18% to 4,250 wells [9] - International operations are expected to continue increasing, although staffing remains challenging due to COVID-related travel restrictions [10] Company Strategy and Development Direction - The company is focused on managing costs, with SG&A expenses decreasing by 24% year-over-year [11] - There is an emphasis on maintaining a capital-light business model, with net capital expenditures for Q2 at only $3 million [11] - The company plans to continue investing in technology and intellectual property to enhance products and services [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in global oil demand and the potential for a multiyear cyclical recovery in the industry [28] - The company expects continued sequential growth in U.S. operations and a strong position in the Canadian market [27] - Future guidance for Q3 2021 anticipates total revenue between $32 million and $35 million, with improved gross margins [21][24] Other Important Information - The company reported zero recordable incidents in 2021, highlighting its commitment to safety [13][39] - Management noted signs of cost inflation and supply chain stresses impacting the business [11] Q&A Session Summary Question: Insights on Canadian market recovery compared to the U.S. - Management noted that the Canadian market has learned to operate within its means, leading to a quicker recovery compared to the U.S. [31][32] Question: Future growth prospects in Canada - Management indicated that while pricing has improved, there is still organic activity growth potential as demand increases [33] Question: Management of net working capital - The company is targeting a net working capital of about 35% of revenue and plans to manage inventory effectively to optimize working capital [34][36]