NCS Multistage(US:NCSM)2025-10-30 13:30Financial Data and Key Metrics Changes - The company's Q3 2025 revenue was $46.5 million, a 6% year-over-year improvement, exceeding the midpoint of guidance [18] - Adjusted EBITDA for the first nine months of 2025 was $17.5 million, representing a 24% increase year-over-year [7] - Free cash flow after distributions to non-controlling interest improved by $6.5 million compared to the same period in 2024, totaling $6.8 million for the first nine months of 2025 [7][20] - Net income for Q3 2025 was $3.8 million, or diluted earnings per share of $1.37, compared to $4.1 million or $1.60 per share in the same quarter last year [19] Business Line Data and Key Metrics Changes - U.S. revenue increased by 26% sequentially and 54% year-over-year, with a 37% increase when excluding Resmetrics [6][18] - Canadian revenue increased by 9% for the first nine months of 2025 despite a 6% decline in average rig count [10] - International revenue reached 10% of total revenue in 2024, with continued growth expected [10] Market Data and Key Metrics Changes - Canadian revenue saw a 19% decline in Q3 2025 due to a general slowdown in activity levels and lower rig counts [18] - U.S. and international revenues increased by 37% and 38% respectively for Q3 2025, driven by increased fracturing system sales [18] Company Strategy and Development Direction - The company aims to build upon its leading market positions, particularly in fracturing systems and tracer diagnostics [9] - The strategy includes capitalizing on high-margin growth opportunities worldwide, with a focus on the North Sea and other international markets [10][11] - The company is committed to commercializing innovative solutions to complex customer challenges, with ongoing product development and field trials [12] Management's Comments on Operating Environment and Future Outlook - Management expressed caution moving into Q4 2025 due to challenging market conditions, including a stagnating U.S. rig count and activity declines in Canada [22] - The company expects annual revenue for 2025 to be between $174 million and $178 million, representing 8% year-over-year growth [22] - Free cash flow guidance for the year has been increased to $11 to $13 million, reflecting more favorable working capital balances [24] Other Important Information - The integration of Resmetrics is progressing well, with early successes noted in operational and financial performance [14][15] - A recent legal matter in Canada was resolved favorably for the company, with the Federal Court of Appeal overturning a prior judgment against NCS [16] Q&A Session Summary Question: What does the opportunity set look like for Resmetrics in the Middle East going forward? - Management highlighted that Resmetrics brought long-term contracts and expanded market presence in the Middle East, particularly in Oman and Saudi Arabia [31] Question: Would free cash flow remain similar in a flat growth environment in 2026? - Management indicated that they typically convert 50% to 60% of adjusted EBITDA to free cash flow, suggesting a stable profile in a flat growth scenario [33] Question: How is the integration of Resmetrics progressing and what synergies are expected? - Integration is on track, with expected synergies of $1.5 million from improved efficiencies in operations and cost of sales [41][42] Question: What is the outlook for the North Sea market and new product developments? - The North Sea remains a strong market, with ongoing projects and new product developments expected to enhance opportunities [44][46] Question: How is the competitive environment in international markets, particularly in the Middle East? - Management noted that competition varies by market, with a focus on delivering value through insights and reports to customers [67]