NCS Multistage(NCSM) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company's Q3 2024 revenue was $44 million, a 15% increase year-over-year, and at the high end of the guided range [7][28] - Adjusted EBITDA for Q3 2024 was$ 7.1 million, exceeding the guided range of $5 million to$ 7 million, and improved by $300,000 compared to Q3 2023 [10][31] - Net income for Q3 2024 was$ 4.1 million or $1.60 per diluted share, while net income for the first nine months was$ 3.1 million or $1.21 per diluted share [12] - The adjusted gross margin for Q3 2024 was 42%, an improvement from 41% in the same quarter last year [29] Business Line Data and Key Metrics Changes - International revenue for the first nine months of 2024 was$ 12 million, exceeding the full year 2023 international revenue, representing 10% of total revenue, up from 5% in the same period last year [20] - U.S. revenues increased due to higher composite plug and perforating gun sales, while Canadian revenues saw a modest increase due to higher fracturing systems activity [28] Market Data and Key Metrics Changes - International revenues increased by 89% year-over-year, while U.S. revenues were up $39 million and Canadian revenues increased by 3% [28] - Sequentially, Q3 revenues increased by 48%, with Canada seeing a 139% increase, reflecting seasonal activity [29] Company Strategy and Development Direction - The company aims to build upon its leading market positions, particularly in fracturing systems and Tracer Diagnostics, to deliver unique value to customers [15][19] - NCS is focused on capitalizing on international and offshore opportunities, with strong results expected from strategic initiatives implemented in previous years [19] - The company is also working on commercializing innovative solutions to complex customer challenges, with several technology developments underway [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the North Sea and international markets, particularly in Argentina and the Middle East, where investment continues to flow into unconventional projects [21][52] - The company expects full-year revenue of$ 155.5 million to $159.5 million, representing an 11% increase compared to 2023 [35] - Adjusted EBITDA is expected to range from$ 18 million to $20.5 million, reflecting a significant year-over-year increase [36] Other Important Information - The company reported a strong balance sheet with a cash balance of$ 15.3 million and total liquidity exceeding $37 million [13][32] - Free cash flow for the first nine months of 2024 was$ 0.4 million, an improvement of $3.3 million compared to the same period last year [13] Q&A Session Summary Question: Product sales growth in U.S. and Canada - Management indicated that the sales growth is part of normal operations rather than inventory build-up [46] Question: Timing of tracer work in the Middle East - Management clarified that the tracer work is progressing on schedule, with some minor delays but no significant issues [48] Question: Future expense reduction opportunities - Management stated that they have already captured most low-hanging fruit and are focusing on ongoing cost management efforts [49] Question: 2025 market conditions - Management expects U.S. activity levels to remain consistent, with growth anticipated in the Canadian market due to pipeline developments [51] Question: Market penetration excitement - Management highlighted the expansion of well construction portfolios in the Middle East and shallow-water offshore applications as key areas of focus [58] Question: Well complexity and product demand - Management noted that increased well complexity is expected to benefit the company, with opportunities for innovation in response to operator challenges [62]